December 2002

Grant Results

SUMMARY

Between 1997 and 1999, the National Center on Addiction and Substance Abuse at Columbia University, New York, conducted an analysis of the impact of substance abuse on spending in 50 states, the District of Columbia and Puerto Rico.

States incur significant costs related to substance abuse that are hidden in departments and activities that do not bear the substance abuse label. They include law enforcement, welfare, social services, foster care, child protective services, court systems, unemployment and job training.

Key Findings
In its report, Shoveling Up: The Impact of Substance Abuse on State Budgets, the project team presented these findings:

  • Of the $620 billion spent by the states in 1998, $81.3 billion (13.1 percent) was associated with substance abuse and addiction.
  • Spending on prevention, treatment, and research represented just 3.7 percent of state spending related to substance abuse.
  • The largest share of substance abuse-related spending went to the:
    • Criminal justice system (37.8 percent).
    • Education (20.4 percent).
    • Health (18.7 percent).
    • Child and family assistance (9.5 percent) programs.

Key Recommendations

  • To reduce the burden of substance abuse on state spending, the project team recommends that states:
    • Invest in prevention and treatment programs targeted at groups likely to yield high payoff, including children, welfare recipients, prisoners and the mentally ill.
    • Take legislative and regulatory steps, such as increasing alcohol excise taxes, to lower the burden of substance abuse.
    • Set targets for reducing the impact of substance abuse on their budgets and install management practices to achieve them.

Funding
The Robert Wood Johnson Foundation (RWJF) provided partial support, $99,999, for the project between October 1997 and February 1999.

 See Grant Detail & Contact Information
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THE PROJECT

The costs of substance abuse and addiction to states, and the amount of state taxes paid by individuals and businesses to deal with these problems, have never been quantified state by state across the nation. Public policy-makers, including most governors and state legislators, remain largely unaware of the full impact of these costs on their budgets. As a result they make policy decisions that fail to take into account these widespread underlying problems.

According to the National Center on Addiction and Substance Abuse at Columbia University, some 80 percent of inmates in state prisons are incarcerated for drug- or alcohol-related crimes, such as murder, rape, assault and child molestation, as well as drug offenses.

In the Medicaid program, almost 20 percent of inpatient hospital costs in 1994 were for substance abuse-related care. In addition, states must cope with the significant costs that alcohol and drugs impose on law enforcement, welfare, social services, foster care, child protective services, court systems, unemployment, job training and other programs.

The center sought to quantify these costs through an analysis of state budget documents and the budgets for prisons, Medicaid, welfare, child welfare, social services, courts and mental health in each state. In 1997, it assembled a team of consultants with expertise and recent experience in financing, budgeting and management in state government (see Appendix 1 for a roster of members).

The consultants helped develop, evaluate and refine the methodology for estimating costs associated with substance abuse. Then, an advisory panel of public officials, researchers and representatives of appropriate special interest groups was convened to advise on the technical aspects of state policy-making and budgeting, and substance abuse and cost-of-illness studies (see Appendix 2).

Other Funding

Other sources of funding for this study included:

  • Starr Foundation
  • Carnegie Corporation of New York
  • Primerica Financial Services
  • National Institute on Drug Abuse
  • National Institute on Alcohol Abuse and Alcoholism
  • Abercrombie Foundation.

Methodology

To develop a model to describe the impact of substance abuse on state spending, the project team reviewed some 400 articles and publications focusing on the effect of substance abuse on public spending. The team also conducted extensive site visits and interviews with state officials in five states — California, Florida, Minnesota, New Jersey and Vermont — representing a cross section of the United States in terms of demographics, budgeting practice and data availability.

Based on this research, the project team worked with investigators at the Rockefeller Institute of Government, Albany, N.Y., to develop a model to estimate the direct and indirect costs of addiction and substance abuse to the states. Most substance abuse costs are hidden in departments and activities that do not bear the substance abuse label, the project team noted.

