Amended in Senate August 21, 2014

Amended in Senate August 4, 2014

Amended in Assembly May 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1837

Introduced by Assembly Member Atkins

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(Principal coauthor: Assembly Member Campos)

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(Principal coauthor: Senator Lieu)

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(Coauthors: Assembly Members Fox, Medina, and V. Manuel Pérez)

February 18, 2014

An act to add and repeal Title 15.8 (commencing with Section 97008) of, and to repeal Section 97013 of, the Government Code, relating to corrections.

LEGISLATIVE COUNSEL’S DIGEST

AB 1837, as amended, Atkins. Board of State and Community Corrections.

Existing law establishes the Board of State and Community Corrections to collect and maintain available information and data about state and community correctional policies, practices, capacities, and needs, as specified. Existing law also requires the board to develop incentives for units of local government to develop comprehensive regional partnerships whereby adjacent jurisdictions pool grant funds in order to deliver services to a broader target population and maximize the impact of state funds at the local level.

This bill would enact, until January 1, 2020, the Social Innovation Financing Program, and would require the board to administer the program. The bill would begin insert , among other things, end insert authorize the begin delete Chair of the end delete Board of State and Community Corrections, upon appropriation of funds by the Legislature for deposit in the Recidivism Reduction Fund, to award grants in amounts of not less than $500,000 and not more than $2,000,000 to each of 3 counties, selected as specified, for the purpose of entering into a pay for success or social innovation financing contract, pursuant to which private investors agree to provide financing to service providers to achieve social outcomes agreed upon in advance and the government agency begin insert that is a party to the contractual agreement end insert agrees to pay a return on the investment to the investors if successful programmatic outcomes are achieved by the service provider. The bill would limit the total amount of the grants awarded to $5,000,000. The bill would require begin delete the chair end delete begin insert each county receiving an award end insert to report annually to the Governor and Legislature on the status of begin insert its end insert program. begin insert The bill would require the board to compile the county reports and submit a summary report to the Governor and the Legislature annually. end insert The bill would also make legislative findings and declarations in this regard.

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) It is the intent of the Legislature to establish partnerships
between local governmental agencies, private investors, nonprofit
organizations, and for-profit service providers to facilitate the use
of social innovation financing to achieve measurable social
benefits.

(b) Social innovation financing and the use of
performance-based contracting can serve as an effective tool for
addressing social and community development challenges where
private sector innovations may be useful and multiple approaches
may be appropriate. Research shows that the selection and design
of these types of social interventions should be done with care in
order to ensure successful outcomes. Among other criteria, selected
projects should meet the following requirements:

(1) Address social needs that are unmet, high priority, and
large-scale.

(2) Address target populations that are well-defined and can be
measured with scientific rigor.

(3) Result in outcomes that are credible and readily available
by cost-effective means.

(4) Propose interventions that are highly likely to achieve
targeted impact goals.

(5) Be carried out by proven service providers that are prepared
to scale with quality.

(6) Include safeguards to protect the well-being of the
populations served.

(7) Be cost-effective programs that can demonstrate financial
savings for government.

SEC. 2.  

Title 15.8 (commencing with Section 97008) is added
to the Government Code, to read:

 

Title 15.8.  Social Innovation Financing
Program

 

97008.  

For purposes of this title, the following definitions
apply:

(a) “Board” means the Board of State and Community
Corrections.

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(b) “Chair” means the Chair of the Board of State and
Community Corrections.

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(c)

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begin insert (b) end insert  “Social innovation financing contract,” which may also be
known and referred to as a “pay for success contract,” refers to a
contractual agreement between government, private investors, and
service providers pursuant to which private investors agree to
provide financing to service providers to achieve social outcomes
agreed upon in advance and the government agency agrees to pay
a return on the investment to the investors if successful
programmatic outcomes are achieved by the service provider.

97009.  

(a) It is the intent of the Legislature that as part of the
package to reduce recidivism in California, the concept of “pay
for success” or social innovation financing should be included to
take advantage of available philanthropic and private investment.

(b) The Legislature hereby declares that a variety of approaches
have been shown to be successful in reducing recidivism, including
addressing homelessness, substance begin delete abuse, and workforce
participation within end delete begin insert use disorder and unemployment among end insert specific
demographic groups.

97010.  

(a) There is hereby established the Social Innovation
Financing Program.

(b) The board shall administer the Social Innovation Financing
Program.

