Performance Incentive Funding: Rewarding What Works in America’s Probation and Parole Systems

Too many Americans are trapped in a perpetual cycle of crime and incarceration. Probation and parole play an important role in helping people leave the criminal justice system and return to being law-abiding citizens. But these programs often fail to deliver adequate results. Probation and parole departments must do better to return individuals in the criminal justice system to peaceful lives in their communities and uphold public safety.

Government failure on this scale impacts all of society. The penal system costs our nation $80 billion annually and is a top expenditure for many local and state governments.[1] This is a crushing burden for most states, which are already struggling to afford necessities like infrastructure maintenance and K-12 education.

Corrections costs continue to rise—by a staggering 7.5 percent each year since 1990.[2]  Additionally, estimates of the costs of crime imposed on Americans exceed $690 billion, or more than 3 percent of U.S. gross domestic product. [3] The emotional and traumatic impacts of crime evade easy calculation but should not be ignored.

But these systems can be fixed, and policymakers are thinking creatively about how to approach the problem. The most promising approach is a model called “performance incentive funding.” The idea is simple: Rather than force probation and parole departments to adopt specific policies, departments are simply awarded additional funding for successfully reducing recidivism rates. And the program is self-sustaining—those funding incentives comes from savings from avoided corrections expenses.

Incentive funding gives practitioners at the ground level a stake in the success of the people they work with. Studies have shown that performance incentive funding fosters innovation, produces locally tailored solutions, and, ultimately, reduces the number of people who end up back in jails and prisons. If every state adopted a performance incentive funding model, over a quarter of a million Americans could stay crime-free and out of prison over the next ten years, saving taxpayers over a billion dollars.

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[1] https://www.themarshallproject.org/2019/12/17/the-hidden-cost-of-incarceration

[2] https://www.governing.com/archive/corrections-cost-correction.html

[3] https://news.vanderbilt.edu/2021/02/05/new-research-examines-the-cost-of-crime-in-the-u-s-estimated-to-be-2-6-trillion-in-a-single-year/