[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4885 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 4885

 To encourage and support partnerships between the public and private 
    sectors to improve our nation's social programs, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 18, 2014

    Mr. Young of Indiana (for himself, Mr. Delaney, Mr. Griffin of 
Arkansas, Mr. Larson of Connecticut, Mr. Reed, Mr. Polis, Mr. Ross, Mr. 
   Kennedy, and Mr. Schock) introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
   Committee on Financial Services, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To encourage and support partnerships between the public and private 
    sectors to improve our nation's social programs, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Impact Bond Act''.

SEC. 2. SOCIAL IMPACT BONDS.

    Title XX of the Social Security Act (42 U.S.C. 1397) is amended--
            (1) in the heading, by striking ``to States'' and inserting 
        ``and Programs for''; and
            (2) by adding at the end the following:

                   ``Subtitle C--Social Impact Bonds

``SEC. 2051. PURPOSES.

    ``The purposes of this subtitle are the following:
            ``(1) To improve the lives of families and individuals in 
        need in the United States by funding social programs that 
        achieve real results.
            ``(2) To ensure Federal funds are used effectively on 
        social services to produce positive outcomes for both service 
        recipients and taxpayers.
            ``(3) To establish the use of social impact bonds to 
        address some of our nation's most pressing problems.
            ``(4) To facilitate the creation of public-private 
        partnerships that bundle philanthropic and other private 
        resources with existing public spending to scale up effective 
        social interventions already being implemented by private 
        organizations, non-profits, charitable organizations, and local 
        governments across the country.
            ``(5) To bring pay-for-performance to the social sector, 
        allowing the United States to improve the impact and 
        effectiveness of vital social programs.

``SEC. 2052. SOCIAL IMPACT BOND APPLICATION.

