Budgeting Based on ROI

E-newsletter Issue #116 | June 6, 2013

Washington, like many states in the 1990s, was grappling with juvenile crime.

State officials handled the problem as many states did—offer a series of services to help the juveniles deal with the problem then, if they kept getting into trouble, send them off to a residential commitment program.

“We take them out of their community and send them off, provide intensive services, educational services, drug treatment programs, counseling services to help them get off the path of committing crime and to, hopefully, turn them into good citizens,” Gary VanLandingham, director of the Pew-MacArthur Results First Initiative, said during a Council of State Governments webinar about the program. “When that process is done, we release them back into the community.”

The treatment plan, he said, is very expensive, costing more than $80,000 per child for every year they are in a residential commitment facility. But what Washington found out is that it’s also not a very effective program. The recidivism rate for those youth is high—more than half of the kids were back in the juvenile justice system in less than two years, according to research by the Washington State Institute for Public Policy.

On the other hand, a new program known as Functional Family Therapy reduced recidivism among those juveniles by 22 percent and cost the state about $3,200 for every juvenile served, VanLandingham said.

“Compared to the $80,000 to send that child off to a residential commitment bed, we can see immediately that it’s more cost-effective,” he said.

But the other thing policymakers must consider, he said, is whether it’s effective to us as taxpayers and as a society; in other words, what’s the return on investment?

The Functional Family Therapy program produced benefits of $37,739—a net savings of about $34,500. That’s a return of $11.86 for every dollar invested in the program. Those benefits include reduced crime, which translated to lower state and victim costs; increased high school graduation, which translated to increased earnings; and reduced health care costs, which meant lowered public costs, VanLandingham said.

But that’s not all Washington did in evaluating the program. It also looked at the cost of other programs, like Scared Straight, which costs about $63 per juvenile served, then considered the net long-term benefits and the cost/benefit ratio. Scared Straight, for instance, netted no benefits, according to the Washington State Institute for Public Policy research.

The Pew Center on the States and the MacArthur Foundation are working to bring that kind of consumer reporting analysis to other states through the Results First initiative. The initiative is free to states with the exception of personnel costs. Results First is operating in 14 states across the country, both large and small, red and blue.

“This is an approach that really communicates across the political divide,” VanLandingham said. “It’s not about spending more money or less money; it’s about spending money better to identify, through (a) proven research approach, what are the most effective ways of investing taxpayer dollars to produce the best return for our citizens.”

In Mississippi, the initiative is getting positive feedback from state agencies, and the state is establishing a program inventory of evidence-based programs, according to Brian Dickerson, program evaluator with the Joint Legislative Committee on Performance Evaluation and Expenditure Review.

Mississippi began work with Results First model in December, and is in the data collection and integration phase of review of the adult correctional programs and K-12 educational programs.

In Massachusetts, the state has completed its most comprehensive assessment of criminal justice data ever done in the state, said Michael Coelho, assistant secretary for policy and planning in the Executive Office of Public Safety and Security.

He said the Results First collaborations are leading to policy innovations across the executive and judicial branches in the state.

Charles Sallee, deputy director of the New Mexico Legislative Finance Committee, said his state began using Results First last year to assess multiple policy areas, including adult and juvenile crime, education, child welfare, substance abuse and health care.

“It’s one other tool to help identify what we are getting from government now,” Sallee said. “Just getting a handle on what agencies are funding is an important first step.”

Knowing what states are funding is one of the challenges policymakers face in determining what programs to continue and what programs to cut.

“States unfortunately don’t have some fairly critical information that they should have,” VanLandingham said. “Programs get created. They are funded. They are given to agencies with implementing legislation to guide their operation.”

After that, he said, they “vanish from sight” because money is appropriated by agency or by line item, such as salaries.

“We don’t know what programs we’re operating; we don’t know how much they cost,” he said.

Results First is working to change that.

“Our goal is not only to get this approach operating in the states, but also to make it live and something policymakers understand and are willing to use in the policy and budget process,” VanLandingham said.

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