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-~97 -

benefits of education and vocational training would
appear to be significantly greater than those of im-
mediate employment because clients of halfway houses
are generally poorly educated and unskilled, and
without education or training, will be continually
relegated to low paying positions, whereas education
and vocational training investments yield a long run
stream of significantly higher earnings.1

(c) Individual houses may produce services in-house rather
than refer clients to services produced in the community,
so as to maximize control over clients (and over "success"
of clients). In some houses, clients are not referred
out even when needed services are not produced in-house.
As long as some clients are undereducated or untrained,
or have personal drug, alcohol, or mental problems,
policies which restrict outside referral of clients
will generally restrict societal benefits as well.

Implementation of the Standards contained in the Corrections
Report would have the effect of introducing limited regulation into
the halfway house sub-industry on several levels.2

teducation and vocational training may possibly yield addi-
tional benefits as well to society in the form of reduced crime, if
the recidivism rate for better educated or better trained ex-
offenders is lower than that of the general ex-offender population.

An interesting survey was conducted several years ago as
Part of an evaluation of Florida's state community corrections
(work release) centers. A question asked during the course of the
interview was: "What is the minimum amount that you feel you need
to get by?" Answers ranged from $40 per week on up to some highly
unrealistic figures, but most replies fell into the $120-$200 range.
Gross wages for residents of houses in the sample averaged only
$120-$150 per week. As long as individuals perceive their need to
be greater than the returns from employment, or any other source of
income (e.g., welfare payments, unemployment benefits, income main-
tenance), they are unlikely to hold a job over the long run and more
likely to return to crime as-a part-time or full-time occupation.
To the extent that education and vocational training result in higher
income, it would seem that additional societal benefits can be derived
from their expanded provision. Currently, however, total societal
benefits resulting from education and vocational training services
are limited by offender employment restrictions.

2700 much regulation, like too much collusion, can restrict

. total societal benefits from halfway houses as well. Two strengths

of halfway houses are their small scale, non-secure mode of opera-
tion and their relatively young, enthusiastic staffs. Complete


1B.

2A.

2B.

2c.

3A.

3B.

4A.

4B.

LIST OF FIGURES

Range of Average (Per Bed) Facility Cost
for the Sample. .........000-68

Graphical Distribution of Average
(Per Bed) Facility Costs for the
Sample... 2 ee eee eee ee ene

Ranges of Average Facility Costs
for Private and State-Operated
Houses 6 ww et ee ee we

Graphical Distribution of Average
Facility Costs for Private
Houses «we ee eee ee ee

Graphical Distribution of Average
Facility Costs for State-Operated
Houses 6 ew we ee ee ee ee ee

Range of Average Daily Operating
Costs (Excluding Facility

Costs) 2 we eet we eee et ete

Graphical Distribution of Average
Daily Operating Costs (Excluding
Facility Costs) 2... ...50520.
Range of Personnel Costs for the Sample

Graphical Distribution of Average
Personnel Costs for the Sample. ....

vii

24

24

26

26

27

33

33
46

46


A-20

Procedures and assumptions used to derive the particular
values shown in the several sample budgets presented in different
Standards and Goals Project reports vary, depending on the types of
statistical data which are available and the number of places for
which such data could be. obtained within the Project's time and re-
source constraints. Therefore more specific procedures and assump-
tions used in constructing each sample budget are discussed in the
text accompanying it.

For other activities envisioned in the Corrections Report,
(such as a probation system which has separate procedures and person-
nel for providing services to the courts and probationers), there are
no existing activities which approximate the recommended activity,
or budget and expenditure data are so limited that it is not possible
to derive a sample budget (as described above). In such cases, model
budgets have been derived by the Standards and Goals Project staff.
A model budget is also a set of estimated criminal justice expendi~
tures, by line item, but it is not based on expenditure or budget
estimates from existing activities. Instead, it is derived from more
indirect sources, such as workload estimates for probation officers
performing different kinds of services for different types of proba-
tioners, ratios of direct and indirect costs for government agencies,
and so forth. As for the sample budgets, more specific procedures
for deriving a panticular model budget are discussed in the text which
accompanies it.


A-15

Family House
200 West Comstock

Seattle, Washington 98119

(1) Telephone conversation with Robert Garst, Director, July 16,
1975.

(2) Family House Program Evaluation, Washington Law and’Planning
Office, 1973.

Opportunity Center
McLennan County Adult Probation Department

Room 300 Court House Annex
Waco, Texas 76701

(1) Telephone conversation with T.G. McWilliams, Jr., Director,
July 1, 1975. ,

(2) Letter and enclosed budget information from T.G. McWilliams,
July 17, 1975.


COST ANALYSIS OF
CORRECTIONAL STANDARDS:

£D128689

HALFWAY HOUSES
VOLUME |

By
Donald J. Thalheimer

This project was conducted by the Correctional Economics Center under
Grant No. 74NI-99-0042 awarded to the American Bar Association by the
National Institute of Law Enforcement and Criminal Justice, Law Enforce-
ment Assistance Administration, U.S. Department of Justice, under the F
Omnibus Crime Control and Safe Streets Act of 1968, as amended. Points ~
of view or opinions expressed in this document are those of the author and
the Correctional Economics Center and do not represent the official posi-
tion or policies of the U.S. Department of Justice or the American Bar
Association.

The Law Enforcement Assistance Administration reserves the right to
reproduce. publish, translate, or otherwise use, and to authorize others

to publish or use, all or any part of the copyrighted material contained
in this publication.

@ 1975 by American Bar Association

NOVEMBER 1975

National Institute of Law Enforcement and Criminal Justice
Law Enforcement Assistance Administration
U.S. Department of Justice

3


CHAPTER IV

THE BENEFIT SIDE: STRENGTHS, WEAKNESSES AND THE

IMPACT OF IMPLEMENTING THE STANDARDS

The primary focus of this report has been on costs of halfway
house operations. The outputs, or benefits of halfway houses have
been touched upon on occasion, but only in relation to a particular
type of cost. Types of services provided have been discussed but
not the benefits derived from those services, either accruing directly
to clients or indirectly to society at large. Data for such a study
is not currently available, nor has a research methodology which can
adequately be applied to halfway houses as yet been devised.

Another focus of eariier chapters has been to maintain a
purely objective approach in organizing the sample and discussing
the results of the sample analysis. This study has, however, brought
the Project into contact with all facets of halfway house operation
and afforded the opportunity to consider the implications of various
policies and procedures employed by halfway houses in general, as
reflected by those in the sample. Having completed the analysis of
all relevant costs of halfway houses, this report now turns to
analyzing certain of those policies and procedures which, if re-
structured, would yield additional net benefits.1

Consider post-trial corrections as an industry in which
correctional authorities produce services to be consumed by

1

Net benefits are the extent to which benefits exceed costs.
Net benefits can be increased by means of three different strategies:

(1) Increasing benefits without affecting costs

(2) Decreasing costs without affecting benefits

(3) Effecting changes in both benefits and costs.
Tn regard to the first strategy, there exists in economics a cri-
terion called the "Pareto Optimality" criterion. A state of Pareto
Optimality with respect to resource allocation exists when it is
possible to make no one better off without making someone worse
off. Holding costs constant, as the first strategy does, is, in
effect, equivalent to not making anyone worse off. A particular
policy would be Pareto Optimal if no additional changes could be
made without making some clients (or society) worse off.

~ 93 -

125


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-41-

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4-18

(2) Once purchase price and renovation expenditures have
been adjusted to 1974 values, the second step consists
of applying a rental equivalency rate incorporating
both a cost of capital factor and an allowance for a
normal rate of return on capital directly invested. The annual
equivalency rate employed is 12%.

Five-sixths of that rate (10%) is the estimated
annual cost of capital. Annual capital cost de-
pends on several factors; most important are interest
costs and amortization periods. Borrowing costs in
recent years have been in the range of 7% to 9% for most
states. Adding an amortization factor and providing
a small margin for uncertainty makes 10% a very reasonable
cost of capital.

The other two percent represents an allowance for
a non-compounded rate of return on capital invested of 8%,
on the assumption that 25% of the market value of the fa-
cility has been directly invested as capital (as down
payment and as payments made toward the mortgage).

To capsulize the estimation process in a single sentence: ren-
tal equivalents were calculated by first adjusting purchase price plus
renovations to 1974 values, and then applying an equivalency rate of
12% to allow for both annual capital costs and a normal rate of return
on capital invested.


Table 7

Comparative Salary Ranges, by

Occupation and State (August 1, 1973)

OCCUPATION

Director of Probation
and Parole Services

Senior Probation and
Parole Officer

Vocational Rehe vilitation

Counselor

Employment Counselor —

__ STATE

District of Columbia
California

Florida

Ohio

Pennsylvania
Missouri

Texas

District of Columbia
California
Pennsylvania
Minnescre

Ohio

Texas

Washington

Florida

Georgia

Missouri

California

Texas

Missourd.
Pennsylvania
Digtrict of Columbia
Georgia

Minnesota

Ohio

Washington

Florida

California
Pennsylvania
Minnesota
Texas

Ohio
Washington
Florida
Georgia
Missouri

SALARY RANGE

$26, 898-34,971
22, 260-27, 060
20, 460-28 ,464
18 ,866-25,459
16 5128-20, 436
12, 000-16, 752
11,616-18,420

$16 , 682-21, 686
13,992-17,004
13,907-17 ,624
12,096-15, 300
10, 650-13 ,666
10,176-12,816
10,092-12,732

9,816~13,572
9,312-12,204
8, 232-11, 448

$11,508-13, 992
10,872-13,692
10,272-13,776
10 054-12, 694

9,520-12,373
9,312-12,204
8,832-11,172
8,382--20,733
8,004- 9,624
7,992-10, 896

$10, 440-12 ,696
10,054-12,694
8,832-11,172
8,628-10,872
8,383-10,733
8,004~ 9,624
7,992-10, 896
7, 800-10, 563
7, 500-10, 416

-52-

85

(cont 'd)


DIRECTIONS ‘FOR FURTHER RESEARCH

This report has highlighted the findings and methodology of
a comprehensive cost analysis of halfway houses. The Standards and
Goals Project, however, has not been able to analyze in depth all
cost-affecting or cost-related variables. Areas in which further
research is needed include:

What are the short and long run facility cost
differentials between renting and buying?

What is the most efficient facility design?

What are the most efficient combinations of staff?
What is the relationship between type and level of
funding and operating costs? Is there an inflationary

effect when federal funding is assumed?

What is the extent of indirect costs? What is the
most efficient administrative design?

What are the most efficient methods of distributing
resources provided by agents external to the criminal
justice system?

What are the trade-offs between opportunity costs to
clients and criminal justice system costs?

What are the aggregate costs to the community of a
halfway house locating within it?

In addition to analysis of cost and cost-related factors in
the operation of halfway houses, further analysis into the benefit
side is needed as well. Some questions which such research efforts
should address include:

What are the output/benefit effects of different goals
and policies of halfway houses?

What are the best available methods for measuring
societal benefits?

What constitutes a "successful" halfway house experience?

= 16 -


. - 102 -

e Public financial resources, which included block funds
from LEAA, HEW or State Planning Agencies (SPA) grants, and
contracts with the Federal Bureau of Prisons and Divi-
sion of Probation, state departments of corrections
and probation and parole authorities (for the houses
operated by state departments of corrections, of course,
some resources were internal);

) Private financial resources, which included funding from
sources outside the criminal justice system such as
private agencies and individuals, and client payments
for room and board; and

e Non-financial resources, which included community re-
sources which provided free or reduced cost services
to clients of halfway houses. Such resources included
doctors, lawyers, dentists, repairmen and volunteers
of all types.

Houses funded primarily by public financial resources were in
effect being subsidized by federal, state and/or local governments,
and this subsidy had both price and quantity effects, especially for
personnel costs. Houses which had strong public resources, which in-

. cluded the houses operated by state departments of corrections, the
houses operated by private agencies or foundations, and several of
the single houses funded primarily by LEAA, generally had mre and
higher salaried personnel than their privately funded counterparts.
Houses serving exclusively work releasees will generally have larger
absolute expenditures than houses serving primarily clients under
other sentencing dispositions, since they are the houses most likely
to have strong public financial resources, especially contracts with
the Federal Bureau of Prisons and the state departments of corrections.

The fourth source of cost variation was economies of scale
and factor indivisibilities. While the existence of economies of
scale could not be affirmed by sample data, certain fixed costs,
principally facility costs and the salary and fringe benefit costs
associated with director and assistant director positions, were found
to affect average costs over two ranges of "number of clients served"--
12 to 18 and 22 to 28. Average costs were lower at the upper end of
each range than at the lower end.

Criminal justice system cost estimates in the form of sample
budgets for four houses providing different sets of in-house services
were derived. The following are average cost estimates associated
with each of these four sample budgets:


- 108 -

e What are the benefit effects of different client
sizes per house?

e How should clients be screened and/or evaluated?
(5) Which average length of residence yields the most benefits?

For decision-making purposes, the most useful analyses are those
which combine cost analysis and output/benefit analysis to determine
exactly how they relate to one another. There are two such types of
analysis: cost/benefit analysis and cost/effectiveness analysis. Both
attempt to relate costs of programs to performance. Cost/benefit and
cost/effectiveness analysis are most valuable because, rather than
determining which are the least costly alternatives or which alter-
natives yield the most societal benefits, they determine which alter-
natives produce the highest net benefits (relative or absolute) or
which alternatives are most cost/effective. Because non-monetary
criteria are employed in measuring output/benefits, cost/effectiveness
in particular lends itself to an interdisciplinary effort, including
other social scientists in addition to economists.

Cost/benefit or cost/effectiveness analysis would be applicable
to most of the research questions previously identified. Such analysis
would be particularly valuable in answering the following two large-
scale questions:

e What is the optimal number of halfway houses on different
levels (local, state, and national)?

e What is the optimal level of regulation in the halfway
house (sub) industry?


-47-

private agency/foundation-operated houses, have, on the average,
a greater number of personnel than single private houses. For
those houses operated by a private foundation or agency (Talbert,
JADCP, Magdala, BRNCP), a Portion of the salaries and fringe
benefits of administrative personnel in the foundation or agency
was allocated among the houses on a Percentage basis and included
in personnel costs,l

Average salaries by position vary significantly as well.

. For the. sample, directors’ salaries ranged from $10,000 to $19,610;
assistant directors, from $9,000 to $16,490; full-time counselors/
caseworkers/job developers/community resource developers/correc-
tional officers, from $5,573 to $15,469; part-time counselors,
$2.10 (minimum wage) to $4.50 per hour; and secretary/clerk/administa-
tive assistants, from $4,388 to $7,083. The two principal deter-
minants of these salary/wage variations, regional price differences
and availability of resources (primarily federal and state funding),
are analyzed in the next two sections,

Interregional Cost Differentials

This section deals with price variation in both labor
(wage and salaries) and other factors, including facility prices,
utility prices and prices of other goods and services. The term
"interregional" refers not only to the differences in major regions
of the country (Northeast, Pacific, and so forth), its narrowest

1the Procedure employed was to allocate the central

administrative costs among the houses and other Projects operated

- by the agency/foundation based on the percentage share of each
house's operating costs. On the basis of project analysis and
telephone interviews with staff members of the houses involved,
it was determined that approximately 1/3 of the time of central
administrative personnel is involved in direct operation of the
house. Therefore, 33 1/3 percent of the allocated amounts of
private, indirect administrative costs were included in the
personnel, and hence operating, costs of the houses.

The author is aware that administrative personnel of
state departments of corrections might as well be directly in-
volved in the operation of state-operated houses, and that a
similar portion of indirect costs should be allocated to these
houses. The Project however, does not have access to such data
or a methodology for deriving meaningful estimates of the amount
to be allocated to-each house. To the extent that such public
indirect costs are significant, the cost estimates for the state
departments of corrections-operated houses are biased downward.

80


-5-

As service~providing resources, halfway houses can thus be
considered to be one of many community-based resources available to
other criminal justice system agencies and departments. Likewise
as halfway houses serve as direct sentencing alternatives, the other
agencies and departments (for example, probation and parole depart-
ments) should be considered as available resources to be utilized
in maximizing the provision of services to halfway-housed clients.
The ensuing analysis will deal with both roles but will concentrate
on the first, that is on halfway houses as direct sentencing
alternatives.

While halfway houses have existed for some years, until
recently they served only in the second role described above, as
mostly private, residential, community-based resources housing
primarily, ex-offenders and a few institutional prereleasees and
parolees.2 Only in very recent years have halfway houses been
considered as sentencing alternatives to both institutionalization
and, at the other end of the post-convictional sentencing spectrum,
to non-residential community-based supervision, as the Corrections
Report envisions:

+ + + Courts should not have to choose between
total confinement and total freedom. The
trend toward use of community-based programs
for offenders after a period of incarceration
suggests that community ori. 1ted programs

with State control over leisure time are a
valuable tool that should not be preconditioned
in all cases on a period of total confinement.
In addition, there may be resources available
in the community which could provide a group
living situation and supervision without the
hardware and institutional control character-
istics of most jails and other correctional
facilities. Thus, courts should have
"halfway-in" houses available to them for
sentencing dispositions, comparable to

those available to institutional decision-
makers.3

Ithe Corrections Report explicitly recommends that halfway houses
(group homes) be available to parolees. Standard 12.6 states that "small
community-based group homes should be available to parole staff for prere-
lease programs, for crises, and as a substitute to recommitment to an insti-
tution in appropriately reviewed cases of parole violation." (p. 430)

2the history of halfway houses has been deseribed in some depth in the
literature, and so will not be repeated in this report. See Keller and Alper,
Halfway Houses, John M. McCartt and Thomas J. Mangogna, Guidelines and Standards
for Halfway Houses and Community Treatment Centers (Washington, D.C.: U.S.,
Department of Justice, Law Enforcement Assistance Administration, May, 1973)
and Patrick T, Deehy, Halfway House’in the Correctional Sequence--A Case Stud
of a Traditional Residence for Inmates of a State Reformatory (Ann Arbor,
Mich.: University Microfilms, 1969).

3Corrections » Pe 570.


CHAPTER III
OTHER COSTS

The previous chapter dealt with analyzing the costs incurred
by the criminal justice system in the operation of a halfway house.
In addition to these criminal justice system costs are:

° External costs incurred by public or private agencies
and organizations outside the criminal justice system
in serving clients of halfway hcuses (which are not
cherged to the halfway house or any other criminal
justice system agency) ;1

e Opportunity costs incurred by clients of halfway houses;}

ry Costs to the community in which the halfway house is
located.

These three types of additional costs are the subject of this chapter.

EXTERNAL COSTS

One of the themes consistently present throughout the
Corrections Report is that greater use of community resources must
be made in providing services to individuals entering the criminal
justice system. Standard 7.2 of the Report, Marshaling and Coordi-
nating Community Resources, specifically states:

Each State correctional system or the
systems of other units of government should
take appropriate action immediately to estab-
lish effective working relationships with the
major social institutions, organizations and

_ agencies of the community, including the
following: .

1
A more detailed definition and discussion of these costs
are contained in Appendix A-l.

-77-

159


Table 1 (cont'd)

Washington Department of
Social Health Services
Comm-Home Hause

Pioneer Fellowship House

Family House

Opportunity Center

Pasco, Washington

Seattle, Washington
Seattle, Washington

Waco, Texas

14,277

503,073
- 503,073
98,713

'Population estimates are for 1973 and are from

the Census.

-12-

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-37-

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A-14

District of Columbia, Department of Corrections

(Department of Community Services)
614 H Street, N.W.
Washington, D.C.

(1) Interview with Delbert Jackson, Director, and Samuel Rosser,
Director of community services, July 16, 1975.
(2) Department of Corrections budget requests.

Georgia Department of Corrections
(Offender Rehabilitation)

Trinity Washington Building
Atlanta, Georgia 30334

(1) Telephone conversation with Winfredd Ladd, Assistant Deputy,
Commission of Offender Rehabilitation, June 27, 1975 and July
14, 1975.

(2) Letter and enclosed budget information from Winfredd Ladd,

July 8, 1975.

Minnesota Department of Corrections
Suite 430 Metro Square Building

7th & Robert Streets

St. Paul, Minnesota 55101

(1) Telephone conversation with Jay Budge, Planning Grant Analyst,
June 27 and July 7, 1975.

(2) Letter and enclosed budget information from Jay Budge, June
30, 1975.

Comm-Home House
525 West Bonneville
Pasco, Washington

(1) Telephone conversation with Keith Weaver, Deputy Administrator,
Law and Justice Planning Office, Office of Community Develop-
ment, June’ 30, 1975.

(2) Telephone conversation with carol Winterburn, Assistant
Supervisor, July 8 and July 16, 1975.

Pioneer Fellowship House
P.O. Box 24046

Seattle, Washington 98124

(1) Telephone conversation with Martin Frank, Director, June 30,

1975.
(2) Letter and enclosed budget information, July 9, 1975.


-8-

topics in their own right; but as this report is a comprehensive
cost analysis and neither a cost/benefit nor a cost/effectiveness
analysis, these issues are dealt with only indirectly. It is
hoped, however, that the cost estimates and cost estimation tech-
niques derived here will be used as a basis for subsequent cost/
benefit and cost/effectiveness research efforts.

All relevant costs have been included in this report,
including external costs, costs to the community in which a house
is located, and opportunity costs to clients of halfway houses,
as well as public criminal justice system expenditures. A com-
plete discussion of each of the types of costs considered in
this report is contained in Appendix A~l. The analysis of these
costs is the subject of the following chapters.

4i


- 40 -

c. Psychological counseling or therapy

d. Vocational training

e. Vocational and/or employment evaluation

£. Employment placement

g- Academic upgrading, e.g., G.E.D., college
courses, etc.

h. Any other services as needed by the type
of program operated and the particular
needs of individual clients.

In general, the agency will provide clearly
identified resources that are relevant and
essential to the successful conduct of its pro-
grams, and.will utilize the resources of other
agencies in order to provide services needed by
its clientele but which cannot or should not be
provided by the agency operating a community
treatment center.

The extent to which a house provides some or all of (or
contract for) the above services will be reflected in total and
average operating costs. ci

All of the houses in the sample provide "basic" services
of shelter, group counseling and placement. Most of the houses
provide food service; others however may either contract out for
meals, issue meal vouchers, or simply have clients provide for
themselves.

Typically the houses in the sample serving exclusively
or primarily work releasees provide the minimal services described
above; some, however, provide or make accessible a wider range of
services including education and vocational counseling and train-
ing. The houses serving primarily prereleasees, probationers,
parolees and clients sentenced directly to the house generally
provide or make arrangements for the delivery of individual psycho-
logical counseling, financial management, vocational counseling
and training, and education in addition to the basic services
described above. Variation in provision of services in-house
impacts operating costs primarily through personnel costs, the
major single component of operating costs.

‘Table 5, pages 41-44, presents personnel costs: first
in current dollars and as a percentage of operating costs; and
secondly in calendar 1974 dollars as total personnel costs,
average (per bed) personnel costs, and average daily personnel
costs. The index employed in converting to 1974 dollars is the

1
McCartt and Mangogna, Guidelines and Standards, p. 83.

73


- 78 -

1. Employment resources--private in-
dustry, labor unions, employment services,
civil service systems.

2. Educational resources--vocational
and technical, secondary college and uni-
versity, adult basic education, private and
commercial training, government and private
job development and skills training.

3. Social welfare services--public
assistance, housing, rehabilitation services,
mental health services, counseling assistance,
neighborhood centers, unemployment compensa-
tion, private social service agencies of.all
kinds.

4. The law enforcement system--Federal,
State, and local law enforcement personnel,
particularly specialized units providing
public information, diversion, and services
to juveniles.

5. Other relevant community organiza-
tions and groups--ethnic and cultural groups,
recreationai and social organizations,
religious and self-help groups, and others
devoted to political or social action.

The Report elaborates further in the accompanying narrative:

Instead of hiring a large number of addi-
tional correctional staff members to per-—
form the services already provided to
nonoffenders, it is much wiser for cor-
rectional agencies to try to develop ef-
fective working relationships with the
agencies and institutions with which
offenders come in contact.

In the previous chapter on the direct criminal justice
system costs of implementing the Standards for halfway house pro-
grams, the additional personnel and personnel-related costs of
adding a community resource manager to the staff of a house pro-
viding basic services were estimated. #It should at this point be
clear that the greater community costs of implementing the Standards
are external costs of providing services to which clients are re-
ferred. External costs of halfway houses can be divided into the
costs of the following public and private agencies and institutions
to which clients are referred for specialized services:

1
Corrections, p. 240.

2rbid., pp. 240-241.


- 100 -

In addition to expanding the direct sentencing role of halfway houses,
implementing the Standards of the Corrections Report would result in
greater referral of clients to services provided by community re-
sources outside the halfway houses, rather than provision of such
services in-house. Implementation of the Corrections Standards thus
will affect all four types of costs listed above. How each will be
affected has been analyzed in turn.

Criminal Justice System Costs

A sample of halfway houses was selected to represent a cross-
section of houses across the country, by size, type (state-operated,
private independent, private agency-operated), services provided,
location (geographical region, size of city, type of neighborhood),
and types of clients served. The sample was selected on the basis of
several additional criteria as well: principally, duplicability and
availability of cost data. Even for houses included in the sample,
several data limitations were in evidence. They included:

e Houses operated on, and therefore budgeted expenditures |
on, different yearly cycles. Some houses operated on
a calendar year basis, others on a fiscal year, and
some even operated on other cycles.

e There was a lack of complete records of actual expendi-
tures. Some houses recorded only budgeted expenditures.

° Houses excluded certain costs from the budgeted and re-
corded, actual expenditures. Costs most commonly ex-
cluded were facility costs and fringe benefits.

If previously deleted, allowances for fringe benefits were in-
cluded in total personnel cost estimates. Rental equivalents were cal-
culated for facilities owned rather than rented. All cost data were
standardized to 1974 dollars, employing the GNP deflator for state
and local government purchases. Average costs were calculated on the
assumption that houses were operating at designated capacities.

Operating costs for the houses in the sample were as follows:

r Facility costs ranged from a low of $76 per bed year
($.21 per bed day) to a high of $1,391 per bed year
($3.81 per bed day). Median annual facility cost per
bed for the entire sample was $335; the mean was $404
per bed year.

© Average (mean) annual facility cost for facilities that
were rented was $455 per bed, as compared to $332 per
bed for facilities which had been purchased. Average
facility cost for the facilities rented by state-operated
houses was $580 per bed, as compared to the sample average
of $404 per bed.

132


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(P, 340) Z eTqeL

- 18 -

51


- 60 -

vacation, holidays, and sick leave, as well as for services performed.
The first step in arriving at the sets of salary estimates was to
determine which positions were to be included. Houses in the sample
varied in the number and types of employees, particularly in the
counselor positions. “he number and types of positions selected
represent the most common employment patterns. Positions included
and the responsibilities of each follow.

The house director is responsible for overall administration
of the house, including hiring and supervision of all personnel and
planning of the house program. He is also responsible for decision-
making regarding which clients enter and remain in the house program.
The assistant director assists the director in performing these func-
tions. . The daytime counselor performs both client monitoring and
basic counseling functions. Basic couseling includes employment
referral and assistance, and conducting of group counseling sessions.
Night and weekend (part-time) counselors are responsible for client-
moniteying functions only. The secretary/bookkeeper and cook/
housekeeper positions are self explanatory.

Salary data from the individual houses were checked to
ensure that they included allowances for leave, as specified above,
and were adjusted to 1974 dollars using the index of state and local
government purchases.1 Salary level for each position for the 30
houses in the sample were then arranged from high to low and divided
down the middle. The mean for each group was calculated and is shown
as the "average high" or "average low" estimate, respectively.

Fringe benefits include employer contributions to retirement
plans, health, accident and life insurance policies, and unemployment
and workman's compensation programs, and represent 15 percent of
total wages and salzries. Data from the Civil Service Commission
and the Office of Management and Budget estimate average fringe
benefits at 15.9 percent in the private non-farm economy, and
16.0 percent for the federal government. Several of the private
houses in the sample, however, reported fringe benefits of under
15 percent, and as most of the houses in the sample (as are most
houses in general) are privately cperated, 15 percent was the figure
selected for these cost estimates.

