Cost-Benefit Analysis (CBA) and Justice Policy for State Legislators

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Cost-Benefit Analysis (CBA) and Justice Policy for State Legislators

  1. 1. An Introduction to Cost-Benefit Analysis(CBA) & Justice Policy for State LegislatorsDecember 15, 2010Senator Karen Fraser, Washington State SenateTina Chiu, Vera Institute of Justice Slide 1
  2. 2. An Introduction to Cost-Benefit Analysis(CBA) & Justice Policy for State LegislatorsDecember 15, 2010Senator Karen Fraser, Tina Chiu,Washington State Senate Vera Institute of Justice Slide 2
  3. 3. The Cost-Benefit Knowledge Bank for Criminal Justice(CBKB) is a project of the Vera Institute of Justicefunded by the U.S. Department of Justice’s Bureau ofJustice Assistance. •Website (cbkb.org, launching in January 2011) •CBA Toolkit •Snapshots of CBA Literature •Podcasts, Videocasts, and Webinars •Roundtable Discussions •Community of Practice Slide 3
  4. 4. Today’s AgendaIntroduction and Housekeeping – 5 minutesBasics of Cost-Benefit Analysis – 5 minutesPresentation by Senator Fraser – 20 minutesQuestions and Answers – 25 minutesWrap Up – 5 minutes Slide 4
  5. 5. Key takeaways• What is cost-benefit analysis?• How is CBA helpful to legislators?• How has CBA been used to assess justice policies? Slide 5
  6. 6. Housekeeping itemsWebinar support and troubleshooting  Call: (800) 843-9166  Email: help@readytalk.comQuestions  Use the chat feature to send us questionsThis webinar is being recorded Slide 6
  7. 7. Cost-Benefit AnalysisBasics Slide 7
  8. 8. CBA is (Take 1)A comparative method for measuring changes in netsocial welfare resulting from government interventioninto a private marketplace.A comparison of the economic value of using aproductive resource with the opportunity cost of usingthe resource. Projects or regulations are evaluatedbased on how they change net economic value. Slide 8
  9. 9. CBA is (Take 2)An approach to policymakingA systematic tool for evaluating public policyA way to weigh optionsA method for finding out what will achieve the greatestresults at the lowest cost Slide 9
  10. 10. A spectrum of economic evaluations Cost Analysis • How much does this program cost? Cost-Effectiveness Analysis • How many outputs do I get for my dollar? Cost-Benefit Analysis • How can I compare programs with different goals and objectives? Slide 10
  11. 11. Advantages of CBAProvides a framework for a comprehensiveassessment of benefits and costsLooks at the long-term and the short-termExamines both tangible (financial) costs and benefitsas well as intangible costs and benefitsIncorporates evidence of the effectiveness ofoutcomesAsks what will yield the greatest net benefit to society Slide 11
  12. 12. CBA in 5 Steps 1. Determine the impact of the initiative 2. Determine whose perspectives matter 3. Measure costs 4. Measure benefits in dollars 5. Compare costs and benefits Slide 12
  13. 13. Hello!Karen FraserState Senator, State of WashingtonDistrict includes Olympia, our state capital Slide 13
  14. 14. About me:I’m Co-Chair of theWashington State Institute for Public PolicyMy background:18 years in the Senate4 years in the HouseFormer: County Commissioner, Mayor, City Council MemberSenate responsibilities:Senate Majority Caucus ChairSenate Ways and Means Committee (Former Vice Chair; Former Capital Budget Chair)Member and former Chair of Senate committees pertaining to environment, energy, waterMember of Committee on Natural Resources and Marine Waters Senate Rules Committee Member Slide 14
  15. 15. Washington State Institute for Public PolicyA highly skilled, nonpartisan, independent, widely appreciatedpublic policy research organization.Governed by a board of 2 legislators from each of the fourpartisan caucuses (generally budget committee members),nonpartisan legislative staff, high level executive branchappointees, and representatives from higher educationinstitutions. Slide 15
  16. 16. Why did we create the Institute?Created in 1983 because legislators wanted:• Sustained capacity to do quality cost-benefit analysis for some of the toughest problems• To use this analysis in formulating major public policy• To understand the long-term and not-so-obvious impacts of policy options• To minimize government by anecdotesThe Institute has continuously been funded by the Legislature,which also assigns its research projects through legislation. Slide 16
  17. 17. The Institute’s goalDo more with lessIdentify evidence-based policy optionsthat improve outcomes and save moneyAnd we’ve done it! Slide 17
  18. 18. The Institute’s methodsHow do we do it?IDENTIFY which programs or state policies work well,by: a) Direct program evaluation and/or b) Meta analysis (Analyzing others’ rigorously and objectively conducted research to determine the “average” effect on outcomes.) Then … Slide 18
  19. 19. The Institute’s methods (continued)CONSTRUCT a cost-benefit model specific toWashington that takes effects into account, andcalculates the state’s “Return on Investment”.Models use a variety of inputs specific to Washingtonsuch as: costs of charging and prosecuting a crime,therapy, incarceration, etc. Slide 19
  20. 20. Notes to other states• WSIPP’s models can be adapted to other states, inputting their own data.• The MacArthur Foundation and the Pew Center on the States provided funds to support these efforts, with an eye toward future usage by other interested states. Slide 20
