Bill Text: NJ S2136 | 2018-2019 | Regular Session | Introduced
Bill Title: Establishes social innovation loan guarantee pilot program and study commission within New Jersey Health Care Facilities Financing Authority concerning opioid and other substance use disorders.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-03-05 - Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee [S2136 Detail]
Download: New_Jersey-2018-S2136-Introduced.html
Sponsored by:
Senator JAMES BEACH
District 6 (Burlington and Camden)
SYNOPSIS
Establishes social innovation loan guarantee pilot program and study commission within New Jersey Health Care Facilities Financing Authority concerning opioid and other substance use disorders.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing a social innovation loan guarantee pilot program concerning opioid and other substance use disorders and supplementing Title 26 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Authority" means the New Jersey Health Care Facilities Financing Authority established pursuant to section 4 of P.L.1972, c.29 (C.26:2I-4).
"Eligible organization" means a nonprofit organization that is exempt from federal taxation pursuant to section 501(c)(3) of the federal Internal Revenue Code (26 U.S.C. s.501(c)(3)) that has applied for participation in the social innovation loan guarantee pilot program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), and is selected by the study commission as qualified to receive a loan guarantee from the "social innovation loan guarantee fund" established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Pilot program" means the social innovation loan guarantee pilot program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Social innovation loan guarantee fund" or "fund" means the fund established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Study commission" means the New Jersey Social Innovation Study Commission established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Treatment and prevention services" means the treatment and prevention of opioid and other substance use disorders.
2. a. (1) There is established a five-year social innovation loan guarantee pilot program within the New Jersey Health Care Facilities Financing Authority to administer and determine the effectiveness of a social innovation loan guarantee pilot program. The pilot program shall concern nonprofit health care services that provide for the treatment and prevention of opioid and other substance use disorders with the purpose of encouraging private investment in those treatment and prevention services to lower federal, State, and municipal expenditures related to those services. The pilot program shall assess the feasibility of expanding a social innovation loan guarantee pilot program Statewide and expanding the scope of social impact loan guarantees, made pursuant to subsection b. of this section, beyond the health care sector.
b. Under the pilot program established pursuant to subsection a. of this section, the authority shall guarantee loans issued to eligible organizations for the provision of treatment and prevention services that generate positive social outcomes and public sector cost savings. Each loan guarantee shall be facilitated by the study commission established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) and consist of:
(1) A lending agreement between an eligible organization, a lender, and a public sector entity which provides: (a) the eligible organization with direct funding from a lender in exchange for the provision of treatment and prevention services; (b) the public sector entity with treatment and prevention services in exchange for defined payments to the lender in an amount proportional to the amount of public sector savings generated by the provision of those services; and (c) the lender with loan repayments in exchange for the provision of funding to an eligible organization.
(2) A loan guarantee agreement between the authority and all parties to the lending agreement from paragraph (1) of this subsection which shall require the lending agreement to conform to the requirements established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) or by the authority; and
(3) An agreement between the authority, the public sector entity making performance payments, the eligible organization, and the lender which agrees to a method of measurement and verification of the public health care services to be performed, how the public sector savings are to be calculated, how the interest rate will be determined, and how funds shall flow between the parties according to each of the agreements made pursuant to this subsection.
c. Up to 100 percent of the value of a loan agreement entered into pursuant to subsection b. of this section may be guaranteed by the authority, provided that the total amount in the aggregate of all loans guaranteed under the social innovation loan guarantee pilot program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $15,000,000.
d. The authority, in cooperation with the study commission and the Department of Human Services, shall offer to guarantee loans made pursuant to subsection b. of this section utilizing funds from the social innovation loan guarantee fund established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) to provide a loan guarantee for the purposes of subsection b. of this section. The authority shall consider the following factors:
(1) The economic feasibility of the treatment and prevention services;
(2) The degree to which the treatment and prevention services will advance Statewide and regional treatment and prevention services strategies and objectives;
(3) The degree to which the treatment and prevention services maximizes the leverage of other State funds; and
(4) The factors listed in paragraph (1) of subsection e. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
e. A lender or nonprofit organization seeking to participate in the social innovation loan guarantee pilot program shall submit an application in a form as the authority shall require. The application shall include any information the authority shall determine is necessary.
f. A loan guarantee agreement entered into pursuant to subsection b. of this section shall provide that any loan guaranteed by the authority shall: (1) be for a loan having a fair effective interest rate as determined by the authority; and (2) contain other terms and conditions considered appropriate by the authority that are consistent with the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill) and with rules and regulations promulgated by the authority pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
g. (1) Consistent with federal law, rule, or regulation, each eligible organization that receives a loan guarantee pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall undergo an audit, at the organization's own expense, at least once every two calendar years. The authority shall designate an auditor to conduct the audit.
