Costs of Mandatory Education and Training Programs for Teenage Parents on Welfare: Lessons from the Teenage Parent Demonstration

Submitted to:

U.S. Department of Health and Human Services
Assistant Secretary for Planning and Evaluation (ASPE)
Rm. 404E, HHH Bldg.
200 Independence Ave., SW
Washington, DC 20201

Project Officer:  Reuben Snipper (reuben.snipper@hhs.gov)

Submitted by:

Mathematica Policy Research, Inc.
P.O. Box 2393
Princeton, NJ 08543-2393
(609) 799-3535

Project Director:  Rebecca A. Maynard

Contract No.:  HHS-100-86-0045
MPR Reference No.:  7700-925

"

Acknowledgements

Many people contributed significantly to the assembly of information for this report.  We are indebted to the state project directors, first Lydia Davis-Barrett and then Janet DeGraaf of the New Jersey Department of Human Services, and Denise Simon of the Illinois Department of Public Aid.  They have been consistently helpful and supportive throughout all of our evaluation efforts.  The demonstration site project directors and managers, Frank Ambrose and Kathy Abbott in Camden, Yvonne Johnson in Newark, and Melba McCarty in Chicago, provided invaluable assistance in identifying resources used in the demonstration programs.  We are also grateful to the many providers of demonstration services, including JTPA agencies, community colleges, and local community organizations offering education, workshop, or support services, who supplied us with critical data on the cost of their services.

Site analyst Charles Nagatoshi performed much of the early descriptive program analysis that supports this study, and programmers Anne Bloomenthal, Dexter Chu, and Cynthia Butchley expertly processed demonstration tracking data and state welfare records to produce the participation measures necessary for unit cost calculations.  Rebecca Maynard, Project Director for the evaluation, and Valarie Piper performed important substantive and editorial reviews.  Jill Miller, Doreen Ambrose, Denise Dunn, and Monica Capizzi provided expert secretarial and production support.

No less important to the production of this report was the ongoing support of the Federal project officers for the evaluation and the demonstration in the U.S Department of Health and Human Services.  Reuben Snipper, the evaluation project officer in the Office of the Assistant Secretary for Planning and Evaluation, and Judith Reich and Nancye Campbell, demonstration project officers in the Administration for Children and Families have provided perceptive and valuable guidance and comment.  Other staff in ASPE and ACF provided useful comments as well.

DISCLAIMER

This report was prepared for the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, under contract HHS-100-86-0045.  This report does not necessarily represent the official opinion or policy of the Department of Health and Human Services.  The results of this study and the views expressed are solely the views of the authors.

CHAPTER I: INTRODUCTION AND SUMMARY

Introduction

From late 1987 through mid-1991, the States of New Jersey and Illinois conducted demonstrations of innovative approaches to reducing long-term AFDC dependency among teenage parents -- the Teenage Parent Demonstration.  With special grant funds from the U.S. Department of Health and Human Services (DHHS), the New Jersey Department of Human Services and the Illinois Department of Public Aid operated demonstration programs in three sites -- Camden and Newark, New Jersey, where the program was known as Teen Progress, and in the south side of Chicago, where it was known as Project Advance.  All three programs provided comprehensive services designed to promote self-sufficiency, including education, job training, job readiness preparation and job placement, a variety of life skills workshops, support service payments for child care and transportation expenses, and case management.  Thus, the demonstration provided a useful test of the range of services envisioned in the Family Support Act (FSA) of 1988 for custodial adolescent parents served by the Job Opportunities and Basic Skills Training ( JOBS ) program.  This report presents the results of an analysis of the resource cost of operating the demonstration programs.

The cost analysis is one component of a comprehensive evaluation of the demonstration that is being undertaken by Mathematica Policy Research, Inc. (MPR), under contract to DHHS.  The evaluation of the Teenage Parent Demonstration is based on an experimental design, which allows rigorous estimation of program impacts based on comparison of key outcomes for randomly assigned program and control groups.  In the three demonstration sites, all eligible teenage parents -- those with a single child who began receiving Aid to Families with Dependent Children (AFDC) for the first time for themselves and their child -- were sent letters instructing them to attend a mandatory intake and baseline data collection session.⁽¹⁾  At the conclusion of this session, the teenage parents were randomly assigned, for evaluation purposes, to an enhanced-service program group or a regular-service control group for the duration of the demonstration.  Those in the enhanced-service group were required to participate in the demonstration as a condition of receiving AFDC.⁽²⁾  If they failed to participate as required, they risked program sanctions -- the reduction of their AFDC grant by removal of the teenage parent's needs from the grant calculation.  Control group members could not receive the special services provided by Teen Progress or Project Advance, but could pursue training, education, and other services from other sources.

A key objective of the demonstration evaluation is to determine the combined impact of the special services provided to the program group and of program-induced changes in the level of utilization of pre-existing services.  Program impacts are being estimated based on comparisons between the enhanced-service and control groups of key outcomes, such as employment, earnings, continued school attendance and completion, child support received, and avoidance of repeat pregnancies.  Estimates of program impacts will be based on follow-up interviews with enhanced-service and control group members about two years and five to six years after intake, as well as on administrative records of earnings, AFDC receipt, and child support outcomes. 

The demonstration evaluation is also designed to provide policy-makers with information on the cost-effectiveness of the demonstration services -- the relationship between program impacts and the costs of delivering program services.  The demonstration cost analysis is intended to provide direct guidance to policy makers and program planners concerning the costs of teenage parent programs, as well as to provide critical input into the subsequent benefit-cost analysis.  There are three steps in developing this information.  First, we must analyze the resources used in delivering demonstration services to the program participants and the costs of these resources.  This report focuses on the results of that analysis.  Second, it is necessary to estimate the costs of services utilized by the control group, and thus the incremental cost of the demonstration program.  Third, the incremental cost of the demonstration will be compared to its impact as a measure of cost-effectiveness, and the costs and benefits of the demonstration will be analyzed from the perspective of government, participants, and society as a whole.  Estimates of the incremental cost of the demonstration, its cost-effectiveness, and relative costs and benefits from alternative perspectives will be based on longer-term follow-up of the sample. 

A thorough and detailed analysis was conducted to identify the program resources used to deliver services to demonstration participants, and to determine their value based on actual costs incurred by the demonstration programs or estimates of the costs incurred by other agencies that delivered services.  This approach to cost measurement -- including both actual program expenditures as well as estimates of the value of services provided by other agencies to program participants -- fully recognizes the resources required in a program that draws together service components from various sources, and provides a consistent basis for comparing programs that may provide similar services but differ in the degree to which they deliver them directly.⁽³⁾ 

Despite the careful analysis leading to these results, shortcomings in available data inevitably introduce some degree of uncertainty or imprecision.  The estimates may be subject to some error, for example, due to some lapses on the part of case managers in recording activity durations precisely, the need to use general service cost rates for groups of similar providers, and the use of approximations based on program staff's estimates of time spent delivering particular services rather than detailed time-sheet records. 

With these minor reservations, the analysis described in detail in the following chapters nevertheless provides a useful measure of the costs of the Teenage Parent Demonstration programs.  The findings of the analysis can be summarized as follows: 

1. The full resource cost of the demonstration for one program year (fiscal year 1989) -- including services to participants, supervision, and site management -- were about $1.05 million in Camden, $0.76 million in Newark, and $2.0 million in Chicago.  Direct expenditures by the programs (subtracting out the value of in-kind services from the resource cost estimates) were significantly less -- about $0.8 million in Camden, $0.5 million in Newark, and $1.0 million in Chicago.  Program-paid costs represent approximately 75 percent of the full resource cost of the two New Jersey site programs and about half of the resource cost of the Chicago program. 
2. The average monthly resource costs to serve a program group member during the period she spent on AFDC -- and was thus considered eligible for demonstration services -- was $344 in Camden, $292 in Newark, and $206 in Chicago.  Cost per person-month on AFDC was considerably lower in Chicago than in the New Jersey sites, in part, because Project Advance had higher case manager caseloads and thus lower case management costs. 
3. Based on the average periods for which participants received AFDC in fiscal year 1989, the full resource cost per participant in that year was estimated at $3,130 in Camden, $2,657 in Newark, and $1,730 in Chicago.  The average annual resource cost per person across the three demonstration sites was $2,141.  Annual per person costs to federal and state agencies (program-paid costs) were $2,379 in Camden, $1,887 in Newark and $917 in Chicago. 
4. Costs are considerably higher when participants are involved in major ongoing activities, due to the costs of education and training courses and related support services (child care and transportation).  Average resource costs per month for participants in these major activities were $920 in Camden, $560 in Newark, and $498 in Chicago.  Based on estimated time spent in education, training, or jobs in fiscal year 1989, the resource cost per person for those who took part in major activities in that year was estimated as $5,351 in Camden, $3,726 in Newark, and $3,087 in Chicago.  The programs paid directly for only a portion of these costs, or about $4,067 in Camden, $2,645 in Newark, and $1,636 in Chicago. 
5. The cost of the Teenage Parent Demonstration programs was about equal to that of work-welfare demonstrations for adults in the early 1980s, which were found by Maynard, Maxfield et al. (1986) to have cost on average about $2,089 per person where job training was offered.  Real annual costs of the programs were lower than costs at the four sites of the Minority Female Single Parent Demonstration, which ranged from $2,679 to $4,824 per enrollee with durations averaging 6 months (Handwerger and Thornton, 1988), compared to about 9 months in the Teen Parent Demonstration programs. 

PLAN OF CHAPTER

The remainder of this chapter provides additional background on the demonstration and the cost analysis.  Later chapters provide details on resources used, cost measurement methods, and cost estimates.  In the two sections immediately below, we describe the settings in which the demonstration was conducted and the samples of teenage parents the programs served, and the general framework of the cost analysis.  In Chapter II, we describe in detail the types of services delivered and enumerate the resources drawn upon for the demonstration.  Chapter III describes the methodology for estimating program costs, including the period over which costs were measured, the treatment of explicit program expenditures and implicit costs, the allocation of costs to various program components or functions, and the computation of unit costs.  Chapter IV then presents the detailed results of the cost analysis.

Demonstration Sites and Participant Samples

The Teenage Parent Demonstration, although managed by State welfare agencies, was operated in three selected local areas.  In Camden, New Jersey, the demonstration program was operated by the Camden County Board of Social Services, the agency which operates the AFDC, Food Stamp, Medicaid, and other assistance programs under the supervision of the New Jersey Department of Human Services, Division of Economic Assistance (DEA).  In Newark, New Jersey, the demonstration program was operated through a special local office staffed directly by the State Division of Economic Assistance, although some aspects of program operations involved coordination with staff of the local Essex County Board of Social Services.  In Illinois, where assistance programs are operated directly by the Illinois Department of Public Aid (IDPA), the demonstration program was run directly by IDPA staff.  In all three sites, special demonstration offices were established apart from the offices where income maintenance functions are performed.  The demonstration programs served teenage parents on AFDC who lived in specified areas.  In Camden and Newark, Teen Progress targeted teenage parents from the entire cities.  In Chicago, Project Advance served teenage parents from the AFDC rolls of four local welfare offices in the south side of Chicago -- Auburn Park, Southeast, Roseland, and South Suburban. 

