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The Importance of Reinvesting Savings in Preventative Programs

Too often, governments simply take savings from successful human services programs and inject them into the general fund. But that's a dangerous practice.

Last month I wrote about "pay for success" initiatives in human services, including opportunity compacts, whereby agencies and budget departments contract through a third-party intermediary to ensure that savings from successful early intervention programs are reinvested back into those same programs.

Opportunity compacts would seem unnecessary given that the rational approach to successful preventative programs would be to feed and not starve them. But way too often -- especially in human services -- "rational" isn't the right word to describe the connection between programs, results and spending. Instead, there is a perverse and pervasive approach to programming and budgeting that I call "punishment-for-performance," which involves taking savings from successful programs and simply sweeping them back into the general fund. It's a powerful disincentive for agencies to pursue smarter, more cost-effective ways of doing business.

There is no more glaring evidence of this practice than in Florida right now. The Department of Juvenile Justice (DJJ) isn't just failing to reinvest in a proven preventative, community-based approach to diverting young adults out of the juvenile justice system, it's dismantling it. This is a program that supporters claim has generated tens of millions in documented savings for the state.

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Normally, I'm skeptical of such savings claims. Among the fuzziest math practiced in the public sector is the calculation of "estimated savings" from some new program, policy or management scheme. But savings from the Florida initiative -- called the Redirection Program -- have been documented by the legislature's highly respected and notoriously rigorous Office of Program Policy Analysis & Government Accountability. According to an April 2010 audit report, "The redirection program has achieved $51.2 million in cost savings for the state since it began five years ago due to lower operating costs compared to residential programs."

But the program has saved more than money: It turns out that kids who were diverted were significantly less likely to commit serious crimes as adults, which means additional and incalculable societal savings over the lifetime of that individual.

It's unclear exactly why the DJJ is taking the initiative apart, says Dan Edwards with Advancing Evidence Based Practices, which consulted with Florida on the diversion program. (Calls to the agency weren't returned by publication time.) But theories range from political pressure from institutional providers to changes in political players (the redirection program was launched in 2006 with strong legislative support, which continued under Gov. Charlie Crist who served from 2007 to 2011).

I can't imagine that the reversal in Florida is going to last long. In fact, there is the possibility of legislative intervention in support of the redirection initiative. But overall, the notion of early intervention and prevention is gaining momentum in the criminal justice field, in no small part because of the attendant impacts on the entire human services system when you keep people out of jail and in their communities and families.

Indeed, the widespread power of early, intensive and community-based intervention is spelled out in a report released just last month on a 17-state initiative being funded by the Bureau of Justice Assistance called the Justice Reinvestment Initiative. The JRI, which launched in 2010, is aimed at "encourag[ing] states to shift toward a culture of greater collaboration, data-driven decision-making, and increased use of evidence-based practices," according to the foreword by Denise E. O'Donnell, director of the bureau -- practices that include everything from reforming probation and parole policies to providing intensive, community-based mental health and substance abuse programs to offenders.

And while there's no discussion in the report of concrete mechanisms for guaranteeing that savings from early intervention, prevention and other reforms be reinvested, the report calculates that already over $165 million in savings have been reinvested thanks to reductions in incarceration rates ranging from under 1 percent to nearly 20 percent.

Those are impressive numbers and ought to get policymakers' and budget writers' attention. Too often, though, government is plagued by a short-sightedness driven by election cycles and the latest sensational headlines. So as other states continue to demonstrate the power of forward thinking, it will be interesting to see if decision-makers in the Sunshine State decide to come to their senses as well.

A Senior Editor of Governing, Jonathan has been covering state and local public policy and administration for more than 30 years.
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