1. The Source for Housing Solutions An Introduction to Scaling Supportive Housing through Pay for Success

2. What is Pay for Success? Social Impact Investment Pay for Success (a.k.a. Social Impact “Bonds”) Upfront Working CapitalPay for Success Contracts Why Social Impact Investments?

3. Reasons to pay for outcomes Do more with what you already spend Shift your current spend to prevention Reduce what you spend in the future Collect data to evidence impact Pay only when outcomes achieved Decrease demand for acute services Strengthen public relations Evidence avoided service usage Evidence cost avoidance

4. Why Consider PFS? Expand and improve outcomes for vulnerable individuals and families Shift government’s focus to measuring and paying for outcomes, not just activities Leverage new financial resources to directly fund supportive housing Provide an admissions ticket to bring together diverse stakeholders focused on meeting the needs of a vulnerable target population

5. What is a PFS structure? Investors 7 3 4 5 6 2 1 Funds Data Investors Intermediary Housing/Services & Target Population Evaluator Government/ End Payor 7 2 Investors provide the upfront capital to finance the intervention. 3 Intermediary provides the service provider(s) with the working capital to implement the intervention. 4 Service providers deliver the transition supports, rental assistance, and services to the target population. 5 Outcomes and costs are tracked and provided to the third-party evaluator. 6 The evaluator determines whether the agreed upon metrics have been achieved. 7 End Payer makes success payments to the intermediary for distribution if outcomes are met. End Payor partners to develop PFS effort that connects a proven intervention with a target population in need of services. 1

6. Completed Social Impact Investments in the US (11 total) 2012 New York City 2013 Utah New York state 2014 Massachusetts x2 Ohio Chicago 2015 Santa Clara County 2016 Connecticut Denver South Carolina Issue Areas: Criminal justice Early childhood Employment Chronic homelessness Child welfare involvement Maternal Child health Family stability

7. PFS Initiatives: Supportive Housing Interventions Denver 250 Homeless Frequent Users of Jails LIHTC financing for 160 units, project- based vouchers Success metrics: stable accommodation, jail day reductions Project launched in February, 2016 Santa Clara 150 – 200 Chronically Homeless High Cost emergency, crisis and public safety systems Success metrics: stable accommodation County funded rental subsidies, LIHTC units Massachusetts 500-800 Chronically Homeless Units from multiple sources including through MA Rental Voucher Program Success metric: stable accommodation Began in early 2015, Housed approximately 250 people to date

8. Reducing future spend Supportive housing has a strong evidence base for service reduction and cost savings… but at a local level realizing the savings depends on the structure and finance of the end payer Will you close a wing of the jail? Can you renegotiate medical contracts provided in jail on a capitated basis? County government Which contracts are relevant and will you be able to renegotiate them to release savings? State government Are any services not reimbursed? Will any service reductions generate more revenue? Hospitals / MCOs

9. How to make appropriations* Policy optionHow it worksExample Full faith and credit Clause that requires legislature to honor contract obligations or else face substantial credit rating implications MA Commonwealth approved legislation to establish a ‘Social Innovation Trust Fund’ with the ‘full faith and credit’ of the Commonwealth Multi-year appropriation Governments pass multi-year appropriation NY State appropriated an initial two-year allocation in the 2013/14 budget for prison re-entry program Designated account Establish a designated account that is pre-funded at the start r funded each year as savings accrue Utah School Readiness Initiative: State set up ongoing appropriation from General Fund into a special revenue fund used to administer the program Rating Agency trigger Governments write a contract in which payment is ‘subject to appropriation’ and includes a provision that it will report any failure to make a payment to the credit rating agencies Chicago PFS transaction: payments from public schools subject to appropriation but any failure to pay will be reported on their CAFR to rating agencies *Chart reproduced from https://www.livingcities.org/blog/809-4-ps-of-pay-for-success-policy

10. Santa Clara: In their words Why not just pay for services out of the regular County budget? 1 The County is using PFS to achieve better outcomes for the clients we serve. Through performance based contracts, PFS projects allow the County to pay for services only when measurable results are achieved for the County and its citizens. In order to ensure that service providers have the upfront funding they need to deliver services before those outcomes have been demonstrated, PFS provides service providers with flexible, upfront funding from private and philanthropic funders. The funders and service provider bear the risk that the services do not achieve the target outcomes, and in return some funders may receive a small return if the project is successful. In exchange, the County is able to ensure taxpayer dollars are spent efficiently and only pay for services if a program is successful. 1 http://www.thirdsectorcap.org/wp-content/uploads/2015/08/150811_SCC-CH-PFS_FAQ.pdfhttp://www.thirdsectorcap.org/wp-content/uploads/2015/08/150811_SCC-CH-PFS_FAQ.pdf

11. The VSH feasibility study Supportive housing is identified as proven intervention to avoid inappropriate usage of healthcare, criminal justice & emergency services for the homeless population Target population is defined through a data match of HMIS, healthcare and jail/prison data to identify a high use group A cost-benefit analysis is conducted using local data and the defined population characteristics to identify cost savings for local organizations The supportive housing service is designed based on best practice and a budget for the intervention is agreed End payers agree to pay for the achievement of defined outcomes, such as 365 days in stable accommodation Service financing – how to fund the service up front – is agreed and a preliminary financial model is developed Complete In progress

12. Proposed target population CriteriaSources Homeless within past yearHMIS 5+ contacts with jail in past five years AND 5+ contacts with hospital in past five years Local DCJS data Local hospital data >1 hospitalization and >1 incarceration in past year Local DCJS data Local hospital data We are in the process of negotiating access to local healthcare data in order to confirm these tentative criteria

13. Baseline service usage Using the target population criteria we are estimating the following baseline service usage for use in the Cost/Benefit Analysis

14. Anticipated housing outcomes Evaluations suggest housing can be more stably maintained over time when supported with services.  Between 85-95% of housed individuals remain stably housed for at least one year  Emergency shelter usage tends to decrease by 90-98% within the first year of entering supportive housing  Shelter usage drop off is maintained in the second year of supportive housing, with 80-95% drop off rates

15. Anticipated criminal justice impacts Supportive housing evaluations suggest the intervention can reduce criminal justice involvement by:  Decreasing jail bed days by 40-98% within one year  Decreasing arrests by up to 50% within one year  Reducing police contact time

16. Anticipated healthcare impacts Supportive housing evaluations suggest the intervention leads to more appropriate healthcare usage by:  Decreasing Emergency Department visits by 50%  Decreasing hospitalizations by 55%  Decreasing hospital bed days by 50%  Decreasing ambulance trips by 50%  Increasing outpatient appointments by 20% For a high use population costing an average of $62K per year, supportive housing could deliver better outcomes for individuals while saving up to $30K in avoidable cost

17. Immediate next steps  Agreeing the target population definition with an interested end payer  Agreeing anticipated outcomes (housing, healthcare, criminal justice) with the end payer  Refining the operating model – service delivery, ramp up of housing units  Determine sources of finance and magnitude of PFS finance

18. For more information: Lauren Fulton Senior Program Manager Government Affairs & Innovation CSH 61 Broadway, Suite 2300 New York, New York 10006 (212) 986-2966 ext 247 (904) 923-2851 (cell)