TRENTON – The Assembly Commerce Committee unanimously released the Social Bonds Act bill, A3289.
The bill would direct the state Economic Development Authority, in cooperation with the Department of Human Services and the Treasurer, to administer a five-year social impact bond pilot program and study commission.
Social impact bonds raise funds from private investors to pay for various social services like homelessness prevention, health care, and substance abuse counseling.
If the private investment improves financial and social outcomes, investors receive success payments from the state.
The goal, according to co-sponsor Albert Coutinho, is to find efficiencies while delivering quality services.
According to the bill, investors will contract with the EDA to purchase social impact bonds, the proceeds from which will be dispersed to a nonprofit organization service provider. The nonprofit organization will deliver services to the target population. If the results of the services provided by the nonprofit organization meet pre-determined, defined financial and social outcomes, the EDA will repay the bonds with financial returns to the private investors, the bill states.
The pilot program and study commission will determine the effectiveness of a social impact bond program on nonprofit health care organizations for the purpose of encouraging private investment in preventative and early intervention health care to reduce federal, state, and municipal expenditures related to those services, as well as to assess the feasibility of expanding this program statewide, according to the bill.
The EDA will solicit grants from philanthropic organizations or other private sources for the establishment and administration of the pilot program and study commission.
The bill’s main sponsor, Angel Fuentes, (D-5), of Camden, said it could go a long way to prevent repeat health care costs from a handful of patients.
“They often wind up in the hospital, again, again, and again,” he said. “Public revenue for social programs is shrinking across the board. We need to look at new ways to supplement them.”
But Assemblyman Reed Gusciora (D-15) believed there is too little accountability, saying that it is “taking money and throwing it someplace without any kind of parameters.”
He considered it a privatization.
“In effect, what we’re doing is privatizing government services,” he said.
He voted to release the bill, saying it needs to be amended to have more “safety mechanisms.”
Assemblywoman Gabreille Mosquera (D-4) said the bill is an example of “out-of-he-box” thinking.