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SB-472 Social Innovation Financing Program.(2021-2022)

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Date Published: 05/21/2021 04:00 AM
SB472:v98#DOCUMENT

Amended  IN  Senate  May 20, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 472

Introduced by Senator Caballero
(Principal coauthor: Senator Becker)
(Coauthor: Assembly Member Berman)

February 17, 2021

An act to amend Sections 97008, 97009, and 97015 of, and to add Sections 97010.5, 97011.5, and 97013.5 to, the Government Code, relating to corrections.


LEGISLATIVE COUNSEL'S DIGEST


SB 472, as amended, Caballero. Social Innovation Financing Program.
Existing law establishes the Social Innovation Financing Program, administered by the Board of State and Community Corrections, to award grants to 3 counties selected by the board, for the purpose of entering into a social innovation financing contract, pursuant to which private investors agree to provide financing to service providers to achieve social outcomes agreed upon in advance and the government agency that is a party to the contractual agreement agrees to pay a return on the investment to the investors if successful programmatic outcomes are achieved by the service provider. Existing law requires the board and each county receiving an award to report annually to the Governor and Legislature, as specified. Existing law repeals the program on January 1, 2022.
This bill would, commencing January 1, 2021, July 1, 2022, authorize the board, upon an appropriation by the Legislature to the Social Innovation Fund created by this bill, to award a new round of grants to 5 counties selected by the board, as specified. The bill would also authorize the board to utilize no more than 2% of any appropriated funds to award microgrants to counties applying for a grant to support the development of grant proposals. The bill would require the board and the grant recipients to report annually to the Governor and the Legislature, as specified. The bill would extend the repeal date of the program to January 1, 2031.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 97008 of the Government Code is amended to read:

97008.
 For purposes of this title, the following definitions apply:
(a) “Board” means the Board of State and Community Corrections.
(b) “Social innovation financing contract,” which may also be known and referred to as a “pay for success contract,” refers to a contractual agreement between government agencies, private investors, intermediaries, and service providers pursuant to which private investors agree to provide financing to service providers to achieve social outcomes agreed upon in advance and the government agency agrees to pay investors commensurate with successful programmatic outcomes achieved by the service provider.

SEC. 2.

 Section 97009 of the Government Code is amended to read:

97009.
 (a) It is the intent of the Legislature that as part of the package to reduce recidivism and the intersection of homelessness and criminal justice in California, the concept of “pay for success” or social innovation financing should be included to take advantage of available philanthropic and private investment.
(b) The Legislature hereby declares that a variety of approaches have been shown to be successful in reducing recidivism, including addressing homelessness, substance use disorder and unemployment among specific demographic groups.

SEC. 3.

 Section 97010.5 is added to the Government Code, to read:

97010.5.
 (a) On or after January 1, 2021, July 1, 2022, and contingent upon an appropriation by the Legislature in the annual Budget Act or another statute for the purposes described in Section 97011.5, the board shall solicit proposals for social innovation financing from county boards of supervisors and shall select five counties to receive grant funding.
(b) A county that has received grant funding pursuant to Section 97010 is not ineligible to receive funding pursuant to this section.
(c) Before awarding a grant pursuant to this section, the board shall evaluate the quality of the proposal for which the grant is to be awarded.
(d) In selecting the counties to receive grants, the board shall consider the diversity of the selected counties in factors including, without limitation, size, demographics, and geography.
(e) No more than one award will be issued to any county in response to each solicitation.
(f) At a minimum, each application for a grant shall include all of the following:
(1) A description of the proposed social program.
(2) A description of the organization’s experience in providing the proposed social program.
(3) A description of the financial stability of the organization.
(4) An identification of each component of the social program to be provided.
(5) A description of the manner in which the social program will be provided.
(6) The proposed quantifiable results upon which success of the social program will be measured.
(7) An estimated budget for service delivery under the contract.
(8) The amount of matching funds provided by the county.
(9) An overview of all potential parties to the proposed contract, and key supporters.
(10) A description of the ways in which the proposal plans to reduce outcomes disparities for priority populations including racial and ethnic minorities.

