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The document provides an analysis of the costs and benefits of The Doe Fund's Ready, Willing & Able (RWA) program. The RWA program provides paid work, job training, housing, education and support services to single homeless adults and recently incarcerated individuals. Section I introduces the analysis. Section II describes the RWA program. Section III reviews incarceration, recidivism and their costs. Section IV estimates these costs. Section V discusses RWA's benefits while Section VI covers its costs. Section VII calculates the social return on investment in RWA. The analysis finds that RWA provides significant financial benefits and reduces criminal justice costs.
Descrizione originale:
An analysis of cost vs. benefits of The Doe Fund's Ready, Willing & Able Program
The document provides an analysis of the costs and benefits of The Doe Fund's Ready, Willing & Able (RWA) program. The RWA program provides paid work, job training, housing, education and support services to single homeless adults and recently incarcerated individuals. Section I introduces the analysis. Section II describes the RWA program. Section III reviews incarceration, recidivism and their costs. Section IV estimates these costs. Section V discusses RWA's benefits while Section VI covers its costs. Section VII calculates the social return on investment in RWA. The analysis finds that RWA provides significant financial benefits and reduces criminal justice costs.
The document provides an analysis of the costs and benefits of The Doe Fund's Ready, Willing & Able (RWA) program. The RWA program provides paid work, job training, housing, education and support services to single homeless adults and recently incarcerated individuals. Section I introduces the analysis. Section II describes the RWA program. Section III reviews incarceration, recidivism and their costs. Section IV estimates these costs. Section V discusses RWA's benefits while Section VI covers its costs. Section VII calculates the social return on investment in RWA. The analysis finds that RWA provides significant financial benefits and reduces criminal justice costs.
I. Introduction ......................................................................................................................... 4 II. The Doe Funds Ready, Willing & Able Program ............................................................. 6 The Relevance of the RWA Program ............................................................................8 III. Incarceration and Recidivism: Trends, Costs, and Consequences ................................... 10 The Rate of Incarceration and Recidivism in the U.S. and its Trends .........................11 Corrections Expenditures and Related Trends .............................................................11 The Link Between Incarceration and Homelessness ...................................................13 The Link Between Incarceration, Recidivism, Employment, and Lifetime Earnings.........................................................................................................14 The Link Between Incarceration, Recidivism, and Economic Mobility .....................16 The Link Between Incarceration, Recidivism, and Lost Child Support ......................18 In Summary ..................................................................................................................20 IV. Estimating the Costs of Incarceration and Recidivism ..................................................... 21 Cost of Corrections and the J udicial System ...............................................................24 Cost of Shelter Services ...............................................................................................26 Reduced Lifetime Earnings..........................................................................................26 Loss of Child Support Payments..................................................................................28 V. The Benefits of the RWA Program ................................................................................... 29 Direct Financial Benefits to the RWA Program Trainees ...........................................32 Benefits to the Community ..........................................................................................40 Criminal J ustice Benefits .............................................................................................41 Estimated Total Benefits From the RWA Program .....................................................48 VI. The Costs of the RWA Program ....................................................................................... 51 The RWA Programs New York City Facilities ..........................................................51 Categories of Operating Expenses of the RWA Program ............................................53
Non-fiscal year 2009 Expenses ....................................................................................54 Shelter Costs Adjustment .............................................................................................56 Net Cost of the RWA Program ....................................................................................57 VII. Social Rate of Return on the Investment in the RWA Program ....................................... 58 VIII. Concluding Remarks ......................................................................................................... 61
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I.
Introduction In March 2011, The Doe Fund, Inc. (The Doe Fund) approached Marks Paneth & Shron LLP (MP&S) to seek consultation in formulating a rigorous cost-benefit analysis of its Ready, Willing & Able (RWA) program in New York City. Through its Litigation and Corporate Financial Advisory Services Group, MP&S provides economic, financial, and other analytical consulting services and valuations to individuals and for-profit and not-for-profit corporations.
RWA is a program that provides paid transitional work, job training, housing, education, and supportive services to single homeless adults and those recently released from prison. MP&S was retained by The Doe Fund to provide a comprehensive cost-benefit evaluation of RWA and to examine the potential direct and indirect impact of RWA on the various facets of the lives of RWA participants (called trainees), their families, the community, and taxpayers. J osefina V. Tranfa-Abboud, Ph.D., is a Director in the Litigation and Corporate Financial Advisory Services Group of MP&S, and is the Economist who conducted the analysis presented hereby. Her Curriculum Vitae is attached at the end of this report as Exhibit 1.
The central goal of this report is to provide a measure of the value of RWA through an estimate of the social rate of return on investment in the program, defined as the ratio of program benefits to costs. Benefits were determined by examining the direct and indirect consequences, financial and otherwise, of incarceration, homelessness, and unemployment on individuals, their families (particularly their children), the community, and taxpayers. When episodes of recidivism, homelessness, and unemployment are prevented, the associated increase in earnings and the avoidance of public costs (e.g., incarceration) are captured as benefits. Program costs were determined through a rigorous analysis of expenses incurred by The Doe Fund to provide services that directly impact RWA participants.
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The benefits resulting from RWA arise from two main sources: (1) the positive financial impact of the program on its trainees, and (2) the indirect economic impact of RWA on the costs of criminal recidivism.
Section II of this report provides a discussion of RWA, its goals and operations, and aspirations. Section III provides a review of the research and literature on the U.S. criminal justice system and its trends in terms of the rate of incarceration, recidivism, and related expenditures. Section III also provides a discussion of the various analyses that have been put forth related to the consequential and collateral costs of incarceration on the lives of the individuals who experience incarceration and their families, in addition to the criminal justice costs imposed on taxpayers.
Our analysis of the quantifiable and non-quantifiable costs of incarceration and recidivism is presented in Section IV, which includes our measurement of the costs associated with incarceration as the initial step in the estimation of the rate of return on an investment in RWA. Section V presents a discussion of the benefits of RWA, which constitutes the second component in the rate of return estimation. Section VI presents a measurement and discussion of the costs of RWA, which represents the third step in the estimation of the rate of return. The final step in our analysis, the rate of return estimation, is presented in Section VII. In Section VIII, we provide commentary on the elements that should be considered in the construction of a measure of the success rate of RWA. Our concluding remarks are presented in Section IX.
The discussion in the following sections provides insight into the topic of incarceration, recidivism, and its direct and consequential costs. However, because three of the four current RWA program facilities are located in New York City (NYC), the discussion will quickly shift its focus to NYC with some references to New York State (NYS) as well.
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II.
The Doe Funds Ready, Willing & Able Program Work Works This is the motto of The Doe Funds Ready Willing & Able program. The true core philosophy and motivation behind the work and mission of RWA is that change comes one person at a time.
The Doe Fund's mission is to develop and implement cost-effective, holistic programs that meet the needs of a diverse population working to break the cycles of homelessness, addiction, and criminal recidivism. All of The Doe Fund's programs and innovative business ventures ultimately strive to help homeless and formerly incarcerated individuals achieve permanent self- sufficiency. The Doe Fund has been widely recognized as a national model for effectively addressing the myriad challenges faced by homeless and/or previously incarcerated individuals. With paid transitional work as its centerpiece, The Doe Fund also provides transitional housing, advanced occupational training, case management, drug testing, relapse prevention, and workshops in life skills, financial management, and work ethics that enhance the likelihood of successful reentry into society and into the work force.
RWA began in 1990 with the purpose of providing paid transitional work and housing, and consequentially a stream of income, to homeless individuals in NYC. Over time, the program evolved to serve individuals with a criminal history, but who are not necessarily homeless. RWA currently operates three facilities in NYC and one in Philadelphia.
Due to the strong correlation between homelessness and incarceration, developing a strong orientation toward parolees and other formerly incarcerated individuals became a natural extension of RWAs evolution. According to a study by Metraux, Roman, and Cho (2007), a significant percentage of those released from prison experience homelessness, while at least 20 percent of homeless individuals have been incarcerated at least once. According to The Doe Funds Client Tracking Database (CTDB), of RWA trainees who entered either the residential
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program or the Day (non-residential) program during fiscal year 2009, 65 percent had been incarcerated, approximately 79 percent had a criminal record, and 88 percent were homeless at intake. These statistics evidence the overlap between incarceration and/or criminal history and homelessness.
According to multiple studies, the lack of work-related training, skills, and experience leaves many of those released from prison or jail facing daunting hurdles to obtain and maintain consistent employment. The resulting struggle to generate a steady stream of income invariably leads to serious difficulties in obtaining and retaining stable housing. One common reality for those released from prison, and for homeless individuals, is the added burden of back-due child support and other debt obligations. These elements have been identified as significant contributors to the high rates of recidivism, homelessness, and unemployment experienced by former inmates.
Recidivism is generally defined as the rate at which previously incarcerated individuals return to prison, although some adhere to a broader definition that accounts for re-arrests and/or re- convictions. Individuals on parole are re-sentenced to prison or jail for either the conviction of a new crime or due to a technical parole violation. Regardless of whether they return to prison for either of these two reasons, subsequent episodes of incarceration have a negative impact on the lives of the re-incarcerated and their family members, and fuel additional expenditures in the criminal justice system, ultimately financed by taxpayers. For purposes of this analysis, we adhere to the broader definition of recidivism.
The central belief of The Doe Fund is that every human being has the potential of being a contributing member of society. RWA seeks to provide individuals with opportunities to: (1) work and earn income; (2) participate in job training and educational offerings; (3) receive supportive services that improve their life skills, increase their knowledge of financial management, and help them remain sober; (4) become a member of a positive circle by being surrounded with other individuals who are working towards breaking the cycle of homelessness and recidivism; and (5) gain an increased sense of dignity.
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While providing comprehensive services to individuals, The Doe Fund also focuses on making a positive impact in the communities in which its facilities operate through the provision of valuable services (e.g., street beautification) to the surrounding neighborhoods and by providing opportunities for participants to become productive and involved community members.
As will be discussed in Section III of this report, the importance of providing an alternative to the revolving doors of incarceration, homelessness, and unemployment is addressed in numerous studies by leading research institutes (e.g., The Pew Center on the States (PCS), the National Bureau of Economic Research (NBER), the Urban Institute (UI), the Center for Economic and Policy Research (CEPR), among others), available statistics through the Bureau of J ustice Statistics (BJ S) and the New York State Department of Corrections and Community Supervision (NYSDOCCS), and other credible sources such as the City of New York and the New York City Department of Homeless Services (NYCDHS). The Relevance of the RWA Program
The financial and social costs in terms of taxpayers money, families left behind, diminished work and educational opportunities to those with an incarceration record, and the consequential loss of potential lifetime earnings, especially critical during economic downturns, creates high demands for programs that seek to prevent future episodes of incarceration, homelessness, and unemployment. Reducing the incidence of incarceration and recidivism is not just a matter of providing resources to homeless individuals and to those recently released from prison. Rather, the key to turning the corner and potentially changing an individuals future lays in the provision of job training and work opportunities, educational assistance, and supportive services all aimed at helping them overcome multiple barriers to self-sufficiency.
A 2007 New York Times (NYT) editorial (The Right Way to Handle Former Inmates), highlights RWA and its impact on criminal recidivism as part of an evaluation commissioned by the New York State Division of Criminal J ustice Services (NYSDCJ S) and overseen by Dr.