Non-personnel costs. The same procedure as was employed in
estimating high and low average salaries by position was used in
determining estimates for each of the non~personnel cost categories.

lonis index is a part of the Bureau of Economic Analysis's
Gross National Product implicit price deflator. Most goods and
services purchased by state and local governments are personnel
services, so this is the best available -ndex for this purpose.

93


Figure J.

Sample Budget for a House Providing Basic
In-House Services Plus Community Resource Referral (1974 Dollars)

PERCENT OF PERCENT OF
TOTAL TOTAL
ITEM AVERAGE OPERATING AVERAGE, OPERATING
HIGH COSTS LOW COSTS
PERSONNEL
Wages and Salaries
Director $15,970 10.9% $12,085 13.0%
Assistant Director/Supervisor 12,737 8.7%" 9,767 10.5%
Community Resource Manager 11,756 8.1% 8,842 9.5%
Counselor 11,756 8.1% 8,842 9.5%
Night Counselor 9,441 6.5% 7,100 7.6%
1 Part-Time Counseior 4,576 3.12% 2,560 2.7%
Secretary/Bookkeeper 7,646 5.2% 6,082 6.6%
Cook/Housekeeper 6,990 4.8% 5,500 5.9%
Total Wages and Salaries (80,872) (55.3%) (60,778) (63.3%)
Fringe Benefits (15%) 12,131 8.3% 9,117 9.8%
TOTAL PERSONNEL COSTS ($93,003) (63.6%) ($69,895) (75.1%)
NON-PERSONNEL .
Professional Fees and $ 4,042 2.8% $ 1,016 1.1%
Contract Services
Travel and Transportation 3,741 2.6% 1,743 1.9%
Rent/Rental Equivalent 12,292 8.4% 4,704 5.1%
Maintenance 2,461 1.7% 1,304 11.4%
Utilities 4,288 2.9% 1,834 2.0%
Communications 2,561 1.8% 1,452 1.6%
Supplies 3,770 2.6% 892 1.0%
Food 18,002 12.3% 9,592 10.3%
Other 2,057 1.4% 698 0.7%
TOTAL NON-PERSONNEL COSTS ($53,214) (36.4%) ($23,235) (24.9%)
TOTAL OPERATING COSTS $146,217 (100%) $93,130 (100%)
AVERAGE COST
Capacity (18) ‘
Average Daily Cost Per Client $ 22.26 $ 14.18

See the text for a discussion of factors to be noted in interpreting and using cost
estimates in this figure.

13


PREFACE

Cost analysis which has been undertaken by the Standards and
Goals Project has had two purposes:

° To analyze and estimate the costs of implementing
Standards of the Corrections Report, issued in 1973
by the National Advisory Commission on Criminal
Justice Standards and Goals (policy-oriented purpos2) ;

e To provide cost guidelines and cost estimation tech~
niques for use by jurisdictions in assessing costs of
their own ongoing or contemplated activities (technical
purpose).

To achieve both purposes, the Project is presenting the re-
sults of its cost analysis of halfway houses in two volumes, of which
this is the first. In focusing on the Project's policy-oriented pur-
pose, this first volume:

e Provides a brief background on the Corrections
Standards relating to halfway houses;

e Focuses on findings of the cost analysis and briefly
explains the methodology used so that these findings
can be interpreted accurately;

° Highlights the policy implications of the analysis.

It is intended for use as a separate document by justice system
administrators, legislators and others in need of a reference to
the policy issues surrounding halfway houses, particularly those
related to cost. In addition, Volume I is designed as a companion
reference to Volume II which is intended for use by planners and
analysts. Volume II both provides detailed, technical description
of estimation techniques applicable to estimating halfway house
costs for a particular jurisdiction and presents detailed findings
of the cost analysis.

dNational Advisory Commission on Criminal Justice Standards
and Goals, Corrections (Washington, D.C.: Government Printing
Office, 1973); hereafter referred to as Corrections.

-1-


APPENDIX A-4

RENTAL EQUIVALENT ESTIMATION PROCESS

This appendix contains a discussion and detailed presentation
of the rental equivalent estimation process employed in this cost
analysis.

SELECTION OF AN ESTIMATION PROCESS

Several alternative approaches to deriving rental equivalents
for facilities purchased rather than rented were evaluated. Three
alternative approaches survived the initial evaluation:

(1) Utilizing the annuai rent for a (rented) building in
the same neighborhood possessing similar characteristics;

(2) Applying a rental equivalency rate against the appraised
(1974) market value of the facility;

(3) Determining the market value (1974) by adjusting a
purchase price and amount of renovations utilizing
a housing value index, then applying a rental equivalency
rate.

The third approach was selected because it was the only approach
allowing a uniform and systematic estimation of rental equivalents,
given the time and resource constraints of this research effort.

{Time and resources did not allow the Standards and Goals Project to
carry out either the first or the second appreach, and accepting each
house's own estimated rental equivalent would have violated a uniform-
ness criterion, Therefore, the third approach is the one which
was employed in determining rental equivalents, and which is discussed

in this appendix.

THE ESTIMATION PROCESS

Rental equivalents were calculated according to the following
two-step process:

(1) The sum of purchase price plus expeatitures on tenova~
tions was adjusted upward (into 1974 dollars) utilizing
the index of ownership costs compiled by the Bureau cf
Labor Statistics (published annually in the Statistical
Abstract of the United States, U.S. \3epartment o.

A-16

156


-15-

Comm-Home House, located in Pasco, Washington, was,
started four years ago as a private, non-profit organization but has
been operated for the past year by the Washington Department of
Social Health Services. Comm-Home serves preleasees from state in-
stitutions who are adult felons.

Pioneer Fellowship House, in Seattle, Washington, is one of

four houses operated by the Pioneer Cooperative Affiliation and
serves primarily state work releasees, under contract with the state.
(The other houses serve alcoholics and others outside the criminal
justice system.) Pioneer Fellowship House has been open since 1965.

Family House, also located in Seattle, is a residential program
serving primarily probationers and parolees with drug problems (and
their dependents). Family House seeks to provide a total environment
of services geared toward reintegrating the drug abuser into society.
Family House is funded by both state and LEAA grants.

Opportunity Center, located in Waco, Texas, began operating
in 1972 and serves exclusively probationers. The Project Director
is Chief of the local Probation Department, and the daily manager is
a Probation Officer. In addition, two community resources special-
ists from the Probation Department assist the clients. The specific
objective of the program is to provide a homelike environment for
young adult probationers between the ages of 17 and 25, in which
their material needs can be met while supervision, discipline, and
guidance can be provided. The House is funded by state and LEAA
funds, private contributions, and resident room and board payments
of $20 per week.

Cost Variation Among Houses in the Sample

A major problem in estimating and analyzing criminal justice
system expenditure costs for halfway houses is that accounting policies
differ widely. Certain expenditures which are legitimate costs borne
by houses may be excluded. For several houses in the sample, for
example, both rent and fringe benefits were excluded from reports
on budgeted expenditures. Excluding either biases the costs
downward.

. Facility costs however, pose an additional problem in that
several of the houses in the sample are completely owned and hence no
rental payments or mortgage payments are made.l To simply assume no
rent payments (rent = 0) in those situations is to bias the cost
estimates downward, as compared to the houses paying rent (in effect

lpacility costs in this report are defined to -be the rental
costs or rental equivalents. Normal maintenance costs are ‘a separ-
ate category and are included in other operating costs.

438


Figure 4A

Range of Average Daily Personnel Costs for the Sample

Range of
Average Personnel Costa Number of Houses
$0 - $5 3
$5 - $10 15
$10 - $15 9
$15 - $20 2
$20 - $25 1

Figure 4B

Graphical Distribution of Average Daily
Personnel Costs for the Sample

qs)
Number
of (9)
Houses
(3)
q@)
$5 $10 $15 $20 $25

Average Daily Personnel Costs

- 46 -


- 55 -

Table 5, pages 41-44, illustrates both of those statements.
Of the ten houses with the highest personnel costs in calendar
1974 dollars, seven are operated by state departnents of correc-
tions, one of the rematni-: theee serves exclusively work releases
under contract with th: . .°:e department of corrections, and the two
ethers have contracts w. state (D.C.) department of correc-
tions and are partially ided by LEAA.

Houses with s : 5 public financial resources will also
typically have large: -pacities. and higher facility costs; sample
averages for both were exceeded by these houses.

Houses in the sample which are dependent on private finan-
cial resources are characterized by low absolute personnel costs.
Personnel costs as a percentage of total operating costs are also
much lower than for the sample as a whole. .These houses have
adapted by paying directors on a part-time contract basis or not
at all, eliminating the assistant director, and Paying counselors
and other (fewer) personnel at lower salaries and wages than for
the sample as a whole.

Non-personnel expenditures by these houses are also lower
than the sample average, but only by 12 percent as compared to
over 75 percent for personnel expenditures. These houses have
also made greater use of non-financial resources in providing
services to their clients, both b: organizing community resou-res
to provide low-cost or no-cost services such as medical, legal,
volunteer counseling and recreational services, and by utilizing
external resources (non-criminal justice system agencies and
organizations) to provide counseling services.

Referring clients to external resources for certain serv-
ices, instead of providing them in-house, reduces total house
operating costs but may increase the operating costs of that
external resource. In effect, there is a trade-off between house
operating costs and external costs.1 The extent to which such a
trade-off takes place on an individual house level partially
accounts for variation in house operating costs. This trade-off
will be discussed in the next chapter dealing with non-criminal
justice system expenditure costs. The next section deals with
the last major source of variation: economies »f scale and
factor indivisibilities.

1

A trade-off is an economic term me:aing that an inve
relationship exists among two resouxces or activities. A reduction
of the costs of one imposes additional costs to the other.


DOCUBENT RESUHE

ED 128 689 cG 010 794

AUTHOR Thalheimer, Ponald J.

TITLE Cost Analysis of Correctional Standards: Halfway
Houses. Volumes I and II.

INSTITUTION American Bar Association, Washington, D.C.

Correctional Economics Center.

SPONS AGENCY National Inst. of Law Enforcement and Criminal
Justice (Dept. of dJustice/LEAA), Washington, D.C.

PUB DATE 75

NOTE 166p.; Volume I is dated November 1975, Volume II is
dated October 1975

AVAILABLE FROM Superintendent of Documents, U.S. Government Printing
Office, Washington, D.C. 20402 (Vol. I. Stock Number
027-000-00393-1, HC $.55; Vol. II, Stock Number
927-000-00396-1, HC $2.10)

EDRS PRICE MF-$0.83 HC-$8.69 Plus Postage.

DESCRIPTORS *Correctional Rehabilitation; *Cost Effectiveness;
Financial Policy; Operating Expenses; Policy
Formation; *Program Evaluation; *Program Planning;
*Rehabilitation Centers; *Standards

IDENTIFIERS *Halfway Houses

ABSTRACT
The. Standards and Geals Project has undertaken cost

analysis of halfway houses in order to analyze and estimate the costs
of implementing correctional standards, and to provide cost
guidelines and cost estimation techniques for use by jurisdictions.
The first volume: (1) provides a brief background on the Corrections
Standards relating to halfway houses; (2) focuses on findings of the
cost analysis and briefly explains the methodology used so that these
findings can be interpreted accurately; (3) highlights the policy
implications of the analysis. It is intended for use as a separate
document by justice system administrators, legislators and others in
need of a reference to the poli®y issues surrounding halfway houses,
particularly those related to cost. In addition, Volume I is designed
as a companion reference to Volume II which is intended for use by
planners and analysts. Volume II both provides detailed, technical
description of estimation techniques applicable to estimating halfway
house costs for a particular jurisdiction and presents detailed
findings of the cost analysis. (Author)

Jae aidod igi aig ick igkigadiiadiok aciaiukick idiiggo dokgidok iia kc dokokick ack ake ik ak ak ak ak
* Documents acquired by ERIC include many informal unpublished

* materials not available from other sources. ERIC makes every effort
* to obtain 2 best copy available. Nevertheless, items of marginal
* reproduc: .ty are often encountered and this affects the quality

* of the mi. «ciche and hardcopy reproductions ERIC makes available

*
*
*
*

via the ERIC Document Reproduction Service (EDRS). EDRS is not
responsible for the quality of the original document. Reproductions
supplied by EDRS are the best that can be made from the original.
Saco oi dogoiga ogi ido daiciaikak dak dei ick ie ek a oki aici ka ea ak ak kak kak

a

*
*
*
*
*
*
*
*
*


apie a4

Cost Estimates of Providing Drug Treatment Services (1974 Dollars)

COST PER CLIENT YEAR

COST PER CLIENT?

Maintenance Project

MODALITY

Drug-Free Residential $6,254> $1,813
Community

Outpatient Abstinence $1,278¢ $ s92h
Clinic

Day-Care, Drug~ $2,7504 not available
Free Project

Outpatient Methadone $1, 300~$2,100° $ sist
Treatment Center

Residential Methadone $5,135 $1,00cf

Footnotes explaining sources and components for the cost estimates shown in

this table appear in Appendix A-7.

~ 82-



- 105 -

The first type of cost is present, but is virtually negligible either

in comparison to community taxes as a whole, or when divided by total
residents. Regarding the second, while no comprehensive analysis of

the effect of halway house location on neighborhood property values

has been undertaken, previous analyses on an individual house basis,
collected as a part of this research effort, all concluded that no
discernible decline in Property values had occurred, Regarding costs

of new crimes committed by clients of halfway houses, the very limited data
that have been collected to data have affirmed that clients of halfway houses
do commit additional crimes, but that the arrest rates for clients of halfway
houses did not exceed that of the general population (of this country) as a whole.

THE BENEFIT SIDE

While the focus of this analysis has been on costs of halfway
houses, any economic analysis is incomplete without at least consider-
ing benefits as well. Accordingly, the benefit side of halfway houses
was considered briefly from an economic perspective,

Benefits were considered from both a macroeconomic (considering
halfway houses as comprising a sub-industry within the corrections
industry) and a microeconomic (on an individual house level) viewpoint.
How different policies and Procedures of houses May serve to generate
or restrict benefits to clients and to society was considered. The
discussion of benefits concluded by considering how implementation of
the Standards of the Corrections Report would affect current policies

and procedures, and therefore affect total benefits to clients and
society:

(1) Halfway houses would be included as part of a state
and/or local long range master plan. Individual houses
would conform to state and local standards. Other state
and local correctional activities would also be included
in the plan, so as to optimize the allocation of cor-
rectional resources among all correctional activities.

(2) The role of halfway houses as a direct sentencing alter-
native would be expanded. This would result in a greater
Percentage of clients assignec directly to houses by the
courts and, in conjunction with the Report theme of min-
imum penetration, result in a wider mix of clients in
terms of age, type of offense, and number of previous
convictions.

(3) The Production-distribution role of houses would be
lessened, by emphasizing referral of clients to services
Provided by community resources rather than Provision of
those services in-house, and by both increasing the number
of clients sentenced directly by the courts and restricting
the power of administrators of houses to turn down pros—
pective clients referred by other correctional activities.

137


An25

*this budget includes only those costs of a drug diversion activity
which are borne by the criminal justice system. Excluded are the costs of
services typically borne outside the criminal justice system, such as drug
treatment. These services to which clients are referred are considered as
external costs, Also excluded from the above budget are opportunity costs
of diversion, including the individual client's loss of the right to a
speedy t~‘al and any potential risk to society of increased crime committed
by diversion clients.

bone average cost per year is derived by dividing the total
criminal justice expenditure by 250, the number of “client slots" available
in the sample drug diversion activity. The "design capacity" and the
“actual total clients served" of drug diversion activities are assumed to
be identical, based on statistics for operational TASC activities. (For
DOL~type diversion, actual total clients served and design capacity are
estimated at different levels, based on statistics for operational activ—
ities.) In this sample drug diversion activity, the typical client tenure
is six months, Thus the total number of clients (500) served during the
typical year is estimated at twice the number of client slots.

"Successful termination" is defined as meeting the court require-
ments for successful participation in drug diversion and treatment, with
the result that charges against a client are dropped (or at least the
penalty is reduced).


TABLE OF CONTENTS

PREFACE «6 ee ee eet ee ee te ee ee eh ee

INTRODUCTION «© ee ee eee ee ee ee ee ee ee

COSTS INCURRED BY HALFWAY HOUSES .. 1... eee eee eevee

CRIMINAL JUSTICE SYSTEM COSTS... 4. ee ee evn

OTHER CQSTS 2. we we ee te ee eh ee he ee

BENEFITS FROM HALFWAY HOUSES . «1. ee ee ee eee eee

DIRECTIONS FOR FURTHER RESEARCH . «se ete ev ee eevee

APPENDIX

3,

HALFWAY HOUSES IN THE STANDARDS AND GOALS
PROJECT SAMPLE «6 es ee ee te et ee ee es

LIST OF FIGURES

Sample Budget for a House Providing Basic
In-House Services Plus Community Resource
Referral (1974 Dollars) 1... ee eee ee eevee

Annual and Daily Criminal Justice System

Cost Estimates (Per Client, in 1974

Dollars) for Halfway Houses Providing

Different Types of Services... . 6 eee ec ee ee

Estimated External Costs in 1974 Dollars for

the Major Services to Which Halfway House
Clients May Be Referred... ee we eu wee wees

ili

12
15

16

18

10

13


_Table 15

Cost Estimates of Providing Treatment Services to Alcoholics

(1974 Dollars)

‘Average Length

TREATMENT Cost Per Client Cost Per Client
SITE Day of Stay Stay
General tiospital SL71.55 -4 days $589.14
e| Specialized Alcohol-
gj ism Uospital 57.70 4 days 230. 84
3} other specialized
3 Hospital 97.39 4.9 days 471.56
Fi
8| Wospital affiliated
SY Medical Emergency 78.55 3.8 days 149.15
| Care Conter
a
§] Nosaital Affiliated
§] Non-Nedical Emer- 16.39 3.1 days 53.01
Mm! gency Care Center
General ilospital 87.38 10.4 days 766.24
g| Specialized Alcohol-
S| ism Hospital 33.78 8.0 days 270.21
| Other Specialized
Fa Hospital 93.66 9.4 days 923.98
3
is €} ciospital Affiliated
fai") Inpatient Care Under 117.00 6.2 days 1,173.71
ig Medical Supervision
Es
fe Partial Hospitaliza~
FI P cion 74.15 16.8 days 1,274.21
a] Secovery Home 12.66 56 days 687.02
Fy
x} Other 24: on~ 4
S| Medical Residential 21.08 29.8 days 735.17
B center
3
“PSl Specialized Alcohol
ism Hospital 26.74 30.3 days 792.99
Hospital-Based Out-
E| patient Clinic 20.07 13 visits 260.91
fe)
vy} Family or Neighbor-
§| hood Alcoholism 15.86 11.7 visits 219.97
GZ] center
F)
a Community Mental
ilealth Center 32.22 3.3 visits 300.87

Source: Booz Ailen and Hamilton, "Cost Study of Model Benefit Package for Alcoholism
Tre at Services," prepared for the National Institute on Alcohol Abuse and

Ales*:

- 83 -

11ié

idem and the National Council on Alcoholism, 1974.



TWO ROLES FOR HALFWAY HOUSES

The Corrections Report, in continually emphasizing the "least
drastic means" policy for treating offenders, specifically identifies
halfway houses as one of the sentencing alternatives which should be
available within the criminal justice system. Standard 16.8, entitled
Sentencing Alternatives, states:

By 1975 each State should enact the sentencing
legislation proposed in Chapter 5, Sentencing, re-
flecting the following major provisions:

1. All sentences should be determined by the
court rather than by a jury.

2. The court should be authorized to utilize a
variety of sentencing alternatives including:

a- Unconditional release.

b. Conditional release.

c. A fine payable in installments with a
civil remedy for nonpayment.

d. Release under supervision in the
community.

e. Sentence to a halfway house or other
residential facility located in the community.

f£. Sentence to partial confinement with
liberty to work or participate in training or
education during all but leisure time.

g. Imposition of a maximum sentence of
total confinement less than that established by
the legislature for the offense.

Standard 5.2, Sentencing the Nondangerous Offender, reinforces
the previous Standard:

State penal code revisions should include a provision
that the maximum sentence for any offender not speci-
fically. found to represent a substantial danger to others
should not exceed 5 years for felonies other than murder.
No minimum sentence should be authorized by the legislature.

The sentencing court should be authorized to impose
a maximum sentence less than that provided by statute.

Criteria should be established for sentencing offenders
Such criteria should include:

1. A requirement that the least drastic sentencing
alternative be imposed that is consistent. with public
safety. The court should impose the first of the following
alternatives that will reasonably protect the public
safety.

bcorrections >» Pp. 569.


- 62-

of this type are presented in Table 8, page 63. The personnel of the
house consist of a director, an assistant director/supervisor whose
duties include both administrative and supervisory functions and
possibly some counseling as well; a full-time counselor providing
both vocational and group counseling services; a night counselor and
a part-time counselor providing strictly supervisory services; and

2 secretary/clerk and cook/housekeeper. All personnel with the
exception of the weekend counselor are full-time and salaried.

Wages and salaries account for the major portion of total operating
costs for both ranges, but especially for the low average estimates.
The director and assistant director positions alone account for 21.8
percent of the total costs for the average high estimates and 26.6
percent for the low.

The two primary components of non-personnel costs are the
rent or rental equivalent ad food cost categories, together account-
ing for over half of total non-personnel costs. The high average daily
cost estimate per client is $20.13; the low average estimate, $12.60--
a difference of $7.53 per client per day. Salaries are 20 <7 30
percer.t lower for the low average estimates than for the hi, , but
the most significant relative differences occur in rent/rental equiva-
lent costs, supply costs and food costs.

As discussed ina previous section dealing with cost varia-
tion attributable to'.economies of scale and factor indivisibilities,
pages 56-58, there are two ranges of operation (in terms of number
of clients served) over which factor indivisibilities result in de-
creasing average operating costs, 12 to 18 and 22 to 28. A capacity
of 18 was selected for the sample budget, because at that level
economies of scale along the lower range were being realized, and
more houses operate at or near a client level of 18 than at 28.

Along the lower range, it is assumed that all costs are fixed
except for supplies and food costs which vary with the number of
clients served. Therefore, at operating levels of less than 18
clients average costs increase with the highest average costs occurring
for a client load of 12. For client loads of 20 or over, more per-
sonnel will have to be added, hence total costs increase along with
food and supply costs. In addition, travel and transportation costs
and communications costs would increase, as they are both partially
(3/4) fixed and partially (1/4) variable with total salary costs.

For houses serving over 20 clients therefore, total operating costs
will be significantly higher. Due to the factor indivisibilities
present along the 22 to 28 client load discussed earlier, average
daily operating costs will likely be higuer for houses serving 22

to 25 clients than for a house serving 18, but at a client load of 28,
average daily opexation costs should not be significantly different.

exclusively work releasees provide additional services as well. Cost
estimates fox tiwuces providing additioial services are contained in
subsequent sample budgets.

95



-57 -

space) per client as others. For the sample, faciiity costs for
houses serving 30 or more clients have higher average facility

costs than those serving 15 or less. This does not indicate that
there are diseconomies of scale present; analysis of the sample
indicates the presence of neither economies or diseconomies of

scale in facility costs. For personnel costs, likewise, the analysis
indicates the presence of neither economies or diseconomies of scale.
Although none of the larger houses had more than one director or
assistant director, they had larger and higher paid staffs than

the smaller houses. The weighted average personnel cost for houses
serving 20 or more clients is $9.24 per day as compared to $10.50
per day. for the houses serving 15 or less.

For non-personnel costs, the situation is the same. While
it might seem that there could be economies in the purchase of food
and other supplies by agencies operating multiple houses, analysis
of expenditures of houses in the sample did not establish the pres-
ence of any.

The fact that no economies of scale were identified in the
‘sample analysis does not preclude their rresence in either person-
nel costs, facility’ costs, or (other) nor-personne. costs. What
is needed, in order to determin: whether economies of scale exist,
is a cost study of houses offering identical services but serving
varying numbers of clients.

The analysis does, however, indicate that factor indivisi-
bilities may cause differences in average annual operating costs
along certain ranges of number of clients served. Sample data
indicates that, in addition to facility costs and personnel costs
associated with the director and assistant director positions
which are fixed in the short run, regardless of number of clients
served, personnel costs associated with the remaining staff posi-
tions and certain components of non-personnel costs are variable
only for large changes in number of clients served. Houses serving
anywhere from 10 to 20 clients have approximately the same number
of staff. Houses serviry 20 to 30 clients have more staff than
the 10 to 20 group, b uong the former, che number of staff does
not vary significantly. Stated differently, a house serving
clients is not likely t: have more staff than a house serving 12
clients; nor is a hous- serving 28 clients more likely to have
more staff than a house serving 22. A house gerving more than 20
clients, would, however, have a larger staff than a house serving
less than 20. Along cach of the two rarges in number of clients
served, .herefore, 12 to 18 and 22 tu 28, the number of personnel
employed is, for the most part, invariabie.

1
The smaller houses without salaried directors or assistant
directors were excluded from the ar lysis of economies of scale.

990


-13-

Figure 3

Estimated External Costs in 1974 Dollars for the
Major Services to Which Halfway House Clients
May Be Referred

Type of Service Average Cost
Education (four-year

public college) $541/client year
‘Vocational Training

(trade/technical school) $900/client year
Drug Treatment $1,278/client year - $6,254/client year
Detoxification $15.84/client day - $171.55/client day
Mental Health Treatment $30.82/client day - $72.80/client day

Two other types of external costs which exist but for which no
estimates were derived are external costs of leisure services
provided to clients and external costs associated with volunteers.

It is also important to consider two other, largely unquanti-
fiable types of costs of halfway houses: opportunity costs incurred
by clients and costs to the community in which a house is located.
Two opportunity costs to clients are particularly important: those
associated with employment opportunities and leisure opportunities
foregone as a result of halfway house limitations on client mobility.
Tradeoffs exist between these two opportunity costs and criminal
justice system costs, such as facility costs (which are a function
of location, among other variables). The better a neighborhood is,
in terms of proximity to employment and leisure resources, the lower
these opportunity costs are for halfway house clients.

There are three types of alleged costs to the community in
which a house is located:

(1) The tax loss associated with property operated by
non-profit or governmental agencies.

(2) A decline in property values in the neighborhood
in which a house is located, and

(3) The cost of new crimes committed by clients of a house.

17


Figure 2C

Graphical Distribution of Average Annual
Facility Costs for State-0; erated Houses

Number 11
of 10
Houses

SCHNURUANAYW

(3)
> (2. a
“T TN —- q
0.

$200 $400 $600 $800 $1,000 $1,200 $1,400
Average Facility Cost

-27- ’


Table 11

Sample Budget for a House Providing
Comprehensive In-House Services (1974 Dollars)

PERCENT OF PERCENT OF
TOTAL TOTAL
ITEM AVERAGE OPERATING AVERAGE OPERATING
HIGH COSTS LOW costs
PERSONNEL
Wages and Salaries
Director $15,970 9.1% $12,085 10.6%
Assistant Director 12,737 7.2% 9,767 8.6%
Counselors (3) 35,268 20.3% 26,526 23.3%
(vocational, employment,
group and individual)
Psychologist/Evaluator (1/2 time) 7,250 4.3% 5,800 5.1%
Night Counselor 9,441 5.4% 7,100 6.2%
Two Part-Time Counelors 9,152 5.2% 5,120 4.5%
(20 hrs. /week)
Secretary/Bookkeeper 7,646 4.4% 6,082 5.4%
Cook/Housekeeper 6,990 4.0% 5,500 4.8%
Total Wages and Salaries (104,814) (59.6%) (77,980) (68.5%)
Fringe Benefits 15,722 8.9% 11,697 10.3%
TOTAL PERSONNEL COSTS ($120,536) (68.52) ($89,677) (78.8%)
NON-PERSONNEL
Professional Fees and $ 4,042 2.3% $ 1,016 0.9%
Contract Services
Equipment 1,240 1.0% 558 0.5%
Travel and Transportation 4,055 2.3% 1,890 1.7%
Rent/Rental Equivalent 12,292 7.0% 4,704 4.1%
Maintenance 2,461 1.4% 1,304 1.1%
Utilities 4,288 2.4% 1,834 1.6%
Communications 2,845 1.6% 1,613 1.4%
Supplies 4,087 2.3% 967 0.9%
Food 18,002 10.2% 9,592 8.4%
Other 2,057 1.2% 698 0.6%
TOTAL NON-PERSONNEL COSTS ($ 55,369) (31.5%) ($ 24,176) (21.2%)
TOTAL OPERATING COSTS $175,905 (100%) $113,853 (100%)
AVERAGE COST
Capacity (18)
Average Daily Cost Per Client $ 26.77 $ 17.33

- 69 -


- 48 -

sense, but also to differences among states, cities (small vs. large)
and sections of cities (inner city vs. suburbs).