(2) If an audit of an eligible organization is performed pursuant to a requirement of federal law, rule, or regulation, the authority shall waive the audit required pursuant to this subsection with respect to all issues addressed by the federally required audit report. However, the authority may require an audit of matters that are not, in the authority's judgment, addressed by the federally required report including, but not limited to, measurement and verification of treatment and prevention service intervention activities, and public sector savings.
h. A loan guarantee agreement made pursuant to subsection b. of this section shall provide that any loan guarantee shall be voided if the terms and conditions of the agreement are violated by any party to that agreement.
i. The authority shall solicit grants from interested public or private sources for the establishment and administration of the pilot program and study commission as well as the capitalization of the "social innovation loan guarantee fund" established pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
j. The pilot program shall expire on the 30th day following the closing of all loans guaranteed pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
3. a. The authority shall oversee a study commission, entitled the "New Jersey Social Innovation Study Commission," established for the duration of the pilot program.
b. The membership and size of the study commission shall be determined by the authority. The authority may consider a variety of professionals, including health care, lending, and social finance experts, for membership on the study commission. The study commission shall organize as soon as practicable after the appointment of the study commission members, shall select a chairperson from among its membership, and shall appoint a secretary who need not be a member of the study commission. At least one member of the study commission shall be a representative of the Department of Human Services, one member shall be a representative of the Department of Health, and one member shall be the Director of the Office of Faith Based Initiatives in the Department of State. All members of the study commission shall serve for a term concurrent with the effective period of the pilot program.
c. Any vacancy in the membership of the study commission shall be filled in the same manner in which the original appointment was made.
d. The study commission may request the assistance and services of employees of any other State department, board, bureau, commission, task force, or agency as it may require and as may be available. Members of the study commission shall serve without compensation, but shall be entitled to employ clerical assistance and incur traveling and other miscellaneous expenses as the study commission may deem necessary in order to perform its duties, within the limits of the funds made available to the study commission for its purposes. The study commission may meet at the call of its chairperson at the times and in the places the study commission may deem appropriate and necessary to fulfill its duties, and may conduct public hearings at a place or places as the study commission shall designate. The study commission shall conduct its meetings in accordance with the "Senator Byron M. Baer Open Public Meetings Act," P.L.1975, c.231 (C.10:4-6 et seq.).
e. It shall be the duty of the study commission to aid the authority in the administration of the social innovation loan guarantee pilot program and to issue annual reports detailing the progress of the pilot program. Specifically, the study commission, in cooperation with the authority and the Department of Human Services shall:
(1) Identify the nonprofit organizations that are eligible to receive loan guarantees from the authority. The study commission shall make this determination taking several factors into consideration which shall include, but not be limited to, the size and identity of the target population that benefits from the organization, the projected financial value of the improvements to treatment and prevention services as a result of the pilot program, including projected public sector savings, the ability to repay the loan in full, the ease of the measurability of the outcomes, and an analysis of impacts beyond financial savings and returns, such as social outcomes;
(2) Assist the authority in soliciting donations from philanthropic organizations and other private sources to capitalize the social innovation loan guarantee fund;
(3) Negotiate contract terms and conditions between social innovation loan guarantee recipients and any public entity for whom the recipient is performing treatment and prevention services, including the development of metrics to project and measure both financial and social outcomes, and the identification of independent third parties to measure and evaluate social outcomes;
(4) Determine whether an independent intermediary with expertise in the areas of social finance and health care should be retained to: (a) assist the study commission in the performance of its duties under this section; (b) perform the measurement and verification activities required in the agreements entered into pursuant to paragraph (3) of subsection b. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill); and (c) to identify appropriate independent intermediaries to recommend to the authority if the study commission determines that intermediary services should be retained; and
(5) Any other purposes related to the pilot program for which the authority requests assistance.
f. (1) Not later than one year following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and annually for four years thereafter, the study commission shall submit to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report containing a study and evaluation of the pilot program. The report shall include, but not be limited to, a description of any eligible organizations funded by the social innovation loans, State, federal, and municipal financial savings related to the issuance of social innovation loans, including Medicaid savings, the expected loan performance and projected payment schedule, the number of people serviced by the eligible organization, a comparison of the population serviced by the eligible organization and a similarly situated control group, and any community impact related to the pilot program.
(2) The study commission shall submit its fifth and final report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, within 90 days of the expiration date of the pilot program, including any recommendations for legislative action it deems appropriate. The study commission's final report shall include, but not be limited to, an analysis of the feasibility of implementing a permanent social innovation loan guarantee program Statewide, the sectors outside of nonprofit treatment and prevention services in which social lending could be successfully applied, the estimated costs for the creation and administration of a permanent social innovation loan guarantee program, the projected State, federal, and municipal savings from administering a permanent program, a calculation of the loan performance realized from the pilot program, a calculation of the State, federal, and municipal savings accrued through the pilot program, and an analysis of non-financial outcomes, such as community impact and preventive results.
g. The study commission shall expire on the 30th day after the date of the issuance of its final report, pursuant to paragraph (2) of subsection f. of this section, or upon the expiration of the pilot program, whichever occurs later.
