Pay for Success Legislation Becomes Law

Legislation that will create a new $100 million program to fund pay-for-success projects was included in a budget bill that Congress passed in the early hours of February 9.

The legislation will provide competitive awards to states and local governments for pay-for-success projects and feasibility studies. The program will be run by the Treasury Department. The law directs the department to launch the competition within a year of the law’s enactment, with winners announced six months after that. (For more details, see the pay for success bill text).

The law also creates two advisory bodies:

  • Federal Interagency Council on Social Impact Partnerships: Chaired by the OMB director, this 11-member council is tasked with advising the Treasury Secretary on projects and policy-related matters. It is composed of representatives from most of the domestic cabinet-level agencies.
  • Commission on Social Impact Partnerships: This 9-member bipartisan commission is tasked with advising the Treasury Secretary on project applications and feasibility studies. It is composed of representatives appointed by the president and congressional leaders.

The new program will pick up where the Social Innovation Fund, which funded similar projects, left off. It was defunded by Congress last year.

The coordinating bodies created by this legislation could also help oversee other pay-for-success programs created over the past few years, including K-12 legislation, a major transportation authorizing bill, and the Workforce Innovation and Opportunity Act. Pay-for-success provisions were also proposed in recent bipartisan drafts of welfare legislation.

Correction: This story originally indicated that the new program was funded at $92 million. That was the last House figure, but the final version of the bill funded it at $100 million.

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