Month: November 2022

By Daniel Clothier

States must surmount various challenges when seeking to remedy a social issue. The state takes upon itself a significant degree of financial risks whenever engaging in new social/welfare programs. Therefore, financial and political constraints tend to guide policymaker’s actions and control the scope of these programs.

The Pay for Success (PFS) financial model introduces an alternative method for financing social programs. In this model, private investors provide funding to a nonprofit organization charged with tackling a public issue. The private investor is paid back, potentially at a profit, by the government if the project achieves the agreed upon results. The model is promising due to its ability to divert financial risk from taxpayers to private investors, should a project not achieve it’s intended outcome. Ideally, the PFS model can remove many of the constraints limiting the scope of innovative social programs.

Pay for Success is unique in its aim to capture return-seeking capital. By creating a profit incentive, the PFS model strives to use investment dollars to solve public issues. In theory, this will significantly increase the funds available for such projects. However, a report in the Stanford Social Innovation Review is skeptical that the PFS model is actually attracting return-seeking capital but instead is relying on impact-seeking capital. Philanthropy’s prominent role in recent PFS deals suggests this may be true. Furthermore, the report warns that “…the model is appropriate only for a narrow cohort of nonprofits that meet two related criteria: they must be able to effectively deliver and measure their social impact; and they must be able to translate that impact into financial benefits or cost savings that are traceable to the budgets of one or more institutions or government departments.”

Due to the potential and possible limits of PFS, the model may be currently more favorable to some state strategies than others. An evaluation of the costs and benefits of the program is therefore an important first step for states to identify if this model aligns with their capacity and policy priorities. With this in consideration, The CSG Healthy States National Task Force’s Fiscal Subcommittee recommends that states should assess Pay for Success models to fund health and human service programs[CS1] . Some states have already begun utilizing the model with promising results.

Utah’s High Quality Preschool Program seeks to provide a high-impact preschool education for low-income families. The program utilizes the Pay for Success structure for funding and partners with United Way of Salt Lake. Utah lacks a state funded preschool education and views this program as a way to mitigate future remedial or special education costs while reducing the taxpayer’s risk if the program is unsuccessful. Likewise, the Massachusetts Juvenile Justice Pay for Success Initiative brought together the state, Third Sector Capital Partners and Roca in what was one of the first PFS contracts in the country. Collectively, they sought to prevent recidivism in previously incarcerated youth. The PFS contract laid out clear benchmarks for Roca to reach regarding recidivism rates. Should these metrics be met, the state will disburse funding.

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By Cassidy White

Title II: Conservation

The Conservation Title (Title II) of the Farm Bill authorizes voluntary programs that help farmers and ranchers implement natural resource conservation efforts on private land. Such programs allow for improved productivity while simultaneously addressing natural resource and environmental concerns.

Over the years, Title II has encompassed various programs, including wetlands conservation, environmental easement (a nonpossessory right to use and/or enter onto the real property of another without possessing it), integrated farm management, wildlife habitat incentives, conservation of private grazing land and even provision of technical assistance related to the implementation of such programs. Programs can be grouped into the following categories: working land programs, land retirement programs, easement programs, partnership and grant programs and conservation compliance.[1]

The most recent Farm Bill (2018) reauthorized and amended portions of most conservation programs; however, the focus was on the larger programs, namely the Conservation Reserve Program, Environmental Quality Incentives Program and Conservation Stewardship Program.

What is the Conservation Reserve Program (CRP)? CRP is the largest land retirement program. Farmers enrolled in the voluntary program receive an annual rental payment and agree to (1) remove environmentally sensitive land from agricultural production and (2) plant species that will improve environmental health. Contracts are typically written to ensure coverage between 10-15 years.[2]

What is the Environmental Quality Incentives Program (EQIP)? Agricultural producers and non-industrial forest managers part of EQIP are provided financial and technical assistance so that they may address natural resource concerns. Benefits include improved water and air quality, conserved ground and surface water, increased soil health and mitigation against weather volatility. The length of an EQIP contract varies, but cannot exceed 10 years.[3]

What is the Conservation Stewardship Program (CSP)? CSP allows for tailored operation plans to bolster productivity and build on conservation efforts. CSP mainly focuses on provision of financial and technical assistance to producers so that they may maintain and improve existing conservation systems.[4] The National Sustainable Agriculture Coalition highlights that, “By providing comprehensive conservation assistance to whole farms, CSP offers farmers the opportunity to earn payments for actively managing, maintaining and expanding conservation activities like cover crops, rotational grazing, ecologically-based pest management, buffer strips and the transition to organic farming – even while they work their lands for production.”[5] Benefits of participating include enhanced resiliency to weather and market volatility, decreased need for agricultural inputs and improved wildlife habitat conditions.

Why should state leaders care about Title II programs?

Title II programs can reap numerous benefits, both locally and nationally. These initiatives support local farmers across various states, which in turn impacts both food and national security. The Conservation Title helps ensure a safe and vast food (as well as fiber and fuel) supply, invigorates rural communities and champions farmers to care for the environment as they engage in their critical work. State leaders must remain cognizant of the various programs and the many benefits they might provide to their constituents while also serving the larger population.  

Moreover, fifty percent of the United States is cropland, pastureland and rangeland owned and managed by farmers and their families.[6] As such, much of our land and water-based solutions to climate change sit in the hands of farmers, ranchers and other private landowners.[7] Importantly, only 2.1 million out of a population of 327 million people are farmers; we rely on a small number of individuals to produce what we eat and how land is managed.[8] State leaders will likely want to remain abreast of these programs directly impacting the communities they represent and serve, as well as – less directly – the entire nation.

Senator Saxby Chambliss, who served on the Senate Agriculture Committee during the crafting of the 2008 farm bill, shared that “Any number of economic policies that we establish in farm bills impact everybody’s daily lives.”[9] Senate hearings for the 2023 farm bill are underway, with the first field hearing taking place on April 29, 2022, in Michigan. Senator Debbie Stabenow (D-MI), Chairwoman of the Senate Committee on Agriculture, Nutrition, and Forestry, listed conservation programs as a major concern for the new farm bill.

Each state and its residents are impacted by Title II of the farm Bill in one way or another, and state leaders should take note.

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[1] https://crsreports.congress.gov/product/pdf/IF/IF12024

[2] https://www.fsa.usda.gov/programs-and-services/conservation-programs/conservation-reserve-program/

[3] https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/financial/eqip/

[4] https://www.everycrsreport.com/files/2019-05-03_IF11199_1abf91e5ef60e8066572ab324e14d521a579e571.pdf

[5] https://sustainableagriculture.net/publications/grassrootsguide/conservation-environment/conservation-stewardship-program/ 

[6] https://www.trcp.org/farm-bill/

[7] https://www.trcp.org/farm-bill/

[8] https://blog.ucsusa.org/elliott-negin/farm-bill-and-everyday-americans/

[9] https://kansasreflector.com/2022/08/13/farm-bill-season-arrives-whats-the-outlook-for-2023/

[10] https://www.farmers.gov/sites/default/files/documents/FarmBill-2018-Brochure-11×17.pdf