BILL NUMBER: SB 593 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 10, 2014
AMENDED IN SENATE JANUARY 27, 2014
AMENDED IN SENATE JANUARY 6, 2014
AMENDED IN SENATE APRIL 23, 2013
INTRODUCED BY Senator Lieu
FEBRUARY 22, 2013
An act to add and repeal Title 15.5 (commencing with Section
97000) of the Government Code, relating to social impact
partnerships.
LEGISLATIVE COUNSEL'S DIGEST
SB 593, as amended, Lieu. Social impact partnerships: pilot
program.
Existing law establishes the Office of Planning and Research
in the Governor's office and sets forth its powers and duties
as the comprehensive state planning agency.
agency, including, among other things, to evaluate plans and programs
of departments and agencies of state government.
This bill would require the Office of Planning and Research to
conduct the Social Impact Partnership Pilot Program. The bill would
authorize the Director of the Office of Planning and Research to
identify and submit proposed social impact partnerships to the
Legislature for consideration with the May Revision of the Governor's
Budget each year beginning in 2015. The bill would create the Social
Innovation Financing Trust Fund from which funds appropriated by the
Legislature would be spent on contracts entered into by the office
with approved applicants, as specified. The bill would authorize the
office to adopt regulations to implement these provisions and to
establish an application fee to cover the expenses of the office. The
bill would also require the director to report annually to the
Governor and Legislature on the status of ongoing social impact
partnerships and the Social Innovation Financing Trust Fund, as
specified. This bill would repeal these provisions on January 1,
2020.
This bill would state findings and declarations of the
Legislature regarding the social problems currently facing the state
and the function of social impact partnerships. The bill would
authorize the Governor to enter into at least 3 social impact
partnerships, as defined, each fiscal year to address policies or
programs not currently funded by the state, to address particular
components of state programs in order to improve outcomes or lower
state costs, to reduce recidivism, to reduce child abuse and neglect,
or to assist at-risk and foster children, provided that the social
impact partnership is not used to operate entire state programs, does
not cause the displacement of any state employee, and the
contractual agreement contains specified provisions. The bill would
require a contract for a social impact partnership to be submitted to
the Legislature as part of the Governor's proposed budget, and any
funding necessary for that fiscal year to be included in the Governor'
s proposed budget for the state agency that would administer or
oversee the contract. The bill would provide that for contracts
approved by the Legislature in prior fiscal years, payments made
under the contract would be subject to appropriation according to the
terms of the contract.
This bill would repeal these provisions on January 1, 2020.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) This act shall be known, and may be cited, as the California
Social Impact Partnership Act.
(b) Over six million people are currently living in poverty in
California, and 22 percent are children. One in five children in
California lives in poverty and nearly one-half of children in
California either live in poverty or perilously close to it.
(c) The recidivism rates in California are among the highest in
the nation. According to a 2012 report by the Department of
Corrections and Rehabilitation, just over 65 percent of those
released from California's prison system return within three years.
(d) Approximately 55,000 children are in the foster care system in
California, yet, according to the Pew Charitable Trusts, by 19 years
of age only 57 percent of emancipated foster youth have received
high school diplomas or general education development (GED). Over 70
percent of all state prison inmates have spent time in the foster
care system.
(e) Despite current efforts to address these challenges, there are
simply not sufficient resources available through traditional
funding mechanisms. Innovative approaches that can be shown to
achieve defined goals should be pursued.
(f) Social impact partnerships are essentially pay-for-performance
contracts that can be used for social programs administered by
nongovernmental organizations whereby governmental agencies pay only
for successful programs with real, measurable outcomes after the
results have been achieved.
(g) This act will authorize the state to contract with
nongovernmental organizations to provide a service to a targeted
population over a specified period of time. If the results of the
services provided meet predetermined program goals, the state will
repay the nongovernmental organization for the services rendered plus
an agreed upon rate of return. If the social program does not meet
the targets, the government pays nothing.
(h) The social impact partnership model was first used in the
United Kingdom in 2010 and has since been adopted in New York City,
Massachusetts, and Ohio, and contracts are being formulated in other
states such as Michigan, Colorado, Utah, North Carolina, and New
Jersey.
(i) In a time of limited public funds and a decrease in
philanthropy, the social impact partnership model is being used
across the nation to address social problems, to reduce recidivism,
to reduce chronic homelessness, and to fund early childhood
intervention and prevention services and job training programs.
SECTION 1. SEC. 2. Title 15.5
(commencing with Section 97000) is added to the Government Code, to
read:
TITLE 15.5. SOCIAL IMPACT PARTNERSHIPS PILOT PROGRAM
CHAPTER 1. GENERAL
97000. (a) For purposes of this title, "social impact
partnership," also referred to as a "pay for success contract," means
a contract for services provided to address a
defined demographic group's particular needs that are
traditionally addressed through state programs and funding therefor,
in order to improve outcomes and lower costs because payment is made
only after measured results are for which payment will
be made after predetermin ed measurable results have been
achieved.
