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Home > Federal & State Reporting Systems > Federal Guidance > State Systems APD Guide

4: Cost/Benefit Analysis for Integrated Systems

If the State is seeking approval for integrated benefits systems which will be approved and funded by more than one Federal benefit program, the cost/benefit information must be shown for each program. This will require that the State

  • Distribute costs among the funding entities;
  • Identify benefits associated with each Federal benefit program; and
  • Develop cost/benefit profiles and measures for each Federal benefit program and for the integrated benefits system as a whole.

Although these determinations and calculations will be highly dependent on each State's proposed approach, this chapter suggests some considerations and provides examples of worksheets that may be of assistance.

4.1 Overview

When the State is proposing the development and implementation of an integrated information system which requires approval from more than one Federal benefit program, extra steps must be taken during the Cost/Benefit Analysis.
4.2 Basis for Approval

Before Federal approval can be granted, States must demonstrate that the proposed system project is:

  • Cost beneficial overall on the merits of the integrated information system, and
  • Cost beneficial from the perspective of each approving Federal program.

This requires the State to break each system down into costs and benefits attributable to each program.
4.3 Allocating Costs

Costs are usually developed and projected by the States for the integrated system as a whole, following processes such as those set forth in Chapter 3. Yet at the same time the overall costs are developed, the State must consider how to distribute costs.

Specifically, States are required to develop their Cost/Benefit Analysis prior to submission of the Implementation APD. Concurrently, States are also preparing the estimates of prospective cost allocation to the various State and Federal funding sources.

Just as actual costs must be allocated to Federal programs for system design and implementation, projected costs and benefits must be "allocated" or distributed to programs in the Cost/Benefit Analysis. The former is linked to payments, the latter to paper documentation required for Federal approval.

The cost distribution used in the Cost/Benefit Analysis should:

  • Conform with the State's prospective cost allocation plans for development and operation, and
  • Be explained in the Cost/Benefit Analysis.

States should keep in mind, however, that the Cost/Benefit Analysis and the Cost Allocation Plan are separate documents with separate purposes and approval processes. They are linked only in that the State should be consistent in the approach to cost distribution presented in the Cost/Benefit Analysis and the Cost Allocation Plan.

Normally, costs will be distributed for the purposes of the Cost/Benefit Analysis based on a measure such as program-specific costs or workloads and be calculated in terms of a percentage of the whole. The Cost Distribution Profile worksheet on page 4-3 can be used to calculate the proposed cost distribution for the Cost/Benefit Analysis.

Once percentages are derived, they can be applied to the costs developed for the integrated system during the analysis described in Chapter 3. Specifically, data developed in the worksheets for the integrated system are distributed to the specific programs. The worksheets on pages 4-4 and 4-5 suggest how this might be done. Note that percentages are applied against projected - not present value - costs.

 

 

Table 4 1: Cost Distribution Profile

Cost / Benefit Analysis: Cost Distribution
Basis:
Federal Program Distribution
Measure Percentage
AFDC n n%
Child Support n n%
JOBS n n%
Child Care n n%
Foster Care n n%
Child Welfare Services n n%
Refuge Resettlement n n%
Medicaid n n%
Food Stamps n n%
Subtotal n n%
State Program Distribution
Measure Percentage
General Assistance n n%
Other: n n%
Subtotal n n%
GRAND TOTAL n 100%

 

 

Table 4 2: Annual Cost Profile: by Program

Check Box Constant Dollars or Check Box Current Dollars Year ____
Cost Category AFDC Child Support JOBS Medicaid Food Stamps Other* General Assist Totals
Non-Recurring Costs: blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equipment Purchase & Fees blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Shipping blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Installation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Purchase blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
System Testing blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Conversion blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Studies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Procurement blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Database Preparation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Subtotal blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Recurring Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equip. Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel Salaries/Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Direct Support Services blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Supplies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Utilities blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Security (incl. Back-up) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Subtotal blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED ANNUAL COSTS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

* Specify other programs, such as Child Care, Foster Care, Child Welfare Services, Refuge Resettlement

 

 

