Florida leads the way in the use of cost-benefit analysis to support policymaking

Pew Charitable Trusts in partnership with the MacArthur Foundation issued the States’ Use of Cost-Benefit Analysis: Improving Taxpayers Results (Results First) study in July.

The Results First study overview states, “In this age of fiscal stress for state governments, it is more important than ever that policy leaders direct public resources to the most cost-effective programs and policies while curbing spending on those programs that have proved ineffective. But to do this well, policy makers need reliable approaches that can help them assess budget choices and identify the best investments for taxpayers.”

Given the dire fiscal situation in Detroit and looming Congressional battles over the budget, a continuing resolution to fund the federal government and raising the debt ceiling votes, Results First study is a document all elected officials should read and reflect upon.

Results First’s research answers three critical questions: Are states conducting cost-benefit analyses? Do they use the results when making policy and budget decisions? And what challenges do states face in conducting and using these studies?

The analysis includes a systematic search and assessment of state cost benefit studies released between January 2008 and December 2011.

The top states [in alphabetical order]—Florida, Kansas, Minnesota, Missouri, New York, North Carolina, Utah, Virginia, Washington, and Wisconsin—each generally released more studies than mixed or trailing states, systematically assessed the costs and benefits of multiple program alternatives, and used results to inform policy or budget decisions. Two of these states, New York and Washington, were leaders on all three criteria.

Results First found:

• Ten states led the way nationally in the production, scope, and use of cost-benefit analysis to support data-driven policymaking. These states were among the leaders in at least two of the three study criteria and trailed in none.
• 11 states—California, Florida, Kansas, Minnesota, Missouri, New York, North Carolina, Ohio, Utah, Virginia, and Washington—led the way in the production of cost-benefit analyses, releasing at least 11 studies each, or an average of three or more per year.

Results First highlighted as an example of effective cost-benefit analysis that, “In 2003, the Florida Legislature directed its Office of Program Policy Analysis and Government Accountability to assess whether it would be cost-effective to create an alternative therapy-based program to serve nonviolent juvenile offenders in the community rather than in residential commitment facilities. The office’s report concluded that, based on national research on similar programs, implementing two pilots of a program called Redirection would save the state an estimated $1.7 million in the first year of operation.”

Results First notes that between 2008-2011, 50 states and the District of Columbia issued 348 cost-benefit studies, but their output varied widely. Florida issued 11 cost-benefit studies.

Former US Senator and Presidential Candidate Barry Goldwater wrote in The Conscience of a Conservative (1960):

“I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size.

I do not undertake to promote welfare, for I propose to extend freedom.

My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or that have failed their purpose, or that impose on the people an unwarranted financial burden.

I will not attempt to discover whether legislation is “needed” before I have first determined whether it is constitutionally permissible.

And if I should later be attacked for neglecting my constituents’ “interests,” I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can.”

Prophetic words indeed.