Evidence in Action: Strengthening Workforce Development through Pay for Performance (America Forward)

Thanks to the persistence of social entrepreneurs across the country, every day we see strategies that are working and delivering results in a rapidly changing world. This Evidence in Action blog series highlights the voices of the more than 70 social innovation organizations that make up the America Forward Coalition, the results-driven solutions our community has for our country’s most pressing social problems, and the evidence-based federal programs that are critical to scaling the impact of this work. Today we will hear from Third Sector Capital Partners and its efforts to shift youth workforce training programs towards outcomes-based contracts using the recent Pay-for-Performance (P4P) provisions of the Workforce Innovation and Opportunity Act (WIOA).

Important changes in the 2014 Workforce Innovation and Opportunity Act (WIOA) provide a favorable opening to focus on improving outcomes. With a shift towards longer-term outcomes through new performance measures and the authorization of Pay-for-Performance (P4P) contracts, there is a window of opportunity for workforce boards to build on the rich history of performance-based contracting, develop more comprehensive services and deploy resources in increasingly outcomes-driven ways. A deeper dive into these changes is included in our recent post, Evidence in Action: Workforce Innovation and Opportunity Act

In 2016, as our second cohort of Social Innovation Fund sub-recipients, Third Sector selected five awardees to receive Pay for Success (PFS) technical assistance to strengthen youth workforce development programs throughout the United States. Workforce boards in Austin, Boston, Denver, San Diego, and Northern Virginia are currently working with us to explore how the P4P provisions of the WIOA can strengthen their programming and develop replicable models to inform and scale outcomes-based contracting across the nation. We recently held an in-person cohort convening where teams shared their early wins and challenges. While the work to develop the data sharing agreements, employer partnerships and contracts is not easy, teams agreed that the benefits of improving outcomes for youth while deploying funds more efficiently were well worth the effort.

Pay-for-Performance has provided a rallying point for governments, employers, providers, and funders to come together and strategize on how to better serve opportunity youth in these communities. With the Austin Workforce Solutions Capital Area team, we are working to scale the highly successful Youth Employment Partnership program in Austin/Travis County through targeted engagement of employers as end-payers. By engaging employers as thought partners in developing outcomes-based contracts, we hope to meet the hiring and retention needs of employers while improving long-term outcomes for opportunity youth in Austin/Travis County.

In Boston, we are working with the Mayor’s Office of Workforce Development (OWD) to strengthen their summer youth employment program (SYEP), which provides summer job opportunities to youth, many of whom come from low-income households. Third Sector and Northeastern University’s Dukakis Center are collaborating with OWD to explore opportunities to implement P4P contracting for Boston’s SYEP. We have convened a Summer Youth Employment advisory group to help inform our efforts and ensure that these learnings are disseminated widely, given the popular nature of this program and the variation in quality that exists across programs. Early evaluation results show SYEP having a significant impact on financial literacy gains and participant’s sense of community involvement. By linking SYEP with other year-round services, we hypothesize that the program could have a larger and lasting impact.

We are also working with the Denver Office of Economic Development to combine P4P funding, rigorous evaluation, and performance-driven service provision to increase educational and employment outcomes for pregnant and parenting youths. We are exploring ways to use existing data systems to track longer-term education and employment outcomes for pregnant and parenting youth and blending federal P4P funds with local public funding sources to embed flexible performance-based contracting concepts in upcoming youth workforce contracts.

In Northern Virginia, we are partnering with the SkillSource Group to launch a P4P pilot focused on reaching foster care and justice-involved 18-24-year-olds in Fairfax, Prince William, and Loudoun Counties. We successfully brought together criminal justice and foster care agencies across the three counties to outline project goals and engage in strategizing towards a P4P approach. While data access has been a challenge, we are working with service providers to understand service delivery, contracting, the service population and data systems to improve referral pathways and develop a strategy to use existing data systems to measure and evaluate longer-term employment and education outcomes.

With the San Diego Workforce Partnership (SDWP), we are exploring the opportunity to use the P4P provisions to increase the rate of placement and retention in employment or postsecondary education, as well as reduce the rate of recidivism for justice-involved youths.

SDWP is interested in shifting its existing contracting process to one that ties payments to performance by using existing data systems to track longer-term education, employment and recidivism outcomes for justice-involved youth in San Diego County, developing an outcomes payment strategy, and designing a contracting and evaluation plan. We are looking to launch the P4P contract in the summer of 2017.

These five pilot projects demonstrate the flexibility and diversity that exists within the parameters of WIOA P4P. Even in cases, such as Austin, where P4P funding will not be necessary, the opportunity to explore outcomes-based contracts under WIOA was the catalyst for developing innovative partnerships and attracting and deploying funds in evidence-based ways. We believe that these examples can serve as models for other workforce boards across the country, as well as uncover ways that state and national leadership can better support P4P efforts. Increased access to data, including individual tax and wage records, and ensuring that state-level policies allow local areas to fully take advantage of the P4P provisions are essential to encouraging continued exploration of P4P. Outreach and collaboration with accounting professionals in state and local government will also ensure that the innovative solutions developed through P4P are supported by financial practices and systems.

Pilot projects will be wrapping up between the summer and end of the year 2017, so stay tuned for project summaries and tools and templates based on the successes and challenges we uncover throughout the projects. If you would like to join our Learning Community and keep up with the progress of these projects, as well as future opportunities to explore P4P in your own community, please contact Celeste Richie at crichie@thirdsectorcap.org.  

About the Social Innovation Fund

The Social Innovation Fund is a program of the Corporation for National and Community Service, a federal agency that engages millions of Americans in service through its AmeriCorps, Senior Corps, Social Innovation Fund (SIF), and Volunteer Generation Fund programs, and leads the President’s national call to service initiative, United We Serve. For more information, visit NationalService.gov.

In 2009, President Obama authorized the creation of the Social Innovation Fund as part of the Corporation for National & Community Service to find solutions that work, and make them work for more people – by proving, improving and scaling effective models. SIF and its non-federal partners have invested nearly $1 billion in effective community solutions since the program’s inception. Launched in 2014, the SIF Pay for Success (PFS) program is designed to help cities, states, and nonprofits develop Pay for Success projects where governments pay service providers only when there are demonstrable results.

Note: Pay for Success (PFS) is a general term for performance-based contracting between government and social service providers, where government only pays providers if target outcomes are achieved, e.g. reduced recidivism or improved health outcomes, as opposed to providing cost reimbursement payments.

This post is part of America Forward’s Evidence in Action blog series. Follow along on Twitter with #EvidenceinAction and catch up on the series here.