By all available measures, the areas served by the demonstration were severely depressed, and ravaged by many of the economic and social ills associated with teenage pregnancy and chronic poverty.  At the 1980 census almost a third of all families in Camden and Newark had incomes below the federally-defined poverty level, and about 40 percent of these families were headed by females with children under the age of six (Table I.1).  Almost a third of the population at the New Jersey sites was receiving some form of public assistance.  Although comparable census data for the specific area of Chicago served by Project Advance are not readily accessible, city-wide statistics and the relative poverty of the demonstration area suggest comparable economic indicators.  In all three areas, dropping out of school is a common problem.  In Camden and Newark, about 30 percent of each high school class drops out before completing high school.  In all three cities, state Department of Education officials report that in any single recent year, about 10-13 percent of the entire student body in grades 9-12 drops out of school.⁽⁴⁾ 

TABLE I.1
CHARACTERISTICS OF THE DEMONSTRATION SITES

	Camden, NJ	Newark, NJ	Chicago, ILa
Total Population	84,910	392,248	3,005,072
Race/Ethnicity
% White, non-Hispanic	27.4	22.1	43.2
% Black, non-Hispanic	52.4	57.3	39.5
% Hispanic	19.2	18.6	14.0
% Other	1.0	2.0	3.2
Enrollment in School by Age Groups
% 7-13 year-olds enrolled	98.3	97.8	98.1
% 14-15 year-olds enrolled	98.1	97.3	96.7
% 16-17 year-olds enrolled	84.4	82.7	84.6
% 18-19 year-olds enrolled	47.2	42.8	48.8
Median Family Income
All families	$10,606	$11,989	$18,776
Female heads with children under age six	$4,357	$4,307	$4,547
Percent of Families with Female Heads and Children Under Age Six	14.8	12.6	6.8
Percent of Families Below Poverty Level	32.3	29.9	16.8
Percent of Families Below Poverty Level with Female Heads and Related Children Under Age Six	40.6	38.5	34.5
Percent of Families Receiving SSI, AFDC, or GA	32.6	30.2	17.0
Percent of Adult Females with Children Under Age Six Who are in the Labor Force	37.5	41.3	43.7
Civilian Unemployment Rate (%)	17.9	13.4	9.8
Unemployment Rate of Female Heads of Households (%)	24.1	18.7	12.3

SOURCE:  U.S. Census, (1980, Tables 16, 25, 29, 57, 117, 119, 120, 124, and 125).

^a The Chicago program serves only communities on the South side of the city -- areas that tend to have higher than average poverty rates and percentages of residents from minority race/ethnic groups.

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The characteristics of the participant group (those assigned to the enhanced-services program) in the three demonstration sites, give some indication of the challenges they face to become self-sufficient (Table I.2).  Participants were young; across the three sites their average age at the time of intake was 18.4 years, and about 30 percent were 17 or younger.  The age at which the sample members became parents was even lower, however, since almost one quarter of them came to the demonstration when their child was past infancy; only about 50 percent of the participants lived with a parent at the time they entered the demonstration programs.  Their basic skills were quite poor; approximately 60 percent scored at or below the 8th grade level on standardized reading and math tests.

TABLE I.2
CHARACTERISTICS OF THE ENHANCED SERVICE GROUP AT INTAKE
(Percents)

	Site			All Sites
	Camden	Newark	Chicago
Age       Less than 17 years old       17 years old       18 years old       18 or older	26.2 22.7 27.5 23.7	11.9 17.5 30.2 40.4	9.7 11.2 39.1 40.0	14.1 15.3 34.4 36.2
Race/Ethnicity       Black, non-Hispanic       Hispanic       White, non-Hispanic/Other	56.7 37.2 6.1	74.3 22.7 3.0	84.5 5.4 10.0	75.7 16.7 7.6
Age of Child       Unborn       1-6 months       7-12 months       1 year or older	5.2 66.0 8.9 20.0	2.6 38.9 23.9 34.5	18.3 48.5 12.8 20.5	11.8 50.6 14.2 23.4
Attending School at Intake	44.8	36.7	46.8	44.2
Completed High School/GED	20.0	27.7	40.9	33.1
Reading Skills       Below 7th grade       7th - 8th grade       Above 8th grade	56.6 7.7 35.7	51.1 13.2 35.7	41.4 13.5 45.1	46.9 12.1 41.0
Math Skills       Below 7th grade       7th - 8th grade       Above 8th grade	43.4 17.1 39.5	41.2 18.6 40.2	40.8 22.1 37.1	41.5 20.2 38.3
Number in Sample	630	572	1,439	2,641

Source: Program Intake Forms.

Framework for the Cost Analysis

The scope of the cost analysis includes all services provided by or arranged by the demonstration programs, regardless of how they were paid for.  Services are included whether they were actually paid for by the program out of the demonstration budget ("program-paid costs") or were provided by other agencies or schools out of their own resources, without charge to the demonstration ("in-kind costs"), to yield the full "resource cost" of the demonstration programs.  Costs are thus estimated for services provided directly by demonstration project staff, for payments made to cover child care and other participant expenses, and for services provided to participants by staff of other agencies, either by "loaned" staff at the demonstration site offices or at their own facilities.  The cost of public school programs for participants who remained in high school, however, is not included, since we assumed that most high schools have excess capacity and thus the marginal cost of additional time spent in school was equal to zero. 

The analysis focuses on the cost of services to participants in the period from July 1988 through June 1989, which is a period approximately in the middle of the overall demonstration term.  This period was chosen to avoid the distortions associated with the start-up or close-down stages of the demonstration, and to focus on a period in which the demonstration most closely resembled a fully developed, ongoing program.  In the initial and final stages of the demonstration, cost estimates could be distorted if the array of services being provided was incomplete, or if the flow of participants into the program was not yet -- or no longer -- at the level for which the scale of the demonstration staffs had been established. 

To estimate the cost of demonstration services we drew on several major sources of data: 

1. State Demonstration Financial Reports.  The starting point was the financial reports on demonstration expenditures issued by the New Jersey Department of Human Services and the Illinois Department of Public Aid.  These reports captured the costs of
   1. Staff working directly for the demonstration program -- site managers, supervisors, case managers and specialists, and clerical staff;
   2. Services provided by other agencies under explicit contracts with the State or local agency running the demonstration;
   3. Support payments made for child care, transportation, and other training-related expenses;⁽⁵⁾  and
   4. Materials, supplies, and equipment used at the sites. 
2. Interviews with Other Agencies.  Large numbers of participants received services from other agencies that were not paid for by the demonstration and thus not accounted for in demonstration expenditure reports.  These services included job training through the local Job Training Partnership Act service-delivery agencies, General Educational Development (GED) or college courses through community colleges and other institutions, and a variety of workshop and placement services provided at the demonstration offices by staff on loan from other agencies.  We consulted at length with demonstration managers and representatives of these other agencies to obtain data needed to estimate the cost of these services. 
3. Activity Data from Case Tracking Systems.  Since cost information on services provided by outside agencies was sometimes stated in terms of either average cost per trainee or student or average cost per month, estimating service cost in some cases required knowing how many demonstration participants utilized these outside services and in some instances for how long.  Estimates of utilization were derived from the Teen Progress Management Information System (TPMIS) used by Case Managers in New Jersey to record participant activity, and the corresponding Client Activity Management System (CAMS) in Chicago. 

In addition to these major sources of data, information from State AFDC records and the demonstration tracking systems was used to identify periods during which sample members were on and off AFDC, and when they were active or not active in program activities.  This information was used as a basis for converting overall cost estimates into unit-cost estimates. 

Endnotes

1.  In Illinois, women in the third trimester of pregnancy can receive AFDC, so the demonstration-eligible population also included pregnant teenagers with no custodial child.

2.  Program group members could receive services directly provided and funded by the demonstration -- such as case management, child care and transportation payments, and program-provided workshops -- only while they were on AFDC.  However, certain services that they obtained through the demonstration (for example, JTPA-funded job training) could be continued and completed after they left AFDC, assuming that they still met the provider agency's eligibility criteria.  In periods when program group members were not receiving AFDC, they could obtain some of these services on their own, as could control group members.

3.  This comprehensive approach has been used in numerous earlier cost studies of employment training programs for disadvantaged populations, such as Kemper and Long (1980) and Handwerger and Thornton (1988).

4.  Based on telephone conversations with representatives of the New Jersey and Illinois Departments of Education, May 7, 1991.

5.  For the Chicago site, it was also necessary to obtain data on support payments from general IDPA computer files, because most support payments for Project Advance participants were made through regular agency payment systems rather than through special demonstration payment procedures.

CHAPTER II: DEMONSTRATION SERVICES AND RESOURCES

Introduction

The three Teenage Parent Demonstration programs had a common mandate to develop comprehensive services for teenage parents.  All three sites developed their programs in keeping with the demonstration guidelines set forth in the grant awarded by the U.S. Department of Health and Human Services.  However, sites had latitude in defining the specific services they offered, finding resources to deliver services in their local communities, and developing staff resources of their own to deliver some services.  They identified services that would be provided directly by demonstration staff, and defined the specific staff positions, organizational structure, and roles these staff would play.  They determined which services would have to be sought from other sources in their communities, developed relationships with these other agencies, and reached formal or informal agreements concerning referral of demonstration participants, the nature of services they would receive, and in some instances the terms of payment for these services. 

The demonstration provided six types of services to participants:  case management, workshops, education, job training, support services, and job placement assistance.⁽¹⁾  Below we describe each of these services and identify the staff and other resources used to deliver them (see Table II.1).⁽²⁾

TABLE II.1
PROVIDERS OF DEMONSTRATION SERVICES

SERVICES	CAMDEN	NEWARK	CHICAGO
Case Management
	Program staff	Program staff	Program staff
Workshops
	JTPA/Food Stamp Employment and Training County Department of Health Rutgers University Extension Service Local community organizations	Program staff New Jersey Department of Labor Counselor Rutgers University Extension Service Planned Parenthood University of Medicine and Dentistry - New Jersey	Program staff Local medical centers University of Illinois Cooperative Extension Service Illinois Department of Employment Security Planned Parenthood Chicago Sexual Assault Alliance
Education
On-site GED/ABE(a) classes	State Department of Personnel and JTPA	Newark Board of Education's Urban Youth Program	Community colleges
Off-site GED/ABE(a) classes	Urban Youth Corps Camden County College	N.A.	Community colleges
Off-site ESL(a) classes	Hispanic Women's Resource Center	Local Hispanic community organization	N.A.
Other education	Camden County College	Essex County College	Universities, 4-year colleges, and community colleges
Education preparation workshop	N.A.	N.A.	Program staff
Training
Pre-employment and/or job readiness	Program staff JTPA or State Department of Personnel	Program staff State Department of Personnel/JTPA	Program staff
Occupational job training	Proprietary schools Public vocational and technical schools Community colleges	Proprietary schools Public vocational and technical schools Community colleges	Proprietary schools Public vocational and technical schools Community colleges
Work Experience	JTPA (summer employment) Urban Youth Corps	JTPA (summer employment)	JTPA (summer employment)
Job Development and Placement
	Training providers Program staff JTPA job counselor	Training providers Program staff Employment Service counselor	Training providers Department of Employment Security counselor
Child Care Assistance
Child care placement assistance	Program counselor	Program counselor	Program staff (case managers)
Child care voucher processing and subsidies	Program staff Program payments to providers	Program staff Program payments to providers	Program payments to providers
Emergency or on-site child care	Program-purchased slots at local centers	On-site private provider	Program staff
Other Support Services
Processing payments for transportation and other training-related expenses	Program staff Program-provided expense payments	Program staff Program-provided expense payments	Program staff Program-provided expense payments Program-provided bus tokens

NOTE:  This table does not distinguish between services provided on-site versus at other locations, or those provided on a contractual basis versus for free.  See Chapter III for details on location of and payments for demonstration services. 

N.A.  means that the program did not offer this service. 

