• Minimizing Regulatory Costs

Minimizing regulatory costs

Every time a new regulation is proposed, or an existing regulation is revisited, the agency should ask one key question: is this rule doing more good than harm? If not, it should be rejected or amended.

The only way to make this determination is doing a cost-benefit analysis. This may sound daunting, but it’s actually pretty straightforward. Virginia agencies were able to perform an analysis on every regulation (usually over 200 per year) and guidance document (up to 500 per year) they issued at little to no additional cost. And artificial intelligence tools now make this process even easier.

Commonly ASKED QUESTIONS & RESOURCES

  • Doing good cost-benefit analysis doesn’t require a PhD in economics. It consists of just a few basic questions: What problem are you trying to solve? What are some alternative approaches to solving it? How much does each alternative cost, and how much does it save?

    Virginia created a guide to help agencies do cost-benefit analysis. You can access a copy here.

    Virginia also created a basic form to help agencies do cost-benefit analysis. It’s available here.

    Other states and the federal government have also created useful resources. Here are links:

    Fulcrum leadership can work with states to design a cost-benefit plan that provides critical insights without imposing a major burden on agency staff or state leadership.

  • In Virginia, agencies were able to do cost-benefit analysis without hiring additional staff. Their analyses were usually very short (8-10) pages.  Here’s an example.

    Artificial intelligence (AI) can now do a preliminary cost-benefit analysis that the agency can review. This saves even more time: the AI pumps out a report in a few minutes, and it takes agency staff much less time to review AI-generated reports than to write new reports from scratch.

    Fulcrum Foundation can train your agency staff on what is required to do a good cost-benefit analysis. Fulcrum also works with leading AI vendors and can connect your state with an AI provider. Fulcrum can also help states decide how best to integrate AI analysis into their workflows and make optimal use of the result.