Ohio to encourage experimentation to address social problems

Associated Press

CLEVELAND

Ohio is joining other states in encouraging private groups to fund and run innovative social experiments to address vexing social problems such as opioid addiction, infant mortality and environmental pollution without putting tax dollars at risk upfront.

Republican Treasurer Robert Sprague is championing the statewide effort, called ResultsOHIO, which is included in the next two-year budget and would provide paybacks with interest to investors when projects achieve or exceed targeted goals. Ten other states have enacted legislation for similar “pay-for-success” programs, which are also known as social impact bonds.

Sprague said he was spurred to explore such a program when, as a House member from northern Ohio, he heard from a constituent about how her adult children had cycled in and out of rehab for opioid addiction.

“We’ve tried hard and invested a lot of money in the treatment system in Ohio,” Sprague said in an interview. “But our recovery rates are stubbornly at 10 to 15 percent. So how do you have innovation occur in the system to increase those recovery rates?”

The basic pay-for-success model typically looks like this: A government agency, a nonprofit service provider and a third-party organizer decide a societal problem needs to be addressed and agree on how to conduct a pilot program. The organizer helps secure funding from philanthropic groups or for-profit entities that are willing to risk their money with the promise they’ll get a return on their investment plus interest if an independent evaluation concludes a project has succeeded. The government agency, which could be the state or a local government, then repays investors if the project works.