^a  GED means General Educational Development; ABE means Adult Basic Education; and ESL means English as a Second Language. 

Case Management

Although the exact responsibilities of case managers varied across sites depending on the other specialized positions included in the program staff, the basic functions of the case managers were to:

1. Perform initial and ongoing assessment of participants and help them plan their program activities,
2. Provide personal support and motivation,
3. Coordinate the delivery of services and serve as advocates to help participants gain access to services,
4. Enforce participation requirements, and
5. Maintain case records.

1. Initial and Ongoing Assessment and Planning.  When teenage parents had completed their intake session, they were assigned to a case manager who conducted an assessment interview and worked with the participant to develop a self-sufficiency plan for full-time program activity.⁽³⁾  The case manager was then responsible for ongoing monitoring, reassessment, and redirection of participants' program activities as needed.  This process occurred when the participant entered the program, and was repeated as necessary during the course of the participant's involvement in the program. 
2. Personal Support and Motivation.  One of the largest challenges case managers faced was helping participants overcome the personal, family and community pressures that could undermine meaningful participation.  Case managers had to strengthen participants' faith in the possibility of building a better life, and help them develop some measure of confidence and self-esteem.  Case managers tried to provide encouragement and sympathy, but also clear and consistent expectations. 
3. Service Coordination and Advocacy.  An important concern of the case managers was ensuring that participants gained access to needed services.  Case managers had to keep track of the availability of desirable education and training courses and program workshops, and fit together plans which made optimal use of available resources and participants' time.  Often they had to intercede on behalf of clients with other agencies, schools, or training providers. 
4. Enforcing Participation Requirements.  Case managers -- or other staff in the case management unit -- enforced the requirement that eligible teenage parents participate in the program, including requirements for attendance at the initial intake session and regular attendance at later workshops, education or training courses, or a job.  Case managers, with support from clerical staff, monitored attendance at on-site activities as well as at public school and other off-site education and training courses.  When participants failed to attend as required, case managers sent warning notices to them, held conferences with them to identify and resolve problems that might be interfering with attendance, and in many cases eventually arranged for imposition of grant-reduction sanctions by income maintenance staff if the participant failed to comply. 
5. Maintaining Case Records.  The program staff at the demonstration sites used a combination of computerized and manual systems to maintain records concerning assessment and self-sufficiency plans, program activity and status, case notes, attendance, and payment issuance.  These systems were also used to issue notices of scheduled workshops, warnings of sanction action for failure to attend program activities, other notices, and management reports.  Case managers also maintained written case narratives. 

Case managers were the core staff for providing these services.  For most of the demonstration period there were five case managers in Camden, five in Newark, and nine or ten in Chicago.  In addition, the demonstration staff included project managers, supervisors, and clerical and data entry support staff, some of whose time was devoted to case management functions. 

Workshops

Two general types of workshops were offered:  initial workshops and ongoing workshops.  Each new participant was required to attend a series of initial workshops, which ranged in length from just three days in Chicago to four to five weeks in Camden and several months in Newark.  The workshops covered topics that program staff judged to be important for all new program participants:

• Motivation and self-esteem,
• The world of work,
• Life skills,
• Family planning and parenting,
• Health and nutrition,
• Child support and child support enforcement,
• AIDS and drug/substance abuse, and
• Personal grooming.⁽⁴⁾ 

The sites also offered some "ongoing" workshops for active participants who had completed the initial workshops and may have already been involved in other program activities.  These workshops were for selected participants in particular circumstances.  The Newark site ran a special parenting workshop intended to provide intensive help for participants deemed at high risk of neglecting or abusing their children.  All three sites conducted pre-employment workshops or job clubs for participants preparing to enter the labor market for permanent full-time or part-time jobs or summer employment.  The Chicago site offered a three-session workshop for participants who were about to enroll or reenroll in high school or other education, or who were having difficulty in school, to help them strengthen their study skills and work habits.  The Chicago program also conducted workshops for active participants on home and life management skills. 

Workshops were led by both in-house program staff and outside experts.  In Chicago, case managers were responsible for all of the initial workshops offered over a three-day period after intake, but staff from other organizations such as the Department of Employment Security, the Sexual Assault Alliance, the University of Illinois Extension Service, and a local medical center contributed staff for ongoing workshops.  At the New Jersey sites, selected case managers devoted a portion of their time to leading some initial workshops, but most initial and all ongoing workshops were led by staff from other organizations.  In some instances these outside staff were provided by the organizations under contract for specified fees, and in others staff time was donated.  Staff who participated in leading workshops in the New Jersey sites were from organizations like the county extension services, Planned Parenthood, the State Department of Personnel, the local child support enforcement offices, a local medical center, and a local non-profit organization devoted to promoting self-esteem and good grooming. 

Education

Many demonstration participants attended some type of educational program.  For example, roughly 40 to 45 percent of the participants reported in their baseline interviews that they were in school at the time; most of these were in high school, and many continued attending high school.  Many participants attended other forms of education at the demonstration site or were referred to courses at other schools.  These included GED preparation, Adult Basic Education (ABE), and English as a Second Language (ESL) courses.  Some participants attended two-year community college programs or four-year colleges.

All three sites provided education courses at their own locations for at least some period of the demonstration.  Arrangements were made with other agencies -- a local community college, local school district, or county Department of Personnel -- for their instructors to teach ABE and GED classes.

Job Training

Occupational skill training was suitable for some of the older teenage parents in the demonstration.  Job training was provided entirely by other agencies at locations apart from the demonstration site.  Although some participants entered job training on their own, most were referred by the demonstration staff to JTPA-funded providers for job training.⁽⁵⁾ 

Support Services

The demonstration helped participating teenage parents deal with the two most pressing practical problems that could interfere with their involvement in the program -- finding and paying for child care, and paying for transportation to and from their program activities.

Child care services included helping participants find providers, inspecting and approving providers' physical facilities, providing child care directly, and paying providers for their services.  In both New Jersey sites, a child care counselor was part of the case management staff.  This counselor helped participants understand the merits of alternative types of child care, identified available providers if participants had not already chosen one, and visited and inspected providers chosen by participants.  The counselor also served as a liaison to providers for resolving questions about invoices and payment.  In Chicago, case managers helped participants identify suitable child care if they did not have care already arranged.

In all three sites, demonstration staff were involved in approving payments to child care providers.  Providers sent invoices to the demonstration office, where either case managers or support staff reviewed the invoices, checked the invoices against participants' attendance at program activities, and authorized payments.  Authorizations were then sent to the appropriate county or State fiscal office, which issued payments according to established rates based on the type of provider and the age of the child.

Child care was also provided to a limited extent directly by the demonstration programs.  In Newark, the demonstration paid an individual private provider to care for participants' children in an on-site child care room while the participants attended classroom activities or workshops at the site, or met with their case managers.  In Chicago, for at least part of the demonstration, work-experience participants from Illinois's adult work-welfare program, Project Chance, were paid to staff a child care room.

The demonstration also helped participants by paying expenses for transportation to and from program activities at the demonstration office as well as at other education and training locations.  In all sites, participants were paid a weekly amount to cover bus fare; in the New Jersey sites all participants received the same amount, but in Chicago amounts were established based on each participants' actual commute to program activities.  The Chicago program also distributed free bus tokens purchased from the Chicago Transit Authority.

Job Placement

Demonstration participants sought employment at various stages of their involvement with Teen Progress and Project Advance.  Some older participants entered the labor market soon after they entered the demonstration program.  Others began their job search after a period in an education activity or in job training.  Some participants found summer employment, often through the JTPA summer youth employment program.

All three sites provided job search and job placement assistance.  Staff stationed at the demonstration offices -- in some instances demonstration staff and in others JTPA staff out-stationed at the demonstration site -- helped to identify appropriate job openings and set up interviews, and arranged job fairs with local employers at the demonstration offices.

Endnotes

1.  Demonstration services are described in detail in other evaluation reports, including Hershey and Nagatoshi (1989) on general program implementation, Hershey (1991c) on identifying and enrolling teenage parents, Hershey (1991b) on program workshops, Hershey (1991a) on case management, and Hershey and Rangarajan (1993) on education and employment services.

2.  In identifying the resources used to deliver services, we distinguish between demonstration "program staff" and other staff.  Demonstration staff were those who worked at the demonstration offices in positions specified in the States' grant applications.  Grant funds were also used to cover the costs of some other staff from other organizations, as described in this chapter, by means of contracts for services.

3.  The demonstration guidelines established a goal of 30 hours of participation per week.

4.  Although not all of these topics were the basis for a distinct workshop in all sites, most of these topics were covered in some way in the initial workshops of all the sites.

5.  While some participants who arranged their own job training obtained it through the JTPA agency, a few others were attending proprietary schools at their own expense.  For the purpose of the cost analysis, who paid for the training is of no consequence, since we are estimating the overall resource cost rather than only program expenditures. 

CHAPTER III: APPROACH TO MEASURING RESOURCE COSTS

Introduction

To estimate the value of the demonstration resources identified in the previous chapter, we defined a specific time period for which costs would be estimated, identified the resources used in that period, and then sought information on actual costs incurred or alternative measures of resource value.  Once total resource costs were estimated, we calculated unit costs in order to standardize costs in relation to the extent of participants' periods of AFDC receipt and participation in major demonstration activities.  In Section A below, we define the demonstration period we selected as the focus for analysis of costs.  In Section B, we describe how we measured the three major elements of total resource costs -- reported costs incurred directly by the demonstration programs, estimated implicit costs of services provided at no charge to the programs by other agencies, and state central management costs.  This discussion forms the basis for the data that are presented and interpreted in Chapter IV. 

Reference Period

The cost analysis focuses on fiscal year 1989 -- the period of July 1988 through June 1989 -- for two reasons.  First, this period was late enough in the demonstration to represent a year of stable program operations, when the demonstration programs most closely resembled ongoing programs, but early enough that demonstration operations at the sites still included enrollment of new participants.⁽¹⁾  Second, this period coincides with the fiscal year in both New Jersey and Illinois, which simplifies some aspects of data collection.

During the year we selected to measure program costs, Project Advance and Teen Progress served teenage parents with varying tenures in the program.  Some had entered the program before the start of fiscal year 1989 and continued to be served during the year.  Others entered the program at various points during the year.  Thus, estimated costs represent a composite of continuing services to participants already established in ongoing activities, initial services to new enrollees, and the process of identifying eligible teenage parents, calling them in, and conducting intake.⁽²⁾

 

Elements of Total Resource Cost

Total resource costs are composed of site costs -- the cost of services delivered by the Camden, Newark, and Chicago programs -- and central management costs -- the cost of overseeing and supporting the programs from the Trenton and Springfield offices of the New Jersey Department of Human Services and the Illinois Department of Public Aid, respectively.  The primary focus of the cost analysis is on site costs, which include both "program-paid costs" for services delivered directly by program staff or purchased by the program, and "in-kind costs" for services provided to demonstration participants at no cost to the program by staff of other agencies, either at the program site or at other community locations.  Our estimates of central management costs are reported separately, because the relative size of such costs is likely to vary with the scale of program operations and we have very limited basis for estimating that variation.  Program-paid site costs, in-kind site costs, and central management costs all include the cost of labor and associated fringe benefits, non-labor costs, and overhead.

Program-Paid Site Costs

A large proportion (although varying from site to site) of the resources used in delivering demonstration services can be valued based on actual expenditures paid by the program and charged to the demonstration projects for staff and personal services, non-labor direct costs, support service payments, capital costs, and overhead.  Data on the cost of these items were obtained from State expenditure accounting records, including special reports on expenditures charged against the demonstration project budget and general expenditure records that are used for certain types of costs incurred on behalf of all AFDC recipients.  The specific categories for which costs were reported, and the types of charges reported in each category, are listed in Table III.1.  In most instances, the State expenditure reports provided a clear and full accounting of the cost of program resources.  However, several exceptions should be noted in which some adjustments or special treatment were required.

