Social Impact Bonds, Hot New Experiment

Both House and Senate bills have been introduced this summer to fund a model called “Social Impact Bonds.” The two bills (HR 4885 and S 2691) are bipartisan and they attempt to expand the use of a funding strategy that would attract private investment to address a social problem or challenge with investors rewarded with a pay-back by government only if specific outcomes and goals are reached over time.

HR 4885 was introduced in June by Congressman Todd Young (R-IN) with 22 cosponsors with the sponsorship split down the middle between the two parties—a rarity in recent congresses. S 2691 was introduced by Senator Michael Bennet (D-CO) and Senator Orin Hatch (R-UT) just before the August break. The House bill is called the Social Impact Bond Act while the Senate bill is called the Pay for Performance Act. Both bills amend the Social Services Block Grant (SSBG) by adding a subsection C with $300 million designated in the subsection but the funds are not necessarily drawn from SSBG (they do not alter the $1.7 billion for the base block grant).

The state or local governments could apply for funding. The general structure is that a non-governmental entity or agency would attract funding from non-profit and for-profit sources to address a specific social challenge. In England a project near London has become one of the earliest tests of the strategy by targeted recidivism rates among inmates exiting prison. If the agency/entity reaches the set outcome, for example a ten percent reduction in recidivism rates over a specific period of time investors would receive their investment with interest back with the government held harmless if the outcomes are not met.

Over the past few years the Center for American Progress has examined the strategy and issued reports including Investing for Success and also hosted a roundtable on the challenges and issues with such strategies. They have also created a factsheet on some of these “pay for performance” approaches to addressing social human service challenges.

The two bills are somewhat different in their structure with the House bill including 13 types of projects that would be eligible for funding and the Senate bill including 14 categories of projects. The common projects in both bills include:

Projects that can qualify:
• Increasing work and earnings by individuals who have been unemployed for more than six consecutive months;
• Increasing employment and earnings of individuals age 16 to 24;
• Increasing employment among individuals receiving Federal disability benefits;
• Reducing the dependence of low-income families on Federal means-tested benefits;
• Improving rates of high school graduation;
• Reducing teen and unplanned pregnancies;
• Improving birth outcomes among low-income families and individuals;
• Reducing rates of asthma, diabetes, or other preventable diseases among low-income families and individuals;
• Increasing the proportion of children living in two-parent families;
• Reducing incidences of child abuse and neglect;
• Reducing recidivism among individuals released from prison; and
• Other measurable outcomes defined by the State or local government that result in positive social outcomes and federal savings.

The House also includes
• Increasing adoptions of children from foster care
While the Senate specifies:
• Reducing the number of youth in foster care who are emancipated from care by increasing adoptions, permanent guardianship arrangements, reunification, or placement with a fit and willing relative for children and youth in foster care; and
• Reducing the number of children and youth in foster care residing in group homes, child care institutions, agency-operated foster homes, or other non-family foster homes, unless it is determined that it is in the interest of the child’s long-term health, safety, or psychological well-being to not be placed in a family foster home.

The Administration has also proposed in recent budgets $300 million in pay for success funding. In fact the former head of the White House Domestic Policy Council under President Obama, Melody Barnes issued a statement at the introduction of the Senate bill that said, “The Pay for Performance Act gives policymakers a critical, evidence-based strategy for dealing with major societal challenges. By connecting the tools of impact investing to a ‘what works’ approach, this bill takes us one step closer to a smarter, leaner, results focused government.”

Congress Leaves Town, Senator Blocks Child Welfare Bill

The Senate ended their summer by leaving on Thursday night and left many priorities including HR 4980, the “Preventing Sex Trafficking and Strengthening Families Act’ unfinished. The legislation will reauthorize the Adoption Incentive Fund for three years and extend it to guardianship placements. It will also extend the Family Connections Grants by one year through this current fiscal year of 2014 but its Senate approval, which would have sent it onto the President, was stopped by Senator Tom Coburn (R-OK).

The Senate was attempting to pass the bill by “UC” or unanimous consent, which translates into a voice vote, that by-passes extensive debate. The overwhelming majority of child welfare bills tend to pass in this way after key committees and members in both houses negotiate their differences over time. This legislation had its first votes and debate last summer in the House. While most child welfare legislation passes this way, before they can get to that point each senator is asked to ok the process and any one member can object and bring the entire process to a dead stop. That is exactly what happened when retiring Senator Tom Coburn (R-OK) blocked a vote. He objected more generally to the process of UC and had some specific objections to provisions of the bill. So he stopped it, stopped the Senate and the reauthorization.