Table 4 3: Systems Life Cost Profile: by Program

Check Box Constant Dollars or Check Box Current Dollars

Cost Category AFDC Child Support JOBS Medicaid Food Stamps Other* Gen Assistance System Life
Non-Recurring Costs: blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equipment Purchase & Fees blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Shipping blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Installation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Purchase blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
System Testing blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Conversion blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Studies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Procurement blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Database Preparation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Subtotal blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Recurring Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equip. Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel Salaries/Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Direct Support Services blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Supplies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Utilities blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Security (incl. Back-up) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Subtotal blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED SYSTEM LIFE COSTS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

* Specify other programs, such as Child Care, Foster Care, Child Welfare Services, Refuge Resettlement

 

 

4.4 Define Program Specific Benefits

Unlike costs which can be broken down from a total, most benefits must be developed separately for each program - that is, built up to a total. Costs are normally calculated top-down, benefits bottom-up.

Benefits vary between programs in terms of both type and extent. For this reason, most benefits should be developed on program specific worksheets.

Modified worksheets - identical to those in Chapter 3 except that space is provided to identify the program - can be used. The same process would be followed, namely:

  • Identify benefits by program for the status quo and each viable alternative (Benefit Profile Worksheet: Program X)(page 4-8);
  • Quantify benefits by program for the status quo and each viable alternative (Quantified Benefits Worksheets: Program X)(pages 4-9 and 4-10);
  • Project annual benefits by program for the status quo and each viable alternative (Annual Benefits Worksheet: Program X)(page 4-11); and
  • Develop systems life benefits by program for the status quo and each viable alternative (Systems Life Benefits Profile: Program X) (page 4-12).

For benefits which will be shared by all programs - that is, common benefits - States may distribute benefits in essentially the same manner as costs, using a top-down approach. The distribution scheme may be the same as the cost distribution (page 4-3) used in the Cost/Benefit Analysis or be based on other reasonable measures developed and justified by the State. The Benefits Distribution Profile worksheet on page 4-13 may be used.
4.5 Develop Program Specific Cost/Benefit Profiles

Once costs and benefits have been developed for each program in the integrated system, as well as for the system as a whole, cost/benefit profiles can be developed. Program specific Cost/Benefit Profiles for the integrated system (page 4-14) can be developed using essentially the same process as that presented in Chapter 3.

Finally, once the program-specific and integrated profiles are developed, the alternatives can be compared. Alternatives are only compared, for the purpose of selection, on the basis of the integrated system profile - so that the best solution overall may be chosen and funded.

Choice of an alternative should not be dominated by a single program's costs; however, each program must have a net benefit. From the State's perspective in analysis, selection of an alternative should be based on lowest overall system costs.

States will not be required to submit program-specific costs and benefits for all alternatives - just for the status quo and selected alternative.

Table 4 4: Systems Life Cost Profile: by Program

Check Box Status Quo Check Box Alternative n
QUANTITATIVE
Category X Description
COST / RESOURCE
  • Reduced Costs
  • Controlled Costs
  • Reduced Staffing
  • Improved Staffing Utilization
  • Increased Productivity
  • Fewer Manual Functions
  • Increased Resources
  • Other
 blank cell blank cell
Reduced Error Rate
  • Increased Caseload Capacity
  • Increased Collections
  • Improved Management Information
  • Improved Controls
  • Interface / Matching
  • Less Data Redundancy
  • Other
 blank cell blank cell
TECHNICAL
  • Faster Record Retrieval
  • More Timely Reporting
  • Less Processing Time
  • Improved Access
  • Improved Security
  • Increased Automation
  • Other
 blank cell blank cell
QUALITATIVE
Category X Description
LEGISLATIVE blank cell blank cell
SOCIO-POLITICAL
  • Integrated Benefits Automation
  • Improved Public Assistance
  • Increased Worker Satisfaction
  • Other
 blank cell blank cell
Improved Management Information
  • Improved Controls
  • Interface / Matching
  • Other
 blank cell blank cell
TECHNICAL
  • More Timely Reporting
  • Expanded Capability / Flexibility
  • Improved Access
  • Improved Security
  • Increased Automation
  • Other
 blank cell blank cell

