Packard, T., Delgado, M., Fellmeth, R., & McReady, K. (2008). A cost-benefit analysis of transitional services for emancipating foster youth. Children and Youth Services Review 30(11), 1267-1278.
Adult life experiences of former foster youth are often disturbing. The authors argue that much more assistance is needed to ensure that these youth have the same opportunities as youth growing up in their own homes, and propose a Transition Guardian Plan (TGP) for former foster youth from their 18th to 23rd birthdays; this is intended to replicate the role of parents in the transition of children to independent adulthood. Youth who opt to participate would receive a monthly stipend and support services from a court-appointed adult guardian who would meet them monthly to distribute the funds, plan for their use, and verify progress towards self-sufficiency. This study was a detailed prospective analysis of a possible service; the program does not yet exist. The following calculations were based on data for the State of California.
Estimated program costs: Monthly stipends to youth (averaging $850 in first year, dropping to $258 in fifth year as youth become more self-sufficient) and to guardians ($100 per child), plus 15% of total cost for administration and evaluation of the program. Estimated Ns drop from 2940 (70% of the youth emancipating each year) to 2100 over the 5-year period; cost per youth over 5 years = $42,113; cumulative total for all youth expected to participate = $123.1 million.
Estimated benefits: Avoided social costs (reduced welfare payments and fewer admissions to state prison) plus Increased tax revenues (higher educational attainments will lead to higher employment earnings, and thus higher taxes). Outcomes for TGP youth are assumed to be equivalent to outcomes for the general youth population in California; differences from youth not in program are calculated. Total benefits for these participants over a 40-year working life are estimated to be $320.2 million.
The resulting benefit-cost ratio would be 1.5 to 1, using discounted present value dollars. Even at 75% success, the ratio would be 1.2 to 1. The authors argue that this program would provide significant benefits for former foster youth, plus financial benefits for society.
Though this study was not an evaluation of an existing program, it does appear to have been carefully considered and well conducted. All assumptions, described in detail, were backed by cited studies and appear to be conservative; estimated amounts were based on published sources. Possible costs associated with mental health, homelessness and substance abuse, which would be harder to estimate, were not included; the benefits calculated here may be an underestimate. The assumption that TGP youth—followed only in the 18-23 age range—could be brought up to California average is perhaps questionable, and needs to be supported by more rigorous evidence.
Though these findings should be interpreted with caution, the study has considerable potential importance. First, the calculations suggest that this specific program could be effective. Second, this approach can be useful in the evaluation of other programs. Justifying the cost of any new program can be difficult; the authors suggest that careful assessment of costs and benefits is of key importance.