Understanding the Costs of
the DOL Welfare-to-Work Grants Program

Final Report

by:
Irma Perez-Johnson, Debra Strong, and Michelle Van Noy

With Contributions by:
Charles Nagatoshi

Submitted to:
Department of Health and Human Services
Office of the Assistant Secretary for Planning and Evaluation
Project Officer: Alana Landey

Submitted by:
Mathematica Policy Research, Inc.
Project Director: Alan Hershey

August 2002

This report is available on the Internet at:
http://aspe.hhs.gov/hsp/wtw-grants-eval98/costs02/

How to Obtain a Printed Copy

Contents

• Executive Summary
• Acknowledgments
• I. Introduction
  1. The Welfare-to-Work Grants Program
  2. The National Evaluation and Cost Analysis
  3. Programs Included in the Cost Analysis
• II. Measuring Program Costs
  1. Total WtW Program Costs
     1. How Total WtW Program Costs Were Estimated
     2. Estimates of Total Costs for WtW Programs
  2. Allocating Costs to Program Components
     1. How Total Costs Were Allocated
     2. Allocation of WtW Costs to Program Components
  3. Estimating Average Costs
     1. How Average Costs per Participant Were Estimated
     2. How Average Costs per Placement Were Estimated
• III. Analyzing WtW Program Costs
  1. Variation in Total Costs
  2. Variation in WtW Resource Allocation
     1. Outreach and Recruitment Were Important WtW Investments for Some Programs
     2. Job Readiness, Placement, and Case Management Are the Core of WtW Services
     3. Emphasis on Work Experience Differentiated Some WtW Programs
     4. WtW Transportation Assistance Helped Fill a Gap in Transitional Support
  3. Variation in Costs per Participant
     1. Sources of Cost Variation Go Beyond Program Model, Scale, and Duration of Participation
     2. Costs Differences Reflected Programs' Emphasis on Work Experience and Postemployment Support
  4. Variation in Costs per Placement
     1. Cost per Placement Clearly Reflects Job-Matching Strategy
     2. Urbanicity and Prevailing Unemployment Rates Had No Obvious Effect on Costs per Placement
     3. Participant Characteristics May Have Influenced WtW Costs per Placement
• IV. Welfare-to-Work Costs in Context
  1. WtW Costs Compared to Earlier Programs
     1. WtW Costs Reflect Targeting of Hard-to-Employ Individuals
     2. WtW Favors Work but Still Emphasizes Skill Building
     3. Focus on Employment for the WtW Population Has Required More Intensive Services
  2. Implications for Future Programs
• References
• Appendix A: Profiles of WtW Programs Included in the Cost Analysis
• Appendix B: Background Information on Programs Comparable to WtW
• Appendix C: WtW In-depth Evaluation Sites And/or Programs Not Included in Cost Analysis
• Figures
  • III.1 Total WtW Program Costs, by Total Participation
  • III.2 Average Allocation of Total Costs Across WtW Components
  • III.3 Percent of Total Costs Spent on Core Versus Other WtW Services
  • III.4 Allocations of Costs per Participant to Main WtW Program Components
  • IV.1 Range of Average Costs per Participant for WtW and Comparable Programs
• Tables
  • I.1 Summary Findings from the WtW Cost Study
  • I.2 Characteristics of the WtW Cost Analysis Programs
  • II.1 Total Estimated Costs for One Year of WtW Program Operations
  • II.2 Allocation of Total Costs Across WtW Program Components
  • II.3 Participation in WtW and Average Costs per Participant During the Cost Analysis Year
  • II.4 Placements in Unsubsidized Employment and Average Costs per Placement During the Cost Analysis Year
  • III.1 WtW Programs with Outreach and Recruitment Costs
  • III.2 Average Costs per Participant, Average Duration, and Scale of Operations for WtW Programs, by Model
  • III.3 Factors Influencing the Per-participant Costs of WtW Work Experience
  • III.4 Factors Influencing the Per-participant Costs of WtW Job Readiness and Preemployment Case Management
  • III.5 WtW Costs per Placement by Job-matching Approach
  • III.6 WtW Costs per Placement by Program Model
  • III.7 WtW Costs per Placement by Use of Paid Work Experience
  • III.8 WtW Costs per Placement by Urbanicity of Service Area
  • III.9 WtW Cost per Placement by Target Population
  • IV.1 Costs of Work-focused Welfare Programs Comparable to WtW

Acknowledgments

This report is part of a congressionally mandated evaluation of the Welfare-to-Work (WtW) Grants program, being conducted by Mathematica Policy Research, Inc. (MPR), and its subcontractors, the Urban Institute and Support Services International. Completing it would not have been possible without the diligent work of a large cast of individuals at MPR and other organizations. The authors wish to acknowledge their contributions.

We could not have completed the report without help from dozens of busy WtW grantee program administrators and staff members across our evaluation sites who gave generously of their time and helped us analyze the costs of their WtW programs. These individuals helped us compile the necessary financial, participation, and outcomes information, and then worked closely with us to interpret this rich and complex information.

At MPR, Alan Hershey, the director of the overall evaluation, oversaw the conduct of the cost analysis and provided insightful guidance throughout. Patricia Ciaccio provided careful editing. William Garrett and others on MPR’s secretarial staff did a superb word processing and production job, as usual. We are especially grateful to Walter Corson, at MPR, and Demetra Smith Nightingale, at the Urban Institute, for their thoughtful and constructive comments as reviewers of the draft document. We also received valuable support from the U.S. Department of Health and Human Services and the U.S. Department of Labor. In particular, Alana Landey, the project officer in the USDHHS office of the Assistant Secretary for Planning and Evaluation has consistently provided useful advice and guidance. We are thankful for careful reading and useful comments on the draft report.

We appreciate these contributions, as well of those of any other individuals we may have omitted unintentionally. Any errors or omissions are strictly the responsibility of the authors.

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Last updated: 0923/02