CHAPTER 5: PROGRAM COSTS

This section discusses the costs of the Gateway Program for the original 153 participants in terms of lost rent, the benefits freeze, staffing, and other expenses. First, the fixed costs of the program were estimated. Then the total annual marginal costs -- those that vary with the number of participants -- were calculated. Next, the fixed costs and the marginal costs were added to obtain an estimated total annual program cost. Finally, the total annual program cost was divided by the number of program participants to determine the cost per participant.

• Fixed Costs
• Marginal Costs
• Total Program Costs

Fixed Costs

The program’s fixed costs are those expenses that do not vary with the number of program participants (see Table 16). From 1989 through 1992, fixed costs have been assigned wholly to the original 153 program participants, but after June 1993, no new participants were followed. Thus, fixed costs from 1993 through 1995 are weighted by the number of the original 153 participants still in the program each year, divided by the total number of participants in each year.

Throughout the program’s existence, 15 percent of the CHA resident services director’s time has been spent overseeing the Gateway Program, at an annual cost of $7,500 (salary costs have been weighted for 1993-1995). From 1989 until 1993, there was only one staff person with an annual salary of $18,000. When a new housing services coordinator was hired in mid-1991, the salary was increased to $22,140 (the 1991 cost of $20,070 is the average of the two salaries). In 1994, a transitional families program manager replaced the housing services coordinator as program manager. This person spends half time ($17,500) managing the Gateway Program and half time overseeing other CHA self-sufficiency programs. In addition, since 1994, the program has employed two and a half full-time case managers at a cost of $81,180. After 1994, however, only a subset of the original program participants were still in the program. Therefore, the costs of the transitional families manager and case managers has been weighted by the number of original participants still in the program in 1994 (68.75%) and in 1995 (13%). Therefore, in 1994 , the cost of the transitional families program manager attributable to the original participants was $12,031, and in 1995, the cost was $2,275. For the case managers, the cost attributable to the original participants was $55,811 and in 1995, $10,553.

Since 1989, students from the public management and social work programs at the University of North Carolina at Charlotte have worked as interns at the Gateway Program at a cost of $5,000 annually for a single intern from 1989 until 1993 and $12,500 annually after 1994 for two and a half interns. The interns and other staff costs have been weighted for 1993-1995 by the annual ratio of the number of the original 153 participants remaining in the program over the annual number of participants in each year.

Table 16: Fixed Program Costs

Prior to 1994, intake testing and the employability development plans were the responsibility of the staff of the Charlotte Department of Employment and Training. Therefore, intake expenses were not applied to the CHA until the function moved in-house in 1994 at a cost of $14,100 (weighted for the proportion of original participants remaining in the program). At the same time, however, there were other employment and training expenses, including from 1989 through 1993 the cost of an intake worker. Costs from 1993 through 1995 have been adjusted for the proportion of original program participants in employment and training programs in those years.

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Marginal Costs

Marginal costs are those that vary with the number of participants and their stage in the program. These include the freeze on rents, Food Stamps, and AFDC benefits, escrow accounts, and tuition and child care costs. Annual totals have been calculated based on the number of original participants receiving benefits in each year (see Table 17).

The cost of the rent freeze has been calculated as the mean difference between the rent a participant pays (a mean of $75 per month) and the amount a person not in the program would pay (a mean of $225 per month). This figure was then multiplied by the number of original participants in the remediation phase in each year of the program, because the rent freeze is in effect only during each participant’s first two years in the program. As the number of participants rose in 1990, the rent cost to the program increased too, from $59,081 to $114,091. As fewer participants continued in the remediation phase, the rent cost decreased. By 1994, none of the original 153 program entrants were still receiving a rent freeze.

Table 17: Marginal Program Costs

The escrow accounts become a CHA expense only when people leave the program and withdraw their savings, which have averaged about $650 per person. During the first three years of the program, no one graduated with an escrow account; therefore, no escrow accounts were withdrawn. Between 1992 and 1995, roughly 40 of the original 153 participants withdrew their escrow accounts, an average of $6,500 each year (10 people a year drawing $650 dollars each).

Tuition costs have varied, not per credit, but because of the different numbers of participants in school each year. Program participants usually attend Central Piedmont Community College, where tuition is $13.25 per credit. The college considers 12 credits or more to be a full load and anything less, part-time. The spreadsheet assumes that each participant will attend two semesters at 12 credits a semester on average during a year.

Day care costs are based on estimates from Child Care Resources, which provides day care services to program participants. Costs from 1989 until 1992 include those for all program participants, while the figures for 1993 until 1995 include only those of the first 153 participants in the program.

Information on the program costs for both Food Stamps and AFDC was provided by the Mecklenburg County Department of Social Services in quarterly reports showing the difference between the amount of benefits due participants both with and without the benefits freeze. The longer participants were in the program (and as their wages increased), the greater the difference between what they actually received and what they would have received without the freeze. Because the freeze is in effect only during the remediation phase of the program, the benefits-freeze affected none of the original participants during 1994 and 1995. They may still have received benefits, but the amount was based on their current income instead of their income when they entered the program.

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Total Program Costs

The total program costs -- $2,434,059 -- were obtained by adding the annual fixed costs from Table 16 and the annual marginal costs from Table 17 (see Table 18). Dividing this sum by the number of original participants (153) yields the program cost per participant, $15,909. Since 49 of the original 153 graduated from the program, the cost per graduate is $49,675.

Table 18: Total Annual Costs

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