Journal Issue: The Next Generation of Antipoverty Policies Volume 17 Number 2 Fall 2007
Rebecca M. Blank
The costs of this program are difficult to estimate, because they depend on many different factors. Let me make a few simple assumptions to provide a ballpark cost estimate. Initial assessments will cost about $500. This estimate is on the high end of such costs in demonstration projects, but these disadvantaged families will need extensive assessments. Caseload and tracking services will cost $50 a month, or $600 a year, as a very rough estimate. If a caseworker handles 100 cases (quite a low caseload relative to many programs, but this population will require more intensive help), the monthly cost would be $60,000 a year—to pay the caseworker and provide the computer and support services necessary to deal with the caseload.
The cost of referral services (job search assistance, mental health services, substance abuse treatment) depends heavily on the services provided. Costs can range from $250 for minimal job search assistance to $5,000 for extended treatment programs. I assume that approximately 50 percent of program participants receive some additional services over a year. The nature of these services varies widely, most states have limited slots for more extended treatments, and even families that receive services will not do so continuously. Hence I estimate the annual cost of additional services at an average of $1,000 for each family receiving them (whether minimal or quite expensive services), or $500 per family among all families in the program.
I assume that virtually all women in the program will receive some cash assistance. Some might receive full benefits (if they are fully waived from work); others will receive partial benefits. And I assume that the average family receives two-thirds of the average state monthly benefit, or $300 a month.
Given these assumptions, the overall cost estimate for the average new entrant into this program in her first year is $5,200, which includes $500 in assessment costs, $600 in case management costs, $500 in other services received, and $3,600 in cash benefits. The cost would be lower if states provided fewer treatment and counseling services and if more women received partial rather than full waivers from work. Costs would be higher if states provided more extensive and more expensive health and counseling services. States could make their own cost estimates for this program, based on their estimated client populations and the types of services they are able to provide.
As noted earlier, as many as 2.2 million women are either disconnected from both welfare and work or are long-term nonworkers on welfare. If the new program served one-quarter of these women, or 550,000 families— a high take-up rate and one likely to result in a maximal cost estimate—the annual cost would be $2.8 billion.
Not all of these costs would require additional spending. Funds are available from other sources to help provide mental and physical health services, substance abuse treatment, child care, employment services, and other treatment services. For at least some of these women, the cash support dollars can come out of TANF. As noted, the primary new cost to states, in both dollars and management expertise, lies in setting up referrals, providing assessment and case management that allows the states to track clients, and staying in touch to encourage them to increase their work efforts and skills.