TABLE III.1
CATEGORIES OF REPORTED SITE COSTS AND ITEMS INCLUDED,
BY DEMONSTRATION SITE

Camden and Newark	Chicago
Salary Costs
Salaries and fringe benefits for site managers, case managers, child care counselors, data entry and clerical staff	Salaries and fringe benefits for site manager, supervisors, case managers, education and employment specialists, data entry and clerical staff
Indirect Costs
Standard agency overhead rate to cover facilities;  annual amortization of office renovation (Newark only)	Not reported;  costs charged directly
Rent, Utilities, Maintenance
Not reported; covered by indirect rate	Office rent, office maintenance, repair and maintenance of office facilities
Centrally Contracted Services
No reported costs	Contracted staff for data entry and data administration;  catering of awards ceremonies;  consultant services to run life management workshop (additional workshop resources included in implicit costs)
Staff Travel/Conferences
Mileage for local travel (e.g. home visits);  travel costs for professional conferences and project meetings	Mileage for local travel (e.g. home visits);  travel costs for professional conferences and project meetings
Computer Equipment and Servicesa
Hardware and software development for installation of client tracking systems (contractor)	Hardware and software development for installation of client tracking systems (contractor)
Other Equipment and Furnishingsa
Purchase, rental, and maintenance of non-computer equipment (photocopy, office furniture, file cabinets, etc.)	Office alarm system, rental and maintenance of office equipment, audio-visual equipment
Staff Development and Training
Payments for consultant services to train case managers	None reported;  most training included in central management costs
Miscellaneous Supplies
General office supplies	General supplies, shipping, printing
Site Service Contracts
Contracts with local agencies to conduct selected workshops (additional workshop resources included in implicit costs)	Included in centrally contracted services
Educational Services and Expenses
Course registration fees;  costs of special group outings	Summer camp fees;  classroom materials
Support Services (Child Care and Training-Related Expenses)
Payments to child care providers for individual children, contracted slots, and on-site care (Newark only);  payments to participants for bus fare	Payments to child care providers;  payments to participants for bus-fare;  bus tokens distributed to participants
Other Client Expenses
Purchase of books, uniforms, tools for education and training courses	No costs reported in this category;  included in support services
Vehicle Leasing/Insurance
Lease and insurance on van used to transport participants to education and training, and for outings (Camden only)	No costs reported

SOURCE:  New Jersey Department of Human Services Teen Progress Quarterly Financial Reports and Illinois Department of Public Aid Obligation Transaction Reports for Project Advance.

^aExpenditures for the purchase or lease of capital equipment in these categories were amortized before inclusion in the cost estimates.

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Some adjustment of New Jersey reports of expenditures for site service contracts was required to arrive at a full estimate of the resources provided to run program workshops in Camden and Newark.  Rather than using actual reported payments, we relied on the terms of contract agreements to estimate the market value of services delivered in fiscal year 1989, for two reasons.  First, because of delays in billing, payments to other agencies were often made many months after services were rendered, and at such irregular intervals that payments in a 12-month period could not be relied on as an estimate of annual costs.  Second, a few agencies that negotiated contracts to provide services later failed to bill the demonstration project for some or all of the periods of service.  Thus, estimates of contract services costs are based on the reported values placed on services by demonstration planners and managers, but not strictly on payments made during fiscal year 1989.⁽³⁾

Special treatment was also given to program-paid expenditures for the purchase or lease of capital items, such as computer equipment, software packages and software development, office furniture and other major office equipment, and major office renovations.  All computer equipment and other capital items which were purchased were assumed to have a useful life of five years.  Thus, one-fifth of total expenditures for such items was attributed to fiscal year 1989.  In the event that State reports did not clearly distinguish between purchase and lease payments for non-computer office equipment, total expenditures for these items were allocated evenly across the four years of the demonstration period, with one-fourth of the expenditures included in reported costs for fiscal year 1989.  The cost of items allocated in these ways is included in the indirect cost category (for Newark only), the computer equipment and services category, and other equipment and furnishings.

Both states reported costs for support service payments -- for child care, transportation and other training-related expenses (TREs) -- but in ways which create slightly different category definitions.  In New Jersey, costs were reported in three separate categories -- payments to child care providers, payments for transportation, and payments for other client expenses (TREs).  The State demonstration expenditure reports in Illinois, which served as the basis for support service cost estimates in this draft, do not distinguish payments for child care from payments for transportation or other TREs.  Thus, these support services are reported as a single category of cost.⁽⁴⁾

In-kind Site Costs

Since program-paid costs reported by the two state agencies did not fully reflect all sources of demonstration services, it was also necessary to estimate the implicit value of some in-kind services provided by other agencies at no reported cost.  In-kind cost estimates were required for some workshops led or sponsored by other organizations, on-site remedial education instructors from other agencies, job training funded by JTPA or other publicly-funded agencies, GED classes and other education programs provided by local community organizations or educational institutions (other than secondary schools), and other services provided by community agencies.  The services for which in-kind costs were estimated and the basis for these estimates are summarized in Table III.2.

TABLE III.2
BASIS FOR ESTIMATES OF IN-KIND SITE COSTS FOR FY 1989

Camden	Newark	Chicago
Program Workshops
ACE Motivational Workshop:  25% of FTE salary of counselor provided by JTPA on site. Child Support Workshop:  8 hours of CSE supervisor FTE salary per year for workshop sessions.	Family Planning Workshop:  Sum of four (non-contiguous) quarterly payments to Planned Parenthood. Nutrition Workshop:  Estimated cost of 6% of extension service instructor's FTE salary. Parenting Skills Workshop:  Budgeted annual cost of contract with University of Medicine and Dentistry of NJ.	Pre-Natal Workshop:  120 hours per year of an educational/staff development nurse (estimated $21.68 per hour). Home/Family Life Management Workshop:  6 days (or 2.3% of FTE) of a University of Illinois Extension Service counselor.  Estimated based on NJ extension service salaries. Abstinence Workshop:  12 hours of Planned Parenthood Counselor.  Cost estimated based on reported average counselor salaries from NJ. Motivational Workshop:  Estimated 15 hours of outside counselor, based on counselor salary rates used for Planned Parenthood.
Education Services
GED/ABE Classes On-Site:  Cost of JTPA contract cost with Department of Personnel ($120,000) divided by expected number of participants (50) and expected duration (6 months) = $400 per participant/month.(a)  Multiplied by participation durations in FY89 from site MIS. GED Classes at Community College:  $250 per person-month of attendance, times average duration from site MIS for persons ever enrolled.(b) ESL Classes:  Cost of instructor at local Hispanic Center for 24-week course ($5,400), spread across reported class size = $154 per enrollee.  Applied to reported number of demonstration referrals. ABE/Work Experience Program (Urban Youth Corps):  Cost of JTPA contract per person ($4,000) spread over expected duration (6 months) = $667/month.  Actual durations from site MIS applied to monthly rate.	GED/ABE Classes On-Site:  Budgeted annual cost of contract with Newark Board of Education ($18,000). ESL Classes:  Cost/participant estimated at Camden Hispanic Center, multiplied by Newark number of participants who entered ESL, from site MIS.(c)	GED/ABE Classes On-Site and Off-Site:  $250 per attendance-month, based on reports from primary provider (community college).  Rate applied to number of entrants to classes during FY89 and estimated average duration from site MIS.
Post-Secondary Education:  Cost/participant-month of $475, derived from cost per credit-hour reported by Chicago Community College.  Applied to number of FY89 participants and average duration from site MIS.	Post-Secondary Education:  Cost/participant-month of $475, derived from cost per credit-hour reported by Chicago Community College.  Applied to number of FY89 participants and average duration from site MIS.	Post-Secondary Education:  Cost/participant-month of $475, derived from cost per credit-hour reported by Chicago Community College.  Applied to number of FY89 participants and average duration from site MIS.
Job Training Services
Job Training Courses:  Average reported JTPA cost/enrollee across all sites ($4,200, including JTPA administration overhead).  Applied to number of participants starting training in FY89, from site MIS. Summer Youth Employment Program:  JTPA-reported cost of $640 per participant (including stipend and training and administration costs).  Applied to number (25) of demonstration participants in FY89, estimated by site manager.	Job Training Courses:  Average reported JTPA cost/enrollee across all sites ($4,200, including JTPA administration overhead).  Applied to number of participants starting training in FY89, from site MIS. Summer Youth Employment Program:  JTPA-reported cost of $640 per participant (including stipend and training and administration costs).  Applied to number (50) of demonstration participants in FY89, estimated by site manager.	Job Training Courses:  Average reported JTPA cost/enrollee across all sites ($4,200, including JTPA administration overhead).  Applied to number of participants starting training in FY89, from site MIS. Summer Youth Employment Program:  JTPA-reported cost of $640 per participant (including stipend and training and administration costs).  Applied to number (78) of demonstration participants in FY89, estimated by site manager.
Other Services
Job/Training Placement:  25% of FTE salary of JTPA counselor on site. High-Priority Child Support Case Tracking:  25% of clerical FTE salary for special case tracking. Hispanic Child Care:  Cost of child care staff at Hispanic Center for 6 months, divided by class size, times number of demonstration referrals = $180 per participant.	Child Support Sessions:  1% of FTE salary for Office of Child Support counselor (1.5 hours per month), to supplement Life Skills Workshop.	Job Club Counselor:  20 days of a Job Service counselor (working with demonstration staff).  Estimated at rate of NJ JTPA employment counselor. Child Support Enforcement:  Counselor from Office of Child Support on-site 2 days per week to conduct "enhanced" child support interviews.  Estimated as 10% of $25,000 FTE. Staff Training:  Estimated 58 hours of consultants for various case manager training sessions.  Estimated at known rate of major consultant ($80 per class hour).

SOURCE:  Interviews with site managers and staff of provider agencies. 

NOTE:  All in-kind cost estimates based on salaries also include overhead rates of relevant agencies. 

^a  Classes were poorly attended and did not enroll the expected number of participants; the unit cost estimated in the contract was applied to each participant, rather than the actual contract cost. 

^b  Monthly costs of community college GED classes in Camden were based on unit costs reported by Chicago Community College System, since no data could be obtained from Camden County College.

^c  Cost per participant in ESL in Newark was estimated based on costs from Camden because no cost information was available on the ESL provider in Newark. 

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In calculating the value of in-kind services, we strove to estimate the full cost of all resources used in providing the services, including indirect and overhead costs, even if not all costs were passed along to consumers of the services.  For example, tuition charges at community colleges do not fully cover the costs of college staff and facilities, because much of the cost is borne by state education subsidies.  Instead of using tuition fees as an estimate of the resource cost for program participants' classes at community colleges, we obtained a more complete estimate of the full cost of college programs. 

In-kind cost estimates were derived from information obtained from service providers, who reported costs in two ways.  Most providers were able to supply information on the total value of all resources used in delivering services to demonstration participants.  In these instances, providers either reported their actual total cost of providing services or, more commonly, provided information on staff salaries, the frequency and duration of service delivery and preparation, and organizational overhead rates, from which we could estimate the total cost of the services.⁽⁵⁾  Since, for example, workshop leaders or GED teachers were provided by other organizations for a specified period of time regardless of the number of demonstration participants who attended the sessions or classes, we did not compute unit costs for the value of these services.

