Dear Dr. Bones,
Let's do it bassackwards and start with the steak rather than the sizzle:
|Massachusetts First State in the Nation to Pursue ‘Pay For Success’ Social Innovation Contracts|
Commonwealth to seek performance-based investments to spur innovative solutions to social issues, achieve better outcomes and save money
BOSTON — Wednesday, January 18, 2012 — The Patrick-Murray Administration today announced a first in the nation initiative to allow Massachusetts to enter into “pay for success” contracts designed to encourage innovative solutions to social problems, improve the performance of government and save taxpayer money. The Executive Office for Administration and Finance (ANF) today issued Requests for Response (RFRs) as a next step in pursuing these social innovation financing contracts.
“Social innovation financing is a tool that helps us tackle long term social issues with innovative methods,” said Governor Deval Patrick. “These initiatives will help us change the delivery of state services to save money and improve program performance.”
Massachusetts is the first state in the nation to issue a competitive procurement to obtain services using this approach. Funding for the Commonwealth’s program would be paid from budgetary resources, but only if the programs work to deliver better social outcomes and savings to the state budget. President Obama’s FY 2012 budget included a proposal to invest $100 million in “pay for success” projects in seven pilot areas including job training, education, juvenile justice and care of children with disabilities. Through this initiative, the Commonwealth expects to be well-positioned to compete for any federal funding that may be available in the future.
“Social innovation financing is one of the tools we are pursuing to accelerate system-wide improvements in government performance,” said Secretary of Administration and Finance Jay Gonzalez. “It’s a creative idea based on a simple premise – have government pay for demonstrated success rather than the promise of success.”
Performance-based investments will help encourage innovation and tackle challenging social issues. New and innovative programs have potential for success, but often have trouble securing government funding because it can be hard to rigorously prove their effectiveness. Social innovation financing allows the government to partner with innovative service providers and, if necessary, private foundations or other investors willing to cover the upfront costs and assume performance risk, to expand promising programs, while assuring that taxpayers will not pay for the programs unless they demonstrate success in achieving the desired outcomes.
Initially, the Patrick-Murray Administration plans to explore the use of social innovation financing to tackle two challenging issues:
* Chronic Homelessness – The Administration seeks to partner with social entrepreneurs to provide stable housing for several hundred chronically homeless individuals. The goal of the initiative will be to improve the well-being of the individuals while simultaneously reducing housing and Medicaid costs.
* Juvenile Justice – The Administration seeks to partner with social entrepreneurs to support youth aging out of the juvenile corrections and probation systems so as to assist them in making successful transitions to adulthood. The juvenile justice contract will be designed with the specific goal of reducing recidivism and improving education and employment outcomes over a six-year period for a significant segment of the more than 750 youth who exit the juvenile corrections and probation systems annually.
The Administration may expand these initiatives to additional policy domains in the future.
Through the RFRs being issued today, the Patrick-Murray Administration will explore a number of options for social innovation financing, including:
Pay-for-success contracts – agreements which will allow the state to pay service providers after they have demonstrated success, rather than the current process of paying for the promise of success. These contracts will target innovative social service programs in domains where sophisticated, multi-year performance measurement is possible.
Social impact bonds – financing arrangements where third party intermediaries and investors give service providers, typically non-profits, upfront funding and other expertise to allow them to enter into pay-for-success contracts with the government. For example, the United Kingdom is piloting a social impact bond program to reduce criminal recidivism.
The sizzle went like this:
|MA leads nation in 'Pay for Success' Social Innovation Contracts|
Bob_Neer | Mon, Jan 30, 2012 10:56 PM EST
Kudos to Secretary of Administration and Finance Jay Gonzalez for experimenting with a new financing structure that has the promise of increased efficiency. This is one reason Massachusetts has one of the most successful economies in the nation, and why Governor Patrick remains very popular: our government is willing to try new things.
In the Social Innovation Press Release Sweepstakes, ’tis likely enough that our poor old MA "leads the nation."
One envisions Mommy Dearest as a toothless crone at Salem Village chuckling unintelligebly to herself as she ladles out the purple-prose Kool-Aid® to naïve blue children of H*rv*rd who have now divested themselves of "intellectual foundation" so thoroughly as to be incapable of keeping steadily in mind that they do not especially *desire* to surpass the Airstrip One of Torycomrade D. W. D. Cameron, "younger son of stockbroker Ian Donald Cameron" in "piloting a social impact bond program to reduce criminal recidivism."
And that is only what is wrong with this pious viennasausage on its LEFT side. The flip side is even more so. Every genuine Brit stockbroker an’ Yank banecapper must dismiss it even more contemptuously than the present keyboard just did. ¡Fancy any self-rational creature specuvestin’ even a halfpence on such terms as "the State to pay service providers after they have demonstrated success"! 
A better plan would be to see what a little hydraulic fracturing directly under B[e]acon Hill turns up. That way we would have a chance to see how the goodvolks who lurk in back of the Massachusetts Bay Torture Authority react on the receiving end of "We regret any inconvenience this may cause," which in itself would be Success enough, even in the total absence of recoverable fossil fuel.
 Fairembalance (the Fox goddess) has asked me to point out that what we have here is, in its way, an honest swindle. Foxily squirreled away in the fine print is "it can be hard to rigorously prove ... effectiveness." Thus ScroogeBank, or Panmure Gordon, or Mittens Blindtrust LLC, or whoever, has been warned up front exactly what she would be gettin' into, were she to specuvest. Not bein' "small people' but rather fine up-standin' Corporate Citizennesses of the new dispensation, nobody is likely to sympathize with these gentry when the accounts they present for payment are in due course pronounced "lacking in rigor" and returned with a check for maybe seventeen cents on the dollar billed.
But then, precisely because they are not "small people," their freelordships do generally read the fineprint, or at least get the hired hand of a _J. D._ to do so for them, which means that Don Neutrino's lunar schemes are more likely to win their nod than is this devaldoggle.
That, however, raises the question of what marks and dupes the Devaldoggler Community propose to attract. His Excellency's own career in the Secret Sector has been such as to rule out serious expectation that Serious Funders--those in the ‘Mittens’ Romney weight class or above--will want anything to do with it. H.E. must be out to prey on smaller fry, but ¿on whom, exactly? There is no 800 number or website mentioned, so evidently H. E. does not expect to cure the solvency of individual Blue Blazers.
A good thing. All of the BB's' spare change for the immediate future seems to have been committed towards buying back The People's Seat™ for St. Elizabeth of Warrenbuffet. More peripheral and parochial specuvestment opportunities like "chronic homelessness" and "juvenile corrections and probation systems" and Cameronian recidivism will be found on the back burner atop the Great Blue Hill. Until Thanksgiving, say.
 Paddy McTammany scribbles merrily, but would have you mark, Dr. Bones, that the pricetag for privatisations is nowadays never lower than "Cost ++Plus" and often much higher, especially when digging is involved to a big extent.