With Santa Barbara’s jail overcrowded and understaffed — a situation that a slated North County jail may alleviate but won’t remove altogether, especially with prison realignment shifting offenders to county jails — the county is looking for new methods of reducing recidivism. For that reason, County CEO Chandra Wallar has proposed to the supervisors a new model for funding services aimed at criminal offenders.
Dubbed the Pay for Success model, some county and state governments have begun experimenting with a social entrepreneurship–style of addressing service gaps. Under this arrangement, private parties loan governments money to kick-start programs, and if those programs are successful, the investor receives a return on the investment. If the program fails, it is the investor who loses out, not taxpayers. Rick Roney, a private citizen who has collaborated with Santa Barbara County for years on addressing recidivism, briefed the supervisors on Pay for Success Partnerships this Tuesday.
The one fully functional example right now is run out of Rikers Island jail in New York. Goldman Sachs loaned the New York City Department of Corrections $9.6 million to provide counseling and therapy for teenagers. If the program reduces recidivism by 10 percent, Goldman Sachs will break even. The investment bank will make a maximum profit of $2.1 million if the recidivism reduction reaches 20 percent. The net savings to New York City would be an estimated $20.5 million.
New York pays Goldman through an intermediary — MDRC, a nonprofit education and policy research organization — that also verifies the numbers. Through Roney’s legwork, Santa Barbara has already secured an offer by MDRC to provide technical assistance in assessing the county’s corrections infrastructure. Roney also acquired grant money to hire Jessica McLernon, a Santa Barbara resident who, in a previous job as New York City’s Director of Workforce Development, rubbed elbows with several of the players in the Rikers Island program. Roney is hoping that MDRC can help answer some of his questions, which were also shared by some of the supervisors. How is success best measured? How much overhead — for instance, for lawyers and go-betweens — would a Pay for Sucess arrangement cost?
Supervisor Janet Wolf asked how the county would save money given that it is so deluged with jail costs. She even thanked Andy Caldwell, the president of COLAB, for articulating the question first. Because of overcrowding, an average of 1,370 inmates have been released early from County Jail annually. Even if the county cut into that number, they wondered, would be any money be saved? Roney said there would obviously be a social benefit, but study needs to be done on where the county will find savings.
Part of the difficulty in doing so is that information is so sparse. The Sheriff’s Office cannot even provide accurate recidivism rates. A study found that inmates receiving reentry services in the county had a 37 percent lower recidivism rate than a control group. Because Santa Barbara County has been so willing to test intervention and reentry programs such as the Day Reporting Center, the organizers of an initiative funded by the Pew Charitable Trusts and the MacArthur Foundation have identified it as one of three pilot markets. Called the Results First initiative, the project provides cost-benefit analyses of options available to criminal justice systems. Since introducing a similar approach in the 1990s, Washington state has saved $1.3 billion per two-year cycle.
In a Who’s on First?-like routine, supervisors Peter Adam and Wolf expressed reservations about approving any action, saying that they wanted to hear real dollar amounts before weighing in. Wallar and Roney repeatedly explained that completing the Results First analysis is necessary to ascertain such information. Part of the confusion resulted in the fact that the staff report had been altered after the Supervisors received their copies. The light bulb first went on for Adam. After securing an agreement that the Debt Advisory Committee would review the Results First findings, Wolf relented as well, and the board voted 5-0 to move forward. First District Supervisor Salud Carbajal said, “We don’t want to kick a gift horse in the mouth.” Supervisor Steve Lavagnino said the Pay for Success model “is definitely outside the box.”
“I like it,” said the 5th District supervisor, “because nobody gets paid if there aren’t results.” Roney agreed, telling The Santa Barbara Independent, “The model we’ve used as a government is we don’t pay for success — we pay for service. Whether we get really good service or really terrible service, we don’t really know. Or we do know, but we don’t have a measurement.” A former Silicon Valley executive, Roney said that one of the lessons he learned from the private sector is that incentives work. “People produce better when they are incentivized,” he said.