83R491 KLA-D
 
  By: Villarreal H.B. No. 1450
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to pay-for-performance contracts for certain criminal
  justice programs and services.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 495, Government Code, is amended by
  adding Subchapter C to read as follows:
  SUBCHAPTER C. PAY-FOR-PERFORMANCE CONTRACTS FOR CERTAIN
  DEPARTMENT PROGRAMS AND SERVICES
         Sec. 495.051.  DEFINITIONS. In this subchapter:
               (1)  "Advisory committee" means the advisory committee
  on pay-for-performance contracts established under Section
  495.053.
               (2)  "Pilot program" means the pay-for-performance
  contract pilot program developed and implemented as required by
  Section 495.052.
         Sec. 495.052.  PAY-FOR-PERFORMANCE CONTRACT PILOT PROGRAM.
  The board shall develop and implement a pilot program to assess the
  feasibility, desirability, and cost-effectiveness of entering into
  contracts:
               (1)  to operate programs or provide services that are:
                     (A)  under the supervision of the rehabilitation
  programs division or the reentry and integration division of the
  department;
                     (B)  designed for the primary purpose of
  rehabilitating inmates or reintegrating former inmates; and
                     (C)  selected by the board for inclusion in the
  pilot program; and
               (2)  under which payments may be made only if:
                     (A)  the contractor meets or exceeds specified
  performance requirements;  and
                     (B)  the state realizes a positive return on
  investment.
         Sec. 495.053.  ADVISORY COMMITTEE. (a) The advisory
  committee on pay-for-performance contracts is established for the
  primary purpose of advising the board regarding the
  pay-for-performance contract pilot program.
         (b)  The advisory committee consists of the following
  members:
               (1)  the executive commissioner of the Health and Human
  Services Commission, or the executive commissioner's designee;
               (2)  the executive director of the Texas Workforce
  Commission, or the executive director's designee;
               (3)  the comptroller, or the comptroller's designee;
               (4)  a representative of a nonprofit organization that
  has participated in a pay-for-performance contract program or
  similar program, appointed by the board; and
               (5)  any other person the board determines would be of
  assistance in developing and implementing the pilot program,
  appointed by the board.
         (c)  Members of the advisory committee appointed under
  Subsections (b)(4) and (5) serve at the will of the board.
         (d)  The advisory committee shall:
               (1)  advise the board with respect to:
                     (A)  criteria to be used for selecting the
  programs and services to be included in the pilot program;
                     (B)  performance requirements applicable to
  contractors under the pilot program and desired outcomes for
  persons served by each selected program or service;
                     (C)  criteria to be used in evaluating whether a
  contractor has met the performance requirements identified under
  Paragraph (B); and
                     (D)  establishing or revising the methodology for
  computing the state's return on investment;  and
               (2)  provide any other advice or information relating
  to the pilot program that the board requests.
         (e)  Members of the advisory committee are not entitled to
  compensation but are entitled to reimbursement for actual and
  necessary expenses incurred in performing their official duties as
  advisory committee members.
         (f)  Chapter 2110 applies to the advisory committee, except
  for Section 2110.008.
         Sec. 495.054.  CONTRACTS AUTHORIZED. (a)  The board may
  enter into a contract for the operation of a program or performance
  of a service that the board selects to be included in the pilot
  program.  Before the board enters into a contract under this
  section, after considering information provided by the proposed
  contractor and other information available to the board, the board
  must determine that it is likely that having the program operated or
  services performed under the contract will result in a positive
  return on investment for the state in accordance with the
  methodology established under Section 495.057.
         (b)  The contract must specify:
               (1)  the program to be operated or service to be
  performed by the contractor;
               (2)  the period during which the contractor is to
  operate the program or perform the service under the contract;
               (3)  a condition that certain performance requirements
  must be met before any payment under the contract may be made
  together with a description of:
                     (A)  the performance requirements;  and
                     (B)  the criteria the board will use to evaluate
  whether the contractor has met the performance requirements;  and
               (4)  a condition that this state must realize a
  positive return on investment from the contract before any payment
  under the contract may be made together with a description of the
  methodology to be used to determine the state's return on
  investment.
