Eight States Reduce Recidivism without Social Impact Bonds

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June 12, 2014; Council of State Governments

It is remarkable how many of the social impact bonds or pay-for-success projects planned or enacted here and in the UK address efforts to reduce prison recidivism. The wrong conclusion to reach from these projects, hopefully not intended by the SIB/PFS promoters, is that private investors such as Goldman Sachs are discovering evidence-based but relatively unrecognized programs to reduce prison recidivism, and that if not for the private investment, this arena of activity might not be getting the governmental attention it is receiving as a result of the SIB phenomenon.

It may be true that the typical governmental approach is more of the same, simply warehousing people in prison and hoping that the blowback from people unavoidably returning to prison after their release into the community won’t be too horrendous—or costly. However, the Council of State Governments just released a report this week that documents the very promising efforts of eight states—Colorado, Connecticut, Georgia, North Carolina, Pennsylvania, Rhode Island, South Carolina, and Wisconsin—that have actually achieved reductions in recidivism between 2007 and 2010. The report on these eight states follows an earlier CSG report that documented the reductions in recidivism achieved by seven other states between 2005 and 2007.

The distinction between these eight states and the two states that are pursuing recidivism-reduction programs with the help of SIBs (New York and Massachusetts) is that the CSG is documenting system-wide, statewide reductions in recidivism as opposed to project- (or prison-) specific efforts. According to the June 2014 report, “compelling evidence is now emerging that shows that recidivism rates for an entire state can indeed change.”

Several states have benefited from grants under the federal Second Chance Act to help states experiment with promising techniques in recidivism reduction. Among the tools and strategies adopted by these states are the following:

  • Investing in community-based mental health and substance abuse treatment programs
  • Using risk and needs assessments so that case management and programs can be tailored to the individual needs of the released people
  • Providing incentives for former prisoners to participate in programs designed to reduce the likelihood of returning to prison, such as cognitive-behavioral therapy, mental health and substance abuse treatment, educational classes, and vocational training
  • Reentry planning for prisoners prior to release dealing with their needs for housing, employment, and substance abuse, accompanied by intensive post-release support and supervision
  • Providing continuity of care for the mental health treatment needs of persons in prison so that their access to services post-release is seamless
  • Creating and expanding alternatives to prison incarceration such as day reporting centers, residential substance abuse treatment centers, and other viable community-based alternatives
  • Developing and using “accountability courts” that use risk and needs assessments to guide decisions about treatment and supervision
  • Encouraging corrections departments to collaborate with partners such as community-based nonprofits and faith-based institutions to help people released from prison with their successful reintegration into communities
  • Upgraded data collection and tracking

Perhaps in New York and Massachusetts, the SIB projects are experimenting with techniques that haven’t been considered by these states that have reduced prison recidivism—techniques so powerful as to warrant a return on investment for Goldman Sachs of 22 percent if Bloomberg Philanthropies weren’t guaranteeing most of its $9.6 million investment in the New York City SIB (or over 87 percent if the Bloomberg guarantee is factored in). However, if the programs work, the implication of the CSG reports is that these valid, evidence-based practices can achieve system-wide results. Should these states not try these techniques because they need private capital through SIB/PFS structures? Or would private capital through a SIB allow these states to do even more, even if the efforts are project- or place- (or prison-) specific?—Rick Cohen

  • Brian O’Shaughessy, communityimpactstrategies.com

    This article proves the value of social impact bonds. Do you honestly believe states would be falling over each other to establish recidivism reduction without a sustained recession and the efforts of the private sector and the social financing community? Providing the financial modeling to show the horrific expense involved in mass incarceration has prompted states to takes steps to reduce recidivism. Without the new wave of financial analysis – of which SIBs is a part – no one would care. People have talked about root causes forever, but until the financial community showed how much money is wasted, the status quo has prevailed.

  • Brian O’Shaughnessy, Community Impact Strategies

    What the author fails to realize is that the desire of states to reduce recidivism is directly attributable to the financial analysis inherent in social innovation financing concepts, of which SIBs are an integral part. The SIB model is just one tool to establish that if we deliver preventive services, the savings are substantial. A sustained recession has resulted in need increasing and decreased public revenues. Without the financial modeling provided by folks in the social and impact investing fields, states would not have been shamed into getting serious about reducing the horrific direct and collateral financial consequences of our criminal justice system.

  • D. Hale

    Well Brian. Let us thank the private sector for their financial analysis and use the newly available political will to reduce recidivism. The public sector can keep the savings in tax dollars and re-invest in other needed areas rather than providing the private sector with trickle up profits and creating an unneeded market.