Cost Benefit Analysis

The Value of Investing in The Doe Funds
Ready, Willing & Able Program

A Cost-Benefit Analysis

By

Josefina V. Tranfa-Abboud, Ph.D.

December 19, 2012

Table of Contents

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

The Ready, Willing & Able Program
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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.

Page 20 of 62

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.

Page 21 of 62

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)

Page 25 of 62

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.

Page 28 of 62

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

Page 30 of 62

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.

Page 32 of 62

Total In-Program Trainee Wage Earnings $12,691,284
Table V.1
Wages Earned During Participation in the RWA Program
A.
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
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.

Post-Program
Earnings
Upper Bound
Month 1 1,037,157
Month 2 1,014,644
Month 3 879,826
Month 4 837,130
Month 5 837,130
Month 6 746,390
Month 7 723,313
Month 8 690,311
Month 9 560,273
Month 10 512,343
Month 11 486,967
Month 12 386,975
Months 13 - 24 4,707,484
Total Upper Bound Wage Estimate 13,419,943
Avg. Unemployment in NYC, 2010 & 2011 9.15%
Table V.4
Wages Earned Post-RWA Program
Upper Bound Total Wages Estimate

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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.

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Counterfactual
Wages
Lower Bound
Month 1 73,660
Month 2 288,840
Month 3 241,280
Month 4 233,740
Month 5 220,400
Month 6 187,340
Month 7 172,432
Month 8 158,309
Month 9 102,660
Month 10 95,002
Month 11 87,747
Month 12 59,160
Months 13 - 24 792,152
Total Lower Bound Wage Estimate 2,712,722
Unemployment Rate for Formerly Incarcerated 50.0%
Table V.5
Lower Bound Counterfactual Wages Estimate
Counterfactual
Wages
Upper Bound
Month 1 362,768
Month 2 350,934
Month 3 304,304
Month 4 288,018
Month 5 288,018
Month 6 256,799
Month 7 244,999
Month 8 233,820
Month 9 189,774
Month 10 180,345
Month 11 171,413
Month 12 136,215
Months 13 - 24 1,823,924
Total Upper Bound Wage Estimate 4,831,331
Unemployment Rate for Formerly Incarcerated 50.0%
Table V.6
Upper Bound Counterfactual Wages Estimate

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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:

Lower Bound Estimated Lifetime Earnings Boost $12,886,062

Upper Bound Estimated Lifetime Earnings Boost $29,688,477

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)

Page 41 of 62

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).
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.

Page 42 of 62

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:

Page 43 of 62

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

Page 44 of 62

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.

Page 45 of 62

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

Page 46 of 62

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).

Page 47 of 62

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.

Page 48 of 62

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

Page 49 of 62

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
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

Page 50 of 62

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
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

Page 51 of 62

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).

Page 52 of 62

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)

Page 53 of 62

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.

Page 54 of 62

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.

Page 56 of 62

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

Page 57 of 62

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)

Page 58 of 62

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

Page 59 of 62

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.

Page 60 of 62

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.

Page 61 of 62

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.

Page 62 of 62

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.



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.


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.



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.



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.

- i -
Marks Paneth & Shron, LLP

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The Value of Investing in The Doe Funds

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