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  • Pima County embarks upon effort to reward innovation, collaboration in addressing longstanding social ills

    Feb 14, 2014 | Read More News
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    A new opportunity exists to leverage private sector investment in resolving longstanding social problems, Pima County Administrator Chuck Huckelberry told an audience Wednesday at a forum introducing a new funding approach known as “Pay for Success.”

    The traditional way of addressing social problems – by focusing on short-term interventions and quantity of services delivered - hasn’t worked, Huckelberry said at a forum sponsored by the Federal Reserve Bank. none

    “We attack the symptoms of the problem, but we don’t cure the causes of the problem. As a result, we haven’t made any significant progress in any of the major societal problems we have today, whether that’s poverty, homelessness, or re-entry for those folks confined in the criminal justice system.”

    A “Pay for Success” model could change that, he said, by rewarding data-driven outcomes and breaking down service silos through greater collaboration.

    Social impact bonds are one of the key tools in the model’s toolkit, bringing together the expertise of nonprofits with the innovation of the private sector.

    Under the approach, which is gaining traction across the country, the government contracts with the partners to achieve a specific and measurable goal, such as reducing juvenile recidivism or improving outcomes for job training recipients. The nonprofit serves as manager, with investors funding the costs of the intervention. The typically long-term project goes through rigorous review and evaluation at the end of the defined period. If the goals are reached, the government pays back with modest returns. If the goals aren’t, the investors don’t get paid.

    “We’ve used our own dollars, our tax dollars, but we’ve never really tapped the full potential of the private sector – and “Pay for Success” and social impact bonds allow us to do that,” Huckelberry explained.

    Huckelberry said he will ask the Board of Supervisors to commit $50,000 in seed money – ideally matched by $150,000 from the community – to begin a process that will:
    •    prioritize specific areas of interest in County service areas where new strategies can lead to future cost savings;
    •    initiate a community planning process in which service providers will be invited to share innovative ideas; and
    •    consider evaluation models that can be used to conclusively demonstrate program success.

    Joselyn Cousins, a regional manager with the Federal Reserve Bank of San Francisco, said she believes Pay for Success models can offer proven solutions – and believes Pima County is ready for the challenge.

    “This isn’t going to happen overnight. It will require long-term commitment from all of you.”

    Her colleague, Ian Galloway, a senior research associate with the Federal Reserve, agreed, noting it is a revolutionary shift in the way government procures services.

    Huckelberry said Pima County is looking forward to the opportunity.

    “I know it will probably be controversial, but anything we do to effect real change is controversial,” he said. “You’re not going to make everyone happy, but in the end, the whole purpose is to have an outcome that will make this community better off than when we started.”

    The County Administrator’s keynote welcoming speech is available here.