Eric Lerner, Ph.D. 
Community & Organizational Development 

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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 criteria.

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
    • Pre-natal care

Eric Lerner, Ph.D.
Community & Organizational Development
504 South Plain Street
Ithaca, NY  14850
(607) 273-1154

Page updated September 5, 2001

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