Congressman Dave Reichert (R-WA), Chairman of the Subcommittee on Human Resources of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on Social Impact Bonds and whether they can help government achieve better results for families in need. The hearing will take place at 2:00 pm on Tuesday, September 9, 2014, in room 1100 of the Longworth House Office Building. 

In view of the limited time available to hear from witnesses, oral testimony at this hearing will be from invited witnesses only. Witnesses will include experts in the development of Social Impact Bonds in the U.S., as well as individuals involved in current Social Impact Bond projects. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee for inclusion in the printed record of the hearing.

BACKGROUND:

The federal government currently spends almost $800 billion each year on 92 programs designed to provide tax relief, medical care, education, food assistance, and other assistance and services for low and moderate-income families. While each of these programs was created with the goal of helping to improve the lives of those who receive these benefits and services, few programs have been rigorously evaluated to determine if they actually achieve their goals. According to social policy experts writing about the evaluation of federal social programs in 2010, “[s]ince 1990, there have been 10 instances in which an entire federal social program has been evaluated using the scientific ‘gold standard’ method” to determine whether the program really works, and “nine of these evaluations found weak or no positive effects.” Other research has shown that, while a number of specific interventions have demonstrated results, programs that haven’t demonstrated their effectiveness not only fail to help individuals in need, but also waste taxpayer funds that could be devoted to more successful programs.

In addition to a lack of evidence regarding what works, many federally-funded social programs are inflexible, centrally-designed programs that don’t take into account key differences between states or local communities. These programs often provide little room for State and local officials to innovate, with key policy decisions frequently made by lawmakers and bureaucrats in Washington, D.C. As such, some federal social programs may operate for decades with few changes, failing to take into account new research that could improve the program’s effectiveness and without acknowledging major societal changes that may affect the program and its intended beneficiaries.

To increase the effectiveness of social programs and ensure they produce real results for families in need, some State and local governments have experimented with funding services through “pay for results” contracts. Using the flexibility provided in programs like the Temporary Assistance for Needy Families block grant, State and local governments have set up agreements under which they pay service providers based on their success in achieving results—such as helping welfare recipients find jobs and maintain employment—instead of simply paying based on the number of people they serve.

Social Impact Bonds (SIBs) are one example of this new approach designed to improve the way taxpayer funds are spent on social services by ensuring money is spent only on programs that work. Under a Social Impact Bond model, government determines a program’s desired outcome, private investors fund a service provider that has demonstrated they can achieve that outcome, and the government reimburses the investors if the outcome is met. Because of this structure, SIBs shift the risk of achieving the outcome from government to the private sector, as taxpayer funds are only spent if desired outcomes are achieved. As a result, SIBs may help drive innovation and competition in the social services sector while providing more local flexibility, as well as accountability for results.

Four SIB models are operating in the U.S. today, in New York City, New York State, Massachusetts, and Utah. Representative Todd Young (R-IN), a member of the Human Resources Subcommittee, has introduced bipartisan legislation (H.R. 4885) that would promote the development of SIBs at the federal level by soliciting proposals from state and local governments for these projects and providing federal funding to pay for positive outcomes.

In announcing the hearing, Chairman Reichert stated, “As Chairman of a congressional subcommittee responsible for many social welfare programs, I’ve held a number of hearings to find out what works to help families in need. Unfortunately, few federal programs have been studied closely to see if they work at all, and even fewer have been shown to be effective. Even when a program seems promising, the federal government often creates ‘one-size-fits-all’ policies that prevent State and local leaders from tailoring programs to meet local needs. In an effort to better serve families in need, some State and local leaders are challenging the status quo and testing a new financing structure—called Social Impact Bonds—to pay for only programs that actually work. I look forward to hearing more about these projects and how they might help us improve the effectiveness of programs in making a real difference in people’s lives.”

FOCUS OF THE HEARING:

This hearing will focus on Social Impact Bonds, including how State and local governments are using this financing structure to achieve better outcomes today, as well as their potential to help achieve better results for families in need in the future.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, https://waysandmeans.house.gov, select “Hearings.” Select the hearing for which you would like to submit, and click on the link entitled, “Please click here to submit a statement or letter for the record.” Once you have followed the online instructions, submit all requested information. Attach your submission as a Word document, in compliance with the formatting requirements listed below, by September 23, 2014. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225-1721 or (202) 225-3625.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in Word format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. All submissions must include a list of all clients, persons, and/or organizations on whose behalf the witness appears. A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.

The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

Note: All Committee advisories and news releases are available online at http://www.waysandmeans.house.gov/.