Pay For Success

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.