The Missoula jail is packed and overcrowding has become a major problem for local policymakers. This week, the University of Utah’s Policy Innovation Lab announced that it has picked Missoula as one of six government entities, which will be receiving an influx of technical expertise and funding. The goal is to develop a “Pay For Success” system to help reduce the prison population. Lab director Jeremy Keele explains how it works.

"Pay for Success is a form of government contracting where the government actually puts a price on an outcome that it is willing to pay for, say, hypothetically, a 10 percent reduction in the recidivism rate. It then selects a service provider, or group of service providers in the community, typically non-profits, there are able to deliver that outcome."

Before Government pays out any money, the Private sector steps in and carries the risk as it tries to put new ideas to work.

"The private sector comes in and funds the intervention up front, so it actually pays for the non-profit to provide that program for a number of years. At the end of that program period an independent evaluator will measure if the program was effective or not. If the program was successful at achieving its target, then the government pays the private sector back."

The ideal situation would be a win-win-win for the government, private entities, and non-profits. The government wins by paying less in social costs and upkeep at the jail, the private sector wins by being able to practice a combination of entrepreneurial and social investment, and the non-profits win by being able to have a steady stream of funding for a given amount of time.

The Policy Innovation Lab will be spending nearly $100,000 dollars on a cost-benefit analysis for Missoula. The state of Massachusetts recently invested $2 million.