    ``(a) Notice.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of the Treasury, in consultation 
with the Federal Interagency Council on Social Impact Bonds, shall 
publish in the Federal Register a notice that the Department is seeking 
proposals from States or local government for social impact bond 
projects in accordance with this section.
    ``(b) Required Outcomes for Social Impact Bond Project.--To qualify 
as a social impact bond project under this subtitle, a project must 
produce a measurable, clearly defined outcome that results in social 
benefit and Federal savings through any of the following:
            ``(1) Increasing work and earnings by individuals who have 
        been unemployed in the United States for more than six 
        consecutive months.
            ``(2) Increasing employment and earnings of individuals age 
        16 to 24.
            ``(3) Increasing employment among individuals receiving 
        Federal disability benefits.
            ``(4) Reducing the dependence of low-income families on 
        Federal means-tested benefits.
            ``(5) Improving rates of high school graduation.
            ``(6) Reducing teen and unplanned pregnancies.
            ``(7) Improving birth outcomes among low-income families 
        and individuals.
            ``(8) Reducing rates of asthma, diabetes, or other 
        preventable diseases among low-income families and individuals.
            ``(9) Increasing the proportion of children living in two-
        parent families.
            ``(10) Reducing incidences of child abuse and neglect.
            ``(11) Increasing adoptions of children from foster care.
            ``(12) Reducing recidivism among individuals released from 
        prison.
            ``(13) Other measurable outcomes defined by the State or 
        local government that result in positive social outcomes and 
        Federal savings.
    ``(c) Feasibility Study Required.--The notice described in 
subsection (a) shall require a State or local government to submit a 
feasibility study for the social impact bond project that contains the 
following information:
            ``(1) The outcome goals of the project.
            ``(2) A description of each intervention in the project and 
        anticipated outcome of such intervention.
            ``(3) Rigorous evidence demonstrating that the intervention 
        can be expected to produce the desired outcomes.
            ``(4) The target population that will be served by the 
        project.
            ``(5) The expected social benefits to participants who 
        receive the intervention and others who may be impacted.
            ``(6) Projected Federal, State, and local government costs 
        and other costs to conduct the project.
            ``(7) Projected Federal, State, and local government 
        savings and other savings, including an estimate prepared by 
        the State or local government of the savings to the Federal, 
        State, and local government, on a program-by-program basis and 
        in the aggregate, if the project is implemented and the 
        outcomes are achieved.
            ``(8) If savings resulting from the successful completion 
        of the project are estimated to accrue to the State or local 
        government, the likelihood of the State or local government to 
        realize those savings.
            ``(9) A plan for delivering the intervention through a 
        social impact bond model.
            ``(10) A description of the expertise of each service 
        provider that will administer the intervention.
            ``(11) An explanation of the experience of the State or 
        local government, the intermediary, or the service provider in 
        raising private and philanthropic capital to fund social 
        service investments.
            ``(12) The detailed roles and responsibilities of each 
        entity involved in the project, including any State or local 
        government entity, intermediary, service provider, independent 
        evaluator, investor, or other stakeholder.
            ``(13) A summary of the experience of the service provider 
        delivering the proposed intervention, a similar intervention, 
        or a summary demonstrating the service provider has the 
        expertise necessary to deliver the intervention.
            ``(14) A summary of the unmet need in the area where the 
        intervention will be delivered or among the target population 
        who will receive the intervention.
            ``(15) The payment terms, the methodology used to calculate 
        outcome payments, the payment schedule, and performance 
        thresholds.
            ``(16) The project budget.
            ``(17) The project timeline.
            ``(18) The criteria used to determine the eligibility of an 
        individual for the project, including how selected populations 
        will be identified, how they will be referred to the project, 
        and how they will be enrolled in the project.
            ``(19) The evaluation design.
            ``(20) The metrics that will be used to determine whether 
        the outcomes have been achieved and how such metrics will be 
        measured.
            ``(21) A summary explaining the independence of the 
        evaluator from the other entities involved in the project and 
        the evaluator's experience in conducting rigorous evaluations 
        of program effectiveness including, where available, well-
        implemented randomized controlled trials on the intervention or 
        similar interventions.
            ``(22) The capacity of the service provider to deliver the 
        intervention to the number of participants the State or local 
        government proposes to serve in the project.
    ``(d) Project Intermediary Information Required.--The feasibility 
study described in subsection (c) shall also contain the following 
information about the intermediary for the social impact bond project 
(whether the intermediary is the service provider or other entity):
            ``(1) Experience and capacity for providing or facilitating 
        the provision of the type of intervention proposed.
            ``(2) The mission and goals.
            ``(3) Information on whether the intermediary is already 
        working with service providers that provide this intervention 
        or an explanation of the capacity of the intermediary to begin 
        working with service providers to provide the intervention.
            ``(4) Experience working in a collaborative environment 
        across government and nongovernmental entities.
            ``(5) Previous experience collaborating with public or 
        private entities to implement evidence-based programs.
            ``(6) Ability to raise or provide funding to cover 
        operating costs (if applicable to the project).
            ``(7) Capacity and infrastructure to track outcomes and 
        measure results, including--
                    ``(A) capacity to track and analyze program 
                performance; and
                    ``(B) experience with performance-based contracting 
                and achieving project milestones and targets.
            ``(8) Role in delivering the intervention.
            ``(9) How the intermediary would monitor program success, 
        including a description of the interim benchmarks and outcome 
        measures.

``SEC. 2053. AWARDING SOCIAL IMPACT BOND CONTRACTS.

