This document provides an overview of a webinar on cost-benefit analysis and its application to justice policy for state legislators. The webinar agenda includes an introduction, basics of cost-benefit analysis, a presentation from Senator Karen Fraser on how Washington State has used cost-benefit analysis to successfully implement evidence-based justice policies, and a question and answer session. Senator Fraser highlights six major successes in the criminal justice field in Washington resulting from policies identified through the state's nonpartisan research institute, which conducts cost-benefit analyses to identify options that improve outcomes and save money.

1. An Introduction to Cost-Benefit Analysis
(CBA) & Justice Policy for State Legislators
December 15, 2010
Senator Karen Fraser, Washington State Senate
Tina Chiu, Vera Institute of Justice
Slide 1

2. An Introduction to Cost-Benefit Analysis
(CBA) & Justice Policy for State Legislators
December 15, 2010
Senator Karen Fraser, Tina Chiu,
Washington State Senate Vera Institute of Justice
Slide 2

3. The Cost-Benefit Knowledge Bank for Criminal Justice
(CBKB) is a project of the Vera Institute of Justice
funded by the U.S. Department of Justice’s Bureau of
Justice 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. Today’s Agenda
Introduction and Housekeeping – 5 minutes
Basics of Cost-Benefit Analysis – 5 minutes
Presentation by Senator Fraser – 20 minutes
Questions and Answers – 25 minutes
Wrap Up – 5 minutes
Slide 4

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. Housekeeping items
Webinar support and troubleshooting
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 Email: help@readytalk.com
Questions
 Use the chat feature to send us questions
This webinar is being recorded
Slide 6

7. Cost-Benefit Analysis
Basics
Slide 7

8. CBA is (Take 1)
A comparative method for measuring changes in net
social welfare resulting from government intervention
into a private marketplace.
A comparison of the economic value of using a
productive resource with the opportunity cost of using
the resource. Projects or regulations are evaluated
based on how they change net economic value.
Slide 8

9. CBA is (Take 2)
An approach to policymaking
A systematic tool for evaluating public policy
A way to weigh options
A method for finding out what will achieve the greatest
results at the lowest cost
Slide 9

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?
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11. Advantages of CBA
Provides a framework for a comprehensive
assessment of benefits and costs
Looks at the long-term and the short-term
Examines both tangible (financial) costs and benefits
as well as intangible costs and benefits
Incorporates evidence of the effectiveness of
outcomes
Asks what will yield the greatest net benefit to society
Slide 11

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. Hello!
Karen Fraser
State Senator, State of Washington
District includes Olympia, our state capital
Slide 13

14. About me:
I’m Co-Chair of the
Washington State Institute for Public Policy
My background:
18 years in the Senate
4 years in the House
Former: County Commissioner, Mayor, City Council Member
Senate responsibilities:
Senate Majority Caucus Chair
Senate Ways and Means Committee (Former Vice Chair; Former Capital
Budget Chair)
Member and former Chair of Senate committees pertaining to environment,
energy, water
Member of Committee on Natural Resources and Marine Waters Senate
Rules Committee Member
Slide 14

15. Washington State Institute for Public Policy
A highly skilled, nonpartisan, independent, widely appreciated
public policy research organization.
Governed by a board of 2 legislators from each of the four
partisan caucuses (generally budget committee members),
nonpartisan legislative staff, high level executive branch
appointees, and representatives from higher education
institutions.
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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 anecdotes
The Institute has continuously been funded by the Legislature,
which also assigns its research projects through legislation.
Slide 16

17. The Institute’s goal
Do more with less
Identify evidence-based policy options
that improve outcomes and save money
And we’ve done it!
Slide 17

18. The Institute’s methods
How 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. The Institute’s methods (continued)
CONSTRUCT a cost-benefit model specific to
Washington that takes effects into account, and
calculates the state’s “Return on Investment”.
Models use a variety of inputs specific to Washington
such as: costs of charging and prosecuting a crime,
therapy, incarceration, etc.
Slide 19

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. Washington State’s
six major successes in the
criminal justice field
Using options identified through the
Institute’s evidence-based process
Slide 21

22. Success #1
Enacted and funded several evidence-based juvenile
justice crime prevention, and juvenile programs in the late
1990s 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. Success #2
Increasing investments in delivering programs to offenders
that meet offenders’ deficits, including:
a)drug courts
b)programs during and after incarceration such as, education, vocational
training, chemical dependency therapy and others.
Effectiveness results:
Reduced crime and recidivism
Reduced incarceration
Cost 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. Success #3
Closed the last, very old, “island” prison in the US, (a gift
from the federal government long ago) and relocated
hundreds 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. Success #4
Reduced prison sentences for low risk drug offenders, with
transfer of fiscal savings to drug courts and to other state
government funding obligations.
Effectiveness results:
Less crime
Cost savings results:
Reduced criminal justice
system costs.
Slide 25

26. Success #5
Sentencing review of potential savings from reduced
incarceration
This current effort is evaluating early release options for
targeted moderate and low risk offenders, and using cost
savings 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. Success #6
“Early Childhood Education” is now included as part of the
State’s K-12 “Basic Education Program” funded by the
State.
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. Other areas of Institute work
K-12 Education Teen Births
Early Childhood Education Employment
Child Abuse and Neglect Public Assistance
Substance Abuse Public Health
Mental Health Housing
Developmental Disabilities
Publications available at: www.wsipp.wa.gov
Slide 28

29. How did we achieve such success
in the criminal justice field?
We relied on the Institute’s
3-PART APPROACH TO RESEARCH
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30. The Institute’s 3-part approach
1) 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. 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. Thank you for your interest.
May I respond to questions?
Slide 32

33. Wrapping Up
Slide 33

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. 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. Contact Information
Tina Chiu
tchiu@vera.org
(212) 376-3038
cbkb@cbkb.org
http://www.vera.org/cba
Slide 36

37. This project was supported by Grant No. 2009-MU-BX-K029 awarded by
the Bureau of Justice Assistance. The Bureau of Justice Assistance is a
component of the Office of Justice Programs, which also includes the
Bureau of Justice Statistics, the National Institute of Justice, the Office of
Juvenile Justice and Delinquency Prevention, the SMART Office, and the
Office for Victims of Crime. Points of view or opinions in this document are
those of the author and do not represent the official position or policies of
the United States Department of Justice.
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38. Thank you!
Slide 38