BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1837 (Atkins) - Social Innovation Financing
Amended: August 4, 2014 Policy Vote: BP&ED 8-0
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Robert Ingenito
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1837 would enact, until January 1, 2020, the
Social Innovation Financing Program, which the Board of State
and Community Corrections (BSCC) would administer, as specified.
Fiscal Impact: The BSCC estimates that up to 5 percent of the
grant awards could be necessary for general administrative costs
to implement and administer this program (See Staff Comments).
Thus, bill would result in costs to BSCC of up to $250,000
(special fund).
Background: A "pay for success" or "social innovation financing
contract" is a financing model in which funds are raised from
private investors through philanthropic and non-governmental
organizations to provide capital for social services
traditionally delivered by public entities. Social impact
partnerships are intended to provide public funding of service
delivery programs only on a reimbursement basis once
demonstrated performance measures are achieved by a private
entity under contract to perform specified services. This model
is intended to shift financial risk to non-governmental entities
that are paid for providing traditional services only upon
demonstration of results.
AB 1837 (Lieu)
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Proposed Law: AB 1837 would enact the Social Innovation
Financing Program, and give administration duties to BSCC. Under
the provisions of the bill, BSCC would, upon appropriation of
funds by the Legislature, award grants between $500,000 and $2
million, to each of three counties, such that the total sum does
not exceed $5 million. The grants would be for the purpose of
entering into "pay for success" contracts, as specified, to
reduce recidivism. The bill gives BSCC authority to charge a fee
sufficient to cover its costs to review proposed grants, and
would require BSCC to report annually
to the Governor and Legislature, as specified. The Program
sunsets on January 1, 2020.
Related Legislation:
SB 593 would require the Governor's Office of Planning
and Research (OPR) to administer the Social Impact
Partnership Pilot Program until January 1, 2020. This bill
is currently pending in the Assembly Appropriations
Committee.
SB 9 (Price), introduced in 2013, would establish the
Office of Social Innovation and Entrepreneurship
Development within the Office of the Governor to establish
partnerships with government agencies, private investors,
nonprofit organizations, and for-profit service providers
to facilitate the use of social impact bonds, as defined,
to address social service needs. The bill has not been
heard in policy committee.
Staff Comments: The grants provided under the bill are designed
such that their payment is conditioned on the achievement of
specific outcomes based upon defined performance targets. BSCC
is tasked with selecting independent evaluators who will
objectively determine whether the targets have been achieved.
The amount of the awarded grants must be fully matched by
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non-state funds (including local government, federal government,
or from private donors).
Costs to BSCC would include (1) hiring a consultant to help
facilitate the process, including convening an Executive
Steering Committee to develop a request for proposals, (2)
proposal evaluation, (3) associated travel costs, (4) providing
technical assistance to counties, (5) conducting public
meetings, (6) developing templates to collect information from
counties and (7) preparing reports, as specified.