H.R. 5170, Social Impact Partnerships to Pay for Results Act, as amended

H.R. 5170

Social Impact Partnerships to Pay for Results Act, as amended

Sponsor
Rep. Todd Young

Committee
Ways and Means

Date
June 21, 2016 (114th Congress, 2nd Session)

Staff Contact
John Huston

Floor Situation

On Tuesday, June 21, 2016, the House will consider H.R. 5170, the Social Impact Partnerships to Pay for Results Act, as amended, under suspension of the rules. The bill was introduced on May 6, 2016, by Rep. Todd Young (R-IN) and was referred to the Committee on Ways and Means, which ordered the bill reported by voice vote on May 11, 2016.

Bill Summary

H.R. 5170 would amend title IV of the Social Security Act to provide funding to states and local governments to support partnership projects only if they achieve results. Such projects would have to identify a social problem that states or localities hope to address, such as improving high school graduation rates or increasing employment among welfare recipients, and the project would be rigorously evaluated to determine whether the project was successful. If the project was a success, the federal government would pay the state or local government for the outcome.

The legislation also would establish the Federal Interagency Council on Social Impact Partnerships and the Commission on Social Impact Partnerships to assist the Department of the Treasury in implementing the projects. The Commission would review the independent evaluation to determine if the desired social outcome was achieved, then the federal government would reimburse the state or local government. If the outcome was not achieved, the federal government would pay nothing.

H.R. 5170 would reserve $100 million of the $608 million already appropriated for the Temporary Assistance for Needy Families (TANF) contingency fund in 2017 to support the partnership projects. The bill would also establish a “What Works Clearinghouse” to catalogue successful approaches helping welfare recipients move into work, as well as extend the TANF block grant at current levels through FY 2017.

Background

Each year, the federal government spends hundreds of billions of dollars on more than 80 programs designed to assist children and families with limited resources. While each program was created with a goal of making a real difference in the lives of those in need, few programs have been proven to produce better outcomes for the low-income families and individuals they serve. In many cases, these programs have never been evaluated to determine if they are working as intended. Most programs cannot demonstrate they achieve better outcomes for poor families. Instead, many decisions on program design and funding are made based on poor quality studies, anecdotes or testimonials, or well-meaning program operators who believe their program will be effective.[1]

The concept of redirecting welfare funding to pay only for outcomes has been recommended in the Poverty, Opportunity, and Upward Mobility Task Force Report[2], the RSC Empowerment Initiative[3], and by the Heritage Foundation. The concept of paying only for outcomes has also been recommended in the Obama Administration’s recent budgets. Social impact financing shifts the risk of achieving the outcome off the federal government, as taxpayer funds are only spent if desired outcomes are achieved. As a result, this funding structure helps drive innovation and competition in the social service sector, as funding will be available to reward those who demonstrate effectiveness. This financing structure also provides more flexibility to service providers to focus on achieving outcomes—instead of focusing on compliance with cumbersome federal rules.[4]

According to the bill sponsor, “Washington spends too much time debating how much or how little to spend on social safety net programs, and not enough time asking whether or not we’re improving lives. For all our best intentions, evidence shows current federal programs aren’t doing much to improve income inequality. The American people feel the effects, and continuing to ignore the problem only fuels their resentment toward a system that’s failing them. By changing the federal government’s definition of success in federal social programs from inputs to actual outcomes, we can help our fellow Americans overcome the root causes of poverty and seize economic opportunities to work and provide for their families.”[5]

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[1] See House Report 114-616
[2] See the Speaker’s Report, “A Better Way—Our Vision For A Confident America: Poverty, Opportunity, and Upward Mobility,” June 7, 2016 at 20.
[3] See RSC Report, “Strengthening our Safety Net to Empower People.”
[4] See House Report 114-616
[5] See Rep. Todd Young Press Release, “Ways and Means passes Young, Delaney bipartisan Social Impact Partnership bill,” May 11, 2016.

Cost

The Congressional Budget Office (CBO) estimates enacting this legislation would reduce direct spending, on net, by $10 million over the 2017-2026 period. Extending TANF for an additional 12 months at current historical levels and establishing a “What Works Clearinghouse would be cost-neutral relative to the baseline. Because enacting the legislation would affect direct spending, pay-as-you-go procedures apply. Enacting H.R. 5170 would not affect revenues.

Additional Information

For questions about amendments or further information on the bill, contact John Huston with the House Republican Policy Committee by email or at 6-5539.