States and other government entities responsible for funding the public mental health system should employ budgeting and contracting mechanisms that emphasize improved outcomes. Performance based budgeting and other mechanisms that allow for costs in one system to be balanced against offsets in another  -  spending in the mental health system versus fewer costs in corrections, for example  -  should be considered by legislatures of states wishing to better understand the full implications of the policies they establish.

Similarly, state mental health agencies that contract with provider agencies for services in communities should attach funding to the outcomes to be achieved. For example, contracts can include incentives for lower rates of arrest among the population served by an agency, along with safeguards that ensure the agency is not "creaming" or finding ways to provide services only to clients at lower risk for involvement in the criminal justice system.

By their nature, performance-based budgeting and contracting mechanisms promote provision of a full spectrum of services that meet all needs experienced by people with mental illness. Strategic placement of both incentives and accountability can lead to development of a system that stresses collaboration and outcomes and allows those making service decisions to make specific spending decisions, as well.