    ``(a) Timeline in Awarding Contract.--Not later than six months 
after receiving an application in accordance with section 2052, the 
Secretary shall determine whether to enter into a contract for a social 
impact bond project with a State or local government.
    ``(b) Considerations in Awarding Contract.--In determining whether 
to enter into a contract for a social impact bond project (the 
application for which was submitted under section 2052) the Secretary, 
in consultation with the Federal Interagency Council on Social Impact 
Bonds (established by section 2056) and the head of any Federal agency 
administering a similar intervention or serving a population similar to 
that served by the project, shall consider each of the following:
            ``(1) The value to the Federal Government of the outcome 
        expected to be achieved if the outcomes specified in the 
        contract are met.
            ``(2) The ability of the State or local government in 
        collaboration with the intermediary and the service providers 
        to achieve the outcomes.
            ``(3) The savings to the Federal Government if the outcomes 
        specified in contract are met.
            ``(4) The savings to the State and local governments if the 
        outcomes specific in the contract are met.
            ``(5) The expected quality of the evaluation that would be 
        conducted with respect to the contract.
    ``(c) Contract Authority.--
            ``(1) Contract requirements.--In accordance with this 
        section, the Secretary, in consultation with the Federal 
        Interagency Council on Social Impact Bonds and the head of any 
        Federal agency administering a similar intervention or serving 
        a population similar to that served by the project, may enter 
        into a contract for a social impact bond project with a State 
        or local government if the Secretary determines that each of 
        the following requirements are met:
                    ``(A) The State or local government agrees to 
                achieve an outcome specified in the contract in order 
                to receive payment.
                    ``(B) The Federal payment to the State or local 
                government for each outcome specified is less than or 
                equal to the value of the outcome to the Federal 
                Government over a period not to exceed 10 years, as 
                determined by the Secretary, in consultation with the 
                State or local government.
                    ``(C) The duration of the project does not exceed 
                10 years.
                    ``(D) The State or local government has 
                demonstrated, through the application submitted under 
                section 2052, that, based on prior rigorous 
                experimental evaluations or rigorous quasi-experimental 
                studies, the intervention can be expected to achieve 
                each outcome specified in the contract.
                    ``(E) The State, local government, intermediary, or 
                service provider has experience raising private or 
                philanthropic capital to fund social service 
                investments (if applicable to the project).
                    ``(F) The State or local government has shown that 
                each service provider has experience delivering the 
                intervention, a similar intervention, or has otherwise 
                demonstrated the expertise necessary to deliver the 
                intervention.
            ``(2) Payment.--The Secretary shall pay the State or local 
        government only if the independent evaluator described in 
        section 2055 determines that the social impact bond project has 
        met the requirements specified in the contract and achieved an 
        outcome specified in the contract.
            ``(3) Limitation.--The Secretary may not enter into a 
        contract for a social impact bond project under paragraph (1) 
        after the date that is 10 years after the date of the enactment 
        of the Social Impact Bond Act.
    ``(d) Notice of Contract Award.--Not later than 30 days after 
entering into a contract under this section, the Secretary shall 
publish a notice in the Federal Register that includes, with regard to 
such contract, the following:
            ``(1) The outcome goals of the social impact bond project.
            ``(2) A description of each intervention in the project.
            ``(3) The target population that will be served by the 
        project.
            ``(4) The expected social benefits to participants who 
        receive the intervention and others who may be impacted.
            ``(5) The detailed roles, responsibilities, and purposes of 
        each Federal, State, or local government entity, intermediary, 
        service provider, independent evaluator, investor, or other 
        stakeholder.
            ``(6) The payment terms, the methodology used to calculate 
        outcome payments, the payment schedule, and performance 
        thresholds.
            ``(7) The project budget.
            ``(8) The project timeline.
            ``(9) The project eligibility criteria.
            ``(10) The evaluation design.
            ``(11) The metrics that will be used to determine whether 
        the outcomes have been achieved and how these metrics will be 
        measured.
            ``(12) The estimate prepared by the State or local 
        government of the savings to the Federal, State, and local 
        government, on a program-by-program basis and in the aggregate, 
        if the contract is entered into and implemented and the 
        outcomes are achieved.

``SEC. 2054. FEASIBILITY STUDY FUNDING.

