Research findings from University of Minnesota graduate students are aiding in dialogue regarding support for social programs in the state.
The Humphrey School research project, presented in mid-June, explores the possibility of using a funding method called "Pay for Success" in which the government pays back private investors only if they reach pre-agreed upon outcomes for their social programs. Many say those outcomes could save the government money.
Over the summer, lawmakers and researchers will explore the PFS model’s ability to support doula care programs, which help women during pregnancy.
“It turns out that providing doulas to women really saves the healthcare system money because these women are less likely to have premature births, and they’re also just less likely to require a lot more medical expenses if they have medical care,” said Judy Temple, a University professor and research advisor on the project.
The PFS model is being explored nationally, with more than 20 active projects and 60 in development, said research analyst for the Urban Institute Mayookha Mitra-Majumdar in an email. The Bipartisan Budget Act of 2018 included $92 million to fund PFS projects.
Researchers found that Minnesota was the first state to enact legislation in support of PFS models in 2011, although projects in the state have still not been implemented because of complications with the programming and legislation, said University research assistant Nishank Varshney.
“[We’re looking at] how could we, as a state, and we, as a society, take advantage of this kind of financing structure to make the sort of investments in people that we know we need to make, and that we are just lacking the political will to make,” said Rep. Dave Pinto, DFL-St. Paul, who is working with the students’ PFS research.
Core topic areas for PFS projects are homelessness, housing, criminal justice and youth development, including early childhood education and child welfare, Mitra-Majumdar said in an email.
“Students in the capstone project were able to help move our knowledge base forward to provide more better context and examples of how the state of Minnesota could take advantage of this financing model," said Rob Grunewald, an economist with the Federal Reserve Bank of Minneapolis who is working on the project.
Aditi Kadam, a student researcher for the project, said the semester-long research revealed that implementing PFS systems for Minnesota will be challenging, leading the team to focus on ways to eliminate barriers.
“Just doing research and just writing papers, I don’t think that’s contributing enough. I think the real contribution is when you can actually realistically implement the paper that you write,” Kadam said.
One of the core challenges for implementing PFS models lies with acquiring start-up costs for the financing mechanism to get off the ground.
“The way that I’ve kind of summarized this idea is that it’s really, really, really hard, there’s many many hurdles — but if it could work, it could really be transformational,” Pinto said. “An ounce of prevention is worth a pound of cure. Right now, we’re paying for a lot of cure.”