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How red-ink states should make tough budget decisions

How states handle painful budget choices will have a deep impact on millions of Americans. Too often, states resort to across-the-board cuts that hamstring effective programs and preserve duds. Instead, using results-based analysis gives citizens the best return on their tax-dollar investment.

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Jobs. Health care. Education. Public safety. Affordable housing. All of these and more are at stake as state legislatures tackle their 2011 sessions and 50 governors – 28 of them new – grapple with projected budget gaps of $82 billion next fiscal year, on top of the $400 billion already closed since the start of the Great Recession.

While some describe the country in terms of red states and blue states, the fact is that almost all are “red-ink states” facing painful choices for years to come. The way they respond will have as much or more impact on American communities as the federal budget decisions made by the White House and Congress.

Unfortunately, most states lack critical information needed to strategically address this challenge. Most do not even have a comprehensive list of the programs created over the years, let alone data that identify how well they are performing. This makes it difficult for policy makers to direct funds to those programs that produce the greatest benefits at the lowest cost. Too often, states resort to across-the-board cuts that hamstring effective programs while preserving low priority and ineffective ones.

Five steps for 'a better way' to budget

By applying the following principles, states can choose a better way that puts results first:

1. Develop comprehensive performance accountability systems that identify, measure, and report on all programs.

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