This bill authorizes the use of state appropriation bond proceeds to fund a pay for performance pilot program that would allow certain state agencies to contract with selected service providers for the provision of services. The bill requires the agency to pay the contractor based on increases in tax revenues or cost savings to the state that result from the contracted services. Appropriation bond proceeds are not public debt of the state, and are specifically exempted from general bond obligation authority. The bonds authorized in this bill must be repaid with appropriations that can be repealed even if the debt has not been repaid.
Section 1 [Minnesota Pay for Performance Act.] provides the citation for this legislation.
Section 2 [Program.]
Subdivision 1 [Pilot program.] directs the Commissioner of Management and Budget to implement a pilot program for the use of state appropriation bonds to pay for state services based on performance and outcomes.
Subdivision 2 [Oversight committee.] directs the Commissioner of Management and Budget to establish an oversight committee to develop the pilot program. Designates the Commissioners of the Departments of Human Services, Employment and Economic Development, and Administration to serve on the committee, along with a representative of a nonprofit organization that has experience with a pay for performance program, and any other entity or person the commissioner determines would assist with the implementation of the pilot program.
Subdivision 3 [Contracts.] directs the Commissioner of Management and Budget and the commissioner of the agency charged with providing a service that will be included in the pilot program to contract with a selected provider. Requires the Commissioner of Management and Budget to pay the provider that has successfully met the terms and conditions of the contract with proceeds from the special appropriation bond proceeds account established in section 3. Requires the commissioner to determine that the return on investment has been positive for the state before the commissioner may make a payment.
Subdivision 4 [Return on investment calculation.] requires the commissioner to establish methods and data for calculating a return on investment before payments may be made under this section. The data must include:
- income taxes and any other revenues that would not have been collected without the provision of the service; and
- any costs avoided by the state through the provision of the service.
Subdivision 5 [Report to the Governor and Legislature.] requires the Commissioner of Management and Budget to provide a report to the Legislature and Governor regarding the operation of the pilot program.
Section 3 [Pay for Performance Program; Appropriation Bonds.] provides authorization for appropriation bonds to be sold to pay for the pilot program established in section 1 of this bill. Specifically states that appropriation bonds authorized under this section are not public debt of this state, and are not backed by the full faith, credit, and taxing powers of the state. Limits the state’s payment obligation to the amounts that are appropriated for debt service on the bonds for any fiscal year. Also provides a statutory appropriation to pay principal and interest on the appropriation bonds authorized under this bill from the general fund.