Return on Investment Report PROGRAM YEAR 2005 JULY 1, 2005 THROUGH JUNE 30, 2006
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1 Return on Investment Report PROGRAM YEAR 2005 JULY 1, 2005 THROUGH JUNE 30,
2 Quantitative Results PAGE 1 STATUTORY CRITERIA The Workforce Investment Act (WIA) statute includes the following passage with respect to return on investment: The purpose of this subtitle is to provide workforce investment activities, through statewide and local workforce investment systems, that increase the employment, retention, and earnings of participants, and increase occupational skill attainment by participants, and, as a result, improve the quality of the workforce, reduce welfare dependency, and enhance the productivity and competitiveness of the Nation. QUANTITATIVE RESULTS The quantitative portion of this report projects the return of federal dollars invested over a three year period. This projection is based upon the monetary benefit derived by the Workforce Investment System as a whole, as well as WIA Title I programs in terms of tax revenue generated and welfare costs saved, divided by WIA dollars expended. Based upon this method, the following is the quantitative projected ROI over the next three years: HW SYSTEM CATEGORY Shared System Services WIA Title I The formula by which ROI was calculated includes the following factors: ROI PER EACH $ INVESTED $ $ Customers Served; Actual Shared System and WIA Funds Expended within the Program Year (Shared System and WIA Dollars Invested) Projected Employment Rate of Exiters Over Three Years Average Projected Participant Wages Over Three Years Projected Savings in Temporary Assistance for Needy Families (TANF) and General Assistance or Safety Net (SN) costs Projected Tax Benefit from Participant Wages Earned WIA Participants employed in the first quarter after exit will remain employed at relatively the same rates over a three year period
3 Customers wages were calculated as if they were to remain static and not subject to cost of living or performance increases TANF and SN savings were projected at static rates based upon current information provided by the Nassau County Department of Social Services Tax Benefits were calculated based upon an average of 15.00% Federal and 5.00% State Withholding WIA Dollars Invested were calculated based upon 100% expenditure of the allocation for the grant being measured in a particular program year Reduction in Unemployment Insurance Benefits, and many other savings were not included The Shared System Services cost was calculated based upon actual costs allocated to the system partners TANF and SN savings were not included in the calculation of the Shared System Services benefits since data related to these costs is not collected from customers at the point they are enrolled into the shared system services SHARED SYSTEM SERVICES 1. Projected Tax Benefit Customers Served: 5,792 Customers Exited as of June 30, 2006 = 1,744 Customers Employed at Exit as of June 30, 2006 = 1,414 Customers Employed 1,414 divided by 1,744 Exiters yields an Entered Employment Rate at exit = 81.1% Projected Entered Employment Number = 4,697 (5,792 Customers x 81.1% = 4,697) Average Weekly Wage at Exit: $ Projected Average Wages for 12 Month Period Following Exit: 4,697 (Projected Entered Employment) x $ (Average Weekly Wage) x 52 Weeks = $163,895, Projected Average Annual Wage Gain Per Participant: $163,895, divided by 5,792 (Customers Served): $28, PAGE 2 Shared System Services
4 Projected Average Tax Benefit Per Participant (Based upon Income Tax Rates of 15.00% Federal and 5.00% State Tax Rates): $228, x 20.00% = $5, Dollars Invested in Shared System Services by One-Stop Partners in accordance with the memoranda of understanding cost sharing agreement: Cost Per Customer: $857, Title 1 (shared system cost) divided by 5,792 (shared customers) = $ Return On Investment (ROI) Ratio Over Three Years First Year: -$ Average Cost Per Participant $0.00 Average Tax Benefit Per Participant -$ Benefit Per Customer Second Year: $0.00 Average Cost Per Participant $5, Average Tax Benefit Per Participant $5, Benefit Per Customer ADULT/OLDER YOUTH/ DISLOCATED WORKERS 1. Projected Tax Benefit Customers Served: 3,743 Entered Employment Rate: 79.67% Projected Entered Employment Number: 3,743 (Customers) x 79.67% = 2,982 Customers Average Weekly Wage: $ Projected Average Wages for 12 Month PAGE 3 Third Year: $0.00 Average Cost Per Participant $5, Average Tax Benefit Per Participant $5, Benefit Per Customer Three Year Benefit: -$ First Year $5, Second Year $5, Third Year $11, Three Year Benefit Per Customer Return on Investment Ratio: $11, (Three Year Benefit) Divided by $ (Cost Per Participant) Yields $75.43 on each WIA dollar invested Period Following Exit: 2,982 (Projected Entered Employment) x $ (Average Weekly Wage) x 52 Weeks = $94,337, Projected Average Annual Wage Gain Per Participant: $94,337, divided by 3,743 (Customers Served): $25, Projected Average Tax Benefit Per Participant (Based upon Income Tax Rates of 15.00% Federal and 5.00% State Tax Rates): $25, x 20.00% = $5,040.76
