Voices from PFS Pioneers: Massachusetts Adult Basic Education Initiative (Nonprofit Finance Fund)

by Nonprofit Finance Fund (08/11/2015)

NFF spoke with Vernette Allen, Director of Pay for Success at JVS, about the Massachusetts Adult Basic Education Initiative. You can read more about the project here. This blog is part of an interview series with selected project partners from our Social Innovation Fund transaction structuring competition

NFF: Tell us about the genesis of this Pay for Success (PFS) project. What was the original impetus? How were the stakeholders who have been moving the project forward brought together originally?

JVS: JVS originally met Social Finance in 2012 at an event showcasing the results of a Social Return on Investment study (SROI) of many of our programs. The SROI study found that JVS programs increased program participants’ aggregate earnings by $2-3 for every $1 invested within the first two years after program completion, and up to $15 within 10 years. At that event, Social Finance introduced us to the idea of Pay for Success (PFS) and shared their opinion that we would be well positioned to apply for PFS contracts if there was ever an opportunity in the workforce development or adult education space.

JVS is fortunate to work in a state that recognized the potential of PFS to deliver high-quality social services using funds from private investors. In 2014, the Commonwealth of Massachusetts issued Request for Proposals (RFP) for service providers and intermediaries for what would be its third PFS project, focused on the issue of adult basic education and the unmet need for English as a Second or Other Language (ESOL) services. When the RFPs were released, JVS and Social Finance met and agreed to work closely together to submit cohesive responses. JVS also connected with Jobs for the Future (JFF) to capitalize on their expertise in adult education and program impact.

The leadership team at JVS decided that we could respond to the RFP with an innovative, four-track model combining vocational training and contextualized English language instruction, drawing on our decades of experience and expertise in adult education and workforce development for immigrant communities. In addition, we saw that a PFS contract would allow us to expand our impact to gateway cities for immigrants in the Greater Boston area, including Framingham, East Boston, Lynn, and Lawrence.

In August 2014, JVS and Social Finance were independently selected as the apparent successful bidders in response to the state’s RFP processes. This earned us the right to negotiate a PFS contract with the state. Since that time, we have been working closely with Social Finance, JFF, and the Commonwealth of Massachusetts to finalize the design of our PFS project. The Harvard Social Impact Bond (SIB) Lab has also been an important partner, supporting our work around data collection, evaluation methodology, and data analysis.

NFF: One of the things that struck us as being innovative about this project is the proposed use of administrative data to evaluate the impact and success of the services JVS will deliver. Can you speak a little bit about how you think this project will grow or diversify the existing PFS field? Also, how will it build the field of workforce development?

JVS: This project gives us the opportunity to demonstrate best practices in the workforce development field and also build a more sustainable model for using data to demonstrate program impact. As the first PFS project focused on workforce development for an adult learner population, it offers the opportunity to build the evidence base for workforce development projects. Specifically, we hope to demonstrate the benefits of contextualized English classes combined with skills training and job placement to support the end goal of moving students into the labor force and supporting their job retention. 

Long-term outcomes in the workforce development field are relatively scarce, partly because studies often rely on survey data from participants, which is difficult and expensive to collect. With this project, we will be able to compare our program participants with a group that did not receive our services. An outside evaluator will observe differences in employment, earnings, and enrollment in post-secondary education, using data made available through data sharing agreements with the state Departments of Labor and Workforce Development, and Higher Education.

Finally, we are very excited that this is the first PFS project in which success payments would be based on increased tax revenue from participants’ increased employment, rather than a reduction in their use of government services.

NFF: As you know, the road to launching a PFS project is a long one! Can you share with us what the biggest challenge to date has been? How have you and your partners overcome this challenge?

JVS: We had been working closely with the previous governor’s administration to design this project. A new administration took office in January 2015, and senior leadership from JVS met with key elected officials and stakeholders to educate them about the project and ensure its continuity. In addition, the involvement of multiple state agencies in securing the necessary data sharing agreements for the project has been challenging; each data sharing agreement must be reviewed and approved by counsel from each of the cabinets. On both fronts, we have found that maintaining regular communications with our various contacts within the Commonwealth has been the key to addressing challenges as they arise. For the last 10 months, we have held weekly conference calls with state representatives and our partner, Social Finance. These calls ensure that we are all on the same page and moving the project forward.