The current public workforce system has left out some of our country’s most vulnerable opportunity youth. With federal funding spread across 11 agencies and 47 programs, much of the system relies on cost-reimbursement contracts that stifle innovation by 1) prescribing services that prohibit providers from adapting programs to needs and 2) not rewarding providers for improving outcomes. Providers are often paid regardless of results, yielding little incentive to use evidence-based interventions or deploy new technologies. While some programs use something called “performance-based contracting,” much of the time, payments are linked to activities and outputs, like enrollment instead of long-term outcomes like wage growth.
Impact Philanthropy is a complex topic, and others found these selections from the Impact Giving archive from Giving Compass to be good resources.
Recognizing the limitations of cost-reimbursement and standard performance-based contracts, Congress and the Department of Labor included important changes in the 2014 Workforce Innovation and Opportunity Act (WIOA) to provide an opening to focus on improving outcomes.
With a shift towards longer-term outcomes through new performance measures and the authorization of Pay-for-Performance (P4P) contracts, there is a window of opportunity for workforce boards to build on the rich history of performance-based contracting, develop more comprehensive services and deploy resources in increasingly outcomes-driven ways.
Read the full article by Celeste Richie on Third Sector Capital Partners
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