1. Pay for Success in the US: Current Activity and Interest
Philip A. Peterson, FSA
Partner, Aon Hewitt
Sara Watson, MPP, PhD
National Director
ReadyNation
Funded by the Pritzker Children's Initiative, a project of the Pritkzer Family Foundation

2. The Council for a Strong America 6,000+ High-level, Unexpected Messengers
More than 4,500 attorneys general, district attorneys, police chiefs, sheriffs and crime survivors who educate policy-makers and the public that early investments in kids prevent later criminal activity.
More than 1,100 business leaders who advocate for high-quality, research-proven public investments in children that strengthen businesses, protect America’s competitive edge in a global marketplace, and help our nation’s children get on the right track.
More than 425 retired admirals and generals who argue that investing in kids is a national security issue.
More than 250 evangelical pastors committed to the development of strong and healthy American families with a specific focus on those at risk.
More than 160 athletes and coaches who work to ensure that every child has the best chance to compete in life.
September 18, 2018

3. What is Pay-for-Success (PFS)?
Combination of performance-based payments and market discipline to accelerate and scale innovative, evidence-based solutions for social services.
Private Funders
Investment
5. Principle + ROI
Governments contract with private sector intermediaries who in turn partner with service providers, and private/public investors to fund prevention-focused social programs.
Governments pay and investors are repaid only if and when agreed-upon performance outcomes are achieved and verified through an independent evaluation process
Intermediary
Government
4. Performance-based payments
2. Working capital
Service Providers
3. Outcomes & budget savings
Source: Presentation, “Ohio Pay-for-Success.” The Ohio Business Roundtable
September 18, 2018

4. Pay for Success in the US Deals in Early Stages
State has an active
social impact bond underway
State is exploring Pay for Success options
Source: Kristina Costa. “Fact Sheet: Social Impact Bonds in the United States.” Center for American Progress
September 18, 2018

5. State and Local Jurisdiction Activity Active Deals in Progress
New York City
First social innovation financing project in US
Goal: Reduce juvenile offender recidivism
Required outcome: Reduce readmission rate at least 10%
Financing: Loan (Goldman); partial loan guarantee (Bloomberg)
Utah – Salt Lake County
First early childhood project in US
Goal: Reduce use of special ed/remediation services
Required outcome: Avoidance of special education/remediation costs
Financing: Senior (Goldman); subordinate (J.B. Pritzker) debt
September 18, 2018

6. State and Local Jurisdiction Activity Active Deals in Progress
Massachusetts
Goal: Reduce recidivism; improve employment outcomes
Required outcomes: Reduce incarceration rate by at least 5.2%; increases in job readiness/employment
Financing: Senior (Goldman); subordinate PRI (Kresge/Living Cities), grants (various foundations)
New York State
Goal: Reduce recidivism; increase employment; transitional jobs
Required outcomes: Reduce incarceration rate by at least 8%; increases in employment/transitional jobs
Financing: Senior (BAML clients), partial loan guarantee (Rockefeller)
September 18, 2018

7. State and Local Jurisdiction Activity Projects under Pilot/Consideration
California
First demonstration project to improve health outcomes for asthmatic children in Fresno
Outcomes: Document cost savings due to program participants’ reduced need for emergency care
Colorado, Connecticut, Illinois, Michigan, New York, Ohio, South Carolina
Harvard SIB Lab engaged
Connecticut, Colorado, Maryland, New Jersey, Pennsylvania, South Carolina, Utah, Washington
Legislation introduced/passed
September 18, 2018

8. Early Childhood PFS Projects Under Construction
California
Nonprofit Finance Fund cosponsoring initiative in Bay Area and Orange County to scale Nurse Family Partnership
Project will include return on investment analysis and convening of potential partners
Connecticut
CT Center for Social Innovation exploring viability of home visitation, community-based health and EC programs
Established Office of early childhood
September 18, 2018

9. Early Childhood PFS Projects Under Construction
Ohio
Governor’s office working with BRT
Completed feasibility study with help of Harvard SIB Lab
Considering RFP to expand Pre-K to 3 and 4 year olds for 2 years; 400 children/year
Considering home visiting as distant choice
Oregon
Work being done under Prevention & Wellness Health Demonstration project
Analyzed client-level data for young children to identify outcomes to link to PFS
Proof of concept model planned for 3-years; child welfare system
September 18, 2018

10. Early Childhood PFS Projects Under Construction
South Carolina
Project underway to expand home visiting services using Nurse Family Partnership model for Medicaid population
Feasibility study completed September 2013
Partnering with SC Department of Health and Human Services (SCDHHS)
SCDHHS pursuing final approvals to contract with NFP
Virginia
Medicaid home visiting project being explored with managed care organizations (Sentara and Nova Health)
Talked with John Tambornino (HHS) about data procurement
Financial model shows considerable savings, with substantial conservatism
September 18, 2018

11. Early Childhood PFS Projects Under Construction
Washington DC
District engaging in project to reduce teen pregnancies and enhance related educational outcomes
Goal is for improved mother/infant health; reduced school dropout rate
Request for Proposal has been released for qualified interventions and service providers
September 18, 2018

12. Early Childhood PFS Conference Takeaways
Prevention vs. remediation
Any success is a success
Partnership among uncommon parties with different perspectives to collaboratively achieve improved social results
Data, rigor and feasibility studies are critical to deals
Focus on outcomes by service providers – opportunity to learn, but reputational and sustainability risks
Perfection is the enemy of good – flexibility and big toolkit are important
Value of desired social change is what really makes the deal work
Gov’t participation is good, but not absolutely required for deal success – as long as the gov’t enters arena at some point
Moral hazard and reputational risk issues make this difficult
September 18, 2018

13. Technical Assistance Funded by Pritzker Children’s Initiative/Pritzker Family Foundation
Nexus of working documents, sample contracts, leaders, legislation, at
First national conference of Early Childhood Social Impact Performance Advisors, March 2014
Technical papers on developing PFS arrangements
Individual technical assistance to state and local teams
Regular webinars on technical subjects on state and federal legislation (next webinar: June 20)
Educating key policymakers, investors and EC groups
September 18, 2018