Understanding the Costs of the DOL Welfare-to-Work Grants Program. Estimates of Total Costs for WtW Programs

08/01/2002

Table II.1 summarizes the total cost estimates and the estimation process. For each WtW program, the table presents the costs the program operator recorded in its accounting system and our estimates of costs incurred off-budget (outside the program's accounts). As the table shows, adjustments were limited and generally accounted for a small portion of total WtW program costs.(4)

Our estimates of total costs are subject to some uncertainty, as we describe below. Nevertheless, we feel that all important costs have been captured and that missing or misestimated costs are unlikely to affect the basic results of our analysis. Resources excluded from our cost estimates are generally small, affected only a small proportion of WtW participants, or both. Therefore, their absence should not substantially affect the cost estimates or analysis.

Despite the adjustments made, not all costs are captured or captured equally accurately in these estimates. Because the objectives of the accounting systems that WtW grantees or program operators maintained differed from the objectives of the cost analysis, we could not obtain data for the analysis solely from program expenditure records. In addition, the structure and definitions of accounting systems differed.

Another source of uncertainty is the inclusion of special demonstration costs. Throughout the evaluation, the WtW programs included in the cost analysis incurred extra expenses to accommodate research requirements and requests. Because we believe these costs were

Table II.1
Total Estimated Costs for One Year of Wtw Program Operations
  Costs Reported in WtW Accounts Off-Budget Adjustments
WtW Programs Cost Analysis Year Total Costs WtW Program Expenditures Percent of Total Costs Supportive or Other Services Volunteered Time Administration and Other Indirect Costs Total Off-Budget Adjustments Percent of Total Costs
Boston-Marriott Nov. 99 - Oct. 00 $216,233 $204,450 95     $11,783 $11,783 5
Boston-Partners Oct. 99 - Sep. 00 $436,673 $385,754 88   $29,625 $21,294 $50,919 12
Chicago-Maximus Jul. 00 - Jun. 01 $1,377,100 $1,348,600 98 $28,500     $28,500 2
Chicago-E&ES Jun. 00 - May 01 $1,867,690 $1,530,190 82 $337,500     $337,500 18
Chicago-Pyramid Jul. 00 - Jun. 01 $711,242 $671,492 94 $39,750     $39,750 6
Chicago-Catholic Charities Jan. 00 - Dec. 00 $1,722,558 $1,591,233 92 $131,325     $131,325 8
Chicago-Easter Seals Jul. 00 - Jun. 01 $439,691 $406,691 92 $33,000     $33,000 8
Fort Worth-ANS Jan. 00 - Dec. 00 $231,760 $231,760 100       $0 0
Fort Worth-WC Jan. 00 - Dec. 00 $440,222 $440,222 100       $0 0
JHU-Florida Jul. 00 - Jun. 01 $315,908 $271,644 86     $44,264 $44,264 14
JHU-Maryland Jul. 00 - Jun. 01 $394,982 $284,198 72     $110,784 $110,784 28
Nashville-Pathways Jul. 00 - Jun. 01 $1,326,515 $1,306,115 98     $20,400 $20,400 2
Philadelphia-TWC Jan. 00 - Dec. 00 $7,757,912 $7,639,236 98 $118,676     $118,676 2
Phoenix-EARN Jul. 00 - Jun. 01 $1,920,564 $1,878,564 98   $42,000   $42,000 2
West Virginia-HRD Jan. 00 - Dec. 00 $1,605,214 $1,605,214 100       $0 0
Yakima-PFP Jul. 00 - Jun. 01 $688,187 $558,303 81 $129,884     $129,884 19
Yakima-OIC Jul. 00 - Jun. 01 $546,629 $421,232 77 $125,397     $125,397 23
Yakima-FWC Jul. 00 - Jun. 01 $639,036 $513,399 80 $125,637     $125,637 20

relatively small, we did not separate them out from total program costs.(5) Thus, our cost estimates are likely to slightly overstate the costs that future nondemonstration program operators would incur to provide similar services.

This slight overstatement of administrative costs is somewhat offset by programs' inability to recognize overhead costs fully within WtW accounts. The WtW regulations limited the amount of grant funds that could be devoted to administrative expenses to 15 percent, and many WIBs and other entities administering the grants at the local level passed on these same restrictions to their WtW contractors. Thus, indirect and overhead costs--agency administration and other costs that were not program-specific--were not always charged fully to the WtW programs. When this undercharge was evident, we adjusted our total cost estimates.(6) However, such adjustments were not possible for all programs.

Finally, for analytical and practical reasons, our analysis focused on WtW-funded supportive services and excluded TANF-funded supportive services. WtW resources were expected to emphasize direct services to participants, rather than supportive ones. The BBA and WtW program regulations restricted the use of WtW grant funds to provide supportive services for participants engaged in job readiness or employment activities to situations when such services were not otherwise available. From an analytical perspective, it made sense therefore for the cost analysis to focus on the use of WtW grant (or other) funds to provide supportive services as a complementary strategy. From a practical perspective, many WtW participants received TANF-funded assistance with child care, transportation, and other supportive service needs, but such assistance was generally provided by the welfare agencies directly.(7) Thus, the staff and administrators of WtW programs had limited knowledge of the assistance their customers had actually received and could not describe such services, much less estimate their value, with confidence.

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