    ``(a) Requests for Funding for Feasibility Studies.--The Secretary 
shall reserve a portion of the funding provided in section 2057 to 
assist States or local governments in developing feasibility studies 
required by section 2052. To be eligible to receive funding to assist 
with completing a feasibility study, a State or local government shall 
submit an application for feasibility study funding containing the 
following information:
            ``(1) A description of the outcome goals of the social 
        impact bond project.
            ``(2) A description of the intervention, including 
        anticipated program design, target population, an estimate 
        regarding the number of individuals to be served, and setting 
        for the intervention.
            ``(3) Evidence to support the likelihood that such 
        intervention will produce the desired outcome.
            ``(4) The expected social benefits to participants who 
        receive the intervention and others who may be impacted.
            ``(5) Estimated costs to conduct the project.
            ``(6) Estimates of Federal, State, and local government 
        savings and other savings if the project is implemented and the 
        outcomes are achieved.
            ``(7) An estimated timeline for implementation and 
        completion of the project, which shall not exceed 10 years.
            ``(8) With respect to a project for which the State or 
        local government selects an intermediary to operate the 
        project, any partnerships needed to successfully execute the 
        project and the ability of the intermediary to foster such 
        partnerships.
            ``(9) The expected resources needed to complete the 
        feasibility study for the State or local government to apply 
        for social impact bond funding under section 2052.
    ``(b) Federal Selection of Applications for Feasibility Study.--Not 
later than 6 months after receiving an application for feasibility 
study funding under subsection (a), the Secretary, in consultation with 
the Federal Interagency Council on Social Impact Bonds and the head of 
any Federal agency administering a similar intervention or serving a 
population similar to that served by the project, shall select State or 
local government feasibility study proposals for funding based on the 
following:
            ``(1) The likelihood that the proposal will achieve the 
        desired outcome.
            ``(2) The value of the outcome expected to be achieved.
            ``(3) The potential savings to the Federal Government if 
        the social impact bond project is successful.
            ``(4) The potential savings to the State and local 
        governments if the project is successful.
    ``(c) Public Disclosure.--Not later than 30 days after selecting a 
State or local government for feasibility study funding under this 
section, the Secretary shall cause to be published on the website of 
the Federal Interagency Council on Social Impact Bonds information 
explaining why a State or local government was granted feasibility 
study funding.
    ``(d) Funding Restriction.--
            ``(1) Feasibility study restriction.--The Secretary may not 
        provide feasibility study funding under this section for more 
        than 50 percent of the estimated total cost of the feasibility 
        study reported in the State or local government application 
        submitted under subsection (a).
            ``(2) Aggregate restriction.--Of the total amount 
        appropriated under section 2057, the Secretary may not use more 
        than $10,000,000 to provide feasibility study funding to States 
        or local governments under this section.
    ``(e) Submission of Feasibility Study Required.--Not later than six 
months after the receipt of feasibility study funding under this 
section, a State or local government receiving such funding shall 
complete the feasibility study and submit the study to the Federal 
Interagency Council on Social Impact Bonds.

``SEC. 2055. EVALUATIONS.

