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Building a Better Workforce

Social Finance and Jobs for the Future

Impact Investments, Results-Based Funding

Key Takeaway

While performance-based contracting is not new, PfP requires a different and often unfamiliar approach for many states. Contracts are rigorously measured against predefined metrics of success, which ensure services result in meaningful impact. They measure, for example, not just how many people are reached by a given service, but what difference it makes in their lives: how many find jobs, retain them, and ultimately achieve higher earnings.

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The Workforce Innovation and Opportunity Act of 2014 (WIOA) supports business growth by expanding career options through a system that connects employers to job seekers. This paper presents recommendations to help state governments utilize the funding from this legislation to support citizens in finding and keeping high-quality jobs. In addition, there is advice on how to design a framework to support Pay for Performance (PfP) contracting.

WIOA specifically authorizes the use of PfP as one of its eligible activities for the first time. In addition, increased overall funding at the state level provides governors with an opportunity to test innovative approaches and promote the growth of evidence-based services through innovative performance-based funding mechanisms.

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