Consider first variation in facility prices. Typically, on
regional and state levels, facility prices are higher in states along
both coasts than in states.in the interior. Adjusted median values
of owner-occupied houses, by region and state, which are presented
in Table 6, pages 49 and 50, demonstrate the price differential.
Values for the Northeast, Middle Atlantic and Pacific regions, re-
spectively, $29,010, $26,490 and $30,700, exceed values for the re-
maining regions. On an individual state level (including the District
of Columbia), the differential is more pronounced; of the states with
the ten highest values, eight are in the three regions listed above
and one of the two remaining is the District of Columbia.

Purchase prices and rental equivalents for the houses in the
sample, contained in Table 2, pages 17-22, also substantiate the
price differential. Both purchase prices and rental equivalents
are higher (on the average) for houses located in coastal regions.

A second significant price diffiisential for facility costs
occurs between large cities vs. small cities. For like areas
(similar house size, neighborhood amenities, and so forth),
facility prices are generally higher in large cities. Larger
cities also have the highest average facility prices (for all
facilities within their boundaries). But the most significant
facility differential occurs within individual cities, between
inner cities (or other transitory neighborhoods) vs. suburbs (or
other stable neighborhoods}. The largest price differentials
are found on this level, and it is here that locational (and
therefore, facility expenditure) decisions must be made. Mar-
ket values for like facilities in different areas of a city
often differ by more than 100 percent in larger cities. In
smaller cities, the difference between neighborhoods as re-
flected in market values of similar facilities is smaller. In
cities with populations under 50,000 there is typically little
variation in facility prices.

Wage and salary variation occurs primarily on a regional
and state level. Other than small differences for cook/house~
keeping positions, little wage and salary variation occurs among
different neighborhoods of the same city.

leichard Muth substantiates this in Ci..es and Housing
(University of Chicago Press). Additional sources for this part
of the analysis were letters and telephone discussions with the
directors or assistant directors of several of the houses in
the sample, and interviews with two real estate agents in
Washington, D.C.

8i


CHAPTER IL
CRIMINAL JUSTICE SYSTEM EXPENDITURES FOR HALFWAY HOUSES

This chapter contains an analysis of the criminal justice
costs incurred by halfway houses in providing a mix of services to
clients. The first section deals with variation in costs among exist-
ing houses. A sample of halfway houses is presented from which the
discussion is drawn.

The second section contains an analysis of the major sources
of variation among houses in the sample.

Four sets of direct criminal justice expenditures estimates
for houses offering alternative sets of in-house services are provided
in the third section.

The final section analyzes additional criminal justice system
costs. na

For the sake of uniformity, when average costs are presented
throughout this report, they are based on the assumption that houses
are operating at capacity, that is, at an occupancy level of 100 per-
cent. Operation at less than capacity raises average costs accord-
ingly, although if fewer clients are served, food and supply costs
will be lower. Many houses apparently operate at less than
capacity.1

recent study of halfway houses and other community-based cor-
rectional facilities in Minnesota by the Evaluation Unit of the Gover-
nor's Commission on Crime Prevention and Control found that post start-
up occupancy rates for houses surveyed ranged from only 37.9 percent to
58.6 percent. The low occupancy rates were attributed to three major
factors: (1) their very nature, community corrections projects are
not affiliated with the criminal justice system and must independently
recruit clientele, (b) some projects do not serve a large enough popu-
lation to keep the project filled, and (3) the occupancy rate is depen-
dent almost entirely upon the policies of the Minnesota Department of
Corrections. "Residential Community Corrections Programs--Summary
and Recommendations--A Preliminary Evaluation" prepared by Evaluation
Unit, Minnesota Governor's Commission of Crime Prevention and Con-
trol, (St. Paul: April, 1975). (Xeroxed.)

-9-

42


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54


-91-

clients of a particular house over a matter of years, and if the
house continued to operate, the reluctance of families to live in
or move into the neighborhood would be reflected in lower market

values.

Members of the immediate community may incur costs as a
result of crimes actually committed by clients of the house as well
as fear that crimes may be committed. it has not been demonstrated, how-
ever, that clients of halfway houses commit (or are likely to commit)
more crimes than the general population at large. Costs may be in~
curred by members of the community as a result of crimes committed by
clients of a house, but no proof exists that such costs exceed the
costs of crimes committed (on the average): by the non-client popula-
tion of the community. As with the property value decline issue, no
formal research efforts have been completed, and the studies for indi-
vidual houses that have been undertaken have for the most part con-
cluded that no significant community crime costs are imposed.

tine Crofton House staff also studied the greater community
cost of crime allegation. They compared all offenses reported within
the beat in which the house was located to all offenses reported in
the city from two years before the house opened to one and one half
years afterward. The results proved inconclusive. Beat offenses as
a percentage of total offenses amounted to 4.0% in 1962, 4.5% in
1963, 4.5% in 1964, the year the house opened (October), 4.3% in
1965, and 3.9% for the first half of 1966.

The North Portland Citizen's Committee study report also
dealt with the community safety issue. The Committee employed a
three fold approach: (1) interviewing individuals residing in other
communities in which a halfway house was located, (2) contacting
police departments in those same communities, and (3) studying
available crime statistics for those communities. The study con-

cluded:
.» + . it does not seem that work release enrol-

lees pose a significant threat to the neighorhood
around a center. Only a very small portion of
enrollees become involved in criminal activi-
ties while in the centers. Most of what crimes
are committed are minor in nature.

The State of Oregon conducted a six year (1966-1972) study
of its work release facilities and determined that only .6 percent
(18) of the total enrollees in work release over that period ccom-
mitted additional crimes.

Lastly, data regarding crimes committed during residence
was collected for the following houses in the sample: Dismas House
in St. Louis, Opportunity Center in Waco, Texas and McMillan House
in Cincinnati. For Dis. .s House, of 83 participants in the halfway
house program over the course of 18 months, only one was convicted
(or arrested) of a new offense during residence there. For the

12

eo


Figure 2A

Ranges of Average Annual Facility Costs for Private and State-Operated Houses

Ranges of Average Number of Number of
Facility Costs Private Houses State-Operated Houses
$0 - $200 4 2
$201 - $400 12 3
$401 - $600 6 0
$601 - $800 4 2
>? $800 t) 1
Figure 2B

Graphical Distribution of Average Annual
Facility Costs for Private Houses

(12)
Number 10 -4-
of 9

Houses 8
7
6 (6)
5 -4-
4 -4- (4) (4)
3 de
2 -4-
1 -4-
0

$200 $400 $600 $800 $1,000 $1,200 $1,400
Average Facility Cost

- 26 -

59


A-4

Criminal justice system costs may be further subdivided in the
following way:

° Public expenditures--direct outlays for, or the imputed
value of, goods and services provided or financed by
governmental agencies or units.1

° Private expenditures~-direct outlays for, or the imputed
value of, goods and services provided or financed by non-
governmental agencies or units.

EXTERNAL COSTS

External costs include direct outlays for, or the imputed value
of, goods and services provided by all agencies, organizations or
individuals external to the criminal justice system. 2 External costs,
like the previous classification, may be further subdivided into:

e Public Expenditures--direct outlays for, or the imputed value
of, goods and services provided or financed by governmental
agencies or units.3 For example, these would include:
welfare, health, and mental health departments of facilities;
employment and training programs, public schools and depart-
ment’ of education.

° Private Expenditures--direct outlays for, or the imputed value
of, goods and services provided or financed by non-governmental
agencies or units.? For example, these might include: private
employment agencies or day care centers, private mental health
practitioners (not paid under government contract).

lphere will be cases in which goods or services are financed through
governmental as well as private sources. The ratio of such financing would
determine whether they were classified as "private" or "public" expenditures.

2The "criminal justice system" is defined to include the agencies or
individuals listed under "criminal justice system costs" above.

3there will be cases in which goods or services are financed through
governmental as well as private sources. The ratio of such financing would
determine whether they were classified as "private" or "public" expenditures.


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- 51 -

Table 7, pages 52 and 53, presents different salary ranges
for particular positions for states in which houses in the sample
are located. The salary ranges were obtained from a report pub-
lished by the U.S. Civil Service Comissicn entitled State ¢alary
Survey, August 1, 1973. Positions included in Table 7 represent
positions closest in function to house staff positions; for example,
director of the probation department and the senior Probation
officer closely approximate the positions af house director and
assistant director.

Although tie probation and parole positions' salary ranges
are higher than the house director's ($10, 000-$19,610) and assistant
director's ($9, 000-$16,490) ranges in the sample, they do serve to
illustrate that variation in salary ranges is extensive among the
different states.

Salaries at the lower limit of the saiar- .-ges for the
director and senior officer Position range from +46 to $26,898
and $8,232 to $16,682, respectively, a range o. ..- +00 percent
over the lower limit for both. The differentiai: :.:.-veen lower

limits are smaller for the lower salaried counselor and social
worker positions, but still over 40 percent for each. The varia-
tion in staff salaries (for similar positions) included in the
sample is not surprising when compared to the salary range varia-
tion contained is Table 7.

Prices of other factors vary by region and state as well,
although the variation is generally less. Food cost data con-
tained in "Urban Family Budgets and Geographical Comparable In-
dexes" determined by the Bureau ef Labor Statistics indicates
that food prices are 9 percent higher in metropolitan areas as
compared with non-metropolitan areas. Among metropolitan areas
contained in the indexes, the price differential was under 10
percent.l The regional price differential, on the other hand,
is larger for utilities. The price of natural gas, for example,
in Kansas City was less than half the price in Washington, D.C.
Data by geographical region and/or states and cities was not
available fox other factors.

dihe index referred to is the Urban Intermediate Budget for
4 persons and a retired couple--total cost, 1967 to 1972, for se-
lected metropolitan areas (U.S. Bureau of Labor Statistics, 1972).
Costs were adjusted for inflation using the Bureau's Consumer
Price Index for food.

2 average price of residential seating gas, for selected
metropolitan areas: 1965 to 1974, "Retail Prices and Indexes of
Fuels and Utilities," Bureau of Labor Statistics.

84


- 61 -

Professional fees and contfact services includes retainer
fees or contracted e..penditures for legal, accounting, and medical
services,

Travel and transportation includes both local staff and
client travel allowances and also allowances for staff long distance
travel for training and seminars.

Rent and rental equivalents consist of high and low average
facility costs based on the estimates contained in Table 2,
pages 17~22.

Maintenance includes the labor and supply costs of maintaining
the facility in adequate operating condition. Major repairs and
renovations are not included.

Utilities include electricity, natural gas, and other
fuel costs.

Communications includes telephone and postage costs.

Supplies includes staff office supplies and operating
supplies consumed by clients.

Food costs include groceries and commodities used in pre-
paving food.

Other costs include licensing, special taxes, and insurance
costs.

The sample budgets are for a house with a capacity of 18
clients. This capacity was selected because it represents the
smaller of the two most efficient capacity levels, as discussed in
the previous section dealing with Economies of Scale and Labor
Indivisibilities, pages 56-58.

Average costs are based on an op.rating level at capacity
(18). Each of the following sections discusses, in addition, the
cost implications of operating at a client level of less than, or

greater than, 18.

Cost Estimates for a House Providir wt In-House Services

The first sample budget presented is for a house previding
only basic in-house services. Basic services are defined to include
provision of housing and food services, group counseling, and employ-
ment assistance. These basic services are typical of those houses
which focus completely on employment, such as those exclusively for
work releasees. Estimates of the basic costs of operating a house

lit is recognized that some houses serving primarily or

94


-~16-

penalizing the less well-funded houses or foundations on a cost ana-
lysis level). Therefore, there are two alternative approaches to
ensuring that the cost analysis remains unbiased: (1) to deter-
mine rental equivalents for those houses which own their facilities
and include that amount in the operating costs for each house or

(2) to first determine rent equivalents and analyze facility cost
variation, and then conduct a separate analysis of remaining operat-
ing costs. The second approach is the one employed in this analysis
of variation among different criminal justice system expenditures.
In subsequent sample budgets presenting cost estimates for houses
offering various combinations of services, however, both the ren-
tal payments and rental equivalents are used to compute facility
costs.

Facility Cost Variation Among Houses in the Sample

Table 2, pages » presents both descriptive and cost
characteristics of the houses included in the sample. The first
group of columns contains descriptive data: types of facilities,
age, capacity, and useable square footage in floor space. The se-
cond set of columns contains data in current dollars. That is,
for facilities which have been purchased, the purchase price and
amount of renovations are listed in the years expended; annual rent
is included for the halfway house activities which rent. In the
third set of columns, annual rent and rental equivalents have been
calculated by converting purchase price and renovation expenditures
into calendar 1974 dollars, employing the index of home ownership
costs (compiled by the Bureau of Labor Statistics) and applying an
annual rate of 12 percent which includes allowances for both annual
capital cost and a normal rate of return. Footnote 2 of Table 2
describes the rationale for applying the 12 percent rate; a more
detailed description of the rental estimation process is contained
in Appendix A~4. Facility costs in this report are defined to be
the rental costs or rental equivalents.l1 Maintenance costs are a
separate category and are included in operating costs.

As Table 2 illustrates, there is considerable variation among
the houses in the sample in both descriptive and facility cost charac-
teristics. The facilities are for the most part rented (58 percent)
and are mostly former family residences; the remainder include floors
of YWCA buildings, a former convent, and a former fraternity house.

111 of the halfway house facilities in the sample have either
been purchased or rented; none of the halfway house programs built
their own facilities. Architectural guidelines for construction of
halfway house facilities have been developed by the National Clear-
inghouse for Criminal Justice Planning and Architecture at the
University of Illinois, Urbana.

49


- 103 -

TYPE(S) OF
SERVICES PROVIDED HIGH AVERAGE LOW AVERAGE MEAN
BY HOUSE Annual Daily Annual Daily Annual Daily

Basic In-House

Services

$7,347 $20.13 $4,598 $12.60 $5,973 $16.36

Basic In-House
Services and

Community
Resource
Referral

$8,123 $22.26 $5,174 $14.18 $6,649 $18.22

Basic Services
and Community
Resource Referral

Utilizing
Volunteers

$7,167 $19.63 $4,599 $12.60 $5,883 $16.12

Comprehensive In-
House Services $9,773 $26.77 $6,325 $17.33 $8,049 $22.05

These estimates compared with a $7,041 per inmate year ($19.29
per inmate day) jail cost estimate for calendar 1974 prepared for
another Standards and Goals Project report on institutional-based pro-
grams. The average (mean) estimates for houses Providing the first
three combinations of services lie below that figure; the estimate for
a house providing comprehensive in-house services is substantially

higher.

Th ze are three other types of criminal justice system costs:

Indirect costs. These were discussed, but the Project

did not attempt to estimate them.

Costs of apprehending and/or prosecuting clients who
abscond or commit new crimes during residence. Average
cost of police patrol time involved in apprehension,
including departmental indirect costs, was estimated to
be $9.44 per hour. Prosecution costs were estimated to
be $21.58 per hour for a district magistrate, $16.38 per
hour for a prosecutor, and $19.32 per hour for a public
defender.

Costs of other criminal justice activities providin,
services to clients of halfway houses. The average
cost per client year of one such Program, TASC, was
estimated to be $1,331 ($3.65 per client day) for low
budget activities and $1,643 ($4.50 per client day) for
higher budgeted activities. Other such costs were
briefly discussed.

135


- 87 -

small, Many houses screen out clients with alcohol and drug problems
as part of the initial pre~acceptance background research.

Consider, however, a house serving 18 clients. Assume that
two of the clients are referred out for educational and vocational
training, and that two more are referred out for each of the differ-
ent types of treatment services costed out previously (for drug and
alcohol abuse and mental illness). A lower bound on the total ex-
ternal costs of that house (assuming the costs are absorbed by the
institutions providing the services or by non-criminal justice system
agencies) would be $9,913, distributed as shown in Table 17, page 88.
Client problems requiring more specified treatment or necessitating
residential care would raise the estimate. If the number of clients
being referred out were doubled, external costs associated with those
referrals would be just under $20,000.

Since many individuals entering the criminal justice system
are undereducated and have drug/alcohol/mental problems, the potential
for outside referrals exists.1 Total external costs of a particular
house ultimately depend upon that house's screening and referral
policies.

Opportunity Costs Incurred by Clients of Halfway Houses

Clients of halfway houses who have been referred (by federal
or state parole, or federal, state or local probation authorities)
incur opportunity costs as a result of their increased supervision
and restricted mobility. Employment opportunities may be lessened
as a result of restricted locational choices; clients of houses
located in large cities may be forced, by the time constraints
imposed by house authorities and by the limitations of public
transportation, to work in locations relatively near the halfway
house. This lessening of employment opportunities could affect
the earnings of a client, depending on the pattern of employment
opportunities within the particular city in which the house is
located. If, for example, a house is located in the inner city
(as many houses are) and most job opportunities for which the client
is qualified are located in the suburbs (to which public transporta-
tion is often not available), then the transition from probationer
or parolee to resident of a halfway house restricts the individual's
employment opportunities and may force him (her) to work in a lower
wage position. A measure of the size of this opportunity cost is
the loss in earnings resulting from the restricted opportunities,

Such a measure, however, ignores another part of the
opportunity cost, the real, but not easily quantifiable,

lyeller and Alper, Halfway Houses.

119


- 96 -

result in a better allocation of local resources among houses (and
other local correctional activities) and a more optimal distribution
of services. Planning in conjunction with other criminal justice
departments, agencies or activities can, in addition, better ensure
that halfway houses operate at or near capacity, thereby better
utilizing their resources.

As most houses are dependent primarily on federal and state
financial resources for continued operation, and as financial re-
sources are limited, houses must compete with one another and with
other correctional activities for funding resources. To the extent
that funds are awarded on the basis of the "success" or visible
short run benefits of houses, the following policies, which may be
restrictive (in terms of societal benefits) are often adopted:

(a) Screening policies which accept only clients who
are most likely to succeed--that is, young, inex-
perienced (few or no previous convictions) and not
dangerous (no previous assault convictions)--are
used. It is, however, offenders with several previous
convictions who possess the greater crime potential;
that is, they are most likely to commit additional or
more serious crimes in the future. Accordingly, it is
possible that providing services in a halfway house
environment to offenders with histories of repeated
offenses could effect a greater reduction in crime
than providing the same services to younger, inex-
perienced offenders. Greater societal benefits could
be realized by a loosening of screening policies, and
thereby providing services to a client base possessing
a broader range of criminal backgrounds.

(b) Employment counseling and referral is emphasized more
than education or vocational training. Immediate em-
ployment offers measurable benefits (earnings, taxes,
family support, room and board payments) in the short
run, while education and vocational training yield
primarily long run benefits. Long run societal

Teor example, if providing services in a halfway house
setting to each offender with multiple prior convictions effected
a reduction in future crimes committed of 3 per offender, while
providing the same services to offenders with only a few (or no)
prior convictions resulted in 2.5 fewer crimes (of the same type)
for each, society would be better off providing more services to
more experienced offenders. Or if providing services to both types
of clients effected identical reductions in future crimes committed
for each, but the crimes committed by more experienced offenders
were typically more violent and socially costly than those com-
mitted by less experienced offenders, then providing more services
to more experienced offenders would benefit society as well.

123


- 101 - ’

e Other operating costs exhibited significant variation
as well. Average daily operating costs, excluding
facility costs, ranged from $4.77 to $27.58. Median vce
daily operating cost of houses in the sample was
$13.33; mean daily operating cost was $13.55.

There were four principal sources of cost variation among
houses in the sample. The first was differences in services provided.
All the houses in the sample provided shelter, supervision (including
custodial), and group counseling services. Most houses provided food
services; others, however, contracted out for meals, issued meal vouch-
ers, or had clients provide for themselves. Most houses provided |
financial management, and basic individual, and employment counseling as
well. With regard to other services, including education, vocational
training, and individual psychological training-~some houses provided
them in-house; other houses referred clients out to other agencies or
institutions; and many did neither.

Differences in services provided affected personnel costs the
most. On the average, personnel costs accounted for well over 50 per-
cent of total operating costs. Average daily personnel costs ranged
from $2.27 per client to $21.31 per client. Median average daily per-
sonnel cost per client was $8.67; the mean was $9.56.

The second source of cost variation was inter-regional price
variation. For houses in the sample, salaries for the director
Position ranged from $10,000 to $19,610. Salaries for the assistant
director position ranged from $9,000 to $16,490. Salaries for full-
time counselor/job developer/community resource developer/correctional
officer positions ranged from $5,573 to $15,509. - Such wide variation
was consistent with salary variation for similar positions (speci-
fically, probation officers), documented in State Salary Survey,
August _1, 1973, published by the U.S. Civil Service Commission.

Facility price variation occurred on two levels. Facility
prices were generally higher in states in the coastal regions
(Northeast, Middle Atlantic, and Pacific regions) than in states
located in the interior. More importantly, within individual cities
facility prices were generally significantly higher in stable neighbor-
hoods (for example, suburbs) than in unstable (for example, inner
city) neighborhoods.

Other price factors varied as well. Utility prices varied
by as much as 50 percent among different states. Food prices were
found to be approximately nine percent higher in metropolitan areas
than in non-metropolitan areas; among metropolitan areas, the food
price differentials amounted to ten percent. |

The third source of cost variation was availability of
resources. Resources were of thrée types:

133


A-17

Commerce, Social and Economic Statistics Administration,
Bureau of the Census).

The index of ownership costs was selected because
it includes, by definition, home purchase, mortgage
interest, taxes, insurance, and maintenance repairs.

The following formula was employed to adjust purchase
price and expenditures on renovations upward:

Value of Facility in _ + Ya.
1974 Dollars Pe x, where

p = purchase price
r = amount of renovation, and

a, and a, are the adjustment factors for purchase
price and renovation expenditures, equal to

Va - Vp
ap an +1
Va - V,
a= ae 1, where
Vv.
r
V, = index value for 1974
Yb = index value for year of purchase
V, = index value for year of renovation

expenditure.

If purchase and renovation occurred in the same year,
then a and a, are identical, and the formula reduces

to:
a7 Np
(p + r)a, or complete, (p + r) V, +1).
P

The adjustment factors for the years in which facili-
ties included in the sample were purchased are:

1964 1.7856
1965 1.7605
1967 1.6320
1968 1.5440
1969 1.4069
1970 1.2700
1971 1.2206
1972 1.649

1973 1.125

1974 * 1.000,

157


APPENDIX A-6

SOURCES AND COMPONENTS FOR ESTIMATES OF
EXTERNAL COSTS ASSOCIATED WITH DRUG
DIVERSION REFERRALS (Table 14)

acosts per client year and costs per client not necessarily com-
parable because they come from two sources, the first from SAODAP, the
second from Booz Allen. See Source Note below. In the second source,
1973 dollars are inflated to 1974 dollars using the GNP implicit defla-
tions for purchase of all goods and services by state and local governments

bprug-Free Residential Communities are modeled after Synanon,
Daytop, and Phoenix House, therapeutic communities (TC) which are com-
munal, residential, and drug-free, They attempt behavior modification
in a strict and highly structured atmosphere. The typical activity has
a capacity of 30 clients. Staff includes an administrator, secretary,
one in-house resident counselor and eight other counselors; personnel -
accounts for 63 percent of the total budget. Other budget items include
psychiatric counsultants (3 hours/week @ $40/hour), 3 percent; travel
for staff and clients, 2 percent; equipment, 4 percent; medical intake
exams @ $75/exam, 2 percent; utilities and communications, 3 percent;
rent and renovation, 7 percent; food ($2.20/client/day), 13 percent;
training and lab testing services, 3 percent.

°The typical outpatient abstinence clinic is designed to treat
200 patients and is open seven days a week, eight hours a day, with an
average of three visits per week per client. No medication will be dis-
pensed in this unit. Because polydrug abusers attend the clinic, pro-
fessional counseling is especially necessary. Staff includes an
administrator, secretary, clerk typist, half-time psychiatrist, a
clinical psychologist, psychiatric social worker, vocational rehabilita~
tion specialist and six counselors. Personnel costs account for 64 per-
cent of the total budget. Other budget items include medical consultants,
2 percent; staff and client travel, 2 percent; equipment, 2 percent;
intake medical exams @ $75/exam, 10 percent; utilities and communications,
l percent; rent, 4 percent; supplies, 3 percent; training, 1 percent;
and lab services ($2.50 per urine), 13 percent.

Ihe typical day-care drug-free projects treat’ 40 clients and
operate six days and week for i0 hours per day. It is a structured but
non-residential setting geared to redirecting life, emphasising employ-
ment or education for employment. Activities include individual
counseling and encounter group therapy three times 2 week, daily voca-
tional readiness seminars with family therapy and individual vocational
counseling as needed. Each client has a job assignment, for example,

A-21


NATIONAL INSTITUTE OF LAW ENFORCEME. ~
AND CRIMINAL JUSTICE

Gerald M. Caplan, pirector

LAW ENFORCEMENT ASSISTANCE
ADMINISTRATION

Richard W. Velde, administrator

For sale by the Su;uin:andent of Documents, U.S. Government Printing Office
Washington, D.C. 20402- Price 55 cents

‘Stock No. 027-000-00393-1
There is a minimum charge of $1.00 for each mail order

4


A-11

SAMPLE USE

In the initial sections of the text of this repert, cost
statistics based on budgeted or actual expenditures by :ouses in
the sample are used to illustrate the extensive cost variation among
houses. The use of the same statistics as predictors of costs of
other halfway houses is limited to estimates of line items for par-
ticular budget categories. Estimates of the cost effects of dif-
ferences in services provided (expected to *e the major source of
cost variation) are based on specified staffing patterns and scale
considerations, not solely on the cost information for houses in
the sample.

Regarding the estimates of the costs of houses operating
in accordance with the Corrections Standards, the report does not
assume such houses will be distributed like those currently existing
or in the sample. Rather, primarily houses offering only basic
services and community resource management are expected, because of
the guidelines established by the Standards.


Table 13

Costs of Education and Vocational Training (1974 Dollars)

Type of Program Type of Cost per Client Cost per Client
Cost Yeara Daya
Two-Year Community Tuition
College and $287 $1.05
Fees
Four-Year Public Tuition
College and $541 $1.98
Fees
Trade/Technical | Tuition $900 $3.30
School Only
Sources: (1) College Scholarship Services, Student Expenses at Post~

seconda:

Intitutions (Princeton, N.J.:

Examination Board, 1974).
(2) National Association of Trade and Technical Schools,
Estimates are based on the actual

Washington, D.C.

costs of students attending the 43

the Association.

College Entrance

0 member schools of

A@costs are based on an academic year, September through June, and are
therefore based on a time period of nine months or 273 days.

= 80 -

liz



- 39 -

sentenced directly to halfway houses. Services offered to clients
typically vary by house depending upon the types of clients housed.

The Corrections Report specifies in the Standards regarding
development of community-based alternatives that, in addition to
developing timetables and plans for implementing alternatives to
incarceration, the state and local corrections planning authorities
should specify which services are to be provided by the correctional
authority and which services should be obtained from the community.
While not specifying directly the services to be provided by half-
way houses, the Report does state that clients of community-based
corrections should at least have access to the same services offered
by institutions, but that whenever possible, such services should
be provided by community resources rather than by residential
community-based correctional programs.1 The Report states that
these (minimum) services should include:

(1) a comprehensive continuous educational program, and

(2) pre-vocational and vocational training programs to
enhance the offender's marketable skills, which
should be part of a reintegrative continuum including
determination of needs, establishment of program
objectives, vocational training, and assimilation
into the job market.2

Guidelines and Standards for Halfway Houses and Community Treatment

Centers identifies services to be provided by halfway houses (and
community treatment centers) in greater detail:

An agency operating a community treatment
center program will provide the following
services:

a. Shelter

b. Food service

c. Temporary financial assistance

d. Individual counseling

e. Group counseling

£. Vocational counseling

g- Vocational training referral

h. Employment counseling and referral.

