Social Impact Bond Act - Amends title XX (Block Grants to States for Social Services and Elder Justice) of the Social Security Act to add a new part C (Social Impact Bonds).
Requires the Secretary of the Treasury to seek proposals from states or local governments for social impact bond projects which produce measurable, clearly defined outcomes that result in social benefit, such as employment for the unemployed, high school graduation, and reduction of teen and unplanned pregnancies as well as incidences of child abuse and neglect. Requires applications to include a feasibility study, funded under this Act, which contains specified information.
Requires the Secretary to decide whether to enter into such a contract within six months after receiving an application.
Makes appropriations for 10 years to carry out this Act.
Requires independent evaluation of a state or local government social impact bond project.
Establishes the Federal Interagency Council on Social Impact Bonds.
Amends the Community Reinvestment Act of 1977 to require the appropriate federal financial supervisory agency to consider, in assessing and taking into account the record of a financial institution in meeting the credit needs of its entire community, its investments in social impact bond projects.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4885 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4885
To encourage and support partnerships between the public and private
sectors to improve our nation's social programs, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 18, 2014
Mr. Young of Indiana (for himself, Mr. Delaney, Mr. Griffin of
Arkansas, Mr. Larson of Connecticut, Mr. Reed, Mr. Polis, Mr. Ross, Mr.
Kennedy, and Mr. Schock) introduced the following bill; which was
referred to the Committee on Ways and Means, and in addition to the
Committee on Financial Services, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To encourage and support partnerships between the public and private
sectors to improve our nation's social programs, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Social Impact Bond Act''.
SEC. 2. SOCIAL IMPACT BONDS.
Title XX of the Social Security Act (42 U.S.C. 1397) is amended--
(1) in the heading, by striking ``to States'' and inserting
``and Programs for''; and
(2) by adding at the end the following:
``Subtitle C--Social Impact Bonds
``SEC. 2051. PURPOSES.
``The purposes of this subtitle are the following:
``(1) To improve the lives of families and individuals in
need in the United States by funding social programs that
achieve real results.
``(2) To ensure Federal funds are used effectively on
social services to produce positive outcomes for both service
recipients and taxpayers.
``(3) To establish the use of social impact bonds to
address some of our nation's most pressing problems.
``(4) To facilitate the creation of public-private
partnerships that bundle philanthropic and other private
resources with existing public spending to scale up effective
social interventions already being implemented by private
organizations, non-profits, charitable organizations, and local
governments across the country.
``(5) To bring pay-for-performance to the social sector,
allowing the United States to improve the impact and
effectiveness of vital social programs.
``SEC. 2052. SOCIAL IMPACT BOND APPLICATION.
``(a) Notice.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of the Treasury, in consultation
with the Federal Interagency Council on Social Impact Bonds, shall
publish in the Federal Register a notice that the Department is seeking
proposals from States or local government for social impact bond
projects in accordance with this section.
``(b) Required Outcomes for Social Impact Bond Project.--To qualify
as a social impact bond project under this subtitle, a project must
produce a measurable, clearly defined outcome that results in social
benefit and Federal savings through any of the following:
``(1) Increasing work and earnings by individuals who have
been unemployed in the United States for more than six
consecutive months.
``(2) Increasing employment and earnings of individuals age
16 to 24.
``(3) Increasing employment among individuals receiving
Federal disability benefits.
``(4) Reducing the dependence of low-income families on
Federal means-tested benefits.
``(5) Improving rates of high school graduation.
``(6) Reducing teen and unplanned pregnancies.
``(7) Improving birth outcomes among low-income families
and individuals.
``(8) Reducing rates of asthma, diabetes, or other
preventable diseases among low-income families and individuals.
``(9) Increasing the proportion of children living in two-
parent families.
``(10) Reducing incidences of child abuse and neglect.
``(11) Increasing adoptions of children from foster care.
``(12) Reducing recidivism among individuals released from
prison.
``(13) Other measurable outcomes defined by the State or
local government that result in positive social outcomes and
Federal savings.
``(c) Feasibility Study Required.--The notice described in
subsection (a) shall require a State or local government to submit a
feasibility study for the social impact bond project that contains the
following information:
``(1) The outcome goals of the project.
``(2) A description of each intervention in the project and
anticipated outcome of such intervention.
``(3) Rigorous evidence demonstrating that the intervention
can be expected to produce the desired outcomes.
``(4) The target population that will be served by the
project.
``(5) The expected social benefits to participants who
receive the intervention and others who may be impacted.