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Bruce Western of Harvard University, one of the nations leading criminal justice experts. In their study of Brooklyns ComALERT program, 1
which provides comprehensive services to recently released parolees, J acobs and Western (2007) concluded that RWA program participants experienced an employment rate of 90 percent, a rate that is several times higher than the employment rate of those in a statistically constructed control group. Furthermore, RWA graduates in the study earned average weekly wages that were 40 percent higher than the control group. The ComALERT study found that, within two years of release from prison, its participants were 18 percent less likely to be rearrested than the control group. ComALERT graduates were 39 percent less likely to be rearrested. Furthermore, within two years of release, ComALERT graduates were 34 percent less likely to be re-incarcerated by parole violation than the control group and were 45 percent less likely to be re-convicted of a crime. In 2010, Dr. Western completed a follow-up evaluation that analyzed the RWA programs long- term effects in greater detail, revealing that the program significantly improves public safety by reducing criminal recidivism in a cost-effective way. Dr. Western created a sample group of program participants who received RWA services (participants), as well as a second sample group of RWA program completers (graduates)a subset of the first sample groupand compared both sample groups to matched control groups. These control groups consisted of other NYC parolees who are statistically similar in all measurable characteristics to RWA clients but who did not take part in our program.
Key findings include: RWA graduates are 60 percent less likely to be convicted of a felony within three years after their release from incarceration and participants are 56 percent less likely to be convicted of a violent crime within three years after their release (the 2010 Western Study).
1 The ComALERT (Community and Law Enforcement Resources Together) program was created in 1999 by Kings County District Attorney Charles J . Hynes to assist parolees returning to Brooklyn through comprehensive drug treatment and counseling, mental health treatment and counseling, GED, and transitional housing and employment. Many ComALERT clients are referred to the RWA Program.
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III.
Incarceration and Recidivism: Trends, Costs, and Consequences Studies and reports regarding the rate of incarceration, the rate of recidivism, the costs associated with the criminal justice system, and the consequential costs of crime and incarceration to the individual, to families, and to society in the U.S. all present a picture that is, at best, sobering. A few conclusions can be drawn from the literature on this subject. The first set of conclusions is that the U.S. rate of incarceration is the worlds highest, Americas prisons are characterized by a revolving door, the increase in the level of government expenditures on the criminal justice system is staggering, and the consequential costs to families and society (although they are extremely difficult to quantify and even more difficult to defray) is equally high.
The current status of the U.S. criminal justice system suggests that a stronger emphasis is needed on alternatives to incarceration and on reducing the rate of recidivism. Effective reduction in the rate of incarceration and recidivism would bring about a significant reduction in the expenditure on the criminal justice system, would reduce the costs to individuals, their families, and society, and could potentially lead to liberating resources that could be utilized in other significant worthwhile investments, such as early education.
The third general conclusion is that programs targeting the effective reentry of former inmates to society and employment play a crucial role in addressing, and potentially reducing, the rate of incarceration and recidivism. Throughout this section, we discuss a few key studies that highlight the various points associated with the state of incarceration and the rate of recidivism, the budgetary expenditure and social costs of recidivism, and the importance of programs that provide innovative approaches.
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According to the CEPR (2010), the rate of incarceration in the U.S. is the highest in the world. The U.S. holds 753 inmates for every 100,000 people, followed by Russia, which incarcerates 629 people out of 100,000. One out of every 48 working-age men was in jail in 2008. That same year, U.S. correctional facilities held 2.3 million inmates, two-thirds in prison and one-third in jail (CEPR, 2010). According to the PCT (2010) study, one in every 100 American adults was incarcerated in 2008, and 1 in 31 American adults was either incarcerated, on parole, or on probation (PCS, 2008). The Rate of Incarceration and Recidivism in the U.S. and its Trends
According to PCS (2011), the rate of recidivism has not changed significantly since 1999. While the number of prison releases increased by more than 13 percent from 1999 to 2004, the three- year rate of re-incarceration declined from 45 percent to 43 percent. Moreover, the rate of recidivism remained steady for various states, including NYS, which reported an unchanged rate of recidivism (39 percent) for individuals released in 2004 compared to those released in 1999. The more recent figures suggest a relative leveling-off compared to the two prior decades. According to BJ S, the rate of recidivism increased from 41 percent for those released in 1983, to almost 52 percent for those released in 1994 (BJ S, 1989, 2002).
These statistics highlight the severity of the rate at which American adults experience incarceration, and also highlight the strong need to increase the support for programs that are dedicated to reducing recidivism and providing opportunities for individuals who have been faced with incarceration to re-enter their families, society, and the work force.
Data and facts published by BJ S, PCS, the New York Citys Mayors Management Report (NYCMMR), and the National Association of State Budget Officers (NASBO), as well as other independent articles and studies, all reveal that the level of expenditures on the criminal justice system is high, posing a heavy pressure on taxpayers as well as local, state, and federal budgets. Corrections Expenditures and Related Trends
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Furthermore, these expenditures are increasing. Total corrections expenditures in the U.S. reached $51.5 billion in 2008 and $52.3 billion in 2009 (NASBO, 2010). The State of New York alone spent in excess of $3.3 billion in corrections in 2008 and 2009, second only to California. 2
Even more sobering is the fact that in 2007, federal, state, and local governments spent $228 billion in police protection, corrections, and judicial and legal services combined, which represented a 1.3 percent increase from 2006 after adjusting for inflation. 3 Total expenditures on the major functions of the criminal justice system (e.g., police, corrections, and judicial services) increased by 171 percent from 1982 to 2007 (BJ S, 2007). This $228 billion includes approximately $104 billion in police protection costs, $74 billion in judicial and legal service costs, and $50 billion in corrections costs. 4
After adjusting for inflation, police expenditures increased by 48 percent from 1990 to 2000, and for the same time period, judicial-legal expenditures increased by 53 percent while expenditures on corrections increased by 56 percent. This information represents a subset of the data available through BJ S and other government and non-government publications and studies that focus on the criminal justice systems and related expenditures. An immediate conclusion that can be derived from this information is that criminal justice costs are high, and that the costs of incarceration are high and increasing, even after correcting for inflation. The increasing pressure on local, state, and federal budgets results in indirectly increased pressure on taxpayers.
According to PCT (2007), in 2001 the average annual cost per prison inmate was $22,650, or $62 per day. According to BJ S, the annual average operating costs per inmate in NYS was $36,835 in 2001 and $42,202 in 2005. According to the 2012 study titled, More Than a J ob: Final Results from the Evaluation of the Center for Employment Opportunities (CEO) Transitional J obs Program (CEO study or Redcross et al, 2012), the marginal cost of incarceration is equal to $129 per day in prison, and to $72 per day in jail. Based on this
2 The State of California spent over $9 billion on corrections in 2008 and 2009. 3 2007 national data on expenditures in police protection, corrections, and judicial and legal services is the most recent available through the various government reports. Based on the rate of inflation applicable to the U.S. economy, the total figure of $228 billion reported for 2007 is equivalent to $239 billion in 2010 dollars. 4 When adjusted for inflation, the respective costs amount to approximately $109 billion, $78 billion, and $52 billion, respectively, in 2010 dollars.
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information, we estimate that the marginal cost of prison incarceration in NYC is equal to $47,085 per year in 2010 dollars. According to the NYCDOC, the average length of jail stay is 50.3 days. 5
Accordingly, we estimate that the cost per episode of incarceration is equivalent to $3,622 in 2010 dollars, and $26,280 per year in 2010 dollars. A growing body of research concludes that individuals who are released from incarceration face an increased probability of homelessness, and homeless individuals face a high probability of arrest and incarceration. A joint study between the University of the Sciences in Philadelphia (USPA), UI, and the Corporation for Supportive Housing (CSH), as part of the 2007 National Symposium of Homelessness Research, states that common characteristics between the homeless population and the previously incarcerated population include the following: The Link Between Incarceration and Homelessness
Both are typically poor; Both possess fewer job skills; Both are undereducated; Both have high rates of disability, particularly mental illnesses; and Both have high rates of substance abuse.
In a study of shelter use patterns of 7,022 individuals living in public shelters in NYC, Metraux and Culhane (2006) found that at least 23 percent of the homeless individuals in the shelter system had experienced at least one episode of incarceration in the two-year period prior to the study. Of this group of individuals, 8 percent had a prison stay, while 17 percent of the individuals surveyed had a jail stay. According to the Bureau of J ustice Assistance (BJ A), 49 percent of homeless adults reported at least one episode of incarceration that lasted a minimum of five days. In citing the results of the 2009 Annual Homeless Assessment Report, a 2011 report by the National Alliance to End Homelessness (NAEH) states that the odds of
5 Data available at http://www.nyc.gov/html/doc/html/stats/doc_stats.shtml
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experiencing homelessness by those released from prison is 1 in 11 individuals. According to the same report, in 2009, 6 percent of shelter users arrived at a shelter upon release from jail or prison.
The aforementioned studies also suggest that individuals who are homeless may have arrived at these circumstances for various reasons, with the common consequence of being unable to afford and/or secure stable housing. For those individuals released from incarceration, various restrictions and difficulties may arise in their attempts to obtain housing. Typically unemployed, individuals released from incarceration who are unable to reside with family members are also without a steady source of income required to meet rent obligations. Subsidized government housing is often denied to those with incarceration records or histories of substance abuse.
One conclusion that can be drawn from the link between homelessness and incarceration is that these circumstances are very likely to constitute a vicious, perpetual cycle that is difficult to break, and becomes more and more difficult to break with repeat episodes of incarceration and homelessness.
The costs associated with incarceration and recidivism expand beyond the accompanying corrections expenditures by local, state, or federal governments, and the expenditures on police protection and the judicial and legal services that surround it. Incarceration affects the lifetime employment opportunities and the lifetime earnings of those who are incarcerated. Incarceration, therefore, also significantly hinders the ability of individuals to provide financial support for their families. The Link Between Incarceration, Recidivism, Employment, and Lifetime Earnings
Evidence suggests that an individual with an incarceration record is likely to be viewed with a more scrutinizing eye by potential employers, resulting in potentially significant challenges in obtaining employment, erratic participation in the work force, and consequentially, low levels of
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income. Evidence also points to the fact that crime and incarceration may be the result of a lack of consistent employment and earnings prior to incarceration. Lower levels of education are likely to be a factor that reinforces the inability to access stable employment and earnings, resulting in a chronic cycle of unemployment and lack of steady earnings. During incarceration, individuals are not likely to improve their educational and occupational characteristics, and only add the incarceration record as a factor to further the difficulties in maintaining employment and a steady source of earnings. These difficulties are further exacerbated with repeat episodes of incarceration. Low levels of education also imply that employment opportunities are limited to those jobs that require very low skills, which are typically characterized by low pay and high turnover rates.
As indicated in at least one study by UI (2003), reentry to the labor market constitutes one of the most significant challenges to those released from incarceration, and the low employment rate reported by those with an incarceration record is closely related to recidivism.
The National Symposium of Homelessness Research (2007) reports that one of the common denominators between the homeless population and the population of formerly incarcerated individuals is the fact that they are typically undereducated. This finding is also reported by a 2003 UI report, which indicates that approximately 70 percent of those with an incarceration record are high school drop-outs, and at least half of them can be classified as functionally illiterate. According to NBER (2010), results from a 2007 national survey, more than two-thirds of prison inmates and 56 percent of jail inmates have less than a high school education. Also, according to NBER, only 27 percent of inmates report participating in a vocational/job-training program, and only 31 percent report participating in an educational program focused on obtaining their GED.
Studies by UI (2003) and NBER (2010) report that the rate of unemployment of those with a criminal record ranges between 35 percent and 65 percent, significantly higher than the rate of unemployment experienced by those with less than a high school education, but who do not have a criminal record. According to statistics published by the U.S. Department of Labor (USDOL)
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and the Bureau of Labor Statistics (BLS), during periods of economic stability the rate of unemployment experienced by those with less than high school education is approximately 15 percent, while the unemployment rate of those with a high school degree fluctuates around 4 percent to 7 percent. According to UI (2003), incarceration reduces the number of working weeks per year by 20-25 percent, and that one year after release, 60 percent of former inmates are not employed in the regular job market.
