2019 State Standard of Excellence
14. Contracting for Outcomes
Did the state or any of its agencies enter into performance-based contracts and/or use active contract management (frequent use of data and regular communication with providers to monitor implementation and progress) to improve outcomes for publicly funded programs?
Why is this important?
Performance contracting techniques allow state governments to get better results and value for each taxpayer dollar.
Since 2015, Rhode Island’s Department of Children, Youth, and Families (DCYF) has worked to reform and restructure the department’s procurement processes in four areas: improving service delivery through strategic planning, embedding results-driven procurement in new contracts, improving performance through active contract management practices, and supporting results-driven contracting practices through technical resources, tools, and processes for staff. As part of this initiative, the department executed $90 million in 116 results-driven contracts that require providers to meet outcome goals rather than output metrics. As a result, DCYF has reduced the number of children in group care by over 20% since 2015, experienced a 50 percent expansion of foster care resources for the most challenging adolescents, doubled the capacity of high quality family visitation and reunification services, and made start-up investments of $1.2 million in nonprofit community organizations to support new and expanded programming.
In 2015, Rhode Island’s Department of Labor and Training launched Real Jobs Rhode Island, an innovative $14 million workforce program. To track the program’s success, Rhode Island created performance-based metrics and used frequent meetings with training providers to track results and make course corrections. As a result of this active contract management, Rhode Island was able to reconfigure the way it manages and evaluates its job training programs to capture meaningful long-term employment outcomes. The state also has created a Strategic Coaching Procurement Playbook, which includes specific strategies and sample language for using active contract management to get better results.
The Illinois Department of Juvenile Justice and Department of Children and Family Services streamlined the process for supporting youth who are dually involved in the child welfare and criminal justice systems. The project used a performance-based contract, active contract management, and other tools to focus on improving case management and coordination between the foster care and juvenile justice systems, and improving services by using evidence-based interventions. Early results include reducing the reporting time for the state to share juvenile justice occurrences with child welfare agencies from 90 days to less than 3 days.
In 2014, Massachusetts launched the Massachusetts Chronic Homelessness Pay for Success Initiative to provide permanent supportive housing to 500 to 800 individuals experiencing chronic homelessness. As part of the five-year, $3.5 million project, the state will make payments based on stable housing for at least one year for program clients.The project partners hold monthly operational monitoring meetings to review performance and quarterly oversight meetings with Massachusetts Department of Housing and Community Development. As of July 2019, the Pay for Success program has housed 857 tenants, of which 643 have been enrolled in the innovative Medicaid reimbursement program, Community Support Program for People Experiencing Chronic Homelessness, that provides health services for chronically homeless individuals. Massachusetts has also launched a Pay for Success contract, Pathways to Economic Advancement, to improve employment outcomes for immigrants.
New York State’s Office of Temporary and Disability Assistance issues outcomes-based contracts for workforce training providers in its Supplemental Nutrition Assistance Program Employment and Training Venture Program. The most recent grants, which fund providers through 2021, link payments (p. 17) to such milestones as educational gains, program completion, job entry, and job retention.
In 2018, the Nevada Governor’s Office of Workforce Innovation released a work-based learning request for proposal that combines evidence-based strategy requirements with pay for performance to “develop stronger contracts linked to outcomes and ensure more effective use of tax dollars.” The initiative provides base level of funding that varies depending on the difficulty of the population being served and ties the remaining funds to performance benchmarks, including employment or completion of an apprenticeship program.
In 2016, the Tennessee Department of Children’s Services introduced a performance-based contracting model that includes “Performance Bands.” Agencies are placed into one of three bands: high performance, mid-range (or average) performance, or lower performance. Providers are then paid based on their performance on specific metrics. As a result of this performance pay system, the agency has standardized outcomes, daily rates for contracts, metric definitions, and measurement methodology. As part of this initiative, the agency distributes monthly performance reports to providers.
Five states (California, Colorado, Connecticut, Michigan, and South Carolina) are currently implementing Pay for Success initiatives but have yet to report outcomes or results from those initiatives. For the most recent information about the projects, their partners, and their outcomes, please visit the Nonprofit Finance Fund or Social Finance.