SEC. 4.

 Section 97011.5 is added to the Government Code, to read:

97011.5.
 (a) Upon appropriation of funds by the Legislature for deposit in the Social Innovation Fund, which is hereby created in the State Treasury, for the purposes of this section, the board shall award a grant in an amount of not less than one million dollars ($1,000,000) and not more than ten million dollars ($10,000,000) to each county selected pursuant to Section 97010.5 for the purposes of entering into a pay for success or social innovation financing contract. The total amount of the grants awarded pursuant to this section shall not exceed twenty-six million dollars ($26,000,000). Any unused state moneys shall revert to the General Fund.
(b) Each county contract described in subdivision (a) shall include all of the following:
(1) A requirement that the payment be conditioned on specific outcomes based upon defined performance targets.
(2) An objective process by which an independent evaluator, selected by the county, will determine whether the performance targets have been achieved. This process shall include defined performance metrics and a monitoring plan.
(3) A calculation of the amount and timing of payments that would be earned during each year of the agreement if performance targets are achieved as determined by the independent evaluator.
(4) A determination by the county that the contract will result in significant performance improvements including reduction in rearrests, an increase in the number of jail days avoided, improved housing placement and stability, or other beneficial impacts to the community, if the performance targets are achieved.
(5) A requirement that an amount equal to a minimum of 100 percent of the Social Innovation Financing Program grant awarded to the county be matched by other county, federal, private, or philanthropic funds. The board may adopt regulations allowing in-kind contributions in lieu of monetary contributions for this purpose.
(6) A clear description of the recruitment and selection process, as applicable, for participants in the social program.
(c) (1) Up to 5 percent of the funds appropriated to the Social Innovation Fund for the purposes of this section may be used by the board for the administrative costs of administering the grant program.

(c)

(2) Up to 15 10 percent of the grant funds awarded pursuant to subdivision (a) may be used by the counties for administrative expenses related to the development of the pay for success or social innovation financing contract. The remainder of the grant shall be contributed toward payments, as stipulated in the contract.
(d) If, after receiving a grant pursuant to subdivision (a), a county does not enter into a contract for which the grant was awarded, the county shall return all moneys awarded by the board pursuant to this section, to the state.
(e) (1) Up to 2 percent of the funds appropriated by the Legislature for purposes of this section may be used by the board to award microgrants to counties to support the development of the proposal described in Section 97010.5.
(2) The intent of the microgrant is to incubate new outcome-based contracting partnerships.
(3) A county board of supervisors interested in being considered for a microgrant pursuant to this subdivision shall submit a brief synopsis of their project including all of the following:
(A) A summary of the challenges targeted by the project.
(B) A list of critical project partners.
(C) A description of the analysis to be conducted during the proposal development process and the source of data to be used in that analysis.

SEC. 5.

 Section 97013.5 is added to the Government Code, to read:

97013.5.
 (a) Each county receiving an award pursuant to subdivision (a) of Section 97010.5 shall report annually to the board on the status of its ongoing social innovation financing program. The report shall also contain an accounting of the moneys awarded. both of the following:
(1) An accounting of the moneys awarded.
(2) The impact of the program on recidivism, using a standard definition prescribed by the board for the purpose of this report. The board may use an existing definition of recidivism previously developed or utilized by the board.
(b) The board shall compile the county reports and submit a summary report to the Governor and Legislature annually.
(c) In preparing the reports required by this section, the board is encouraged to convene representatives from each participating county to discuss progress and share experiences with the board and other participating counties.
(d) A report made pursuant to this section shall be made in accordance with the requirements of Section 9795.

SEC. 6.

 Section 97015 of the Government Code is amended to read:

97015.
 This title shall remain in effect only until January 1, 2031, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2031, deletes or extends that date.