Effects of states' spending on public mental health programs on jails

Objectives: The significant number of persons with mental illness encounter in many sections of the criminal justice system, especially local jails. This study empirically examines whether greater state spending on public mental health may reduce jail population and capacity.

Methods: We analyze state panel data for 40 states over 2001–2009 (N = 360).  Outcomes include jail population size–defined as annual average daily jail inmates–and jail capacity–defined as the official number of beds or inmates. State Mental Health Agencies’ spending on inpatient and community mental health is the main independent variable. A dynamic panel data model is employed to test whether jail population and jail capacity respond to contemporaneous and/or lagged public mental health spending. We obtain the efficient and consistent Arellano-Bond system GMM estimator, applying the Windmeijer finite-sample correction. The empirical models control for comprehensive confounders and state heterogeneity.

Results: A one-dollar (approximately 3%) increase in state inpatient mental health spending significantly reduces jail population by 1.3% (p < .001) and jail capacity by the same 3% in the following year (p < .01) while there is no contemporaneously effect. Results for community mental health spending are similar. The study results and jail cost estimates from the literature suggest, taken together, that every dollar spent on public mental health programs leads to six-cent cost saving for the jail system.

Conclusion: States’ expenditures on public mental health programs, institutional or community-based, have a positive spill-over effect on the jail system, reducing its inmate population size and costs.