The agency, if it does not itself provide,
will see that its clients have ready access to:
a. Medical services, including psychiatric
and dental care
b. Psychological evaluation

loorrections, pp. 237-238.

2Tbid., pp. 368-369.

oi
bo


- 25 -

rental prices are closely tied to the demand and supply conditions
of the rental unit market. In a locality where the rental market
is very tight, the long run cost differential between owning and
renting will be larger.

A subsequent section of this report dealing with the
variation in costs (including facility costs) attributed to
regional differences (among geographical regions, states, cities,
and sections of cities) will include a discussion of facility
cost differentials. (See page 47).

Figures 2A, 2B and 2C, pages 26, 27, illustrate the ranges
and distribution of average facility costs for private houses and
state-operated houses. Whereas the distribution of average faci-
lity costs for private houses is a bell-shaped curve approximating
a normal distribution, the distribution of average facility costs
for state-operated houses is both flat and wide, part of which is
attributable to the small size of the sample. There are two other
reasons for both the higher mean and greater variation. The first
is that state departments of corrections, like other state agencies,
typically must justify operation on an annual budget. This justi-
fication, on a short run rather than a long run basis, usually
calls for renting rather than purchasing facilities, regardless of
whether or not it is less expensive in the long run (the total
period for which a house is Operated) to purchase rather than rent.

costs. Whether transitory neighborhoods are less or more desirable
is a controversial matter. For example, Alper and Keller state
that

+.» [halfway houses] in urban areas are

often located in transitional neighborhoods

where lack of community cohesion and anonym—

ity make public protest less likely. Further-

more, many residents come from similar

neighborhoods, will return to them and

therefore need help in coping with the

condition there prevailing. (p. 117)

On the other hand, in an undated pamphlet entitled "The
Residential Center: Corrections in the Community," (p. 47), the
Bureau of Prisons counters that

Many "halfway houses" have been located
in the most deteriorated facilities and
sometimes this has been defended by
arguing that they should not be in
"better" neighborhoods that are better
than those from which offenders come.
At this time there is no real evidence
that the argument has validity.

1 personal interview with the director and assistant director
of Community Services, D.C. Department of Corrections.

58


~74-

In all cases in which the absconders or individuals who
have committed additional crimes are apprehended and prosecuted,
the costs of the prosecuting are borne by the courts.

Cost estimates for police and court time have been pre-
pared for another Standards and Goals Project report on citation
and summons as alternatives to arrest. The unit cost estimate for
police patrol time involved in apprehension and court appearances,
including departmental indirect costs, is $9.44 per hour for all
cities of 10,000 population and over. Unit cost estimates for re-
sources used in prosecution also include $21.58 per hour for a
district magistrate, $16.38 per hour for a prosecutor, and $19.32
per hour for a public defender. The number of hours, or portions
thereof, which are utilized in apprehension or prosdeution proce-
dures need to be estimated and combined with these unit cost
estimates to arrive at a "total cost" estimate for apprehension
and prosecution. .

If the number of clients who abscond or commit new crimes
is relatively large, the total costs of apprehension and prosecu-
tion may be large as well.

Costs of Other Criminal Justice Activities to Which
Clients are Referred

Clients with particular behavioral problems may be re-
ferred to other activities, both within and outside of the
criminal justice system. If the activity is a criminal justice
system agency, then the cost of serving the client incurred by
that agency, while not a direct cost of the halfway house from
which the client has been referred, is nevertheless a criminal
justice system cost and is therefore considered here. Costs in~
curred and absorbed by non-criminal justice system activities
serving clients referred by a house are defined as external costs
and considered in the next chapter dealing with non-criminal
justice system costs.

Several criminal justice system agencies conduct programs
offering services available to clients of halfway houses. The
agency for which the most detailed data is available and which
is therefore included in this analysis is the Treatment Alter-
natives to Street Crime (TASC) Program serving individuals with
drug abuse problems. Most individuals in the TASC programs are

Tyten such time estimates, the same Standards and Goals
Project report mentioned above estimates the total cost for appre-
hending and prosecuting a willful failure to appear in court to be
$43.71.

167


“ PREFACE

The subject of this report is the cost and resource implica-
tions of correctional standards related to halfway houses. Standards
used as a basis for the analysis are those contained in the 1973 Cor-
rections Report of the National Advisory Commission on Criminal Justice
Standards and Goals. This is one of several program reports being pre~
pared by the Standards and Goals Project. Others will cover such topics
as "Pretrial Diversion Programs," "Activities to Assure Appearance in
Court," and "Institutional-Based Programs and Parole."

The purpose of the Project's program reports is to provide state
and local decision makers with cost information on the many different
kinds of activities advocated in the Standards of the Corrections
Report. The decision makers are assumed to include:

e State criminal justice planning agencies

e State correctional administrators and staffs
e State budget office staffs

e State legislatures and staffs

e Similar planners, administrators and staffs at the
local level.

Project reports are intended to supplement the Corrections Report by
providing information these decision makers need to adopt and to
implement state and local standards“arnd goals for corrections.

Similar analytical techniques have been utilized in program
reports on the diverse criminal justice activities studied, in order
to obtain a set of cost estimates which can subsequently be used in
analysis of inter- and intra-program shifts in the Project's system
analysis. The cost typology which guides all of these reports is
described in more detail in Appendix A-l of this report.

National Advisory Commission on Criminal Justice Standards
and Goals, Corrections (Washington, D.C.: Government Printing
Office, 1973); hereafter referred to as Corrections.

viii

32


TABLE OF CONTENTS

(continued)
CHAPTER
Cost Estimates for a House Providing
Comprehensive In-House Services ....
Applying the Cost Estimates .... . .
OTHER CRIMINAL JUSTICE COSTS .... .” .
Indirect Costs « - + eee ee ee ee ee
Costs of Apprehending and Prosecuting
Clients Who Have Absconded or
Committed New Crimes During
Residence... 1 eee ee ee ee ee
Costs of Other Criminal Justice
Activities to Which Clients
are Referred . . - see eee ee eee
III. OTHER COSTS «we ew ee ee ee ee ee eee
EXTERNAL COSTS « «we ee ee ee ee eee
Costs of Education and Vocational
Training «6 6 ee ee ee ee eee

Costs of Drug Treatment Services ....--
Costs of Detoxification Services

for Alcoholics ...... sete
Costs of Mental Health Services wee ee
Leisure Services .. eee + ee ee eee
Volunteer Services . - + ee ee eee ee
Aggregate External Costs of

Halfway Houses ... . . eee
Opportunity Costs Incurred by Clients

of Halfway Houses . . see ee ee eee
Costs Incurred by the Community in

Which a House is Located .... +.

Iv. THE BENEFIT SIDE: STRENGTHS, WEAKNESSES ©

AND THE IMPACT OF IMPLEMENTING THE

STANDARDS 2. ee ee ee ee ee ee ee es
ve SUMMARY AND CONCLUSIONS . 1. 1 ee eee eens

COSTS OF IMPLEMENTING THE

STANDARDS . «6 see ee eee

Criminal Justice System Costs .....++-+
Other Costs . ee ee ee ee eee eee
THE BENEFIT SIDE .... se ee ee

DIRECTIONS FOR ADDITIONAL RESEARCH .

APPENDICES
A. METHODOLOGY «6 we ee ee ee ee ee ee
Be BIBLIOGRAPHY . «1 6 6 ee ee eee ee ee ee

67
70
72
72

73

74
77
77

79
81

81
84
84
84
86
87

90

93
99

99
100
10.
105
106

A-1


- 79 -

(1) agencies/institutions providing full-time educational
and vocational training services;

(2) agencies/institutions providing drug treatment services
(typically in conjunction with a TASC program);

(3) agencies/institutions providing detoxification services
for alcoholics;

(4) agencies/institutions providing mental health services;
(5) agencies/institutions providing leisure services.
Discussion of the services provided by each and associated external

cost estimates are contained in the following sections.1

Costs of Education and Vocational Training

While the principal focus of all halfway houses is*on full-
time employment, most of the houses offer at least the opportunity
for referral to external agencies and institutions offering education
and vocational training services.2 Most houses have some type of in-
house General Equivalence Diploma program, either taught by a staff
member (non-specialized) or by an area teacher on a part-time paid
or volunteer basis. A few houses do refer clients to GED classes
taught in the commynity. Such programs are typically free or low
cost ($15 to $50).” Further accredited education beyond the high
school degree requires referral outside the house to an agency or
institution providing such services. Institutions providing educa-
tion/vocational training services are two year community colleges
(associate degree), four year colleges (bachelor and advanced de-
grees) and trade and technical schools. Estimated costs of educa-
tional/vocational ining by such institutions are presented in
Table 13, page 80.

As illustrated by Table 13, the costs of providing educa-
tior’.1 services are significantly less ($287 per year and $541 per
yea. for two-year and four-year colleges, respectively) than voca-
tional training costs ($900 per year). This is qualified, however,
by the fact that the cost estimates for educational services are

lcost estimates for treatment services for clients with
drug, alcoholic, or mental problems were prepared for another Standards
and Goals Project report on pretrial diversion activities.

2a discussion of the relative emphasis of most halfway houses
on immediate full-time employment is contained in the next chapter.

3this is the range of external costs of GED classes for the
houses in the sample.

lii


-7-

e Halfway house policies and programs focus on employment
and to a lesser degree, education and vocational
training.

There are two interrelated factors which account for the
fact that offenders admitted tend to be young, inexperienced, and
non-dangerous. The first is concern for community safety and for
community attitudes toward the halfway house. If the clientele of
the houses are young, inexperienced and adjudged to be non-dangerous,
it is believed that they are less likely to commit additional
felonies so that community fear, and voiced opposition in
response to that fear, will be lower. —

The second factor is more questionable. It is that such
offenders are less set in their ways, and hence are more likely
to respond to the halfway house program and the services provided.
The probability for "successful" termination or graduation from
halfway house programs is therefore expected to be higher for
young, inexperienced and non-dangerous offenders than for the
offender population as a whole, and especially for offenders with
multiple prior convictions for armed offenses and other "violent"
crimes.

The definition of what constitutes a "successful" graduate
of a halfway house program (as well as a successful graduate of
diversion, probation, parole or any criminal justice program),
and what should be the criteria to determine success are delicate
and volatile issues.1 Both of these issues are important research

Tuccartt and Mangogna, in Guidelines and Standards for
Halfway Houses and Community Treatment Centers, discuss the whole
issue of what types of offenders or clients should be serviced.
In particular, they state:

Keeping in mind that the halfway house
has an obligation to the community of which
it is a part, as well as to its clients,
adequate controls to safeguard the community
as well as sound judgement in selection of
program participants, must be exercised.

This should not be interpreted to mean
that the- halfway house should accept only
those clients whose success is relatively
assured, but that it should not accept
those types of clients with which it is
unable to cope or help. Admittedly, the
number of prospective clients who fall
into this latter category. is a small
percentage of the total offender
population. (p. 39)

40


- 89 -

dissatisfaction resulting from working in a less desirable job. In
the language of the economist, this cost is the utility loss on the
part of the individual resulting from less desirable employment. How-
ever, the extent to which this opportunity cost is incurred by resi-
dents of halfway houses is diminished by two realities:

(1) Clients of halfway houses are generally undereducated
and unskilled, and therefore unqualified for other than
low wage, unskilled positions which are generally
available in most sections of the city, and

(2) Most clients of halfway houses are prereleasees or
preparolees coming from institutions (an environment
in which they had no employment opportunities).

A second type of opportunity cost incurred by clients of
houses with prior probation or parole status is any utility loss re-
sulting from diminished leisure opportunities. Such a cost, like the
employment-related utility loss, is real but unquantifiable with cur-
rent estimation techniques and data.

Both leisure-related and employment-related opportunity costs
are largely functions of the location of the house and the services
provided. Location near employment and recreational opportunities,
or arrangements for transportation to them, reduce or eliminate these
opportunity costs. In the language of the economist, (once more)
there exists a trade-off between location and transportation to the
employment and recreational activities (or provision of leisure acti-
vities in-house). The nearer the location to these opportunities,
the smaller are the opportunity costs to the clients of a house.
Similarly, these opportunity costs will be larger with poorer loca-
tions or less adequate transportation arrangements.

To the extent that there are budget (criminal justice
system) savings by location in a relatively poor or distant loca-
tion without access to adequate transportation, these savings may
be traded off as increased opportunity costs to the clients and
these costs may outweigh the savings gained. As these costs are
real, they must be considered not only in a cost analysis, but
especially in the initial development (decision-making) phase of
a halfway house program.

In terms of total opportunity costs imposed on clients,
halfway houses lie somewhere in between probation and institu-
tionalization. Probation, with lesser restrictions on both
employment and leisure activities, imposes less opportunity costs
than does a halfway house. Institutions, on the other hand, with
complete restrictions on both employment and leisure opportunities,
impose much higher opportunity costs than do halfway houses.


APPENDIX A-1

TYPOLOGY OF COSTS

Administrators and planners, in satisfying the demands of the
annual budgetary process, are frequently forces to consider and to
justify their programs in terms of their own budgetary costs alone.
Therefore the following types of costs are often neglected in budgetary
debate and program analysis:

e The costs of goods and services from actors outside

the- agency whose budget is being considered. (Example:
Such actors may include individuals as well as private
or governmental agencies. Specific examples of measures
of the value of their goods and services are: the cost
of donated facilities and equipment for a halfway house,
the value [imputed cost] of volunteer labor in a proba-
tion department, or the value to a bail agency of legal
aid or public defender consultation.)

° Full costs of support or administrative activities which,
though they do not benefit a "clientele" directly, are
necessary to provision of direct services. (Example:
The accounting department for a corrections agency has
no direct relation to a person on probation, yet it
manages the accounts for all probation activities. Like-
wise, the manager of the accounting department may never
prepare data on probation activities, yet is accountable
for the work of those who do.)

© Costs incurred by individuals as a result of their
participation (whether voluntary or involuntary) in
a given activity. (Example: if one partcipates in
a diversion activity, he or she may be losing the right
to a speedy trial. It is assumed that this loss will
fave a value to the individual, and in this sense repre-
sent a "cost" of the diversion activity.)

e Costs incurred by society as a result of a given action
or inaction. (Example: Incarcerating people suspected
of a crime has been assumed to reduce the risk of danger
to society. If society chooses to place some individual
in halfway houses rather than in institutions, it pre-
sumably agrees to assume a greater risk of crime. The
expected value associated with this risk represents a
cost to society.)


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- 86 -

one-to-one counseling and night and weekend supervision, indications
are that the utilization of volunteers is rising.1

Methods of estimating the value of such volunteers’ time
contributions vary. Costs may be estimated as the value of volun-
teers' leisure time foregone plus their expenses (such as transporta-
tion and food) which are not reimbursed, or as the imputed value of
the volunteers' services were they to be paid a salary.

Because of the current limited utilization of volunteers in
halfway houses, the Standards and Goals Project did not attempt to
derive estimates for this type of external cost. The Corrections
Report, however, stresses increased use of volunteers in corrections,
as was discussed in Chapter II. As with the previous external costs
analyzed, to the degree that the Corrections Standards are imple-
mented, external costs of volunteers will increase.

Aggregate External Costs of Halfway Houses

No estimate has been made of either average or total numbers
of clients referred out for services provided by agencies or insti-
tutions outside the criminal justice system; therefore no estimates
of aggregate external costs of halfway houses can be determined.
Total costs of providing out-of-house services depend upon the needs
of clients and the policies of the house.

Of the houses in the sample, most of those serving exclu-
sively work releasees do not refer clients out for educational/
vocational training as a matter of policy; a few refer clients out
for vocational training and one refers clients out for both. Of
the houses serving clients either from other jurisdictions or sen-
tenced directly, some do not refer clients out for either service.
Less than a third of the houses in the sample refer clients out for
these two (or any) services, and of that number of houses, less than
20 percent of the clients are referred. On an aggregate level, less
than 5 percent of all the clients of houses in the sample are re-
ferred out for educational or vocational training.

Although the extent to which clients are referred out for
treatment services is not known, the percentage is also apparently

ltnis is particularly the case in private houses, where lack
of funding pressures serve as an incentive to the volunteer-for-
paid-staff substitution, described above and in Chapter II. Use
of volunteers in state-operated houses is limited because such
incentives typically do not exist. Union pressure on houses in
some larger cities would likely restrict any substitution attempt.

118


Table 6

Adjusted Madian Values of Owner-Occupied Housing Units, by Region and State®

REGION, STATE VALUE
NORTHEAST $29,010
Maine 17,940
New Hampshire 22,990
Vermont 22,990
Massachusetts 28,870
Rhode Island 25,510
Connecticut 25,740
MIDDLE ATLANTIC $26,490
New York 31,530
New Jersey 32,800
Pennsylvania . _ 19,060
EAST NORTH CENTRAL . $24,530
Ohio : 24,670
Indiana 19,340
Illinois 20,620
Michigan 24,530
Wisconsin . 24,250
WEST NOP NTRAL $20,320
Minnesota “ 25,230
Towa 19,480
Missouri 20,180
North Dakota 18,220
South Dakota 15,480
Nebraska 17,380
Kansas . 16,960
SOUTH ATLANTIC $21,160
Delaware 23,970
Maryland 26,210
District of Columbia 29,850
Virginia 23,970
West Virginia 15,840
North Carolina 17,940
South Carolina 18,220
Georgia 20,460
Florida 21,020
(cont'd)

- 49 -

82


CHAPTER I
INTRODUCTION

The very name halfway house suggests its position in the cor-
rections world: halfway-in, a more structured environment than pro-
bation and parole; halfway-out, a less structured environment than
institutions. As halfway-in houses they represent a last stop before
incarceration for probationers and parolees facing or having faced
revocation; as halfway-out houses, they provide services to prere-
leasees and parolees leaving institutions. Halfway houses also provide
.4 residential alternative to jail or outright release for accused
offenders awaiting trial or convicted offenders awaiting sentencing.

The role of halfway houses within corrections has increased
significantly in the past decade. The 1974 Directory of Halfway Houses
belonging to the International Halfway House Association includes
houses from most of the 50 states, with a total of 1,370 houses listed;
there are, in addition, a substantial number of halfway houses which
do not belong to the association.!

At the bcginning of an effort to describe and analyze the costs
of halfway houses, one fact clearlystands out.» That fact is the tre-
mendous variation in all of the descriptive and cost characteristics of
houses except one, population capacity. There exists a wide range in

lincluding some, apparently, who have not heard of the associ-
ation. See the U.S. General Accounting Office study entitled Federal
Guidance Needed If Halfway Houses Are To Be a Viable Alternati
Prison (Washington, D.C.: Government Printing Office, May, 1975)

zone comprehensive study takes it one step further:

+ + » No single definition can possible fit or describe
the wide range of places and facilities which are
called - or which call themselves - halfway houses.
As of this writing, no single comprehensive picture
could possibly encompass the hundreds of stations
which serve offenders halfway between the instituion
and the free society.

At this point, it is perhaps accurate to say that
innovation and diversity are perhaps the only charac-
teristics which all these places have in common. Keller,


-~67-

Accordingly, a sample budget has been constructed for a house utiliz-
ing volunteers both to complement halfway house staff in individual
(one-to-one) and employment counseling, and also as substitutes for
“the cook/housekeeper and night and weekend supervisory personnel.
Therefore there are no night or part-time counselors and no cook/
housekeepers on the house staff. The community resource manager
serves as a volunteer coordinator, in addition to his or her other
duties described above.

Volunteers man 16 supervisory shifts per week: two eight-
hour weekday shifts, 4 p.m. to 12 a.m. and 12 a.m. to 8 a.m., and
six eight-hour shifts per weekend. Volunteers manning supervisory
shifts are paid a stipend of $8.33 per shift to cover transportation,
meals and other expenses; on holidays the stipend is $15.00.!

Table 10, page 68, prs:sents the sample budget for this
house. Personnel costs are significantly lower, due to the sub-
stitution of volunteers for the night counselor and part-time
counselor positions, and account for a lower percentage of total
operating costs than in Table ¥. Other staff salaries have not
changed.

Total non-personnel costs increased substantially with
the addition of $7,214 in total volunteer stipends. Other non-
personnel line item cost estimates are equivalent to those con-
tained in Table 9, with the exception of travel and transporta-
tion costs which are partially variable with total wages and
salaries, and hence lower. High and low average daily operating
costs are $19.63 and $12.60, respectively, associated with daily
savings of $2.63 and $1.58.

Cost Estimates for a House Providing Comprehensive In-House Services

For the sake of comparison, a further set of estimates has
been derived for a house providing comprehensive in-house services.
In addition to basic services, specialized vocational and employment
counseling, psychological testing, and individual counseling services
are provided. Table 11, page 69, presents the sample budget for
such a house.

The bulk of the additional operating costs occurs in wage
and salary costs which are $23,942 and $17,202 higher (for high and
low estimates, respectively) than in the previous sample budget in
Table 9, page 65 (for a house providing basic services and community

Iinese are the stipends paid by Mass.ichusetts Halfway House,
Inc., in Boston, Massachusetts. The higher holiday stipend is
intended to offer some compensation for the loss of holiday meals
and festivities.

100


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14


Table 6 (cont'd)

REGION, STATE VALUE
EAST SOUTH CENTRAL $17,100
Kentucky 17,660
Tennessee 17,520
Alabama 17,100
Mississippi 15,700
WES’ SOUTH CENTRAL $16,820
Arkansas 14,720
Louisiana 20,460
Oklahoma 15,560
Texas 16,820
MIDWEST $22,850
Montana 19,620
Idaho 19,760
Wyoming 21,440
Coloraio 24,250
New Mexico 18,220
Arizona 22,850
Utah 23,550
Nevada 31,400
PACIFIC $30,790
Wash: gton : 25,930
Oregon 21,580
California 32,380
Alaska . 31,820
Hawaii 49,200

Median values for owner-occupied housing were obtained from the U.S.
Bureau of Census in the 1970 U.S. veasvs of Housing, 1970, Volume 1, and
adjusted upward for inflation since 1970 utilizing the index of home owner-
ship costs, U.S. Bureau of Labor Statistics.

- 50 -


- 56 -

Economies of Scale and Factor Indivisibilities

This section analyzes the question of whether houses serving
fewer clients are more 2r less expensive than houses serving a
larger number of clients. In other words, this section analyzes
variation among operating costs which is attributable to the scale
of operation, that is, to the number of clients served.

If, in the long run, it is less expensive to service a
larger number of clients (25 to 30) rather than fewer (15), then,
in the language of the economist, economies of scale are present.
If it Ls more expensive, there are diseconomies of scale. The
phrase "in the long run" implies a time period sufficiently long
so that decisions can be made regarding all operating factors:
type, and therefore, cost, of facility; services provided; size
of staff; and expenditure levels for all non-personnel categories.
All costs are variable in the long run, whereas in the short run
some costs are fixed and indivisible. Type and size of facility,
and therefore facility costs, and director and assistant director
salaries and fringe benefits typically are fixed and indivisible
in the short run.

For example, a house serving 15 clients will not pay any
more in rent or salary and fringe benefits to the director and
assistant director if the number of clients served increases to
20 (nor will it pay less if the number decreases to 10).. Yet the
average cost for rent and director and assistant director positions
will decrease 33 1/3 percent. Variable costs such as food, supplies,
utilities, counselors and other staf£ costs will increase, but total
average operating costs wili most li‘«ly have decreased.1

ifway house may have to move to a

larger facility, or expand the current one, and the salaries and
benefits of the director ird ortisiaxt director may be increased
to reflect the increase in t:° scale of wpexation (number of

In the long run, the

clients > 4), in which case there would be no economies of
scale, 4%. on znalysis of operating costs ci? houses in the
sample, t pre ..ce of economies of scale cannot be identified
in either iiity .csts or personnel costs.

For Lect y costs, the analysis is clouded by the fact
that the types of facilities vary widely; some facilities have
twice as much space (in terms of use*ble square footage of floor

Tit may be the case that ful1-time counselor positions are
largely indivisibie and another counselor has to be added to the
staff, with the in-ease to costs of his salary and benefits,
offsetting the lower average costs for fixed factors.

89


-6-

e Facility costs ranged from a low of $76 per bed year
($.21 per bed day) to a ‘high of $1,391 per bed year
($3.81 per bed day). Median annual facility cost per
bed for the entire sample was $335; the mean was
$404 per bed year.

e Average (mean) annual facility cost for facilities that
were rented was $455 per bed, as compared to $332 per
bed for facilities which had been purchased. Average
facility cost for the facilities rented by state-operated
houses was $580 per bed, as compared to the sample aver-
age of $404 per bed.

e Other operating costs exhibited significant variation
as well. Average daily operating costs, excluding

. facility costs, ranged from $4.77 to $27.58. Median
daily operating cost of houses in the sample was $13.33;
mean daily operating cost was $13.55.

There were four principal sources of cost variation among houses
in the sample. The first was differences in services provided. All the
houses in the sample provided shelter, supervision (including custodial)
and group counseling services. Most houses provided food services;
others, however, contracted out for meals, issued meal vouchers, or had
clients provide for themselves. Most houses provided financial manage~
ment, basic individual, and employment counseling as well. With regard
to other services, including education, vocational training, and indi-
vidual psychological training--some houses provided them in-house;
other houses referred clients out to other agencies or institutions;
and many did neither.

Differences in services provided affected personnel costs the
most. On the average, personnel costs accounted for well over 50 per-
cent of total operating costs. Average daily personnel costs ranged
from $2.27 per client to $21.31 per client. Median average daily
personnel cost per client was $8.67; the mean was $9.56.

The second source of cost variation was inter-regional price
variation. For houses in the sample, salaries for the director
position ranged from $10,000 to $19,610. Salaries for the assistant
director position ranged from $9,000 to $16,490. Salaries for full-
time counselor/job developer/community resource developer/correctional
officer positions ranged from $5,573 to $15,509. Such wide variation
was consistent with salary variation for similar positions (specifi-
cally, probation officers), documented in State Salary Survey, August
1, 1973, published by the U.S. Civil Service Commission.

Facility price variation occurred on two levels. Facility
prices were generally higher in states in the coastal regions
(Northeast, Middle Atlantic, and Pacific regions) than in states
located in the interior. More importantly, within individual cities
facility prices were generally significantly higher in stable

10.


Table 16

Cost Estimates of Providing Mental Health Services
(1974 Dollars)

MODALITY COST PER CLIENT DAY

Free Standing Outpatient
Psychiatric Clinics® : $36.60

Inpatient Services, At £
Public Hospitals $30.80

Inpatient Services At
Private Hospitals®

Non-Profit $72. 805

For Profit $63.00
Residential Treatment

Centers $37.82

Sources: U.S. Department of Health, Education and Welfare, National Institute of
Mental Health Statistics A-10, A-13 and Statistics Note 106 and preliminary unpub-
lished data from the National Institute of Mental Health; and Jeff Gillenkirk,
"There's No:Plece Like Home," Washingtonian, (September 1974), pp. 162-164. All costs
have been converted to 1974 dollars using the GNP implicit price deflator for purchases
of all goods and services by state and local governments,

"Estimate is for all ages for all diagnostic conditions. 74 percent of the
cost is for salaries; 21 percent for other operating expenditures; 5 percent for
capital expenditures.

bestimate is U.S. average. 79 percent of cost is for salaries,

Estimate is U.S. average. 63 percent of cost in non-profit hospitals is for
salaries; 54 percent in profit hospitals is for salaries.

sEctimate is for Washington, D.C.
"Estimate is U.S. average, all facilities, all patients under 18.

frhe average costs of hospitalization for mental illness are lower than hospi-
talization for alcoholism, drug addiction or for other physical ailments because mental
hospitals are often only custodial, are understaffed with low-paid personnel and because
the treatment of mental illness, unlike physical illness, does not require costly equip-
ment. Interview with M.J. Witkin, Division of Biometry, National Institute of Mental
Health, 9 October 1975. 85

1i7


- 54 -

Combining price variation for all factors including labor,
both the government data referred to in this section and contained
in Tables 6 and 7, pages 49-50, 52-53, and the sample data con~-
tained in Tables 2, 3, and 4, pages 17-22, 29-32, 35-38, indicate
that expenditures for a certain fixed amount of goods and services
in the different states would follow the same pattern as described
in the discussion of regional variation in facility prices: higher
in larger cities and in the states located on or near Soth coasts
and lower for the interior states.