5 2. Projected Welfare Savings Welfare Customers Served: 75 TANF Customers: 48 SN Customers: 27 Average Monthly TANF Cost (Based upon a Mother and two Children): $ (Cash Grant) + $ (Food Stamps) = $ Average Annual TANF Cost: 48 Customers x $ x 12 Months = $504, Ave. Annual TANF Benefit for Total Participants: $504, divided by 33 = $10, Average Annual TANF Benefit Per Participant: $504, divided by 3,743 = $ Average Monthly SN Cost (Based upon a Single Individual): $ (Cash Grant) + $80.00 (Food Stamps) = $ Average Annual SN Cost: 27 Customers x $ x 12 Months = $163, Average Annual SN Benefit Per Participant: $163, divided by 27 = $6, Average Annual SN Benefit for Total Participants: $163, divided by 3,743 = $ Dollars Invested Projected WIA Title I: $3,331, Cost Per Participant: $3,331, divided by 3,743 = $ Return On Investment (ROI) Ratio Over Three Years Title 1 First Year: -$ Average Cost Per Participant $0.00 Average Tax Benefit Per Participant $0.00 Average TANF Benefit Per Participant $0.00 Average SN Benefit Per Participant -$ Benefit Per Customer Second Year: $0.00 Average Cost Per Participant $5, Average Tax Benefit Per Participant $ Average TANF Benefit Per Participant $43.71 Average SN Benefit Per Participant $5, Benefit Per Customer PAGE 4 Third Year: $0.00 Average Cost Per Participant $5, Average Tax Benefit Per Participant $ Average TANF Benefit Per Participant $43.71 Average SN Benefit Per Participant $5, Benefit Per Customer
6 Three Year Benefit: - $ First Year $5, Second Year $5, Third Year $9, Three-Year Benefit Per Customer open in the local area are created due to a highly skilled, competitive workforce Recruitment costs for employers are lowered as a result of the job matching services High school dropout rates decrease and college entrance rates increase due to Qualitative Results Return on Investment Ratio: $9, (Three Year Benefit) Divided by $ (Cost Per Participant) Yields $10.73 return on each WIA dollar invested. QUALITATIVE RESULTS While the quantitative results of this report indicate that benefits are being achieved by the Workforce Investment System on the basis of cost effectiveness and performance achievements, this portion attempts to further illustrate the fulfillment of its mission in human terms. Unlike such measures as TANF and SN savings, which were factored into the Year-round Youth and Summer Youth programs More youth and adults return to school and achieve General Equivalency Diplomas (GEDs) Vocational rehabilitation, substance abuse recovery and displaced homemaker programs experience high success rates as a result of sequential or concurrent PAGE 5 Quantitative Results section with specific monetary values, additional benefiting factors of the Workforce Investment System are listed here in more general terms: Sales tax revenues are generated from customers earning training based payments while enrolled in Work Experience programs Sales, real estate, and school tax revenues are generated from exiters who enter employment Dollars are returned by participants in both of the above categories into the local economy. Increased opportunities for existing businesses to expand and for new ones to programming with WIA Costs for outplacement services are reduced through rapid and expeditious response activities conducted for employers that are downsizing Local workforce development activities are more efficient as a result of these initiatives The welfare to work rate increases The period of unemployment for dislocated workers is shortened
7 While the benefit of the above general factors is manifested both in financial and humanitarian terms, they combine with the quantitative factors to yield perhaps an even greater, but less tangible value in terms of improving the quality of life for our local citizens. Examples of how the system improves the quality of life are as follows: Breaking the cycle of poverty and welfare dependency for economically disadvantaged individuals Establishing positive role models for young people in impoverished families Elevating the self-esteem of unemployed and underemployed individuals by furnishing them with occupational and life skills Maintaining confidence in the strength of the local economy Establishing an efficient transition system for dislocated workers to enable them to address the emotional and psychological issues related to displacement, and at the same time to gain the skills needed to compete in a labor market affected by corporate restructuring, rapidly emerging technology, and global competition Increased education, employment and training opportunities heretofore underutilized segments of the workforce including: women in non-traditional employment, minorities, mature workers and individuals with disabilities Private sector direction of workforce investment in the local area as a result of the efforts of the Workforce Investment Board (WIB) Continuous improvement and increased customer satisfaction as a result of the WIB s quality initiatives Collaboration among local educational agencies, community based organizations, businesses, commerce organizations, and local government to create opportunities for job seekers and entrepreneurs PAGE 6 Qualitative Results
8 Abilities, Inc. City of Long Beach Office of Youth and Family Services Circulo de la Hispanidad, Inc. Economic Opportunity Commission of Nassau County, Inc. Education and Assistance Corporation Goodwill Industries of Greater New York and Northern New Jersey, Inc. Incorporated Village of Hempstead Community Development Agency Nassau Community College Nassau County Department of Senior Citizens Affairs Nassau County Department of Social Services National Council On The Aging, Inc. NYS Department of Labor, Division of Employment Services NYS Education Department Workforce Investment Act Title II Network Town of Hempstead Department of Occupational Resources Town of Hempstead Housing Authority NYS Education Department Vocational and Educational Services for Individuals with Disabilities The Paxen Group, Inc. Your connection for working solutions HEMPSTEAD EXECUTIVE PLAZA 50 CLINTON STREET, SUITE 400, 4TH FLOOR HEMPSTEAD, NEW YORK PHONE: FAX: TTY: The Workforce Investment Act Title 1 financially assisted program is an equal opportunity employer/ program. Auxiliary aids and services are available upon request to individuals with disabilities.
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