Meg Massey
Urban Institute
Outreach Manager, Pay for Success

What the “skinny budget” does and does not tell us about pay for success

March 30, 2017 - 1:31pm

Two weeks ago, when the White House Office of Management and Budget released the president’s annual budget proposal blueprint, funding for the Social Innovation Fund (SIF) was zeroed out as part of a proposal to eliminate funding for SIF’s parent agency, the Corporation for National and Community Service (CNCS).

The most prominent support for pay for success (PFS) at the federal level has been through the SIF’s grants for PFS feasibility studies and transaction structuring in jurisdictions across the country. This proposed defunding of SIF has many in the PFS field wondering whether this could be the end to federal support for PFS. The short answer is no, but the longer answer is more complicated.

First, it’s worth noting that a blueprint proposal like this is just that: a proposal. Any action taken on the proposal is entirely up to Congress.

Second, the proposal is a “skinny budget” that lays out a vision for each federal agency’s spending for the coming fiscal year without getting into a line-item level of specificity.  When the completed president’s budget is released later this spring, we are likely to get more detail on the SIF specifically and funding for PFS more broadly. In the previous Administration, PFS was mentioned explicitly in the president’s budgets for FY 2012 through FY 2017. Some of the proposals—such as the creation of a PFS incentive fund at the Treasury Department, included in the FY 2014, 2015, 2016, and 2017 proposals—were not ultimately approved by Congress. But other proposals, including authorization for the use of certain funding streams for PFS activities, did move forward in the appropriations process.

Third, SIF has, crucially, not been the only source of federal support for PFS. Over the last several years, the Departments of Education (ED), Labor (DOL), Justice (DOJ, and Housing & Urban Development (HUD) have used some of their existing funding for grants to state and local organizations to support PFS. For example:

The “skinny budget” does not discuss these particular funding streams, or go into detail on how grant competitions at these agencies will be run in the future – so it’s premature to assess whether the federal government will be supportive of PFS under the new Administration.

Regardless of what is proposed in the president’s budget or what Congress ultimately appropriates for the coming fiscal year, the funds for PFS already appropriated will continue to seed important work at the state and local level. Given that PFS has traditionally enjoyed bipartisan support as a mechanism for investing taxpayer dollars in what works, there is reason to be optimistic that federal support will continue, in one capacity or another.

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