On the Senate floor Coburn objected to generally to the unanimous consent process for several bills and the spending that resulted. In a letter to the Republican leader, Senator Mitch McConnell (R-KY), Coburn said, “As a father, grandfather and physician, my heart goes out to children who need a permanent family.” He then went on to outline his objections to the “…the role of the federal government to be interfering in state’s adoption and foster care programs.” He also objected to several of the trafficking issues raised and emphasized his concerns over the spending provisions. Although the legislation is “budget neutral”—in other words paid for—he objected because the savings to offset the cost was in the out years of the budget process.

The objection is ironic in that the bill was praised by Republican leaders when it passed the House because it reduces the deficit over ten years. In reality most of the cost in the program is in the adoption incentive piece which has to be appropriated each year for over 15 years. It is dependent on what the appropriations committees decide to provide. Generally that is $40 million a year. An greater irony is that Senator Coburn had also block action a last minute supplement funding request to aide Israel and its maintenance of their iron dome missile defense system. That allocation of $225 million was blocked by the Senator because it wasn’t paid for but over Thursday night a firestorm of criticism ensued and although most senators had left, the Senate was still technically in session and Friday morning so the emergency Defense Department request was approved—without any offsets. No such break was extended to children and youth in foster care.

What happens next is less clear and is entirely up to the Senate (the House approved the bill the week before). Leaders may try to persuade Senator Coburn or attempt to schedule a vote. The second option may not be that easy. The Senate will be around for less than 20 actual days next month before they leave for the election. If it gets on the list of bills for debate, it could become entangled in election year politics whereby members see it as an opportunity to hang politically-charged amendments in an attempt to create political attacks for the last weeks of the election. For example, issues dealing with immigration, coal, oil pipelines.

Perhaps the biggest victims is the one-year of funding (FY 2014, this year) for the Family Connections Grants. From a hopeful bipartisan deal last October in the House that provided three years of funding, it has been reduced to one year of funding (FY 2014) to this situation with only two months of the fiscal year left. Some current grantees in the third year of their efforts are still awaiting that funding that ran out last October 1. The grants help kinship navigator programs and by extension all kinship families, it also funds family finding efforts to help connect children in foster care with extended family members, and it funds family group decision making casework which are programs that bring family and friends together in an effort to help children at risk or in foster care and finally it funds substance abuse treatment for parents involved in the foster care system. Other provisions in the bill include:

• Reauthorize the Adoption Incentive Fund through FY 16, extends the awards to guardianship/kinship placements,
• Extends the Family Connections Grants by one year through 2014 (this year only) which will likely be just enough to continue funding to programs that are currently in the third year of their funding
• Adds state plan requirements regarding screening and services to victims of f sex trafficking, and locating and responding to children who have run away from foster care including plans to address, report and track children who run from care
• Includes sex trafficking data in the adoption and foster care analysis and reporting system (AFCARS).
• Requires the state to develop a “reasonable and prudent parent standard’ for foster parent training
• Limits to children age 16 or older the option of being placed in a planned permanent living arrangement (APPLA) and gives children age 14 and older authority to participate in the development of their own case plans,
• Requires that foster children leaving foster care (unless in foster care less than six months) are not discharged without being provided with a copy of their birth certificate, Social Security card, health insurance information, copy of medical records, and a driver’s license or equivalent state-issued identification card.

House Moves Adoption-Child Welfare Bill, Senate Finalization This Week

On Wednesday, July 23, the House of Representatives passed HR 4980, the “Preventing Sex Trafficking and Strengthening Families Act.’ The legislation will reauthorize the Adoption Incentive Fund for three years and extend it to guardianship placements. It will also extend the Family Connections Grants by one year through this current fiscal year of 2014.

After many weeks of negotiation between the House and Senate committees, the legislation was agreed to several weeks ago and was taken up by the House under the “suspension” calendar which allows a speedier passage that allows for a voice vote. The plan is for the Senate to take similar action this week through a Senate “unanimous consent” process which also allows a voice vote.

The original bill had passed last October and December in the House and the Senate respectively but was delayed because Congress could not find more than $15 million to extend the Family Connection grants beyond the one year. The original House and Senate bills extended the Family Connections Grants for three years but the money to “offset” (pay for) that extension was taken up by the budget deal agreed to earlier this year. Many also saw the legislation as an opportunity to address domestic victims of sexual exploitation and trafficking and that added to the negotiation challenge.