    ``(a) Contract Authority.--For each State or local government 
awarded a social impact bond project approved by the Secretary under 
this Act, the head of the relevant agency, as determined by the Federal 
Interagency Council on Social Impact Bonds, shall enter into a contract 
with such State or local government to pay for the independent 
evaluation to determine whether the State or local government project 
has met an outcome specified in the contract in order for the State or 
local government to receive outcome payments under this subtitle.
    ``(b) Evaluator Qualifications.--The head of the relevant agency 
may not enter into a contract with a State or local government unless 
the head determines that the evaluator is independent of the other 
parties to the contract and has demonstrated substantial experience in 
conducting rigorous evaluations of program effectiveness including, 
where available, well-implemented randomized controlled trials on the 
intervention or similar interventions.
    ``(c) Methodologies To Be Used.--The evaluation used to determine 
whether a State or local government will receive outcome payments under 
this subtitle shall use experimental designs using random assignment or 
other research methodologies that allow for the strongest possible 
causal inferences when random assignment is not feasible.
    ``(d) Progress Report.--
            ``(1) Submission of report.--The independent evaluator 
        shall--
                    ``(A) not later than two years after a project has 
                been approved by the Secretary and biannually 
                thereafter until the project is concluded, submit to 
                the head of the relevant agency and the Federal 
                Interagency Council on Social Impact Bonds a written 
                report summarizing the progress that has been made in 
                achieving each outcome specified in the contract; and
                    ``(B) at the scheduled time of the first outcome 
                payment and at the time of each subsequent payment, 
                submit to the head of the relevant agency and the 
                Federal Interagency Council on Social Impact Bonds a 
                written report that includes the results of the 
                evaluation conducted to determine whether an outcome 
                payment should be made along with information on the 
                unique factors that contributed to achieving or failing 
                to achieve the outcome, the challenges faced in 
                attempting to achieve the outcome, and information on 
                the improved future delivery of this or similar 
                interventions.
            ``(2) Submission to congress.--Not later than 30 days after 
        receipt of the written report pursuant to paragraph (1)(B), the 
        Federal Interagency Council on Social Impact Bonds shall submit 
        such report to each committee of jurisdiction in the House of 
        Representatives and the Senate.
    ``(e) Final Report.--
            ``(1) Submission of report.--Within six months after the 
        social impact bond project is completed, the independent 
        evaluator shall--
                    ``(A) evaluate the effects of the activities 
                undertaken pursuant to the contract with regard to each 
                outcome specified in the contract; and
                    ``(B) submit to the head of the relevant agency and 
                the Federal Interagency Council on Social Impact Bonds 
                a written report that includes the results of the 
                evaluation and the conclusion of the evaluator as to 
                whether the State or local government has fulfilled 
                each obligation of the contract, along with information 
                on the unique factors that contributed to the success 
                or failure of the project, the challenges faced in 
                attempting to achieve the outcome, and information on 
                the improved future delivery of this or similar 
                interventions.
            ``(2) Submission to congress.--Not later than 30 days after 
        receipt of the written report pursuant to paragraph (1)(B), the 
        Federal Interagency Council on Social Impact Bonds shall submit 
        such report to each committee of jurisdiction in the House of 
        Representatives and the Senate.
    ``(f) Limitation on Cost of Evaluations.--Of the amount made 
available for social impact bond projects in section 2057, the 
Secretary may not obligate more than 15 percent to evaluate the 
implementation and outcomes of such projects.

``SEC. 2056. FEDERAL INTERAGENCY COUNCIL ON SOCIAL IMPACT BONDS.

    ``(a) Establishment.--There is established the Federal Interagency 
Council on Social Impact Bonds (in this section, referred to as the 
`Council') to--
            ``(1) coordinate the efforts of social impact bond projects 
        funded by this subtitle;
            ``(2) advise and assist the Secretary in the development 
        and implementation of such projects;
            ``(3) advise the Secretary on specific programmatic and 
        policy matter related to such projects;
            ``(4) provide subject-matter expertise to the Department of 
        the Treasury with regard to such projects;
            ``(5) ensure that each State or local government that has 
        entered into a contract with the Secretary for a social impact 
        bond project under this subtitle and each evaluator selected by 
        the head of the relevant agency under section 2055 has access 
        to Federal administrative data to assist the State or local 
        government and the evaluator in evaluating the performance and 
        outcomes of the project; and
            ``(6) address issues that will influence the future of 
        social impact bond projects in the United States.
    ``(b) Composition of Council.--The Chair of the council shall be a 
member of the National Economic Council or the Domestic Policy Council. 
The Council shall be composed of one designee, designated by the head 
of the relevant agency, from each of the following:
            ``(1) Office of Management and Budget.
            ``(2) Department of Labor.
            ``(3) Department of Health and Human Services.
            ``(4) Social Security Administration.
            ``(5) Department of Agriculture.
            ``(6) Department of Justice.
            ``(7) Department of Housing and Urban Development.
            ``(8) Department of Education.
            ``(9) Department of Veterans Affairs.
            ``(10) Department of the Treasury.

``SEC. 2057. FUNDING.