``(6) Projected Federal, State, and local government costs
and other costs to conduct the project.
``(7) Projected Federal, State, and local government
savings and other savings, including an estimate prepared by
the State or local government of the savings to the Federal,
State, and local government, on a program-by-program basis and
in the aggregate, if the project is implemented and the
outcomes are achieved.
``(8) If savings resulting from the successful completion
of the project are estimated to accrue to the State or local
government, the likelihood of the State or local government to
realize those savings.
``(9) A plan for delivering the intervention through a
social impact bond model.
``(10) A description of the expertise of each service
provider that will administer the intervention.
``(11) An explanation of the experience of the State or
local government, the intermediary, or the service provider in
raising private and philanthropic capital to fund social
service investments.
``(12) The detailed roles and responsibilities of each
entity involved in the project, including any State or local
government entity, intermediary, service provider, independent
evaluator, investor, or other stakeholder.
``(13) A summary of the experience of the service provider
delivering the proposed intervention, a similar intervention,
or a summary demonstrating the service provider has the
expertise necessary to deliver the intervention.
``(14) A summary of the unmet need in the area where the
intervention will be delivered or among the target population
who will receive the intervention.
``(15) The payment terms, the methodology used to calculate
outcome payments, the payment schedule, and performance
thresholds.
``(16) The project budget.
``(17) The project timeline.
``(18) The criteria used to determine the eligibility of an
individual for the project, including how selected populations
will be identified, how they will be referred to the project,
and how they will be enrolled in the project.
``(19) The evaluation design.
``(20) The metrics that will be used to determine whether
the outcomes have been achieved and how such metrics will be
measured.
``(21) A summary explaining the independence of the
evaluator from the other entities involved in the project and
the evaluator's experience in conducting rigorous evaluations
of program effectiveness including, where available, well-
implemented randomized controlled trials on the intervention or
similar interventions.
``(22) The capacity of the service provider to deliver the
intervention to the number of participants the State or local
government proposes to serve in the project.
``(d) Project Intermediary Information Required.--The feasibility
study described in subsection (c) shall also contain the following
information about the intermediary for the social impact bond project
(whether the intermediary is the service provider or other entity):
``(1) Experience and capacity for providing or facilitating
the provision of the type of intervention proposed.
``(2) The mission and goals.
``(3) Information on whether the intermediary is already
working with service providers that provide this intervention
or an explanation of the capacity of the intermediary to begin
working with service providers to provide the intervention.
``(4) Experience working in a collaborative environment
across government and nongovernmental entities.
``(5) Previous experience collaborating with public or
private entities to implement evidence-based programs.
``(6) Ability to raise or provide funding to cover
operating costs (if applicable to the project).
``(7) Capacity and infrastructure to track outcomes and
measure results, including--
``(A) capacity to track and analyze program
performance; and
``(B) experience with performance-based contracting
and achieving project milestones and targets.
``(8) Role in delivering the intervention.
``(9) How the intermediary would monitor program success,
including a description of the interim benchmarks and outcome
measures.
``SEC. 2053. AWARDING SOCIAL IMPACT BOND CONTRACTS.
``(a) Timeline in Awarding Contract.--Not later than six months
after receiving an application in accordance with section 2052, the
Secretary shall determine whether to enter into a contract for a social
impact bond project with a State or local government.
``(b) Considerations in Awarding Contract.--In determining whether
to enter into a contract for a social impact bond project (the
application for which was submitted under section 2052) the Secretary,
in consultation with the Federal Interagency Council on Social Impact
Bonds (established by section 2056) and the head of any Federal agency
administering a similar intervention or serving a population similar to
that served by the project, shall consider each of the following:
``(1) The value to the Federal Government of the outcome
expected to be achieved if the outcomes specified in the
contract are met.
``(2) The ability of the State or local government in
collaboration with the intermediary and the service providers
to achieve the outcomes.
``(3) The savings to the Federal Government if the outcomes
specified in contract are met.
``(4) The savings to the State and local governments if the
outcomes specific in the contract are met.
``(5) The expected quality of the evaluation that would be
conducted with respect to the contract.
``(c) Contract Authority.--
``(1) Contract requirements.--In accordance with this
section, the Secretary, in consultation with the Federal
Interagency Council on Social Impact Bonds and the head of any
Federal agency administering a similar intervention or serving
a population similar to that served by the project, may enter
into a contract for a social impact bond project with a State
or local government if the Secretary determines that each of
the following requirements are met:
``(A) The State or local government agrees to
achieve an outcome specified in the contract in order
to receive payment.