The vast majority of employers require at least a high school diploma, previous work experience, and other basic skills. UI (2003) points to an employers expectation that the worker will show up every day and on time, will work hard and take some responsibility, will be generally trustworthy, etc. The UI study goes on to assert that other research conducted on welfare recipients in the labor market indicates that success in the work force depends heavily on these characteristics. Therefore, it follows that too few job skills, in combination with low levels of education, common factors among those with an incarceration record, severely hamper ones ability to secure and maintain employment. Coupled with the incarceration record, the probability of employment and earnings among those released from prison is further decreased.
NBER (2010) provides evidence of employers attitudes towards certain characteristics of applicants. More than 70 percent of employers would not accept an applicant with an incarceration record, and approximately 60 percent of employers would not accept an applicant with minimal work experience. At least 36 percent of employers would not accept applicants who have been unemployed for more than one year.
The central conclusion in the 2010 PCT study is that incarceration and recidivism have a direct impact on the economic mobility of the individuals who experience incarceration, as well as on the lives of their children. PCT (2010) defines economic mobility as the ability of families to move up the income ladder over their lifetime and across generations. Also, according to this The Link Between Incarceration, Recidivism, and Economic Mobility
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study, more than two-thirds of male inmates were employed prior to incarceration and more than half of them constitute the primary source of income and financial support to their children. Across various other studies, it is reported that the inmate population is overwhelmingly male (approximately 93 percent). 6
If more than two-thirds of the inmate population were employed prior to incarceration and provided financial support to their children, it follows that upon incarceration their financial support to children comes to a halt. The statistical data reported by PCT (2010) includes the following facts: By age 48, incarcerated white men have experienced a total loss of earnings of 2 percent, while Hispanics and African-Americans experience total losses of 6 percent and 9 percent, respectively; Incarceration may result in a reduction in total earnings of $179,000 by age 48 (The PCT, 2010); J ob seekers with a criminal record are offered half as many jobs as those without a criminal record, and African-American job seekers with a criminal record are offered two-thirds fewer jobs than those without a criminal record; Education, job training, and work support prior to and following release have been proven to assist in securing employment and reducing recidivism; The Employment-to-Population Rate (EPOP) of African-American males without a high school diploma or GED and with an incarceration record is 26 percent ; 12 percent of probation revocations are due to failure to meet financial obligations in the form of child support, restitutions and fees; 2.7 million children have a parent behind bars; 54 percent of inmates are parents with minor children, and 1 in 28 children has a parent incarcerated; 23 percent of children with a father who is incarcerated are expelled or suspended from school, while only 4 percent of children whose fathers are not incarcerated are expelled or suspended from school; Families with an incarcerated parent experience a decrease in family income and a higher likelihood of entering poverty. During the time of a fathers incarceration, the family income is, on average, 22 percent lower than it was prior to incarceration. After the father is released, the family income remains, on average, at 15 percent below the pre-incarceration level; Data from the Economic Mobility Project suggest that family income is the strongest indicator of economic mobility, and it indicates that 42 percent of children in the bottom fifth of the income distribution remain in the lower percentiles of the income distribution into adulthood.
6 NBER, PCS, BJ S, and other groups report that the vast majority of inmates are male. Hispanics and African- Americans are significantly over-represented among the population of those incarcerated. One in 87 white males, one in 36 Hispanic males, and one in 12 African-Americans are incarcerated.
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In 2003, there were 1.4 million parents in state and federal prisons, and half of the parents currently in state prison have been incarcerated for a previous offense (UI, 2003). Parental separation due to incarceration can have many negative effects on their family and children, including loss of financial support, poor school performance, intergenerational patterns of criminal behavior, and a decreased sense of self-esteem. Some incarcerated parents have their children placed in foster care, and they are unable to regain custody until after they are released and can demonstrate that they are able to provide for their children. Furthermore, parents who receive public assistance prior to incarceration are one and a half times more likely to have their children placed in foster care than those who do not receive public assistance prior to incarceration. In addition, incarcerated non-custodial parents continue to accrue child support obligations that they are most likely not able to meet upon release. The Link Between Incarceration, Recidivism, and Lost Child Support
According to many studies on the family characteristics of inmates, and as stated above, a large percentage of inmates are parents with child support payment obligations. While it is the case that the amount of child support payments is determined based on the level of income, for those incarcerated, the fact that their income level is close or equal to zero does not provide sufficient basis for most states to nullify an inmates child support obligations. Consequentially, back-due child support payments are likely to accumulate during incarceration and many individuals released from prison owe significant amounts in child support upon release. While the rules vary by state, child support payment obligations are typically based on the individuals income prior to incarceration, and some states establish the amount of child support obligations based on the applicable minimum wage and an assumption of 40 hours per week of employment. In some states the minimum child support obligation is set at $250 per month, or $3,000 per year.
According to the NYS Human Resources Administration (2011), 7
7 NYS Human Resources Administration Department of Social Services - http://home2.nyc.gov/html/hra/html/directory/child_support_calculator.shtml. the monthly amount of child support payments is based on the number of children and the non-custodial parents income.
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Typically, the NYS computes the amount of child support as follows:
Number of Child Support Children
Obligation 1 child 17% 2 children 25% 3 children 29% 4 children 31% 5+children 35% or more
According to statistics published by the BLS, the median annual wage income for males with less than a high school education in NYC was $21,575 in 2010. This implies that the child support obligations of an incarcerated NYC male resident, with less than a high school education and two children, could amount to $5,400 per year. 8
States differ in their approach to child support obligations during incarceration. Central to the current debate is whether child support should continue to accrue during incarceration. An editorial by the American Prospect released on March 14, 2011 indicates that the Obama 2012 Budget included a proposal to eliminate the so-called draconian burden of continued accumulation of child support payments during incarceration. Arguably, back-due obligations for child support pose significant pressure on newly released parolees, and such pressure is considered as one of the significant factors increasing the likelihood of re-offending.
According to UI (2010), in 2007, child support represented 40 percent of the income of families classified as poor custodial families who received child support, and 10 percent of income of all poor custodial families combined. In 2007, child support represented 63 percent of the family income of deeply poor families who received child support, and 15 percent of the family income of all deeply poor families combined. These statistics only reinforce the need for programs that facilitate the process of securing employment after incarceration, and programs
8 Certain rules may be applicable in individual cases that may limit the amount of child support obligations for the non-custodial parent.
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that assist former inmates with the management of back-due child support that can be a significant financial burden.
According to many research studies and available statistics, the rate of incarceration in the U.S. is the highest in the world, and the cost to taxpayers associated with incarceration and recidivism are significant and increasing. However, the costs of incarceration and recidivism, its sources and consequences, are not limited to their fiscal implications. In Summary
The source of crime, incarceration, and recidivism is many times linked to low levels of education, episodes of unemployment, inconsistent earnings, and in many instances, homelessness prior to incarceration. Once homelessness, incarceration, or both are present in the life of an individual, the individuals opportunities for change become limited, and the lives of their families, particularly their children, are affected by lack of financial means and by their absence.
Throughout this section we highlighted some of the aspects related to the trends in incarceration and recidivism, as well as the potential causes and some of the potential consequences of such episodes. In the next section we will turn our attention toward the identification and analysis of the measurable costs of incarceration and recidivism. The discussion and analysis presented in the next section will also indirectly identify the costs and consequences of homelessness as one key characteristic associated with the potential sources and the consequences of incarceration.
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IV.
Estimating the Costs of Incarceration and Recidivism The previous sections highlighted the effects of crime, incarceration, and recidivism on the budgetary costs to local, state, and federal governments, on the lifetime prospects of the individual, and on families. These various points help identify the direct and collateral cost implications of the current state of incarceration and recidivism. We utilize this information to design an equation that attempts to estimate the costs of incarceration and recidivism. When a portion of the costs of incarceration and recidivism are avoided or prevented, such savings can be interpreted as a segment of the benefits of such prevention.
As stated earlier, the U.S. spent a total of $228 billion on the criminal justice system in 2007 (BJ S J ustice Expenditure and Employment Extracts Report). In NYC, total expenditures on police protection, corrections, criminal justice, and legal services reached $5.3 billion in 2007, $5.7 billion in 2008, $6 billion in 2009, and $6.3 billion in 2010 (NYC Comptrollers Report, 2009 and 2010).
The costs associated with recidivism (subsequent episodes of incarceration) are in addition to the costs already incurred as a result of prior incarceration. Therefore, the cost of recidivism has a compounding effect on the costs of incarceration.
In NYS, 40 percent of those released from state prisons return to incarceration within three years, and most of them return due to a parole violation rather than a new crime (NYSDOCCS, 2011). Close to 60 percent of those who return to incarceration return within 12 months, more than 70 percent of those who return do so within 18 months of release (NYSDOCCS, 2011), and 85 percent returned within 24 months. Those who had previously returned to prison have a higher rate of recidivism, reaching more than 49 percent, which seems to suggest that the more the frequency of re-admission, the higher the rate of recidivism.
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The first step in estimating the costs of incarceration and recidivism is to identify the different categories of cost. Based on the discussion presented throughout the vast literature on this subject, we divide the costs associated with incarceration and recidivism in quantifiable and non-quantifiable costs.
We define quantifiable costs as those costs for which a tracking system is in place, or could be established, to accurately estimate the costs of incarceration and recidivism, either globally or on a person-by-person basis. Quantifiable costs can be classified as follows:
o The direct financial expenses incurred by the local, state, and federal corrections and judicial systems; Direct Financial Costs o The collateral costs to the individual and their families in foregone financial productivity (foregone earnings) during incarceration; o Continuation of accrual of back-due child support obligations for non-custodial incarcerated parents; and o The collateral financial expenses by local, state, and federal agencies for the provision of financial support to the families of those incarcerated.
o The potential costs to local and state governments for shelter services due to the high likelihood of homelessness post-release; Consequential Financial Costs o The indirect cost to the families for decreased financial productivity post-release due to the history of incarceration; and o The consequential financial effects resulting from reduced educational attainment and, consequentially, occupational opportunities of the children of those with a history of incarceration.
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o The financial costs of the crime per se, often referred to as the cost of victimization; Direct and Indirect Costs of Crime o Accumulation of debt to the judicial system in the form of retribution payments and other fees posed to inmates upon release; and o The budgetary cost of police services and law enforcement.
We define non-quantifiable costs as those non-financial negative collateral effects of incarceration and recidivism on the various facets of the lives of the offender, their families, and the communities in which they live. Non-quantifiable costs also include the effects on those victimized by the crime(s), and on the communities in which the victims reside and operate.
Non-quantifiable costs affect the outlook in the life, attitude, and preferences of victims and offenders, and affect the perception of the criminal justice system and reentry programs. Such non-quantifiable costs could include, but are not be limited to, the following:
o The effect of network-building with other inmates during the time of incarceration as an element that is likely to help perpetuate unlawful activity post-release; o The indirect non-financial costs to the individual, their families and the community around them in terms of life-style, reputation, and stigma, resulting from the crime per se, as well as for the consequential chronic unemployment; o The emotional effects on the individual and their families, particularly to children, resulting from a history of incarceration.
A complete evaluation of the costs associated should be based on measuring each of the categories of quantifiable costs as listed above for each particular individual incarcerated. Due to data limitations, such an appraisal is not possible. As an example, statistics regarding the financial assistance to the families of those incarcerated cannot be readily extracted from the various sources. However, an approximation to the cost can be conducted by using the statistical data that is available through various reports.