  21. 21. Washington State’ssix major successes in the criminal justice fieldUsing options identified through theInstitute’s evidence-based process Slide 21
  22. 22. Success #1Enacted and funded several evidence-based juvenilejustice crime prevention, and juvenile programs in the late1990s and early 2000s.Effectiveness results: Programs targeted toward youth with the highest potential to recidivate. Reduced juvenile crime.Cost savings results: Closure of some state juvenile rehabilitation institutions due to reduced need. Reduced state capital and operating costs. Slide 22
  23. 23. Success #2Increasing investments in delivering programs to offendersthat meet offenders’ deficits, including:a)drug courtsb)programs during and after incarceration such as, education, vocationaltraining, chemical dependency therapy and others.Effectiveness results: Reduced crime and recidivism Reduced incarcerationCost savings results: Reduced criminal justice costs by an amount greater than increased program costs. Delayed for 10 years the construction of a new 2000 bed, $250 million prison. This saved annual $18 million debt service and $45 million operating costs for each of the next 25 years. This totals: $63 million savings per year, for a total of $630 million in 10 years. Slide 23
  24. 24. Success #3Closed the last, very old, “island” prison in the US, (a giftfrom the federal government long ago) and relocatedhundreds of inmates to more cost-effective, newer prisons.Cost savings results: Significant cost reductions in operations, maintenance, ferry transportation, subsidized staff living costs, and more. Slide 24
  25. 25. Success #4Reduced prison sentences for low risk drug offenders, withtransfer of fiscal savings to drug courts and to other stategovernment funding obligations.Effectiveness results: Less crimeCost savings results: Reduced criminal justice system costs. Slide 25
  26. 26. Success #5Sentencing review of potential savings from reducedincarcerationThis current effort is evaluating early release options fortargeted moderate and low risk offenders, and using costsavings from reduced incarceration for: a) increased treatment programs for high risk offenders to reduce their risk of recidivism; and b) other state budget needs. Slide 26
  27. 27. Success #6“Early Childhood Education” is now included as part of theState’s K-12 “Basic Education Program” funded by theState.Effectiveness results: Improves future educational success for kids. Reduces crime.Cost savings results: Reduces criminal justice system costs. Increases effectiveness of education expenditures. Net cost-benefit ratio is positive: benefits exceed costs. Slide 27
  28. 28. Other areas of Institute work K-12 Education Teen BirthsEarly Childhood Education Employment Child Abuse and Neglect Public Assistance Substance Abuse Public Health Mental Health HousingDevelopmental Disabilities Publications available at: www.wsipp.wa.gov Slide 28
  29. 29. How did we achieve such success in the criminal justice field? We relied on the Institute’s3-PART APPROACH TO RESEARCH Slide 29
  30. 30. The Institute’s 3-part approach1) Rigorous evaluations of REAL WORLD efforts. Careful study of other studies that have been conducted rigorously and fairly. Identify what really works and what doesn’t from quality comparative studies.2) Rigorous analysis of the economics of alternatives. Computation of benefits, costs, and risk (return on investment) to Washington taxpayers for each policy option.3) Identification of a “portfolio” of options that could affect statewide outcomes. This includes evaluating the risk of failure of each option. Slide 30
  31. 31. For further information & consultation Steve Aos, Director Washington State Institute for Public Policy Phone: 360-586-2740 Email: saos@wsipp.wa.gov Institute Publications: www.wsipp.wa.gov Senator Karen Fraser, Board Co-Chair Washington State Institute for Public Policy Phone: 360-786-7642 Email: Karen.Fraser@leg.wa.gov Slide 31
  32. 32. Thank you for your interest. May I respond to questions? Slide 32
  33. 33. Wrapping Up Slide 33
  34. 34. Key takeaways• What cost-benefit analysis is• How CBA is helpful to legislators• How CBA has been used to assess justice policies Slide 34
  35. 35. Follow up• Please complete our evaluation form• To receive information and notifications about our site launch, upcoming webinars, and other events • Follow us on Twitter at http://www.twitter.com/CBKBank• Future webinars will cover • A step-by-step guide to conducting CBAs for justice policies • Evaluations and CBAs Slide 35
  36. 36. Contact InformationTina Chiutchiu@vera.org(212) 376-3038cbkb@cbkb.orghttp://www.vera.org/cba Slide 36
  37. 37. This project was supported by Grant No. 2009-MU-BX-K029 awarded bythe Bureau of Justice Assistance. The Bureau of Justice Assistance is acomponent of the Office of Justice Programs, which also includes theBureau of Justice Statistics, the National Institute of Justice, the Office ofJuvenile Justice and Delinquency Prevention, the SMART Office, and theOffice for Victims of Crime. Points of view or opinions in this document arethose of the author and do not represent the official position or policies ofthe United States Department of Justice. Slide 37
  38. 38. Thank you! Slide 38

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