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In late 2007, the United States entered one of the most significant recessions in recent memory. While the consequences to individuals have been well documented, less attention has been paid to the effects on state-sponsored organizations such as police agencies. The current study examines fiscal distress (e.g., layoffs, hiring freezes) in a sample of large municipal law enforcement agencies. According to a framework proposed by Levine, departments should be most vulnerable to fiscal distress when the jurisdiction experiences economic shocks (environmental entropy), the demand for police services declines (problem depletion), the political system becomes less supportive of police agencies (political vulnerability), and the organization becomes more structurally complex (organizational atrophy). Structural equation modeling results suggest that fiscal distress is driven by the local economic context, changing crime rates, and organizational size. This research has implications for helping organizations address future economic declines.

Organizational Decline and Fiscal Distress in Municipal Police Agencies