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As mentioned earlier, the RWA program operates in NYC and Philadelphia. Because the bulk of RWAs programming occurs in its NYC facilities, our analysis focuses mainly on NYC while highlighting some of the information available for NYS whenever possible. Since the vast majority of RWA trainees are male, we also focus our attention to statistics and data available for males, where applicable. In the discussion that follows we focus our attention to 2009. Data and statistics available for other years are presented on the tables that accompany this report, based on the data availability.
Table IV.1 below presents the police protection, justice, and legal services and corrections expenditures for NYC for years 2007-2010. In 2009, the total cost of corrections in NYC reached almost $1.3 billion dollars or an average daily cost of over $3.5 million. The cost of judicial and legal services exceeded $500 million in that same year, while the cost of police protection exceeded $4.2 billion. The cost of corrections, judicial and legal services, and police protection all increased at a rate of approximately 2 percent to more than 3 percent per year from 2007 to 2010. Cost of Corrections and the Judicial System
2007 2008 2009 2010 Expenditures (as of March 31st): Total Justice System Expenditures 5,354 $ 5,693 $ 6,042 $ 6,277 $ Total Expenditures on Corrections and Judicial & Legal Services 1,698 $ 1,754 $ 1,801 $ 1,858 $ Expenditures on Corrections 1,233 $ 1,256 $ 1,289 $ 1,318 $ Expenditures on Judicial & Legal 466 $ 498 $ 512 $ 540 $ Expenditures on Police Protection 3,656 $ 3,938 $ 4,241 $ 4,419 $ Source: NYC Comptrollers Report Data 2007 - 2010 Budget Analysis Table IV.1 Justice System Expenditures for New York City Police Protection, Judicial & Legal, and Corrections Expenditures by Year Year (in millions)
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Table IV.2 below reports the daily average inmate population for NYC from 2001 to 2010. On average, 13,987 individuals were jailed in NYC on any given day in 2007, 13,850 in 2008, 13,362 in 2009, and 13,049 in 2010. Therefore, the average number of jailed individuals has declined from 2007 to 2010.
These statistics highlight the fact that the total cost of incarceration has increased consistently since 2007, and that the average cost to society per incarcerated individual has increased since 2007. According to our conversations with the NYC Department of Corrections (NYCDOC) and the NYC Public Information Office, the average cost of one year of jail in 2011 is $81,707 per inmate. Total Year* Inmates 2010 13,049 2009 13,362 2008 13,850 2007 13,987 2006 13,497 2005 13,576 2004 13,751 2003 14,533 2002 13,934 2001 14,490 * Fiscal year Source: City of New York Department of Correction http://www.nyc.gov/html/doc/html/stats/doc_stats.shtml Table IV.2 New York City Average Daily Inmate Population
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According to the most recent NYCMMR (2011), 17,635 single adults entered a Department of Homeless Services (DHS) shelter in NYC. On average, single adults remained in shelters for 261 days at an average cost per day per individual of $70.18. This represents an average cost per individual of $18,317 in homeless shelter services. Cost of Shelter Services
An individuals total annual earnings are a function of wages and total hours worked. As discussed earlier, research studies suggest that formerly incarcerated individuals work nine fewer weeks per year than those without an incarceration record, which leads in total lifetime earnings of $179,000 by age 48. The difficulties facing individuals with an incarceration record in securing employment and maintaining employment is the most significant factor in the reduction of lifetime earnings. Reduced Lifetime Earnings
Table IV.3 presents data published by the U.S. Census Bureau regarding the median earnings by gender and education level in NYC. We focus our attention to the earnings reported for individuals without a high school education. In 2009, the median annual earnings of a male without a high school education were $20,942 and the median earnings of a female with less than a high school education was $15,819. The median earnings of all individuals without a high school education in NYC were $18,815 in 2009 when not segregated by gender.
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Year Total Males Females Total Males Females 2005 $19,069 $21,973 $15,298 $26,557 $30,600 $22,228 2006 17,920 20,753 14,754 26,191 29,498 22,744 2007 18,655 21,610 14,443 26,689 30,252 23,269 2008 20,372 23,132 15,871 29,173 31,963 25,058 2009 18,815 20,942 15,819 27,578 30,237 24,259 2010 19,446 21,575 15,689 27,045 30,714 23,562 Source: US Census Bureau: American Fact Finder http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS&_submenuId=&_lang=en&_ds_name=ACS_2009_5YR_G00_&ts= Table IV.3 Median Earnings by Education and Gender in New York City Median Earnings Less Than High School High School Graduate
During incarceration an individual with less than a high school education may forego median earnings equivalent to $20,942 per year in potential annualized earnings in 2009 dollars. As will be discussed in more detail in a later section of this report, RWA program trainees who secured employment outside of the RWA program reported average starting wages of $10.35 per hour, or $21,020 in annualized terms in 2009 dollars, 9
a figure very similar to the median earnings of males without a high school education in the NYC. We conduct an analysis of the potential foregone earnings for males in the NYC based on the following information, statistics, and assumptions:
Males working in NYC reported median earnings of $20,942 in 2009; NYC experienced an average rate of unemployment of 6.5 percent during periods of relative economic stability; Individuals with an incarceration record experienced a rate of employment of 35 percent to 65 percent, or a midpoint of 50 percent; and Wages increased at an average rate of 3 percent over the last 10 years.
9 This figure is based on assuming 40 hours of paid work per week and 50 weeks of employment per year.
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Based on this information, we estimate that a male of age 30 and with an incarceration record in NYC may experience a reduction in lifetime earnings of $178,700 by age 46 and a reduction in lifetime earnings of $206,000 by age 48 compared to a male without an incarceration record. These figures are consistent with the findings reported in the literature discussed earlier and discussed in Section III (PCT, 2010).
According to the various studies reviewed, once released, former inmates face various financial obligations in addition to those they may have already had prior to their incarceration. In NYS, child support continues to accumulate during incarceration. Other financial obligations, such as restitution payments and fees, are also accumulated during incarceration. These financial obligations continue to limit the ability of former inmates to meet their continued child support obligations. Loss of Child Support Payments
Since data regarding specific financial assistance to families due to the incarceration of a parent is not readily available, an estimate of the loss of financial support to the family of incarcerated individuals could be based on the child support rules of NYS. Child support for two children could be equivalent to 25 percent of earnings, or a minimum of $250 per month. Assuming that the financial support obligations of incarcerated parents could be equivalent to $250 per month, such cost to the families of incarcerated individuals could be as high as $3,000 per year. The accumulated financial debt, and the severe limitations to secure and maintain employment post- release, may become significant obstacles to an individuals ability to move forward once they have experienced incarceration.
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V.
The Benefits of the RWA Program A common highlight in the studies that evaluates the importance of reducing the rate of homelessness and recidivism is the significance of programs that provide assistance in the process of reentry to society and to the work force. Various studies and reports by PCS and CEPR, among others, point out the importance of providing inmates or recently released parolees with opportunities for paid work and stable housing, which helps in meeting their financial obligations as well as improving their quality of life. Several of the studies discussed in Section III and Section IV point to the significance of public costs prior to incarceration, the direct and collateral costs of incarceration per se, and the consequential post-release costs. The frequent occurrence of lack of pre-incarceration employment and earnings opportunities is only exacerbated once an individual has a criminal record, resulting in continued and increased challenges in the work force. Post-release employment opportunities are even more limited for those inmates who have less than a high school education.
It is clear from the literature that the costs of crime, incarceration, and recidivism are high in terms of both the financial costs to taxpayers, families, and society, as well as the consequential costs to the former inmates (evidenced by the significant reduction in employment and lifetime earnings potential). The literature, however, is not limited to the discussion of the consequences, financial and non-financial, of crime, incarceration, and recidivism. Homelessness is often discussed in parallel with crime and incarceration, as well as with the financial and non-financial costs to the individuals and to society, and accompanied by the discussion of the common socio- economic and educational characteristics.
The RWA program is designed to provide paid work opportunities, training, housing and educational opportunities to its trainees, individuals who are either formerly incarcerated or homeless, or both. The various stages of the program span over a course of 9 to 12 months. While some RWA trainees secure employment and housing less than a year after starting the program, the majority of trainees who attain graduate status do so at or around the 12-month
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mark. When a trainee completes all phases of the program and is able to obtain employment, the trainee may remain a resident of the program until they are able to secure housing a process that normally takes one or two months. The RWA program allows for this extended stay after finding full-time employment because securing housing is typically contingent on proof of income.
The focus of our analysis is to attempt to identify and measure the quantifiable benefits of the RWA program. Similar to our discussion in Section IV, quantifiable benefits are defined as those benefits for which a tracking system is in place for their direct measurement, or for which a tracking system could be established, or which can be measured based on reasonable assumptions constructed based on the data and information available. In our analysis we consider only the quantifiable benefits of the RWA program that can be measured either through the data available, or the benefits that can be inferred based on valid assumptions constructed based on the RWA program data.
METHODOLOGICAL NOTE Because this analysis examines RWA participants who were active during fiscal year 2009, in some cases we were required to estimate benefits (as well as costs) for periods of time that fall outside of fiscal year 2009. In order to calculate these projections, we analyzed the participant pools average length of stay (number of days) for both within the fiscal year and outside the fiscal year.
This analysis demonstrates that, on average, participants spent 56 percent of their length of stay in fiscal year 2009 and 44 percent outside fiscal year 2009. The breakdown for residential participants in the RWA program was 55 percent and 45 percent, respectively, and for non- residential participants the breakdown was 60 percent and 40 percent. These breakdowns are used to inform various elements of the cost-benefit analysis.
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The quantifiable benefits resulting from the RWA program, as well as the related activities in which The Doe Fund engages in to the benefit of the community, are classified as follows:
1. A. Trainee Stipend Wages Earned During Participation in RWA; Direct Financial Benefits to the RWA Program Trainees B. Post-RWA Program Employment Wages; C. Offsets to Post-RWA Program Wages: Counterfactual Wages; D. Projected Lifetime Earnings Boost; and E. Graduation Incentive Grants.
2. A. The Community Improvement Program Work Output Value (CIP). Benefits to the Community
3. A. Savings in Costs of Recidivism During Participation in RWA; Criminal Justice Benefits B. Savings in Costs of Recidivism Post-RWA Program; and C. Savings in Costs of Crime, Police Services, Convictions (Court Costs), and J ail Incarceration.
The discussion that follows focuses on the details and measurement of the above categories of benefits for the cohort of trainees who participated in RWA during fiscal year 2009 (J uly 1, 2008 to J une 30, 2009). We have chosen to focus on this time frame in order to adequately capture two years of post-program benefits. For instance, if someone joined the RWA program in J une 2009 and completed the program in J une 2010, complete three-year outcomes would be accounted for in J une 2012.
