DearColleague.us

Letter

 

From: The Honorable John K. Delaney
Sent By:
xan.fishman@mail.house.gov

Date: 2/27/2014

SUPPORT “PAY FOR SUCCESS” FUNDING IN FY15
Deadline Extended:  Noon on Friday, February 28th  
Current Signers:  Delaney, Polis, Meeks, Cardenas, Huffman, Titus, Foster, Kennedy
Dear Colleague,
As Members of Congress, it is our duty to explore ways to improve outcomes for our constituents.  At the same time, with our current fiscal challenges, we should all look for opportunities to save taxpayer money.  That is why we write to get your support
to urge President Obama to include funding for Pay For Success (a.k.a. Social Impact Bonds) in the FY15 budget he submits to Congress.
Pay For Success is a model of financing that partners government, non-profits, and the private sector to implement interventions to accomplish social goals while saving the government money in the long term.  The best part of the deal is that we only have
to pay for success; the government doesn’t pay if the intervention proves ineffective as measured by an independent third-party evaluator.  This minimizes risk to taxpayers while providing the incentives to maximize the effectiveness for our constituents.
Pay For Success has widespread bipartisan support as can be seen by this collection of quotes from both Republican and Democratic Governors from this February 6th article from Governing magazine entitled “The
Promise and Potential of Social Impact Bonds
” by Michele Jolin and George Overholser.
“Not only does this approach help pursue solutions to tough problems,” said Ohio’s Republican governor, John Kasich, “but it does so in an accountable, results-oriented way.” South Carolina Gov. Nikki Haley, another Republican,
put it succinctly: “I love this pay-for-success model.” Colorado Gov. John Hickenlooper, a Democrat, plans to use the SIB approach to target homelessness, and New York’s Democratic governor, Andrew Cuomo, praised it as cost-effective, adding that “solutions
that work can be brought to scale.”
Scholars from think tanks on both sides of the aisle have endorsed the idea as well.  See “Private money, public good” by Andrew Kelly and Michael McShane of the American
Enterprise Institute (AEI) and “Social Impact Bonds: Social Finance: A Primer” by Sonal Shah and Kristina Costa of Center for American Progress (CAP.)
We hope you’ll join us in urging President Obama to include this funding in his FY15 budget.
For any questions or to sign on, please contact Xan Fishman with Congressman Delaney at
xan.fishman@mail.house.gov or Allie Kimmel with Congressman Polis at
allie.kimmel@mail.house.gov
Sincerely,
John K. Delaney                      Jared Polis
Member of Congress                Member of Congress
February XX, 2014

President Barack Obama
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear President Obama,

We write to recommend that you include Pay For Success funding in your budget for fiscal year 2015.

As you know, the Pay For Success financing model, sometimes known as Social Impact Bonds, is an innovative way for the government to maximize return on investment.  Pay For Success models allow the government to be more outcome focused, creating financial
arrangements such that the government only has to pay if the desired outcome is achieved and certified by an independent third-party evaluator.  This minimizes risk to the taxpayer, and maximizes incentives for effective interventions and outcomes that will
both serve the common good and ultimately save the government money, creating a true double-bottom line for both the government and private investors.  As you know, more and more private capital has been set aside by philanthropic organizations and social
investment funds to fund these initiatives and we should work with them to accomplish our shared objectives.
The Pay For Success model can be used to accomplish a diverse set of policy objectives such as reducing recidivism, providing work-force training, reducing unemployment, and maximizing the effectiveness of early childhood education, and improving health
care outcomes.  Up to this point, states have taken the lead, but federal involvement is needed in order to ensure incentives are aligned.  Without federal involvement, states only have the incentive to fund projects that will save the state money, but they
don’t have an incentive to use Pay For Success financing for initiatives that will save the federal government money.  That is why is so important to include this funding in your FY15 budget and why we support creating a Pay For Success Incentive Fund within
the Treasury Department that can help align cost-saving incentives and provide outcome payments, credit enhancement, and technical assistance to agencies on specific projects.  This is especially true with our difficult fiscal situation where an opportunity
to improve outcomes while saving money is a goal that our colleagues on both sides of the aisle can agree on.
Please do not hesitate to contact our offices with any questions. We look forward to hearing your thoughts on how we can increase the use of Pay For Success programs in this coming fiscal year and in future years.

Sincerely,