INTEROFFICE MEMORANDUM

TO: DR. JUSTICE

FROM: NICOLE CARMICHAEL
SUBJECT: JOURNAL 7: COST/ BENEFIT ANALYSIS
DATE: DECEMBER 4, 2015
CC: TEAM 2

The following is a costs/ benefits analysis of implementing a policy intervention

designed to mitigate homelessness in Delaware. While Delaware has been relatively
successful in sheltering people in the short term, we are focusing on chronic
homelessness by using the existent DE-CMIS database (Homeless Planning Council),
and amplifying it so that it includes not only the name and surface information of people
who are homeless, but also documents the primary cause(s) of their circumstances. This
policy includes requiring all shelters in Delaware to use the database, which they will use
to increase the communication they are having with each other. Currently, emergency
shelters are not communicating with transitional housing shelters, and counselors for
people who are homeless are not communicating, which this policy will encourage.

Benefits and Stakeholders:

Lowered incarceration costs Government, taxpayers

Lowered healthcare costs Government, taxpayers

Higher job productivity Delaware residents, homeless people

Stimulation to the housing market Real-estate agents, house buyers

Increased counseling jobs Counseling professionals

Stimulating HPC’s funds Homeless Planning Council and other

homeless non-profits

Costs and Stakeholders:

Training Homeless shelter administrators, people

who fund the shelters

Salary Homeless shelter administrators, people

who fund the shelters

Time/ Communication costs Homeless shelters employees

 Database fee
Cost of programmers for database
Three Most Significant Benefits, with Ratings and Justifications:
Description of Benefit
Lowered incarceration costs
Lowered healthcare costs
Finance administrators in the shelters,
people who fund the shelters, government
Shelters, funders
Rating Justification of Rating
1 In this policy, we are focusing on addressing the
criteria of chronic homelessness. As we have
shown, Delaware has had progress with sheltering
people who are homeless. This is a momentary fix
and addresses the symptoms, while we want to
mitigate the cause. One of these causes is
incarceration. It is difficult to adjust to everyday life
after being in prison, so this policy would allow
people to be counseled through that. This would
stop them from entering a cycle of incarceration,
which is extremely expensive. Although this is
important and should be considered as a benefit for
those reasons, only a minority of homeless people
have been through the prison system, so I rate it
with a 1.
2 Increasing the health of individuals is a large
objection of this policy intervention. It is near
impossible for someone to prioritize medical issues
of themselves and their family, when they do not
even have a roof over their heads. They will not
have regular doctor checkups, or given any primary
care. Therefore, when the severity of the injury piles
up and requires a visit to the emergency room, this
incurs huge costs to the healthcare system. By using
the database to identify the cause of individuals’
issues and providing them with resources to help, a
large amount of healthcare costs will be saved. I
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3 Addressing the core issues of the focal unit is the
Higher job productivity
rate this as a 2 because of these costs saved, since
they will affect taxpayers and the healthcare system,
which are large groups of stakeholders.
best way to help the problem. We are doing that
with this intervention, and it will allow many people
to find a place to live, and they will consequently be
able to focus on other aspects of their lives. It is
difficult to get a job when one is homeless, because
to apply for a job, an address of permanent
residence is needed. Also, having a permanent
location to get rested and nourished before and after
a job is crucial. This intervention will allow
previously homeless people to accomplish this, and
will allow them to enter the workforce. This will
expand the economy and increase worker
productivity. Also, increasing the quality of life of
Delaware residents by having less homeless people
on the street would increase their job productivity.
This policy is designed to help many homeless
people in Delaware, and multiplying this magnitude
by the amount each individual would add to the
workforce would yield a very large number.
Therefore, I see this as the most significant benefit
to the policy intervention, and rate it with a 3.

Three Most Significant Costs, with Ratings and Justifications:

Description of Cost Rating Justification of Rating

Training 2 When trying to get to the core of homelessness
from many different perspectives, we will
need a variety of educated professionals with
different backgrounds. This will cost money to
train people who currently work in homeless
shelters to deal with this additional
responsibility. Given the interconnected social
system that surrounds homelessness, we will
need a group of employees working to
implement the program that will be able to
address many problems at once. Homelessness
is not a problem on its own, and shelters have
people who are experts on homelessness, and
who may even be experts with dealing with