    ``(a) In General.--Out of any money in the Treasury not otherwise 
appropriated, there is hereby appropriated $300,000,000, to remain 
available until 10 years after the date specified in section 
2053(c)(3), to carry out the activities authorized under this subtitle.
    ``(b) Limitation.--Of the amounts made available under subsection 
(a), the Secretary may not use more than $1,000,000 in any fiscal year 
to support the review, approval, and oversight of social impact bond 
projects, including activities conducted by--
            ``(1) the Federal Interagency Council on Social Impact 
        Bonds; and
            ``(2) any other agency consulted by the Secretary before 
        approving a social impact bond project or a feasibility study 
        under section 2054.

``SEC. 2058. WEBSITE.

    ``The Federal Interagency Council on Social Impact Bonds shall 
establish and maintain a public website that shall display the 
following:
            ``(1) A copy of, or method of accessing, each notice 
        published regarding a social impact bond project pursuant to 
        this subtitle.
            ``(2) For each State or local government that has entered 
        into a contract with the Secretary for a social impact bond 
        project, the website shall contain the following information:
                    ``(A) The outcome goals of the project.
                    ``(B) A description of each intervention in the 
                project.
                    ``(C) The target population that will be served by 
                the project.
                    ``(D) The expected social benefits to participants 
                who receive the intervention and others who may be 
                impacted.
                    ``(E) The detailed roles, responsibilities, and 
                purposes of each Federal, State, or local government 
                entity, intermediary, service provider, independent 
                evaluator, investor, or other stakeholder.
                    ``(F) The payment terms, methodology used to 
                calculate outcome payments, the payment schedule, and 
                performance thresholds.
                    ``(G) The project budget.
                    ``(H) The project timeline.
                    ``(I) The project eligibility criteria.
                    ``(J) The evaluation design.
                    ``(K) The metrics used to determine whether the 
                proposed outcomes have been achieved and how these 
                metrics are measured.
            ``(3) A copy of the progress reports and the final reports 
        relating to each social impact bond project.
            ``(4) An estimate of the savings to the Federal, State, and 
        local government, on a program-by-program basis and in the 
        aggregate, resulting from the successful completion of the 
        social impact bond project.

``SEC. 2059. COMMUNITY REINVESTMENT ACT.

    ``Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C. 
2903) is amended by adding at the end the following:
    ```(e) Social Impact Bond Projects.--In assessing and taking into 
account, under subsection (a), the record of a financial institution, 
the appropriate Federal financial supervisory agency shall consider, as 
a factor, investments made by the financial institution in social 
impact bond projects under subtitle C of title XX of the Social 
Security Act.'.

``SEC. 2060. REGULATIONS.

    ``The Secretary, in consultation with the Federal Interagency 
Council on Social Impact Bonds, may issue regulations as necessary to 
carry out this subtitle.

``SEC. 2061. DEFINITIONS.

    ``In this subtitle:
            ``(1) Agency.--The term `agency' has the meaning given that 
        term in section 551 of title 5, United States Code.
            ``(2) Intervention.--The term `intervention' means a 
        specific service delivered to achieve an impact through a 
        social impact bond project.
            ``(3) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(4) Social impact bond project.--The term `social impact 
        bond project' means a project that finances social services 
        using a social impact bond model.
            ``(5) Social impact bond model.--The term `social impact 
        bond model' means a method of financing social services in 
        which--
                    ``(A) Federal funds are awarded to a State or local 
                government only if a State or local government achieves 
                certain outcomes agreed upon by the State or local 
                government and the Secretary; and
                    ``(B) the State or local government coordinates 
                with service providers, investors (if applicable to the 
                project), and (if necessary) an intermediary to 
                identify--
                            ``(i) an intervention expected to produce 
                        the outcome;
                            ``(ii) a service provider to deliver the 
                        intervention to the target population; and
                            ``(iii) investors to fund the delivery of 
                        the intervention.
            ``(6) State.--The term `State' means each State of the 
        United States, the District of Columbia, each commonwealth, 
        territory or possession of the United States, and each 
        federally recognized Indian tribe.''.
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