Multisystemic Therapy Funding
Why Invest in MST?
MST is not only effective—it is a smart financial investment. Research shows MST can generate up to $23.59 in return for every dollar spent, with a net benefit of up to $200,000 per youth. By reducing incarceration, reoffending, and out-of-home placements, MST helps communities lower long-term justice, child welfare, and social service costs.
How to Fund MST Programs
Funding a Multisystemic Therapy (MST) program requires a thoughtful mix of public and private resources. Here are some sources to consider:
Use Existing Public Funds
- Redirection: Many communities see that MST helps keep kids at home instead of in detention or residential care. Because of this, they shift funding from placements to MST services.
- Reinvestment: Agencies can also reinvest the savings from fewer out-of-home placements back into MST to keep the program going and expand it. Partnering with private funders can help support this approach.
Allocate State or Local General Funds
Many states support MST using general fund dollars. In some communities, counties or cities also contribute funding. These flexible funds can help cover services not paid for by Medicaid and provide stable, ongoing support for MST programs.
Use Existing Public Funds
Entitlements
Medicaid can be used to fund MST as a family therapy service. MST also has its own billing code (HCPCS H2033), and some states bill it as a psychosocial rehabilitative service. Medicaid funding requires a state match, with the match rate set by the federal government.
Formula Funds
Several federal formula funding sources may support MST:
- Juvenile Accountability Block Grants (JABG): Support efforts to reduce juvenile offending through accountability, mental health screening, and early intervention.
- OJJDP Formula Funds: Fund delinquency prevention and juvenile justice improvements. Evidence-based programs like MST are a priority and funds are typically awarded competitively through states.
- Mental Health Services Block Grant (MHSBG): Supports mental health prevention and treatment efforts and may be used for MST.
- Title IV-B (Parts 1 and 2): Provides flexible funding to child welfare agencies for prevention and family preservation services.
Discretionary Federal Grants
Discretionary federal grants are often used for MST startup costs. Agencies such as SAMHSA and OJJDP administer grant programs that may support program launch and early implementation.
Identify Foundation Grants and Partnerships
A number of states use foundation grants to begin MST programs. Usually, foundations do not provide funds over the long haul. However, an Opportunity Compact creates a public/ private partnership in which private funding initiates an intervention such as MST and the savings earned for the public sectors are then used to maintain the program.
Unlock New Funding Through Social Impact Bonds
Social impact bonds, also known as pay-for-success contracts, along with other debt-financing tools, can help fund MST startup and expansion. In these models, private investors cover upfront costs, and governments repay them using savings generated by better outcomes. Because MST reduces reliance on costly incarceration, it is well suited for this approach. Interest in social impact bonds continues to grow as communities explore new ways to fund effective, evidence-based programs.
Key Considerations for MST Funding
Assess whether your
community needs MST
Communities assess how many youths are placed or at risk, review how well current programs work, and use this data to determine MST program size and cost, often leading to a community-led MST proposal.
Determine what funding
is available
Starting an MST program requires funding for startup and the first two to three years of operation. While grants or state funds may help initially, short-term funding should transition to a sustainable, long-term source.
Set up sustainable funding that
will be in place for years
Long-term MST funding typically combines federal (Medicaid) and state dollars. Because Medicaid has limits, successful programs braid multiple funding streams to ensure access for youth from families who may not qualify.
