Pay For Success

January 2019 Update

The Colorado Office of State Planning and Budgeting announced that it has now executed three Pay for Success contracts for three Pay for Success Projects. The announcement is below, followed by the three signed Pay for Success contracts and a one-page summary of the three projects.

FOR IMMEDIATE RELEASEOffice of Gov. John HickenlooperShelby Wieman| shelby.wieman@state.co.us |303-957-6011

Colorado expands Pay for Success projects to improve outcomes for at-risk teens

DENVER — Wednesday, Jan. 2, 2019 Gov. Hickenlooper today praised the launch of two new Pay for Success Projects aimed at improving outcomes for at-risk Colorado teens. A third project involving Jefferson County Public Schools was announced last May. These are the first state-funded Pay for Success projects in Colorado history and together are expected to serve more than 1,100 Colorado youth and families.

“These projects use an innovative funding mechanism to ensure that more teens graduate on time and stay out of state custody,” said Governor John Hickenlooper. “We appreciate the collaboration of our partners to create new public-private partnerships. Their commitment to evidence-based approaches helps Colorado be a model for other states to follow.”

Together, the three projects will cost $6 million over the next four years. With the passage of HB 18-1323, the State set aside half of the projects’ upfront costs. The remaining half of the projects will be funded with $3 million in investor capital from Northern Trust, Community First Foundation, Gary Community Investments, and the Denver Foundation. These investors will be repaid if the projects succeed. Success includes demonstrating that more youth are on track to graduate from high school on time and fewer are involved in the justice system or removed from their homes. Funding to cover these success payments was also set aside in HB 18-1323.

An additional $800,000, including grants from the Laura and John Arnold Foundation and the Annie E. Casey Foundation, funds three rigorous evaluations led by the Colorado Evaluation and Action Lab, an independent evaluator at the University of Denver’s Barton Institute for Philanthropy and Social Enterprise.

Two new projects will launch this month. The Denver Collaborative Partnership funds preventive services for runaway teens and pre-teens, and will refer runaway youth and their families to evidence-based services in the home and community, with the goal of reducing youth system involvements. The Multi-Systemic Therapy (MST) project will support underserved regions of Colorado. MST is an intensive family- and community-based intervention for at-risk youth to reduce criminal justice involvement. This project will expand the availability of MST to underserved regions of Colorado where it is not currently available, placing therapists in Pueblo, Greeley, Grand Junction, Adams and Broomfield counties, and two more sites to be selected soon. The State is partnering with the University of Denver’s Center for Effective Interventions on this initiative.

Jeffco Public Schools calls their program Fostering Opportunities. It partners a student who lives in foster care with a specialist who advocates for the student wherever needed. These specialists are not restricted to the school building. They can meet students wherever they need to – at school, in court, out in the community, etc. Students are able to access the resources offered through the program regardless of how they are doing in school. Social services caseworkers have already come to rely on the specialists for any school related needs or information. Regardless of the status of a student’s family structure, specialists always work to include and collaborate with all adults involved in the students’ lives, including biological parents. Twenty students are currently in the program, and the workgroup plans to add 20 more this school year. After this school year, the plan is to double the number of students over the Pay for Success grant period.

Social Impact Solutions, a Colorado intermediary that specializes in Pay for Success, helped support and structure the three projects. In addition, the feasibility and structuring process that launched these projects would not have been possible without additional funders in Colorado and across the country. More details about the Pay for Success projects can be found here.

MST/CEI PFS Contract
Denver PFS Contract
JeffCo PFS Contract
PFS Projects Summary

Overview of Pay For Success

Under a Pay for Success contract, a state or local government commits to paying for a service based on outcomes and impact, measured rigorously by an independent evaluator.

The model may be accompanied by some version of Pay For Success financing, with foundations and/or impact investors providing up-front project financing, funding a service provider or providers.

Through a contract, a government may commit to repay these funders if the intervention achieves key outcomes (for instance, a reduction in recidivism or justice-system involvement, or improvements in school performance) for the target population, as measured by the evaluator.

Additional background regarding Pay for Success in general can be found here.

Colorado's Pay For Success Feasibility Project

As a follow-up to Pay For Success legislation passed by the state in 2015, available here, the Office of State Planning and Budgeting is conducting a feasibility study funded by Colorado's state legislature and a federal grant via the Sorenson Impact Center, a Utah-based organization dedicated to innovative and evidence-based policymaking, exploring the viability of a Pay For Success project to improve outcomes for Colorado underserved youth.

OSPB is looking in particular at two Colorado youth target populations:

Target Population 1: Child-welfare involved youth (Emphasizing out-of-home-placed, grades 7-12, but including upstream preventive approaches for all child welfare-involved families).

Key Outcomes of Focus:

  • Increase on-time high-school graduation, and/or reduce high school drop-outs.
  • Reduce future juvenile and adult justice system involvement.
  • Improve post-secondary educational and employment outcomes.
  • Improve other intermediary outcomes such as school attendance, academic performance, etc.
  • Increase likelihood of legal permanency and/or increased placement stability.

Target Population 2: Youth post-short term secure detention, returning to their communities.

Key Outcomes of Focus:

  • Decrease future Division of Youth Corrections involvement (secure detention and commitment).
  • Decrease future arrests, and/or future Department of Corrections incarceration.
  • Improve educational outcomes including high-school graduation, school attendance, etc.
  • Improve intermediate outcomes that may be linked with above outcomes (for instance, reduced substance use or improved mental health).

In January 2017, the Office of State Planning and Budgeting released a Call for Innovation soliciting ideas and improved approaches for this feasibility study and for these young people and their families from nonprofits, service providers, Colorado local governments and other stakeholders. The Call for Innovation webpage provides information to learn more.