A survey was designed to capture substance abuse-related spending in the following areas:

  • adult and juvenile justice and the courts
  • elementary and secondary education
  • health care
  • child and family assistance
  • mental health and developmental disabilities
  • substance abuse prevention, treatment and research
  • public safety
  • regulation of alcohol and tobacco and collection of taxes
  • state worker absenteeism

The survey did not attempt to capture substance abuse-related spending on public housing, higher education, and lost productivity and health care for state employees because of a lack of available data.

The survey instrument was pre-tested in three states and was administered in September 1998 in all 50 states, Puerto Rico and the District of Columbia. Forty-five states, Puerto Rico and the District of Columbia completed the survey. The project team estimated state spending for five states (Indiana, Maine, New Hampshire, North Carolina and Texas) that did not complete the survey.

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FINDINGS

In its report, Shoveling Up: The Impact of Substance Abuse on State Budgets, the project team presented these findings:

  • Of the $620 billion spent by the states in 1998, $81.3 billion (13.1 percent) was associated with substance abuse and addiction. Spending on adult and juvenile justice represented the largest share of state spending related to substance abuse (37.8 percent). Spending on prevention, treatment, and research represented just 3.7 percent of state spending related to substance abuse. Large shares of substance abuse-related spending went to education (20.4 percent), health (18.7 percent), and child and family assistance (9.5 percent) programs.
  • States spend a greater proportion of their budgets on substance abuse (13.1 percent) than they do on Medicaid (9.7 percent) or on transportation (8.3 percent), and they spend as much on substance abuse as they spend on higher education (13.1 percent).
  • Although states spent $24.9 billion on the costs of substance abuse related to children, just $218 million (less than 1 percent) is allocated to prevention, treatment and research. The largest share of child-related substance abuse spending was on education (66.3 percent). Other costs included foster care, independent living arrangements, and adoption programs for victims of child abuse and neglect (21.3 percent), and juvenile justice (11.6 percent).
  • Americans paid $277 per year in state taxes to deal with the burden of substance abuse and addiction; of that, only $10 a year went toward prevention and treatment.

Recommendations

The project team recommended that states take the following steps to reduce the burden of substance abuse on public programs:

  • Invest in prevention and treatment. Theproject team noted that children who do not begin smoking or using illicit drugs before age 21 are likely never to do so. Treatment programs are cost effective because they reduce the cost to state programs in the short run and they avoid future costs. States should make targeted interventions on groups where they hold promise for high return, including:
    • Prisoners with substance abuse problems, who are more likely to become repeat offenders.
    • Mentally ill patients with substance abuse problems, who are more likely to cycle back through the mental health system.
    • Welfare recipients with substance abuse problems, which may prevent them from becoming self-supporting.
    • Children of substance abusing parents, who have a greater likelihood of becoming substance abusers themselves, as well as becoming criminals, child abusers and welfare recipients.
  • Expand the use of state powers of legislation, regulation and taxation to reduce the impact of substance abuse. Among them:
    • Increase taxes on alcohol and tobacco to reduce the amount people consume.
    • Dedicate tax revenues from tobacco and alcohol sales to prevention and treatment.
    • Require treatment for substance abusers in state-funded programs, such as probation or parole, welfare and education.
    • Increase enforcement of prohibitions against sales of alcohol and tobacco to minors.
  • Manage investments for better results. States should set targets for reducing the impact of substance abuse on their budgets and install management practices to achieve them.

Communications

The center released Shoveling Up: The Impact of Substance Abuse on State Budgets, at a press conference held in Washington in January 2001. (The report can be downloaded from the center's Web site.) Coverage was aired on six national television outlets, including CNN Headline News, CSPAN II, Fox News Live and MSNBC, and was picked up by 104 affiliate stations.

Stories ran in 6 national newspapers/magazines, and 74 other newspapers around the country. Five national radio programs picked up the story, as did 19 local radio stations. A commissioned paper, "Filling the Gaps in Current Methodology: Estimating the Costs of Substance Abuse to State Budgets," was published in the United Nations Bulletin on Narcotics in 2000 in the six U.N. languages. (See the Bibliography.)

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AFTER THE GRANT

In a follow-up project, the center plans to use the same survey methodology to estimate the impact of substance abuse on spending in selected U.S. cities.