``(B) The Federal payment to the State or local
government for each outcome specified is less than or
equal to the value of the outcome to the Federal
Government over a period not to exceed 10 years, as
determined by the Secretary, in consultation with the
State or local government.
``(C) The duration of the project does not exceed
10 years.
``(D) The State or local government has
demonstrated, through the application submitted under
section 2052, that, based on prior rigorous
experimental evaluations or rigorous quasi-experimental
studies, the intervention can be expected to achieve
each outcome specified in the contract.
``(E) The State, local government, intermediary, or
service provider has experience raising private or
philanthropic capital to fund social service
investments (if applicable to the project).
``(F) The State or local government has shown that
each service provider has experience delivering the
intervention, a similar intervention, or has otherwise
demonstrated the expertise necessary to deliver the
intervention.
``(2) Payment.--The Secretary shall pay the State or local
government only if the independent evaluator described in
section 2055 determines that the social impact bond project has
met the requirements specified in the contract and achieved an
outcome specified in the contract.
``(3) Limitation.--The Secretary may not enter into a
contract for a social impact bond project under paragraph (1)
after the date that is 10 years after the date of the enactment
of the Social Impact Bond Act.
``(d) Notice of Contract Award.--Not later than 30 days after
entering into a contract under this section, the Secretary shall
publish a notice in the Federal Register that includes, with regard to
such contract, the following:
``(1) The outcome goals of the social impact bond project.
``(2) A description of each intervention in the project.
``(3) The target population that will be served by the
project.
``(4) The expected social benefits to participants who
receive the intervention and others who may be impacted.
``(5) The detailed roles, responsibilities, and purposes of
each Federal, State, or local government entity, intermediary,
service provider, independent evaluator, investor, or other
stakeholder.
``(6) The payment terms, the methodology used to calculate
outcome payments, the payment schedule, and performance
thresholds.
``(7) The project budget.
``(8) The project timeline.
``(9) The project eligibility criteria.
``(10) The evaluation design.
``(11) The metrics that will be used to determine whether
the outcomes have been achieved and how these metrics will be
measured.
``(12) The estimate prepared by the State or local
government of the savings to the Federal, State, and local
government, on a program-by-program basis and in the aggregate,
if the contract is entered into and implemented and the
outcomes are achieved.
``SEC. 2054. FEASIBILITY STUDY FUNDING.
``(a) Requests for Funding for Feasibility Studies.--The Secretary
shall reserve a portion of the funding provided in section 2057 to
assist States or local governments in developing feasibility studies
required by section 2052. To be eligible to receive funding to assist
with completing a feasibility study, a State or local government shall
submit an application for feasibility study funding containing the
following information:
``(1) A description of the outcome goals of the social
impact bond project.
``(2) A description of the intervention, including
anticipated program design, target population, an estimate
regarding the number of individuals to be served, and setting
for the intervention.
``(3) Evidence to support the likelihood that such
intervention will produce the desired outcome.
``(4) The expected social benefits to participants who
receive the intervention and others who may be impacted.
``(5) Estimated costs to conduct the project.
``(6) Estimates of Federal, State, and local government
savings and other savings if the project is implemented and the
outcomes are achieved.
``(7) An estimated timeline for implementation and
completion of the project, which shall not exceed 10 years.
``(8) With respect to a project for which the State or
local government selects an intermediary to operate the
project, any partnerships needed to successfully execute the
project and the ability of the intermediary to foster such
partnerships.
``(9) The expected resources needed to complete the
feasibility study for the State or local government to apply
for social impact bond funding under section 2052.
``(b) Federal Selection of Applications for Feasibility Study.--Not
later than 6 months after receiving an application for feasibility
study funding under subsection (a), the Secretary, in consultation with
the Federal Interagency Council on Social Impact Bonds and the head of
any Federal agency administering a similar intervention or serving a
population similar to that served by the project, shall select State or
local government feasibility study proposals for funding based on the
following:
``(1) The likelihood that the proposal will achieve the
desired outcome.
``(2) The value of the outcome expected to be achieved.
``(3) The potential savings to the Federal Government if
the social impact bond project is successful.
``(4) The potential savings to the State and local
governments if the project is successful.
``(c) Public Disclosure.--Not later than 30 days after selecting a
State or local government for feasibility study funding under this
section, the Secretary shall cause to be published on the website of
the Federal Interagency Council on Social Impact Bonds information
explaining why a State or local government was granted feasibility
study funding.