(c) (1) The begin delete chair end delete begin insert board end insert shall solicit proposals for social
innovation financing from county boards of supervisors and shall
select three counties to receive grant funding.

(2) Before awarding a grant pursuant to paragraph (1), the begin delete chair
shall consult with the end delete board begin delete regarding end delete begin insert shall evaluate end insert the quality
of the proposal for which the grant is to be awarded.

(3) At a minimum, each application for a grant 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 the manner in which 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 begin insert and performance
thresholds end insert upon which success of the social program will be
measured.

(H) An itemization of all expenses proposed to be reimbursed
under the contract.

(I) The amount of matching funds provided by the county.

(J) A description of how the final payments for successful
programmatic outcomes begin delete are end delete begin insert will be calculated and end insert structured in
the contract.

(K) A description of all parties to the proposed contract,
including prospective investors and philanthropic foundations.

97011.  

(a) Upon appropriation of funds by the Legislature for
deposit in the Recidivism Reduction Fund for the purposes of this
title, the begin delete chair end delete begin insert board end insert shall award a grant in an amount of not less
than five hundred thousand dollars ($500,000) and not more than
two million dollars ($2,000,000) to each county selected pursuant
to Section 97010 for the purposes of entering into a pay for success
or social innovation financing contract. The total amount of the
grants awarded pursuant to this section shall not exceed five million
dollars ($5,000,000). Any unused state moneys shall revert to the
General Fund.

(b) Each begin insert county end insert contract described in subdivision (a) 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 begin delete chair, end delete begin insert county, end insert will determine whether the
performance targets have been achieved. begin insert This process shall include
defined performance metrics and a monitoring plan. end insert

(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 county that the contract will result
in significant performance improvements begin insert , such as a reduction in
rearrests or an increase in the number of jail days avoided, end insert and
budgetary savings if the performance targets are achieved.

(5) A requirement that an amount equal to a minimum of 100
percent of the Social Innovation Financing Program grant awarded
to the county be matched by other county, federal, begin delete or end delete private,
begin delete including end delete begin insert or end insert philanthropic, funds. The board may adopt regulations
allowing in-kind contributions in lieu of monetary contributions
for this purpose.

(c) Up to 10 percent of the grant funds awarded pursuant to this
title may be used by the counties for administrative expenses
related to the development of the pay for success or social
innovation financing contract. The remainder begin insert of the grant end insert shall be
contributed toward final payments to investors for successful
programmatic outcomes achieved, as stipulated in the contract.

(d) If, after receiving a grant pursuant to this title, a county does
not enter into a contract for which the grant was awarded, the
county shall return all moneys awarded by the board pursuant to
this title, to the state.

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97012.  

(a) The board may adopt regulations to implement this
title.

(b) 

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begin insert 97012. end insert   

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The board is encouraged to begin delete consult with end delete begin insert form an
executive steering committee with members from end insert relevant state
agencies and departments begin insert with expertise in public health,
homelessness and housing, workforce development, economic
development, and effective rehabilitative treatment for adult and
juvenile offenders end insert in the evaluation of the social innovation
financing program, including, but not limited to, the Governor’s
Office of Business and Economic begin delete Development end delete begin insert Development, the
Department of Housing and Community Development, the
California Workforce Investment Board, end insert and the Office of Health
Equity, begin delete in order to determine the efficiency end delete begin insert to make
recommendations to the board regarding the efficacy end insert and viability
of proposals.

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(c) The board may adopt a reasonable grant application fee that
is sufficient to cover the expenses incurred by the board in
reviewing an application for a grant pursuant to this title.

end delete

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97013.  

(a) The chair shall report annually to the Governor and
Legislature on the status of each ongoing social innovation
financing program, 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 moneys
awarded.

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begin insert 97013. end insert   

end insert begin insert

(a) Each county receiving an award shall report
annually to the board on the status of its ongoing social innovation
financing program. The report shall also contain an accounting
of the moneys awarded.

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(b) The board shall compile the county reports and submit a
summary report to the Governor and Legislature annually.

end insert begin delete

(b)

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begin insert (c) end insert  A report made pursuant to this section shall be made in
accordance with the requirements of Section 9795.

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(c)

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begin insert (d) end insert   This section shall remain in effect only until January 1,
2020, and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2020, deletes or extends that date.

97014.  

This title does not create a statutory entitlement to
services or any contractual obligation on the part of the state.

97015.  

This title shall remain in effect only until January 1,
2020, and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2020, deletes or extends that date.