OP-ED | The Delivery of Social Services Can Save Money
Our nation’s most successful businesses engage in the relentless cycle of operation, evaluation and adjustment to ensure that “return on investment” is optimized. This discipline is so ingrained in our culture that most high school students are familiar with the concept of ROI. Why not government?
We have been trying to reduce deficits in Connecticut for as long as anyone can remember. The majority of states and our federal government are also dealing with intense budget issues tied to decreased revenues and increased need. Connecticut has significant challenges as one of only 2 states with a constricting private jobs market, well publicized challenges attracting new businesses and very high debt. Our state always shows up on the list of states in the worst financial condition.
Six states – not including Connecticut, but including New York and New Jersey—just pooled resources and created the State Budget Crisis Task Force. This task force concluded that the emerging revenue/need crisis is a threat to existing “social order.”
On Dec. 4, 2012, a conference at the Legislative Office Building in Hartford addressed trends in financing social services. My firm was one of the sponsors. A variety of topics and projects were discussed with a consistent financial thread weaving throughout: Effective social services save government money and preventative social services save huge amounts of money. The hot issue was the “social impact bond,” where private investors fund a proven preventative social service with the stated goal of saving government money. Because the SIB model contemplates the potential for a return for philanthropic “investors,” it receives perhaps too much attention in relation to the larger discussion.
What is the larger discussion? Simply stated, the delivery, refinement and measurement of social services are central to a state’s fiscal planning. A state is a contained fiscal entity. Policy decisions regarding what social services are delivered—and when—are as central to the fiscal health of a state as decisions regarding tax levels, economic development and building bridges.
There is a nascent movement that seeks to quantify the economic benefit derived from the delivery of preventative social services. Not always identified by the same moniker, this movement presents itself in a variety of forms. New York, Massachusetts and the Federal Government have implemented a “pay-for-success” contracting structure that measures the results of delivering preventative social services in relation to workforce development, juvenile justice and homelessness. Mayor Bloomberg pushed forward a reentry SIB in NYC for the formerly incarcerated. Connecticut has witnessed these trends and is considering a SIB project that seeks to reduce recidivism of the formerly incarcerated. The Washington State Institute for Public Policy has being conducting research for years to create data surrounding the ROI on a variety of social services.
We should redirect our budget efforts from maintaining historical funding levels to how can we use our limited resources to address the underlying issues that cause us to increase spending each year. The good news is that we have many answers. Early childhood education has shown to dramatically reduce the need for more expensive special education programming later in life. Functional family therapy directs participants to supports. Treating the family as a “whole” has shown a return of over 300 percent because it diverts family members from a variety of other “services,” especially the brutally expensive juvenile and adult criminal justice systems.
There will be substantial resistance to implementing policies based upon readily available research and common sense. Hard choices always challenge the status quo. These are not reasons to be passive. When a state prioritizes preventative social services to employ parents, divert juveniles from the criminal justice system, provide housing for the homeless or break the cycle of incarceration, the financial benefits to a state are huge. Successful service delivery for these issues transforms large populations from revenue negative to revenue positive. Beneficiaries stop costing the state money and become tax paying citizens who contribute to the social and economic health of the communities in which they live. While these positive outcomes hopefully make us feel good as human beings, in this challenged economic environment that is now the new normal, these social service decisions are economically necessary.
Brian O’Shaughnessy of New Haven is a principal in the firm Community Impact Strategies, Ltd.