Budgeting Like a Business

Do you know how much bang for the buck your state is getting from the money it spends?

That’s an important question to answer, said Gary VanLandingham, director of the Pew-MacArthur Results First Initiative. He spoke during Thursday’s “Results First—Cost-Benefit Approaches to State Policymaking.”

VanLandingham said policies need to be built on data, not the anecdotes used by lobbyists during a legislative session.

“While everybody wants to do that, the question is what are those good programs out there,” he said. “What are those bad programs out there? States haven’t had a very good way to identify what are those good programs.”

The Results First Initiative helps states implement a model that provides a cost-benefit analysis for state programs, such as what is the most effective and cost-efficient program for keeping juveniles in the justice system from reoffending.  VanLandingham calls it “investment advice” for states.

“Over the last 40 years, we have done (rigorous evaluations of programs) across the country,” he said. “We know about what works now in a lot of areas and we can use this information to target like we’ve never done before.”

The same idea can be done with health impact assessments, which evaluate how potential or current legislation may impact health.

“Health impact assessment is at its best when informing decisions that, at its face, don’t seem to have anything to do with health,” said Ruth Lindberg, senior associate of the Health Impact Project, a joint effort of the Robert Wood Johnson Foundation and Pew Charitable Trusts.

Lindberg said a health impact assessment, for instance, helped show how increasing public transportation in Atlanta before the 1996 Olympic games, which was supposed to ease traffic congestion, also helped decrease emergency room visits for children with asthma due to the decrease in vehicle exhaust.

Josh Goodman of the Pew State Fiscal and Economic Growth Project, said legislators also need to take a look at their state’s tax incentives to see how much they cost and whether they are creating the jobs they were designed to create.

“Lots of incentives have no real fiscal note attached to them or incomplete fiscal notes that don’t include how much it is going to cost,” Goodman said. “Also, you need some kind of estimate of how popular the incentive will be. How many companies will take advantage of this incentive? How much will it cost?

“The problem with these incentives isn’t that the programs are expensive, it’s (that) the costs can be unexpected.”