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Human Services Financing for the 21st Century

A blueprint for building stronger children and families


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Approximately $1 trillion is spent funding human services in the U.S. each year. These services comprise a wide range of programs to assist vulnerable populations and people living in poverty. From foster care to income assistance to education and training, human services provide a critical safety net for those Americans most in need.

Given the importance of human services, more attention is needed on how we finance them. Our country’s national human services system arose during the Kennedy Administration and took root during President Johnson’s “War on Poverty.” Programs and services have changed dramatically over the years as have the way in which we pay for them. Most significantly has been the shift from grants to federal cost-reimbursement contracts and the increasing use of Medicaid to support human services.

This human services financing approach has strained service providers to the breaking point. A burdensome patchwork of government revenue streams rewards success with a tangle of regulations and true integration of services requires heroic hurdles of bureaucracy. Accounting regulations and inflexible financing mechanisms prevent organizations from creating capital and planning for the future. Innovation is more likely to wither on the vine than spread from state to state as programs are created and dismantled based on funding cycles rather than need.

To explore and examine how human services financing might be transformed, Deloitte, the Alliance for Children and Families, and the Hillside Family of Agencies convened a group of leading thinkers to create a blueprint that can be used by the Obama Administration and Congress to stimulate change. In the end, we arrived at a surprising degree of consensus on the basic outline for human services financing transformation. The group’s proposal consists of structural changes to current government funding mechanisms as well as innovations to improve human service sector capitalization.

Download the full report below.

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