Ep.100 - The Economics of Defunding the Police
📸 IG handle: DollarSenseLA
MONEY REFLECTS PRIORITY
How someone spends their money reflects their priorities, whether consciously or subconsciously.
Just like an individual, how much a city government chooses to appropriate to different departments speaks loudly about a city’s priority. These past few weeks have raised increased calls to defund the police. But what does that actually mean? To better understand the economics of defunding the police, we will take a deep look at police funding across 9 major cities (originally inspired by the 2017 research from the Center for Popular Democracy).
POLICE FUNDING IS TYPICALLY THE SINGLE LARGEST COST TO A CITY, ACCOUNTING FOR 1/3 OF THE GENERAL FUND
There are two ways to understand how much a city spends on its police department (scroll through the charts below to see both).
Compare police spending to the holistic total city budget. The total city budget includes the General Fund and all other earmarked funds, which are meant for specific activities, such as pensions, debt servicing and etc. By this measure, police funding (not including police pension) is generally in the mid-to-high teens of a city’s total budget, averaging about 1/6.
Compare police spending to the General Fund budget only, which is the main budget source to operate a city. The General Fund is not earmarked for any specific use. In other words, money from the General Fund can be allocated at the Mayor’s office’s discretion. By this measure, police funding (not including police pension) is typically 1/3 of a city’s General Fund.
Both measures largely tell the same story when it comes to police funding. However, the second method (measured against the General Fund) arguably paints a more clear picture of how much a city spends on the police, because almost the entire police budget comes from a city’s General Fund. For example, 94.4% of Chicago’s police spending ($1.635B out of the $1.68B) and 91.2% of Oakland’s ($290.1M out of the $318M) in 2020 are appropriated from the General Fund.
As a percentage of a city’s General Fund budget, police funding is generally the single largest expense, typically eating into a third of the budget. The two notable outliers in the research are New York City, which spends the lowest amount at 7.7%, and Oakland, which spends the highest amount at 46.1%.
New York: Though New York City’s 7.7% police funding seems low compared to the rest, New York City actually spends $5.6B in FY19-20, more the next 5 cities (Los Angeles, Chicago, Houston, Philadelphia, and Baltimore) combined. Thanks to the huge +$90B city budget (in fact bigger than 46 state governments’ budgets), the police cost is simply low mathematically.
Oakland: Oakland spends $318M a year on policing. This is almost half of the city’s FY19-20 General Fund budget. As it currently stands, over the next two years, police spending will remain high, accounting for 44% of the General Fund (chart below).
By studying Oakland, an extreme version of police spending, we can find clues why police spending is so high, and perhaps even know where to cut.
Again, budget reflects priority. And we know loud and clear where Oakland’s priorities are.
Source: Oakland city government. https://cao-94612.s3.amazonaws.com/documents/FY-2019-21-Adopted-Budget-Policy-Book-FINAL-WEB-VERSION.pdf
OAKLAND POLICE COST $273K PER PERSON, MORE THAN TWICE AS MUCH COMPARED TO THE REST
Source: data extracted from city government’s 2019-2020 adopted budgets. Links to each budget are attached at the bottom of this article.
When examining the average cost per police (both sworn and civilian), the cost typically ranges between $100k and $125k for most cities. However, Oakland stands out again, with an average of $273K per police headcount, which is more than twice as much compared to all other cities.
Police personnel, which include salaries, benefits, and overtime, is typically the primary driver of the police budget. According to the Urban Institute, nearly all police spending (97 percent) in 2017 went toward operational costs, such as salaries and benefits.
Though the FY19-20 Oakland budget does not disclose the exact spending on police personnel, we can nonetheless use the available 2018 data as a reference point. In FY17-18, Oakland police spent $218M on police personnel, covering salaries, overtime pay, benefits, and other pay, according to public data from Transparent California (excel version here). During the same time frame, the Oakland police budget in the General Fund was $245M. This suggests, in FY17-18, the vast majority of the police budget (roughly 89% = $218M/$245M) was spent on personnel.
