ReWORKing Welfare Technical Assistance for States and Localities. 22. Strategies to Reduce Costs

03/01/1997

The differences in program costs among the work first programs discussed in section 21 reflect differences in program funding, policy, and implementation; the availability of community services; regional wages and prices; labor market conditions; and the demographic characteristics of participants. Some of these variables are outside the control of program planners. However, given these environmental factors, planners can reduce the amount spent on each participant through the decisions they make regarding program policy and implementation. Research suggests some ways to do so, outlined below.

Remember, however, that there are trade-offs to cost-saving strategies, and program administrators need to strike a balance among costs, benefits, goals, and outcomes. Minimal government investment in the short run does not necessarily save government money in the long run. Conversely, well-managed programs with considerable up-front investments can be cost-effective.

Reducing the Length of Time Spent in the Program

  • Close monitoring of participation. By keeping close track of attendance and progress, case managers can ensure that program resources pay for active participation and can reduce the number of months that participants spend in the program. Caseload sizes need to be small enough to allow for close monitoring, or else specialized staff need to be assigned responsibility for monitoring participation (see section 15 for more on caseload size and specialization). Close monitoring also involves coordination with service providers if program activities take place off-site (see section 20, on interagency linkages).
  • Short-term activities. Use of short-term activities, such as job search, reduces the amount of time participants spend in the program. Priority can also be given to short-term programs in other areas, such as education and training, where programs can vary greatly in length.
  • Payment agreements. In order to encourage service providers to reduce the length of time participants stay in activities, targets for completion of activities can be written into contracts and funding agreements. For example, Riverside County makes incentive payments to schools that succeed in getting participants to make progress and complete their education assignments.

Reducing Unit Operating Costs

  • Economies of scale. Programs that enroll large numbers of participants benefit from economies of scale. Overhead costs, such as rent, utilities, equipment, and administrative staff salaries, are spread across a larger base of participants.
  • Referrals to outside agencies. Outside agencies (such as adult schools, community colleges, vocational training institutes, and trade schools) may provide and pay for some services utilized by work first participants. The welfare department can reduce its own costs (though not necessarily government costs, since other agencies' costs may increase) by referring participants to these agencies.
  • Contracts with outside agencies. Outside agencies that specialize in particular areas or that serve large numbers of participants may be able to offer some program services more cheaply than can welfare departments. Program administrators can take advantage of this by contracting out those program elements. However, the offsetting costs of contract management and oversight must also be considered.

Reducing Child Care Costs

  • Type of child care. Child care provided by licensed centers tends to be most expensive, followed by family day care and then by child care provided by friends or relatives. Some programs counsel participants to seek low-cost child care, taking the position that welfare recipients who are using low-cost care will be able to afford this service on their own after leaving welfare. Other programs counsel participants to use licensed child care centers, believing that such facilities offer higher quality and more reliable care, and can therefore provide better support for program participation and employment. (See section 7 for suggestions on designing child care support services.)
  • Age of children. Infant child care tends to be most expensive, followed by toddler care and care for preschool-aged children. Program planners may want to take this into account when determining who should participate in work first. However, some administrators have found that it is not more expensive to serve parents with young children because they tend to have fewer children and often rely on relatives for child care.
  • Flexible scheduling. Limiting the number of required hours of participation, and maintaining flexibility in scheduling those hours, can reduce child care costs. For example, the San Diego SWIM program referred individuals to activities that coincided with their children's school hours. Parents then needed only some preschool, after-school, "backup," and summer care, so costs were noticeably reduced.

Close monitoring of participation. Close monitoring will ensure that child care expenditures support active participation. In addition, reducing the number of months that individuals participate in work first-through close monitoring and use of short-term activities-will also reduce child care costs (though participants may receive transitional child care benefits after leaving the program).