Editorial: Pass ‘pay for success’ bill (Tampa Tribune)

Florida should give the go-ahead to a funding proposal that would benefit taxpayers and government operations.

Legislation offered by Republicans Rep. Chris Sprowls of Palm Harbor and Sen. Aaron Bean of Fernandina Beach would enable private investors to fund state programs. They would receive a return on their investment, but only if the programs achieve intended results.

Other states have tried such “pay for success” programs with success.

In Utah, as we’ve pointed out, Goldman Sachs and J.B. Pritzker committed to fund preschool services under an agreement in which they would receive 95 percent of any special-education savings to the state until the investments are repaid with interests. The program is reporting impressive results.

Initial funding allowed about 600 students to enroll in preschool programs in 2013, and only one of those students required special-education aid in kindergarten. Under normal circumstances, without preschool, it would be expected that 110 of those youngsters would need special education.

Officials estimate the arrangement saved the school system about $281,000.

The pay for success approach brings private sector efficiency and accountability to social spending. And as Sprowls points out, the funding arrangement allows “service providers to test alternatives to the status quo.” At the same time it holds “private entities accountable for the outcome.”

The legislation does not link pay for success to any particular public service, but it could be particularly helpful in funding education innovations.

The approach has managed to win the support of conservatives and liberals alike.

Patricia Levesque, executive director of the Foundation for Florida’s Future, which was founded by former Gov. Jeb Bush, says, “Government is not designed for innovation and creativity. It is not always good at directing resources where they will produce the best results. These are strengths unique to the private sector, coming from those who think outside the box in addressing issues and problems in the most cost-efficient manner possible.”

President Obama’s education team also has praised Utah’s funding model for providing more children access to preschool.

It will be important, of course, to ensure pay-for-success ventures are closely monitored and “cost avoidance” figures are carefully calculated to ensure that genuine savings are achieved and, more importantly, that the services benefit the public.

But with proper oversight, the pay-for-success funding arrangement should improve social programs and expand their reach. Florida lawmakers should welcome this promising partnership for spending.