``(d) Funding Restriction.--
``(1) Feasibility study restriction.--The Secretary may not
provide feasibility study funding under this section for more
than 50 percent of the estimated total cost of the feasibility
study reported in the State or local government application
submitted under subsection (a).
``(2) Aggregate restriction.--Of the total amount
appropriated under section 2057, the Secretary may not use more
than $10,000,000 to provide feasibility study funding to States
or local governments under this section.
``(e) Submission of Feasibility Study Required.--Not later than six
months after the receipt of feasibility study funding under this
section, a State or local government receiving such funding shall
complete the feasibility study and submit the study to the Federal
Interagency Council on Social Impact Bonds.
``SEC. 2055. EVALUATIONS.
``(a) Contract Authority.--For each State or local government
awarded a social impact bond project approved by the Secretary under
this Act, the head of the relevant agency, as determined by the Federal
Interagency Council on Social Impact Bonds, shall enter into a contract
with such State or local government to pay for the independent
evaluation to determine whether the State or local government project
has met an outcome specified in the contract in order for the State or
local government to receive outcome payments under this subtitle.
``(b) Evaluator Qualifications.--The head of the relevant agency
may not enter into a contract with a State or local government unless
the head determines that the evaluator is independent of the other
parties to the contract and has demonstrated substantial experience in
conducting rigorous evaluations of program effectiveness including,
where available, well-implemented randomized controlled trials on the
intervention or similar interventions.
``(c) Methodologies To Be Used.--The evaluation used to determine
whether a State or local government will receive outcome payments under
this subtitle shall use experimental designs using random assignment or
other research methodologies that allow for the strongest possible
causal inferences when random assignment is not feasible.
``(d) Progress Report.--
``(1) Submission of report.--The independent evaluator
shall--
``(A) not later than two years after a project has
been approved by the Secretary and biannually
thereafter until the project is concluded, submit to
the head of the relevant agency and the Federal
Interagency Council on Social Impact Bonds a written
report summarizing the progress that has been made in
achieving each outcome specified in the contract; and
``(B) at the scheduled time of the first outcome
payment and at the time of each subsequent payment,
submit to the head of the relevant agency and the
Federal Interagency Council on Social Impact Bonds a
written report that includes the results of the
evaluation conducted to determine whether an outcome
payment should be made along with information on the
unique factors that contributed to achieving or failing
to achieve the outcome, the challenges faced in
attempting to achieve the outcome, and information on
the improved future delivery of this or similar
interventions.
``(2) Submission to congress.--Not later than 30 days after
receipt of the written report pursuant to paragraph (1)(B), the
Federal Interagency Council on Social Impact Bonds shall submit
such report to each committee of jurisdiction in the House of
Representatives and the Senate.
``(e) Final Report.--
``(1) Submission of report.--Within six months after the
social impact bond project is completed, the independent
evaluator shall--
``(A) evaluate the effects of the activities
undertaken pursuant to the contract with regard to each
outcome specified in the contract; and
``(B) submit to the head of the relevant agency and
the Federal Interagency Council on Social Impact Bonds
a written report that includes the results of the
evaluation and the conclusion of the evaluator as to
whether the State or local government has fulfilled
each obligation of the contract, along with information
on the unique factors that contributed to the success
or failure of the project, the challenges faced in
attempting to achieve the outcome, and information on
the improved future delivery of this or similar
interventions.
``(2) Submission to congress.--Not later than 30 days after
receipt of the written report pursuant to paragraph (1)(B), the
Federal Interagency Council on Social Impact Bonds shall submit
such report to each committee of jurisdiction in the House of
Representatives and the Senate.
``(f) Limitation on Cost of Evaluations.--Of the amount made
available for social impact bond projects in section 2057, the
Secretary may not obligate more than 15 percent to evaluate the
implementation and outcomes of such projects.
``SEC. 2056. FEDERAL INTERAGENCY COUNCIL ON SOCIAL IMPACT BONDS.
``(a) Establishment.--There is established the Federal Interagency
Council on Social Impact Bonds (in this section, referred to as the
`Council') to--
``(1) coordinate the efforts of social impact bond projects
funded by this subtitle;
``(2) advise and assist the Secretary in the development
and implementation of such projects;
``(3) advise the Secretary on specific programmatic and
policy matter related to such projects;
``(4) provide subject-matter expertise to the Department of
the Treasury with regard to such projects;
``(5) ensure that each State or local government that has
entered into a contract with the Secretary for a social impact
bond project under this subtitle and each evaluator selected by
the head of the relevant agency under section 2055 has access
to Federal administrative data to assist the State or local
government and the evaluator in evaluating the performance and
outcomes of the project; and
``(6) address issues that will influence the future of
social impact bond projects in the United States.
