2020 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?
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 has worked to reform and restructure the department’s procurement. 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, the Department has reduced the number of children in group care by over 20% since 2015, experienced a 50%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.
Also in 2015, the Department of Labor and Training launched Real Jobs Rhode Island, an innovative, $14 million workforce program that used performance-based metrics and active contract management. As a result, the state reconfigured the way it manages and evaluates its job training programs to capture meaningful, long-term employment outcomes and created a Strategic Coaching Procurement Playbook, which includes specific strategies and sample language for using active contract management to achieve better results.
Rhode Island Works, administered by the Department of Human Services, also used performance payments and active contract management to improve its job search services, which, in 2015, ranked at the bottom nationally on the federal measure of work participation rate (which counts the number of recipients engaged in work-related activities as a share of all work-eligible clients receiving benefits). To improve the program, the Department partnered with the Harvard Kennedy School Government Performance Lab to incorporate performance-based payments for self-sufficiency outcomes and deploy active contract management. As a result, the federal participation rate improved by one-third within the first six months after these reforms were launched.
In 2019, the Arizona Department of Child Safety partnered with the Harvard Kennedy School Government Performance Lab to improve upon the existing rate of nearly one in five families receiving supportive in-home preservation services that were re-reported for maltreatment, which resulted in the removal of a child from that home. Through active contract management, implementing uniform performance measures for providers, and establishing a unit to oversee child and family service contracts, the Department was able to reduce the number of families re-reported by 40% and the number child removals by 50%.
The Florida Department of Children and Families partnered with the Harvard Kennedy School Government Performance Lab to improve child welfare and behavioral health service delivery in Florida’s SunCoast region, which has four million children receiving child protection services. The Department, which adopted active contract management practices to enhance coordination among providers, allowed contracted providers to track client-level data for a prioritized set of six performance metrics. These innovations led to better service delivery, including increasing the share of clients completing a timely needs assessment by 28% and doubling the share of caretakers beginning substance use treatment within 30 days of referral.
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 streamlining case management, improving coordination between the foster care and juvenile justice systems, and augmenting 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 fewer than three days.
A 2012 Massachusetts law authorized established a Social Innovation Financing Trust Fund for the purpose of funding contracts to improve outcomes and lower costs for contracted government services, referred to as “pay for success contracts.” The first contract entered in January 2014 supports an on-going project to help young men leaving the juvenile justice system or on probation avoid re-offending ($28 million in success payments). In 2016, the state launched a Pay for Success contract, Pathways to Economic Advancement ($15 million in success payments), to improve employment outcomes for immigrants. A July 2018 contract, the most recent project, supports unemployed or underemployed veterans with post-traumatic stress disorder in attaining competitive and compatible employment ($1.5 million in success payments). In addition, the state has taken a similar approach to use pay for success and performance for performance contracts in Adult Basic Education.
In 2014, Massachusetts launched the Massachusetts Chronic Homelessness Pay for Success Initiative ($6 million in success payments) to provide permanent supportive housing to 500 to 800 individuals experiencing chronic homelessness with payments based on stable housing for at least one year for program clients. As of July 2020, the Pay for Success program has housed 998 tenants, 857 of whom have been enrolled in the Community Support Program for People Experiencing Chronic Homelessness, the innovative Medicaid reimbursement program that provides health services for chronically homeless individuals. The Department also incorporated “success payments” into its procurement for the family homeless shelter system.
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 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 resulting in a performance pay system with standardized outcomes, daily rates for contracts, metric definitions, and measurement methodology. As part of this initiative, the agency distributes monthly performance reports to providers.
A 2017 Washington law consolidated several agencies into a new Department of Children, Youth, and Families (DCYF), requiring a shift of all contracts for client services to performance-based contracts. With the support of partner organization Third Sector, the agency is converting over 1,000 contracts that invest approximately $1 billion each biennium to support nine (9) priority outcome goals for children, youth, and families. Building on traditional performance-based contracting (PBC) mechanisms, the project intentionally focuses on deepening stakeholder engagement, using PBC as a tool to advance racial equity, and facilitating continuous improvement through data and research. Once fully implemented, DCYF will become the first state agency to successfully implement outcomes-oriented contracts across its entire portfolio of programs.