This report documents later implementation experiences and final results for two U.S. Department of Labor (DOL) pilot projects that tested use of a Pay for Success (PFS) approach. Under PFS, financing for the initial costs of services comes from investors who are repaid, possibly with a substantial return, only when specific, pre-determined results are achieved and verified.

The DOL PFS projects involved two state workforce agencies: the Massachusetts Executive Office of Labor and Workforce Development (EOLWD) and the New York State Department of Labor (NYSDOL), which would receive approximately $12 million each if the projects met key impact targets on recidivism and employment. The impacts would be determined by evaluations using an experimental design involving a randomized controlled trial.

Funds for grants were drawn from an appropriation for the Workforce Innovation Fund, and both states also committed state funds to continue the pilots beyond the DOL four-year grant period into a second phase. Both pilots focus on improving employment outcomes and reducing recidivism among individuals newly released from incarceration. The Massachusetts pilot targeted young male parolees and probationers, while the New York pilot focused on high-risk adult parolees.

The final report provides details on the partnerships that the grantees were required to put in place, the metrics used, payment formulas, the challenges of random assignment, evaluation methods, and impact results. Neither project achieved the impacts that would have triggered payment from DOL. The report notes that the projects required significant time and resource investments by partners and the four-year time frame for conducting the pilots was challenging. Implementing random assignment (as part of a rigorous evaluation) proved to be the most difficult aspect for the two projects - and may have contributed to the inability to detect positive impacts. The report suggests that carefully planning and providing support for the evaluation component will be important in future PFS efforts.

Additional information on the two projects can be found in an interim report (see below) which covers the development of the their grant applications, payout formulas, and initial implementation.