Bill Summary for Bill Number Presentation on the Pay for Success Act and House Bill 15-1317

Date: 07/20/2015

Final
Presentation on the Pay for Success Act and House Bill 15-1317

EARLY CHILDHOOD AND SCHOOL READINESS

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09:46 AM -- Presentation on the Pay for Success Act and House Bill 15-1317

Senator Martinez Humenik, chair, welcomed the commission members to the meeting. She invited Senator Johnston to the table to begin his presentation on the Pay for Success Act.

Senator Johnston stated that investments in early childhood are good moral, educational, and fiscal investments. He explained that bills similar to House Bill 15-1317 and the Pay for Success model have been attempted in other states and localities across the country, and that the Pay for Success model brings together funding partners such as philanthropists and foundations with educators. He explained that the funders will work with local partners such as school districts to address existing educational issues. The funders and the school districts agree on measurable metrics (for example instead of 20 percent of children being ready to enter kindergarten, the metric will be that 70 percent of children are ready to enter kindergarten) and a neutral third party will evaluate the efficacy of the program. The savings measured through the foregone spending is how the school district pays the funders back for the work. He explained that if these savings are not achieved, the funders do not receive a financial return on their original investment. Senator Johnston told the commission that HB 15-1317 passed the Senate by 33 votes and with bipartisan support and that the Governor's Office is now creating a Request for Proposal (RFP) process for partners to put together proposals. He said that if the Office of State Planning and Budgeting (OSPB) approves it, the project will begin and once the program is implemented, potential state savings will be used to pay back funders. He said that this will allow the state to improve student outcomes without expanding the state budget.

Senator Johnston explained that a public entity must be a partner in the program for it to fit under the requirements of the law and generally, the public entities themselves are not investors. He said that Boulder County has already implemented several programs similar to this for children ages 0 to 3, and that it is a similar financing structure for any public entity. Representative Wilson asked how many schools or school districts are expected to participate in the Pay for Success program. Senator Johnston responded that it will likely be a small number of schools at first.

01:24 PM

Senator Merrifield asked if any schools have already joined the program. Senator Johnston responded that the Governor's office has not yet finalized the RFP process but there are a handful of funders and schools that are interested in participating. Senator Martinez Huminek asked where the Governor's office is in the RFP process, citing several potential funders that hope to join the program. Senator Merrifield asked about the funding requirements for funders and school districts. Senator Johnston said that funders, school districts, and the early childhood providers must come to contract terms that they are all comfortable with, and that the OSPB must also approve the deals to make sure the state believes the agreements are reasonable.

The commission members discussed potential outcomes of the program. Senator Johnston said that he hopes the program creates additional success for children in Colorado and will be modeled across the state. Representative Singer asked whether Executives Partnering to Invest in Children (EPIC) would be involved in the contract process.

01:28 PM -- Gloria Higgins, President of EPIC, came to the table to answer questions from the commission. Ms. Higgins stated that EPIC is in support of the Pay for Success model and will host its first policymakers luncheon in September to discuss collaborations. Ms. Higgins stated that the business community supports the guardrails that have been put into place in HB 15-1317. Senator Martinez Humenik thanked Ms. Higgins for her comments.

01:32 PM -- Cindy Schultz of the Cydney and Tom Marsico Foundation came to the table to provide feedback to the commission. She asked how the success of HB 15-1317 will be evaluated over time and if there will be an annual or biannual review of the process and the success of programs. Senator Johnston replied that HB 15-1317 provided flexibility for local partners to determine the most appropriate evaluation timeline for each individual program. Senator Martinez Huminek added that unless there are successful outcomes associated with the individual partnerships, funders may not be interested in continuing to provide financial support.