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GRANT DETAILS & CONTACT INFORMATION

Project

Study of the Impact of Substance Abuse on State Budgets

Grantee

The National Center on Addiction and Substance Abuse at Columbia University (New York,  NY)

  • Amount: $ 99,999
    Dates: October 1997 to February 1999
    ID#:  032338

Contact

Susan E. Foster
(212) 841 5240
sfoster@casacolumbia.org

Web Site

http://www.casacolumbia.org

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APPENDICES


Appendix 1

(Current as of the time of the grant; provided by the grantee organization; not verified by RWJF.)

Consultants

Donald J. Boyd
Director, Fiscal Studies Program
Rockefeller Institute of Government
Albany, N.Y.

Deborah Ellwood
Former Senior Researcher
Rockefeller Institute
Rochester, N.Y.

Dall W. Forsythe, Ph.D.
Senior Fellow
Rockefeller Institute of Government
Albany, N.Y.

Sherry A. Glied, Ph.D.
Division Head, Associate Professor
Division of Health Policy and Management
Mailman School of Public Health
Columbia University
New York, N.Y.

Russell Gould
Senior Vice President for Finance
J. Paul Getty Trust
Los Angeles, Calif.

Deborah Hasin, Ph.D.
Professor of Clinical Public Health
Mailman School of Public Health
Columbia University
New York, N.Y.

Brian Roherty
Vice President, IDL Systems
Washington, D.C.

Marvin A. Weidner
Weidner Consulting
Austin Texas


Appendix 2

(Current as of the time of the grant; provided by the grantee organization; not verified by RWJF.)

Advisory Panel

Gregory Bloss
Public Health Analyst
National Institute on Alcohol Abuse and Alcoholism
Bethesda, Md.

Frederick M. Bohen
Executive Vice President (Retired)
The Rockefeller University
New York, N.Y.

The Honorable Gaston Caperton
President
The College Board
New York, N.Y.

Hale Champion, Ph.D.
Lecturer Emeritus in Public Policy
John F. Kennedy School of Government
Harvard University
Cambridge, Mass.

Timothy P. Condon, Ph.D.
Associate Director, National Institute on Drug Abuse
Director, Office of Science Policy and Communications
Rockville, Md.

Cabell Cropper
Executive Director
National Criminal Justice Association
Washington, D.C.

Ester Fuchs, Ph.D.
Director
Columbia University Barnard-Columbia Center for Urban Policy
New York, N.Y.

Kristine Gebbie, Ph.D., R.N.
Professor
Columbia University, Center for Health Policy and Health Services Research
New York, N.Y.

John (Jack) Gustafson
Former Executive Director
National Association of State Alcohol and Drug Abuse Directors
Washington, D.C.

The Honorable Herschella Horton
Former State Representative
Phoenix, Ariz.

Nolan E. Jones, Ph.D.
Director, Human Resources Group
National Governors Association
Washington, D.C.

Dorothy P. Rice, Sc.D.
Professor Emeritus
University of California Institute on Health and Aging
San Francisco, Calif.

Ron Snell
Director of Economic, Fiscal and Human Resources
National Conference of State Legislatures
Denver, Colo.

Gloria Glimmer
Former Executive Director
National Association of State Budget Officers
Washington, D.C.

Julie Wilson, Ph.D.
Kennedy School of Government
Harvard University
Cambridge, Mass.

Nancy Young, Ph.D.
Director
Children and Family Futures
Irvine, Calif.

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Reports

The National Center on Addiction and Substance Abuse at Columbia University.

Shoveling Up: The Impact of Substance Abuse on State Budgets. January 2001. Also appears online.

Articles

Foster EM and Modi D. "Estimating the costs of substance abuse to state budgets in the United States of America." Bulletin on Narcotics, Vol. 2, Nos. 1 and 2, 2000. United Nations, New York, N.Y.

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Report prepared by: Madeleine J. McComas
Reviewed by: Richard Camer
Reviewed by: Molly McKaughan
Program Officer: Robert G. Hughes

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