Category Archives: Administration

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.”

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Congress Fails To Act On Unaccompanied Minors

Despite all the recent focus on unaccompanied children crossing the U.S. border, the Congress left for a five week break being nowhere near a consensus on how to deal with the crisis. The President who had been the subject of criticism earlier this spring for not requesting greater funding to address the growing numbers of children, was also the subject of some departing congressional criticism for asking for too much funding. In the end, the House reduced their funding even more than last week’s initial proposal, pulled a vote on that package on Thursday afternoon and then passed a slightly higher costing proposal on Friday after the Senate had left for the break. The Senate couldn’t get enough votes to break a filibuster on their package and they failed to pass a bill and by week’s end the President was still contemplating what he could or would do without Congress.

The President has requested $3.7 billion to be spread across HHS, the State Department and Homeland Security. He indicated some openness to amending a 2008 change that was made to the Trafficking Victims Protection Act (TVPA) which allowed for greater deliberation for unaccompanied minors coming here (as long as they were not coming from Mexico or Canada) but a large number of Democrats in both the Senate and House have objected to such a change.

At the direction of House Speaker John Boehner (R-OH), a working group of Republican House members crafted their own proposal that was set at a total of $1.5 billion and would designate much of the funding for border patrol, and the National Guard and direct quicker deportation of the children. By Thursday that funding had been reduced to approximately $650 million but late Thursday afternoon the House leadership pulled the bill because they didn’t have enough Republican members who would support it. The leadership issued a statement through Speaker Boehner’s office that said in part, “There are numerous steps the president can and should be taking right now, without the need for congressional action…” The statement seemed to run counter to a law suit filed a day earlier that charges the President has acted independent of congressional authority. The statement was criticized by both the White House and some conservative critics of the President. The reaction to the postponed vote delayed the House departure until Friday because many members wanted evidence that they at least voted for something. By Friday morning the package had inched up to $694 million with added money for governors to use the National Guard. They also had a vote to restrict the President’s executive authority in regard to immigrant status and issues.

On the Senate side, the progress was just as slow. Senate Democrats couldn’t break a filibuster over their legislation. The Senate Appropriations Committee Chair Senator Barbara Mikulski (D-MD) had been guiding a $2.7 billion bill that would not amend the 2008 changes to the TVPA. It would also cover funding for services through the end of the calendar year meaning it would cover parts of FY 2014 and 2015. To pass the bill would require 60 votes and some Republican support. Debate stopped when a procedural vote failed by a vote of 50 to 44. An additional part of the Senate debate was the efforts of Senator Ted Cruz (R-TX) who had been working with House Republicans to work for a repeal of President Obama’s 2012 executive order that offered some protections to immigrant students who had been brought into the United States at a younger age (similar to the “Dream Act”). Although critics of the President had been arguing that that 2012 order had caused the surge in immigrants, recent debate has now focused on the 2008 changes to the TVPA instead.

Congress is gone until September 8. The President is likely to move funding from other government programs if funding runs out before the Congress returns.

Funding to Address Unaccompanied Minors Crisis May Wait Until Fall Session

Congress will likely make this week their last week before they leave for the August break and that will happen regardless of the unaccompanied minor issue. Going into this week there are three general proposals: the President’s, the Senate’s and the House’s. It seems certain that none of them can garner enough votes to get through both houses and to the President for his signature. The House proposal was changing even more as members were leaving for the weekend.

The President has requested $3.7 billion to be spread across HHS, the State Department and Homeland Security. He indicated some openness to amending a 2008 amendment to the Trafficking Victims Protection Act (TVPA) which allowed for greater deliberation for unaccompanied minors coming here (as long as they were not coming from Mexico or Canada).

House Speaker John Boehner (R-OH) immediately rejected the President’s request and assigned a working group of Republican House members to craft their own proposal. That proposal was unveiled on Wednesday, July 23, at a total of $1.5 billion and would designate much of the funding for border patrol, and the National Guard and direct quicker deportation of the children. It would also require spending cuts in other areas of the budget instead of designating the spending as an emergency. It was unclear however whether there are enough Republican votes to pass the proposal with some members of the House Republican caucus feeling the proposal was not tough enough. As a result a new proposal spending less than $1 billion was gaining support among Republican House members. It would likely change some current immigration law including a repeal of the 2008 changes to the Trafficking Victims Protection Act (TVPA). There could also be a separate attempt to overcome the President’s 2012 executive order that implemented parts of the “DREAM Act” legislation that extends legal protection to some youth brought here at a young age and now successfully attending school or enrolling in the military.

The Senate, acting through the Senate Appropriations Committee Chair Senator Barbara Mikulski (D-MD) proposed $2.7 billion in funding and it would not amend the 2008 changes to the TVPA. It would also seek to target funding for services through the end of the calendar year meaning it would cover parts of FY 2014 and 2015. It would be subject to a filibuster however and that means at least some Republican votes would be needed. Senator Ted Cruz (R-TX) has been working with House Republicans to work for a repeal of President Obama’s 2012 executive order that offered some protections to immigrant students who had been brought into the United States at a younger age (similar to the “Dream Act”). Although critics of the President had been arguing that 2012 order had caused the surge in immigrants, recent debate has now focused on the 2008 changes to the TVPA instead.

Congress is also confronted with several other pressing issues this week including an extension of highway funding, reaching a bipartisan reform on the Veterans Administration as well as overall appropriations. They could all be put off until September but that creates a long list for a Congress that will be desperate to leave for the 2014 election.

Two Tracks For Congressional Funding to Address Unaccompanied Minors

By the end of last week, July 18, Congress’s path forward to address the issue of the surge of unaccompanied minors across the US boarder was becoming less clear with each house pursuing different approaches. The President has requested $3.7 billion in emergency funding mainly for services both legal and humanitarian with the bulk of funding for HHS and smaller parts for the State Department and Homeland Security. The House leadership, mainly through Speaker John Boehner (R-OH), has made clear that the House will not honor the request by the President. It is not clear exactly what the House will be able to pass or if they will get it done before they leave for the August break. Elements of the House majority proposal could include: reducing the funding request, changing the current 2008 Trafficking Victims Protection Act (TVPA) amendment that allowed greater protections for unaccompanied minors coming into the country (if they weren’t from Mexico or Canada) and possibly a cut in other domestic programs as a way to pay for the request. The President asked the funding to be covered under the emergency spending category.

The Senate was considering several options. One proposal by Senator John Cornyn (R-TX) and Congressman Henry Cuellar (D-TX) would bundle funding with a change in the TVPA law but Senate Majority Leader Harry Reid (D-NV) opposes such a plan and there appears to be strong opposition to the proposal by members of the Congressional Hispanic caucus. There is also an intense feeling among advocates that the law should not be changed since it was a bipartisan proposal signed into law by President George W Bush in an increased effort to better assist the worldwide force-labor and sex trafficking victims. Another potential issue is an effort led by Senator Ted Cruz (R-TX) to repeal the President’s 2012 executive order that created a version of the “Dream Act.” The order, similar to the legislation, allows some children and youth to stay here legally if they came to the United States before age 16 and before 2007, have lived here for at least five years, and are in school, are high school graduates or are military veterans in good standing.