Costs of Mandatory Education and Training Programs for Teenage Parents on Welfare: Lessons from the Teenage Parent Demonstration. Total Resource Costs and Costs by Program Component

07/12/1993

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.


 

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.


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.