Availe

lity of Resources

The third major source of cos variation is the availability
of resources. These resources are of three types:

e Public financial resources, which includes block
funds such as LEAA, HEW, or State Planning Agency
(SPA) grants, contracts with the Federal Bureau of
Prisons and Division of Probation, state Departments
of Corrections and Probation and Parole Commissions,
and county/local probation and parole authorities
(for the houses operated by state departments of
corrections, of course, some of the resources are
internal);

° Private financial resources, which includes funding
from sources outside the criminal justice system
such as private agencies and individuals, and client
payments for room and board; and

° Non-financial resources, community resources which
provide free or reduced cost services to clients of
halfway houses (such resources include doctors,
lawyers, dentists, repairmen and volunteers of
all types).

Houses funded primarily by public financial resources are
in t subsidized by federal, state and/or local governm:ats,
and this subsidy has be 4 price and quantity effects, especially
ix: neg “ing personnel costs.

ie «aes whick hee. ucsong publi. resources, which include
the hous*s operatei by the state departments of corrections, the
hous2s operated by private agencies or foundations, and several
sf the single horses funded primarily by LEAA, will generally have
more and iiigner salaried personnel than their counterpart houses.
“Houses servins exclusively werk releases 27> 79st likely to have
strong public finencial resources, espectaiiy acreracts with the
federal Bureav of Prisons and the state departments oi corrections.
hese houses will gonereliy also have larger absoiute expenditures
‘an houses servin, primarily clients under other seutencing
Zispositions-

87


- 81 -

for public institutions only; private educational institutions are
typically more costly.

Costs of Drug Treatment Services

Clients with drug problems may require specialized counseling
and psychiatric services and, if addicted, medical treatment (metha-—
done maintenance, for example) services. Such services are usually
non-residential (outpatient), but for clients physically addicted,
medical drug treatment may require residence for a short time. Table
14, page 82, contains cost estimate.- for the different types of
agencies and institutions providing these services.

Costs of drug treatment are substantially higher than the costs of
education and vocational training, ranging from $1,278 per client year
for non-residential treatment services to $6,254 per client year for
residential services. Costs of drug treatment services are typically
charged to agencies outside the criminal justice system and are there-
fore external costs (although in some cases, houses may have to bear
urinalysis costs or pass them on to clients). Houses with a high
percentage of clients with drug problems requiring outside referral
can incur substantial external costs.

Costs of Detoxification Services for Alcoholics

a

Clients who are alcoholics may require specialized outpatient
counseling and psychiatric services and, for severe problems, in-
patient detoxification treatment for short periods. Such services
are provided by public and private hospitals and detoxification
centers. The costs of these services are presented in Table 15,
page 83. Costs range from $15.84 per client day for outpatient
treatment to $171.55 for inpatient treatment services. ‘The more
significant statistic, however, is cost per client stay, which
ranges up to $1,274.21 for partial hospitalization. Moreover,
clients with severe alcoholic problems may require several stays.
As costs of providing both outpatient and inpatient detoxification
services are typically charged to agencies/institutions outside the
criminal justice system and hence external, houses with a high
percentage of clients with alcohol problems requiring outside re-
ferral for treatment may also incur substantial external costs.

1

TASC programs do provide counseling and psychiatric
services, but do not provide drug treatment services. Currently,
TASC programs are operated in only 20 states.

113


Table 9

Sample Budget fer a House Providing Basic
In-House Services Plus Commsnity Resource Referral (1974 Dollars)

PERCENT OF PERCENT OF
TOTAL TOTAL
ITEM AVERAGE OPERATING AVERAGE OPERATING
: HIGH Costs Low costs
PERSONNEL
Wages and Salaries
Director $15,970 10.9% $12,085 13.0%
Assistant Director/Supervisor 12,737 8.7% 9,767 10.5%
Community Resource Manager 11,756 8.1% 8,842 9.5%
Counselor 11,756 8.1% 8,842 9.5%
Night Counselor 9,441 6.5% 7,100 7.6%
1 Part-Time Counselor 4,576 3.1% 2,560 2.7%
Secretary/Bookkeeper 7,646 5.2% 6,082 6.6%
Cook/Housekeeper 6,990 4.8% 5,500 5.9%
Total Wages and Salaries (80,872) (55.3%) (60,778) (63.3%)
Fringe Benefits (15%) 12,131 8.3% 9,117 9.8%
TOTAL PERSONNEL COSTS - ($93,003) (63.6%) ($69,895) (75.1%)
NON-PERSONNEL
Professional Fees and $ 4,042 2.8% $ 1,016 1.1%
Contract Services
Travel and Transportation 3,741 2.6% 1,743 1.9%
Rent/Rental Equivalent 12,292 8.4% 4,704 5.1%
Maintenance 2,461 1.7% 1,304 1.4%
Utilities 4,288 2.9% 1,834 2.0%
Communications 2,561 1.8% 1,452 1.6%
Supplies 3,770 2.6% 892 1.0%
Food 18,002 12.3% 9,592 10.3%
Other 2,057 1.4% 698 0.7%
TOTAL NON-PERSONNEL COSTS ($53,214) (36.4%) ($23,235) (24.9%)
TOTAL OPERATING COSTS $146,217 (100%) $93,130 (100%)
AVERAGE COST.
Capacity (18)
Average Daily Cost Per Client $ 22.26 $ 14.18

93

-~ 65 -


Figure 34

Range of Average Daily Operating Costs (Excluding Facility Costs)

Range of Average

Daily Operating Costs

0

$5
$10
$15
$20
$25

$5

$10
$15
$20
$25
$30

1
3

18

Number of Houses

Number

Houses

18-4
17
16-F
is
14-4

117

Graphical Distribution of Average Daily
Operating Costs (Excluding Facility Costs)
(18)

Figure 3B

@)

$5

$1o

$15
Average Daily Operating Costs

$20

$25

$30

- 33 -

6

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- 29 -

62


-19-

MINNESOTA DEPARTMENT OF CORRECTIONS (State, Operated)
Minneapolis, Minnesota (Pop.: 382,423)

Project Reentry 28 Beds
Restitution Center 23 Beds

Single Houses

Dismas House (Private Independent) 24 Beds
Kansas City, Missouri (Pop.: 487,799)

Reality House (Private Independent) 14 Beds
Columbia, Missouri (Pop.: 60,932)

Morman House (Private Independent) 10 Beds
Farmington, Missouri (Pop.: 7,250)

Home of Industry for Displaced Prisoners 15 Beds
(Private Independent)
Philadelphia, Pennsylvania (Pop.: 1,861,719)

Community Outreach Services (Private Independent) 14 Beds
Daytona Beach, Florida (Pop.: 47,352)

Washington Halfway House for Women 16 Beds
' (Private Independent)
Washington, D.C. (Pop.: 733,801)

Georgia Department of Corrections (State Operated) 30 Beds
Atlanta, Georgia (Pop.: 451,123)
Adjustment Center

Comm-Home House (State Operated) ; 14 Beds
Pasco, Washington (Pop.: 14,273)

Pioneer Fellowship House (Private Independent) 33 Beds
Seattle, Washington (Pop.: 503,073)

.Family House (Private Independent) 22 Beds
Seattle, Washington (Pop.: 503,073)

Opportunity Center (Private Independent) 23 Beds
Waco, Texas (Pop.: 98,713)

*Population estimates are for 1973 and are from the U.S. Bureau of
the Census.

‘4US. GOVERNMENT PRINTING OFFICE : 1976 0-210-839 (1924)

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53


Figure 1A

Range of Average (Zer Bed) Annual Facility Costs for the Sample

Range of
Average Facility Costs Number of Houses
0 - $200 6
$201 - $400 15
$401 - $600 6
$601 - $800 6
> $800 1

Figure 1B

_ Graphical Distribution of Average
(Per Bed) Annual Facility Costs for the Sample

qs)

(6) 6. (6)

q@)

OPNWRUAYO

$200 $400 $600 $800 $1,000 $1,200 $1,400
Average Facility Costs

- 24 -

57


Table 7 (cont'd)

OCCUPATION STATE SALARY RANGE
Graduate Social Worker Ohio $10, 254~-13,166
Pennsylvania 10,954-12,694
District of Columbia 9,520-12,373
Georgia 9,312-11,904
Washington 9,192-11,604
Florida 8,832-12,132
Texas 8,628-10,872
Missouri 8, 232-11, 448
California 8,196- 9,960
y Minnesota 8,040-10,020
Physician District of Columbia $24, 956-30, 869
Pennsylvania 22,357-24,626
Florida 22, 200~30,252
California 20,184-22,260
Missouri 19, 300-22,300
Washington 18, 588-21,444
Minnesota 17, 892-23,532
Georgia 17, 676-23, 436
, Ohio , 15,142-20, 322

Source: U.S. Civil Service Commission, Bureau of Intergovernmental Personnel

Programs, State Salary Survey, August 1, 1973 (Washington, D.C.:

Government Printing Cifice, 1973).

-53-


In all of these comparisons, if the opportunity cost (that is the
product of the activity foregone) is greater than the product of the activity
undertaken, there is a loss or "cost" to society above and beyond the eight
types of costs described earlier. This loss to society is a social cost to
be allocated to undertaking the activity whose productivity is lower. The
question of how to define and measure productivity (or even relative pro-
ductivity) becomes a major problem when the analysis moves rom the level of
individual resources to criminal justice activities whose "products" are
differentially defined as deterrance, rehabilitation and so forth, by policy-
makers and analysts.

For this cost analysis of halfway houses. crly the first type of
opportunity cost is explored in detail. Opportunity costs associated with
other levels of comparison identified above are discussed briefly in the
Project's summary report.

ANALYSIS OF HALFWAY HOUSE COSTS

The typology of costs presented in this appendix serves as an intro~
duction to analysis presented in the Standards and Goals Project's program
reports, and as a guide for administrators and planners considering the full
costs of existing and comtemplated halfway houses.

It is beyond the scope of this report to treat all costs of all half-
way houses with the same amount of analytical and numerical precision. It
will therefore focus on:

r) Analyzing costs <° : >st_immediate concern to criminal justice
decision-makers *” ly public expenditures of the criminal
justice system) ;

e Signaling (and analyzing to the extent possible) other types
of costs that are likely to be most significant in calculating
the full costs of halfway houses;

e Analyzing differences in the costs of current activities and the
types of halfway houses recommended in the Corrections Report.


A-1
A-2
A-3
A-4

A-5

APPENDIX A

Typology of Costs

Sample Selection and Use

Data, Sources

Rental Equivalent Estimation Process

Methodological Note on the Derivation
of Sample and Model Budgets Used In
Standards and Goals Project Reports

Sources and Components for Estimates
of External Costs Associated With
Drug Diversion Referrals (Table 14)

Sample Budget for Annual Criminal Justice

Expenditures for an Operational Drug
Diversion Activity

14i


-14-

The first type of cost is present but is virtually negligible,
either in comparison to community taxes as a whole or when divided
by total residents. Regarding the second, while no comprehensive
analysis of the effect of halfway house location on neighborhood
property values has been undertaken, previous analyses on an indi-~
vidual house basis, collected as a part of this research effort, all
concluded that no discernable decline in Property values had occured.
Regarding costs of new crimes committed by clients of halfway houses,
very limited data that have been collected to date have affirmed that
clients do commit additional crimes, but that the arrest rates for
clients of halfway houses did not exceed that of the general population
(of this country) as a whole.

18


In the budgetary process of criminal justice agencies, it may not
be possible to consider all these costs routinely, but they are within
the proper purview of economic analysis. Ideally, familiarity with them
could open budgetary debate to consideration of the full range of pro-~
gram costs.

For the Standards and Goals Project's reports, the kinds of costs
described above have been incorporated into a cost typology which can be
used for analyzing the resource implications of all criminal justice
activities. Types of costs within this typology are described and com
pared in the paragraphs which follow. For the Project's program reports,
only costs incurred by the particular activity being studied (in this
report, halfway houses) are analyzed in detail.

CRIMINAL JUSTICE SYSTEM COSTS

Criminal justice systems costs include direct outlays for, or the
imputed value of, goods and services by:

e Law enforcement agencies

° Courts

° Legal services agencies, bureaus or firms

e Other agencies, organizations or individuals whose
stated mission could not be carried out if there

were no crime

e Activities of organizational units or individuals
financed by any of the above

The criminal justice system thus is defined to comprise the activities
and agencies listed above.

lyhere is brief discussion of the types and magnitude of costs
averted by undertaking a particular activity (for example, the trial costs
that are averted if a person successfully completes a formal pretrial di-
version activity) in some of ‘the Project's program reports and the summary
report covering the entire Project.

143


- 28 -

The second reason is that because any financial returns from short
or long rua investments or savings from budget underruns typically
are channeled into general funds, there may be no incentives to
seek out the least cost facility alternative.

Of the private houses, some rent by necessity rather than
by choice because of limited funding. The impact of the level
of funding upon halfway house costs including facility costs will
be included in the analysis of sources of variation under the
section entitled Availability of Resources.

The next section discusses variation for the other oper-
ating cost categories among houses in the sample.

Variation in Other Operating Costs

This section deals with the variation in operating costs
exclusive of facility costs. Operating costs for this analysis
include personnel costs: salaries, wages, and fringe benefits;
and non-personnel costs (exclusive of rent) which include:
travel and transportation, office supplies and equipment,
consultant and contract services, utilities, communications,
maintenance, operating supplies and food. The term operating
costs, when used throughout the remainder of this chapter, will
denote operating costs exclusive of rent, unless specifically
stated otherwise.

Table 3, pages 29-32, presents operating costs in current
and 1974 dollars for the houses in the sample. The index em-
ployed for converting current dollars into Calendar 1974 dollars
was the index of state and local government expenditures, Gross
National Product implicit price deflator obtained from the Bureau
of Economic Analysis. The third column indicates the type of
expenditure represented. Where calendar 1974 or fiscal 1975
actual expenditures were not available, fiscal and calendar 1975
budgeted expenditures were included in the sample base. Total
average (per bed) annual, and daily operating costs are presented
in the last three columns.

Average (per bed) daily costs range from a low of $4.77
to a high of $27.58. The median daily operating cost of the houses
in the sample is $13.33; mean average daily operating cost is
$13.55. Figures 3A and 3B, page 33, illustrate the range and
distribution of average daily operating costs for the sample
of 30 houses. The distribution approximates that of the bell-
shaped normal curve, but is skewed slightly to the right and
flatter indicating the presence of more variation than occurs
within the standard normal distribution.


INTRODUCTION

Halfway houses occupy two roles within corrections: as re-
sources serving clients from other criminal justice programs (for
example, diversion or parole) and as direct sentencing alternatives.
The second role, that of direct sentencing alternatives, is currently
limited but increased use is recommended by the Corrections Report.
Standard 16.8, entitled Sentencing Alternatives, states:

By 1975 each State should enact the
sentencing legislation proposed in Chapter 5,
Sentencing, reflecting the following major
provisions:

1. All sentences should be determined
by the court rather than by a jury.

2. The court should be authorized to
utilize a variety of sentencing alternatives
including:

a. Unconditional release.

b. Conditional release.

c. A fine payable in installments
with a civil remedy for nonpayment.

d. Release under supervision in
the community.

e. Sentence to a halfway house or
other residential facility located in the
community.

£. Sentence to partial confinement
with liberty to work or participate in train-
ing or education during all but leisure time.

g. Imposition of a maximum sentence
of total confinement less than that established
by the legislature for the offense.1

In addition to expanding the direct sentencing role of halfway
houses, implementing the Standards of the Corrections Report would
result in greater referral of clients to services provided by community
resources outside the halfway house rather than Provision of such
services in-house. Standard 2.9, entitled Rehabilitation, states:

1
Corrections, p. 569.


- 45 -

index of state and local government purchases compiled by the Bureau
of Economic Analysis. As Table 5 illustrates, personnel costs vary
widely both in absolute and average terms and as a Percentage of
operating costs.

Personnel costs range from 31 percent to 90 percent of
operating costs. With the exception of only three houses, how-
ever, personnel costs account for at least 50 percent of operating
costs; the median figure is 70 percent. In calendar 1974 dollars,
daily per client personnel costs range from $2.27 per day to
$21.31 per day with 15 or 50 percent of the houses having average
daily personnel costs in the $5.00 per day to $10.00 per day range.
Median average daily personnel cost (for the sample 30 houses)
is $8.67 per day; the mean is $9.56 per day.1

Figures 4A and 4B, page 46, illustrate both the range and
distribution of average personnel costs for ‘the sample. Like
operating costs excluding facility costs, the distribution approxi-
mates the standard normal curve but is skewed to the right.

Variation in total and average personnel costs is attri-
butable to both number and types of staff employed, and to average
salaries by position. Twenty-seven of the houses in the sample
have full time directors, two have only part-time directors, and
one house has no paid director. Most of the houses, including
all of the state-operated houses and houses operated under private
agencies or foundations, have assistant directors; several of the
single private houses do not. Full-time counselors/job developers/
community resource developers/corrections officers employed range
from 0 to 11. In addition, several of the houses employ part-time
counselors.2 Both state departments of corrections-operated and

Lin attempt was made to separate personnel costs of the
houses in the sample into custodial costs and costs associated
with services to clients. It was not possible to do so, because
in many of the houses, particularly the private houses, several
personnel were responsible for more than one function, and with
existing (or lack of any) data, any estimate of a time breakdown
between various functions performed would have been highly
arbitrary or conjectural.

In larger scale correctional activities, such as insti-
tutions, individual staff typically perform only one function and
such a (non-arbitrary) separation of personnel costs (into cus-
todial costs and costs of services to clients) can be made.

Some houses may employ part-time personnel at lower
wage rates than wouid be paid full-time staff in order to lower
costs. Other houses utilize volunteers or clients in performing
some services such as cooking, housekeeping and facility (and
property) maintenance. Such labor substitution practices
obviously lower total personnel costs.

78


Because the Project's reports are also intended to serve as
guides to criminal justice administrators and planners, the results
of the research effort are presented in two volumes, of which this
is the second. Volume I summarizes the purpose, methodology and
findings of the study. Though it is intended for use primarily by
decision makers, analysts will find it useful as a quick companion
reference to this volume. Volume II is intended for use by analysts,
and provides them with detailed technical descriptions of estimation
techniques applicable to analyzing the costs of halfway houses in any
particular jurisdiction, as well as a presentation of the findings
of this study.

The form and content of this program analysis have been guided
by the Project's Plan for a Cost Analysis of the Corrections Report.
Particularly pertinent to this halfway house analysis are the sec~
tions on programmatic changes and guidelines for the Project's
general approach to program analysis. Following procedures in the
Plan, this report has been guided in part by comments of those who
reviewed earlier drafts. The reviewers included selected members of
the Project's Advisory Board and other state and local officials
with interest or expertise in halfway houses.2 The author is es-
pecially grateful for the information, assistance and advice given
by Tom Gilmore, member of the Advisory Board and Senior Analyst at
the Management and Behavioral Science Center, Wharton School of
Finance; Sylvia Bacon, also a member of the Advisory Board and
Judge of the Superior Court of the District of Columbia; Carolyn
Jackson, Supervisory Auditor in the U.S. General Accounting Office;
John Galvin, Director of the Alternatives to Jail Incarceration
Project, American Justice Institute; Mike McCartt, Executive
Director of Talbert House, Inc.; Tom Christiansen, Assistant
Executive Director of Magdala Foundation; and Brian Riley, Execu-
tive Director of Massachusetts Halfway House, Inc.

The author wishes to thank Dr. Virginia B. Wright, Re-
search Director of the Standards and Goals Project, and Billy L.
Wayson, Director of the Correctional Economics Center, for their
guidance and assistance throughout this research and writing
effort, and most of all for their patience. Finally, the author
is especially grateful to Barbara Bland, Administrative Assistant,
who typed the manuscript (many times) and who is one of only two
people in the world capable of decoding his handwriting.

Istandards and Goals Project, Plan for a Cost Analysis of
the Corrections Report (Washington, D.C.: American Bar Associa-
tion, Correctional Economics Center, 1975), pp. 18, 19, 23, 24,
and 34-37; hereafter referred to as Plan.

Wid.

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- 43 -

ise]


APPENDIX A-3

DATA SOURCES

Talbert House, Inc.
2525 Victory Parkway

Cincinnati, Ohio 45206

(1) Telephone conversation with Mike McCart, Director; May 13,
May 25, June 24 and July 16, 1975.

(2) Financial statements and supplementary information, Report
of Certified Public Accountants.

Dismas House
3000 Campbell
Kansas City, Missouri 64109

(1) Telephone conversation with John Cavanaugh, Director, June 30,
1975.
(2) Letter from John Cavanaugh, July 15, 1975.

Reality House
500 Rollins

Columbia, Mo. 65201

(1) Telephone conversation with George Brown, Director, June 23,
1975.
(2) Letter from George Brown, July 21, 1975.

Morman House
P.O. Box 48
Farmington, Missouri 63640

(1) Telephone conversation with Jack Masters, Director, June 22,

1975.
(2) United States Accounting Office, "Federal Guidance Needed If

Halfway Houses Are To Be a Viable Alternative to Prison,"
Government Printing Office, June, 1975.

Magdala Foundation
2501 North llth St.

St. Louis, Missouri

(1) Telephone conversation with Tom Christiansen, Assistant Director
May 13, June 11, June 26 and July 24, 1975.
(2) Letter from Tom Christensen, May 14, 1975. -

A-12

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69

- 36 -


LAW ENFORCEMENT ASSISTANCE
ADMINISTRATION

Richard W. Velde, administrator



-10-

VARIATION IN COSTS AMONG EXISTING HOUSES

As was stated in the Introduction, perhaps more variation
exists among halfway houses than among any other of the correctional
alternatives. Although no cost analyses of halfway houses have
been attempted thus far, several general studies have alluded to the
variation in descriptive and cost characteristics and have posited
different explanations for the variation.l For this analysis it
was decided that the best approach would be to take a representa-
tive sample of houses across the country to determine the extent: ”
of variation among those houses, and to analyze the variation.

Selection of a Sample of Halfway Houses

The sample of houses was selected on the basis of several cri-
teria. They represent a cross-section of houses across the country
by size, type (state operated, private independent, private agency-
operated), services provided, location (geographical region, size of
city, type of neighborhood) and types of clients served. The meth-
odology employed in selecting the sample of houses is described in
detail in Appendix A-2.

Characteristics of Houses in the Sample

Table 1 on pages 11 and 12 presents the houses included in the
sample, the cities in which they are located, and the respective popu~
lations of those cities.

Talbert House Incorporated, located in Cincinnati, Ohio, oper-

ates a variety of programs, both residential and non-residential. Its
residential programs include five halfway houses: two for men,
McMillan House and Wesley House; one for women, Halfway House for
Women (HHW); a Residential Youth Treatment Project (RYTP) and Ven-
danta, a house serving primarily drug offenders. The houses operate
primarily on per diem contracts with the Municipal Court Probation
Office and the state Adult Parole Authority. Talbert House is also
funded by the County Community Mental Health and Mental Retardation
Board, the City Board of Health, the Bureau of Vocational Rehabilita-
tion, the County Welfare Board, and private donations. The houses
‘serve individuals. from a wide range of jurisdictions: county proba-
tion, municipal probation, state parole, Treatment Alternatives to
Street Crimes (TASC), federal work release, and federal parole.

l5c6 both Keller and Alper, Halfway Houses, and Deehy , Halfway
House in Correctional Sequence.



A-23

£.

Residential methadone maintenance, unlike the drug-free community
is geared for fairly rapid turnover; after an average of five weeks the
client: is to back in the community while continuing in an outpatient

methadone maintenance clinic,

The typical residential Program is designed for 48 clients. It
operates seven days a week, 24 hours a day and provides detoxification,
maintenance, individual and group therapy, family counseling and vocational
services on site, Each client has a job assignment, for example, house-
keeping. Emergency medical services are available, but the initial physical
exam will be contracted out at $75 per exam. Needed legal services are
referred to a community legal aid agency and are not covered in this budget.
Within a month to six weeks of employment, each maintenance client returns
to the community to live and receives methadone from the clinic as an
outpatient. The staff includes an administrator, secretary, two nurses,
one full-time, the other one day a week, three counselors, and one voca-
tional specialist, Personnel costs account for 59 percent of the budget.
Additional items are as follows: 4 hours per week for medical consultants,
2 percent; travel and training, 1 percent; equipment, 5 Percent; medical
exams @ $75 each, 2 percent; utilities and communications, 3 percent;
rent and renovation, 9 percent; ab services, 3 percent; food @ $2.20/
client/day, 16 percent.

as defined in footnote” above and similar to it in the structure
of the budget. Based upon survey of drug-free residential communities
in Baltimore, Charleston, Chicago, Gary, Watts (Los Angeles), Miami,
New Orleans, San Fransisco and South Alameda County, California.

hay defined above in footnote® above and similar to it in budget
structure, Based on survey of outpatient abstinence clinics in cities
listed in footnote® above.

i

As defined in footnote® above and most similar to budget structure
of cnter for 300 clients. Based upon survey of outpatient methadone
cruters listed in footnote® above.


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10.

11.

12.
13.

LIST OF TABLES

Houses Included in the Sample see

Facility Costs in Current and 1974 Dollars
for a Sample of Halfway Houses. .....

Operating Costs Excluding Facility Costs

in Current and 1974 Dollars for a Sample of

30 Houses». ew ee ee ee eee

Average (Per Bed) Daily Operating Costs in
1974 Dollars for a Sample of 30 Houses...

Personnel Costs in Current and 1974 Dollars
for a Sample of 30 Houses ........

Adjusted Median Value of Owner Gecupied
Housing Units, by Region and State...

Comparative Salary Ranges, by Occupation
and State (August 1, 1973).......

Sample Budget for a House Providing
Basic In-House Services (1974 Dollars) .

Sample Budget for a House Providing
Basic In-House Services Plus Community
Resource Referral (1974 Dollars) ....

Sample Budget for a House Utilizing
Volunteers in the’Provision of Basic
In-House Services and Community
Resource Referral (1974 Dollars) we

Sample Budget for a House Providing
Comprehensive In-House Services

(1974 Dollars) .........0.004
Combined Average Cost Estimates ....

Costs of Education and Vocational
Training (1974 Dollars) ........

29

11

17

29

35

“41

49

52

63

65

68

69
70

80


4-10

In addition, as both the literature in the field and Project
advisors had delineated the variation among halfway houses, it was
determined that a representative sample was critical to the usefulness
of the research effort. It was further determined that the sample
should be representative in terms of:

(1) size (house capacities in terms of maximum number of
+ clients served);

(2) type (state operated houses, private agencies opera-
ting more than one house, and private independent
houses) 3

(3) services provided;

(4) location (geographical region, size of city and type of
neighborhood); and

(5) types of clients served.

The optimal approach to assuring that a sample is representa-
tive is to assure that each aspect of a characteristic is associated with the
same proportion of the sample as it is of the population. Such an approach
is achieved through a process called stratification. This process
assumes, however, that the relevant characteristics have been identi-
fied in the population, and that the proportions in which the different
aspects of those characteristics occur in the population are known.
Unfortunately, these proportions are not known for the population of
halfway houses; the exact proportion in which these different aspects
occur have never been identified.

A second best approach to constructing a representative sample
is to estimate the proportions utilizing available data, and select the
sample accordingly. This procedure was adopted.

Therefore, the houses comprising this sample have been
selected from known halfway house programs satisfying the cost data
availability and duplicability criteria, so as to provide a representa-
tive mix in terms of the five characteristics listed above, according
to data contained in the literature (see Appendix B, Bibliography)
and supplied by Project advisors.

