SF 98 (LSB 1198XS (1) 88)

SENATE FILE 98

BY  MATHIS

A BILL FOR

An Act requesting the establishment of a pay for success bond interim study committee.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  PAY FOR SUCCESS BOND INTERIM STUDY COMMITTEE.
   1.  The legislative council is requested to establish an interim study committee to determine whether opportunities exist for the use of pay for success bonds in Iowa. As used in this section, “pay for success bond” means a financial instrument in which private investors provide working capital to nonprofit organizations to implement preventive programs aimed at achieving predefined social outcomes. If an independent evaluator determines that the predefined outcomes have been achieved, the government repays the investors their principal and a rate of return; otherwise, the investors lose their capital.
   2.  The committee shall be comprised of the following voting members:
   a.  Five members who are members of the senate, three of whom shall be appointed by the majority leader of the senate and two of whom shall be appointed by the minority leader of the senate.
   b.  Five members who are members of the house of representatives, three of whom shall be appointed by the speaker of the house of representatives and two of whom shall be appointed by the minority leader of the house of representatives.
   3.  The committee shall be comprised of the following nonvoting members:
   a.  One representative from the department of human services, one representative from the Iowa finance authority, and one representative from the state treasurer’s office who shall be appointed by the governor.
   b.  Two representatives from nongovernmental social service or community organizations who shall be appointed by the majority leader of the senate and the speaker of the house of representatives in consultation with the minority leaders of the senate and the house of representatives.
   4.  The interim committee shall study the advisability and feasibility of using pay for success bonds in Iowa. The committee’s study shall include but not be limited to all of the following:
   a.  Reviewing existing social innovation programs in this state and in states with pay for success bond programs.
   b.  Identifying opportunities for the use of pay for success bonds in this state, particularly any opportunities that would be strong candidates for a pilot program.
   c.  Identifying potential challenges and risks of a pay for success bond program.
   d.  Identifying statutory changes that would be necessary for the establishment of a pay for success bond program in this state.
   e.  Developing legislation to provide the necessary statutory framework for a pay for success bond program in this state.
   5.  The interim committee shall present a summary of its review and recommendations in a report to the 2020 session of the general assembly no later than December 15, 2019.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill requests the legislative council to establish an interim study committee to determine whether opportunities exist for the use of pay for success bonds in Iowa. The bill defines “pay for success bond” to mean a financial instrument in which private investors provide working capital to nonprofit organizations to implement preventive programs aimed at achieving predefined social outcomes. If an independent evaluator determines that the predefined outcomes have been achieved, the government repays the investors their principal and a rate of return; otherwise, the investors lose their capital.
   The legislative interim committee is to be comprised of legislative members who shall be voting members of the committee, and representatives from the department of human services, the Iowa finance authority, and the state treasurer’s office, and nongovernmental social service or community organizations who shall be nonvoting members of the committee. The committee is directed to study the advisability and feasibility of using pay for success bonds in Iowa which shall include but not be limited to reviewing existing social innovation programs in this state and in states with pay for success bond programs; identifying opportunities for the use of pay for success bonds in this state; identifying potential challenges and risks of a pay for success bond program; identifying necessary statutory changes; and developing legislation.
   The committee is required to present a summary of its review and recommendations in a report to the 2020 session of the general assembly no later than December 15, 2019.