Connecticut State’s Department of Children and Families (DCF) estimates that parental substance abuse is responsible for up to half of the instances when children ages 0-6 are identified as at risk for abuse, neglect, poor developmental outcomes, and/or removal from the home. The Connecticut Family Stability Pay for Success (PFS) project will deliver Family Based Recovery (FBR), an in-home family-based therapy designed to promote positive child-parent interactions and help parents on their path to substance abuse recovery, to 500 DCF-involved families with young children. The success of the project will be measured by reduced re-referrals to DCF and avoided out-of-home placements for children, as well as negative toxicology screens during treatment. Ultimately, a successful program will result in stronger parent-child bonds, safe and supportive environments for children to develop in, and better long-term social and economic outcomes for both parents and children.
- Year Launched2016
- Service Delivery Term (Years)4
- Motivation for ProjectThe Connecticut Department of Children and Families (DCF) spends more than $600 million each year to address child abuse and neglect. In 2013, more than 50 percent of all cases investigated by DCF has an indication of parental substance use.
- Project Objective(s)Promote family stability and reduce parental substance use for DCF-involved families
- Individuals Served500 families
- Issue AreaEarly Childhood
- Initial Investment ($ millions) [Note 2]11.2
-  This category captures the initial private investment raised to support the project that has the potential to be repaid if the project achieves its pre-determined outcomes. Many projects, particularly those in the supportive housing and health arenas, leverage existing public resources, such as subsidized housing and health insurance, to achieve program impact; the value of these resources is not included in these dollar values but are discussed in more detail in Sections 7, 8 and 9 of this report.
- Service Provider(s) [Note 1]Family-Based Recovery Services (hosted at Yale Child Center) [Note 15]
- Payor(s) [Note 2]Connecticut Department of Children and Families
- Transaction Coordinator(s) [Note 3]Social Finance US
- Evaluator [Note 4]UConn Health
- Validator [Note 5]None
- Project Manager [Note 6]Social Finance US
- External Legal Counsel [Note 7]Jones Day
- Technical Assistance Provider(s) [Note 8]Harvard Kennedy School Government Performance Lab
-  Delivers program interventions to target population over the course of the PFS contract
-  In addition to Yale Child Study Center, Family Based Recovery teams will be managed at three different local community health centers: United Child and Family Services, Community Mental Health Affiliates, and Community Health Resources.
-  Makes payments when pre-determined outcomes have been met
- Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
-  Design and implement plan for determining whether outcomes have been met
-  Verify accuracy of data used in evaluation plan, or evaluation plan itself
-  Intermediary during service delivery phase, and/or fiscal sponsor for project funds
-  Provide assistance in drafting, reviewing and negotiating PFS contracts
-  Provide support and expertise to project stakeholders in the project development and/or project implementation phases
Evidence and Program Design
- Service Intervention(s) Model and/or TypeFamily-Based Recovery (FBR): inhome parent-child attachment therapy and clinical substance use treatment
- Evidence base for interventionQuasi-experimental study
- Has effectiveness of the intervention for PFS project target population been evaluated?Partly [Note 9]
- Has the service provider provided this intervention previously?Yes
- Is PFS project: Scaling an existing intervention by replicating at a larger scale? Demonstrating the effect of a new program model or combination of services? Transplanting an existing intervention(s) to a new target population and/or service delivery setting?Scaling; Demonstrating
-  The intervention targeting children under 36 months of age at the time of referral has been studied. FBR targeting children ages three to six is new and therefore has not been studied.
- Evaluation Design MethodologyRCT
- Data Source(s) for EvaluationConnecticut Department of Children and Families administrative data; Service provider data
- Outcomes Tied to Success Payments1) Reduction in out-of-home placements; 2) Reduction in re-referrals to DCF; 3) Reduction in substance use; 4) Successful FBR enrollment
- Outcomes Tracked, Not Tied to Success PaymentsVarious
- Length of Evaluation Period6 years
Service Provider Characteristics and Service Delivery
- Single or multiple service providers?Multiple
- Service provider type(s) (nonprofit, government, private)Nonprofit
- Service provider OR site selection methodRFQ
- Service Provider Experience with PFS InterventionExperienced with FBR; Yale Child Study Center has two existing FBR teams; local community health centers all previously contracted with DCF to provide FBR
- Referral Method for PFS Target PopulationEligible participants identified by DCF
- Did the project have a ramp-up phase? (Y/N; brief description)No official pilot phase
PFS Contracting and Governance
- Operational Oversight Structure [Note 1]Operations Committee includes implementing agents, service provider, Connecticut DCF, evaluator, and Social Finance
- Frequency of meetings and/or reportsBi-weekly
- Executive Oversight Structure [Note 2]Executive committee includes Connecticut DCF, Social Finance, and Yale Child Study Center; funders retain one non-voting observer right
- Frequency of meetingsBi-annually
- Investor role in project governance?Can attend Oversight Committee meetings as non-voting member [Note 7]
- Frequency of reporting to investorsQuarterly
- Non-standard Contract Termination Events [Note 3]1)Insufficient enrollment
- Appropriations Risk Mitigation Strategy [Note 4]Annual deposit in escrowed outcomes account
-  Committee or working group involved in regular and/or day-to-day monitoring of project progress
-  Oversight and decision-making body for PFS project
-  Investors may require consent rights or rights to direct SPV voting through the loan agreement for material changes to the PFS contract and ancillary agreements.
-  Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
-  Means by which to mitigate risk that funding is not available for investor repayment
Basic Repayment Structure
- Initial Investment ($Millions)11.2
- Maximum Repayment Funds Committed by Payor ($Millions)14.8
- Full service delivery term (years)4
- Full repayment period (years)6
- Interim outcomes reported? Tied to payments?No/No
- Sustainability/ Recycling of FundsGovernment Partners hope to continue successful programs
Detailed Repayment Terms
- Interest5% (senior); 3% (junior) [Note 9]
- Trigger for initial repayment of principal [Note 1]Any 1) Reduced out-of-home placements; 2) Reduced re-referrals to DCF; 3) Clean toxicology screens; 4) FBR enrollment
- Threshold for full repayment of principal[Note 10]
- Threshold for full repayment of principal plus maximum success payments[Note 10]
- Repayment timingAnnually, starting at the end of year 1
- Return to Investor [Note 2]Expected IRR base case: Seniors 6-6.5%; Juniors 5-6%
- Success Payment to Other Stakeholders? [Note 3]Yes: Intermediary
-  Payment of accured interest contingent on achievement of outcomes
-  Initial repayment does not equate to full principal return. Investors may recover only part of their principal if projects do not meet a certain level of success.
-  There are multiple paths to repayment and repayment starts with initial outcomes.
-  There are multiple paths to repayment and repayment starts with initial outcomes.
-  There is no standard methodology for calculating investor return. These numbers are what is publically reported, and comparing from one project to another may not be an apples-to-apples comparison for the reason of potentially different calculation methodologies. Calculation methodologies may be provided in investor agreements, which are not available publically and were not available for this report’s analysis.
-  Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
- Project Development Costs Not Covered by PFS Capital RaiseHarvard Kennedy School Government Perfomance Lab fellow; Legal services
- Funding source(s) for project development costs, if anyPro bono legal support; Social Finance (in-kind)
- Project Implementation Costs not covered by PFS CapitalNone
- Funding sources for implementation costs not covered by PFS capitalNone