Massachusetts Pathways to Economic Advancement

Last updated Tuesday, October 17, 2017

Quick Facts

Current Phase
Issue Area
Interventions
Project Scope
Implementation Start
Woman helps adult education students. Photographer: Ilene Perlman

In the Greater Boston area, large concentrations of immigrants and long waitlists for English language instruction are significant barriers to employment for many people. This Pay for Success project will serve nearly 2,500 adult learners from Greater Boston with a combination of vocational training, contextualized English for Speakers of Other Languages instruction, and job search assistance. Effective implementation of these services will produce measurable outcomes for people through post-secondary education enrollment, improved employment prospects, and increased earnings. 

Analysis

  • Market Overview

    • Year Launched
      2017
    • Service Delivery Term (Years)
      3
    • Motivation for Project
      With approximately 200,000 known adult English language learners in greater Boston, at least 16,000 are on service provider waitlists for English classes. Furthermore, current services lack a workforce component - few programs help individuals improve English and transition to either employment or higher earnings.
    • Project Objective(s)
      Support 2,000 adult English language learners who are seeking to transition to employment, higher wage jobs, and/or higher education
    • Individuals Served
      2000
    • Geography
      Greater Boston, MA
    • Issue Area
      Workforce
    • Initial Investment ($ millions) [Note 2]
      12.43
    • [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.
  • Project Partners

    • Service Provider(s) [Note 1]
      Jewish Vocational Service
    • Payor(s) [Note 2]
      Commonwealth of Massachusetts
    • Transaction Coordinator(s) [Note 3]
      Social Finance US
    • Evaluator [Note 4]
      Economic Mobility Corporation
    • Validator [Note 5]
      None
    • Project Manager [Note 6]
      Social Finance US
    • External Legal Counsel [Note 7]
      Morgan, Lewis & Bockius
    • Technical Assistance Provider(s) [Note 8]
      Jobs for the Future
    • [1] Delivers program interventions to target population over the course of the PFS contract
    • [2] Makes payments when pre-determined outcomes have been met
    • [3]Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
    • [4] Design and implement plan for determining whether outcomes have been met
    • [5] Verify accuracy of data used in evaluation plan, or evaluation plan itself
    • [6] Intermediary during service delivery phase, and/or fiscal sponsor for project funds
    • [7] Provide assistance in drafting, reviewing and negotiating PFS contracts
    • [8] 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 Type
      Vocational training; contextualized English language instruction
    • Evidence base for intervention
      Provider performance data cross-referenced with administrative wage and higher education data
    • Has effectiveness of the intervention for PFS project target population been evaluated?
      Partly [Note 11]
    • 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
    • [11] JVS underwent a RCT on an earlier variation of one of the 4 program tracks being delivered under the PFS project. While an important indicator of the program's impact under a rigorous evaluation, project partners primarily relied on analysis of historical administrative data, conducted by Social Finance and the Government Performance Lab, to establish the track record for 3 of 4 PFS program tracks.
  • Evaluation

    • Evaluation Design Methodology
      Differs by program track; includes RCT for English for Advancement track [Note 6]
    • Data Source(s) for Evaluation
      Commonwealth of Massachusetts administrative data; Service provider data
    • Outcomes Tied to Success Payments
      1) Earnings; 2) Transition into college; 3) Program engagement
    • Outcomes Tracked, Not Tied to Success Payments
      Program completion rate; job attainment rate; college registration rate
    • Length of Evaluation Period
      6 years
    • [6] Occupational Skills Training track: pre-post design; Rapid Employment: arithmetic mean; Bridges to College: proportion; program engagement metric for all 4 program tracks will be a validated count.
  • PFS Contracting and Governance

