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STATE OF OPPORTUNITY. Can Kids in Michigan Get Ahead?
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This special reporting project wrapped up in May 2017. Read more.
Policy

Pay now or pay later? The State of Opportunity story

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Pay now or pay later? I feel like that could be the unofficial tag line for our State of Opportunity project.  

The "pay now or pay later" question comes up time and again when we talk about programs aimed at helping kids climb out of poverty. For example: Do we spend the money up front for high-quality preschool for low-income kids, or do we wait until they're falling behind to try and step in to help? Do we offer preventive medical care for low-income kids, or do we wait to treat them until they've developed asthma or heart disease later in life?  

The up-front preventive costs are high, but they're often much lower than what taxpayers have to spend to fix the problem later on. Take prisons, for example. Kids from poverty are much more likely than their well-off peers to wind up in the prison system. A high-quality preschool education, which has been proven to increase graduation rates and significantly reduce crime rates, costs roughly $11,000 per child. A hefty sum, no doubt. But as this CNN data chart shows, the cost to house a prisoner in Michigan is more than twice that. 

And now here's another "pay now or pay later" dilemma to grapple with. This one deals with chronic homelessness. In 2005, Utah had a serious homelessness problem. As James Surowiecki writes in this New Yorker article, the traditional way to deal with it was to help these folks get "house ready" first. In other words, deal with their substance abuse or mental health issues first, then help them find a home. But Utah decided to flip that model, and their "Housing First" strategy has led to some pretty surprising results:

Handing mentally ill substance abusers the keys to a new place may sound like an example of wasteful government spending. But it turned out to be the opposite: over time, Housing First has saved the government money. Homeless people are not cheap to take care of. The cost of shelters, emergency-room visits, ambulances, police, and so on quickly piles up. Lloyd Pendleton, the director of Utah’s Homeless Task Force, told me of one individual whose care one year cost nearly a million dollars, and said that, with the traditional approach, the average chronically homeless person used to cost Salt Lake City more than $20,000 a year. Putting someone into permanent housing costs the state just $8,000, and that’s after you include the cost of the case managers who work with the formerly homeless to help them adjust. The same is true elsewhere. A Colorado study found that the average homeless person cost the state $43,000 a year, while housing that person would cost just $17,000 dollars.

A quick Internet search shows that Michigan has a Housing First model as well. I've got calls out to see how it's going and will update this post with the answer. Stay tuned!