Florida leading nation in use of cost-benefit analysis for public policy choices

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Florida is among the 10 national leaders in use of cost-benefit analyses to inform public policy decisions, according to a study released Monday by the Pew Charitable Trust and the MacArthur Foundation.

The study, titled “States’ use of cost-benefit analysis: improving results for taxpayers,” is the first study of its kind to measure states’ use of a proven method to achieving cost-effective programs and policies while curbing spending on programs that prove ineffective. 

Cost-benefit analysis compares the expense of a program to the returns it delivers — yet the majority of states are not consistently using this approach to deliver the best investments for taxpayers.

States were ranked on three criteria: production, measured as the number of cost-benefit studies released per year between 2008 and 2011; scope, measured as whether the studies assessed multiple program alternatives or different service models intended to achieve the same outcomes; and use, measured as the extent to which study findings influenced budget and policy decisions.

Florida was one of 10 states to rank highly on at least two of these criteria: the state was one of 11 that released at least 11 studies during the review period, and was among the 29 states whose cost-benefit studies were strongly used in driving legislative or executive action.  Florida’s results were mixed in terms of scope, however, where the state did study multiple policy alternatives but within separate reports versus as a portfolio of alternatives with combined costs.

Overall, the number of states using cost-benefit analysis has increased 48 percent between 2008 and 2011, and the number of studies released increased by 79 percent during this time — likely in response to state budget restraints.

Florida requires studies of acquisition, building, and consolidation opportunities as part of an annual report on leasing, and utilizes independent research from its Office of Program Policy Analysis and Government Accountability (OPPAGA) to inform decisions across a broad scope of policy areas.

These facts were not lost on the Pew team: the director of the Pew-MacArthur Results First Initiative is Gary VanLandingham, former director of OPPAGA who served in this role for about eight years prior to joining Pew.  During his tenure at OPPAGA, the Florida Legislature adopted 83 percent of OPPAGA recommendations, resulting in savings of $1.4 billion.

“States that are committed to ensuring that taxpayer funds are spent effectively are turning to cost-benefit analysis,” said VanLandingham in the news release. “Many policymakers are looking for information that would allow them to target cuts more strategically, rather than make across-the-board reductions that treat effective and ineffective programs alike. Policy and spending choices should be based on evidence about what works and what does not. The bottom line is while the use of cost-benefit analysis is growing, states should be making wider and better use of this approach.”

The Pew-MacArthur Results First Initiative is a project that works with states to implement an approach that uses research to determine returns on investment for a broad range of programs.  Florida is among the 14 states involved in this project.

Karen Cyphers, PhD, is a public policy consultant, researcher, and mother to three daughters.