Why doesn’t this country, or this state, seem to get a good return on its investment? Simple: Inefficiencies.
Christopher Flavelle’s Jan. 9 commentary (“War on poverty: U.S. needs to change tactics”) claiming that the United States doesn’t get as much bang for the buck as other countries seems likely to be on target. But if we want better results, the changes will have to involve something other than the simple cutting of programs.
Some time ago, in an attempt to figure out what the billions of dollars per year (more than half of which are federal funds) spent each year by Minnesota governments on health and human services is buying for the state, I gained an appreciation of the mind-boggling complexity of human-services programs in the United States.
The most helpful single source for understanding this at the national level was the 2002 Brookings Institution Press book “The State of Nonprofit America,” edited by Lester Salomon. An essay in the book by Steven R. Smith suggests that the inefficiency of America’s war on poverty, alleged by Flavelle, may stem from “America’s unique approach” to social policy.
“In other countries,” Smith writes, “personal social services are championed by major political parties as an essential right of every citizen. Extensive networks of social services exist as a consequence. In this country, we have been much more reluctant to enact entitlement programs in the area of social services. … Yet the social needs remain, so policymakers and advocates did an ‘end run’ … [and] significantly expanded federal support for social services by making technical changes to existing laws (for example, expanding Supplemental Security Income and Medicaid coverage).” This, we learn elsewhere in the book, “transformed Medicaid from a relatively narrow health and nursing home program into a veritable social service entitlement program.”
The “end run,” Smith continues, also involved “creating new programs for specific subsectors such as child welfare and drug abuse treatment, and reclassifying certain social services as long-term care (for example, community residences for the developmentally disabled and mentally ill) or health care (for example, counseling and drug abuse treatment). And in the past few years, nonprofit social service providers received money for new programs in part due to the political unpopularity of cash assistance. Policymakers are more apt to support expanded childcare and job training that help welfare recipients go to work than to support direct cash assistance.”
Minnesota’s human-services delivery system both reflects and exacerbates the arcane federal structure. We reflect the federal pattern with extensive involvement of third-party service providers, mostly nonprofit organizations. According to 2010 budget documents, Minnesota’s Department of Human Services licenses about 24,300 service providers.
We exacerbate the federal structural challenge by being among the nine states noted in a 2009 analysis to rely primarily upon counties for human-services delivery, with 84 separate public agencies in charge of delivering human services in Minnesota’s 87 counties (thanks to there being one two-county and one three-county agency).
A few days ago, at a forum discussing Minnesota’s precarious public finances, I mentioned the possibility that regionalized human-services delivery could be more efficient. People immediately claimed that the Legislature will never do this because the existing system means a lot of county-level jobs.
Minnesota’s human-services delivery system is a relic of the 19th century. I say let’s use this month’s 50th anniversary of the “War on Poverty” as an opportunity to bring our strategy and tactics into the 21st century.
Why bother? Because the costs of health and human services otherwise will bankrupt our governments as baby boomers age. My effort to understand this led me to categorize Minnesota’s human-services spending as of 2008, as best I could from the limited light available in this budgetary black hole.
I came up with 39.8 percent going to “services for vulnerable adults,” 26 percent for “child development outside school,” 21.9 percent for “residential care for dependent persons” (nursing homes, prisons) and 12.3 percent for “other investments in human capital.”
Spending in the first and third categories is likely to explode in the coming years.
During another recent discussion of Minnesota’s fiscal challenges at a St. Paul restaurant, my companions and I asked our waitress her impressions of human services. She came back with the “we’re wasting big money on welfare cheaters” response that is so typical.
The facts: Back in 2008, basic welfare spending on families was less than 4 percent of human-services spending, and General Assistance — basic welfare spending on single adults — was less than one-half of 1 percent.
We have a real problem right here in Minnesota that goes beyond the (real) national problem. Neither problem is about welfare cheaters. A great way for Minnesota to begin dealing with reality would be to implement a sensible regionalized delivery system that would create some efficiencies and promote a focus on best practices.
John P. James is a senior fellow with the Center for Policy Studies and an attorney who was Minnesota’s commissioner of revenue from 1987 to 1991 under Gov. Rudy Perpich.
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.