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Total In-Program Trainee Wage Earnings $12,691,284 Table V.1 Direct Financial Benefits to the RWA Program Trainees Wages Earned During Participation in the RWA Program A. Direct Financial Benefits to the RWA Program Trainees The direct financial benefits to the trainees during their participation in the RWA program is constituted by the trainee stipends they earned during the program. Among trainees who were active in the program during fiscal year 2009, participants earned $12,691,284 in trainee stipends, or an average of $7,687 per participant. Trainee Stipend Wages Earned During Participation in the RWA Program
B. Of the 1,651 trainees who participated in the RWA program in fiscal year 2009, 647 were placed in full-time jobs with an average starting hourly wage of $10.36. Of all participants, 563 became program graduates, for whom The Doe Fund maintains data on employment, housing and wages through post-program follow-up. Table V.2 provides the count of fiscal year 2009 RWA graduates for whom post-RWA job retention was verified. In addition, RWA graduates are given a cash incentive of $200 per month for five consecutive months post-graduation if they return to The Doe Fund and provide proof of continued employment and stable housing, and pass a drug test. Post-RWA Program Employment Wages
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Because the data available through The Doe Funds systems is collected at distinct points in time while total wages are earned over a period of time, certain assumptions must be made to estimate the total wages earned by the group of reporting individuals. Also, because not all fiscal year 2009 RWA program trainees have returned to The Doe Fund for follow up, the data available regarding post-program wages constitute only a lower bound to the actual total post-RWA program wages that may have been earned by the RWA program trainees examined in this analysis. 10
10 In fiscal year 2009, only graduates who maintained and voluntarily provided evidence of all three graduate criteria (housing, employment and sobriety) were eligible for the cash grant. For those graduates who chose not to return for lack of interest, fear of failing a drug test or other reasons, no graduate retention data is recorded. In the discussion that follows we present a lower bound estimate and an upper bound estimate of the post-RWA program wages earned by fiscal year 2009 RWA trainees. Number of Graduates Month 1 531 Month 2 498 Month 3 416 Month 4 403 Month 5 380 Month 6 323 Month 7 297 Month 8 273 Month 9 177 Month 10 164 Month 11 151 Month 12 102 Months After Graduation Table V.2 Number of RWA Graduates who Retained Employment, by Month (July 1, 2008 to June 30, 2009) Fiscal Year 2009 With Employment Retention
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The lower bound estimate of post-RWA program wages is based on the average starting wages earned by the group of RWA graduates who returned for follow up, multiplied by the number of individuals, and assuming 40 hours per week of work for each of the periods of time reported in the table above. Lower Bound Total Wages Estimate
In order to estimate wages for months 13 to 24, it is assumed that the average base wages reported for individuals for whom data is available during months 10 to 12 may have increased at a rate of three percent, based on the historical average increase in weekly wages as reported by the BLS. The 13 to 24 months wage estimate is also adjusted to account for the possibility of non-full-time work based on the average unemployment rate (9.15 percent) experienced by workers in NYC in 2010 and 2011 as reported by the BLS.
Based on the information available and the assumptions delineated above, Table V.3 reports the estimated post-RWA program wages of fiscal year 2009 RWA program trainees for the 24 months following their graduation from the program.
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As discussed earlier, only program graduates are contacted for follow-up and not all RWA graduates return to The Doe Fund for follow up. Of the 647 trainees who were placed in jobs, 562 achieved graduate status. It is assumed that a portion of those who were placed in jobs, but who did not graduate, as well as those who may not have returned to the program to report their earnings may have continued their participation in the work force. We estimate the upper bound of the total post-program by estimating the wages of (a) the individuals placed in jobs, but who did not graduate, and (b) the sub-group of graduates who have not returned to The Doe Fund for follow up. Collectively, these sub-groups are referred to as unknowns. The upper bound estimate of total post-RWA program wages are based on the assumption that the proportion of Upper Bound Total Wages Estimate Post-Program Earnings Lower Bound Estimated Post-RWA Wages: Month 1 880,518 Month 2 835,114 Month 3 697,605 Month 4 679,370 Month 5 640,597 Month 6 544,507 Month 7 509,072 Month 8 467,377 Month 9 303,085 Month 10 269,891 Month 11 249,280 Month 12 168,068 Months 13 - 24 2,044,518 Total Lower Bound Wage Estimate 8,289,002 Avg. Unemployment in NYC, 2010 & 2011 9.15% Table V.3 Direct Financial Benefits to the RWA Program Trainees Wages Earned Post-RWA Program Lower Bound Total Wages Estimate
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graduates who maintained jobs as reported by those who return for follow up is also applicable to the unknowns. Therefore, the upper bound total post-RWA wage estimate is constructed as the total wages of those who return to follow up, plus the estimate of total wages that may have been earned by the unknowns. The upper bound wage estimate is adjusted to account for possible non-full-time work in a similar fashion as adjusted as part of the lower bound analysis. Wages for months 13 to 24 are assumed to have increased by three percent, as assumed in the lower bound estimate.
Based on the aforementioned assumptions, the estimated upper bound wages of fiscal year 2009 RWA program graduates is presented in Table V.4.
C. Our analysis factors in counterfactual wages to take into account the possibility that RWA graduates may have been able to secure and maintain employment regardless of their participation in the program. The counterfactual wage projections offset the estimate of post- RWA program wages. Offsets to Post-RWA Program Wages: Counterfactual Wages
As developed in the literature discussed in Section III and Section IV of this report, individuals with a criminal record, a record of homelessness, and a record of incarceration face many constraints in the job market that result in significantly higher rates of unemployment, and significantly lower wages. Based on information from the literature on this topic, and as discussed in earlier sections of this report, we assume that had they not participated in the RWA program, graduates may have earned minimum wages ($7.25 an hour), and may have faced a 50 percent rate of unemploymenta figure consistent with the aforementioned literature on labor market trends for this population.
Similarly to our estimate of the post-RWA program wages earned by graduate trainees as discussed above, we estimate a lower bound and an upper bound to counterfactual wages. The lower bound estimated counterfactual wages correspond to the presumed wages that could have been earned by the RWA graduates who returned to The Doe Fund for follow up. The upper bound estimated counterfactual wages corresponds to the presumed wages that could have been earned by all RWA program participants who were placed in jobs, whether or not they returned to The Doe Fund for follow up.
Accordingly, the estimated counterfactual wages are presented in Table V.5 and Table V.6. Lower bound and upper bound wages for months 13 to 24 are estimated based on the assumption of a three percent increase in the wages estimate in months 1 to 12.
D. Our analysis includes the estimation of the potential lifetime earnings boost for RWA participants who are placed in jobs and retain employment for at least one year. This projection relies on the methodologies used by the Robin Hood Foundation as part of the performance metrics they use to measure the impact of their grant making (Weinstein, 2009). Projected Lifetime Earnings Boost
The analysis of the lifetime earnings boost is based on the assumption that the difference between annual post-program participant wages ($6,433), based on average hourly earnings of those still employed after one year ($10.30 x 40 hours/week x 52 weeks =$21,424), and counterfactual wages ($7.25 x 40 hours/week x 52 weeks =$15,080) will remain constant until retirement age. Based on current rules of eligibility for full, unreduced social security retirement benefits we assume that RWA trainees may work until the age of 67. Because the average age of participants is 42, the lifetime earnings boost is estimated based on a 25-year projection assuming that post-RWA earnings as well as counterfactual earnings could have increased at a rate of 3.0 percent per year.
Because the total lifetime earnings boost would occur in an annual fashion over a period of 25 years into the future, the analysis must include consideration for the time value of money. Accordingly, the value in 2010 dollars (present value) of each estimated future annual earnings boost is computed using a discount rate of 5.0 percent rate, and based on the following formulas:
PVEB n =EB n / (1 +i) n
Total PVEB = PVEBn 25 =1
Where: PVEB n =Present Value of Earnings Boost in Year n N =Year 1 through Year 25 EB n =Earnings Boost in Year n i =Discount Rate (5.0 percent)
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We create lower and upper bound estimates for the total lifetime earnings boost based on (1) the confirmed one-year graduate retention (lower bound) and (2) conservative assumptions about those who were placed in jobs, but did not graduate, and those graduates for whom we have no follow-up information (upper bound).
The present value of the estimated lifetime earnings boost is as follows:
E. As discussed earlier, RWA program trainees who attain graduate status are given a cash incentive of $200 per month for five consecutive months post-graduation if they return to the RWA program for follow up. The total incentive grants paid to RWA program graduates who participated during fiscal year 2009 ($198,800), after adjustment to reflect non-fiscal year 2009 incentive grants, was as follows: Graduation Incentive Grants
Total Graduation Incentive Grants $ 357,248
Benefits to the Community A. The CIP is the most established of The Doe Funds social enterprises, and it provides extensive street and sidewalk cleaning services in NYC. RWA trainees provide the manpower for CIP. In turn, CIP provides the opportunity for trainees to earn a trainee stipend and to acquire soft skills, such as dependability, punctuality, teamwork and the ability to accept supervision. Funding for CIP is provided through contracts with Business Improvements Districts (BIDs), parks, and local elected officials. The Community Improvement Program Work Output Value (CIP)
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In order to quantify the value of the CIP work output, we analyzed CIP contract revenue for fiscal year 2009. We used the contract value to calculate a market value for the CIP work outputnot just the paid contract work. The CIP crews provide street cleaning in many areas in the city for which The Doe Fund receives no contract revenue. We took the total contract value ($1,045,542) and compared that to the total number of trainee hours worked on those contracts (91,832). From this we arrive at an hourly CIP work value of $11.39. Based on this hourly work value and the total number of hours worked by fiscal year 2009 participants on the CIP (885,750 hours), we arrive at the following estimate:
CIP Work Output Value $10,088,693
The analysis of the criminal justice impact of RWA is constructed from three sources of information. The first source is the information provided through the various statistics available in the literature discussed in the previous sections of this report, with particular emphasis placed on the 2007 Releases Three Year Post-Release Follow-Up published by the NYS Department of Corrections and Community Supervision (NYSDOCCS, 2011). The second source is the data available through The Doe Funds various systems that track outcomes for each RWA participant and graduate. The third source is the aforementioned study commissioned by The Doe Fund to evaluate the impact of participation in the RWA program on the rate of recidivism (the 2010 Western Study). Criminal Justice Benefits 11
The 2010 Western Study represents an initial and preliminary evaluation of the true impact of the RWA program in reducing the rate of crime and recidivism. The main objective of the study was to compare the rate of recidivism of RWA trainees who arrived at the doors of The Doe Fund
11 Harvard University, Department of Sociology.
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with recent incarceration histories between J anuary 2006 and J uly 2009, to the rate of recidivism recorded by a matched control group that was constructed based on data from the NYS Division of Parole and the NYSDCJ S. Segments of the discussion that follows will rely on the preliminary results presented in the 2010 Western Study to estimate the criminal justice savings resulting from the reduction in the future incidence of crime, arrests, convictions, and prison and jail sentences for new crimes that, based on statistical analyses, can be attributed to the services provided through RWA.
The following elements are included in our analysis and the estimate of the social benefits of RWA:
A.
Savings in the Cost of Recidivism During Participation in the RWA Program One of the limitations of the 2010 Western Study is that three-year outcomes for parole violations are not captured. As a result, this report cannot estimate savings related to a reduction in parole violations after trainees leave the program. However, for those trainees who are on parole, we know that they have not violated their parole as long as they were participating in the RWA program or had retained post-program employment. The savings from the reduction in the rate of recidivism during participation in the RWA program is computed for two distinctive groups of RWA trainees who were on parole during the time of their participation: (1) the group of RWA trainees who participated in the program for six months (excluding those who continued in the program beyond six months); and (2) the group of RWA program trainees who participated in the program for 12 months (excluding those with post-program job retention data). The group of individuals for whom this analysis is conducted is the sub-cohort of RWA trainees who arrived at the doors of The Doe Fund as recently incarcerated individuals.
The estimated savings in the cost of recidivism for the aforementioned groups of individuals is based on the following information and facts:
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According to the 2007 NYS post-release study, 38.1 percent of parolees released in 2007 returned to incarceration within three years post-release. Of those who returned to incarceration, 31.5 percent did so during the first six months post-release, and an additional 32.1 percent returned to incarceration during months 7 to 12 post-release. A total of 63.6 percent of parolees who returned to incarceration did so during the first 12 months post- release, 26.9 percent returned to incarceration during the second year post-release, and the remaining 9.4 percent returned to incarceration during the third year post-release. We assume that RWA trainees who entered the RWA program as parolees would have experienced similar three-year rates of recidivism as reported in the 2007 NYS post-release study. Of the 1,651 individuals served by the RWA program in fiscal year 2009, 722 were on parole. Of that number, 150 parolees stayed in the program for six months, and an additional 84 parolees stayed 12 months. The average parole violation sentence (222 days) is based on NYS data used in CEOs study (Redcross et al, 2012).
