The Mystery Behind Pay for Success Financing and the Justice System

• In Event: Legislation and Policy: Practical and Ethical Considerations

Abstract

Pay for Success (PFS) contracts are an innovative vehicle for financing effective programs, yet they remain a mystery to many policymakers in the justice realm. Whether these contracts are worthwhile is largely contested.

In this paper, we study the Rikers Island PFS contract, the first PFS deal in the country, and discuss why the deal collapsed. We compare this contract with other deals that have been developed, or that seem promising, to arrive at factors that drive successful PFS transaction development. Importantly, we study the robustness and validity of the research used to justify some PFS contracts, and how this research supports transaction structuring in the form of evaluation design, success metrics and the value of success payments.

Lastly, we explore particular challenges with these complex contracts, from the extensive commitment by a broad coalition of stakeholders to the ideological challenges of ‘return on investment’ for improving social outcomes for vulnerable populations. While these contracts are significant for encouraging innovation, focusing on improving outcomes rather than service delivery, and potentially realizing savings for a costly justice system, it is important that all decision-makers understand the components and implications that accompany PFS deal development and contracts.

Authors

• Deirdre O'Connor, National Council on Crime and Delinquency

• Shaun Edwards, CUNY Institute for State and Local Governance

• Michael Jacobson, CUNY Institute for State and Local Governance