4. a. To implement the social innovation loan guarantee pilot program, the authority shall establish and maintain a special non-lapsing, revolving fund called the "social innovation loan guarantee fund" which may be credited with:
(1) monies appropriated by the State for the purpose of the fund;
(2) monies received by the authority from any public or private donations to guarantee the loans issued pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);
(3) any monies as may be available to the authority from grants or other forms of assistance established to support treatment and prevention service intervention activities by the authority or by other State agencies or authorities; and
(4) monies received from eligible organizations in the form of any applicable fees.
b. Monies deposited in the fund may be used by the authority for the following purposes:
(1) guaranteeing loans issued pursuant to subsection b. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);
(2) reasonable and necessary expenses incurred by the authority related to the administration of the pilot program and the study commission; and
(3) administrative expenses for the provision of loan guarantees issued pursuant to subsection b. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
c. The amount of loans guaranteed by the authority pursuant to subsection b. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $3,000,000 per year or $15,000,000 in the aggregate over five years, as determined by the authority.
d. The authority shall not issue a loan guarantee in an amount greater than the available and uncommitted monies in the fund.
e. The authority may charge fees in connection with applications for participation in the social innovation loan guarantee pilot program as it deems reasonable to cover authority expenses in administering the pilot program and issuing loan guarantees.
f. The authority shall appoint a director, who is also an employee of the Health Care Facilities Financing Authority, to manage the activities associated with the "social innovation loan guarantee fund" established pursuant to this section. The director shall receive compensation as determined by the authority.
g. The authority shall issue a report six months after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and annually thereafter not later than September 15, to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature concerning the financing of the pilot program as described in section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), undertaken with monies from the "social innovation loan guarantee fund." The initial report and each annual report required pursuant to this section shall include a description of the pilot program funded by loans guaranteed to eligible organizations and a detailed analysis of the consideration given to the factors set forth in subsection d. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
5. The authority shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), any rules or regulations necessary to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).
6. This act shall take effect on the first day of the fourth month following the date of enactment, but the authority may take anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.
STATEMENT
This bill establishes a five-year social innovation loan guarantee pilot program (pilot program) for the purpose of encouraging private investment in health care services for the treatment and prevention of opioid and other substance use disorders (treatment and prevention services) to lower public expenditures related to those services.
Under the bill, the New Jersey Health Care Facilities Financing Authority (HCFFA) is to establish a pilot program to guarantee loan agreements among lenders, eligible nonprofit organizations, and public sector entities. The loan agreements are to: 1) provide an eligible nonprofit organization with direct funding from a lender in exchange for the provision of treatment and prevention services; 2) require the public sector entity receiving funds for treatment and prevention services to make defined payments to the lender in an amount proportional to the amount of savings generated by the provision of treatment and prevention services; and 3) authorize the lender to receive loan repayments from the public sector entity in exchange for the provision of funding to an eligible nonprofit organization. In the event that the anticipated savings are not achieved, the HCFFA is to provide a loan guarantee for the lender.
The HCFFA, lender, and eligible nonprofit organizations are also required to establish a method of measurement and verification that ensures treatment and prevention services were performed, calculating any public sector savings resulting from those services, and determining any interest rates or payments applicable to the agreements. The bill allows the guarantees issued by the HCFFA to be up to 100 percent of the value of the loan agreements, with loan amounts not to exceed $3,000,000 per year or $15,000,000 in the aggregate over the five-year pilot program period.
The bill establishes a non-lapsing, revolving fund called the "social innovation loan guarantee fund" (loan fund) which is to be used to guarantee pilot program loans to fund the loan program and to pay for expenses related to the administration of the loan guarantees. The loan guarantee fund may be credited with monies from State appropriations, public or private donations, grant funding, and loan guarantee program fees. The HCFFA is not to issue a loan guarantee in an amount greater than the available and committed monies in the loan guarantee fund.
The bill requires the HCFFA to solicit grants from philanthropic organizations or other private sources for the establishment and administration of the pilot program and capitalization of the loan guarantee fund.
The bill establishes the "New Jersey Social Innovation Study Commission" (study commission) within the HCFFA to assist the HCFFA in administering the pilot program and issue annual reports concerning the pilot program. The bill requires the HCFFA to oversee the study commission, to determine the membership and size of the study commission, and to appoint members to the study commission. The Director of the Office of Faith-Based Initiatives in the Department of State, a representative from the Department of Health, and a representative from the Department of Human Services are to be members of the study commission.
The bill directs the study commission to: 1) identify the nonprofit organizations that will be eligible to receive loan guarantees from the HCFFA; 2) assist the HCFFA in soliciting donations for the loan guarantee fund; 3) help negotiate contract terms and conditions of the loan agreements among lenders, eligible nonprofit organizations, the HCFFA, and public sector entities; 4) determine the necessity of retaining an independent intermediary to assist the study commission in the performance of its duties or to perform the measurement and verification functions needed to execute the loan guarantees; and 5) assist the HCFFA, upon request, with any other issues related to the program.
