Pay for Success Bonds - 2012 Budget

The 2012 President’s Budget designates $100 million that may be used for Pay for Success bonds. Under Pay for Success, Federal programs contract with a financing organization to measurably improve outcomes for at-risk populations. With philanthropic and other investors providing up-front funding, the Federal government pays only if clearly defined outcomes are achieved. Pay for Success leverages private resources to drive evidence-based innovation and to invest in what works. Pay for Success funding is spread across seven pilot and innovation grant programs in five agencies: Education,

Labor, Justice, the Social Security Administration, and the Corporation for National and Community Services. Federal agencies would only use the designated funds for Pay for Success projects if there is agreement with a

State or locality and a financing organization that a promising Pay for Success pilot is ready to be launched. The Budget includes appropriations language allowing unused Federal funds (e.g., if Pay for Success pilot does

not achieve results) to be de-obligated and re-obligated for other high priority programs. 2012 Budget General Provisions (pg. 12, section 734)

Appropriations Account

Program Maximum Funding

(millions/%) References in the Budget

Title V General Provisions (covering ED

and DOL)

Workforce Innovation Fund

$20/5%

Department of Education – Rehabilitation Services and Disability Research

Congressional Justification (pgs. 131-132); Department of Labor – General Provisions

Budget (pg. 6)

SSA/Supplemental Security Income (SSI)

SSI R&D $10/26% Social Security Administration – SSI Budget

(pgs. 3 and 5)

ED/Office of Innovation and Improvement

Investing in Innovation $15/5% Department of Education – Federal Budget

(pg. 70)

CNCS/Operating Expenses

Social Innovation Fund $14/20% Corporation for National and Community

Service – Congressional Justification (pgs. 10, 16, and 47)

ED/Higher Ed FIPSE $15/10% Department of Education – Higher Education Congressional Justification (pgs. 3, 5-6, 106)

ED/Special Ed PROMISE $6/20%

Department of Education – Special Education Congressional Justification (pgs. 2, 5-6, 108-

110)

DOJ – State and Local Law Enforcement

Assistance

Second Chance Act (Offender Re-Entry)

Programming $20/20%

Department of Justice – Office of Justice Programs Congressional Justification (pgs.

37 and 57)

Total $100

Other Links

“Social Impact Bonds: A promising new financing model to accelerate social innovation and improve government performance” (Jeffrey B. Liebman, Center for American Progress)

“What Are Social Impact Bonds?” (New York Times) “Rockefeller Foundation Sees Social-Change Dividend” (Wall Street Journal) “Heads Taxpayers Win, Tails They Don’t Lose” (Washington Post) “Obama’s social impact bonds: private money, public benefit” (Baltimore Sun) “For Federal Programs, A Taste of Market Discipline” (New York Times) “The Most Exciting 0.0003% of Obama’s Budget: Social Impact Bonds” (Fast Company)