 

 

Table 4 5: Systems Life Cost Profile: by Program

Check Box Constant Dollars or Check Box Current Dollars Year ____
BENEFIT CATEGORY / DESCRIPTION
Benefit Number:
Description:
STATUS QUO BENEFIT VALUE
Assumptions:
Numbers Basis Source
Current Measure/Volume: blank cell blank cell
Projected Increase/Decrease Over Time: blank cell blank cell
Current Value: blank cell blank cell
Annual Benefits Profile: Status Quo
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
ALTERNATIVE n BENEFIT VALUE
Assumptions:
Numbers Basis Source
Measure/Volume at Implementation: blank cell blank cell
Projected Increase/Decrease Over Time: blank cell blank cell
Initial Value at Implementation: blank cell blank cell
Annual Benefits Profile: Alternative n
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

 

 

Table 4 6: Systems Life Cost Profile: by Program

Check Box Constant Dollars or Check Box Current Dollars

BENEFIT CATEGORY / DESCRIPTION
Benefit Number:
Description:
STATUS QUO BENEFIT VALUE
Assumptions:
Numbers Basis Source
Current Measure/Volume: blank cell blank cell
Projected Increase/Decrease Over Time: blank cell blank cell
Current Value: blank cell blank cell
Annual Benefits Profile: Status Quo
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
ALTERNATIVE n BENEFIT VALUE
Assumptions:
Numbers Basis Source
Measure/Volume at Implementation: blank cell blank cell
Projected Increase/Decrease Over Time: blank cell blank cell
Initial Value at Implementation: blank cell blank cell
Annual Benefits Profile: Alternative n
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

 

 

Table 4 7: Systems Life Cost Profile: by Program

Check Box Status Quo Year _____
Check Box Alternative n Check Box Constant Dollars, or Check Box Current Dollars
Benefit Number and Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Benefit 1: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Benefit 2: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Benefit 3: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
etc. blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED BENEFITS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
PRESENT VALUE FACTOR N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A blank cell
TOTAL PRESENT VALUE BENEFITS N/A blank cell N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A blank cell
CUM TOTAL PROJ BENEFITS / PRIOR YEAR N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A blank cell
CUMULATIVE TOTAL PROJECTED BENEFITS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell N/A

 

 

Table 4 8: Systems Life Cost Profile: by Program

Check Box Status Quo Year _____
Check Box Alternative n Check Box Constant Dollars, or CCheck Box urrent Dollars
Benefit Number and Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
Benefit 1: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Benefit 2: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Benefit 3: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
etc. blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED BENEFITS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PRESENT VALUE BENEFITS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
CUMULATIVE TOTAL PROJECTED BENEFITS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell N/A

 

 

Table 4 9: Systems Life Cost Profile: by Program

Cost / Benefit Analysis: Common Benefits Distribution
Basis:
Federal Program Distribution
Measure Percentage
AFDC n n%
Child Support n n%
JOBS n n%
Child Care n n%
Foster Care n n%
Child Welfare Services n n%
Refuge Resettlement n n%
Medicaid n n%
Food Stamps n n%
Subtotal n n%
State Program Distribution
Measure Percentage
General Assistance n n%
Other: n n%
Subtotal n n%
GRAND TOTAL n 100%

 

 

Table 4 10: Systems Life Cost Profile: by Program

Check Box Status Quo Check Box Constant Dollars or Check Box Current Dollars Check Box Alternative n
SYSTEM LIFE COST PROFILE
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
Non-Recurring Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Recurring Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Total Projected Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Total Present Value Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
SYSTEM LIFE BENEFITS PROFILE
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
Total Projected Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Total Present Value Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
CUMULATIVE BENEFIT / COST PROFILE
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
Cumulative Total Projected Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell N/A
Cumulative Total Projected Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell N/A
QUALITATIVE BENEFITS
Benefits Related System Objectives Measure of Effectiveness
Very Effective Effective Minimally Effective Not Effective
blank cell blank cell blank cell blank cell blank cell blank cell

 

 

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