The U.S. budget bill enacted on February 9, 2018 provides funding for states and localities for pay-for-success projects and feasibility studies. Title VIII of the bill, titled “Supporting Social Impact Partnerships to Pay for Results,” authorizes the U.S. Treasury to award $100 million of competitive funding to states and local governments for “social impact partnership projects” that “produce one or more measurable, clearly defined outcomes that result in social benefit and Federal, State, or local savings.” The legislation also provides for up to $10 million of the total available funding to be awarded for feasibility studies to apply for project funding.

Projects can be related to a variety of issues, including increasing employment; reducing dependence on Federal benefits and increasing financial stability of low-income families; improving high school graduation rates and improving educational outcomes; reducing teen and unplanned pregnancies; improving birth outcomes and childhood health and development; reducing rates of preventable diseases among low-income families; increasing the proportion of children living in two-parent families; reducing the number of youth in foster care; reducing recidivism in high-risk populations; and other measurable outcomes defined by a State or local government. At least 50 percent of funding must be for initiatives that directly benefit children. If selected, the project will only receive funding if an independent evaluator determines that the project has achieved a defined outcome as a result of the project.

The legislation directs Treasury to publish a request for proposals from State and local governments within a year of enactment of the legislation. Applications will be required to include, among other things, rigorous evidence demonstrating that the described intervention can be expected to produce the desired outcomes, projected government savings if the project is implemented and the outcomes achieved, and the metrics that will be used to determine whether the outcomes have been achieved. Treasury, in consultation with a Federal Interagency Council on Social Impact Partnerships created by the legislation, will evaluate applications within 6 months after receipt.