(TRENTON) – The Assembly Commerce and Economic Development Committee today passed legislation by Assemblyman Angel Fuentes (D-Camden/Gloucester) to create a pilot program which opens the door to Social Impact Bonds, a type of pay-for-success contract. The goal of the NJ Social Impact Bond Act is to improve healthcare in New Jersey without using taxpayer dollars.
“The public health crisis plaguing Camden City and many of our state’s urban centers has to be addressed,” said Assemblyman Fuentes. “Opening the door to new resources while reducing government costs is crucial to building sustainable programs that improve quality of life while not burdening taxpayers.”
The NJ Social Impact Bond Act seeks to attract private funding for public programs aimed at reducing the cost of providing healthcare to low-income and uninsured residents. The Economic Development Authority (EDA) will administer the program and oversee a study commission established by the bill.
The study commission will aid the EDA by determining a non-profit to receive the investment funds from private investors, and issuing annual reports detailing the progress of the program.
A3289 has received widespread support, with several leaders of the impact investing industry submitting testimony in favor of the legislation. George Overholser, founder and CEO of Third Sector Capital Partners and former Director of Strategy and New Business Development for Capital One said Social Impact Bonds hold wide appeal for being both socially responsible and fiscally conservative.
“Assemblyman Fuentes and Chairman Coutinho should be commended for leading New Jersey in the pursuit of these innovative projects that change the way government allocates and invests its resources by focusing on results,” Overholser said. “Pay for Success and Social Impact Bonds have the potential to improve the lives of New Jersey’s most vulnerable residents while generating valuable fiscal savings for the state.”
“As the legislators of New Jersey have demonstrated, there is an imminent need to rethink the way critical social service programs are funded in the face of unprecedented budgetary constraints,” added Tracy Paladjian, CEO and Co-Founder of Social Finance. We are excited about New Jersey's exploration into social impact financing and the role commercial capital can play in expanding social services in the state.”
“We know that prevention is a better investment than paying for care in the ER or hospital,” said Rick Brush, CEO of Collective Health, which has pioneered the development of Health Impact Bonds and is leading related projects throughout the U.S. “The challenge is that most of our health care dollars are spent after people get sick. Health Impact Bonds allow us to expand proven prevention programs to a much greater number of people who will benefit.”
“As former president of the Camden City Council, I am fully aware of how tight public funds are for social programs,” Assemblyman Fuentes added. “The Social Impact Bond Act establishes a strong foundation for innovative methods to expand capital in a meaningful way.”
Sponsors of the NJ Social Impact Bond Act include Commerce and Economic Development Chair Assemblyman Al Coutinho, Assemblywoman Angelica Jimenez, Appropriations Chair Assemblyman John Burzichelli, and Assemblywoman Gabriela Mosquera. The bill was passed by the Commerce and Economic Development Committee unanimously, and will now be considered by the Assembly Appropriations Committee.
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