Other providers reported unit cost estimates for their services.  To compute the aggregate costs of these services, unit cost estimates were multiplied by the relevant number of units in the study period, based on data from the sites' participant tracking systems.  However, the definitions of the units for which costs were reported and, thus, the way the data had to be used, varied by service provider and type.  For example, JTPA agencies reported the average cost per person served in job training.  To compute total job training costs, we multiplied JTPA per-person cost estimates by the number of demonstration participants determined to have participated in training during fiscal year 1989.  In contrast, community colleges reported the cost per credit hour in college level classes and the cost per person-month in non-matriculation (GED and ABE) classes.  To calculate total in-kind costs for these services, cost per credit hour was converted to a cost per person-month of attendance.  The average cost per person per month was then multiplied by the number of months spent by demonstration participants in the relevant educational programs or courses during fiscal year 1989.  Since contacting every service provider to obtain unit cost estimates was impractical, unit cost information was obtained from selected providers.  These unit cost rates were then applied to estimate total costs for other providers of comparable services.  Representative unit cost rates were used to compute the aggregate implicit costs of job training, some education services, and a few infrequently conducted workshops (Table III.2). 

To calculate the in-kind costs to the programs of job training at all three sites, we used a unit cost rate equal to the approximate average of JTPA costs per trainee across all three sites.  This rate was applied to all job training, regardless of the provider or whether or not the training was actually funded by JTPA.  Demonstration participants received training from about 25 providers in Camden, 17 in Newark, and over 100 in Chicago.  Most training was funded by JTPA, however, so the JTPA cost per trainee provides a reasonable basis for the cost estimate.  Camden, Newark, and Chicago JTPA agencies reported per-trainee costs of $3,695⁽⁶⁾, $4,299, and $4,500 respectively, with the average JTPA cost for the three agencies (unadjusted for number served) of $4,158.  A rounded unit cost rate of $4,200 was adopted for the three sites.⁽⁷⁾

For education, the costs of in-kind services were estimated in a variety of ways depending on the kinds of information available from each provider.  Cost estimates for GED/ABE courses and post-secondary courses at community colleges were based on the cost per person-month of attendance for each of the two types of programs reported by the Chicago Community College system -- $250 per person-month of GED/ABE attendance, and $475 for post-secondary courses.⁽⁸⁾  ESL classes were reported only in Camden and Newark, and for very few participants; person-month costs in both sites were based on a report from the Camden Hispanic Women's Resource Center, where ESL classes were offered, on the costs of instructor time and the size of classes.  The cost of classes in four-year college programs was assumed to be the same as at two-year community college programs.  This assumption may understate some education costs, but since a very small number of participants attended four-year colleges, it does not introduce any substantial distortion of cost estimates.

Representative rates were also used to estimate costs for providers of very small-scale services -- primarily occasional workshops.  For every such service, we obtained estimates from site managers of the time that staff from other agencies spent delivering the service.  For each service, we applied a salary rate obtained either from the particular provider agency or from a comparable agency in that site or one of the other sites.  For example, approximate extension service counselor salaries in Camden were obtained and applied to estimate the costs of nutrition workshops in Newark and the home/life management skills Workshop in Chicago.  Other such examples are noted in Table III.2.

Central Management Costs

The full costs of any program include the cost of central management control and oversight, and these must be given some recognition in our accounting of demonstration costs.  Our analysis therefore includes approximate estimates of the cost of central management provided by the New Jersey Department of Human Services (NJDHS) and the Illinois Department of Public Aid (IDPA) to the sites in Camden, Newark, and Chicago.  However, we report central management costs separately from site costs, for several reasons.  In Illinois there is no clear accounting of central office costs actually incurred for the demonstration; as a result, we must infer estimates from information in demonstration grant application budgets.  In New Jersey, central staff costs are reported, but they coincide so closely to grant application estimates that they do not appear to reflect close documentation of the actual time spent on demonstration management.  Obtaining a reasonably accurate breakdown of the time allocation of central office staff in either state was impractical.  Finally, the magnitude of such costs relative to site program costs is likely to depend on the scale of program operations, and might be quite different at the scale of a one- or two-site demonstration than at the scale of an ongoing, statewide program.  We therefore present estimates of central management costs separately to provide some indication of how central management increases overall program costs, but with less supporting data than is the case for site costs.

Data on central management costs were available in different forms in each state.  In New Jersey, the time of central management staff was explicitly budgeted in grant proposals and then charged to State demonstration accounts, and the associated costs were included in demonstration expenditure reports and grant financial reports.  Total New Jersey central office staff salaries, fringe benefits, and indirect costs were 30 percent of total reported site labor costs in Camden and Newark (salaries and fringe benefits).  In Illinois, central management costs were not explicitly included in grant proposal budgets, and the time of central management staff was not accounted for in State expenditure reports.  However, IDPA normally applies a 26.3 percent indirect cost rate to labor costs when planning and budgeting for its programs.  A portion of this indirect cost -- that which covered site office overhead in Chicago -- was included in the state accounting reports for the demonstration program.  However, the portion that supported office staff and facilities in Springfield was not reported since these services were provided to the demonstration program at no cost.  This portion of indirect cost for central office functions amounts to 24 percent of reported site salaries and fringe benefits.  Although the accounting definitions underlying these data are unclear, these two central office overhead rates -- 30 percent for New Jersey and 24 percent for Illinois -- provide an approximate range for the relationship of central management costs to demonstration site costs.

Presumably, the ratio of central management to site costs would be somewhat lower in a larger, ongoing, multi-site program than in a small demonstration project, due to economies of scale in central monitoring efforts.  The origins of the two central management cost rates derived above support this interpretation and provide some basis for selecting a central management overhead rate that might apply in ongoing programs.  The higher rate in New Jersey reflects an accounting of central office costs during the demonstration.  The lower Illinois rate reflects broader agency experience not only with demonstration programs but other ongoing programs, as well as the larger scale of operation there.  For this reason, we have applied the rate derived for Illinois -- 24 percent -- to reported salaries and fringe benefits in all three sites as a consistent way of estimating the central office costs that would be associated with program sites like those in the Teenage Parent Demonstration if they were part of a larger, ongoing program.

Endnotes

1.  Project Advance continued to enroll teenage parents in the program at a reduced level after intake for the demonstration evaluation sample ended in September 1989.  Program participants who enrolled after that time were not included in the demonstration evaluation. 

2.  Costs associated with conducting intake included administering baseline questionnaires and basic skills tests to teenage parents who ended up being assigned to the control group. As a result, program costs are slightly overstated.

3.  In cases where reported expenditures over time correspond to contract terms, workshop costs are included under program-paid site costs as site service contracts.  In those instances where actual expenditures do not clearly match reported contract terms over any defined period, the estimated cost of services provided is included as an in-kind cost, as explained in the following section.

4.  Some data on support service payments obtained from the Illinois Department of Public Aid did not allow us to distinguish payments made to program participants.  As a result, our estimate of Chicago support service costs is likely to somewhat understate total costs.

5.  For example, workshop cost estimates were calculated based on the estimated total number of hours that an agency staff person spent preparing for and conducting workshops at the demonstration site, the staff's approximate salary, and the applicable overhead rate for the provider agency.

6.  The Camden JTPA agency actually reported an estimate of $2,500 per-trainee, exclusive of administrative overhead.  Since that agency applied an overhead rate of 47.8 percent to the salary of a JTPA job counselor provided to the demonstration, we used the same overhead increment to adjust the unit cost estimate for training services.

7.  Using the average cost per person served in JTPA job training assumes that demonstration participants consumed the same amount of training program resources as the general population served by JTPA programs.  It is possible, of course, that teenage participants may have been more or less likely to drop out of programs they started than other trainees.  However, since most training programs have fixed class schedules that do not allow trainees who drop out beyond the initial stages of a program to be replaced, even dropouts can be assumed to be consuming a "program slot" regardless of the actual duration of their training participation.  Overall average cost per JTPA training participant is therefore a reasonable basis for estimating costs for demonstration participants.

8.  These rates were also used to calculate the in-kind costs for GED/ABE classes taught at the Project Advance site (provided by one of the city community colleges) and for any educational courses provided as part of the New Jersey programs that were not program-paid and reported in the demonstration accounts.  We did not pursue separate unit cost estimates of education services in New Jersey because costs for almost all GED/ABE classes in the New Jersey sites were program-paid and included in the demonstration accounting reports and only a limited number of New Jersey participants were in post-secondary education in fiscal year 1989.  Using the Chicago community college rate to calculate the small amount of implicit educational costs in New Jersey introduces little error in our estimates.  Only 17 Camden participants were reported as active at any time in postsecondary education in FY 1989.  In Newark, only four participants were in post-secondary education in FY 1989, and the approximations of college cost rates received from the local Essex County College were roughly consistent with the cost estimates from Chicago.

CHAPTER IV: COST ANALYSIS RESULTS

Introduction

To deliver the services described in Chapter II, the three demonstration programs and other agencies that served participants incurred substantial costs.  Our analysis indicates that the value of all resources used by the three programs to serve their participants during fiscal year 1989 ranged from almost one million dollars to just over two million dollars.⁽¹⁾  On average, the full resource costs of the site programs were between $206 and $344 for each month that a sample member spent on AFDC and was thus eligible for program services, and between $498 and $920 for each month that a sample member spent involved in a major activity -- education, training, or a job.  These figures translate into an annual resource cost per participant, estimated for fiscal year 1989, ranging from $1,730 to $3,130.  The full resource cost of serving participants who took part in education, training, or employment ranged from just over $3,000 to about $5,400 during fiscal year 1989.  Since between 25 percent and 50 percent of these costs were assumed by other organizations (providing in-kind services), direct costs to the programs were significantly less.  Annual per person costs paid by federal and state agencies (program-paid costs) were between $917 and $2,399, and between $1,636 and $4,067 for participants involved in major activities.

The considerable range in costs among the three programs can be attributed to differences in program scale, the variety and intensity of services used, overall program structure, and rates of participation in program activities.  In Section A of this chapter we present data on the cost of the site programs, broken down by components or service categories, and discuss the relationship between cost and program characteristics.  In Section B we present the calculated unit costs of the programs.  In Section C we discuss how the results presented in this report will contribute to a future benefit-cost analysis.

Total Resource Costs and Costs by Program Component

The cost of services provided by the Teenage Parent Demonstration programs varied significantly across sites.  As shown in Table IV.1, total program-related costs in fiscal year 1989 were estimated at $764,001 for the Newark Teen Progress site, $1,049,765 for the Camden Teen Progress site, and $1,964,002 for Project Advance in Chicago.  Between 53 percent (Chicago) and 76 percent (Camden) of these resource costs were supported by direct program expenditures.  The Chicago program relied most heavily on in-kind services provided by community, state, or federal agencies.  However, the vast majority of education and training services in all three sites were provided to the programs by other agencies at no cost.