OAKLAND SPENDS THE 2ND MOST ON POLICE AFTER ADJUSTING FOR CITY POPULATION
Source: data extracted from city government’s 2019-2020 adopted budgets. Links to each budget are attached at the bottom of this article.
Police cost per city resident is another measure to gauge if cities are spending too much on policing. Adjusted for the size of the city, the residents of Oakland are shouldering more costs in supporting their local police than other cities.
OAKLAND HAS THE SMALLEST POLICE FORCE AFTER ADJUSTING FOR CITY POPULATION
Source: data extracted from city government’s 2019-2020 adopted budgets. Links to each budget are attached at the bottom of this article.
The data increasingly suggest possibly excessive police spending in Oakland. Not only does Oakland spend nearly half of the General Fund budget on funding the police, it also has the smallest force (2.7 per 1000 residents) compared to 3.5 in Los Angeles and 6.4 in New York.
Police cost = average cost/person * size of the police force. This (comparatively) small Oakland police force is a direct contributor to the high $273K per person cost.
OAKLAND CITY AUDIT SHEDS LIGHT ON QUESTIONABLE OVERTIME PAY PRACTICES
How are Oakland police costing $273K per person, you ask? A lack of accountability associated with overtime pay practices could explain some of it.
According to the June 10 audit by City Auditor Courtney Ruby, 217 Oakland police officers – nearly 30 percent of the total force – each accumulated about 520 hours of overtime last year, amounting to more than $30 million in total overtime pay. One extreme example of overtime pay is Malcolm Miller, whose total pay was $539K in 2018, while his base salary was $123K.
Here are a few practices out of the audit that made me scratch my head.
Overtime Pay While on Paid Leave: Auditors found 3,600 instances where Oakland police officers worked overtime while they were on paid leave.
Unlimited Overtime: Oakland police do not have a policy limiting the number of overtime hours that an employee can work in a fiscal year, resulting in 1 police working +2,600 hours in overtime, which translates to +50 overtime hours/week, or alternatively +90 total hours/week (50+40) consistently for the year.
Compounding “Comp Time” Result in 22.5 hours of Pay for 10 Hours of Work: Oakland officers can accrue 1.5 hours of "comp time" for every hour of overtime worked. When an officer cashes in that comp time and isn't working, colleagues have to work overtime to fill the gap. That creates a cascade of additional overtime pay—10 hours of overtime creates 15 hours of comp time, which some other officer has to work, earning 22.5 hours of comp time.
Limited Oversight: The special event staffing process is not documented and one officer is responsible for most decision-making. In fact, this officer, Malcolm Miller, is the second-highest OPD overtime earner for the last five fiscal years (accumulating $2.5M in total pay in five years). How did it he do? He consistently assigned himself to work many of the special events.
HIGH POLICE SPENDING IN OAKLAND ≠ MORE RACIAL JUSTICE
High police spending does not lead to better racial justice in Oakland. According to the most recent police performance data, released by the Oakland government itself, African Americans in Oakland are being unfairly treated by the police in all metrics. Here are the specifics about police results in Oakland.
Traffic Stops: African Americans were 8.2 times more likely than Whites to be pulled over.
Police Use of Force: African Americans were 23.7 times more likely than Whites to experience the use of force.
Felony Arrests: African Americans were 13 times more likely than Whites to get arrested for a felony.
Jail Incarceration: African Americans were 8.6 times more likely than Whites to be incarcerated in jails.
Prison Incarceration: African Americans were 20 times more likely than Whites to be incarcerated in prisons.
HOW TO DEFUND THE POLICE: ADOPT ZERO-BASED BUDGETING
There are several working definitions of “defund the police”. My working interpretation is aligned with the explanation offered by Philip McHarris from Yale, during the PBS interview. Basically, it does not necessarily mean getting rid of the police altogether. Rather, it means reinvesting the cities budget into other community resources and institutions such as education and health care.
