Using Benefit-Cost Analysis in Special Education
Are we "getting our money's worth" from special education programs in the public schools? With the increasing application of benefit-cost analysis to other social service programs, the public has come to expect that similar economic analysis can somehow be applied to special education.
The "need" for special education is well established in the literature and political arenas, based upon concerns regarding the importance of providing children and youth with handicapping conditions access to social and learning opportunities similar to those afforded their nonhandicapped cohort. Most analysis of the merits of special education services focuses upon issues of access, equal opportunity, features of program models, and evaluation of program effects. The efficiency and productivity of special education services has received only minimal attention from policy makers, researchers, or practitioners. Although some recent attention has been directed at examining the costs of special education (see, for example, the review on this issue in Lewis, Bruininks, & Thurlow, 1987), little attention has been given to linking these costs with outcomes. To date, not a single study has attempted to systematically examine aspects of school-based special education services from a program efficiency or benefit-cost perspective.
On the other hand, during the past decade there has been a number of benefit-cost applications to postschool employment training alternatives for young adults with developmental disabilities. Recent reviews of these efforts are provided by Nobel and Conley (1987) and Rhodes, Ramsing, and Hill (1987).
Especially noteworthy has been the work by Cronin and Cuvo (1979); Hill, Hill, Wehman, and Banks (1985); Hill and Wehman (1983); Hill, Wehman, Kregel, Banks, and Metzler (1987); Kerachsky, Thornton, Bloomenthal, Maynard, and Stephans (1985); Lam (1986); Rhodes (1982); Schneider, Rusch, Henderson, and Geske (1981). Successful applications of benefit-cost analysis to other educational and social service programs can also be found in the broader literature (see, for example, Kemper, Long, & Thornton, 1981; Psacharopoulos & Woodhall, 1985; Thompson, 1980; Weber, Foster, & Weikert, 1978; and Weisbrod, 1981). Beyond employment data, little information of a systematic nature has been collected on the economic benefits of school-based special education programs. Admittedly, the evaluation of special education services for children and youth with handicaps is complex and should be focused upon the broadest form of analysis. Nevertheless, one useful, but by no means complete, strategy of special education evaluation involves the development of program outcome information in economic terms and more systematic benefit-cost assessments.
In most basic terms, benefit-cost analysis is concerned with assessing the relative economic efficiency of alternative programs through comparing their benefits against their costs of services. Thornton (1984) succinctly describes the primary aspects of this analytic approach:
The basic technique . . . is to assign dollar values to all estimated effects and costs. These values are them summed together to yield an estimate of the program's net present value (i.e., the difference between the benefits and costs where all dollar values are adjusted to reflect their value in a specific base period). This process is called "discounting" and is used to adjust the value of benefits or costs that accrue over several time periods to reflect their value at a specified base period. . . . A positive net present value indicates that resources are being used efficiently. A negative net present value indicates that (at least at its current scale) the program's resources could be used more efficiently elsewhere. (p. 226)
ISSUES IN THE USE OF BENEFIT-COST
The basic question being addressed in this article is whether formal benefit-cost analysis might allow us to determine whether the monetary outcomes of particular special education services for school-age children and youth are worth their resource costs. …