15u


Table 8

Sample Budget for a House Providing
Basic In-House Services@ (1974 Dollars)

PERCENT OF PERCENT OF
TOTAL TOTAL
XTEM AVERAGE OPERATING AVERAGE OPERATING
HIGH costs? LOW cosTsb
PERSONNEL
Salaries and Wages
Director $15,970 V2.1% $12,085 14.6%
Assistant Director/Supervisor 12,737 uk 9,767 11.8%
Counselor 11, 756 B.9% 8,842 10.7%
Night Counselor 9,441 TALE 7,100 - 8.6%
Part-Time Counselor . 4,576 3.5% 2,560 3.1%
(20 hrs. /week) :
Secretary/Bookkeeper 7,646 5.8% 6,082 3%
Housekeeper/Cook ~990 5.3% 5,500 6.7%
Total Wages and Salaries (69,116) (52.3%) (51,936) (62.7%)
Fringe Benefits (15%) 10,367 7.8% 7,790 9.5%
TOTAL PERSONNEL COSTS ($79,483) (60.1%) ($59, 726) (72.2%)
NON PERSONNEL
Professional Fees and .
Contract Services $ 4,042 3.1% 3 1,016
Travel and Transportation 3,589 2.7% 1,670
Rent/Rental Equivalent 12,292 9.3% 4,704
Maintenance 2,461 1.9% 1,304
Utilities 4,288 3.3% 1,834
Communications 2,422 1.8% 1,372
Supplies® 3,614 2.7%
Food? 18,002 13.6% 9, °92
Other 2,057 1.6% &
TOT..L NON-PERSONNEL COSTS ($52,767) (39.9%) ($23,064}
TOTAL OPEATING COSTS $132,250 (100%) $82, 7)
AVERAGE COST
Capacity (18)
Average Daily Cost Per Client $ 20.13 $ 12.60

This budget includes only those costs o: a halfway house which are borne by the criminal
justice system. Exlcuded are the costs of services typically provided outside the criminal
j ice system -- such as manpower training, aptitude testing, GED tutoring, and vocational
ing. These services .. which halfway house clients are reterred are treated as external
ansts, discussed in the next chapter.

b

ot

Percentages may not add to 100 because of rounding.

Supply cost estimates are based on average per client costs of ~55/client/day and /13/
clinct/day. .

4 Food cost estimates are based on average per client -oste of $2.74/citent/day and
$1.46/client/day. - 63 -


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50


- 58 -

Non~personnel factors,-with the exception of consumable
supplies and food, both of which vary with the number of clients
served, are likewise invariable along these two ranges of clients
served. The implication is that among houses in the same range in
terms of clients served, since staff size does not vary and non-
personnel costs other than food and consumable supplies are approxi-
mately the same as well, the majority of variation is attributable
to price variation and different services being provided.1

CRIMINAL JUSTICE COST ESTIMATES FOR HOUSES OFFERING ALTERNATIVE
SETS OF IN-HOUSE SERVICES

The previous sections of this chapter have dealt with the
amount of variation in different types of costs among the houses
in the sample, and the sources of that cost wneiation. This section
now extends the analysis by presenting cos: estimates for a "typical"
operational house offering alternative sets of in-house services.
The estimates are averages based on the actual or budgeted expendi-
tures (in 1974 dollars) of the houses in the sample, and are pre-
sented in the form of sample budgets. Personnel costs are in the
form of salaries and wages by position and total fringe benefits;
non-personnel costs are identified by type.

Two sets of estimates are given in each sample budget:
the first represents an average of the highest 50 percent of
sample houses for expenditures in each category and the second,
an average of the lowest 50 percent.2 This format was selected
because it recognizes that price variation for approximately the
same item at the same time, is present among halfway houses, and
it provides two sets of estimates which decision makers can use
as benchmarks in estimating the costs of operating a house in
their own localities (based upon the particular client-service-
personnel mix).

lie factor prices are the same for a group of houses serving
numbers of clients in the same range, say 12-18, then average (daily)
operating costs would be the lowest at the upper limit of the range
18, significantly lower than for a house serving 12. But as: the
results of the analysis of the sample for economies of scale indi-~
cated, average operating costs are not significantly lower (nor
higher) than a house serving 28 as compared to 18. The analysis
does indicate however, thet given no differences in labor prices
between houses, a house serving 18 would have lower everage operating
costs (as well as lower total operating costs) than a house serving
22, and that s house serving 28 would have lower average costs
(altheugh higher total operating costs) than a house serving 12-

2For more. general information on how the sample budgets used
in the Standards and Goals Project have been constructed, see
Appendix A-5.


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68


- 59 -

There are four features of the estimates contained in the
following sample budgets which should be noted:

(1) The estimates are for an on-going opérational activity
and as such exclude the high start-up-costs that
characterize the first year of a new project.

(2) For each budg-: item, two estimates are given, an
average high and an average low.

(3) The sample budgets include only those expenditures
incurred by the criminal justice system in the
operation of a halfway house. Excluded from the
budget (but discussed in the next chapter) are
external costs (for example, the cost of education
or job tr ining activities outside the criminal
justice system to which the client may be referred)
and opportunity costs (for example, the potential
cost to society of any increased risk of crimes
committed by house clients).

(4) Estimates presented in the sample budget are in
calendar 1974 dollars, therefore anyone using these
estimates as a basis for determining the costs of
operating a house in his or her community will need
to make allowances for post-1974 price increases
(by using, for example, indexes constructed by the
U.S. Bureau of Economic Analysis and the U.S. Bureau
of Labor Statistics).

Specific Budget Items

Each of these four sample budgets 2 follows a basic format:
salaries and wages by position; total fringe benefits; total
personnel costs; non-personnel costs by type; total non--personnel
costs; total operating costs; and average operating costs per bed.
Both the contents of, and the methodology employed in determining,
the individual budget line items are discussed in this section.

Salaries and wages, in conformance with definitions used
by the U.S. Office of Management and Budget, include pay for

luigh start-up costs can be a significant problem for persons trying
to initiate a halfway house program, particularly if such costs are estimated
to include the total cost of a facility and equ: ient purchase or extensive
renovation. From an economic perspective, such capital (facility and equip-
ment) costs should be 2'located over the “productive life" of a halfway house,
now just at the beginning of its operations, but this approach is not always
recognized or accepted by all groups in a community.

2tt is aasumed in three of the samp: 2 budgets that all services are
performed by paid staff and not by volunteers or clients. Substitution of
volunteer or client labor for paid staff would therefore lower the estimates
contained in these three sample budgets. In the fourth (Table 10), volunteers
are assumed to be providing services, so a comparison between it and Table 9
illustrates cost savings from such substitution.

92



- 95 -

Halfway houses must compete with other activities, both
within the corrections industry and with activities from other
industries, for financial resources and for labor resources as well.
Hence a halfway house is both a competitor in the resource markets,
and a monopolist in the distribution of services.

The function of the entire corrections industry, and there-
fore of halfway houses, can be considered from a social welfare view-
point to be the maximization of benefits to society through provision
of services (including custody) to offenders.l As such, the objective
function of both the halfway house sub-industry as a whole, and indi-
vidual houses, can be considered to be the employment of available
(though scarce) resources in such a manner as to maximize the societal
benefits derived from both providing services produced in-house and
from referring clients to services produced outside.

Halfway houses, both on a sub-industry and an individual
house level, generally interact little with other correctional
alternatives or with one another. To the extent that this results
in duplication of services or underutilized resources, and to the
extent that planning, managerial, or production efficiencies could
be realized, increased interaction with other correctional alter-
natives and among the halfway houses themselves would yield increased
benefits.

Planning on other than an individual house level is con-
spicuously absent, and even on that level, long range planning is
infrequent. Lack of planning or short run planning can result in
sub-optimal resource allocation decisions. For a community in which
there are several houses, for example, a less than optimal resource
allocation may occur because of duplication of services (in-house)
‘among the houses. Resources might be better allocated by having
individual houses specialize in serving clients with particular
needs (employment, education, vocational training) or problems
(drugs, alcohol, mental), with clients being sentenced or referred
to particular houses on the basis of their needs and/or problems.
Long range planning, particularly on a local (city) level could

the halfway house sub-industry most closely conforms is called
monopolistic competition. Under monopolistic competition, there are

a number of small firms, each of which, however, has some (monopolisti
control over its product (services).

dan equivalent function to maximizing societal benefits
would be minimizing social costs.

2at the other end of the interaction continuum is collusion
(too much interaction). Whereas in more traditional economics such
collusion typically results in price fixing, collusion among halfway
houses would likely carry policy rather than price implications
(i.e., movement toward more restrictive policies).

127


- 98 -

(1) Halfway houses would be included as part of a state
and/or local long range master plan. Individual
houses would conform to state and local standards.
Other state and local correctional activities would
also be included in the plan, so as to optimize the
allocation of correctional resources among all cor~
rectional activities. Such planning on the state
level would have the effect of reducing competition
among individual houses within the state. Short range
planning and decisions regarding client progress
(through the house programs) and service provisions,
however, would still be primarily the responsibility
of the individual house.

(2) The role of halfway houses as a direct sentencing
alternative would be expanded. This would result in
a greater percentage of clients assigned directly to
houses by the courts and, in conjunction with the
Report theme of minimum penetration, result ina
wider mix of clients in terms of age, type of offense,
and number of previous convictions.

(3) The production-distribution role of houses would be
lessened, by emphasizing referral of clients to ser-
vices provided by community resources rather than
providing those services in-house, and by both in-
creasing the number of clients sentenced directly by
the courts and restricting the power of administrators
of houses to turn down prospective clients referred by
other correctional activities.

This discussion of current policies and procedures of halfway
houses on both an individual house and sub-industry level, and of the
implications of implementation of the Corrections Standards, has been
intended as a brief discussion of potential economic considerations
associated with the benefit side of halfway houses, both current and
proposed. While the primary focus of this report has been a cost
analysis of halfway houses and implementation of the Corrections
Standards relating to halfway houses, the benefit side cannot be
completely ignored in an economic analysis; hence this prief discus-
sion. Both comprehensive and detailed research efforts into policies
and practices of halfway houses and their impact in terms of benefits
to clients and to society are needed so that optimal policy and
procedural strategies can be developed, and cost/benefit trade-offs
identified.

regulation on, for example, a state level could result in larger
scale, more closely supervised operations (as is often the case
in state-operated work release houses) and state control of

staffing.

130


-4-

a. Unconditional release.
b. Conditional release.

c. A fine.
d. Release under supervision in the
community.

e. Sentence to a halfway house or other
residential facility located in the community.

f£. Sentence to partial confinement with
liberty to work or participate in training or
education during all but leisure time.

g- Total confinement in a correctional
facility.1

The preceding Standards identify halfway houses as one of several
sentencing alternatives. A second role of halfway houses is that of a
resource available to other activities within the criminal justice system
(both pretrial and post-trial) for provision of services. Housing, food
and in-house supervision may be provided to pretrial releases, proba~
tioners, releases from institutions, and parolees.

In discussing this second role of halfway houses and other
forms of community-based corrections within the criminal justice system,
the National Advisory Commission Report states:

3. . Community-based correctional programs
embrace any activity in the community directly
addressed to the offender and aimed at helping
him to become a law-abiding citizen. Such a pro-
gram may be under official or private auspices.
It may be administered by a correctional agency
directly or by a noncorrectional service. It
may be provided on direct referral from a
correction agency or on referral from another
element of the criminal justice system (police
or courts). It may call for changing the
offender through some combination of services,
for controlling him by surveillance, or for
reintegrating him into the community by placing
him in a social situation in which he can
satisfy his requirements without law violation.
A community-based program may embrace any one or
any combination of these processes.

lipid., p- 150.

Tbid., p. 222.


A-22

food preparation. Enrollment in educational or job training programs

or employment begins typically within 90 days. At that time, the client
participates in weekly groups and individual counseling as needed until
satisfactory adjustment to the community has been made. The costs of
client lunches, therapy, family counseling, and educational and voca-
tional services are included; the costs of services provided by community
health and legal aid programs to’ which the clients may be referred are not.
Staff includes an administrator, secretary, three counselors and one
vocational rehabilitation specialist. Personnel costs account for 67
percent of the total budget. Other costs are medical consultants (4 hours
per month), 1 percent; local travel for clients, 1 percent; equipment,

4 percent; intake medical exams which are contracted at $75 per exam,

5 percent; utilities and communications, 3 percent; rent, 6 percent;
food, 8 percent; lab services, 6 percent.

°Range in cost is due to economies of scale. The more costly
serves 100 clients; the othe: 300. Both centers are open seven days
aweek, Staffing patterns satisfy FDA regulations and shares of budget
items are as follows:

300 Clients 100 Clients

Share Share

item of Budget Eten of Budget.
Personnel =

2 administrators 2 administrators

secretary secretary

clerk typist clerk typist

1/2 time doctor doctor

4 nurses 71h 6 nurses 65%

1/2 time vocational vocational

specialist specialist

4 counselors ; 10 counselors i
psychiatric con- psychiatric con-
sultants 2% sultants 3%
travel 1% travel : 1%
equipment 1% equipment 2%
medical exams 6% medical exams 10%
communications and communications and
utilities 1% utilities Ze
rent 4% rent 3%
supplies 3% supplies 3%
training and lab training and lab
services 11% services 11%

182


-8-

served''--12 to 18 and 22 to 28. Average costs were lower at the
upper end of each range than at the lower end.

In selecting the sample of halfway houses used for the
analysis described above, an effort was made to represent a cross-
section of houses across the country, by size, type (state-operated,
private, independent, private agency-operated), services provided,
location (geographical region, size of city, type of neighborhood),
and types of clients served. The sample was selected on the basis
of several additional criteria as well: principally, duplicability
and availability of cost data. However, even for houses included
in the sample, several data limitations were encountered. They
included the following:

° Houses operated on, and therefore expenditure data
were available for, different yearly cycles. Some
houses operated on a calendar year basis, others on
a fiscal year, and some even operated on other cycles.

e There was a lack of complete records of actual
expenditures. Some houses recorded only budgeted
expenditures.

° Houses excluded certain costs from the budgeted and

recorded, actual expenditures. Costs most commonly
excluded were facility costs and fringe benefits.

If previously deleted, allowances for fringe benefits were included

in total personnel cost estimates. Rental equivalents were calculated
for facilities owned rather than rented. All cost data were stand-
ardized to 1974 dollars, employing the GNP deflator for state and
local government purchases. Average costs were calculated on the
assumption that houses were operating at designated capacities.

Using line item cost data from houses in the sample, four
sample budgets for halfway houses offering different types of
services were derived. The format for such a sample budget is
illustrated in Figure 1 on page 9, which presents a set of criminal
justice system cost estimates for a halfway house providing basic in-
house services plus community resource referral, the combination of
services most closely associated with all_of the Corrections Report's
recommendations regarding halfway houses. Average cost estimates
associated with each of the four sample budgets derived by the
Project are shown in Figure 2 on page 10.

1
All four sample budgets are presented in Volume II of this
report.

12


This cost analysis of halfway houses will be concerned only with
those external costs that are associated with a Particular house or with
halfway houses as a whole. For example, though the analysis is not con-
cerned with all of the costs of providing educational services to adults,
it is concerned with the costs of Providing educational services to adults
who are clients of halfway houses.

DIRECT AND INDIRECT COSTS

The following types of costs apply to all the categories above
(criminal justice and external costs) when a specific activity (for example,
a halfway house, citation, summons, diversion) is assessed. Direct costs
include personnel and other expenditures associated with the provision
of services to clients by a specific service-producing activity; in this
report, service producing activity is a halfway house. For example, the
salary of. a house counselor serving individual clients within a house would
be considered a direct cost of a halfway house program, Likewise, food,
rent, utilities, telephone and other non-personnel operating costs would
be considered direct costs.

Services may be provided directly to the activity's clients by the
activity itself (the halfway house) or by other agencies (beth within and
outside of the criminal justice system). Costs associated with services
Provided by other agencies within the criminal justice system are still
considered direct client costs. If such services are provided by other
agencies outside the criminal justice system, then those costs, while
still direct since the agencies are serving a client of the activity being
analyzed, are external direct costs. .

Where direct costs of halfway houses are not immediately identifi-
able, such as in the case where Personnel of other criminal justice agencies
provide services to clients of a particular house, estimates must be “tiade
on a percentage time basis. For example, consider a halfway house serving
exclusively probationers, and assume that some of the counseling and referral
services are being provided to clients of the house by officers of the
probation department. In order to determine the total criminal justice
system costs of the halfway house, in addition to the costs associated with
the provision of services by the house must be added to the estimate of the
cost associated with the provision of services by probation officers.

If it is determined that probation officers spend 15 percent of their time
Providing services to halfway house clients, then 15 percent of their salaries
and fringe benefits must be included as a portion of the costs of that house.
That is, that amount of salary and fringe benefits would be a direct cost of
the halfway house. (The administrative cost absorbed by a probation depart-
ment or state department of corrections in referring and then monitoring

the progress of clients through the same halfway house would be an indirect
cost and therefore not included in the Project's criminal justice system cost
estimates, as explained below.)

145


A-13

Home of Industry for Discharged Prisoners

State Road & Penna. R.R.
Upper Darby, Pa. 19082

(1) Telephone conversation with Joseph Liberati, Director, June
25, 1975.

(2) Letter from Joseph Liberati, July 9, 1975...

(3) United States Government Accounting Office.

Community Outreach Services
P.O. Box 943
Daytona Beach, Florida 32014

(1) .Télephone conversation with Phillippe G. Robert, Director,

July 1, 1975. .
(2) Letter from Phillippe G. Robert, July 8, 1975.

Jacksonville Adult Development Centers Project
10 South Catherine Street
Jacksonville, Florida 32202

(1) Telephone conversation with Anthony J. Parrish, Director,
July 1, 1975.

(2) Letter from Anthony Parrish, July 8, 1975.

(3) Letter from Joe Schmidling, Assistant Director, July 15,
1975.

Washington Halfway House for Women

1816 19th St. N.W.
Washington, D.C.

(1) Telephone conversation with Sonia Moore, Director, June

17, 1975.
(2) Correctional Economics Center, "Community Programs for Women
Offenders: Cost and Economic Considerations."

Bureau of Rehabilitation for the National Capital Area

666 llth St. N.W.
Washington, D.C.

(1) Telephone conversation with Patricia R. Nelson, Research and
Program Analyst, June 18, 1975; and Edward R. Johnson, Assis-
tant Director for residential programs, June 23, 1975.

(2) Bureau of Rehabilitation for the National Capital Area,
"1974 Annual Report."


APPENDIX A-5

METHODOLOGICAL NOTE ON THE DERIVATION
OF SAMPLE AND MODEL BUDGETS USED IN.
STANDARDS AND GOALS PROJECT REPORTS

For several different types of activities envisioned in the
Standards of the Corrections Report (for example, drug and "DOL model"
diversion and halfway houses), sample budgets have been derived by the
Standards and Goals Project staff. A sample budget is a set of esti-
mated criminal justice system expenditures, by line item (staff salaries
by position, fringe benefits, facilities and so forth), for a type of
activity suggested in the Corrections Report.

Included as criminal justice system expenditures are direct
outlays for, or the imputed value of, goods and services provided by:

. Law enforcement agencies

e Courts

e Legal services, agencies, bureaus or firms

e Other agencies, organizations or individuals whose

stated mission could not be carried out if there
were no crime

° Activities of organizational units or individuals
financed by any one of the above.

Estimates shown in a sample budget are derived from, but not
necessarily identical with, budget or expenditure statistics from two
or more existing activities which have characteristics similar to those
advocated by the Corrections Report. Two estimates are provided for
each line item--a "high average" and a "low average"—to reflect vari-
ation in the cost of approximately the same item (a staff person at a
particular level [for example, a police patrolman] or 1,000 square
feet of office space) for different parts of the country.

lyhis Appendix was written by Dr. Virginia B. Wright, Research
Director for the Standards and Goals Project.

A-19

1593


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52


~7-

neighborhoods (for example, suburbs) than in unstable (for example,
inner city) neighborhoods.

Other price factors varied as well.' Utility prices varied
by, as much as 50 percent among different states. Food prices were
found to be-approximately nine percent higher in metropolitan areas
than in non-metropolitan areas; among metrolpolitan areas, the food
price differentials amounted to ten percent.

The third source of cost variation was availability of
resources. Resources were of three types:

e Public financial resources, which includes block
funds from LEAA, HEW or State Planning Agencies (SPA)
grants, contracts with the Federal Bureau of Prisons
and Division of Probation, state departments of cor-
rections and probation and parole authorities (for
the houses operated by state departments of corrections,
of course, some resources were internal);

° Private financial resources, which includes funding
from sources outside the criminal justice system such
as private agencies and individuals, and client pay-
ments for room and board; and

C) Non-financial resources, which includes community re~

sources which provided free or reduced cost services

to clients of halfway houses. Such resources included

doctors, lawyers, dentists, repairmen and volunteers

of all types.
: The analysis indicated that houses funded primarily by public
financial resources were in effect being subsidized by federal, state
and/or local governments, and this subsidy had both price and quantity
effects, especially for personnel costs. Houses which had strong public
resources, which included the houses operated by state departments of
corrections, the houses operated by private agencies or foundations, and
several of the single houses funded primarily by LEAA, generally had more
and higher salaried personnel than their privately funded counterparts.
The houses in the sample serving exclusively work releasees generally had
larger absolute expenditures than houses serving primarily clients under
other sentencing dispositions, since they were the houses most likely to
have strong public financial resources, especially contracts with the
Federal Bureau of Prisons and the state departments of corrections.

The fourth source of cost variation was economies of scale and
factor indivisibilities. While the existence of economies of scale
could not be affirmed by sample data, certain fixed costs, princi-
pally facility costs and the salary and fringe benefit costs
associated with director and assistant director positions, were
found to affect average costs over two ranges of "number of clients

il


-13-

Dismas House, in Kansas City, Missouri, is a non-profit organ-
ization committed to "alleviating the crowded conditions of the county
jail while providing a program of rehabilitation and custodial care."
Dismas House serves recidivist offenders over 21 referred by and/or
under per diem contract with the Missouri Division of Corrections,
the Federal Bureau of Prisons (BOP), the Board of Probation and Parole,
the Jackson County Department of Corrections, and the Circuit Courts.
Dismas House is also funded by a grant from LEAA, private contri-
butors, and room and board payments by participants of up to $28 per
week based on earnings.

Reality House, in Columbia, Missouri, describes itself as a
“community residential treatment center designed for the client who
is capable of actively involving himself in therapy." Reality

. House serves clients referred by the Missouri Department of Correc-
tions, regional Probation and Parole Offices, Circuit Court judges
and other criminal justice system agencies. Reality House is funded
primarily by LEAA.

The William Howard Morman House, located in Farmington,
Missouri, was established in 1972 and serves probationers and parolees
who are primarily first offenders from a ten-county rural area. Morman
House operates under per diem contracts with both the Missouri Divi-
sion of Corrections and the Federal Bureau of Prisons, but receives
most of its funding from LEAA. Clients contribute a portion of their
earnings for room and board on an upward scaled percentage basis.

Magdala Foundation operates four halfway houses in St. Louis,
Missouri: one for women_and three for men. They provide an overall
service-intensive program’to primarily probationers and parolees be-
tween the ages of 17 and 21: In addition to the houses, Magdala Foun-
dation operates botha mandatory six-month after-care program for
graduates of the residential program, and a non-residential vocational
and counseling service program. The Foundation is funded by the state,
LEAA, private contributions, and room and board payments by residents
ranging up to $21 per week.

The Home of Industry for Discharged Prisoners (HIDP), located
in Upper Darby (Philadelphia), Pennsylvania, is an incorporated non-
profit organization with the stated objectives of "helping ex-
prisoners to enter society by awakening an incentative to their man-
liness and good citizenship." HIDP dates its origin back to 1889 and
now serves primarily parolees faced with revocation. HIDP is almost
completely funded by LEAA grants and by room and board payments by
residents of $20 per week.

Community Out-Reach Services (COS), which formerly operated
under the name Cain House, is located in Daytona Beach, Florida, and
serves probationers, parolees and prereleasees referred by and under
contract to the Florida Department of Offender Rehabilitation, Federal

46


- 94 -

convicted offenders (who have dittle choice but to consume whatever
is supplied). By definition, an industry is a collection of firms
producing a "similar product;" corrections activities can be
characterized as producing a similar product--services to accused
or convicted offenders.1 Halfway houses comprise a sub-industry
within corrections; and each halfway house is a producer within the
industry, employing various combinations of resources to produce
services. As producers, halfway houses have a choice of employing
in-house resources or utilizing external, community-based resources.
Each halfway house is, in addition, a distributor of those services
and is responsible both for determining who the consumers of those
services will be and which consumers will consume which combinations
of services.

Halfway houses possess a certain degree of monopolistic
power within their operations. In traditional economic theory,
monopolistic power is demonstrated by controlling output and thereby
controlling prices and restricting consumer choices. Halfway houses
exert monopolistic power as they determine whom they will serve and
what they will serve them, and thereby restrict client choices.
They consequently control opportunity costs to clients, which can
be considered as the price clients pay for those (restricted) choices.
The degree to which choices are restricted is directly related to the
price or amount of total opportunity costs. Choices are muxe se-
verely restricted and opportunity costs greater for inmates of insti-
tutions than for clients of halfway houses; similarly, choices are less
restricted and opportunity costs less for probationers than for halfway
house clients.

The degree to which monopolistic power is exerted, and con-
sequently, client choice restricted and opportunity costs imposed,
varies among the individual houses. To the extent that houses are
ultimately responsible to other corrections authorities or to the
courts, the monopolistic power of the individual house is diminished.

l'services to clients of halfway houses" is, in reality, a
joint product. Such services include both custody (an indirect service
to clients, more a service to society) and other services (such as job
placement) to clients. The services are a joint product because the
inputs cannot be separated. House staffs perform both functions at

the same time.

2For most services, with the exception of food, production
and distribution are simultaneous functions. Supervision and counsel-
ing, for example, are one stop, production-distribution operations.
However, it is useful to view the functions separately, so as to con-
sider the inputs of production on the one hand (labor, physical re-
sources, the facility), and the recipients to whom the services are
distributed on the other.

3~he economic classification of market structure to which

126 .


COST ANALYSIS OF
CORRECTIONAL STANDARDS:

HALFWAY HOUSES
VOLUME II

By
Donald J. Thalheimer

This project was conducted by the Correctional Economics Center under
Grant No. 74NI-99-0042 awarded to the American Bar Association by the
National Institute of Law Enforcement and Criminal Justice, Law Enforce-
ment Assistance Administration, U.S. Department of Justice, under the
Omnibus Crime Control and Safe Streets Act of 1968, as amended. Points
of view or opinions expressed in this document are those of the author and
the Correctional Economics Center and do not represent the official posi-
tion or policies of the U.S. Department of Justice or the American Bar
Association,

The Law Enforcement Assistance Administration reserves the right to
reproduce, publish, translate, or otherwise use, and ‘o authorize others
to publish or use, all or any part of the copyrighted material contained
in this publication,

© 1975 by American Bar Association

OCTOBER 1975

National Institute of Law Enforcement and Criminal Justice
Law Enforcement Assistance Administration
U.S. Department of Justice

25

For aale by the 81 of U.S. Government Printing Office, 1 D.C. 20402 - Price $210
‘Stock Number 027-000-00208—1



BENEFITS FROM HALFWAY HOUSES

While the focus of the Standards and Goals Project's analysis
has been on the costs of halfway houses, any economic analysis is
incomplete without at least considering the benefits with which these
costs must be compared, in selecting and implementing correctional
activities. Accordingly, the benefit side of halfway houses is dis-
cussed briefly in this volume, from an economic perspective.

Benefits can be considered from both a macroeconomic viewpoint
(considering halfway houses as comprising a sub~industry within the
corrections industry) and a microeconomic viewpoint (regarding the
individual house as the unit of analysis). Different policies and
procedures of houses may serve to generate or restrict benefits to
clients and to society. Implementation of the Standards of the
Corrections Report would affect current policies and procedures,
and therefore affect total benefits to clients and society, as:

(1) Halfway houses would be included as part of a state
and/or local long range master plan. Individual houses
would conform to state and local standards. Other state
and local correctional activities would also be in-
cluded in the plan, so as to optimize the allocation
of correctional resources among all correctional
activities.

(2) The role of halfway houses as a direct sentencing
alternative would be expanded. This would result in
a greater percentage of clients assigned directly to
houses by the courts and, in conjunction with the
Report theme of minimum penetration, result in a
wider mix of clients in terms of age, type of offense,
and number of previous convictions.

(3) The production-distribution role of houses would be
lessened; by emphasizing referral of clients to ser~
vices provided by community resources rather than
provision of those services in-house, and by both
increasing the number of clients sentenced directly
by the courts and restricting the power of administra-
tors of houses to turn down prospective clients re-
ferred by other correctional activities.