Based on data extracted from the CEO study, the marginal cost of a day in prison is $129 in 2009 dollars.
We estimate the savings from the prevention of recidivism as follows:
B.
Savings in Cost of Recidivism Post-RWA Program As discussed earlier in this section, RWA program trainees who attained graduate status are given a cash incentive if they return to the RWA program for follow up and provide proof of residence and earnings, and pass a drug test. In turn, The Doe Fund maintains what is referred to as graduate retention data, which indirectly includes information on the RWA graduates recidivism status. Many RWA graduates return for follow up not only during the first five Savings in Cost of RecidivismDuring Participation in the RWA Program six months $515,484 Savings in Cost of RecidivismDuring Participation in the RWA Program twelve months $582,123 Total Savings in Cost of Recidivism During Participation in the RWA Program $1,097,607 Table V.7
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months after their discharge from the program, but continue to visit The Doe Fund and continue to provide updated information.
Using the data maintained by The Doe Fund on returning graduates, we estimate the savings realized from the prevention of parole violations, under the assumption that parolees who participate in the RWA program would have had the same propensity to violate parole rules and to be recommitted as those reported in the 2007 NYS post-release study.
The estimated savings from prevented parole violations among RWA program graduates is based on the following:
Rate of parole violations among NYS parolees at 18 months post-release (30.6 percent), (24 months (34.5 percent) and 36 months (38.1 percent); Number of RWA program trainees on parole with graduate retention data 6 months and 24 months post-RWA program; The average parole violation sentence (222 days) is based on NYS data used in CEOs study (Redcross et al, 2012); and Based on data extracted from the CEO study, the marginal cost of a day in prison is $129 in 2009 dollars.
Because not all RWA graduates return to The Doe Fund for follow up, the estimated savings in the cost of parole violations that can be computed with the graduate retention data available constitutes only a lower bound to the potential total savings in the cost of recidivism associated with RWA program graduates. Among fiscal year 2009 participants and of the program graduates on parole, 122 retained graduate status for six months. Another 49 retained status for 12 months. For the latter group, in line with the earlier post-program wage estimations, we project that 100 percent of these individuals retained graduate status for an additional 12 months.
In addition to providing the lower bound estimated savings in the cost of recidivism as just discussed, an upper bound estimate is also provided. The upper bound estimate is based on the assumption that a certain portion of the non-returning graduates successfully observed their parole restrictions in a similar fashion to those who did return to The Doe Fund for follow up.
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The principle applied for the construction of this estimate is similar to the principle applied to the estimation of wages earned by the unknowns discussed earlier in this section of this report. The upper bound estimates for the number of participants who retained graduate criteria at 6 and 24 months are 143 and 87, respectively.
Table V.8 reports the lower bound and upper bound savings from the prevention of parole violations during the two years following graduation from the RWA program.
C.
Savings in Costs of Crime, Police Services, Convictions (Court Costs), and J ail Incarceration As discussed above, the 2010 Western Study provides a preliminary examination of the statistical difference in the incidence of recidivism among RWA participants and graduates compared to that of individuals in the control group constructed from the NYS DCJ S data. According to the 2010 Western Study, participation in the RWA program is associated with a reduction in episodes of arrests, which implies a reduction in episodes of crime, a reduction in episodes of convictions, and a reduction in the rate of return to jail. We estimate the savings Lower Bound Savings in Cost of Parole Violations Six Months Post-RWA $1,069,114 Savings in Cost of Parole Violations 24 Months Post-RWA $534,643 Total Savings in Cost of Parole Violations Post-RWA Program $1,603,757 Upper Bound Savings in Cost of Parole Violations Six Months Post-RWA $1,249,675 Savings in Cost of Parole Violations 24 Months Post-RWA $947,776 Total Savings in Cost of Parole Violations Post-RWA Program $2,197,451 Table V.8
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from this reduction in the incidence of arrests based on data available regarding the following components of the cost of crime to society:
a) the average cost of crime; b) the marginal cost of arrests (police services); c) the marginal cost of convictions (or court services); and d) the marginal cost of jail sentences.
The crime cost figures utilized here are based on data provided by McCollister et al. (2010). According to the literature cited in the 2010 Western Study, on average, one arrest occurs per each 10 episodes of crime, and participation in the RWA program results in 0.4 fewer arrests over a period of three years post-release from incarceration. Therefore, it is estimated that participation in the RWA program is associated with four fewer crime episodes per participant over the three-year period following release. To obtain a lower bound estimate of the savings resulting from the reduction in episodes of crime, we apply the lowest per-offense-cost based on victimization estimates in McCollister et al (2010) $653 for larceny/theft. 12
Using this figure translates to a per-participant savings of $2,612 over three years, which we apply to the number of RWA participants with a history of incarceration (1,075). An upper bound estimate of crime-related cost savings uses the second-lowest victimization cost from the McCollister et al. (2010) ($2,364 for household burglary 13
), which is the same criminal activity category used in the 2010 Western Study analysis. The upper bound savings estimate is calculated using the same methodology as the lower bound, and the results are presented in Table V.10. The savings in terms of marginal cost of police services is estimated based on information provided in the CEO study, the reduction in the number of arrests over the three-year period
12 This calculation, based on data in McCollister et al. (2010), captures crime victim costs ($480), crime career costs ($163) and corrected risk-of-homicide costs ($10). 13 This calculation, like the larceny/theft calculation, uses data from McCollister et al. (2010), and captures crime victim costs ($1,362), crime career cost ($681) and corrected risk-of-homicide costs ($321).
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post-release reported for RWA program participants compared to the number of arrests reported for the control group per the 2010 Western Study, and the proportion of RWA program trainees with a record of incarceration. According to the CEO study, the average full sample marginal police cost per arrest was approximately $386, which translates to an RWA per-participant cost savings of $116 (based on the 2010 Western Study arrest analysis).
The savings in terms of marginal costs of the court systems associated with one conviction is estimated based on the marginal costs of the court systems as discussed in the 2012 CEO study, the reduction in the number of episodes of convictions over the three-year period post-release resulting from participation in the RWA program compared to the control group, and the proportion of RWA graduates with a record of incarceration. According to the CEO study, the average full sample marginal cost per conviction was approximately $689, which translates to an RWA per-participant cost savings of $207 (based on the 2010 Western Study conviction analysis).
The savings in terms of marginal costs of prevented jail sentences is estimated based on the marginal cost of a day in jail, or $79 per day, as reported in the CEO study, the reduction in the number of jail sentences associated with participation in the RWA program over the three-year period post-release, the proportion of RWA program graduates with a record of incarceration, and the average number of days of jail arrest (50.3 days) as reported in the 2009 NYCMMR. According to the 2010 Western Study, 16.8 percent of the full sample program group (N=1,126) was sentenced to jail within three years, compared to 26 percent of the control group (N=1,134). This translates to an RWA per-participant jail sentence cost savings of $333 (based on the 2010 Western Study jail sentence analysis).
Accordingly, we estimate the savings from impact on the criminal justice system as presented in Table V.9 and Table V.10.
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Lower Bound Savings Fromthe Costs of Crime Lower Bound $2,807,900 Savings in Police Costs 124,341 Savings Fromthe Costs of Court System 144,629 Savings in Jail Costs 233,216 Total Savings in Cost of Crimes Lower Bound $3,310,086 Table V.9
Upper Bound Savings Fromthe Costs of Crime Upper Bound $10,165,200 Savings in Police Costs 124,341 Savings Fromthe Costs of Court System 144,629 Savings in Jail Costs 233,216 Total Savings in Cost of Crimes Upper Bound $10,667,386 Table V.10
Based on the discussion presented in this section, the estimated lower bound and upper bound quantifiable benefits of the RWA program are listed in Table V.11 and Table V.12, respectively. Estimated Total Benefits From the RWA Program
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Amount Benefits to Trainees Wages Earned During Participation in the RWA Program $12,691,284 Plus: Lower Bound Wages Post-RWA 8,289,002 Minus: Lower Bound Counterfactual Wages (2,712,722) Plus: Total Graduation Incentive Grants 357,248 Total Net Wages Lower Bound $18,624,812 Projected Lifetime Earnings Boost $12,886,062 Benefits to Community Community Improvement Project Work Output Value $10,088,693 Total Benefits to Community $10,088,693 Criminal Justice Benefits Savings in Cost of RecidivismDuring Participation in the RWA Program $1,097,607 Savings in Cost of Parole Violations Post-RWA Program 1,603,757 Savings in Cost of Crimes 3,310,086 Total Criminal Justice Benefits $6,011,450 Total Lower Bound Benefits $47,611,017 Table V.11 Benefits of the RWA Program Lower Bound Estimates
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Amount Benefits to Trainees Wages Earned During Participation in the RWA Program $12,691,284 Plus: Upper Bound Wages Post-RWA 13,419,943 Minus: Upper Bound Counterfactual Wages (4,831,331) Plus: Total Graduation Incentive Grants 357,248 Total Net Wages Upper Bound $21,637,144 Projected Lifetime Earnings Boost $29,688,477 Benefits to Community Community Improvement Project Work Output Value $10,088,693 Total Benefits to Community $10,088,693 Criminal Justice Benefits Savings in Cost of RecidivismDuring Participation in the RWA Program $1,097,607 Savings in Cost of Parole Violations Post-RWA Program 2,197,451 Savings in Cost of Crimes 10,667,386 Total Criminal Justice Benefits $13,962,444 Total Upper Bound Benefits $75,376,758 Table V.12 Benefits of the RWA Program Upper Bound Estimates
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VI.
The Costs of the RWA Program Because the largest presence of the RWA program is in NYC, our analysis of the costs and benefits of RWA focuses on the programs locations in this geographic area. Throughout our discussion, when referring to RWA, we refer to the programs NYC facilities: the RWA Gates Facility (Brooklyn), the RWA Harlem Facility (Harlem), the Porter Facility (Brooklyn), which includes residential and non-residential program components, and RWA Stuyvesant (Brooklyn), which is no longer operational. During fiscal year 2009 (J uly 1, 2008 to J une 30, 2009), RWA assisted a total of 1,651 trainees, including 190 non-residential participants, in NYC. The RWA Programs New York City Facilities
The cost analysis included in this report is based on the following data:
The Doe Funds fiscal year 2009 audited financial statements. A fiscal year 2009 analysis of RWA versus non-RWA beds at the Porter Facility; and The percentage of time spent by program participants during fiscal year 2009 versus during time spent outside of fiscal year 2009 (e.g., fiscal year 2008, fiscal year 2010).
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Total Operating Expenses RWA Brooklyn $2,927,203 RWA Harlem 9,307,657 Porter Avenue HDFC 7,441,884 Stuyvesant 1,460,888 Gates Avenue 192,372 Porter Avenue HDFC Day Program 2,051,987 Total RWA Operating Expenses $23,381,991 Plus: Allocated Overhead 2,605,587 Plus: Non-Fiscal Year 2009 Program Expenses 20,660,959 Total The Doe Fund Operating Expenses $46,648,537 Table VI.1 Total Operating Expenses by RWA Program Facility Fiscal Year 2009 (July 1, 2008 - June 30, 2009)
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The Doe Funds audited financial statements provide a breakdown of the various categories of operating expenses by each facility. Based on discussions with The Doe Funds staff and our analysis of the information provided, the following categories of operating expenses represent the costs directly related to the services provided to RWA trainees: Categories of Operating Expenses of the RWA Program
Social Services Salaries Work and Training Staff Salaries (includes wages to RWA program trainees) Client Services (e.g., recreational activities, client supplies, medical supplies, contracted medical services, client transportation, laundry services, adult education, outreach services, program supplies, and client furniture) Aid to Clients (e.g., direct financial aid, grants and allocations, and the trainee matching grant) Occupancy Costs (e.g., rental expense, real estate taxes, property and casualty insurance, facility and building maintenance services, and utilities expenses) Equipment, Furniture, and Vehicle Purchases Equipment Maintenance and Repair Vehicles and Transportation
While not directly linked to the services provided to RWA program trainees, the following categories of expenses are directly related to the operations of the RWA program facilities, and are, therefore, considered part of the costs included in our analysis:
Legal, Professional, and Management Fees Office Expenses Travel and Meetings
Table VI.2 reports the above categories of operating expenses for each of the four RWA program facilities for fiscal year 2009.
