Local Government Initiatives
that "Save" Tax Dollars
Cost saver task force
Many programs claim they "save the taxpayers money".
How can we evaluate that claim? Can we spell out criteria that will identify
programs that truly save money, and earmark those programs in the budget
for appropriate treatment?
What does it mean to save money?
Distinguish new initiatives that are intended to
save money, from on-going programs that claim to save money.
It's relatively easy to find cases in which investing
in a new initiative will save money compared to existing standard practice.
For example, buying energy-efficient lightbulbs may require a larger initial
expense, but may reduce costs over the long run.
But can we then say that this initiative continues
to save us money in the long run, year after year? In an important sense,
I think not. It's surely true that continuing the new practice may well
be a good idea from now on. And it would surely be wasting money to go
back to using less efficient lightbulbs.
But note this key fact. For any program whatsoever,
without exception, it's surely always possible to find even less efficient,
more expensive and generally dumber ways to do the same thing. No matter
how poorly designed and implemented a program is, there's always a more
expensive alternative. Thus any program at all can claim to "save" money,
because we (whoever we are) are doing it better than if we'd chosen the
really dumb expensive way. Moreover, any program that has ever succeeded
in improving at all can claim to "save" money because we do it better now
that in the bad old days when we did it the more expensive way.
So if all it takes to be a cost-saver program is
to be doing things in a way that costs less than the way we used to do
them, then virtually every program is a money saver. We can celebrate and
go home. But if we want to identify a subset of programs that save money
in some clearer sense, we need to set the bar higher, with more stringent
The more stringent criterion we developed was to
ask which programs could demonstrate that as a result of their activities,
the costs in some other department were reduced by an amount equal
to or greater than the original cost of the program. That is, the widget
renoberation program of department A wins cost-saver designation only if
it is responsible for cost-reductions in some department B, and by an amount
at least equal to the W.R. program's budget.
Home health aids
Alternatives to incarceration
Eric Lerner, Ph.D.
Community & Organizational Development
504 South Plain Street
Ithaca, NY 14850
Page updated September 5, 2001