Pay For Success Program Piloted with Grants Awarded to NY, MA

The U.S. Department of Labor (DOL) has announced the award of almost $24 million dollars in Pay For Success (PFS) grants through the Workforce Investment Fund (WIF).  The initial solicitation for $20 million in PFS funds was increased to include fiscal years 2012 and 2013 funds due to the quality of the applications.

This is in addition to the $147 million of WIF grants that were awarded earlier this year ”to develop and expand innovative strategies to help Americans return to work.”

In a recent post, Paying For Success: A Potential Future Funding Model for Workforce Development, KRA Corporation highlighted the program, looking at some of the benefits and costs associated with the model.

The grant money—to be split almost evenly between the N.Y. Department of Labor ($12,000,000) and the Massachusetts Office of Labor and Workforce Development ($11,670,000)—is earmarked for the improvement the employment outcomes and to attempt to reduce recidivism rates of formerly incarcerated individuals.

The PFS model has gained traction in recent years in programs around the world through the issuing of Social Impact Bonds wherein multiple stakeholders are involved in financing social programs with government agencies paying once track-able outcomes have been achieved.

The shift of financial responsibility from public to private sector revenue streams is becoming more popular of a model and some think more viable, too.

DOL Secretary Tom Perez said of the program: “At a time when all levels of government are experiencing cutbacks, Pay for Success offers a new approach to strategically leverage resources to provide essential services for vulnerable populations through programs with measurable success rates.”

Secretary Perez went on to dub the program as “a promising strategy for expanding effective programs while ensuring maximum return on taxpayer dollars.” A major component of this new model is the rigor with which the program and their results will be evaluated.

KRA Corporation can fully appreciate the necessity for innovative and far-reaching programmatic advances in the rapidly evolving workforce development arena. With an economy that is still gridlocked, sustainability and measurable outcomes take on even more importance.

Still in its fledgling state, the PFS model will have to show that it can be a viable model with the goal of developing the most effective strategies in workforce development (through expanding the body of knowledge), while investing taxpayer dollars more wisely, spending them only on those outcomes deemed successful by independent evaluators.

KRA Corporation salutes the work of the DOL as well as those stakeholders willing to lend their support—both financial and philosophical—to the future of workforce development.  We will continue to remain at the forefront of workforce development, and look forward to following the progress of this new PFS program model.