TABLE IV.1
FY 1989 SITE RESOURCE COSTS

Cost Category	Camden	Newark	Chicago	All Sites
Program-Paid Costs	$797,581	$542,910	$1,047,414	$2,387,905
Salaries/Fringe Benefits	$334,992	$291,673	$449,547	$814,212
Indirect Cost	56,662	51,690	0	108,352
Rent/Utilities/Maintenance	0	0	211,529	211,529
Centrally Contracted Services	0	0	68,833	68,833
Staff Travel/Conferences	8,699	1,675	5,882	16,256
Computer Equipment/Services	22,184	22,184	93,721	138,089
Other Equipment/Furniture	3,347	5,984	29,937	39,268
Staff Development/Training	4,632	6,307	0	10,939
Miscellaneous Supplies	12,208	17,265	1,369	30,842
Site Service Contracts	115,155	48,000	0	163,155
Educational Expenses	5,255	2,580	3,003	10,838
Child Care Payments	166,019	66,126
Transportation/TRE Payments	52,348	29,426	183,593	497,512
Van Leasing/Insurance	16,080	0	0	16,080
In-kind Costs	$252,184	$221,091	$916,588	$1,389,863
Workshop Costs	$10,518	$60,151	$5,171	75,840
Education Costs	96,190	46,238	228,285	370,713
Job Training Costs	129,400	114,300	671,520	915,220
Other Services	16,076	402	11,612	28,090
Total Resource Costs	$1,049,765	$764,001	$1,964,002	$3,777,768

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; interviews with demonstration site managers.

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Differences in resource costs arise most obviously from differences in the scale of demonstration operations.  Over the full course of the demonstration, the Chicago site enrolled 1,439 teenage parents in the enhanced-services group, compared to 633 in Camden and 575 in Newark.  During fiscal year 1989, the study year for the cost analysis, 1,138 members of the overall Chicago participant group received AFDC at some time and were thus eligible for demonstration services at some point in the year, compared to 337 in Camden and 288 in Newark.⁽²⁾  Much of the variation in overall cost is due to these program scale differences.  The Chicago site enrolled 2.3 and 2.5 times as many participants throughout the demonstration as did the Camden and Newark sites, and used resources in fiscal year 1989 valued at 1.9 and 2.6 times the resources used by the Camden and Newark sites, respectively.

The three demonstration sites provided a similar range of services, but they varied in their allocation of resources to major program components -- case management, workshops, education, job training, support services, and job placement.  Their allocation of resources depended on several factors -- service accessibility, participant characteristics, program strategy, and program management.  The accessibility of particular services clearly can affect the portion of overall program resources devoted to these services.  For example, stringent entrance requirements for job training will restrict access and constrain the share of program costs spent on training.  Participant characteristics, such as the age distribution of enrollees, can affect the number of participants attending or returning to public school, and thus determine the demand for other education or training resources.  Conscious decisions about program strategy can affect cost patterns as well; a decision to conduct very brief initial workshops, for example, is likely to make workshops a less significant aspect of program costs.  A decision to emphasize intensive counseling efforts to find suitable child care arrangements can result in both higher staff costs related to child care and higher utilization of child care subsidies.  Site program management can also affect the distribution of costs.  Tighter monitoring of participant attendance may lead to greater need for case management or clerical support staff, and may increase the percentage of participants who are active in major activities, both of which may result in higher service costs.

In order to distinguish the contributions of different services to overall cost, we allocated all costs to the major program components identified earlier -- case management, workshops, education, job training, support services, and job placement assistance.  Costs associated with site management and supervision and central management, both essential program components, were kept separate rather than grouped together under one "management" category.

Many program costs could clearly be associated with specific components.  The costs of most outside staff or agency services could be readily allocated because they were engaged for a specific purpose, such as running program workshops or providing job training.  Non-labor costs, such as child care payments, were reported at a level of detail that allowed direct allocation to program components.

However, allocating the remaining costs to the major program components required some judgment.  Most importantly, it was necessary to allocate the cost of program staff among the different components according to their job functions.  Salaries and fringe benefits were not reported by the states separately for individual staff persons but for the site as a whole.  Since staff were recruited at different times and in some instances had multiple responsibilities, we had to identify in which parts of fiscal year 1989 each staff person was employed, how each person's time was spent, and their salaries, in order to decompose total salary cost into the service categories.  We used information provided by site managers on employees' periods of employment and their specific roles, along with salary and fringe benefit rate information included in the States' demonstration proposal budgets, to distribute the cost of each staff person's time across component categories.  General site expenditures, such as those for office supplies, furniture, and indirect costs, were allocated to case management services and site supervision in proportions reflecting the approximate distribution of labor costs.

The distribution of site resource costs by service components shows that there were significant differences in program emphases, even when divergences in program scale and the magnitude of overall program costs are taken into account (Table IV.2 and Figure IV.1).⁽³⁾  Most notably, the Chicago site devoted far more resources to job training, even relative to program size, than did the New Jersey sites; Project Advance enrolled more than twice as many demonstration participants as did the Teen Progress sites, but the estimated value of training resources used by Chicago participants was significantly more than twice as high as those used by participants in Camden and Newark.  On the other hand, Chicago site costs were lower, even in absolute terms, than the New Jersey sites for program workshops, reflecting the use of brief three-day initial workshops in Chicago compared to the extensive sequences of initial workshops in Camden and Newark.  Site program costs for support services were also estimated to be lower in Chicago than in the New Jersey sites; Project Advance used 0.8 and 1.7 times the resources for support services as the Camden and Newark sites, despite operating on a general scale at least twice the size of the Teen Progress programs.  This difference most likely arises from the heavier investments in the New Jersey sites in child care counseling staff, and their policy of consciously promoting use of subsidized child care options, but could be due to potential underestimation of support service payments in Chicago, as noted earlier.  Case management resources in Chicago were about twice those devoted to case management in the New Jersey sites, approximately corresponding to differences in overall number of participants throughout the demonstration.  However, case management costs in Chicago were lower than in the other sites when standardized for the sample members' tenures on AFDC.

TABLE IV.2
FY 1989 RESOURCE COSTS, BY PROGRAM COMPONENT

Program Component	Camden	Newark	Chicago	All Sites
Site Costs	$1,049,765	$764,001	$1,964,002	$3,777,768
Case Management	$255,058	$276,502	$536,022	$1,067,582
Workshops	$108,173	$73,185	$17,308	$198,666
Education	$102,450	$48,818	$261,407	$412,675
Training	$129,400	$114,300	$671,520	$915,220
Support Services	$301,701	$143,386	$245,182	$690,269
Training/Job Development and Placement	$43,256	$43,425	$33,306	$119,987
Site Management and Supervision	$109,727	$64,385	$199,257	$373,369
Central Management Cost	$82,798	$70,002	$107,891	$260,691
TOTAL RESOURCE COST	$1,132,563	$834,003	$2,071,893	$4,038,459

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; interviews with site managers; Illinois FY 1989 grant renewal application.

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FIGURE IV.1
DISTRIBUTION OF THE TOTAL TEENAGE PARENT DEMONSTRATION COSTS
BY COMPONENT AND SITE

Program Component	Camden	Newark	Chicago
Case Management	24%	36%	27%
Workshops	10%	10%	1%
Education	10%	6%	13%
Training	12%	15%	34%
Support Services	29%	19%	13%
Training/Job Development and Placement	4%	6%	2%
Site Management and Supervision	11%	11%	10%

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; and interviews with demonstration program staff and other providers.

Unit Costs

To provide a useful basis for projecting the full resource costs of programs similar to the Teenage Parent Demonstration in other jurisdictions, and to provide input to the benefit-cost analysis, it is necessary to standardize costs by constructing unit measures that express costs in relation to the size of the program or the extent of program participation.  We have defined two unit cost measures: (1) the average cost of site services for each person-month of AFDC receipt; and (2) the average monthly cost of site services provided to individuals engaged in major activities (education, training, and employment).⁽⁴⁾  Each of these measures, given additional information on the average duration of AFDC receipt and major activity, can be converted into estimates of average cost per person.

Cost Per Person-Month on AFDC

Expressing resource costs in relation to the size of the teenage parent caseload on AFDC is a relevant standardized cost measure because of the way in which the demonstration defined the population to be served.  The demonstration offered services to teenage parents and required their participation only while they were receiving AFDC.  The extent to which teenage parents remained on AFDC affects the size of the ongoing caseload of the program, and variations in the rate of departure from and return to AFDC can affect the overall level of demand for program services.⁽⁵⁾

To standardize costs in relation to the extent of AFDC receipt among the demonstration caseload, we estimated average resource cost per person-month on AFDC, by dividing total site costs by total person-months on AFDC.  Using data on AFDC receipt obtained from the two states' AFDC payment system files (FAMIS in New Jersey and CIS in Illinois), we determined the number of months of AFDC receipt during fiscal year 1989 for every demonstration participant who had completed Teen Progress or Project Advance intake before the start of the fiscal year or who completed intake sometime during the year.  We then summed the number of months on AFDC during the fiscal year across all participants to obtain total person-months on AFDC.  We could then divide resource cost estimates by total AFDC months to estimate average cost per person-month on AFDC.

Cost per person-month of AFDC receipt in effect answers the question: How much do program services cost for each month of a teenage parent's stay on AFDC? This cost was $344 in Camden, $292 in Newark, and $206 in Chicago (Table IV.3).  Average direct expenditures by the programs for each person-month on AFDC were significantly less, since many services were provided in-kind; program-paid costs per person-month on AFDC were about $261 in Camden, $207 in Newark, and $109 in Chicago.

TABLE IV.3
FY 1989 RESOURCE COSTS PER PERIOD OF PROGRAM ELIGIBILITY
(AFDC RECEIPT)

	Camden	Newark	Chicago	All Sites
Total Resource Cost	$1,049,765	$764,001	$1,964,002	$3,777,768
Measures of Participation(a)
Number of participants receiving AFDC	337	288	1,138	1,763
Total person-months of AFDC receipt	3,051	2,612	9,529	15,192
Average person-months of AFDC receipt	9.1	9.1	8.4	8.6
Unit Cost Estimates
Average cost per person-month of AFDC receipt	$344	$292	$206	$249
Average annual cost per person	$3,130	$2,657	$1,730	$2,141

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; New Jersey and Illinois public assistance eligibility systems (FAMIS and CIS).

^a  These figures assume that 23 cases that were unable to be matched with state AFDC records data for FY 1989 were not receiving AFDC during that year.  This assumption potentially biased upward the cost estimates slightly.  For Camden, the bias could be up to five percent; the maximum impact on the cost estimates of the other sites is less than one percent.

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During the study year some teenage parents were just entering the demonstration, some were participating in major activities, and others were sanctioned for noncompliance or deferred for medical reasons.  The cost of serving individuals in different stages of their program participation undoubtedly varies, but these estimates represent average cost for a caseload reflecting all of these stages of participation.

These results can be useful in program planning in other contexts.  Since different jurisdictions are likely to have varying degrees of success in finding and relying on community or other in-kind services, average resource cost per person-month on AFDC is more relevant than the program-paid monthly cost figure for projecting maximum costs in other sites.  The resource cost per person month, in conjunction with estimates of the average expected caseload of AFDC teenage parents, can be used by program planners as a basis for estimating the annual cost of offering a program such as the demonstration sites provided, assuming comparable services, resources, and participation rates in major program activities.

There were clear differences in program emphases among the three demonstration programs, some of which were discussed earlier, and these differences are highlighted when costs for particular service components are expressed as unit costs (Table IV.4).  Project Advance case management costs per person-month of AFDC were just over half of case management costs in the New Jersey Teen Progress sites; this finding is consistent with the observation of higher staff caseloads in Chicago.  Chicago workshop costs of $2 per person-month of AFDC receipt were a small fraction of workshop costs in Camden or Newark ($35 and $28, respectively), which largely reflects the use of extensive initial workshops in New Jersey and brief three-day initial workshops in Chicago.  Although the Chicago site offered a variety of workshops for ongoing participants, these were brief workshops offered on a limited schedule, and did not consume substantial resources.

