Strategies for Tough Fiscal Times

Principles

During recessions, tax revenues decrease and the newly unemployed require more services. As a result, state policymakers must make difficult choices to balance their state budgets. Policymakers should follow these principles to make the best decisions for children and families.

1. Protect the most vulnerable. Recessions sharply increase unemployment, homelessness, and hunger. [i] Funding benefits and services for people who need them most not only minimizes human suffering; it also reduces future costs to the state.

2. Focus on results. Focusing on measurable results can help set priorities and guide decisions about the best use of scarce resources.

3. Maximize return on investment – over the short and long term. Especially when money is tight, it pays to invest in cost-effective services, programs and policies that provide immediate benefits for children and families and that keep paying as children grow into productive adults.

4. Stimulate the economy by investing in children and families. Providing financial support to struggling families who will immediately spend it on necessities both quickly injects money into the economy and benefits those most likely to be hurt by the economic downturn. [ii]

5. Strengthen community resources. In times of hardship, many people turn to extended families, neighbors, faith groups, local food banks, and other community resources. By investing in local assets, policymakers can strengthen neighborhoods, spur local innovation and problem-solving, and tap the capacity of communities to prevent the need for more extensive assistance.

6. Seize the opportunity for reform. When budgets are tight, it’s easier to develop political consensus to eliminate well-intentioned but ineffective programs that don’t help vulnerable children and families. Tough times provide impetus for changing the way decisions are made and for building the capacity to make effective financing, budgeting and policy choices.