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Forecasting the Revenues of Local Public Health Departments in the Shadows of the “Great Recession”

Reschovsky, Andrew PhD; Zahner, Susan J. DrPH, RN

Journal of Public Health Management and Practice: March/April 2016 - Volume 22 - Issue 2 - p 120–128
doi: 10.1097/PHH.0b013e31828ebf8c
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Context: The ability of local health departments (LHD) to provide core public health services depends on a reliable stream of revenue from federal, state, and local governments. This study investigates the impact of the “Great Recession” on major sources of LHD revenues and develops a fiscal forecasting model to predict revenues to LHDs in one state over the period 2012 to 2014. Economic forecasting offers a new financial planning tool for LHD administrators and local government policy makers. This study represents a novel research application for these econometric methods.

Methods: Detailed data on revenues by source for each LHD in Wisconsin were taken from annual surveys conducted by the Wisconsin Department of Health Services over an 8-year period (2002-2009). A forecasting strategy appropriate for each revenue source was developed resulting in “base case” estimates. An analysis of the sensitivity of these revenue forecasts to a set of alternative fiscal policies by the federal, state, and local governments was carried out.

Findings: The model forecasts total LHD revenues in 2012 of $170.5 million (in 2010 dollars). By 2014, inflation-adjusted revenues will decline by $8 million, a reduction of 4.7%. Because of population growth, per capita real revenues of LHDs are forecast to decline by 6.6% between 2012 and 2014. There is a great deal of uncertainty about the future of federal funding in support of local public health. A doubling of the reductions in federal grants scheduled under current law would result in an additional $4.4 million decline in LHD revenues in 2014.

Conclusions: The impact of the Great Recession continues to haunt LHDs. Multiyear revenue forecasting offers a new financial tool to help LHDs better plan for an environment of declining resources. New revenue sources are needed if sharp drops in public health service delivery are to be avoided.

This article describes the impact of the Great Recession on the major sources of local health department (LHD) revenue, using a fiscal forecasting model based on data from Wisconsin LHDs to predict the total revenue available to each LHD during 2012-2014. Multiyear revenue forecasting helps LHDs better plan for an environment of declining resources.

Robert M. La Follette School of Public Affairs (Dr Reschovsky) and School of Nursing (Dr Zahner), University of Wisconsin–Madison.

Correspondence: Andrew Reschovsky, PhD, Robert M. La Follette School of Public Affairs, University of Wisconsin-Madison, 1225 Observatory Dr, Madison, WI 53706 (reschovsky@lafollette.wisc.edu).

Funding for this research was provided through the National Coordination Center for Public Health Practice-Based Research Networks, a program of the Robert Wood Johnson Foundation, and by the Clinical and Translational Science Award program, through the National Institutes of Health (NIH) National Center for Advancing Translational Sciences, grant UL1TR000427. The authors acknowledge the excellent research assistance of Kohei Enami and Senay Goitom.

The article is solely the responsibility of the authors and does not necessarily represent the official views of the NIH.

The authors declare no conflicts of interest.

Copyright © 2016 Wolters Kluwer Health, Inc. All rights reserved.