WASHINGTON — The District of Columbia will become the first jurisdiction in the United States to implement a social impact bond to finance services aimed at reducing teen pregnancy and increasing high schoolers' educational attainment, the mayor's office has announced.
Under a SIB, investors provide upfront capital to fund social programs, and governments repay the investors only if the desired pre-determined outcomes are achieved.
D.C. Mayor Vincent Gray's budget and finance office said in a release on Wednesday that programs that are a good fit for SIB financing have clear and measurable outcomes, a need for significant upfront investment, a well-defined target population and an ability to generate savings for taxpayers.
The District is working with Social Finance US, a nonprofit intermediary, to develop and launch the SIB. Social Finance released a request for qualifications to identify programs that could decrease teen pregnancy and increase educational attainment for high school aged youth.
The RFQ asks for general information about the respondents, an overview of the groups' proposed intervention for high schoolers, what outcomes for the interventions would be, and how they would be measured.
Responses to the RFQ are due by noon on May 21, and finalists will be selected and notified by May 27. The finalists will be invited to submit responses to a request for proposals that provide more detail about program design, the target population, outcomes and management systems and business plans, according to the RFQ. The responses to the RFP will be due on June 9.
The specific targets the service provider has to achieve will be determined in contract negations after a provider is selected. Educational targets could include increasing graduation rates or reducing dropout rates, said Rebecca Leventhal, a director at Social Finance.
The District's teen pregnancy rate has been declining but is higher than the national average. In 2010, D.C.'s teen pregnancy rate was 90 pregnancies per 1,000 girls aged 15 to 19 years old, compared with a national rate of 57 pregnancies for the same group, according to the National Campaign to Prevent Teen and Unplanned Pregnancy.
People in the District's non-profit and community service communities, both in the public and private sector, had suggested that the city try using SIBs, a spokesman from the mayor's office said.
"A Social Impact Bond has the potential to catalyze significant improvements in some of our most pressing social challenges by scaling up solutions that require considerable upfront capital to implement," Gray said in a release. "SIBs are also an innovative way to ensure better outcomes while reducing risk exposure for the taxpayers of the District."
Other jurisdictions have explored using SIBs to provide services relating to criminal justice, nursing home visits and education, District officials said. SIB projects are currently being operated in New York City, New York state, Massachusetts and Utah.
There is also interest in the SIB, or Pay For Success, model among President Obama and some members of Congress. Obama's fiscal 2015 budget includes almost $500 million for PFS programs, and the omnibus spending law for fiscal 2014 includes $14 million in funding for the Corporation for National and Community Service for PFS pilots. Rep. Todd Young, R-Ind., has recently introduced draft legislation about SIBs. But at a Senate task force hearing on SIBs, some Senators seemed skeptical of the financing method.
