Calculating drug court costs: An interview with Shannon Carey

By , September 14, 2011

Cost-benefit literature cites two ways of calculating program costs: top-down and bottom-up. Top-down approaches take the total cost of a program and divide by the number of program participants resulting in an average cost per participant. Bottom-up approaches take the price of each resource and multiply by the quantity of resources used, giving you an individual cost per participant.

Though top-down approaches are more common in the cost-benefit literature, bottom-up approaches are increasingly used in cost-benefit analyses of drug courts, including a number of studies conducted by NPC Research, a research organization based in Portland, Oregon. In 2004, NPC Research coined its own bottom-up approach, known as Transaction and Institutional Cost Analysis, or TICA. I spoke with Shannon Carey, executive vice president and senior research associate at NPC Research, about how TICA was developed and how it can be useful to jurisdictions conducting their own cost analysis.

Shannon Carey

Q.   What is TICA?

A.  TICA stands for Transaction and Institutional Cost Analysis. It’s a cost calculation method that looks at every interaction a person has with the criminal justice system as a transaction, like buying a hamburger at McDonalds. When you buy that hamburger, you buy the hamburger itself, but you also pay for the person who made it, the person who served you at the counter, the overhead, the lights, and the facility. Every time a person interacts with the criminal justice system, there’s a transaction. In our studies of drug courts, we see treatment sessions, drug tests, appearances in court, and meetings with case managers as transactions. We put a price on each type of transaction, and add the costs across transactions to get a total cost.

Q.   How does TICA work?

A.   The first step in the TICA method is to understand the program process and identify where all the transactions are happening. This step is much easier if you have a strong process evaluation.

Next, we establish a price per transaction by identifying the parties involved and measuring how much time they spent on the transaction and preparing for the transaction. Each type of transaction has different people involved, and the mix typically includes judges, attorneys, and treatment providers. We identify each person’s salary, benefits, and fringe, and incorporate indirect costs, such as overhead and facilities charges. Then we measure how long each transaction takes by interviewing the people involved, asking them to complete time logs, or timing each transaction separately. This leaves us with an average price per transaction.

Then, we look to data from an outcome evaluation to identify how many times each participant completed each type of transaction. If a participant was involved with drug courts for a year and got drug tested twice a week, for example, he or she would have 104 or so drug test transactions (two multiplied by 52 weeks per year).

Lastly, we arrive at a total cost per participant. We multiply the average price of the transaction by the number of transactions of that kind. Then we add up the cost across transactions. Each participant has a different cost.

I should mention that TICA primarily focuses on taxpayer costs. Though costs to society are important and quality of life affects us all, when it comes down to making policy, taxpayer costs make people sit up and pay attention.

Q.   How does TICA differ from other approaches to calculating costs?

A.   TICA is based more on the actual resources used within the local context and is highly detailed. Though not as detailed, other approaches, including the method used by the Washington State Institute for Public Policy, can be faster, and are generally enough to provide policy makers with the data they need to determine priorities and allocate funding across different programs. If looking to start-up or expand a drug court, top-down approaches and others that provide an average cost per program, may be better at predicting what the program will cost. TICA is most useful when you want to know what the program operating in your jurisdiction costs, with your people, using your local taxpayer dollars. We’re not predicting. We’re looking at what actually happened.

Q.  Why is TICA particularly useful in evaluations of drug courts? What other areas of justice are appropriate for TICA?

A.   TICA is particularly useful in drug court cost studies because there are many different agencies involved in drug courts, and most do not rely on a single drug court budget. You can’t simply take a drug court program budget and divide by a number of participants. Drug courts are funded by partial budgets in many different agencies. A district attorney, for example, spends a certain amount of time on drug courts, but he or she may or may not be paid for that time through a drug court allotment. TICA allows you to create an actual drug court budget using the combined resources supplied by all the agencies that contribute to the program.

TICA also—and this is where it applies to other areas of the justice system—lets you measure variation in your sample. The top-down approach assumes that everyone is using the average amount of resources. But, drug court practitioners will tell you, and we’ve seen in our evaluations, that some people use the system a lot, and others, not as much. Knowing how costs vary across participants is useful to drug court administrators because they can better manage their resources.

Q.   What challenges have you encountered when implementing this method?

A.  The most common challenge is getting the data we need. As I’ve already mentioned, TICA requires outcome and utilization data, including records of the number of times each participant completed each transaction (e.g., the number of times they went to in-patient treatment, got drug tested, were rearrested, etc.). This data needs to be collected at the individual level for every person in our sample. We also need cost data, such as salaries, benefits, and fringe.

Often, the people with access to the data are not responsive or are skeptical about sharing information. Treatment agencies, in particular, are zealous about protecting their information. Being very focused with your data request can be helpful. Sometimes we can get what we need by just asking for the billing records rather than the specific types of treatment provided to each participant.

On the other hand, if the project budget is large enough, you can really get down to the micro-level. In our study of the drug court in Multnomah County, Oregon, we used stop watches and actually followed people around, waiting for when they went into a transaction and recording the time when they came out. The data collectors were pretty entertained with the whole process, but it’s probably one of the most accurate ways we measured resource utilization.

Q.   What advice do you have for jurisdictions that would like to use TICA?

A.  Be persistent and make sure that you record everything. Cost exercises tend to be esoteric and theoretical, with people arguing constantly about the accuracy of the methods. It’s very important to be thorough, to make sure your methods make sense, and to be clear about your assumptions. Write up your results in the context of your assumptions. At the end of the day, somebody else can do it another way, and you need to be clear about how you did it.

This month CBKB focuses on the costs and benefits of drug courts. Share your questions or feedback by adding a comment to this post or by sending us a message on Twitter or Facebook.

3 comments

  1. WSIPP is a non-partisan research arm of the Washington State legislature with the primary goal of helping policy makers identify evidence-based strategies that can deliver better outcomes per dollar of taxpayer spending. Thus, we estimate the benefits of programs and policies as well as the costs.

    The most important aspect in our methodology to estimate the cost per participant is to include all true costs incurred by the program regardless of the budget source. That is, we include costs such as grant funding outside of the program’s operating budget, citizen volunteer hours, or quality assurance costs because these are costs essential to program delivery. When possible, we estimate the marginal cost of the program per participant, but in some instances, we are limited to the average cost per participant.

    When data are available, we use rigorous methodologies, such as the methods described in this blog, to calculate the cost per program participant. See, for example, our cost methodology of programs delivered in the state’s juvenile justice system (http://www.wsipp.wa.gov/rptfiles/09-12-1201.pdf ).

    • Yes. I apologize for not clarifying how I was defining the “WSIPP” method. The original question I was asked for the blog was to compare TICA to the WSIPP method. I thought the interviewer was referring to the meta-analysis, overarching view WSIPP is particularly known for. I wasn't really considering any specific program evaluations WSIPP did as the “WSIPP” method. I expect you use all types of methods depending on what is appropriate for the program and the purpose of the research/evaluation, etc.

  2. As the State Administering Agency for the Justice Assistance Grant in Oregon, NPC's work has been very helpful to us. The TICA methodology has helped us determine, and inform local agencies, how much implementation of a drug court should cost at the agency level. For example, when a district attorney's office was hesitant to implement a drug court due to cost concerns, NPC's evaluation helped convince them that the drug court might actually save them time and money in the long-run.

    The TICA methodology is too time and cost intensive to apply to all our grant programs, but when we do have this information, it has been very helpful to us in allocating our resources. Several of the grant program evaluations that Dr. Carey has done are available on our website. http://www.oregon.gov/cjc.

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