(b) "Director" means the Director of the Office of Planning and
Research established pursuant to Section 65037.
(b) Social impact partnerships may be entered into, subject to
subdivision (d), for any of the following:
(1) To address policies or programs not currently funded by the
state.
(2) To address particular components of state programs in order to
improve outcomes or lower state costs.
(3) To improve outcomes in programs designed to reduce recidivism
in the population of formerly incarcerated individuals.
(4) To reduce the incidence of child abuse and neglect through
prevention and treatment, to improve the stability of at-risk and
foster children through behavioral health and other trauma-informed
care, and to improve educational outcomes and job preparedness for
at-risk and foster children.
(c) Social impact partnerships shall not be used for the operation
of entire state programs nor cause the displacement of any state
employee.
(d) The Governor is authorized to enter into a social impact
partnership for the purposes set forth in subdivision (b) if the
contractual agreement contains all of the following:
(1) A requirement that payments for services be conditioned upon
the achievement of specific outcomes based on defined performance
measures.
(2) A requirement that an independent evaluator be used to
determine whether the performance outcomes have been achieved.
(3) Specifications for how success will be measured and payments
for services are earned.
(4) A calculation for the amount of, and the timing of, payments
that will be earned by the service provider during each year of the
agreement, if performance outcomes are achieved as determined by the
independent evaluator.
(5) If applicable, pursuant to paragraph (2) of subdivision (b), a
statement that the contract will result in significant performance
improvements or budgetary savings if the performance outcomes are
achieved.
(e) If the Governor exercises the authority set forth in
subdivision (d), he or she shall enter into at least three contracted
agreements for social impact partnerships during the fiscal year in
which the state enters into the first contractual agreement.
97001. (a) The Office of Planning and Research shall conduct the
Social Impact Partnerships Pilot Program.
(b) (1) The director may identify and submit proposed social
impact partnerships to the chairs of the Senate and Assembly budget
committees and the chairs of the relevant subcommittee for
consideration with the May Revision of the Governor's Budget each
year beginning in 2015.
(2) Prior to the submission of any proposed social impact
partnerships, the director shall consult with the appropriate state
agency or department responsible for administering any affected state
program.
(3) At a minimum, each submission shall include all of the
following:
(A) A description of the proposed social program.
(B) A description of the organization's experience in providing
the proposed social program.
(C) A description of the financial stability of the organization.
(D) An identification of each component of the social program to
be provided.
(E) A description of how the social program will be provided.
(F) A description of the recruitment or selection process, or
both, for participants in the social program.
(G) The proposed quantifiable results upon which success of the
social program will be measured.
(H) An itemization of all expenses proposed to be reimbursed under
the contract.
97002. (a) Upon appropriation of sufficient funds by the
Legislature, the director shall enter into a contract with the
approved applicant.
(b) Each contract shall include all of the following:
(1) A requirement that the payment be conditioned on the
achievement of specific outcomes based upon defined performance
targets.
(2) An objective process by which an independent evaluator,
selected by the director, will determine whether the performance
targets have been achieved.
(3) A calculation of the amount and timing of payments that would
be earned by the service provider during each year of the agreement
if performance targets are achieved as determined by the independent
evaluator.
(4) A determination by the director that the contract will result
in significant performance improvements and budgetary savings across
impacted agencies or departments if the performance targets are
achieved.
(c) The director shall not enter into any contract that exceeds
the funds appropriated for it by the Legislature.
97003. (a) The Social Innovation Financing Trust Fund is hereby
created in the State Treasury. All funds appropriated by the
Legislature pursuant to Section 97002 shall be deposited into the
Social Innovation Financing Trust Fund.
(b) Social impact partnership contracts entered into by the office
with approved applicants shall be paid from the Social Innovation
Financing Trust Fund.
97004. (a) The Office of Planning and Research may adopt
regulations to implement this title.
(b) The office shall adopt an application fee that is sufficient
to cover the expenses incurred by the office, including startup
costs.
97005. The director shall report annually to the Governor and
Legislature on the status of each ongoing social impact partnership,
including, but not limited to, a description of the desired outcome
and an overview of the independent evaluator's findings. The report
shall also contain an accounting of the Social Innovation Financing
Trust Fund.
97006. This title shall not create a statutory entitlement to
services or any contractual obligation on the part of the state. It
is the intent of the Legislature that a proposed contract under
Section 97001 is subject to legislative review and approval before
its execution, and that any appropriation only occur after the review
and approval.
97007. This title shall be repealed on January 1, 2020.
97001. (a) A contract for a social impact partnership shall be
submitted to the Legislature as part of the Governor's proposed
budget, and any funding of the contract for that fiscal year shall be
included in the Governor's proposed budget for the state agency that
would administer or oversee the contract.
(b) For contracts approved by the Legislature for prior fiscal
years, payments made under the contract shall be subject to
appropriation according to the terms of the contract.
97002. This title shall be repealed on January 1, 2020.