Maximize Return on Investment

A new wave of research proves what’s long been common sense – investing now in the success of children and families saves taxpayer dollars by cutting costs for corrections, hospitalization, special education, and other programs that combat the after effects of problems and ignored risks.

What Can Policymakers Do?

Ensure That Children Are Healthy and Enter School Ready and Prepared to Succeed. Putting children on a pathway to good health and school success through healthy births, nutrition and food security, early screening, dental care, immunizations and quality early education is a proven strategy for saving tax dollars long term.

• Early Care and Education . Returns on investment in quality early childhood education programs are well documented, with positive long term impacts on job growth, productivity, and the economy that generate returns far exceeding that of most publicly funded economic development projects. [i] 

• Immunization.  According to the Centers for Disease Control (CDC), every dollar spent on immunization saves $6.30 in direct medical costs. When indirect costs such as missed work, death and disability are added to the calculation, the return on investment jumps to $18.40. [ii]

•  Dental care . Medicaid enrolled children who have their first preventive dental visit by age one are more likely to have future preventive visits and to experience lower dental related costs. [iii]

• Child care subsidies .  Forty-five percent of parents polled miss at least one day of work every six months due to a child care breakdown and 65 percent are late to work or leave work early due to child care issues. [iv]

•   Home visiting programs . Dividends for every dollar invested range from $1.26 to $5.07 depending on the program model and the population it is designed to serve. [v]

Ensure that Children Grow Up in Safe, Supportive and Economically Successful Families. When states invest in supports that allow unemployed and underemployed workers to stay out of poverty, supplement their wages, and get training and skills, they also stimulate the economy and increase tax revenues long term. Safe and nurturing families are critical to positive outcomes for children [vi] and save taxpayers the cost of out-of-home placements.

• Food Stamps (SNAP). Because eligible families spend SNAP benefits rapidly, they provide not only immediate help to those most in need, but also a strong return on investment. Among economic stimulus options, food stamps offer the biggest “bang for the buck.”  Each $5 of federal Food Stamp benefits generates nearly two times that in economic activity. [vii]

• Earned Income Tax Credit . In Baltimore, 2002 EITC payments created $102 million in economic output, 1,061 jobs, nearly $31 million in wages, and almost $600,000 in city tax revenue. [viii]   EITC dollars received in Cuyahoga County, Ohio in the first months of 2003 equaled all wages and salaries paid in the local hotel industry in that quarter. [ix]

•  Workforce Development . A 2007 study showed yields on investment averaged roughly $2-3 for every dollar spent, including increases in wages and income taxes and decreases in unemployment insurance, public assistance, Social Security and Medicare payments.

• Family Preservation . In Washington State, Intensive Family Preservation Services, closely following the “Homebuilders” model significantly reduce out-of-home placements and subsequent abuse and neglect.  The estimated return on investment is $2.59 for each dollar of cost. [x]

• Family Reunification .  Maryland’s Family Recovery Program saves taxpayers $1 million annually by combating child abuse and drug addiction with a family drug treatment court and effecting timely reunification of children in foster care.

• Adoption Assistance . The cost savings of adoption assistance range from $3.3 billion to $6.3 billion for the 50,000 children adopted from foster care each year.  Each dollar invested in adoption assistance yields between $2.45 and $3.26 in benefits to society and provides children with a permanent, lifelong family.

• Subsidized Guardianship . Evaluation of an Illinois waiver to demonstrate the effectiveness of subsidized guardianship with kin showed that after ten years the program reduced the average length of stay in foster care by 269 days per child.  Illinois saved $4,590 per child in administrative and court costs–an accumulation of $54.4 million at the end of the first five years. [xi]

Prepare Youth to Succeed as Adults.   Investments in programs that promote positive development for youth avoid costs for mental health, welfare, unemployment and corrections and pay a high return in positive, lifelong contributions to society.

• Community-based programs  . A cost-benefit analysis of a range of prevention and early intervention programs for children and families found that investments in effective programs for juvenile offenders have the highest net benefit. Such programs yield from $1,900 to $31,200 per youth by avoiding otherwise certain participation in more costly interventions. [xii]