-15-

19


-4-

Each correctional agency providing parole,
probation, or other community supervision
should supplement its rehabilitative ser-
vices by referring offenders to social
services and activities available to citizens
generally. The correctional authority should,
in planning its total range of rehabilitative
programs, establish a presumption in favor of
community~based programs to the maximum
extent possible.1

From an economic perspective, implementation of the two
Standards cited above, as well as other recommendations in the
Report which call for correctional planning and improved services
to alleged or convicted offenders, would affect costs and benefits
(outputs) associated with halfway house activities. The nature
and magnitude of such effects is the subject of this report.

1

Ibid., p. 43.


- 106 -

DIRECTIONS FOR ADDITIONAL RESEARCH

This report has described a comprehensive analysis of
houses. This analysis, however, has not been able to analyze
all cost-affecting or cost~related variables. Cost-affecting
Yelated areas in which additional research is needed include:

(1) Facility Costs

e What are the short and long run facility cos
entials between renting and buying?

e What is the most efficient facility design?

e What is the most efficient facility size per

halfway
in depth
or cost-

t differ-

client

for a house with a capacity of, for example, 30?
(2) Other Operating Costs
° What are the most efficient combinations of staff?
° What are the most efficient combinations of non-
personnel inputs?
(3) Sources of Variation
e What are the most efficient combinations of inputs
to provide different services?
° What is the extent of interregional price variation?

e What is the relationship between type and le
funding and operating costs? Is there an in:
effect when federal funding is assumed?

vel of
flationary

e Are there economies of scale? What is the most

efficient scale of operation?
(4) Other Criminal Justice System Costs

° What is the extent of indirect costs? What
most efficient administrative design?

e What is the aggregate of police and court co:
apprehending and prosecuting clients who abs

(5) External Costs
e What are the most efficient methods of distr:

resources provided by agents external to the
criminal justice system?

138

is the

sts of
cond?

ibuting


= 84 -

Costs of Mental Health Services

Clients with mental illnesses may require outpatient or short
run inpatient services provided by public and private hospitals or
other institutions (outside the criminal justice system). The costs
of providing such services are contained in Table 16, page 85. The
daily cost per client ranges from $30.86 for inpatient care at public
hospitals to $72.80 for inpatient care at private hospitals. As the
major expense is personnel costs, outpatient care is not much less
costly than inpatient; for treatment in an outpatient psychiatric
clinic, the daily cost per client is $36.60.

Costs of such services are almost always charged to the
institution providing the services and hence external. Relatively
fewer clients are referred out for treatment of mental illness as
compared to referral for treatment of alcohol and drug problems,
and hence aggregate external costs of providing treatment services
to mentally ill clients are not expected to be as large.

Leisure Services

Another type of external cost considered is that associated
with private or public institutions,’ agencies, or businesses pro-
viding leisure services to clients.

Although leisure services have typically received low
priority compared to supervision and other services to clients,
some houses allocate a portion of staff time (as well as volunteer
time, if volunteers are utilized) to locating free or low cost (to
the halfway house) leisure resources and activities. Such resources
and activities range from use of private and public gymnasiums and
swimming pools to free or lower-priced movies and concerts.

As with volunteers, use of these services may be costless
or low cost, but external costs are imposed on the resources pro-
viding them. The extent of these external costs obviously varies
with both the type of resource and the nature of the service. A
cost trade-off exists between the amount and type of leisure service
provided (and therefore the external costs of those services) and
the leisure-related opportunity costs to clients of the halfway.
house (which will be discussed in a following section). The greater
the amount, and wider the variety, of leisure resources available to
clients, the smaller will be their opportunity costs.

Volunteer Services
A final type of external cost is that borne be volunteers who

work in halfway house programs. While current use of volunteers is still
on a small scale and functions performed are generally limited to

116


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17.

LIST OF TABLES
(continued)

Cost Estimates of Providing Drug

Treatment Services (1974 Dollars) ......

Cost Estimates of Providing Treatment

Services to Alcoholics (1974 Dollars) ....

Cost Estimates of Providing Mental
Health Services (1974 Dollars) .....

Estimated External Costs for a Selection
of Treatment Services Provided to Eight
Clients of a Halfway House (1974 Dollars)

“vi

30

- 83


APPENDIX A-2

SAMPLE SELECTION AND USE

SAMPLE SELECTION

In this research effort (as in most research efforts), it was
possible to collect data from every halfway house (element); accord-
ingly, a sampling methodology was necessary. The first consideration
was sample size. A sample of 25 to 30 elements is generally both a
large enough and still manageable sample because of the evident wide-
spread variation among halfway houses on all levels except house
capacities. The larger number, 30, was adopted.

Sample selection procedures can be classified into four
different types:

(1) random selection, in which selection is made in such a
way as to ensure that each element has an equal probabil-
ity of being selected;

(2) systematic selection, in which each element is selected;

(3) cluster selection, in which a larger unit is selected
which contains several of the elements--for example
selecting a particular school as the sample for
studying student (national) attitudes; and

(4) deliberate selection, in which elements are selected
so as to ensure that they satisfy certain criteria
and/or are representative of the population as a whole.

This fourth sample selection procedure was employed because
two selection criteria had been identified as necessary or important
qualifications for houses in the sample. These two selection criteria
were:

(1) that cost date, including expenditures or budget break-
downs, be available; and

(2) that halfway house programs be duplicable in keeping with
the Standards and Goals Project's function of providing
source guides for state and local administrators, plan-
ners and analysts.

not


-1-

In interpreting or applying the cost estimates associated with
sample budgets shown in Figures 1 and 2, the following should be noted:

e. The cost estimates contained in the sample budgets were
based primarily on sample date, but staffing and non-
personnel resource patterns were determined on the basis
of observed patterns both in the sample and elsewhere,
and according to staffing and other resource patterns
envisioned in the Corrections Report. ‘

° Halfway houses, like most governmental activities, are
labor intensive. Therefore a very high percentage of
a sample budget is for personnel costs.

° With allowances for factor. indivisibilities, these esti-
. mates are associated with houses designed to serve 18
clients, operating at capacity. Based on the Project's
analysis discussed earlier, houses operating at less
than capacity or at design capacities close to, but
above or below, 18 clients can expect to have somewhat
higher average costs.

. The “average high," “average low" and "mean" figures

' associated with a particular item were derived as
follows. The average high is the average of the upper
half of the sample for that item; the average low is
the average of the lower half; the mean is the average
of the average high and the average low. No estimate
shown is an extreme (at the high or low end of the
spectrum of cost variation among houses in the sample).
Which estimate is most appropriate for a particular
locality or house will depend primarily on where the
locality or house stands regarding the four major
sources of cost variation, discussed earlier.

° These estimates were derived for an ongoing, operational
activity. Higher startup costs have therefore been
excluded.

° Cost estimates have been standardized to 1974 jollars.
Adjustments for inflation since that time will need
to be made to arrive at estimates for houses operating
in subsequent years.

e A sample budget includes only those costs incurred by
the criminal justice system in the operation of a
halfway house. Not included are external and opportunity
costs, discussed below.

lit is assumed in three of the sample budgets that all services are
performed by paid staff and not by volunteers or clients. Substitution of
volunteer or client labor for paid staff would therefore lower the estimates
contained in‘these three sample budgets. In the fourth (Table 10), volunteers
are assumed to be providing several services, so a comparison between it and
Table 9 illustrates cost savings from such substitution.

15


Opportunity cost can be viewed from the perspective of many different
levels of resource aggregation, that is, there is an opportunity cost associa~
ted with:

e A single resource which could be used in different ways (such
as a person who can hold different jobs);

e A set of resources which could be used in alternative correc-
tional activities (such as $10,000 for a halfway house or non-
residential probation) ;

e A set of resources which could be used in alternative public
activities (such as government doctors for criminal justice or
mental health programs) ;

° A set of resources which could be used in public or private
activities (such as $10 million in loans to build a correc-
tional institution or private homes).

From the perspective of a single resource which could be used in
different ways, one measure of the opportunity cost of an inmate in an
institution is the productivity of his labor that is foregone, or the op-
portunity cost of using a person to teach inmates is the teaching (or
other tasks) he or she might have performed elsewhere. At the level of
alternative correctional activities, the opportunity cost of using a set
of resources! to provide services to clients of a halfway house can be
thought of as being the result or product (measured in terms of the criminal
justice system's objectives, such as reduced crime or integration of offen-
ders into society) that could be obtained from using those same resources in
other types of correctional activities (such as non-residential probation
or parole). At other levels of resource use suggested in the list above,
individual halfway houses, or all houses as a group, can be compared to other
criminal justice activities, other non-criminal justice governmental activities,
or non-governmental activities,

Itheir "value" has previously been computed by the calculations of
direct and indirect costs described above.

2As a concept which is derived from production theory and efficiency
considerations, opportunity cost analysis focuses on the “alternative uses"
of products from a given resource or set of resources. The related, but
analytically distinct, concept of cost diversion, on the other hand,
on the "least cost alternative" for achieving a given product or set of
products.

147


-2-

stated goals and objectives, locational characteristics, facility make-
up and costs, staff size and staffing costs, number and types of services
provided and costs of those services, and therefore average and total
operating costs. Yet capacity and average population size are fairly
constant for a cross-section of houses throughout the country--10 to 15
for most and 25 to 30 for the larger houses.

To some degree, this variation among the other factors can be
explained by: (1) the types of clients served (offenders directly
sentenced to halfway houses, probationers, parolees, and prereleasees) ;
(2) socio-economic variables associated with the types of clients
served (most importantly age); and/or (3) geographical differences
(such as differences in prevailing wege rates for different regions).
But variation also exists among houses serving the same types of
offesders with similar socioeconomic attributes within the same geo-
graphic area.

’ Follewing a general description of reles, goals, and policies
of halfway houses, as they relate to specific Standards and recommen-
dations in the Corrections Report, this report will single out and
analyze. the major factors accounting for cost variation. Cost esti-
mates jor a «ample of halfway houses across the country will be used
extensively in this analysis. Sample budgets will be employed to
identify costs to the criminal justice system for halfway houses pro-
viding various combinations of services to individuals. Other costs
external to the criminal justice system will also be explored. This
analysis wili focus on halfway houses serving adult clients, as time
and resources do not permit an analysis of all halfway houses.

Oliver J., and Alper, Benedict S., Halfway Houses:

Sommunity Center Corrections and Treatment (Lexington,
Mass.: Heath Lexington Books, 1970) p. 11.

laiper, in Community Residential Treatment Centers (Hackensack,

N.J.: National Council for Crime and Delinquency, April, 1966), states:
In the matter of size we find perhaps greater

agreement than in any other. Most residences set the
optimal number of released prisoners who should be in
care at any one time at between 10 and 25 with the latter
figure the maximum. Given the turnover which may be
expected in this type of facility, the chances are that
the total number of persons at any one time will tend
to fall below 25.

Both the statement and the figures mentioned remain accurate today.

38


-71-

As was stated earlier in the report and is further elabor~
ated upon in Appendix A-5, both high and low averages were presented
in order to provide two sets of benchmarks for administrators,
planners, and analysts. For the sake of comparison, the means of
these two averages are presented here as well. The house with the
lowest costs is one providing basic in-house services plus community
resource management but utilizing volunteers in place of a cook/
housekeeper and night and weekend counselors. The $5,883 and $16.12
annual and daily estimates for this house are lower than the $5,973
and $16.36 estimates for a house providing in-house services--but
only because the cost savings in eliminating night and weekend super-
visory personnel has more than offset the added costs of a community
resource manager (and volunteer coordinator) and volunteers' sti-
pends. Without volunteer substitution for paid night and weekend
staff personnel and a cook/housekeeper, average annual and daily
operating cost estimates for a house providing basic in-house
services plus community resource referral amount to $6,649 and
$18.22, respectively. Substantially higher are the annual and
daily operating cost estimates for a house providing comprehensive
in-house services, $8,049 and $22.50, respectively.

These estimates compare with a $7,041 per inmate year
($19.29 per inmate day) jail cost estimate for calendar 1974 pre-
pared for another Standards and Goals Project Report on institu-
tional-based programs.1 The average (mean) estimates for a house
~ providing the first three combinations of services lie below that
figure; the estimate for a house providing comprehensive in-house
services is substantially higher. a
The estimates contained in the sample budgets and in the
preceding table have all been direct operating cost estimates.
Direct operating costs are most important to administrators and
planners, but they represent only a part of the total costs
associated with operation of a halfway house. Consideration of
direct costs alone underestimates the total cost of a halfway
souse activity; consequently these criminal justice system
expenditure estimates must be combined with estimates of other
relevant costs in order to assess the total economic costs of
halfway houses.

linis estimate is based on fiscal 1973 expenditure data
for local non~juvenile institutions, contained in Expenditure and
Employment. Data for the Criminal Justice System: 1972-73
(Washington, D.C.: Government Printing Office, 1973). The $7,041
estimate is for a jail providing services like those of the average
jail in fiscal 1973, with an additional allowance for fringe benefits
and an annual capital allowance based on traditional jail construc-
tion like that undertaken in recent years, all inflated to calendar
1974 dollars using the same GNP deflator used to prepare estimates

for this report.

194



A-6

Costs which cannot be attributed to a specific service-producing
activity, such as a halfway house, but which are known to be associated
in part with that activity, are defined to be indirect costs. Indirect
costs, therefore, include:

(1) Costs of administering or monitoring clients of halfway houses
which are associated with an agency or organization other than
the halfway house;

(2) Costs which are expended or charged to another agency or organi-
zation (except those of other criminal justice agencies noted
under direct costs above).

Only direct costs have been analyzed in the Standards and Goais
Project's reports for relatively self-contained activities, such as cor-
rectional institutions, most halfway houses (except those which are a part
of a group administered by a single private agency) and diversion projects.
Indirect costs associated with general administrative services, which are
provided by state or local correctional agencies or other state or local
government personnel, are assumed to be associated with general administra-
tion of correctional programs and not specific correctional activities.

The complexities of estimating indirect costs associated with
particular diversion activities make it impossible for the Standards and
Goals Project to include allowances for indirect costs in all of the
Project's cost estimates. However, administrative costs associated
with a group of houses administered by a single private agency, considered
to be part of the normal costs of operation (administrative functions nor-
mally performed by the directors and assistant directors of single houses)
are included in the cost analysis (as private indirect costs). ~

OPPORTUNITY COSTS

In addition to criminal justice system and external costs described
above, another type of cost is considered in this cost analysis of halfway
houses. Opportunity cost is a measure of the cost which results from
the fact that when one activity is undertaken another activity must be
foregone.

e
~
a


- 64 -

The Corrections Report, however, recommends that community-
based corrections activities, including halfway houses, refer clients
to services provided by community resources in addition to providing
basic services in-house. The next sample budget therefore includes
cost estimates for a house providing both basic services and community
resources referral.

Cost Estimates for a House Providing Basic In-House Services
Plus Community Resource Referral

The Corrections Report emphasizes’ continually that services
provided by community resources should be made available to clients
of community-based correctional activities, and that referral for
rehabilitative services to community resources should be favored over
provision of such services in-house.1 Consequently cost estimates for
a house providing community resource development and referral services
have been derived and are presented in Table 9, page 65.

Providing community resource referral services requires the
addition of a full-time community resource manager (the title is
derived from the Report) ;2 all other positions and salaries remain
the same as in the previous sample budget for a house providing
basic services only. Consequently the addition of community re-
source referral adds the cost of the manager's salary and fringe
benefits to total personnel costs.

As the number of clients served by the house (18) has not
changed, only those non-personnel costs partially variable with
respect to salary costs will increase. Travel and transportation,

le eandard 2.9 on Rehabilitation, for example, states:
Each correctional agency providing parole,
probation and other community supervision, ’
should supplement its rehabilitative ser-
vices by referring offenders to social
services and activities available to
citizens generally. The correctional
authority should, in planning its total
range of rehabilitative programs, estab-
lish a presumption in favor of community-
based programs to the maximum extent
possible. (p. 43)

the Report discusses community resource referral in greatest
detail in the discussion on services to probationers. The Report
emphasized that the probation officer must move in the direction of
referring probationers to community resources so that, "As community
resource manager, he will utilize a range of resources rather than
be the sole provider of services." (p. 323)

97


-12-

The estimates shown in Figure 2 can be compared with a
$7,041 per inmate year ($19.29 per inmate day) jail cost estimate
for calendar 1974 prepared for another Standards and Goals Project
report on institutional-based Programs. The average (mean) estimates
for houses providing the first three combinations of services lie
below that figure; the estimate for a house providing comprehensive
in-house services is substantially higher.

Three other types of criminal justice system costs and in-
formation developed for them are described below:

e indirect costs. Except for allocations to allow for
personnel in the central office of a private agency
operating more than one house who Perform functions
ordinarily assumed by house directors, indirect costs
have been considered but not estimated by the Standards
and Goals Project.1

° Costs of apprehending and/or prosecuting clients who
abscond or commit new crimes during residence. Average
cost of police patrol time involved in apprehension,
including departmental indirect costs, was estimated
to be $9.44 per hour. Prosecution costs were estimated
to be $21.58 per hour for a district magistrate, $16.38
per hour for a prosecutor, and $19.32 per hour for a
Public defender,

e Costs of other criminal justice activities providin;
services to clients of halfway houses. The average
cost per client year of one such Program, TASC, was
estimated to be $1,331 ($3.65 per client day) for low
budget activities and $1,643 ($4.50 per client day) for
higher budgeted activities. Other such costs were
briefly considered.

OTHER COSTS

As the Corrections Report recommends greater referral of
clients to services provided by community resources, much of the
added cost of implementing the Standards can be expected to be
external. External costs for the major services to which clients
may be referred were estimated by the Project and are shown in
Figure 3 on page 13.

1Se0 Volume II for more details.

16


- 70 -

resource referral without extensive use of volunteers). Increased
salary costs associated with the addition of two full-time counselors,
a@ part-time psychologist/evaluator and another part-time counselor

to house staff account for 81 and 83 percent of the total operating
cost increases. Providing the additional services in-house results
in average daily operating costs of $26.77 and $17.33, respectively.

Applying the Cost Estimates

As stated in the Preface of the report, direct criminal
justice system cost estimates contained in the previous analysis
are intended to serve as cost benchmarks and guides to administra-
tors, planners and analysts in estimating the costs of a halfway
house activity in their own states or localities. It is in keeping
with this intention that these estimates are based on actual or
budgeted expenditures of a sample of houses across the country,
rather than hypothetical estimates for a model house.

In order to compare the different cost estimates derived,

high and low average, annual and daily, operating costs from each
of the four sample budgets have been combined in Table 12.

Table 12

Average Cost Estimates for Halfway Houses
Offering Different Types of In-House Services

TYPE(S) OF
SERVICES PROVIDED HIGH AVERAGE LOW_ AVERAGE AVERAGE?
IN-HOUSE Annual DaiIy Annual Daily Annual Daily

Basic In-House
Services $7,347 $20.13 $4,598 $12.60 $5,973 $16.36

Basic In-House
Services and
Community Re-
source Referral $8,123 $22.26 $5,174 $14.18 $6,649 $18.22

Basic In-House Ser-
vices and Community
Resource Referral
Utilizing Volunteers $7,167 $19.63 $4,599 $12.60 $5,883 ..$16.12

Comprehensive In-
House Services $9,773 $26.77 $6,325 $17.33 $8,049 $22.05

@Mean between "high average" and "low average" estimates.

195


-75 =

clients of pretrial diversion activities; TASC does, however, serve
offenders on probation and parole and clients of halfway houses as
well. TASC programs offer counseling and rehabilitative services,
while screening each individual's behavior for evidence of drug use.

An estimate of TASC per client costs was determined as part
of the Standards and Goals Project's cost analysis of pretrial diver-
sion programs. Average cost per client year was estimated to be
$1,331 for low budget programs and $1,643 for higher budgeted
Programs, with average costs per client per day of $3.65 and $4.50,
respectively.

Clients of halfway houses who are also undergoing counseling
or psychiatric services in a TASC activity, incur criminal justice
system costs under both programs. If the client requires drug-
related medical treatment, or if the client is an alcoholic, he
(she) may be referred to an agency/organization outside the criminal
justice system, the costs (external) of which are the subject of
the next chapter.

tyoth of these estimates include only those costs of TASC
activities which are borne by the criminal justice system. Excluded
are the costs of services typically provided outside the criminal
justice system, such as actual drug-related médical treatment.
The average cost per year is derived by dividing the total annual
criminal justice expenditures by 250, the number of "client slots"
available in the sample drug diversion activity. The "design
capacity" and the "actual total clients served" of drug diversion
activities are assumed to be identical, based on statistics for
operational TASC activities. As in the sample budgets for halfway
houses providing combinations of services, the same format with
high and low averages was used. The complete sample budget for
a typical TASC program is contained in Appendix A-6.


-92-

Costs may be incurred on the expectation of crimes committed
as well as crimes actually committed. Such costs may be real to the
individual although based on false assumptions. Fear of increased
crime may restrict the leisure opportunity of members of the community
and result in utility losses. Of course, such costs are largely
unquantifiable.

Finally, the community in which a house is located can suffer
a tax loss if there is the sale of a tax-generating facility to a
non-profit halfway house program. This cost is an easily quantifi-
able monetary cost; however, both as a percentage of total taxes and
in comparison to other costs associated with halfway houses, the tax
loss is virtually negligible.

There is a need for a formal research effort into the area
of total costs to communities in which halfway houses are located.
The development of a methodology for determination of, and compensa-
tion for, such costs could both eliminate inequalities caused by the
imposition of costs, and reduce community opposition to additional
halfway houses.

Opportunity Center, of 104 participants discharged from the program
over a 20 month period, 7 were arrested for crimes committed while
in residence there. The breakdown of the newer crimes was as
follows: 3 for sale of marijuana, 3 for burglary, and 1 for
robbery by assault. Four of the 7 crimes included physical or
monetary costs to residents of the community. For McMillan House,
for 93 admissions over a year, 7 were arrested for new charges
during their residence there. As a total sample of 280, 15 or
5.4% were arrested for crimes committed during residence. For

the sake of comparison, the national arrest rate in 1973 for the
country as a whole was 4.2%, and for cities over 250,000, 5.7%.
(Federal Bureau of Investigation, Crime in the United States,
1973).



tS S ean] ee OS WHINSD ALINATHOSA
hea a bi) ag oT § aSnOH ATINVA
weit § TOTS 1s" ASNOW AIHSMOTTSA UAANOT
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guzaeredo a8exeay ATTEG

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Aap pORA

(P,3409) y eTIBL

= 38 -

71


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2

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paaegpng ALND
Luz $ 678 $ 0L0'6T $ ey £96°6T $ SLOT TeosTa €z ALINAIUOAdO
Tenqay
rye $ ssz'r$ 009'4z$ pata 009'Lz $ yL6T 2epuETeED zz ASQOH XIDHVA
renazy aSNOH d1Hs
Ten $ 699'Z $ z90'ee $ 469 z90‘ee $ 46 aepuateo ee HOTTaa waakord
paaegpng -
. ‘ ‘ ‘
esos soto $ cee'y8 § 218 z9L ‘98 § SLOL Testa ST SNOW HOH-FI00
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69°ET § S66°7S SB6°YIT$ 218 T6E‘OZT $ SLOT Te28Ta €z uoFINzTIsey
AtpaT Tenuuy TesoL S350) SUpaeiedQ SaetTod ‘eany;pusdxg
—asg aa jo efequesteq —_quazano uf 3unomy yo adéy AayoRdeg SaqtToeg

Qeteli. SCS aepusten Uy 8350p TouuosIeg B87809 ToulosTeg TeIOL

(p,auod) § aTqeL

= 44

i~

th


-17-

° What are the output/benefit effects of different
combinations of services to be provided in-house?

e Which types of clients benefit most from services
provided in a halfway house setting?

For decision making purposes, analyses which relate cost and
output/benefit considerations to each other are required. There are
two such types of analysis: cost/benefit analysis and cost/effective-
ness analysis. Both attempt to relate costs of programs to perfor-
mance. Cost/benefit and cost/effectiveness analysis are most valuable
because, rather than determining which are the least costly alter-
natives or which alternatives yield the most societal benefits, they -
determine which alternatives produce the highest net benefits (rela-
tive or absolute), or which alternatives are most cost/effective.
Because non-monetary criteria are employed in measuring output/
benefits, cost/effectiveness in particular lends itself to an inter-
disciplinary effort, including other social scientists as well as
to economists.

As with most research projects, the Standards and Goals
Project has found as many questions as it has answered in the course
of its,analysis of halfway houses. Hopefully this volume will,
however, be helpful to criminal justice decision makers in their
own jurisdictions, as they seek answers and estimates on topics the
Project has addressed most comprehensively--specifically, the nature
and magnitude of costs and cost differentials among halfway houses--
and as they ask questions for which answers will be found only after
considerable additional study, nationally and at the level of the
particular jurisdiction developing or improving its own halfway
house program. .

21


‘APPENDIX B

BIBLIOGRAPHY

Alper, Benedict S. Community Residential Treatment Centers. Hackensack,
N.J.: National Parole Institute, Nationai Council on Crime and
Delinquency, 1966.

Deehy, Patrick T. Halfway House in the Correctional Sequence--A Case

Study of a Transitional Residence for Inmates of a State
Reformatory. Ann Arbor, Mi.: University Microfilms, 1969.

Duff, Robert W. "North Portland Work Release Impact Report."
Portland, Or.: North Portland Citizens Committee, 1974.

Griggs, B.S.and McCune, G.R. "Community Based Correctional Programs—-
A Survey and Analysis" Federal Probation (June 1972).

Hecht, J.A. Effect of Halfway Houses on Neighborhood Crime Rates and
Property Values. Washington, D.C.: Department of Corrections,
1970.

Keller, Oliver J. and Alper, Benedict S. Halfway Houses: Community
Center Corrections and Treatment. Lexington, Mass: Heath
Lexington Books, 1970.

McCartt, John M. and Mangogna, Thomas J. Guidelines and Standards for
Halfway Houses and Community Treatment Centers. Washington, D.C.:
Law Enforcement Assistance Administration, 1973.

Minnesota Governor's Commission on Crime Prevention and Control,
Evaluation Unit. "Residential Community Corrections Programs,
A Preliminary Evaluation: Summary and Recommendations."
St. Paul, April, 1975. (Xeroxed.)

National Advisory Commission on Criminal Justice Standards and Goals.
Corrections, Washington, D.C.: Government Printing Office,
1973.

Rachin, Richard L, "So You Want To Open a Halfway House" Federal
Probation (March 1972).

U.S. Bureau of Prisons. Residential Center: Corrections in the
Community. Washington, D.C.: Government Printing Office,
n.d.

U.&. Seneral Accounting Office. Federal Guidance Needed If Halfway Houses

Are To Be a Viable Alternative to Prisons. Washington, D.C.:
Government Printing Office, 1975.

Bl

‘tr US. GOVERNMENT PRINTING OFFICE : 1978 0210-839 (1935)


-72-

There is an economic trade-off between in-house provision of
services and external costs. Providing additional services in-house
results in higher direct operating costs as compared to a house
providing only basic services in-house plus community resource
referral, but to the extent that féwer clients are referred out,
external costs will be lower for a house providing comprehensive
services in-house.

. OTHER CRIMINAL JUSTICE COSTS wea

This chapter has thus far dealt with analyzing the direct

costs of operating halfway houses within the criminal justice
system. Total and average operating costs and their components

: have been determined and analyzed for a sample of houses. For houses
in which services were provided by employees of a criminal justice
agency or department, all direct costs assoc:.ated with the provi-
sion of those services were determined and included in the analysis
as direct operating costs. Direct cost estimates were then derived
for a typical (based on sample averages) house offering alternative
sets of in-house services.

The remainder of this chapter deals with three other types
of criminal justice system costs of halfway houses: indirect
costs, which are defined as those costs charged to other criminal
justice agencies or departments which cannot be attributed to a
specific service producing activity, such as a halfway house, but
which are known to be associated in part, with that activity;l
costs of apprehending and/or prosecuting clients who have absconded
or committed new crimes during residence; and costs of other
criminal justice system activities to which clients of a house are
referred. The following three sections will discuss each type of
cost in turn.

Indirect Costs’

There are two types of indirect costs associated with the
operation of halfway houses:

(1) Indirect personnel costs of referring or monitoring
clients which are expended or charged to other criminal
justice agencies or departments, and

(2) Associated administrative and non-personnel costs
experided or charged to other criminal justice
system agencies.

ty complete discussion of indirect costs and the differences
between direct and indirect costs is contained in the Typology of
Costs in Appendix A-1.

