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The report documents the early efforts of Massachusetts and New York as they designed and implemented the Pay for Success (PFS) pilots funded under the U.S. Department of Labor’s (DOL) Workforce Innovation Fund (WIF). This report examines the seven-month period grantees had to develop their grant applications after the Solicitation for Grant Awards (SGA) was announced, the four months of planning once awards were made, and the initial approximately 10 months of operation. Specifically, this report examines the pilots’ early activities in identifying a problem and target population, developing working partnerships and management structures to address that problem within a PFS structure, securing private and philanthropic capital and financing mechanisms, developing the service intervention, setting up the evaluation design, and establishing outcome measures, targets, and payment amounts.

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Key Takeaways

• The support and influence of each state’s Governor’s Office as well as other state leaders was important in launching the initiative.
• Educating pilot partners about the PFS approach was a necessary part of the planning process.
• Carefully structured contracts and a strong management and communication process are needed to guide project organization and the PFS partnerships.
• While private capital remains the cornerstone of the PFS approach, partners reported the value of a diverse funding base.
• Recognizing the need for rigorous evaluation was an important milestone that was eventually reached by both projects, but there have been some challenges in implementing these designs.
• Determining the how to measure the outcomes of the service interventions and the potential budgetary savings associated with them was a difficult task.
• Establishing outcome targets that trigger payments to investors required significant time and negotiation.

Citation

Abt Associates. (2016). Process Study of the U.S. Department of Labor’s “Pay for Success” Pilots in Two States: Development of the Grant Applications and Initial Implementation. Employment and Training Administration, U.S. Department of Labor.

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This study was sponsored by the Employment and Training Administration, Office of Policy Development and Research, Division of Research and Evaluation, and was produced outside of CEO’s standard research development process.