TABLE IV.4
FY 1989 RESOURCE COSTS PER PERSON-MONTH ON AFDC
BY PROGRAM SERVICE COMPONENT

Program Component	Camden	Newark	Chicago	All Sites
Case Management	$84	$106	$ 56	$ 70
Workshops	35	28	2	13
Education	34	19	27	27
Training	42	44	70	60
Support Services	99	55	26	46
Training/Job Development and Placement	14	16	4	8
Site Management and Supervision	36	24	21	25
Total Site Resource Costs	$344	$292	$206	$249

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; New Jersey and Illinois public assistance eligibility systems (FAMIS and CIS).

NOTE: Detailed information on rates of participation in program services can be found in Gleason et al. (1992).

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Unit education expenditures varied in the three sites, but were highest in Camden.  This pattern reflects the fact that Newark and Chicago relied primarily on community college GED classes.  In Camden, heavy use was made of the Urban Youth Corps program, which offered not only small-group remedial classes but also work experience activities, at an estimated average monthly cost of

$667 per person, far above the estimated average monthly cost for community college remedial classes of $250.

Project Advance costs per AFDC person-month for job training were substantially higher than unit training costs in the New Jersey sites -- $70 compared to just over $40 -- primarily because participants at the Chicago site were far more likely to have entered job training.  In Chicago, 33 percent of all teenage parents who entered the program took part in some job training, compared to about 18 percent in the New Jersey Teen Progress sites.

Support service resource costs, on the other hand, were considerably lower in Chicago than in the New Jersey sites.  This difference appears to stem from staffing differences as well as differences in subsidy payment practices.  Whereas both New Jersey sites had a full-time child care counselor, the Chicago site relied on case managers to arrange child care.  In addition, the Chicago site followed a general policy of arranging and paying for child care only when participants stated a need for help.  The New Jersey staff were more likely to suggest subsidized child care alternatives.

Project Advance also had considerably lower resource costs per person-month on AFDC for placing participants in training and jobs.  This difference in unit costs between the Chicago and New Jersey sites is due more to the greater number of total months on AFDC in Chicago, than to higher total costs for training and job placement services.  All three sites had either an on-site job and training counselor (Camden and Newark) or an employment specialist (Chicago) and thus had roughly comparable total costs.  However, the substantially higher caseload in Chicago resulted in lower average unit costs for training and job placement functions, compared to the New Jersey sites.

The resource cost per person-month of AFDC receipt for site management and supervision was also lowest in Chicago, although unit-expenditures on these services in Newark were close to those in Chicago.  Like the divergence in training and job placement costs, this difference reflects simple economies of scale -- the fact that there were at least twice as many participants in the Chicago program (and about three times as many person-months on AFDC) than in Camden and Newark.  Although all three sites incurred the costs of a site manager and case management supervision, the New Jersey demonstration programs were smaller and participants spent less time on AFDC.

Cost Per Person-Month of Major Activity

Average resource cost for each person-month on AFDC reflects a composite of costs for individuals in very different stages of activity, and for individuals who ultimately utilize very different levels of program resources.  Costs are likely to be highest when participants are attending full-time job training or educational classes, or are employed.  During these periods, they are likely to be receiving child care subsidies and are using the resources of education and training providers, in addition to receiving case management services.  Participants who never enter these major activities consume some of these same program resources, of course -- for intake and assessment, for program workshops, for case managers' efforts to guide them into major activities, and to some extent for support service payments while they are involved in these activities.  However, the rate at which participants take part in major program activities is a very significant factor in the overall cost per participant.

We, therefore, estimated the average monthly cost of services to participants taking part in education, training, or employment.  This cost per month of major activity is the sum of two components: (1) the average monthly cost of education, training, and support services for people in such courses or employment; and (2) the average monthly cost of other services such as case management, workshops, placement in jobs and training, other counseling, and site supervision and management, services which are provided to both participants in major activities and those who are not.  To estimate the first component, we computed the total resource costs of education, job training, and support service payments, and divided this total by the number of person-months spent in education, training, or employment in fiscal year 1989.⁽⁶⁾  To estimate the second component, we divided all remaining costs by the total number of person-months on AFDC in fiscal year 1989, because individuals involved in major activities are assumed to use other program resources at approximately the same rate while they are in major activities as during other periods when they are not.

This second unit cost measure answers the question: What is the average monthly cost of serving teenage parents while they are involved in education, training, or employment? This cost estimate allows planners to predict how program costs might change if, due to variation in availability of services or characteristics of client populations, they achieved different levels of participation in these major activities.  The average monthly resource cost for those in major activities was $920 in Camden, $560 in Newark, and $498 in Chicago (Table IV.5).  As shown in Table IV.5, differences across sites are somewhat greater for education/training/support payment costs than for the costs of other program services (case management, workshops, counseling on child care, job and training placement, and general site supervision and management) during periods of major activity.  When only direct program expenditures are considered, differences across sites are even more pronounced.  The average overall costs per month of major activity paid by the programs were $699 in Camden, $398 in Newark, and $264 in Chicago.

TABLE IV.5
FY 1989 RESOURCE COSTS PER MONTH FOR PARTICIPANTS
IN MAJOR ACTIVITIES

	Camden	Newark	Chicago	All Sites
Total Costs
Education, Training, and Employment(a)	$491,342	$268,003	$1,178,109	$2,018,164
Other Costs(b)	$558,423	$495,998	$1,141,246	$2,195,667
Total Person-Months
In Education, Training, or a Job	667	724	3,113	4,504
On AFDC	3,051	2,612	9,529	15,192
Average Cost per Month
Education, Training, Child Care, and Transportation	$737	$370	$378	$448
Other Costs	$183	$190	$120	$145
Total Costs	$920	$560	$498	$593

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; New Jersey and Illinois public assistance eligibility systems (FAMIS and CIS); demonstration participant tracking systems (Teen Progress Management Information System and Project Advance Case Management System).

^a  Education, training, and employment costs include the costs of education and training courses on-site and off-site, and all support service payments for child care and transportation.  Since participants could receive these payments to attend workshops or meet with program staff outside periods of education, training, or employment, this approach overstates the portion of program costs associated with major activities.

^b  Other costs include only the costs of case management, workshops, training and job placement, and site management and supervision.

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Cost Per Person

Costs per person-month of AFDC receipt, and per person-month of major activity, can be converted to average costs per person, based on the average duration of participants' stays on AFDC and in education, training, or job.  Based on the average duration of stays on AFDC in fiscal year 1989, the resource cost per person for one year of the demonstration services averaged $3,130 in Camden, $2,657 in Newark, and $1,730 in Chicago (Table IV.3).  For those individuals who were involved in education, training, or employment at any time during that year, average per-person resource costs were $5,351 in Camden, $3,726 in Newark, and $3,087 in Chicago (Table IV.6).  Annual per person costs to federal and state agencies (program-paid costs) were substantially less, ranging from $917 to $2,379 per year of program eligibility (AFDC receipt) and from $1,636 to $4,067 per year for persons in major activities.

Two factors should be noted when interpreting these estimates of average costs per person.  First, the measures of the lengths of stay on AFDC and in education, training, or employment that went into these calculations are based on observation of durations only within a particular year of the demonstration, rather than a complete observation of all enrollees through an extended follow-up period.  Thus, the maximum length of stay on AFDC or in major activities for each participant is artificially constrained to 12 months and our cost per person figures pertain to one year of program participation only.  The average cost per participant would be higher than the annual per-person costs estimated because many participants stayed on AFDC and used program services for longer than one year.  Second, the variation in estimated unit costs across the programs should not be viewed as evidence of which sites had more cost-effective programs or higher quality services.  The cost results are at this point not accompanied by any estimates of long-term program impacts.  It is possible that higher levels of program resources per person will yield greater impacts on key outcomes.

TABLE IV.6
FY 1989 RESOURCE COSTS PER PERSON FOR PARTICIPANTS
IN MAJOR ACTIVITIES

	Camden	Newark	Chicago	All Sites
Average Cost per Month
For Education, Training, Child Care, and TREs(a)	$737	$370	$378	$448
For Other Costs(b)	$183	$190	$120	$145
Total Costs	$920	$560	$498	$593
Average Months in FY 1989
In Education, Training, or Employment	5.1	5.5	5.5	5.4
On AFDC(c)	8.7	8.9	8.4	8.5
Average Annual Cost per Person
Cost of Education, Training, and Employment	$3,759	$2,035	$2,079	$2,419
Other Costs	$1,592	$1,691	$1,008	$1,233
Total Costs	$5,351	$3,726	$3,087	$3,652

SOURCE: New Jersey Department of Human Services Demonstration Expenditure Reports; Illinois Department of Public Aid Obligation Transaction Reports; New Jersey and Illinois public assistance eligibility systems (FAMIS and CIS); demonstration participant tracking systems (Teen Progress Management Information System and Project Advance Case Management System).

^a  Education, training, and employment costs include the costs of education and training courses on-site and off-site, and all support service payments for child care and transportation.  Since participants could receive these payments to attend workshops or meet with program staff outside periods of education, training, or employment, this approach overstates the portion of program costs associated with major activities.

^b  Other costs include only the costs of case management, workshops, training and job placement, and site management and supervision.

^c  This row reports average months on AFDC in FY 1989 for individuals who participated in education, training, or employment.  Their durations on AFDC in that year were similar to the durations for the overall sample as reported in Table IV.3.

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Comparison with Costs of Other Programs

The costs estimated for the Teenage Parent Demonstration can usefully be compared to estimated costs for other teenage parent programs and employment training programs.  In the early 1980s, Project Redirection, sponsored by the Manpower Demonstration Research Corporation, provided comprehensive educational, health, employability, family planning, parenting, and life management training services to over 800 teenage parents in programs run by community organizations in Boston, New York, Phoenix, and Riverside, California.  Program costs were estimated at $3,893 per service year, or $3,536 per participant (Branch, Riccio, and Quint, 1984).  When adjustments are made for inflation, Project Redirection would thus appear to have cost approximately 60 percent more than the Teenage Parent Demonstration across all three sites.⁽⁷⁾  This difference is particularly striking because, unlike our estimates of the Teenage Parent Demonstration service costs, the estimates for Project Redirection did not include the implicit costs of in-kind services provided by other agencies (for example, the in-kind costs of off-site GED classes or job training).  This substantial difference may be due to the smaller scale of Project Redirection and the likelihood that it's sites incurred high fixed costs relative to caseloads.  The four programs enrolled a total of 807 teenage parents over a 30-month period, compared to the total of 2,647 enrolled in approximately the same length of time by the Camden, Newark, and Chicago sites of the Teenage Parent Demonstration.  One probable indicator of these high fixed costs is the fact that Project Redirection sites reported that half of their program costs were for program management as opposed to other major cost components -- program services, ancillary services, stipends to participants, and payments to community mentors.