In order to achieve that, I believe zero-based budgeting could be a simple, and effective way to divest the funding from the police while re-investing them into other community resources. The key elements of this method are:
Justify Spending With An Objective: Every spending needs to be justified by an objective instead of using last year’s number. If it’s excessive, then reduce. If it is ineffective, then eliminate altogether.
Consider Alternative Use of Funding: We need to consider alternative scenarios. For example, instead of paying the police to give out minor traffic tickets that do not pose real dangers, how about using that money to fund support programs for teens?
Start with 0: Budget spending starts from 0 instead of using last year’s number as the baseline. For example, just because I spent $1000 on eating out last month does not mean I should allocate the same or more next month. The same is true for government spending.
So far only two major city governments, Chicago and Houston, have adopted zero-based budgeting. And the adoptions are very recent, in 2019 for Chicago and 2020 for Houston. There is research to support zero-based budgeting (check out more here).
CHICAGO TAKING THE LEAD ON ZERO-BASED BUDGETING
Using zero-based budgeting forces governments to think strategically and provide concrete justification for spending. When Chicago began doing zero-based budgeting in 2019, Chicago saved $149M, 3.3%, out of the $4.5B General Fund budget.
Houston is another vanguard city that began zero-based budgeting, a year after Chicago. According to Mayor Pro-Tem Dave Martin, who also serves as Chair of the Budget and Fiscal Affairs Committee, “the good thing about zero-based budgeting is we’ll be able to identify the cuts that each department has to make pretty quickly”.
STARTER IDEAS ON RE-INVESTING THE SAVINGS FROM POLICE FUNDING
I am no expert on how to reallocate excessive police funding to alternative programs. , but here are some starter ideas, after having read from these three pieces, When it Works to Defund the Polic (from the NYT), The Cities Taking Up Calls to Defund the Police (from City Lab) and Growing Calls to Defund the Police (from the Vox) .
People’s Budget: One way to know how to reallocate funding is to listen to city residents about how to prioritize funds. The People’ Budget project in Los Angeles presents a new innovative way to channel feedback on city priorities directly from the people to the government.
Decriminalize Drug Usage: Portugal was able to lower heroin users by 3/4 and the overall overdose to the lowest rate in Western Europe, by following the advice of experts and decriminalized the possession even of hard drugs. Instead of having the police throw drug users in jail, like in the U.S, Portugal gave small-time users help from social workers and access to free methadone from roving trucks.
Invest in Social Work: Ali H. Mokdad, a health specialist at the University of Washington, argues that domestic violence, youth offenders, alcoholism, addiction, mental illness and homelessness would often be better handled by social workers or other non-police professionals. Why? He believes, having an armed person intervene causes more harm sometimes for the person who needs help. I would agree with this.
Invest in Supplemental School Programs: If an after-school program can help put a child on a productive path in life, it can be a more effective way to fight crimes, because it prevents it from the get-go. I’ve had personal experience with a program called Bright Prospect in Southern California. Through this program, I visited Disney Concert Hall for the first time, learned about the college application process, and received financial and academic support all through college. Now, this program is serving thousands of kids each year, with 99% of program participants matriculating to college.
Invest in Health: According to the ACLU, there are three million American students in schools that have a police officer but not a nurse. Sure, some schools may need a police officer, but most probably do not. I personally attended a public high school with a permanent police officer within the school. I’ve always thought that was excessive. Perhaps a zero-based budget can help evaluate that from the ground-up, school by school, city by city.
Ultimately, the argument to defund the police is not only good economics, but it is also a public challenge to local officials, who have relied on largely symbolic gestures towards racial equity and justice, to take an actual stand and create a budget that truly says Black Lives Matter.
DATA SOURCES:
New York: Budget Link1, Budget Link2
Los Angeles: Budget Link
Chicago: Budget Link
Houston: Budget Link
Baltimore: Budget Link
Detroit: Budget Link
Oakland: Budget Link
Atlanta: Budget Link
Philadelphia: Budget Link