TEENAGE PARENT DEMONSTRATION

Report on Costs of Education and Training Programs, Chapter I

CHAPTER I:
INTRODUCTION AND SUMMARY

TABLE OF CONTENTS

1. Introduction
2. Demonstration Sites and Participant Samples
3. Framework for the Cost Analysis

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⁾ 

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.

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.

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. 

[End of Chapter I]

Go to Chapter II: Demonstration Services and Resources

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.  [Back to text]

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.  [Back to text]

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).  [Back to text]

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

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.  [Back to text]

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