The estimated costs of the Teenage Parent Demonstration are less than or roughly consistent with the costs estimated for other demonstration programs offering comprehensive services to adults.  For example, the Minority Female Single Parent (MFSP) Demonstration, sponsored in four community-based organizations by the Rockefeller Foundation, offered GED and ABE classes, job training, child care, and counseling to minority single mothers.  At these four sites, average cost per enrollee ranged from $2,679 to $3,861 in fiscal year 1986, and average cost per participant who entered education or training ranged from $3,909 to $6,147 (Handwerger and Thornton, 1988).  These cost estimates are not only higher, in real terms, than the costs of the Teenage Parent Demonstration programs, but also represent durations of enrollment that are substantially less than in these programs (approximately 6 months for MFSP compared to 9 months for TPD).⁽⁸⁾  Costs for the Teenage Parent Demonstration are also roughly comparable to the costs of the comprehensive work-welfare demonstrations of the 1980s.  Some of those programs offered job training as well as basic education and job search assistance, and thus provided a range of services similar to the Teenage Parent Demonstration, albeit for a differently defined population.  Cost per participant in these programs was estimated at $2,089 (Maxfield, 1990).⁽⁹⁾

Cost Estimates as Input to Benefit/Cost Analysis

The cost estimates presented here are a partial step towards the information needed for the benefit/cost analysis.  To compare program benefits and costs, we must be able to quantify the incremental cost of the demonstration services provided to members of the program sample as compared to services received by the control group, over a consistently defined follow-up period.  Using demonstration participant tracking data, we can estimate the costs of only those services that the enhanced-services program sample received from or through the demonstration program while they were receiving AFDC.  Program data do not allow us to identify services received from other sources.  For the benefit/cost analysis, therefore, we will supplement estimates of demonstration program costs for the enhanced-services program sample with more comprehensive estimates of service utilization, based on follow-up interviews.  These total service costs will be compared to the estimated cost of services reported by control group members in their follow-up interviews.

Endnotes

1.  As described in the previous chapter, site resource costs include both program-paid costs and estimates of the costs of in-kind services, but exclude central management costs.

2.  The numbers of participants who received AFDC in FY 1989 are lower than the overall number of participants in the demonstration programs for two reasons.  First, some participants who had enrolled in the demonstration before FY 1989 were no longer receiving AFDC by July 1988 (the start of the fiscal year).  Second, additional sample members were enrolled in fiscal years 1990 and 1991.

3.  The allocation of the line-item costs in Table IV.1 to program service components is presented in detail in Appendix A.

4.  Central management costs, the difference between total program costs and site costs, were excluded from the calculations of unit measures.

5.  As noted earlier, of course, participants could obtain services similar to some of those provided by the demonstration during periods when they were off AFDC.  The extent of such activity cannot be determined from the demonstration program data, and the cost of those non-demonstration services is not included in this analysis.  Estimates of non-demonstration service costs will be based on follow-up survey data and will be included in the benefit-cost study.

6.  Support service payments were allocated entirely to major activities, although child care and other transportation payments were made during periods when participants were not in major activities (e.g., to attend program workshops).

7.  For example, cost per participant-year, in 1993 dollars, was $5,709 for Project Redirection and $2,425 for the Teenage Parent Demonstration (based on the Gross Domestic Product implicit price deflator).

8.  This difference may be due in part to the fact that the MFSP sites achieved considerably higher rates of participation in education and training than did the Teenage Parent Demonstration sites.  In the year studied for the MFSP cost analysis, sample members were active in education or training for 53 percent of the months they were enrolled.  In the Teenage Parent demonstration in the cost study year, participants were reported active in education, training, or employment for 34 percent of the months in which they were on AFDC and thus eligible for demonstration services.

9.  These programs included the Virginia, Baltimore, and Maine WIN demonstrations, the San Diego Saturation Work Incentive Model, and the San Jose-based Center for Employment Training (one of the sites also included in the Minority Female Single Parent Demonstration).

APPENDIX A: SUPPLEMENTARY TABLES

TABLE A. 1
TEEN PROGRESS RESOURCE COSTS, FY 1989
CAMDEN

Total Costs	Total	Case Management	Workshops	Education	Training	Child Care	Other Support Services	Training and Job Placement	Management and Supervision
Program-Paid Costs
Salaries	$266,672	$130,136	--	$800	--	$33,601	$18,934	$12,267	$70,934
Fringes	$68,320	$33,340	--	$205	--	$8,608	$4,851	$3,143	$18,173
Indirect Cost	$56,662	$45,330	--	--	--	--	--	--	$11,332
Rent, Utilities, Maintenance	--	--	--	--	--	--	--	--	--
Contract Services	--	--	--	--	--	--	--	--	--
Staff Travel, Conferences	$8,699	$6,959	--	--	--	--	--	--	$1,740
Computer Equipment	$22,184	$17,747	--	--	--	--	--	--	$4,437
Other Equipment, Furniture	$3,347	$2,678	--	--	--	--	--	--	$669
Staff Development, Training	$4,632	$4,632	--	--	--	--	--	--	--
Miscellaneous, Supplies	$12,208	$9,766	--	--	--	--	--	--	$2,442
Service Contracts	$115,155	--	$97,655	--	--	--	--	$17,500	--
Education Services, Expenses	$5,255	--	--	$5,255	--	--	--	--	--
Child Care Expenses	$166,019	--	--	--	--	$166,019	--	--	--
Training, Transportation Expenses	$46,169	--	--	--	--	--	$46,169	--	--
Other Client Expenses	$6,179	--	--	--	--	--	$6,179	--	--
Van Leasing, Insurance	$16,080	--	--	--	--	--	$16,080	--	--
Estimated In-kind Costs
Workshop Costs	$10,518	--	$10,518	--	--	--	--	--	--
Education Costs	$96,190	--	--	$96,190	--	--	--	--	--
Training Costs	$129,400	--	--	--	$129,400	--	--	--	--
Other Services Costs	$16,076	$4,470	--	--	--	$1,260	--	$10,346	--
Total Site Resource Costs	$1,049,765	$255,058	$108,173	$102,450	$129,400	$209,488	$92,213	$43,256	$109,727

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TABLE A. 2
TEEN PROGRESS RESOURCE COSTS, FY 1989
NEWARK

Total Costs	Total	Case Management	Workshops	Education	Training	Child Care	Other Support Services	Training and Job Placement	Management and Supervision
Program-Paid Costs
Salaries	$239,695	$156,761	$4,794	--	--	$31,640	$7,670	$2,157	$36,673
Fringes	$51,978	$33,994	$1,040	--	--	$6,861	$1,663	$468	$7,953
Indirect Cost	$51,690	$41,352	--	--	--	--	--	--	$10,338
Rent, Utilities, Maintenance	--	--	--	--	--	--	--	--	--
Contract Services	--	--	--	--	--	--	--	--	--
Staff Travel, Conferences	$1,675	$1,340	--	--	--	--	--	--	$335
Computer Equipment	$22,184	$17,747	--	--	--	--	--	--	$4,437
Other Equipment, Furniture	$5,984	$4,787	--	--	--	--	--	--	$1,197
Staff Development, Training	$6,307	$6,307	--	--	--	--	--	--	--
Miscellaneous, Supplies	$17,265	$13,812	--	--	--	--	--	--	$3,453
Service Contracts	$48,000	--	$7,200	--	--	--	--	$40,800	--
Education Services, Expenses	$2,580	--	--	$2,580	--	--	--	--	--
Child Care Expenses	$66,126	--	--	--	--	$66,126	--	--	--
Training, Transportation Expenses	$26,980	--	--	--	--	--	$26,980	--	--
Other Client Expenses	$2,446	--	--	--	--	--	$2,446	--	--
Van Leasing, Insurance	--	--	--	--	--	--	--	--	--
Estimated In-kind Costs
Workshop Costs	$60,151	--	$60,151	--	--	--	--	--	--
Education Costs	$46,238	--	--	$46,238	--	--	--	--	--
Training Costs	$114,300	--	--	--	$114,300	--	--	--	--
Other Services Costs	$402	$402	--	--	--	--	--	--	--
Total Site Resource Costs	$764,001	$276,502	$73,185	$48,818	$114,300	$104,627	$38,759	$43,425	$64,385

---

 

TABLE A. 3
PROJECT ADVANCE RESOURCE COSTS, FY 1989
CHICAGO

Total Costs	Total	Case Management	Workshops	Education	Training	Child Care	Other Support Services	Training and Job Placement	Management and Supervision
Program-Paid Costs
Salaries	$401,975	$178,075	$10,853	$26,932	--	$32,962	$22,109	$26,932	$104,112
Fringes	$47,572	$21,074	$1,284	$3,187	--	$3,901	$2,617	$3,187	$12,322
Indirect Cost	--	--	--	--	--	--	--	--	--
Rent, Utilities, Maintenance	$211,529	$169,223	--	--	--	--	--	--	$42,306
Contract Services	$68,833	$54,498	--	--	--	--	--	--	$14,335
Staff Travel, Conferences	$5,882	$4,706	--	--	--	--	--	--	$1,176
Computer Equipment	$93,721	$74,977	--	--	--	--	--	--	$18,744
Other Equipment, Furniture	$29,937	$23,950	--	--	--	--	--	--	$5,987
Staff Development, Training	--	--	--	--	--	--	--	--	--
Miscellaneous, Supplies	$1,369	$1,095	--	--	--	--	--	--	$274
Service Contracts	--	--	--	--	--	--	--	--	--
Education Services, Expenses	$3,003	--	--	$3,003	--	--	--	--	--
Child Care Expenses	$183,593	--	--	--	--	$87,347	$96,246	--	--
Training, Transportation Expenses	--	--	--	--	--	--	--	--	--
Other Client Expenses	--	--	--	--	--	--	--	--	--
Van Leasing, Insurance	--	--	--	--	--	--	--	--	--
Estimated In-kind Costs
Workshop Costs	$5,171	--	$5,171	--	--	--	--	--	--
Education Costs	$228,285	--	--	$228,285	--	--	--	--	--
Training Costs	$671,520	--	--	--	$671,520	--	--	--	--
Other Services Costs	$11,612	$8,425	--	--	--	--	--	$3,187	--
Total Site Resource Costs	$1,964,002	$536,022	$17,308	$261,407	$671,520	$124,210	$120,972	$33,306	$199,257

REFERENCES

Branch, Alvia, James Riccio, and Janet Quint.  "Building Self-Sufficiency in Pregnant and Parenting Teens:  Final Implementation Report of Project Redirection."  New York, NY:  Manpower Demonstration Research Corporation, 1984.

Gleason, Philip, Rebecca Maynard, Walter Nicholson, Denise Polit, and Anu Rangarajan.  Service Needs and Use of Welfare-Dependent Teenage Parents.  Princeton, NJ:  Mathematica Policy Research, Inc., 1993.

Handwerger, Sharon and Craig Thornton.  "The Minority Female Single Parent Demonstration:  Program Costs."  New York, NY:  The Rockefeller Foundation, 1988.

Hershey, Alan, and Charles Nagatoshi.  Implementing Services for Welfare Dependent Teenage Parents:  Experiences in the DHHS/OFA Teenage Parent Demonstration.  Princeton, NJ:  Mathematica Policy Research, Inc., June 1989.

Hershey, Alan M.  Case Management for Teenage Parents:  Lessons from the Teenage Parent Demonstration.  Princeton, NJ:  Mathematica Policy Research, Inc., December 1991a

Hershey, Alan M.  Designing Program Workshops for Teenage Parents:  Lessons from the Teenage Parent Demonstration.  Princeton, NJ:  Mathematica Policy Research, Inc., December 1991b.

Hershey, Alan M.  Enrolling AFDC Parents in Mandatory Education and Training Programs:  Lessons from the Teenage Parent Demonstration.  Princeton, NJ:  Mathematica Policy Research, Inc., December 1991c.

Hershey, Alan M. and Anu Rangarajan.  Delivering Education and Employment Services to Teenage Parents:  Lessons from the Teenage Parent Demonstration.  Princeton, NJ:  Mathematica Policy Research, Inc., June 1993.

Kemper, Peter and David A. Long.  "The Supported Work Evaluation:  Technical Report on Value of In-Program Output and Costs."  New York, NY:  Manpower Demonstration Research Corporation.  1980.

Maynard, Rebecca and Myles Maxfield, et al.  "A Design of a Social Demonstration of Targeted Employment Services for AFDC Recipients."  Princeton, NJ:  Mathematica Policy Research, Inc., 1986.