ROSI – Return On Social Investment

A common business metric is Return On Investment (ROI.)  It is used to measure the money gained or lost on an investment, relative to the amount of money invested.

Addressing social pathologies requires an ongoing financial investment.  I propose that a metric be created to measure the increase or decrease in tax money that is expended on programs that address social pathologies: Return On Social Investment (ROSI.)

For example, what is the ROSI for money spent on teen pregnancy prevention and high school dropout prevention programs?  What investment is required to realize a $1 million savings to taxpayers?

If a programs has a negative ROSI, then consider another, more cost effective program.

Social pathologies represent several great costs to our nation.  These pathologies include a variety of crimes, dropping out of school, substance abuse, and various forms of physical, mental, and emotional abuse.  The costs to us all include higher tax burdens, lost workplace productivity, higher crime rates, dependency upon social programs, crowded prisons, and an overall decline in the quality of life in our communities.

There is a body of data that estimates the tax burden associated with various social pathologies.  There is also a cost of doing nothing to address them.  Prevention is usually cheaper than intervention and having to address the consequences of the problem for years.

There is also an issue with addressing the needs of our U.S veterans.  Many are homeless.  Many others who were sent into conflict must now deal with physical, mental, and emotional scars.  On the US Economy blog, you can read about how the VA is addressing the needs of veterans:

$3.2 Billion Well Spent to Help Vets

The cost to rehabilitate 154,000 homeless veterans is $2.3 billion.  Over the life time of these veterans, what are all the types of costs that result from doing nothing to help them, who will bears all of these various costs, how much money will these costs represents, and for how many years will we bear all of these costs?

Aside from the cost of doing nothing, there is an intangible cost for not addressing the needs of these veterans.  It is a loss of national honor for not attending to those who answered the call of duty and paid a price.

I was on the state planning committee for the 2008 South Carolina Dropout Prevention Summit.  There, I heard someone suggest that if a student drops out of school, you might as well send them straight to prison because that is where so many dropouts end up, anyway. When you compare the cost of 4 years of high school to 10-20 years for incarceration, the investment in education seems a lot cheaper.

My focus on the Dropout Summit planning committee was to work with SC Dept. of Ed. staff and other state education policy makers to develop a school resource funding model that school districts could use to obtain locally funded resources for dropout prevention and other school programs.  Basically, if a business, organization, or person has budgeted or purchased a resource, and is provided with an incentive to offer that resource for public service, then taxpayers do not need to pay for it.

I developed a couple of spreadsheets to demonstrate this school resource funding concept. You can download them from the SC Dept. of Eduction website. For my example, I chose the risk factors related to teen pregnancy for which dropout prevention programs might be developed in order to help these at risk students stay in school until graduation.

Click on the following link at the bottom of the web page to download the spreadsheets.
Example of Dropout Risk Factor Resource Inventory and Analysis
(Anderson County Teen Pregnancy & Early Parenthood)

One spreadsheet is for tabulating a countywide inventory of resources (e.g, qualified personnel, facilities, equipment & supplies) that you would include in the budget for a dropout prevention programs.

The second spreadsheet is a resource capacity analysis.  With a comprehensive resource inventory, you can estimate how many at risk students can be helped, or not.  If there is a resource deficit, then a decision must be made whether or not to provide the resources for these at risk students to help them stay in school until graduation.  If we decide not provide the resources, them we know that they are still at risk of dropping out, and should simply quit complaining about our low high school graduation rates and the low workplace competency of our workforce.

The very useful thing about a spreadsheet is that you can change the row headings and still have the same spreadsheet.  Since public education is a government program, this funding model applies to any governement agency, and to the budget of any state, county, or local government.  You just need to pick the program that needs resources and insert the resource providers in the row headings.

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