    • Operational Oversight Structure [Note 1]
      Operating Committee includes representatives of Executive Office of Administration and Finance, Executive Office of Labor and Workforce Development, Executive Office of Education, JVS, and Social Finance
    • Frequency of meetings and/or reports
      Monthly for first 12 months; quarterly thereafter
    • Executive Oversight Structure [Note 2]
      Oversight Committee includes representatives of Executive Office of Administration and Finance, Executive Office of Labor and Workforce Development, Executive Office of Education, service provider, and intermediary
    • Frequency of meetings
      Bi-annually
    • Investor role in project governance?
      Two observer seats on Oversight Committee [Note 8]
    • Frequency of reporting to investors
      Quarterly
    • Non-standard Contract Termination Events [Note 3]
      1) Systemic under-enrollment
    • Appropriations Risk Mitigation Strategy [Note 4]
      Success payments backed by full faith and credit of Commonwealth
    • [1] Committee or working group involved in regular and/or day-to-day monitoring of project progress
    • [2] Oversight and decision-making body for PFS project
    • [8] Investors may require consent rights for material adverse changes to the PFS contract that affect the timing of success payments.
    • [3] Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
    • [4] Means by which to mitigate risk that funding is not available for investor repayment
  • Investors

    • Senior Investor/ Lender and Total Senior Investment ($MM)
      $9.94 total
    • Subordinate Investor/ Lender and Total Subordinate Investment ($MM)
      $2.49 total
    • Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]
      None
    • Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2]
      None
    • Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]
      None
    • Guarantor and Guarantee ($MM) [Note 4]
      None
    • Illinois Dually-Involved Youth Project
    • [1] Deferred fees are delayed payments for the services provided by service providers, transaction coordinators and/or project managers. Deferred fees are one way of structuring projects so that more stakeholders have a financial interest in ensuring project success.
    • [2]Philanthropies can use either their regular grant making protocols, or protocols for program-related investments (PRIs), to contribute to PFS capital stacks. If a foundation does not use a PRI, their investment may be structured as either a loan or a recoverable grant. The distinction between the two is in the expectation of repayment. A loan, even if from a philanthropic source, is expected to be repaid, and structured accordingly. A recoverable grant does not bear the same expectation of repayment.
    • [3] Non-recoverable grants are traditional grants contributed to capital stacks; if the project is successful and generates full repayment, the non-recoverable grants can remain with the service provider or project manager, or be recycled by the original funder.
  • Basic Repayment Structure

    • Initial Investment ($Millions)
      12.43
    • Maximum Repayment Funds Committed by Payor ($Millions)
      15
    • Full service delivery term (years)
      3
    • Full repayment period (years)
      6
    • Interim outcomes reported? Tied to payments?
      No/No
    • Sustainability/ Recycling of Funds
      Government Partners hope to continue successful programs
  • Detailed Repayment Terms

    • Interest
      None
    • Trigger for initial repayment of principal [Note 1]
      Any 1) Earnings; 2) Transition into college; 3) Program engagement
    • Threshold for full repayment of principal
      N/A [Note 11]
    • Threshold for full repayment of principal plus maximum success payments
      N/A [Note 11]
    • Repayment timing
      Quarterly, starting in Q3
    • Return to Investor [Note 2]
      Expected rate of return at base case: Class A 6.5%; Common 4-9%
    • Success Payment to Other Stakeholders? [Note 3]
      Yes: Service provider and intermediary
    • [1] 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.
    • [11] Due to this project not having investors, success payments will go to the service provider, Telecare.
    • [11] Due to this project not having investors, success payments will go to the service provider, Telecare.
    • [2] 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.
    • [3] Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
  • Project Costs

    • Project Development Costs Not Covered by PFS Capital Raise
      Harvard Kennedy School Government Perfomance Lab fellow; Legal services; Transaction coordinator, service provider, and evaluator costs for project development
    • Funding source(s) for project development costs, if any
      Pro bono legal support; Social Finance (in-kind); Social Innovation Fund
    • Project Implementation Costs not covered by PFS Capital
      MA administrative wage data
    • Funding sources for implementation costs not covered by PFS capital
      Commonwealth of Massachusetts