``(b) Composition of Council.--The Chair of the council shall be a
member of the National Economic Council or the Domestic Policy Council.
The Council shall be composed of one designee, designated by the head
of the relevant agency, from each of the following:
``(1) Office of Management and Budget.
``(2) Department of Labor.
``(3) Department of Health and Human Services.
``(4) Social Security Administration.
``(5) Department of Agriculture.
``(6) Department of Justice.
``(7) Department of Housing and Urban Development.
``(8) Department of Education.
``(9) Department of Veterans Affairs.
``(10) Department of the Treasury.
``SEC. 2057. FUNDING.
``(a) In General.--Out of any money in the Treasury not otherwise
appropriated, there is hereby appropriated $300,000,000, to remain
available until 10 years after the date specified in section
2053(c)(3), to carry out the activities authorized under this subtitle.
``(b) Limitation.--Of the amounts made available under subsection
(a), the Secretary may not use more than $1,000,000 in any fiscal year
to support the review, approval, and oversight of social impact bond
projects, including activities conducted by--
``(1) the Federal Interagency Council on Social Impact
Bonds; and
``(2) any other agency consulted by the Secretary before
approving a social impact bond project or a feasibility study
under section 2054.
``SEC. 2058. WEBSITE.
``The Federal Interagency Council on Social Impact Bonds shall
establish and maintain a public website that shall display the
following:
``(1) A copy of, or method of accessing, each notice
published regarding a social impact bond project pursuant to
this subtitle.
``(2) For each State or local government that has entered
into a contract with the Secretary for a social impact bond
project, the website shall contain the following information:
``(A) The outcome goals of the project.
``(B) A description of each intervention in the
project.
``(C) The target population that will be served by
the project.
``(D) The expected social benefits to participants
who receive the intervention and others who may be
impacted.
``(E) The detailed roles, responsibilities, and
purposes of each Federal, State, or local government
entity, intermediary, service provider, independent
evaluator, investor, or other stakeholder.
``(F) The payment terms, methodology used to
calculate outcome payments, the payment schedule, and
performance thresholds.
``(G) The project budget.
``(H) The project timeline.
``(I) The project eligibility criteria.
``(J) The evaluation design.
``(K) The metrics used to determine whether the
proposed outcomes have been achieved and how these
metrics are measured.
``(3) A copy of the progress reports and the final reports
relating to each social impact bond project.
``(4) An estimate of the savings to the Federal, State, and
local government, on a program-by-program basis and in the
aggregate, resulting from the successful completion of the
social impact bond project.
``SEC. 2059. COMMUNITY REINVESTMENT ACT.
``Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C.
2903) is amended by adding at the end the following:
```(e) Social Impact Bond Projects.--In assessing and taking into
account, under subsection (a), the record of a financial institution,
the appropriate Federal financial supervisory agency shall consider, as
a factor, investments made by the financial institution in social
impact bond projects under subtitle C of title XX of the Social
Security Act.'.
``SEC. 2060. REGULATIONS.
``The Secretary, in consultation with the Federal Interagency
Council on Social Impact Bonds, may issue regulations as necessary to
carry out this subtitle.
``SEC. 2061. DEFINITIONS.
``In this subtitle:
``(1) Agency.--The term `agency' has the meaning given that
term in section 551 of title 5, United States Code.
``(2) Intervention.--The term `intervention' means a
specific service delivered to achieve an impact through a
social impact bond project.
``(3) Secretary.--The term `Secretary' means the Secretary
of the Treasury.
``(4) Social impact bond project.--The term `social impact
bond project' means a project that finances social services
using a social impact bond model.
``(5) Social impact bond model.--The term `social impact
bond model' means a method of financing social services in
which--
``(A) Federal funds are awarded to a State or local
government only if a State or local government achieves
certain outcomes agreed upon by the State or local
government and the Secretary; and
``(B) the State or local government coordinates
with service providers, investors (if applicable to the
project), and (if necessary) an intermediary to
identify--
``(i) an intervention expected to produce
the outcome;
``(ii) a service provider to deliver the
intervention to the target population; and
``(iii) investors to fund the delivery of
the intervention.
``(6) State.--The term `State' means each State of the
United States, the District of Columbia, each commonwealth,
territory or possession of the United States, and each
federally recognized Indian tribe.''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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