BILL ANALYSIS �
AB 1837
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CONCURRENCE IN SENATE AMENDMENTS
AB 1837 (Atkins)
As Amended August 21, 2014
Majority vote
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|ASSEMBLY: |69-0 |(May 27, 2014) |SENATE: |32-0 |(August 25, |
| | | | | |2014) |
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Original Committee Reference: J., E.D. & E.
SUMMARY : Establishes the Social Innovation Financing Program,
administered by the Board of State and Community Corrections
(BSCC), which will provide grants to three counties for the
purpose of utilizing pay-for-success contracts to reduce
recidivism.
The Senate amendments delete the general requirements relating
to the state's efforts in expanding the use of social innovation
financing and pay-for-success contracting as a useful mechanism
for addressing significant social issues, including, but not
limited to, homelessness, prison inmate recidivism, and
workforce development. The amendments, instead, establish a
grant program, which will allow three county governments to
apply social innovation financing models to reduce recidivism.
FISCAL EFFECT : According to the Senate Committee on
Appropriations, the BSCC estimates that up to 5% of grant
program moneys will be necessary for the general administrative
costs. The BSCC estimates that administrative costs would be up
to $250,000 in Special Funds. SB 875 (Budget and Fiscal Review
Committee) includes $5 million from the Recidivism Reduction
Fund to the Board of State and Community Corrections for the
establishment of a social innovation financing program for
counties.
COMMENTS : For decades, California's prison system has faced
significant challenges in meeting its basic security and
rehabilitation responsibilities. Designed to house an inmate
population of 80,000, the state prison population has remained
well above that mark. In 2006, the California prison population
hit its peak with over 170,000 men and women. The resulting
conditions were the subject of two federal class actions, which
were ultimately consolidated [Plata/Coleman v. Brown].
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Currently, the court has ordered the state to reduce its prison
population to:
1)143% of design capacity by August 31, 2014;
2)141.5% of design capacity by February 28, 2015; and
3)137.5% of design capacity by February 28, 2016.
If the Administration fails to meet any of the above benchmarks,
Justice Elwood Lui, the court appointed Compliance Officer, is
authorized to order the release of the number of inmates
required to meet the benchmark.
On August 15, 2014, the state reported that it had met the first
benchmark with the state's 34 prisons at 140.2% of design bed
capacity, and 8,803 inmates being housed in out-of-state
facilities. While it may appear that the state has successfully
reached both its 2014 and 2015 goals, the state's high
recidivism rate will make it challenging to maintain the lower
inmate population level.
This bill authorizes the BSCC to partner with counties in
applying pay-for-success contracting to achieve measurable
reductions in the recidivism rate of formally incarcerated
individuals. This bill may be one of several key actions the
state will need to take in order to remain compliant.
Federal Lessons on Performance-Based Contracting:
Performance-based contracting is designed to ensure that
contractors are given the freedom to determine how best to meet
the government's performance objectives, while allowing
governments to only pay for those services that meet the
pre-determined quality and performance levels. This is not a
new concept, but it is growing in popularity as governments face
tighter budgets and become more open to using private sector
innovations to address social challenges where "one size" will
not fit all.
The United States Department of Defense was an early pioneer in
the use of performance based contracting. One early study
suggests that the model resulted in an average 15% reduction in
contract price, and an 18% improvement in satisfaction with the
contractor's work. Although a documented success, this early
research also identified a number of key challenges government
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faced when using performance-based contracts, including
identification of which service contracts were best suited to
the model, preparation of a sufficiently focused statement of
work, and ensuring quality standards were being met. Under this
bill, GO-Biz will examine these types of issues and make
recommendations on how state agencies can best move forward in
performance-based contracting
Innovating Performance-Based Contracts: Since the 1990s,
performance based contracts have evolved to better address
social services and community development challenges. One of
the key changes is the funding method, whereby a third party
finances the initial service contract and is then paid at a
premium rate by the government upon successful completion of the
contract. If the measurable outcome is not achieved, the third
party financer receives no money. Several states and major
metropolitan areas are currently using or are preparing to use
social innovation financing including Massachusetts to address
both chronic homelessness and high recidivism rates among
juvenile offenders.
Recent Federal Activity: As noted above, the federal government
has been using performance-based contracting for over two
decades. The Obama Administration awarded nearly $24 million in
pay-for-success grants, which are one type of performance-based
contracts, to states including New York State ($12 million) and
Massachusetts ($11.67 million). In January 2014, the White
House Office of Science and Technology Policy released a Request
for Information designed to accelerate the development,
evaluation, and adoption of high-impact learning technologies
using pay for success contracts and other types of social
innovation financing.
All this suggests that additional federal funds will become
available. Implementation of AB 1837 will allow California to
be ready to access these moneys in a manner that is thoughtful
and appropriate for the state.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090 FN:
0005461
AB 1837
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