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Total Porter Porter Selected RWA Gates RWA Avenue Avenue HFDC Operating Brooklyn Avenue Harlem HDFC Day Program Stuyvesant Expenses Operating Expenses: Salaries and Incentives $2,093,449 $0 $6,640,006 $4,723,723 $1,576,258 $824,196 $15,857,632 Legal, professional and management fees 63,418 22,217 371,741 414,037 2,982 23,265 897,660 Occupancy Costs 22,171 170,155 183,948 658,757 0 261,454 1,296,485 OfficeExpenses 63,440 0 173,352 134,372 10,495 13,454 395,113 Travel and Meetings 4,586 0 16,111 13,817 389 0 34,903 Client Services 432,641 0 1,174,843 1,205,362 386,976 276,053 3,475,875 Equipment, furniture, and vehiclepurchases 35,535 0 185,774 66,394 4,999 0 292,702 Equipment maintenanceand repairs 8,950 0 27,748 25,257 6,405 3,929 72,289 Vehicles and Transportation 165,288 0 484,814 158,876 20,071 33,603 862,652 Aid to Clients 37,725 0 49,320 41,288 43,412 24,934 196,679 Total Operating Expenses $2,927,203 $192,372 $9,307,657 $7,441,884 $2,051,987 $1,460,888 $23,381,991 Table VI.2 Selected RWA Program Operating Expenses by Facility Fiscal Year 2009 (July 1, 2008 - June 30, 2009)
To account for management and overhead costs, we first examined the total costs of the RWA program at the facilities included in the analysis. By comparing these costs to The Doe Funds total operating budget (minus management and general expenses), we create a ratio of RWA expenses to total operating expenses for each cost category. We then apply that ratio to the management and general expenses in order to capture a proportional amount of the management and overhead costs of running the RWA program.
Because this analysis captures outcomes for all fiscal year 2009 participants, regardless of when they began or ended the program, the analysis requires an estimate of the expenses that were incurred outside of fiscal year 2009. The additional costs are calculated through the following steps: Non-fiscal year 2009 Expenses
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1. Using The Doe Funds participant data, we calculated the average participant length of stay (LOS) for both residential participants and non-residential participants during fiscal year 2009 and outside of fiscal year 2009. 2. By dividing the total fiscal year 2009 program costs (separated by residential and non-residential) by the total number of participant days in fiscal year 2009, we arrive at a fiscal year 2009 cost per day for both the residential participants and non-residential participants. 3. Using the percentage of average non-fiscal year 2009 LOS (45 percent), we arrive at a total number of non-fiscal year 2009 participant days (residential and non- residential). 4. We then applied the fiscal year cost per day to the total number of non-fiscal year days to arrive at the additional costs.
The following is a summary of the cost breakdown:
1. Total Facility Expenses -- Gates, Harlem, Porter, Porter Day, and Stuyvesant Facilities 14
$23,381,991 2. Total The Doe Fund Operating Expenses 15
$46,679,018 3. The Doe Fund Management and General Expenses 16
$ 4,960,997 4. Management and General Expenses Allocated to the RWA Program NYC Facilities 17
$ 2,605,587 5. Average fiscal year 2009 cost per day: a. Residential: $23,727,657 / (Average FY09 LOS (143 days) x 1,461 residential participants) =$114 cost per day.
b. Non-Residential: $2,259,920 / (Average FY09 LOS (87 days) x 190 non-residential participants) =$138 cost per day.
14 Audited Financial Statements Fiscal Year 2008 and 2009, pp. 48 and 52. 15 Audited Financial Statements Fiscal Year 2008 and 2009, p. 48. 16 Audited Financial Statements Fiscal Year 2008 and 2009, p. 50. 17 Based on an expense line share of RWA costs to total TDF costs.
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6. Non-fiscal year 2009 Operating Expenses a. Residential: Average non-FY09 LOS (115 days) x 1,461 residential participants x $114 cost per day =$19,157,050
b. Non-Residential: Average non-FY09 LOS (58 days) x 190 non- residential participants x $138 cost per day =$1,503,909
Based on the above information, the total captured costs of the RWA program in NYC were as follows:
Total Fiscal Year 2009 Expenses $ 25,987,577 Plus: Non-Fiscal Year 2009 Program Expenses (Residential +Non-Residential) Total Analyzed Costs of the RWA Program $ 46,648,537 20,660,960
Of the 1,651 individuals who participated in the RWA program during fiscal year 2009, 1,461 participated in RWAs residential program, which operates as a transitional shelter for single adults through a contract with the NYCDHS. Accordingly, these 1,461 individuals would have posed a cost to the shelter system even if they had not joined RWA. Therefore, an adjustment is to be made to account for the counterfactual costs of shelter services that would have been provided to this group of individuals, had they not entered the RWA program. Shelter Costs Adjustment
As discussed in Section IV of this report, according to the February 2011 NYCMMR, in fiscal year 2009, homeless single adults remained in shelters an average of 261 days, and the average cost of single adult shelter services was $70.18 per day, for an annual per single adult shelter total cost of $18,317. Because The Doe Funds fiscal year 2009 operating expenses included shelter bed costs 365 days a year for 527 beds in NYC (214 at Porter, 198 at Harlem, 70 at Gates, and 45 at Stuyvesant), we estimate a fiscal year 2009 counterfactual shelter cost of $13,499,474 ($70.18 x 365 days x 527 beds). In order to calculate the non-fiscal year 2009 counterfactual shelter costs, we used the average of DHSs average cost of single adult shelter services for fiscal
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years 2008 and 2010 ($70.82) and multiplied it by the average number of non-fiscal year LOS (115 days) and the number of residential participants (1,461). This produces an additional counterfactual shelter cost of $11,898,822.
J ust as residential clients would have incurred costs were they not to enter the RWA program, we also project counterfactual costs for non-residential program participants. For this analysis, we rely on CEOs study, which is the only source of cost estimates for recently released parolees in NYC. In their study, control group costs were projected to be $1,739 per participant. When we apply this figure to the 190 non-residential RWA participants, we arrive at a counterfactual cost of $330,410.
Accordingly, we estimate the total Counterfactual Shelter Costs as follows:
Residential RWA Program Counterfactual Shelter Costs $25,398,296 Non-Residential RWA Program Counterfactual Shelter Costs Total RWA Program Counterfactual Shelter Costs $25,728,706 330,410
The total cost of the RWA program is adjusted to account for the cost of shelter services and non-residential services that may have been provided RWA program trainees had they not entered the program. The net cost of the RWA program is, therefore, computed as follows: Net Cost of the RWA Program
Total expenses for fiscal year 2009 RWA participants $ 46,648,537 Minus Counterfactual Costs Net Cost of the RWA Program $ 20,919,831 (25,728,706)
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VII.
Social Rate of Return on the Investment in the RWA Program The estimated social rate of return of investing in the RWA program is based on the ratio of the benefits associated with participation in RWA relative to the costs of running such a comprehensive program. The discussion presented in Section III and Section IV provided a roadmap to the analysis of the costs associated with homelessness, incarceration, and recidivism and it provided a basis for the investigation of the direct and indirect quantifiable benefits associated with participation in and graduation from RWA. In Section V, the discussion and analysis focused on the identification of the quantifiable benefits of the RWA program and on the estimated monetary value of such benefits in light of the discussion found in the literature on the topic of recidivism and homelessness. Section VI turned the attention to the determination of the costs of the RWA program.
As discussed in Section V, a lower bound estimate and an upper bound estimate of the benefits associated with the RWA program are computed. One of the central points of distinction between the lower bound estimate and the upper bound estimate is the availability of data on RWA graduates. The lower bound estimates for post-program earnings and reductions in technical parole violations are based on data on post-RWA program follow-up for graduates who returned to The Doe Fund to verify current employment and housing. Lower bound estimates also incorporate more conservative cost savings based on the three-year impact results from the 2010 Western Study. The upper bound estimates are based on the assumption that a percentage of those RWA program graduates whose status is unknown may have had similar rates of job and housing retention as those who did return to The Doe Fund for follow-up. We use this assumption to project an upper bound estimate of post-program earnings as well as reductions in technical parole violations. The upper bound estimates also include slightly more liberal cost savings calculations based on the 2010 Western Study findings.
Based on the quantifiable benefits of the RWA program presented in Section V and the costs of the RWA program presented in Section VI, the lower bound and upper bound estimates of the
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social rate of return of the investment in the RWA program are presented below on Table VII.1 and Table VII.2, respectively.
Table VII.1 Three-year Social Rate of Return from Investment in the RWA Program Lower Bound Fiscal Year 2009 Participants
Lower Bound Quantifiable Benefits $ 47,611,017 RWA Program Costs 20,919,830 Lower Bound Benefit-to-Cost Ratio 2.28:1
Table VII.2 Three-year Social Rate of Return from Investment in the RWA Program Upper Bound Fiscal Year 2009 Participants
Upper Bound Quantifiable Benefits $ 75,376,758 RWA Program Costs 20,919,830 Upper Bound Benefit-to-Cost Ratio 3.60:1
Based on the analysis of the points raised in the literature and the analysis of the data available through The Doe Funds current data tracking systems, it is our opinion that the total actual quantifiable benefits of the RWA program are potentially significantly higher than what is reflected above. Therefore, the analysis presented here constitutes only a partial construct of the social rate of return associated with the RWA program. Also, as discussed in Section VI, the results presented in the 2010 Western Study were based on data available through: (1) The Doe Funds tracking systems, (2) the NYS Division of Parole, and (3) the NYSDCJ S. Based on the limitations of the data, the analysis and results presented in the 2010 Western Study may not be reflective of the full criminal justice benefits resulting from participation in the RWA program.
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Moreover, the 2010 Western Study, as well as the analysis of benefits presented in Section V of this report focus on the post-RWA program benefits as evidenced for those RWA trainees who attain graduate status. Because the data available does not allow for the estimation of post-RWA program wages for those individuals who did not attain graduate status, the results presented throughout this report are based on the premise that the potential benefits of the RWA program are only applicable to those individuals who graduated from the program. However, it is possible that participation in the RWA program, even for those who may not have completed the programs various stages, may have a positive impact on their ability to secure and maintain employment and housing, and their ability to prevent episodes of crime and recidivism.
In addition to the discussion above, the benefits of the RWA program as investigated throughout the analysis presented herein is based solely on those benefits that can be quantified through available data. Other social benefits, such as the social effects on the families of RWA trainees, and the potential for positive personal psychological effects, are potential gains from participation in the RWA program that are not quantifiable, further rendering the social rate of return presented above only a partial estimate of the true social rate of return of investing in the RWA program.
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VIII.
Concluding Remarks This report provides a detailed overview of the RWA program, as well as the mission and goals of The Doe Fund. The central aim of our analysis and discussion was to define a model for, and provide a measure of, the social rate of return from investing in the RWA program.
Section II provided an overview of the mission, work, and goals of The Doe Fund and, in particular, the RWA program as one that assists formerly incarcerated individuals in their process of reentry, and homeless individuals in their process of finding and securing employment and independent housing. In that section we discussed how the RWA program provides assistance in the various stages of the process of securing steady employment and housing.
