2020 State Standard of Excellence
11. Cost-Benefit Analysis
Did the state or any of its agencies assess and make publicly available the costs and benefits of public programs?
Cost-benefit analysis helps state governments quantify outcomes and program costs to ensure that public dollars are being efficiently spent to get the most value for taxpayers and the best outcomes for residents.
A 2013 Washington State law (pp. 105-106) directed the Department of Corrections, in consultation with the Washington State Institute for Public Policy (WSIPP), to: (1) compile an inventory of existing programs; (2) determine whether its programs were evidence-based; (3) assess the effectiveness of its programs, including conducting a cost-benefit analysis; and (4) phase out ineffective programs and implement evidence-based programs. As a result of this and similar laws, WSIPP has published cost-benefit analyses in a wide variety of issue areas over the past 10 years, including a 2020 report on the state’s extended foster care program. The WSIPP cost-benefit framework has been widely adopted by governments across the country.
A 2015 Connecticut law (pp. 649-651) requires the Institute for Municipal and Regional Policy at Central Connecticut State University to perform cost-benefit analyses of programs operated by the Connecticut Departments of Correction, Children and Families, and Mental Health and Addiction Services, and the Court Support Services Division of the Judicial Branch. The initiative issues regular reports, including the November 2019 report that found 92 evidence-based programs and services implemented in the state, 38 of which were subject to a Connecticut-specific cost-benefit analysis. The report also found that the Judicial Branch’s Court Support Services Division spent 79% of their adult program funding and 86% of juvenile funding on evidence-based programs; the Department of Children and Families spent 20%; and the Department of Corrections spent 98% on such evidence-based programs.
A 2015 Minnesota law directed Minnesota Management and Budget to develop a cost-benefit inventory of evidence-based interventions. As a result, the state developed cost-benefit analyses in the areas of criminal justice, adult mental health, children’s mental health, child welfare, probation, and substance use, based on the following four levels of evidence: proven effective, promising, theory-based, or no effect. Minnesota Management and Budget maintains the Minnesota Inventory, which includes a searchable clearinghouse of more than 500 programs.
New Mexico has published a series of inventory and cost-benefit reports in the areas of children’s behavioral health; adult behavioral health; early education; child welfare; criminal justice; healthcare, infant and maternal health; and education.
In 2019, the Legislative Finance Committee’s Evaluation Unit also published analyses on substance abuse treatment outcomes and Medicaid spending and managed care administration. The state has also published guidance on Legislating for Results.
Beginning in 2013, the New York State Division of Criminal Justice Services developed a cost-benefit analysis, based on an initial technical report, to outline the impact, costs, and benefits of specific criminal justice interventions. As a result of these efforts, New York has continued to operate Alternatives to Incarceration programs, a $12.8 million initiative in 2019-2020, to support evidence-based interventions.
As a result of a 2003 Oregon law, the Oregon Department of Corrections, Oregon Youth Authority, Oregon Youth Development Division, and the Oregon Health Authority divisions focused on mental health and addiction issues are required to perform a cost-benefit analyses and compile a biennial program inventory that details results from funded programs. In 2019, the Youth Authority and the Department of Corrections both published reports on costs and benefits of their programs, with the Youth Authority’s data found that four of six programs examined had a high likelihood of providing a positive return on investment.
Since 2013, Utah state agencies have used the SUCCESS Framework to perform cost-benefit analyses of government services. As detailed in the state’s Measurement Guide, this framework integrates the performance elements of quality, throughput, and cost to “help agencies improve quality, reduce costs, and create the capacity to do more with the same or fewer resources (improved throughput).” These program performance elements are reported as part of the state’s annual budget process.