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Affordable Child Development

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Savings to Society


When long-range planning is applied to social problems, the eventual savings to society are considerable.


Based on some practical assumptions, we have estimated the potential savings to society when social services are applied to meet critical needs. While we recognize the hypothetical nature of these findings, the underlying principal of working today to ensure a better tomorrow becomes obvious when looking at these extrapolated figures. We call this “The Double Bottom Line” and we welcome comments on this exercise.


PROBLEM ONE:
Lack of Affordable Child Care in Los Angeles

Investment in child care is an investment in the future of our city and our society. When quality early childhood education, health screenings, good nutrition, safety, and enrichment programs are a part of a preschooler’s day-to-day environment, studies have shown that they are more likely to experience higher lifetime earnings, avoid involvement in criminal activity, have less need of welfare assistance, and experience greater commitment to marriage. According to a study conducted by the High/Scope Educational Research Foundation, which followed the same control group for more than 20 years, the overall benefit-cost ratio is 716% of the program investment returned to the public over the lifetime of the participants.

Assumption A:
Higher Lifetime Earnings
According to the study noted above, 71% of children who attended preschool graduated from high school, compared to only 54% of those who did not. Those who graduated from high school tended to earn more annually than those who did not.
The Pay-Off! Applying this data, the increased taxes paid over the lifetime of the 500-plus children in the child development programs at Century-developed centers in any given year would result in
$4.9 million in additional income tax revenue
.
Assumption B:
Welfare Cost Reductions
While 80% of children who did not complete child care needed welfare assistance at some point in their lives, only 59% of the children who completed child care required welfare assistance.
The Pay-Off! This represents a potential savings of $1.6 million when applied to the more than 500 children in the programs at such centers as the Drew Head Start program at the Century Community Children’s Center.
Assumption C:
Crime Reduction Benefits
While 35% of children who did not complete child care were arrested more than four times, only 7% of the children who completed child care were arrested multiple times.
The Pay-Off! Again applying this data to the child care slots in Century-developed centers, this would represent a potential savings of $38.9 million in justice-system and related crime-victim costs.

 

PROBLEM TWO:
Los Angeles Children Performing Poorly in School

Independent evaluations prove that Century/LIFT® students do better in school as a result of the after-school tutoring program. A 2004 study by the UCLA/Rand Center for Adolescent Health Promotion showed that returning Century/LIFT students scored 7.75 points higher on English standardized tests and 31.75 points higher on math when compared to the average scores from their schools. In addition, 40 Teen Center students participated in the Ivy West Test Prep series (S.A.T. preparation) in 2005, increasing their overall reading comprehension score by 11% and their mathematics score by 19%. Century/LIFT expects to serve 5,000 children over the next ten years. For the sake of our illustrations here, we are basing our calculations below on these 5,000 children.

Assumption A:
Higher Lifetime Earnings
The National Center for Education estimates that 53% of low-income students who finish high school are college qualified. According to a U.S. Department of Education study, students who attend college earn 114% of the median income.
The Pay-Off! Applying these percentages to our Century/LIFT students over a 40-year working career—and subtracting out minimum wage—would mean an additional $4.7 billion of spending power to society.

 

PROBLEM THREE:
More Than 16,000 Homeless Veterans on the Streets of Los Angeles

Veterans suffering from medical problems, substance abuse problems, post-traumatic stress disorder, and other debilitating conditions represent a substantial cost to society. There is also a direct correlation between the number of days spent in inpatient care and the difficulty veterans have in paying rent on their housing, increasing the risk of homelessness. Transitional housing, coupled with social services such as sobriety group therapy and job placement assistance, has been proven to reduce the need for inpatient care.

Assumption A:
Reduction of Inpatient Care
Studies of Westside Residence Hall—a collaborative effort between Century Housing and U.S. VETS focusing primarily on sobriety, mental health, and employment—have revealed that once veterans leave Westside, they significantly reduce the likelihood of their ending up in a VA inpatient bed over the next year.
The Pay-Off! Estimates of government savings over a five-year period from this program alone are $12 million in health care expenditures.

 

PROBLEM FOUR:
Low Wages Put Even Basic Housing Out of Reach for Many

Los Angeles is the nation’s poverty capital. Equipping residents with skills they can use to earn a living wage is part of Century’s contribution to alleviating this problem. Of the Century Community Training Program (CCTP) trainees who have graduated to date, the vast majority of trainees were unemployed (68%). Many were on welfare assistance (28%). Nearly half were high school dropouts (46%). More than half were ex-offenders (55%). Before CCTP, the earning prospects for this group were bleak at best.

Assumption A:
Welfare Cost Reductions
At last count, CCTP placed 110 graduates formerly receiving public assistance. There is approximately a $25,200 annual benefit for a family of four over the 5-year lifetime maximum for payments.
The Pay-Off! For this group of 110, this represents a savings of $2.8 million in welfare costs to taxpayers.
Assumption B:
Incarceration Cost Reductions
At last count, CCTP placed 225 ex-offenders in construction jobs and related fields. 80% of these were repeat offenders. Current estimates put a $1.4 million price tag on lifetime incarceration.
The Pay-Off! If these repeat offenders were not provided opportunities for employment and ended up back in the corrections system, the cost to society would be as much as $260 million.

 

 

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