The Impact of the Great Recession on County Human Service Organizations: A Cross Case Analysis

Background and Purpose: The study of “cutback management” emerged against the backdrop of economic stagnation in the 1970s and reductions in domestic spending during the 1980s Reagan administration (Bozeman, 2010). The Great Recession of 2008 has spurred organizational scholars to revive the study of organizational decline in public organizations (Pandey, 2010).  During this era, reduced budgets and increased service demand forced public human service organization (HSO) leaders to make difficult fiscal choices that shaped the social services available in their communities during the financial crisis. This study was designed to examine the principles that guided those choices, the strategies used to make decisions and balance budgets, and to identify modern best practices for public sector cutback management.

Methods: This qualitative study examines the experiences of eleven California county HSOs. The counties range in population size (300,000 to 2,000,000), physical size (47 to 3200 sq. mi.) and HSO size (400 to 2200 FTEs).  Qualitative interviews were conducted with 3-6 senior leaders in each HSO.  Purposive sampling was used to identify the participants.  Interviews were semi-structured to elicit the experiences and observations of expert informants. The analytical approach to transcripts involved multiple coding cycles to create holistic single case studies for each HSO (Saldana, 2013; Yin, 2003). The case studies were then analyzed in a multi-case study approach (Stake, 2006), with the input of HSO directors.

Findings: Strategies ranged from making extensive efforts to engage their staff in decision making to making all decisions in a rational, top-down decision process.  Some organizations made annual incremental cuts, while other organizations made deep structural cuts early in the process.  Strategies reported reflect previous findings on managing public sector cutbacks, including revising the mission and articulating guiding principles to focus strictly on mandates. New inter-departmental collaborations, engaging stakeholders and forming new relationships in the community helped every organization find innovative ways to maintain quality and capacity in the context of diminished resources.  In contrast to previous findings, public service organizations in the Great Recession benefited from the data and efficiencies brought about by modern technologies, but struggled with implementation of these at a time when resources were limited and staff turnover was high.  Modern information technologies also impacted the means with which organizational leaders were able to engage internal and external stakeholders in the process, and communicate changes and expectation to them. Respondents reported a need to educate mid-level staff on the complexities of social service financing to enable their participation in budgetary decisions.

Conclusions: Findings indicate effective tactics to prepare an organization for inevitable, periodic budget challenges.  Leaders should invest in developing positive and collaborative relationships with key stakeholders, identify and implement capacity building technologies, and educate staff on social service budgeting. Themes related to anticipating consequences of budget reduction decisions point to the benefits of continuing to advance an organization’s strategic plan and taking the time to consider potential repercussions when faced with a financial crisis.  Future research should focus on further examining HSO technology implementation and stakeholder engagement strategies during budget cutbacks.