The legislation was approved along with several other bills to address sex trafficking. One of those bills, HR 5081, would amend parts of the Child Abuse Prevention and Treatment Act (CAPTA). The bill was held for a roll call vote unlike the other bills. While not providing additional funding it would require three new requirements (number 24, 25 and 26) which would require CPS to have procedures to identify victims of sex trafficking (as defined by the Trafficking Victims Protection Act, TVPA), training of CPS personnel and the identification of services for victims. It also requires a report by HHS to the Congress. Such changes to CAPTA have not been debated or considered yet in the Senate as was the case in the larger bill (HR 4980) so it may require greater consideration by the Senate before they move on such CAPTA changes. It should be noted however that the House never voted on the CAPTA provisions either.

HR 4980 would:

• Reauthorize the Adoption Incentive Fund through FY 16, extends the awards to certain subsidized guardianship/kinship placements, bases the incentive on a ‘rate” rather than specific numbers of adoptions to provide better recognition of states that may have a smaller pool of adoptable children because they have fewer children in foster care, it refines targeting to adolescent children who have been coming into care in higher numbers;

• Extends the Family Connections Grants by one year through 2014 (this year only) which will likely be just enough to continue funding to programs that are currently in the third year of their funding—these programs are kinship navigator programs, family finding programs, family group decision making and family-based drug treatment;

• Strengthens requirements and directives to HHS in crafting a formula that will assure that states are reinvesting savings they will realize as a result of the 2008 expansion of Adoption Assistance funding, that law gradually expands federal assistance funding to cover all special needs adoptions in a state

• Adds state plan requirements regarding screening and services to victims of f sex trafficking, and locating and responding to children who have run away from foster care including plans to address, report and track children who run from care

• Includes sex trafficking data in the adoption and foster care analysis and reporting system (AFCARS)

• Requires the state to develop a “reasonable and prudent parent standard’ for the child’s participation in age or developmentally appropriate extracurricular, enrichment, cultural, and social activities and it requires states to assure foster parents or an individual in a care facility has the training and ability to exercise their judgment that will allow children to participate in these type of activities

• Limits to children age 16 or older the option of being placed in a planned permanent living arrangement (APPLA) and requires new documentation and determination requirements for an APPLA status

• Gives children age 14 and older authority to participate in the development of their own case plans, in consultation with up to two members of the case planning team

• Requires that foster children leaving foster care (unless in foster care less than six months) are not discharged without being provided with a copy of their birth certificate, Social Security card, health insurance information, copy of medical records, and a driver’s license or equivalent state-issued identification card.

• Requires notification of parents of a sibling (through adoption) when another child is removed from parental custody.

For a more detailed copy of a CWLA description of the legislation send an e-mail to john.sciamanna962@gmail.com

Offset Issue Holds Up More Child Welfare Legislation

Legislation that would renew the Adoption Incentives Fund and the Family Connections Grants, programs that officially expired in October of last year, is also in limbo due to the cost-offsetting issue reported on last week.

In October the House of Representatives approved the Promoting Adoption and Legal Guardianship for Children in Foster Care Act (H.R. 3205) that would extend both the Adoption Fund and Connection Grants. The bipartisan bill was introduced in late September by Committee on Ways and Means Chairman Dave Camp (R-MI), Ranking Member Sandy Levin (D-MI), Human Resources Subcommittee Chairman Dave Reichert (R-WA), and Ranking Member Lloyd Doggett (D-TX).

The Senate responded with their version of the legislation in December when the Senate Finance Committee reported out two bills: one that extended the adoption program and one that did that and also included provisions that related to youth and victims of sexual exploitation (S. 1870 and S. 1876).  With the Senate unable to act, the negotiations over a budget deal that was taking place at the same time ended up taking all available “offsets.” When Congress returned in January of this year, the funding to pay for the extension of the $15 million for the Family Connections Grants was gone.

If the Family Connections Grants are not extended there are several programs across the country that will lose the third year of their three year grants—and of course there will be no more future grantees. The Family Connections Grants fund four different programs:

• “kinship navigator” programs that provide resource and referral services to any kinship families,
• “family finding” programs that use various strategies and technologies to help children in foster care find their families,
• “Family Group Decision Making” programs which attempt to bring together families and friends to potentially strengthen families and prevent placements in some cases, and
• “Residential Drug Treatment” programs that target the substance abuse problems of parents involved in child welfare and foster care.

Under the Adoption Incentive Fund, states are currently rewarded for an increase in their overall adoptions ($4000 per child), special needs adoptions ($4000) and older child adoptions—considered a child age 9 or older ($8000). In the last reauthorization a $1000 incentive was included for states that experienced an increase in their adoption rate. This part of the award was only provided to states if the funding did not run out after the other categories were provided. The House and Senate bills would take slightly different approaches in how this formula would be re-vamped and how much support a new incentive would reward kinship placements.

Call your Senator and Representatives: Congress should finish their work to extend the bipartisan Adoption Incentives Fund and Family Connection Grants.