195


TABLE OF CONTENTS
PREFACE 2 6 ee ee ee ee ee ee ee te ee

CHAPTER
I. INTRODUCTION. . 2.1... ee eee eee eae

TWO ROLES FOR HALFWAY HOUSES ......
GOALS AND POLICIES OF HALFWAY HOUSES . .

II. CRIMINAL JUSTICE SYSTEM EXPENDITURES FOR
HALFWAY HOUSES... 2.2... eee eee

VARIATION IN COSTS AMONG EXISTING HOUSES
Selection of a Sample of Haifway
Houses .. 2... ee ee ee ee
Characteristics of Houses in the
Sample we... eee eee eee
Cost Variation Among Houses in
the Sample ...... wee ee
Facility Cost Variation Among Houses
in the Sample... ......20.4.
Variation in Other Operating Costs . .
Average Cost Variation ........
MAJOR SOURCES OF COST VARIATION AMONG
EXISTING HOUSES .........
Differences in Services Provided
Interregional Cost Differentials
Availability of Resources ....
Economies of Scale and Factor
Indivisibilities ..... we
CRIMINAL JUSTICE COST ESTIMATES FOR
HOUSES OFFERING ALTERNATIVE SETS
OF IN-HOUSE SERVICES .........
Specific Budget Items .........
Cost Estimates for a House Providing
Basic In-House Services. ......
Cost Estimates for a House Providing
Basic In-House Services Plus
Community Resource Referral. ....
Cost Estimates for a House Utilizing
Volunteers in the Provision of
Basic In-House Services and
Community Resource Referral .....

a]

DD

sviii

10
10
10
15
16
28
34
34
34
47
54
56
58
59

61

64

66


- 23 -

The facilities ranged in age from over a hundred years to fairly re-
cently constructed residences. In terms of size, here measured in
useable square footage of floor space, facilities in the sample
ranged from 3,250 square feet for 15 clients upward. Capacities
ranged from a low of 10 to a high of 40; most however, clustered
around the 15 to 25 capacity levels.

Facility costs exhibited variation in all categories, rang-
ing from a low of $1,817 per year and $76 per year per bed to a high
of $32,000 per year and $1,391 per year per bed, with most houses
clustering within the $100 to $500 range for facility costs per year
per bed. Median annual facility ‘costs per bed for the sample is
$335; the mean is $404 per year per bed.

Figures 1A and.1B, page 24, illustrate the range and distribu-
tion of average (per bed) facility costs for the houses. In Figure
1B, the distribution is highly skewed to the vight indicating that
while most houses fall into the $100 to $500 range, several houses
have facility costs significantly higher than the sample mean and
median (the sample mean exceeds the sample median by 21 percent).

From sample data, two significant patterns can be determined:
(1) rental costs are higher on the average than rental equivalent
costs (alternatively, houses in the sample that rent have higher
facility costs than those that have bought); (2) houses operated by
Departments of Corrections have higher facility costs than do pri-
vately owned houses.1 As to the first, in fhe long run, it is
typically more economical to buy than to rent for all types of build-
ings since some rate of return is always included in the rental
rate. In the case of halfway houses wii:ich tenu to locate in transi-
tory neighborhoods where turnover . £ tenants is relatively high,
rental prices may be relatively even tess economical.2 In addition,

laverage annual facility cost for facilities that are rented
is $455/bed as compared to $332/bce4 for facilities which have been
purchased. Average facility cost for the facility rented by state
operated activities is $580/bed compared to the Sample average of
$404/bed.

2the decision as to where (in which neighborhood) to locate
within a city is ultimately a function of three principal factors:
(1) access to community-based services, including access to public
transportation; (2) public attitude toward halfway houses; (3) facility
costs--average costs of rent or acquisition for one neighborhood as
compared to another (which includes tradeoffs between facility costs
and transportation costs of clients and staff if such transportation
costs are paid for by the house). In general, access to community-
based services including public transportation is better in more
established neighborhoods, but in less established, transitory neigh-
borhoods there is less community opposition as well as lower facility

56


Table 10

Sample Budget for a House Utilizing Volunteers in the Provision
of Basic In-House Services and Community Resource Referral
(1974 Dollars)

PERCENT OF PERCENT OF
TOTAL TOTAL
ITEM AVERAGE OPERATING AVERAGE OPERATING
HIGH costs LOW COSTS
PERSONNEL ~
Wages and Salaries
Director $15,970 12.4% $12,085 14. 6%
Assistant Director/Supervisor 12,737 9.9% 9,767 11.8%
Community Resource Manager/

Volunteer Coordinator 11,756 9.1% 8, 842 10.7%
Counselor 11,756 9.1% 8,842 10.7%
Secretary/Bookeeper 7,646 5.9% 6,082 7.3%

Total Wages and Salaries (59,865) (46.42%) (45,618) (55.1%)
Fringe Benefits (15%) 8,980 7.0% 6,843 8.3%
TOTAL PERSONNEL COSTS ($68,845) (53.4%) ($52,461) (63.4%)
NON-PERSONNEL
Volunteer Stipends $ 7,214 5.6% $ 7,214 8.7%
Professional Fees and

Contract Services 4,042 3.1% 1,016 1.2%
Travel and Transportation 3,469 2.7% 1,621 2.0%
Rent/Rental Equivalent 12,292 9.5% 4,706 5.7%
Maintenance 2,461 1.9% 1,304 1.6%
Utilities 4,288 3.3%, 1,834 2.2%
Communications 2,561 2.6% 1,452 1.8%
Supplies 3,770 2.9% 892 1.1%
Food 18,002 14.0% 9,592 11.6%
Other 2,057 1.6% 698 0.8%

TOTAL NON-PERSONNEL COSTS ($60,156) (46.6%) ($30, 327) (36.6%)
TOTAL OPERATING COSTS $129,001 (100%) $82,788 (1002)
AVERAGE COST

Capacity (18)

Average Daily Cost Per Client $ 19.63 $ 12.60

- 68 -

ay
oS
rn


-6-

GOALS AND POLICIES OF HALFWAY HOUSES

Among the goals of individual halfway houses, the primary one
appears to be universal: the movement and adjustment of offenders to
independent community living, that is, helping offenders become pro-
ductive, law-abiding citizens. Additional goals vary greatly,
usually in terms of emphasis placed on different approaches toward
reaching that primary goal. Additional goals, however, can be gen-
eralized as concentrating on employment, education, and reducing
correctional costs. The following, for example, were goals identified
by administrators of several houses:

e Development of attributes conducive to good employment,

e Placing the inmate in employment which he may retain
after release,

e Providing an atmosphere suitable for education,
e Reducing confinements to state institutions,

@ Offering an effective residential program at less cost
per offender than institutions,

e Effecting a reduction in county costs.

A direct by-product of the goals identified by individual
halfway houses is their screening procedures and policies which in
turn define the types of offenders served by each house and the
manner in which they are treated. There are significant differences
as to screening procedures and policy orientation among the differ-
ent houses, but two characteristics do predominate:

e Individuals accepted into halfway house programs
tend to. be:

(1) young

(2) inexperienced--first offenders or few prior convictions

(3) non-dangerous--sentenced (or charged, if pretrial
release) for a non-violent offense.1

lthis characteristic/observation has been noted as well in
Keller and Alper, Halfway Houses: Community Center Corrections and
Treatment, and in the General Accounting Office report, Federal
Guidance Needed If Halways Houses Are To Be a Viable Alternative
to Prison.
Not all halfway house programs concur with this rigid
screening/acceptance policy, however; some accept any offender
who demonstrates a willingness to enter the program. Massachusetts
Halfway House, Inc., for example, which has served over a thousand
clients in its program over the past decade, states that its
"typical" client has had 12 arrests and 4 incarcerations.

39



~ 107 -
(6) Opportunity Costs to Clients

° What are the best available methods for measuring
opportunity costs?

. What are aggregate opportunity costs to clients?

e What are the trade-offs between opportunity costs to
clients and criminal justice system costs?

° How can opportunity costs be minimized?
(7) Costs to the Community
e What are the aggregate costs to the community?

e Should individuals who incur these costs be
compensated? How?

. What are the trade-offs between costs to the
community and other costs?

e How can these costs be minimized?

Chapter IV briefly discussed the output/benefit side of halfway
houses and some of the implications of certain policies and procedures
commonly employed by halfway houses. Chapter IV was only a limited
overview--what is needed are thorough research efforts in all benefit-
related areas, to answer questions such as the following:

(1) What are the output/benefit effects of different goals
and policies of halfway houses?

(2) What are the best available methods for measuring
societal benefits?

e What constitutes a "success"?

(3) What are the output/benefit effects of different
combinations of services to be provided in-hruse?

e. To what extent should custodial services be provided?

° What affect do different types of staff have on
output/benefits?

(4) Which types of clients benefit most from services pro-
vided in a halfway house setting? (Alternatively, which
type of client, when served, yields the most societal
benefits?)

139


APPENDIX

Halfway Houses in the Standards and

Goals Project Sample*

Houses Affiliated With Organizations Sponsoring
More Than One House in the Sample

TALBERT HOUSE, INC. (Private Agency)
Cincinnati, Ohio (Pop.: 426,245)

McMillan House

Wesley. House

Vendanta House

Halfway House for Women
Residential Youth Treatment Project

MAGDALA FOUNDATION (Private Agency)
St. Louis, Missouri (Pop.: 558,006)

Missouri Avenue House
North llth Street House
Rauschesbach House
West Pine House

JACKSONVILLE ADULT DEVELOPMENT CENTERS PROJECT
(Private Agency)
Jacksonville, Florida (Pop.: 521,953)

Bold City

Walnut House

Probationers Residence
Women Probationers Residence

BUREAU OF REHABILITATION FOR THE NATIONAL
CAPITOL AREA (Private Agency)
Washington, D.C. (Pop.: 733,801)

Shaw Residence #1

Shaw Residence #2

Community Care Center

Shaw Residence #3
Residential Treatment Center

DISTRICT OF COLUMBIA DEPARTMENT OF CORRECTIONS
(State Operated)
Washington, D.C. (Pop.: 733,801)

Center #1
Center #4
Center #5

22

-18-

16
17
30
15
18

22
18
25
25

22
15
30
12

24
24
30

25

40
23
40

Beds
Beds
Beds
Beds
Beds

Beds
Beds
Beds
Beds

Beds
Beds
Beds
Beds

Beds
Beds
Beds
Beds
Beds

Beds
Beds
Bads

(cont'd)


- 34 -

Average Cost Variation

Although facility costs and other operating costs have been
treated and analyzed separately for reasons discussed previously,
for the sake of comparison, the sums of average facility costs and
average operating costs excluding facility costs for each of the
houses in the sample are presented in Table 4, pages 35-38.

The four major sources of variation in facility costs and

other operating costs are discussed and analyzed in the following
section.

MAJOR SOURCES OF COST VARIATION AMONG EXISTING HOUSES

Based on an examination of more specific cost information
for houses in the sample (such as salaries by position), other
statistics (such as salary ranges for state employees holding
similar positions in different states), and consideration of
other conditions likely to affect criminal justice expenditures
for a particular area or project (such as the availability of
LEAA funding), four major sources of cost variation among
existing houses can be identified:

(1) Differences in services provided

(2) Interregional cost differentials

(3) Availability of resources

(4) Economies of scale.
Each of these four sources of cost variation are discussed in
this section. A set of criminal justice system cost estimates

for halfway houses which allows for these four types of varia-
tion is presented in the following section.

Differences in Services Provided

The most important source of ccst variation among halfway
houses is the fact that they provide different services to their
clients. This variation can be analyzed systematically by looking
at "client-service-personnel" relationships which essentially denote
the fact that these three factors operate together in producing
cost variations among the houses.

Clients served include individuals under the jurisdiction
of other criminal justice system departments (pretrial release
and diversion, federal and state work release and parole, and
federal, state, county, and local probation) as well as those

67


- 104 -

Other Costs

As the Corrections Report recommends greater referral of clients
to services provided by community resources, much of the added cost of
implementing the Standards can be expected to be external. External
costs for the major services to which clients may be referred were
estimated as shown in the table below:

Type of Service Average Cost

Education (four year

public college) $541/client year
Vocational training

(trade/technical school) $900/client year
Drug treatment $1,728/client year - $6,254/client year
Detoxification $15.84/client day ~ $171.55/client day
Mental Health $30.86/client day - $72.80/client day

Two other types of external costs which exist but for which
no estimates were derived are external costs of leisure services
provided to clients and external costs associated with volunteers.

It is also important to consider two other, largely unquanti-
fiable types of costs of halfway houses: opportunity costs incurred
by clients and costs to the community in which a house is located.
Two opportunity costs to clients are particularly important: those
associated with employment opportunities and leisure opportunities
foregone as a result of halfway house limitations on client mobility.
Tradeoffs exist between these two opportunity costs and criminal
justice system costs, such as facility costs (which are a function of
location, among other variables). The better a neighborhood is, in
terms of proximity to employment and leisure resources, the lower
these opportunity costs are for halfway house clients.

There are three types of alleged costs to the community in
which a house is located: :

(1) The tax loss associated with property operated by non-
profit or governmental agencies,

(2) A decline in property values in the neighborhood in
which a house is located, and

(3) The cost of new crimes committed by clients of a house.

136


Table 17

Estimated External Costs for a Selection of Treatment
Services Provided to Eight Clients of a Halfway House
(1974 Dollars)

NUMBER .
TYPE OF TREATMENT RECELVING EXTERNAL COST FOR
TREATMENT ONE YEAR®
Education q) $541
Vocational Training qd) $900
Drug Treatment
Methadone Maintenance qq) $1,278
Outpatient Abstinence
Clinic (1) $1,300
Alcohol Treatment
Outpatient Detoxification
Counseling Clinic (2) $2,088
" Mental Illness Treatment
Outpatient Psychiatric
Clinic (2) $3,806
All Treatment Services (8) 9,913

4vore specifically, assume: one client is attending classes at
a public four-year college, another classes at a vocational school; two
clients are receiving non-residential drug treatment services, one at a
methadone maintenance clinic and another at an outpatient abstinence
clinic; two clients are receiving detoxification services (once a week)
at a hospital outpatient clinic; and two clients are receiving weekly
counseling sessions at an outpatient psychiatric clinic.

120

- 88 -


- 90 -

Costs Incurred by the Community in Which a House is Located

The last type of costs to be analyzed are costs to the com-
munity in which a house is located. Two costs are commonly cited
in community opposition to neighborhood location of a proposed
halfway house: .

(1) Lower property values to homeowners or commercial
property owners in the immediate neighborhood in which
a house is located, and

(2) Utility losses from crimes committed by clients.
Whether these costs are real is currently an open question.

The first, if real, involves a pecuniary loss to homeowners
and property owners which is incurred when the properties are sold.
An analysis of whether those costs are incurred requires a before
and after (initiating operation of the halfway house) study of
market values to determine if they have actually declined. No
such formal research effort has yet been undertaken. Studies
which have been undertaken on an individual heuse basis have con-
cluded that no discernible decline in property values occurred.1
It is plausible, however, that if a number of crimes were committed by

sorofton House in San Diego (now defunct) undertook an
unsophisticated study in 1966 of the decrease in property value
allegation. They studied (1) whether there was a significant
increase in sales of houses within the immediate neighborhood
shortly after Crofton House opened, and (2) whether there was a
significant decrease in property values. The results of the study
indicated that there was neither a significant increase in sales
nor a decline in market values. Their variable for determining
market value, however, was actual sales price as a percentage of
asking price, not a very good variable for the phenomenon being
tested.

A similar study (1974) was conducted for two halfway
houses located in the Pacific Northwest region: Agape House in
Seattle, Washington, and the Portland Men's Center in Portland,
Oregon. The study was conducted as part of a research effort
contracted for by a citizen committee in Portland (North Portland
Citizens Committee) in response to the proposed neighborhood loca-
tion of a halfway house (Hacienda House). The study of whether
property values were affected by location of the two halfway
houses was conducted by the Multnomah (Oregon) and King (Washing-
ton) County assessors. Both assessors, after reviewing property
sales records and inspecting the properties involved, concluded
that there had been no discernible change in property values as
a result of the halfway house locations.

122


COSTS INCURRED BY HALFWAY HOUSES

Associated with implementation of the Corrections Standards
are four types of costs incurred by halfway houses:

° Criminal justice system costs,
° Costs external to the criminal justice system, borne by
individuals or groups providing services to halfway

house clients,

° Opportunity costs incurred by clients of halfway houses,
and

° Costs to the ccmmunity in which a house is located.

Each of these is discussed in the sections which follow.

CRIMINAL JUSTICE SYSTEM COSTS

There exists a tremendous amount of variation in all of the
descriptive characteristics for halfway houses except one, population
capacity. There exists a wide range in stated goals and objectives,
locational characteristics, facility makeup, staff size, number and
types of services provided. Yet capacity and average population size
are fairly constant for a cross-section of houses throughout the
country-~10 to 15 for most and 25 to 30 for the larger houses.1

That such variation in descriptive characteristics is also
associated with substantial cost variation is supported by the re-
sults of cost analysis of a sample of 30 houses conducted by the
Stardards and Goals Project for this report. (Houses in the sample,
as well as their capacities and types of sponsership, are listed in
an appendix to this report). Operating costs for the houses in the
sample were as: follows:

lyor more description and discussion of this variation, see

Keller, Oliver J., and Alper, Benedict S., Halfway Houses: Community
Center Corrections and Treatment (Lexington, Mass.: Heath Lexington

Books, 1970).

2oince it was necessary to estimate rental equivalents for
houses which had been purchased, rather than rented, facility costs
were analyzed separately from other operating costs. Maintenance *
costs were included as a separate component of other operating costs.

-5-

9


- 66 -

communications, and supply costs have increased in response to the
addition of a conmunity resource manager to house staff. The

total additions to operating costs as a result of adding the com-
munity resource referral service are $13,967 and $10,360, for the
high and low average estimates, respectively. In terms of daily
operating costs, the increases amount to $2.13 and $1.58 per client
per day for average daily operating costs of $22.26 and $14.18,
respectively.

These costs, however, represent only the in-house costs of
referring clients to community resources. Provision of services to
clients will result in increased expenditures by the community
resources (unless all costs are fixed and there is excess capacity).
If these costs are absorbed by the. community, as assumed here, then
they are considered external costs which will be discussed in the
following chapter. Some services, however, may require payment by
the halfway house or by another criminal justice system agency,
thereby becoming criminal justice system expenditures.

Cost Estimates for a House Utilizing Volunteers in the Provision
of Basic In-House Services and Community Resource Referral

Beyond the referral. of clients to community-based resources,
the Corrections Report also recommends that volunteers be utilized
in providing services:

Correctional administrators must define roles
in which volunteers can serve. They must
recruit, train and properly supervise volun-
teers across the entire range of programs,
from intake to discharge, from highly skilled
roles to simpler relationships, from group
social events to intensive casework, includ-
ing library work, teaching, legal service,
and cultural activities. The range seems
endless.1

Volunteers can be utilized on two levels within halfway
houses (as well as other correctional activities):

(1) To complement halfway house staff in providing
services to clients, and

(2) As a substitute for paid staff in non-administrative,
non-professional positions.

1
Corrections, p. 230.

99


Table 1

Houses Included in the Bample

HALFWAY HOUSE PROGRAM LOCATION POPULATION @
Talbert House, Inc. Cincinnati, Ohio 426,245
(five houses)
Dismas House Kansas City, Missouri 487,799
Reality House Columbia, Missouri 60,832
Morman House Farmington, Missouri 7,250
Magdala Foundation St. Louis, Missouri 558,006
(four houses)
Home of Industry for Philadelphia, Pennsylvania 1,861,719
Discharged Prisoners
(HIDP)
Community Outreach Services Daytona Beach, Florida 47,352
(cos)
Jacksonville Adult Development Jacksonville, Florida 521,953
Centers Project (JADCP)
(four houses)
Washington Halfway House Washington, D.C. 733,801
for Women (WHHW)
Bureau of Rehabilitation for Washington, D.C. 733,801
National Capital Area
(BRNCA) (five houses)
District of Columbia Depart- Washington, D.C. 733,801
ment of Corrections
(three community correc-
tions centers)
Georgia Department of Atlanta, Georgia 451,123
Corrections (three +
adjustment centers)
Minnesota Department of Minneapolis, Minnesota 382,423
Corrections:
Project Reentry
Restitution Center
(cont'd)

-u-

44


APPENDIX A-7

Sample Budget of Annual Criminal Justice
Expenditures for an Operational Drug Diversion Activity®

AMOUNT (1974 DOLLARS) PERCENT
OF
‘ITEM AVERAGE AVERAGE TOTAL,
Low HIGH cosTs'
PERSONNEL SERVICES
Wages and Salaries
Administrative Unit: 5
Project Director $ 17,600 $ 22,100
Deputy Director 9,800 14,100 13.6%
Administrative Assistant/Bookkeeper 8,800 13,700
Secretary 6,800 7,900 J
Intake _an¢ Diagnostic Unit
Clinical Psychiatrist 17,600 27,300
Social Worker 8,400 11,300 14.1
Counselor 9,200 16,200
Secretary 6,800 7,900 J
Screening Unit
Supervisor 10,200 11,300
Interviewers (3 @ $8,300 and 9,400) 33,200 37,600
Lab Technician 6,500 9,800 16.7
Escort 7,300 8,200 |
Court Liaison Unit (2 @ $8,800 and 9,800) 17,600 19,600 5.0
Tracking Unit
Supervisor of Evaluation 11,200 11,600
Case Managers (4 @ $9,300 and 9,600) 37,200 38,400
Statistical Clerk 7,300 8,400 19.2
Records Clerk 6,300 7,400
Secretary 6,800 7,900 J
Total Wages and Salaries 228,600 280,700 ( 68.73
Fringe Benefits 34,290 42,105 10.3
TOTAL PERSONNEL SERVICES $262,890 $322,805 (79.0)%
OTHER DIRECT COSTS
Travel $ 11,000 $ 13,500 3.32
Equipment 1,300 1,600 0.4
Supplies 5,700 6,900 1.7
Duplication Services 2,300 2,900 6.7
Rent, Urilisies and Maintenance 14,300 17,600 63
Communications 3,300 4,100 1.0
Urinanalyses (5,000 € $2.75 and $3.00) 13,750 15,000 3.9
Miscellaneous 18,200 24,200 5.7
TOTAL OTHER DIRECT COSTS $ 69,850 ¥ 85,860 ( 21.0)2,
TOTAL ANNUAL CRIMINAL JUSTICE EXPENDITURES $332,740 $408,605 100.0%
AVERAGE COST
Per Client Year (250 per Year) $ 1,331 $ 1,643
Per Client Referral (500 per Year)? $665 $817
Per “Successfully” Terminated Client
(350 per Year)© S$ 951 , $ 1,167

Footnotes are on the following page.



CHAPTER V
SUMMARY AND CONCLUSIONS

This report has a two-fold function:

(1) To present a uniform but comprehensive methodology for
analyzing costs of halfway houses on any level (federal,
state or local), including the costs of implementing
the Standards recommended in the Corrections Report, and

(2) To present the result of such an analysis carried out
for a sample of halfway houses from acress the country.

The previous four chapters have presented the methodo2ogy and the re-
sults of the analysis. This chapter summarizes what has been de-
veloped in the previous chapters, and coticludes by recommending
directions for additional research efforts.

The subject of this analysis has been all costs associated
with the operation of halfway houses as recommended by the Corrections
Standards. These costs include:

e Criminal ji.stice :;stem expenditures,

e “vternal cests,
@ portunity costs incurred by clients of halfway
uses, and

e Costs to the community in which a house is located.
The focus of the analysis has been on those costs about which sub~

stantial information is available, and therefore on criminal justice
system and external costs.

COSTS OF IMPLEMENTING THE CORY.ZCTIONS -STANDARDS

Halfway houses occupy two roles within corrections: as re-
sources serving clients from other criminal justice programs (for
example, diversion and yzynle) and as direct sentencing alternatives.
The second role, that of direct sentencing alternatives, is currently
limited, but increased use is recommended by the Corrections Report.

- 99 -

13i


~73-

Indirect costs of referring or monitoring clients are expended by
or charged to either federal, state, or local agencies who have pre-
released clients under their jurisdiction in a halfway house, or to
courts which have sentenced clients directly to a house. These in-
direct costs include the costs of preliminary background research
prior to referral of a client, the costs incurred during the refer-
ral process, and the subsequent monitoring costs of maintaining a
file on the client during his stay in a house program.

Clients on probation or parole may have to report periodi-
cally to the probation or parole officer, or, as is the case in some
houses, officers may visit the house. Both represent indirect costs
of the house which are absorbed by the probation or parole department.
Transportation costs incurred in monitoring clients, costs of typing
up caseload reports, and supervisory costs incurred in approving
referral recall decisions, represent indirect costs of the second

type.

The complexities of determining estimates of indirect costs
made it impossible to determine indirect cost estimates for houses
in the sample or for a "typical" house. Indirect cost data pro-
vided by some of the sources in the sample, however, indicate that
indirect costs may be quite large.1

Costs of Apprehending and Prosecuting Clients Who Have Absconded
or Committed New Crimes During Residence

Another criminal justice system cost not borne by private
houses, but which may be borne by state operated houses, is the
cost of apprehending and Prosecuting clients who abscond from the
halfway house program or commit additional crimes during residence.
If custodial staff members of state operated houses are utilized
to apprehend clients who have absconded, and the search and appre-
hension process results in overtime expenditures or expenditures
for additional personnel, then those added costs represent costs
which would not be charged to a private house (unless staff members
of the private house apprehended abscondees as well). When house
staff members do not apprehend the absconded clients, then the
police must do so and the costs are therefore charged to the
police department.

line District of Columbia Department of Corrections, for
example, estimated indirect costs for fiscal year 1974. Indirect
costs of houses operated directly by the Department of Corrections
ranged from $4,32/client/day to $5.27/client/day. Indirect cost
estimates of houses operated privately but serving clients (work
releasees) under contract, interestingly, were much higher, ranging
from $11.56/client/day to $14.76/client/day. The reason given for
the highcs indirect costs of the private houses was that work
release clients in the private houses required more administrative
work, .

106


-14-

Bureau of Prisons and the Division of Probation. COS is also funded
by LEAA and private contributors.

The Jacksonville Adult Development Centers Project (JADCP), in
Jacksonville, Florida, operates four houses under the auspices of
the Jacksonville Department of Human Resources. The four houses,
Bold City, Walnut House, Probationer's Residence, and Women's Proba-
tioner's Residence, serve primarily probationers with histories of
drug and alcohol problems who have been sentenced directly by one of
the judges or referred by a state or federal probation/parole super-
visor. JADCP is funded by LEAA with lesser matching shares by the
state and the city.

The Washington Halfway House for Women (WHHW), in the District
of Columbia, has operated since 1972 with the stated objective of
“providing a comprehensive program of services to convicted women
offenders who would otherwise be in institutions." WHHW serves pri-
marily prereleasees, under contract with the District of Columbia
Department of Corrections.

The Bureau of Rehabilitation of the National Capital Area
(BRNCA), also located in Washington, D.C., has existed since 1929
and now operates five houses for men and women: Shaw Residence #1,
Shaw Residence #2, Community Care Center, Shaw Residence #3, and
the Residential Treatment Center. BRNCA houses clients under con-
tract from both the Federal Bureau of Prisons and the D.C. Depart-
ment of Corrections, and is further funded by LEAA and the United
Way.

The D.C. Department of Corrections operates several halfway
houses, three of which are included in the sample: Community Cor-
rections Centers #1, #4 and #5. The three houses serve felon prere-
leases from the D.C. Department of Corrections and also misdemeanants
from the city jail.

The Georgia Department of Corrections is currently in the
process of opening and operating several adjustment centers and res-
titution centers throughout the state, including three in Atlanta.
A "typical" adjustment center is included in the sample.

Two halfway house projects operated by the Minnesota De-
partment of Corrections in Minneapolis are included: Project
Reentry housing prereleasees from institutions within the Department
of Corrections and the Restitution Center which houses selected pro-
perty offenders diverted out of the Minnesota State Prison follow-
ing completion of a contractual arrangement specifying the amuunt,
form and schedule of restitution to be made.