SB 242 — AN ACT TO AMEND TITLE 29 OF THE DELAWARE CODE RELATING TO PAY FOR SUCCESS CONTRACTS.

Summary

This Act creates Pay for Success contracts. A Pay for Success contract is an agreement between a State agency and either a program intermediary or an investor under which an investor will provide upfront capital to fund a service, program, or economic development initiative. The State agency agrees to repay the program intermediary or investor if the service, program, or economic development initiative meets the performance measures and outcomes agreed to in the contract. An independent evaluator will determine if the performance measures and outcomes are met. If the State agency contracts with a program intermediary, the program intermediary will manage all aspects of the project, including identifying the investor and the entity or entities that will provide the service, program, or economic development initiative. In other situations, a State agency will contract directly with the investor, who will contract directly with the entity or entities that will provide the service, program, or economic development initiative.

Bill Text

• Bill Text View text Current pdf

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

This bill establishes a framework for Pay for Success contracts in Delaware, enabling State agencies to enter into agreements that allow for upfront funding by investors contingent upon achieving specified performance measures.

• § 6990

  "Pay for Success contract" means a written agreement to provide a program, service, or economic development initiative, under which an investor provides funding that a state agency agrees to repay to the investor if the service, program, or economic development initiative meets the performance measures and outcomes in the agreement.

  This defines what constitutes a Pay for Success contract.

• § 6991

  (a)(1) An agency may enter into a Pay for Success contract if the agency head determines with reasonable certainty that the contract will produce a quantifiable public benefit or financial savings to the State by doing any of the following:

  This specifies the criteria under which an agency may enter into a Pay for Success contract.

• § 6991

  (b) A Pay for Success contract may be made between either of the following: (1) An agency and a program intermediary. (2) An agency and an investor.

  This clarifies the parties that can enter into a Pay for Success contract.

• § 6991

  (d) The Director must approve the terms and conditions of a Pay for Success contract before an agency head may enter into a contract under subsection (a) of this section.

  This establishes a requirement for Director approval of contract terms.

• § 6991

  (f) Each Pay for Success contract must include all of the following:

  This outlines the mandatory components that must be included in each contract.

• § 6991

  (8) The method that will be used to calculate the amount and timing of outcome payments to the program intermediary or investor during each year of the Pay for Success contract if the independent evaluator determines that the program intermediary or investor achieves a performance measure.

  This ensures clarity on how outcome payments will be managed and calculated.

• § 6991

  (9) The terms under which a Pay for Success contract may be terminated.

  This provides a framework for how contracts may be terminated.

• § 6991

  § 6991. Pay for Success contract reserve account.

  This creates a requirement for a reserve account specifically for Pay for Success contracts.

• § 6991

  (a) The State Treasurer shall create a Pay for Success contract reserve account for public funds appropriated by the General Assembly for each Pay for Success contract.

  This mandates the creation of a reserve account for managing funds related to Pay for Success contracts.

• § 6991

  (b) Money held in a Pay for Success contract reserve account is not subject to yearly reversion until the Pay for Success contract is completed or terminated and all obligations to the program intermediary or investor are satisfied.

  This protects funds allocated to the reserve account from reversion to the general fund until obligations are fulfilled.

• § 6991

  (d)(1) If the amount of funding in the Pay for Success contract reserve account does not equal or exceed the amount of the total payments due to the program intermediary or investor under a Pay for Success contract if the program intermediary and investor achieve full performance for the services or outcomes under the Pay for Success contract, the agency head must submit to the Director a schedule detailing how much funding is needed in each remaining year of the Pay for Success contract to meet the contract obligations.

  This requires agencies to provide a funding schedule if reserve account funds are insufficient.

• § 6991

  (2) After the Director approves the schedule under paragraph (d)(1) of this section, the agency head must request an appropriation from the General Assembly as part of the agency’s annual budget request, in the amount required under the schedule to meet the funding requirements under the Pay for Success contract, during each fiscal year under the term of the contract.

  This necessitates that agencies seek additional appropriations if the reserve is insufficient to meet contract needs.

• § 6991

  (3) Funds appropriated by the General Assembly under this subsection must be designated as a separately identifiable appropriation.

  This establishes that funds allocated for contracts must be clearly identified in budgeting.

• § 6991

  The Office of Management and Budget shall establish the procedure for an agency to execute a Pay for Success contract under this Act by December 1, 2018.

  This assigns the Office of Management and Budget the task of creating execution procedures for these contracts.

Action History

1. August 08, 2018

   Signed by Governor

2. June 28, 2018

   Passed By House. Votes: 39 YES 1 NO 1 ABSENT

3. June 27, 2018

   Reported Out of Committee (Administration) in House with 5 On Its Merits

4. June 15, 2018

   Assigned to Administration Committee in House

5. June 14, 2018

   Passed By Senate. Votes: 18 YES 3 ABSENT

6. June 14, 2018

   Amendment SA 1 to SB 242 - Passed By Senate. Votes: 17 YES 4 ABSENT

7. June 13, 2018

   Reported Out of Committee (Elections & Government Affairs) in Senate with 3 On Its Merits

8. June 12, 2018

   Introduced and Assigned to Elections & Government Affairs Committee in Senate

Sponsors

• Stephanie L. Hansen · Cosponsor
• Gerald W. Hocker · Cosponsor
• Brian Pettyjohn · Cosponsor
• Nicole Poore · Cosponsor
• Bryan Townsend · Cosponsor
• Stephanie T. Bolden · Cosponsor
• Sean M. Lynn · Cosponsor
• Edward S. Osienski · Cosponsor
• Jeffrey N. Spiegelman · Cosponsor
• Anthony Delcollo · Cosponsor
• John "Jack" Walsh · Primary
• Kimberly Williams · Primary
• Melanie George Smith · Cosponsor
• Bryon H. Short · Cosponsor
• Michael Ramone · Cosponsor
• Michael Mulrooney · Cosponsor
• John L. Mitchell · Cosponsor
• Sean Matthews · Cosponsor
• John A. Kowalko · Cosponsor
• Helene M. Keeley · Cosponsor
• Gerald L. Brady · Cosponsor
• Andria L. Bennett · Cosponsor
• Robert Marshall · Cosponsor
• Gregory F. Lavelle · Cosponsor
• Bruce C. Ennis · Cosponsor

Votes

Subjects