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County dedicates $3M to permanent supportive housing

Wednesday, October 3, 2018 by Ryan Thornton

The Travis County Commissioners Court voted Tuesday morning to dedicate $3 million to permanent supportive housing for repeat users of the criminal justice and health care systems.

The county’s $3 million, comprising $600,000 annually over five years, is roughly a fifth of the total $15.5 million dedicated to the program, which aims to create 250 housing units serving 250-300 individuals. The investment process, however, is somewhat convoluted: Rather than investing the money directly, the county will serve as an end payer and will only pay once certain measured outcomes are achieved.

Social Finance – the organization managing the funding of the housing program – has secured $15 million from private investors who will be reimbursed by the end payers once desired outcomes are achieved. The model, known as Pay for Success (PFS), has become a popular method of addressing social needs.

“If we don’t deliver the outcomes, you don’t pay,” said Ann Howard, executive director of the Ending Community Homelessness Coalition (ECHO), addressing the commissioners. “That’s the beauty of this.”

In 2015, ECHO received a PFS technical assistance grant to work with Social Finance in the creation of the housing units.

Other end payers include the city of Austin, Central Health, the Community Care Collaborative and the Episcopal Health Foundation. The city has agreed to fund $6 million and the three health partners have agreed to collectively invest another $6 million.

Earlier this year the county attempted to establish an interlocal agreement with the city of Austin to substitute for their $3 million in funding, but the city rejected the proposal. Under the agreement, the county was to reimburse the city in proportion to the money saved from fewer jail bookings and greater housing stability. Such an agreement would give the county more power to determine its outcomes and measure savings.

In contrast, there was significant concern from the commissioners about how success outcomes will be measured under a contract with Social Finance.

“It is the most important thing,” said Commissioner Gerald Daugherty. “We’ve got to be able to determine the outcome measures.”

Daugherty stressed the importance of not letting financial pressure from investors influence the process of determining the program’s success. “The private guys are going to put this money up. They want to get their money back. In order for anybody to get their money back, then all these outcomes have to be hit,” he said, emphasizing the potential temptation to minimize any failures in order to please investors.

The three outcomes articulated in the agreement between Social Finance and Travis County are fewer jail bookings, fewer occupied jail beds and greater housing stability. While the outcomes are clearly defined, how to measure them in terms of social and financial success was a serious concern of Daugherty and commissioners Jeff Travillion and Brigid Shea.

Echoing Daugherty’s remarks, Shea pressed the question of what will qualify as success or failure. “It will be really helpful for me to have a very clear – and I think the public too – explanation of exactly how those calculations will happen,” she said. “And I think that’s part of what people are going to have to really understand before there will be public acceptance of us paying private investors back for savings.”

Howard reassured the court that while the exact figures cannot be predicted, the program is likely to save the county money and achieve broad social goals in the long term.

“The folks that are just cycling through jail because mostly of homelessness and their health situation, those are the folks that you are going to see the reduction, and that is a real cost avoidance,” she explained. “It’s sort of a convergence of lots of stuff the county is working on, that here’s a tool to help advance some of those other initiatives also.”

Having refrained from comment for much of the discussion, County Judge Sarah Eckhardt addressed the concerns of the commissioners in stating the need for a meeting that will determine the specifics of the outcome measures and the importance of sharing outcome data in an independent third-party analysis to ensure objectivity in measuring the program’s success.

“It’s a significant investment,” Eckhardt concluded. “It will be well spent, however, if it has the outcomes that we anticipate it will have.”

Following Eckhardt’s statements, Daugherty motioned for Travis County to enter into a contract with Social Finance under the Pay for Success model. The motion was passed unanimously.

Photo by Clay Junell made available through a Creative Commons license.

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