PRESENTERS: DR. SONAM GUPTA; DR. MITHUNA SRINIVASAN 2 SOCIETY FOR - PowerPoint PPT Presentation

1 IMPAQ INTERNATIONAL LLC. PRESENTERS: DR. SONAM GUPTA; DR. MITHUNA SRINIVASAN

2 SOCIETY FOR BENEFIT-COST ANALYSIS A BENEFIT-COST ANALYSIS OF A WORKFORCE DEVELOPMENT PROGRAM FOR DISCONNECTED YOUTH

3 SOCIETY FOR BENEFIT-COST ANALYSIS PRESENTATION OUTLINE � @LIKE Description � Evaluation Components and Main Findings � CBA Overall Framework � Estimation of Costs � Estimation of Benefits � Estimation of Net Present Value � Sensitivity Analysis � Conclusion

4 SOCIETY FOR BENEFIT-COST ANALYSIS WHAT IS @LIKE? � The Linking Innovation, Knowledge, and Employment (@LIKE) Program is a Workforce Innovation Fund initiative � @LIKE was designed to: ▸ Test strategies to reconnect young adults to educational opportunities, employment, and community ▸ Focus on socio-psychological elements of resiliency and self efficacy through life coaching

SOCIETY FOR BENEFIT-COST ANALYSIS WHAT IS @LIKE? � U.S. DOL awarded contract for $6m;contract began July 2012 � Program was in operation across three unique counties: Imperial, Riverside, and San Bernardino � Served young adults ages 18 to 24 who were disconnected from work and school

6 SOCIETY FOR BENEFIT-COST ANALYSIS EVALUATION OVERVIEW � Workforce Innovation Fund (WIF) requirement � IMPAQ International: Independent evaluator

7 SOCIETY FOR BENEFIT-COST ANALYSIS IMPACT ANALYSIS � Did the program improve the educational and employment outcomes of individuals? YES!!

8 SOCIETY FOR BENEFIT-COST ANALYSIS FRAMEWORK: COST-BENEFIT ANALYSIS � Research Questions ‣ What are the costs associated with the @LIKE program? ‣ What are the benefits associated with the @LIKE program? ‣ What is the net benefit or net present value of the program? ‣ How does the estimate of net present value change if important underlying assumptions are changed?

9 SOCIETY FOR BENEFIT-COST ANALYSIS FRAMEWORK: COST-BENEFIT ANALYSIS ‣ Estimate Incremental or additional per capita cost of the @LIKE program compared to WIA/WIOA. ‣ Estimate direct and indirect benefits. ‣ Consider costs incurred during program implementation. ‣ Consider a one year horizon and social discount rate of 3 percent. ‣ Conduct sensitivity analysis.

10 SOCIETY FOR BENEFIT-COST ANALYSIS ESTIMATION OF COSTS ▸ Program related and non- Personnel, Fringe Other, 7.6% 8.4% Benefits, program related costs 2.9% ▸ Cost per participant: $9,036 ($5,255 as compared to WIA/WIOA). ▸ Source: @LIKE budget summary; quarterly performance Contracts with Service narrative Providers, 80.9%

11 ESTIMATION OF BENEFITS Outcome Benefit Type Monetization of Benefits Unsubsidized Employment Direct Wages associated with receiving unsubsidized employment Crime Reduction Indirect Savings Associated with Incarceration Costs, Avoided Costs to Crime Victims Reduction in Substance Indirect Dollar Benefit from not using drugs and/or alcohol Abuse Benefit = � � X W X p � � � = Impact of the @LIKE program on Outcome � � � W = Expected dollar benefit from Outcome p = Share of participants who achieved outcome

12 ESTIMATION OF BENEFITS (CONTD..) Outcome Estimation Components Estimated Benefit Unsubsidized employment Impact of @LIKE = 26.4% $6,822 Average annual earnings in CA = $ 50,871 Outcome achievement share = 50.8% Crime Reduction Impact of @LIKE = 10% $38 Per Capita Savings from Criminal Justice Costs = $3,016 Per Capita Savings from Tangible Victim Costs = $3,167 TOTAL SAVINGS = $6,183 Outcome achievement share = 6.1% Substance Abuse Reduction Impact of @LIKE = 10% $45 Per Capita Savings from Drug Avoidance = $6,687 Per Capita Savings from Alcohol Avoidance = $2,229 TOTAL SAVINGS = $8,916 Outcome achievement share = 5% $6,905 TOTAL PER CAPITA BENEFIT

13 SUMMARY OF COSTS AND BENEFITS Direct Indirect Benefits of the @LIKE Program Society Benefits Benefits Obtaining Unsubsidized Employment $6,822 - $6,822 Savings associated with Crime Reduction - $38 $38 Benefit from Reduced Drug & Alcohol Use - $45 $45 Total Benefit (per participant) $6,905 Incremental Cost (per participant) $5,255 @LIKE results in a $1.30 direct benefit for the average participant, for every $1.00 spent on that participant.

14 ESTIMATION OF NPV B = each year’s benefits (direct +indirect) � �� C = average cost ��� =�� − �� T = last year of the analysis � + � ��� ��� t = year from 1 to T r = social discount rate Item Value Total Benefit $6,905 Cost (Outlay) $5,255 T 1 R 3% Net Present Value $1,449

15 SENSITIVITY ANALYSES (NPV UNDER DIFFERENT BENEFIT SCENARIOS) NPV Scenario Scenario Description r=3% Baseline Direct + All Indirect Benefits $1,449 Scenario 1 Only Direct Benefits $1,368 Scenario 2 Direct + Crime Reduction $1,405 Scenario 3 Direct + Substance Abuse Reduction $1,412

16 SENSITIVITY ANALYSES (NPV UNDER VARYING r) NPV Scenario r=3% r=5% r=6% r=7% Baseline $1,449 $1,321 $1,259 $1,198 Scenario 1 $1,368 $1,242 $1,181 $1,121 Scenario 2 $1,405 $1,278 $1,217 $1,156 Scenario 3 $1,412 $1,285 $1,223 $1,163

17 CONCLUSION � Program successfully enabled participants to access services and achieve positive outcomes � Measured benefits of @LIKE exceed its measured costs, one year following program completion � @LIKE’s net benefits (NPV) are $1,449, under the assumption of a social discount rate of 3 percent � @LIKE CBA is a useful framework for measuring costs and benefits associated with young adult training programs

18 SOCIETY FOR BENEFIT-COST ANALYSIS QUESTIONS?? Sonam Gupta, Ph.D Senior Research Associate IMPAQ International sgupta@impaqint.com (202) 774-1955 www.impaqint.com Mithuna Srinivasan, Ph.D Economist IMPAQ International msrinivasan@impaqint.com (202) 774-1995 www.impaqint.com