Our analysis and estimation of the social rate of return from investing in the RWA program was constructed based on the various aspects of homelessness and incarceration and their measurable costs and consequences that can be considered as savings and benefits to the program participants, the community, and taxpayers as a result of the services provided by RWA to its clients. The portion of the vast literature on the causes of incarceration and recidivism and on their direct and collateral costs and consequences that was presented in Section III was used as the basis for the determination of the various categories of benefits that are brought about by someones participation in the RWA program.
The trends in the costs of incarceration, the link between incarceration and its impact on present and future employment and earnings, and the consequential effects resulting from the lack of child support during and after incarceration (and possibly prior to incarceration) presented in Section IV are among the most significant factors that set the stage for the estimations presented in Section V of this report. Data obtained from The Doe Funds various systems and financial statements, and the discussion presented in the 2010 Western Study, provide the basis for the measurement of the quantifiable benefits of the RWA program presented in Section V.
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The costs of running such a comprehensive program were computed based on the information provide to us through The Doe Funds audited financial statements and data extracted from the various accounting systems of The Doe Fund. The cost analysis discussed in Section VI includes the discussion of the costs of services that were provided to those trainees who participated in the RWA program in 2009 and either before or after fiscal year 2009.
The discussion, analysis, and findings in Section V and Section VI are brought together in Section VII in the form of two possible scenarios of the rate of return on the investment in the RWA program. According to our analysis, the lower bound estimate of the rate of return of the investment in the RWA program is 228 percent. This implies that a $1 investment in the RWA program yields in $2.28 in quantifiable benefits. The upper bound estimate of the social rate of return from the investment in the RWA program is 360 percent. In other words, a $1 investment in the RWA program yields quantifiable benefits equivalent of up to $3.60.
Because many aspects of the lives of the individuals who are admitted to the RWA program cannot be measured, either because they are not quantifiable or because the required data is not readily available, the estimated rate of return presented in this report constitutes a partial computation of the true social benefits arising from the RWA program.
One key aspect that is not measured in the analysis presented in this report is the dollar value of the consequences of incarceration on the economic mobility of the children of parents with an incarceration record. The literature on this topic points to the conclusion that this may constitute the epitome of all consequences of incarceration as it affects future generations and not just the generation of those with an incarceration record. Or conversely, the epitome of the benefits that can be brought about by preventing incarceration and switching a life to one of productivity and presence in the family life by means of participation in the RWA program. Another key element that is not measured herein, and which may constitute another significant cost item, is the cost of victimization. If victimization is prevented, an additional savings is realized, regardless of the possibility of its accurate measurement. Marks Paneth & Shron LLP
J osefina V. Tranfa-Abboud, Ph.D. Page 1 of 5
EXHIBIT 1 CURRICULUM VITAE
Josefina V. Tranfa-Abboud, Ph.D. Education:
Ph.D., Florida State University, Tallahassee, Economics, 1998 Fields: Labor Economics; Industrial Organization and Regulation Graduate Studies, Vanderbilt University, Nashville, TN Graduate Studies, Economics Institute, Boulder, CO B.S., Universidad Central de Venezuela, Caracas, Venezuela
Professional Experience in the United States:
Marks Paneth & Shron, LLP; New York, NY Director Economic Consulting - Litigation and Corporate Financial Advisory Services J uly 2007 to Present Responsible for all aspects of economic and statistical analysis, research, economic damages calculations, and expert testimony in: a) Labor and employment law disputes, including employment discrimination claims; b) Personal injury and wrongful death litigation; c) New York State 50-B structured settlements analysis; d) Commercial breach of contract and business interruption. Responsible for all aspects of deliverables to clients and provide services in the areas listed above as a consulting expert as well as a testifying expert. Responsible for industry-specific research and analysis, including the evaluation of financial trends. Utilize reliable sources of data and information as applicable to the specific aspects of each dispute analysis. Review and understanding of scholarly articles related to case-specific issues. Review, analyze and critique opposing expert reports. Author reports and other manuscripts as deliverables to clients.
JTA Economic Consulting, LLC; Morristown, NJ Projects: Research and analysis on the effects on competition in health care provision markets 2007 Economic Consulting Services for MPS/Zaumeyer Economic Consulting LLC An Affiliate of Marks Paneth & Shron LLP; New York, NY Independent Economic Consultant March 2007 to present Economic analysis and research in matters related to (a) commercial litigation; (b) insurance claims including personal injury and wrongful death; (c) employment litigation matters such as wrongful termination, failure to promote and compensation differential claims; Structured settlement analysis and computations under 50B regulations.
Marks Paneth & Shron LLP
J osefina V. Tranfa-Abboud, Ph.D. Page 2 of 5
Economatrix Research Associates, Inc.; New York, NY Senior Economist - J anuary 2005 to May 2006 Economic analysis, research and economic damages calculation in (a) pharmaceuticals commercial litigation; (b) business interruption litigation; (c) employment wrongful termination and failure to promote litigation; (d) personal injury litigation. Research and study specific industries as related to specific projects, including understanding the financial trends of the market and the specific companies. Research reliable sources of data and information, such as data and statistics and studies produced by Bureau of Economic Analysis, Department of Labor, Glass Lewis Associates, IMS Health, the American Hospital Association, Generic Pharmaceutical Association, among others. Review and understanding of scholarly articles related to case-specific issues. Review, analyze and critique opposing expert reports. Understanding the process by which specific companies prepare revenues forecasts. Prepare simulation analysis of revenue forecasts using Excel based upon case-specific assumptions. Prepare reports and other manuscripts as deliverables to clients as well as for internal use. Discuss research, methodology and findings with attorneys and clients in the process of delivering intermediate phase and final phase product. Analysis of income and benefits streams, including pension benefits analysis and calculations.
ERS Group, Inc., Washington D.C. and Tallahassee, Florida Research Economist September 1998 to May 2003 Conducted economic and statistical analysis and research related to human resources policies and practices, prepared analyses, reports and expert opinion in employment litigation matters related to human resources decisions such as compensation, hiring, terminations, promotions, demotions, training, job channeling. Analyzed large computerized databases to evaluate integrity of information and to conduct statistical analyses. Wrote and reviewed computer programs in SAS, SPSS and STATA to conduct statistical analyses. Trained project participants in the use of SAS, SPSS and STATA. Responsible for projects involving economic and statistical analyses related to employment litigation, as well as analysis involving both auditing and monitoring of HR policies and practices, including OFCCP and Affirmative Action compliance analyses. Designed analysis and established model specifications in accordance to organizational structure and Human Resources policies and decisions. Managed projects involving the estimation of economic losses associated with employment litigation, as well as litigation involving exposure to hazardous materials. Interpreted analysis results and prepare draft reports. Conducted literature reviews relevant for project specific issues and prepare informative documentation on relevant issues in the current economics literature. Discussed with clients data characteristics, human resources and compensation policies and practices, preparation of databases for analysis and corresponding results. Marks Paneth & Shron LLP
J osefina V. Tranfa-Abboud, Ph.D. Page 3 of 5
Teaching Experience in the United States and Abroad:
Rutgers University Department of Public Administration, Ph.D. Program Newark, New J ersey Visiting Professor Fall 2003 to Spring 2004 Course: Quantitative Methods I and II (Ph.D. level research methods and econometrics course)
Florida State University - Department of Economics - Tallahassee, Florida Teaching Assistant Spring 1997 to Spring 1998 Courses: Introduction to Economic Thinking Principles of Microeconomics Economics of Industrial Organization
Universidad Central de Venezuela, Department of Economics Caracas, Venezuela Instructor J anuary 1990 to August 1992 Courses: Principles of Computer Science
Professional Experience in Venezuela:
Central Budget Office (OCEPRE) Caracas, Venezuela Advisor to the Chief Officer (Asesor del J efe de Oficina) April 1992 to September 1992 Modernization of the Public Administration: Liaison between the office and the consulting group conducting statistical analyses to evaluate viability of the new Budget System. Processed, reviewed and provided data as well as other relevant information to the consulting group. Technical Secretary on behalf of OCEPRE to the Presidents Committee for the Revision of Public Expenditure (Comision Presidencial Revisora del Gasto Publico). Responsible for meetings logistics and the processing and provision of the information required by the Committee members.
Central Planning and Coordination Office for the State - Caracas, Venezuela Oficina Central de Planificacin y Coordinacin del Estado (CORDIPLAN) Advisor to the Director of Short-Term Planning J anuary 1991 to April 1992 (Asesor para el Director de Corto Plazo) Assistant to the coordination of the Operating Plan for 1993 (Plan Operativo 1993) and Follow up Coordinator of the Operating Plan 1992 (Seguimiento del Plan Operativo 1992). Responsible for the Budget Follow up (PEC - Programa Economico Cuantificado) of 4 publicly owned, primary industry firms: SIDOR, VENALUM, Ferrominera del Orinoco and BAUXIVEN. Participated in the Committee for the Restructuring Plan of the Steel Plant (SIDOR). Project partially funded by the World Bank. In charge of the analysis and revision of the Auditing Systems of the plant.
Marks Paneth & Shron LLP
J osefina V. Tranfa-Abboud, Ph.D. Page 4 of 5
Publications:
At The Crossroads of Health Care Reform, Corporate Restructuring and Employment Litigation. The Metropolitan Corporate Counsel. Forthcoming.
Employee Benefits: Not All Are Created Equal. The Metropolitan Corporate Counsel, Volume 20, No. 7, J uly/August 2012.
Compensatory Damages in Lost Wages Claims: The Relevance of Unemployment Trends Adjustments. Employee Relations Law Journal, Vol. 37, No. 4, Spring 2012.
Damages in Labor and employment Disputes: Designing the Economic Damages Model and the Role of the Expert. The Metropolitan Corporate Counsel, Volume 19, No. 11, November 2011.
Models for Estimating Lost Wages May Be Incomplete. Interview with CCH, a Wolters Kluwer Company, CCH Human Resources Management Ideas and Trends, Issue No. 727, October 5, 2011.
An Alternative Approach to a Critical Issue in Employment: Identifying and Correcting Potential Disparities in Employee Selections Before They Happen. Employee Relations Law Journal, Vol. 36, No. 3, Winter 2010.
The Use of Attrition Rates for Economic Loss Calculations In Employment Discrimination Cases A Case Study, with Paul F. White and Frederick M. Holt. Journal of Forensic Economics, Volume XVI, Number 2, Published September 2004.
Reply to Comments on The Use of Attrition Rates for Economic Loss Calculations In Employment Discrimination Cases A Case Study, with Paul F. White and Frederick M. Holt. Journal of Forensic Economics, Volume XVIII, Number1.
Ph.D. Dissertation:
Structural Changes in the Norwegian Farm Sector: And Empirical Study of Worker Adjustment Costs to Leaving Agriculture. Summer Semester 1998.
Presentations:
Lost Profits Disputes: Foundation for Reasonable Economic Damages. NJ Law J ournals In-House Counsel Seminar, March 2012, Brooklake Country Club, Florham Park, New J ersey. Presentation with Stuart M. Lederman, Esq., Riker, Danzig, Scherer, Hyland, Perretti, LLP.
Marks Paneth & Shron LLP
J osefina V. Tranfa-Abboud, Ph.D. Page 5 of 5
Professional Associations and Memberships:
American Economic Association National Association of Forensic Economics
Honors and Awards:
Merit Scholarship for graduate studies in Economics in the United States, granted by Fundacion Gran Mariscal de Ayacucho, Caracas, Venezuela 1992 1998. Nominated for Outstanding Teaching Assistantship Award 1998, Economics Department, Florida State University, 1998.
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