         Sec. 495.055.  ISSUANCE OF GENERAL OBLIGATION BONDS FOR
  PAY-FOR-PERFORMANCE CONTRACTS. (a) The Texas Public Finance
  Authority shall issue and sell general obligation bonds of the
  state, as authorized by Section 49-q, Article III, Texas
  Constitution, in a total amount sufficient to provide money for
  payments anticipated to be due under contracts entered into under
  this subchapter.
         (b)  The Texas Public Finance Authority shall remit to the
  comptroller the bond proceeds for deposit to the credit of the
  special fund created as required by Section 49-q(b), Article III,
  Texas Constitution.  The proceeds may be appropriated only:
               (1)  to the Texas Department of Criminal Justice to
  make payments under contracts entered into under this subchapter;  
  or
               (2)  to the authority to pay the principal of or
  interest on the bonds.
         Sec. 495.056.  CONTRACT PAYMENTS. Using money appropriated
  to the Texas Department of Criminal Justice from the special fund
  established under Section 49-q, Article III, Texas Constitution,
  the board shall make payments under contracts entered into under
  this subchapter, provided that:
               (1)  the contractor has met the performance
  requirements specified in the contract;
               (2)  the state's return on investment under the
  contract is positive; and
               (3)  all other contract terms have been satisfied.
         Sec. 495.057.  RETURN ON INVESTMENT COMPUTATION. (a) The
  board, with advice from the advisory committee, shall establish a
  methodology for computing the state's return on investment to
  determine whether that return is positive for purposes of making
  contract payments in accordance with Section 495.056. The
  methodology must:
               (1)  define a positive return on investment for the
  state as increases in state revenue, costs avoided by the state, or
  a combination of increased revenue and avoided costs in a total
  amount that equals or exceeds the state's financing and
  administration costs associated with a contract; and
               (2)  include considerations of the following:
                     (A)  state tax revenue and any other state revenue
  collected during the state fiscal year after the state fiscal year
  during which the contract was entered into that would not have been
  collected if the contract had not been entered into;
                     (B)  costs avoided by the state by operating the
  program or providing the services through the contract;  and
                     (C)  costs of debt service on bonds issued under
  this subchapter to provide money for payments due under the
  contract.
         (b)  The comptroller shall assist the board in collecting
  information useful for purposes of determining the state's return
  on investment under a contract.
         Sec. 495.058.  REPORT. (a) On or before December 15 of each
  year following the year in which the pilot program is implemented,
  the department shall submit to the governor and the standing
  committees of the legislature with primary jurisdiction over
  criminal justice and corrections a report regarding the operation
  of the pilot program. The report must:
               (1)  explain the criteria the board uses for selecting
  the programs and services to be included in the pilot program;
               (2)  explain the performance requirements applicable
  to contractors under the pilot program and desired outcomes for
  persons served by each selected program or service;
               (3)  explain the criteria the board uses to evaluate
  whether a contractor has met the performance requirements described
  by Subdivision (2);
               (4)  identify the net benefits to the state of the pilot
  program;
               (5)  explain the methodology the board uses to
  determine the state's return on investment before pilot program
  contract payments are made and the period during which those
  payments may be made;
               (6)  include a comparison of the costs to the state of
  providing programs and services under contracts entered into under
  this subchapter and the costs to the state of directly providing
  those programs and services for a comparable period;
               (7)  include a summary of the amounts and terms of the
  bonds issued under Section 49-q, Article III, Texas Constitution;
  and
               (8)  include a recommendation regarding continuation
  or expansion of the pilot program.
         (b)  The Texas Public Finance Authority shall provide to the
  department information necessary for the department to provide the
  summary required by Subsection (a)(7).
         SECTION 2.  This Act takes effect January 1, 2014, but only
  if the constitutional amendment proposed by the 83rd Legislature,
  Regular Session, 2013, providing for the issuance of general
  obligation bonds to finance pay-for-performance contracts for
  certain programs and services for certain offenders is approved by
  the voters. If that amendment is not approved by the voters, this
  Act has no effect.