Financing Community Responder Programs

2. Dedicated Tax Revenue Stream

Jurisdictions can also explore opportunities to create special tax revenue sources dedicated to funding public safety or behavioral health programming like community responders.³ Depending on state and local laws, some jurisdictions can establish a new tax, or enact an increase to an existing tax, with a legal requirement to direct all new revenue to a particular local need or initiative. Dedicated tax revenue can provide a reliable funding stream that is relatively insulated from budget cuts or political turnover.⁴

Acquiring funding from taxes may not be available to all local leaders, since the ability to impose taxes is often constricted by state laws.⁵ Additionally, in some jurisdictions, tax policy changes must be approved by voters through a referendum or ballot initiative process, which often requires a resource-intensive campaign to win public support.⁶ This funding source may also have political implications for local government officials given sensitivities around taxation.

3. Federal Funding

Federal grants offer jurisdictions an opportunity to obtain financial resources for community responders without straining the local budget. One way that jurisdictions can tap into federal funds is to bill Medicaid for reimbursable services such as mobile crisis outreach, which can be offered by many community responder programs. Because Medicaid is a state-federal partnership program, localities must work within the restrictions specified by their state Medicaid agency and the U.S. Department of Health and Human Services to use these funds.

Despite these restrictions, jurisdictions can access Medicaid funding to support community responder programs in multiple ways. For one, states considering this funding source can apply for a waiver of Medicaid program requirements, known as a Section 1115 waiver. This waiver provides jurisdictions with flexibility to direct Medicaid dollars toward innovative service delivery models like community responders. Additionally, the passage of the American Rescue Plan (ARP) in 2021 opened up more opportunities to use federal funding for community needs, authorizing $350 billion in direct relief funding for state and local governments with few limitations.⁷ A number of jurisdictions across the country have directed these flexible funds to support community responder programs.⁸ The ARP also encouraged jurisdictions to leverage Medicaid dollars for community responder programs by offering enhanced federal reimbursement for these costs. While the Medicaid incentives provided by the ARP will expire after 5 years, states can still use standard Medicaid funding to support community responder programs in the long term.

The U.S. Department of Health and Human Services has a number of flexible funding sources that can also be used to support these programs. The Substance Abuse Prevention and Treatment or the Community Mental Health Services Block Grants are non-competitive federal formula grants distributed to all states. State Opioid Response grants are another funding source that have been used by states to develop substance use crisis response strategies that could include community responder programs.

Every year, the U.S. Department of Justice’s (DOJ) Office of Justice Programs (OJP) also distributes roughly $5 billion in grants, much of which is awarded to state and local governments. Below are three grants to consider applying to:

• Byrne Justice Assistance Grant program: A formula grant that provides highly flexible funds that can support a wide range of safety and justice activities.
• Comprehensive Opioid, Stimulant, and Substance Abuse Program (COSSAP): Competitive COSSAP grants can support first-responder models that divert people with substance use needs and co-occurring mental health disorders from the criminal justice system.⁹
• Justice and Mental Health Collaboration Program (JMHCP): JMHCP grants can be used to support a range of cross-system approaches for helping people with mental illnesses and co-occurring substance use disorders. It may not be a good fit for all community responder programs, however, as it requires a partnership with a criminal justice agency, which excludes programs that operate fully outside of the justice system. Under JMHCP a new grant opportunity called Connect and Protect launched in FY2021.

While federal grants are a short-term funding source, they may be useful for launching a community responder program and collecting initial performance data to make the case for future investments of local resources. However, obtaining federal funds may be difficult for smaller, local governments that lack the resources to apply for and administer grants.

4. Private Grants

Much like federal aid, grants from private donors or philanthropies can provide an opportunity for local leaders to support a community responder program financially without cutting into the local budget. Philanthropic resources can cover a range of different costs associated with a community responder program, from development to implementation and evaluation. Private grants may also come with more flexibility and fewer constraints than federal funds, which often include intensive applications and in-depth reporting requirements.

Local leaders should be aware, however, that some philanthropies are limited in their ability to directly fund government entities. As a workaround, local governments may consider implementing community responder programs in partnership with nonprofit organizations that are able to accept philanthropic support.