ReWORKing Welfare Technical Assistance for States and Localities. 21. Program Costs


Operating a work first program typically costs less per participant than operating a program that emphasizes education and training, mainly because participants remain in program activities for less time. However, work first programs can vary greatly in their costs, for a number of reasons. These include differences in the average length of participation, the extent of monitoring and case management, which services are emphasized, and the extent to which support services are made available.

To illustrate the range of work first program costs and some of the reasons for the variation, this section looks at the costs of six programs that MDRC has evaluated: Florida's Project Independence; San Diego SWIM (Saturation Work Initiative Model); Riverside, California's, GAIN program; and JOBS programs in Atlanta, Grand Rapids (Michigan), and Riverside.

Table 3 breaks down program-related costs into operating costs-staff, administration, and other overhead-and support service costs-mostly for child care and transportation (see section 7 for more on support services). Operating costs are further broken down into costs to the welfare department and costs borne by other agencies, including Job Training Partnership Act (JTPA) agencies and education providers. On the one hand, program administrators will aim to maximize the amount of resources leveraged from other sources. On the other hand, administrators should be aware of the larger picture: maximizing cost-effectiveness from a total government and taxpayer perspective involves taking a certain amount of responsibility for all program-related costs.

Table 3

Estimated Costs for Single Parents Assigned to a Work First Programa

                           Operating Cost         Support Service   Total Cost    
      Program                 Per Person          Cost Per Person    Per Person   

                      Welfare     Other     Total    Welfare Dept.                  
                       Dept.     Agencies              Cost Only                    

Florida's Project                                                                   
Independence             $  312     $  491   $  803             $118        $   921 

San Diego SWIMb             988        858    1,846              101          1,947 

Riverside GAINc           1,671        817    2,488              123          2,611 

Atlanta JOBS              1,154        802    1,956              882          2,838 

Grand Rapids JOBS           648      2,164    2,812              297          3,109 

Riverside JOBS              919        187    1,105              122          1,227 

Average                     949        886    1,835              274          2,109 

SOURCES: Kemple, Friedlander, and Fellerath, 1995; Hamilton and Friedlander, 1989; Riccio, Friedlander, and Freedman, 1994; U.S. Department of Health and Human Services and U.S. Department of Education (prepared by Hamilton, Brock, Farrell, Friedlander, and Harknett), forthcoming.

aCosts are for single-parent AFDC recipients for a two- to three-year follow-up period and are in 1993 dollars. The costs are averages across all program group members, including both those who did and those who did not participate in program activities. (Control group members are not included.) Roughly 60 percent of program group members ever participated in a program activity. Also not included are the costs of services that program group members received after leaving the work first program.

bThese figures have been inflation-adjusted and therefore differ from those in the cited report. SWIM operating costs include the cost of some community college and training services that participants received after leaving the SWIM program.

cThese figures are based on two to three years of follow-up, rather than the five years of follow-up in the cited report.

The following is a discussion of some of the reasons for the variation in costs among the programs cited in Table 3:

  • Operating costs. Project Independence had the lowest total operating cost per program group member. As economic and other conditions in Florida changed, caseloads increased dramatically. At the same time, the program experienced a hiring freeze and child care budget cuts. Facing those constraints, the program spent less on each participant. Grand Rapids' higher operating costs can be explained primarily by a high level of participation in education and training programs, in part due to an extensive network of education and training services offered in the Grand Rapids community. Many individuals were already participating in education or training when they entered Grand Rapids' work first program, and they were allowed to continue in those activities.
  • Support service costs. Support service costs were lowest in SWIM. Support service costs in most programs are primarily for child care, and SWIM's program group was composed mostly of parents with children six and older, who did not require levels of child care services as high as those needed at the other sites. Also, SWIM's allowable child care rates during the first year of the program were very low ($1.25 per hour per child). Atlanta's support service costs were much higher than the other programs' costs due to high monthly child care costs, a high number of monthly child care payments, and generous payments made for transportation and other ancillary services.

Costs for Program Activities

Table 4 presents the per-person cost of each major work first program activity for those who participated in that activity. The table is based on data from the work first programs in Florida, Atlanta, Grand Rapids, and Riverside (both GAIN and JOBS). The component costs given in the table include the costs of the activity or service as well as costs for case management to monitor and enforce participation requirements and address barriers to participation. These costs can give you a start in estimating what your own program costs might be, depending on how many people you expect to participate in each component, how long you expect them to participate, and other factors. The range of costs reflects differences across the five programs studied; the third column of the table explains those differences by noting some of the factors that affected the cost of each component.


Welfare-to-work programs do cost the government money, but they can also bring a return on the investment when program participants leave welfare for work. Virtually every program evaluated by MDRC in which job search has been the first component for most participants has been found to be cost-effective from the standpoint of government budgets. The savings from reduced welfare, food stamps, and Medicaid, as well as increased revenue from taxes paid by participants, more than paid for the program. Moreover, close to half of these programs have proven to be very good investments for taxpayers. Within five years, programs in San Diego, Arkansas, and Riverside returned to government between $2.34 and $5.50 per dollar spent.

Table 4

Cost Per Single-Parent Participant for Work First Program Components:

The Range of Costs for Five Programsa

Component       Cost Per Participant      Factors That Affected Costs      

Orientationb          $25-$100              Length of orientation; group size    

Job search            $270-$1,930           Duration of job search; staffing     
                                            and group size                       

Basic education       $1,610-$4,365         Duration of education; class size;   
                                            providers used                       

Vocational training   $4,395-$6,980         Duration of education or training;   
and college                                 class size; providers used           

Work experience       $340-$1,400           Duration of activity; intensity of   
or on-the-job                               supervision                          

Child cared           $435-$2,250           Length of participation; type of     
                                            care; age of children; local market  

Transportatione       $65-$125              Type of transportation; extent of    

Other support         $105-$115             What is covered (e.g., uniforms,     
servicese                                   books, equipment, registration and   
                                            licensing fees)                      

SOURCES: Kemple, Friedlander, and Fellerath, 1995; Hamilton and Friedlander, 1989; Riccio, Friedlander, and Freedman, 1994; U.S. Department of Health and Human Services and U.S. Department of Education (prepared by Hamilton, Brock, Farrell, Friedlander, and Harknett), forthcoming.

aCosts are two- to three-year costs for single-parent AFDC recipients and are in 1993 dollars. Note that this table uses a different base than does Table 3. Table 3 presents the cost per program group member, including both those who did and those who did not participate in program activities. Table 4, in contrast, presents the cost for each person who actually participated in the program activity cited. As noted below, costs of some components for some sites are not included; this is because of small sample sizes or because comparable estimates were not available.

bNot including Riverside GAIN.

cNot including Riverside JOBS. Another study in seven sites found a similar range of per-participant costs for unpaid work experience that generally lasted three to six months. On the basis of that study, MDRC estimated that it would cost between $2,000 and $4,000 annually (excluding child care costs) to keep a work experience position filled for a year. See Brock, Butler, and Long, 1993.

dNot including Florida.

eNot including Florida or Grand Rapids.