Cutting Costs Alone Won't Make Government More Efficient
Canceling contracts and cutting costs have their role to play in the pursuit of efficiency, but, beyond these approaches, there are three criteria essential to efficient spending that the Trump Administration must embrace if it wants to be successful.
When met, these criteria are the difference between wasting taxpayer dollars and spending taxpayer dollars on outcomes-driven programs that are good for government, good for business, and, most importantly, good for working people.
The first rule for efficient spending is that we should routinely evaluate programs to see if they continue to meet their stated goals. Too often, we fund programs without monitoring their results or continue to fund programs that worked only once. This must change.
The second rule for efficient spending is even more straightforward: we should spend money only on programs that get results and course correct when they don't. The third rule is the most innovative of the three: we should develop financial mechanisms that extend the impact of every taxpayer dollar we spend.
Taken together, these criteria are the basis for the 'Pay for Success' model that took off in England in 2010 and that we've been testing and refining ever since. Pay for Success is a practical, outcomes-based approach that channels government funding to social programs that get results and offramps programs that underperform.
The model has been implemented at the federal and state levels in the United States as well to great success.
In 2018, Congress passed, and President Trump signed, the Social Impact Partnerships to Pay for Results Act (SIPPRA) as part of the Bipartisan Budget Act. SIPPRA appropriated $100 million to support the launch of state and local Pay for Success initiatives over a decade. Since then, millions in grants have been awarded to states and cities for a range of evidence-based initiatives–most recently housing and childhood literacy–with proven results.
Similarly, we've seen state governments embrace Pay for Success models when allocating their funds for education programs. For instance, Texas has made public funding for community colleges contingent on success metrics that include, critically, the number of students who earn 'credentials of value' that are proven to lead to good-paying jobs. Oregon has begun to take the same approach. The logic is simple: when we lean into outcomes and the accountability that ensues, we create the conditions for learners and programs to thrive.
These Pay for Success examples satisfy rules one and two: assess for success and spend wisely. We've also developed models that embrace rule number three: where feasible, tie spending to financial mechanisms that compound impact over time–mechanisms that often come in the form of revolving funds.
Consider New Jersey's 'Pay It Forward' program, which offers learners no-interest loans for tuition and grant support for other expenses associated with getting trained (e.g., transportation and childcare). The program partners with specific programs at institutions that have a track record of graduating students and placing them in good-paying jobs in nursing, radiography, welding, HVAC, and other industries. And they structure the loans so that students repay them only once they've gotten work with wages that can support a middle-class family.
What makes this model even more efficient, however, is the revolving fund at its core: when students repay the loans, the money gets repurposed for the next student. Alternately, employers might relieve their workers of the burden by paying into the fund to access and retain talent.
Either way, this approach to government spending rewards success, phases out programs that don't meet their benchmarks, and gets more value out of every dollar. What's more, the approach builds on a template that can be used in any state for training in any sector. Its playbook is clear: pay for success, repurpose funds, and align incentives among the private and public sectors.
The logic behind all these efforts has bipartisan support and momentum. Members of Congress from both sides of the aisle have already launched initiatives that signal their willingness to get serious about efficient spending. If DOGE really wants to drive efficient policy, Pay for Success must be the cornerstone of its agenda.
Contact us at letters@time.com.
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