Implementation, Participation Patterns, Costs, and Two-Year Impacts of the Portland (Oregon) Welfare-to-Work Program: Executive Summary. Findings on Program Costs

05/01/1998

  • Excluding spending that would have occurred without any special welfare­to­work program, the two­year net per person cost of Portland’s program was $2,017.  This net cost is higher than the average net cost for the three work first programs studied as part of the NEWWS Evaluation ($1,550) and much lower than the average net cost for the three skills­building programs ($3,077).

The costs estimated in this report consist of all costs associated with providing employment services and related support services to sample members; costs associated with authorizing and processing welfare payments are not included.  The gross cost per program group member during the two­year follow­up period consists of costs paid by the welfare department and non­welfare agencies while sample members were enrolled in Portland’s program as well as for employment and support services after they exited the program and, in some cases, left AFDC.  The two­year gross cost per Portland program group member was $4,027.  The welfare department paid about two­thirds of this cost; the remainder was paid by schools and other agencies.  The proportion of costs covered by the welfare department is high compared to the other programs studied in the NEWWS Evaluation.  The welfare department in Portland contracted out, and thus paid for, most of the program services, whereas most programs rely more on noncontracted outside agencies.

The net cost per program group member during the two­year follow­up period is the gross cost per program group member minus what would have been spent in the absence of a mandatory welfare­to­work program, as measured by the cost per control group member.  Control group members were not eligible to take part in program activities, but could enroll on their own in other employment­related activities in the community and were eligible for activity­ and employment­related welfare department support services.  Thus, control group costs include expenditures for all of the nonprogram activities and support services utilized by control group members during the two­year follow­up period.  As Table 1 shows, Portland’s two­year net cost per program group member was $2,017.  This net cost is higher than the average net cost per work first sample member and much lower than the average net cost per skills­building sample member.  (A five­year benefit­cost analysis will eventually be completed as part of the NEWWS Evaluation.)

  • Compared to the six programs studied in Atlanta, Grand Rapids, and Riverside, the cost of support services in Portland was very high because of high monthly child care payments and extensive use of child care benefits both while people were participating in program activities and during employment.  For parents with younger children, these factors were even more pronounced.

Support services accounted for 38 percent of Portland’s gross costs (see Table 1).  A large proportion of the support service costs — $1,422 per program group member — was for child care.  Total child care costs in the six work first and skills­building programs ranged from $88 to $794 per person.  In Portland, 50 percent of program group members received payments for child care services while they were enrolled in the program, compared to 17 to 31 percent in the six work first and skills­building programs.  Twenty­six percent in Portland received employment­related child care payments (including transitional child care, provided for up to one year for those who left AFDC for work, and Employment­Related Day Care, provided with no time limit to those not eligible for transitional care) compared to no more than 7 percent in any of the other programs studied.

The high rates of child care use for both program participation and employment in Portland probably reflect the strong emphasis that staff placed on securing child care arrangements and having a backup option.  The high rates of employment­related child care use also reflect Portland’s large impact on employment.  Furthermore, it is possible that Portland’s integrated case managers were more likely than the traditional case managers in the other sites to know the two facts that qualify an individual for transitional benefits:  namely, that the individual has received AFDC for at least three of the past six months and is leaving AFDC for employment.  Staff who perform a dual role may also be more inclined to authorize benefits automatically, without a special request from a parent or other staff member.

Table 1: Two-Year Gross and Net Costs.

Child care costs in Portland were particularly high for parents with younger children.  As mentioned, Portland required parents with children as young as age 1 to participate in the program.  The child care costs for those entering the program with a child under age 3 were more than twice the costs for parents entering the program with no children under age 3 ($2,144 compared to $936).  Parents with younger children at program entry had higher average monthly child care payments and higher rates of child care receipt and received payments for a longer time than those without young children.  It is interesting to note that although Grand Rapids also required participation from parents with children as young as age 1, per person child care costs in the Grand Rapids work first and skills­building programs ($367 and $542, respectively) were much lower than in Portland, owing to lower monthly payments and much lower rates of child care use.