Schlossberg introduces legislation to help state pay for success

HARRISBURG, May 21 – State Rep. Mike Schlossberg, D-Lehigh, introduced legislation this week that would allow the Office of the Budget and other agencies to enter into pay-for-success agreements, which is an important component of Gov. Tom Wolf's 2015-16 state budget proposal.

The pay-for-success model, which is currently operating in many states, including Massachusetts and New York, would allow the commonwealth to enter into partnerships with philanthropic and private sector investors who would provide upfront capital to cover the costs of certain programs and services.

"In a time when government has been asked to do more with less, the pay-for-success model has a lot of potential to offer the commonwealth," Schlossberg said. "As budget negations heat up, I think this is an idea worthy of consideration."

Participating organizations would be required to track their capital investment, and a third party would evaluate the outcomes from the funded program or service to ensure it is meeting predefined performance targets. An investor would only receive a return on their investment if the program met those predefined standards. 

"There is an extremely high cost to underfunding education and human services," Schlossberg said. "This proposal would allow Pennsylvania to invest in services we know save money now so that we aren’t paying for jail, rehabilitation, crime and welfare later.”

Programs and services that could be performed under a pay-for-success contract would include early childhood education, including pre-kindergarten; workforce development; public safety, including programs to reduce recidivism; health and human services, including drug and alcohol addiction treatment; and long-term care. 

House Democrats have begun introducing the legislation that comprises Wolf's 2015-16 state budget package. The budget is designed to close the state's $2 billion budget deficit that resulted from recent Republican budgets; restore cuts made to school funding in the past four years; substantially reduce property taxes; invest in job creation and essential services; boost the middle class; treat taxpayers fairly; and move all Pennsylvanians forward together.

Schlossberg's legislation, H.B. 1147, awaits consideration in the House.