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 the current DE-CMIS database. But our policy
intervention involves training additional
experts on causes such as drug abuse, or the
trials that incarcerated people deal with when
trying to re-assimilate back into their regular
routine. Given these complications, it would
cost a lot to train people as employees for this
intervention. It is also extremely
fundamentally crucial to the policy. Therefore,
I rate this highly with a 3.
Time/ Communication 3 The DE-CMIS is a database that is already
costs created and used by homeless shelters.
However, what is not currently being done is
communication between one, emergency
shelters and transitional housing shelters, and
two, counselors for different issues (like job
search counselors don’t know how to counsel
people for drug abuse). The productivity lost
due to this new communication time is
valuable to workers. It is time they could
spend working, and they will now have this
opportunity cost to spend. I rate this as a 2
because, although it is time lost, they will be
compensated for the time, and once the system
is in place and using the database becomes
part of the daily routine, it shouldn’t take up
that much additional time.
Salaries of employees 2 I rate this as a 2 because it is a consistent cost,
and over time can add up to be a great sum of
money. If the policy goes as designed, over
time people who are chronically homeless will
be helped to find homes, instead of shelter
staff having to keep assisting them time after
time. In that case, staffs will be able to
downsize, or not pay employees for so many
hours, which could balance out this cost.
That’s why I see it as a middle rating, and give
it a 2.

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 Estimated Cost of the First Year of Intervention:

Item of Cost Amount per Individual Individual cost x 5

employees in each firm

Increased salary of $52,000 (average salary of non- $286,000

current employees profit housing worker1) + 10%
increase = 57,200
Training costs $3,995 (tuition for drug and $19,975
alcohol abuse counseling
certification course2)
Database fee $450 (cost of joining database *20 shelters = $9,000
system3)
Time/ 2 hours/ week = 100 hours * $13,000
communication $26.00 (hourly wage) = $2,600
Total = $327,975
Item of Benefit Amount per Individual Total Benefit
Lowered $2500 (cost of average ER visit for $750,000
healthcare costs a homeless person4) * (1/3)(900)5
Lowered $49 billion (state tax dollars spent $980,000
incarceration costs on corrections6) *2% = 980,000
Higher job 900 homeless people * (1/5) = 180 $2,700,000 added to
productivity 180 people * $15,000 starting economy
salary in first year
Total = $4,430,000

Above is a list of the monetary values of the major costs and benefits that would occur
from implementing our policy of expanding the DE-CMIS database. The cost benefit rate
is the total of benefits divided by the total costs, which comes out to $13.5. The marginal
benefit says that for every $1.00 we spend in costs for this policy, we will get a $13.5
return. That makes this policy an excellent investment. My hesitations lie in the fact that

1
Non-Profit Organizations Salary and Benefits Report. (2014).
2
Substance Abuse Counselor Certificate Program. (n.d.).
3
Homeless Planning Council of Delaware (2015).
4
“Cost of Homelessness”
5
“Cost of Emergency Care”.
6
“Policy Basics: Where do our State Dollars Go?”

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there are many other contributing factors that could also be taken account in the equation,
but I certainly recommend this policy because these are the main factors, and they have
been calculated. Some of the numbers has been taken from national data, and may not
apply to Delaware exactly. These are my concerns with the numbers. It is based on the
assumptions that the numbers of average non-profit homeless shelters follow these
salaries, numbers etc., which may not be the case. However, the benefits and costs listed
are fairly comprehensive to my knowledge, and I would strongly recommend the policy.

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 References
Costs of Emergency Care Fact Sheet. (n.d.). Retrieved December 4, 2015, from
http://newsroom.acep.org/index.php?s=20301&item=29928

Cost of Homelessness. (2015). Retrieved December 4, 2015, from

http://www.endhomelessness.org/pages/cost_of_homelessness

Homeless Planning Council of Delaware (2015). FAQs: Community Managements

Information System (CMIS). Retrieved from
http://www.hpcdelaware.org/faq/detail/C3#55

Non-Profit Organizations Salary and Benefits Report. (2014). The Non-Profit Times.
Retrieved December 3, 2015, from http://www.thenonprofittimes.com/wp-
content/uploads/2014/04/1.12.14-2014-NPT-Executive-Summary.pdf

Substance Abuse Counselor Certificate Program. (n.d.). Retrieved December 3, 2015,

from http://www.pacific.edu/Academics/Professional-and-Continuing-
Education/Programs/Certificate-Programs/Substance-Abuse-Counselor-
Certificate-Program.htm
Policy Basics: Where Do Our State Tax Dollars Go? (2015). Retrieved December 4,
2015, from http://www.cbpp.org/research/policy-basics-where-do-our-state-tax-
dollars-go