Cost Benefit Analysis Term Paper

Excerpt from Term Paper :

Establishing the Decision Framework

Does the study carefully define a problem? Yes. The study argues that traditional special education classes should be replaced with Instructional Support Teams. This argument is based on the premise that traditional special education classes are costly and educationally insufficient. The study notes that the 1993-94 federal estimate of children enrolled in special education classes was 5.4 million, which is an increase of 3.7% in just one year. Data suggest that the cost of special education is twice the cost of regular education. (Pg, 556) In addition Ray and Hartman claim that traditional special education practices need to be reexamined because of the effects labeling and placement in special education classes has on children. The study asserts that the implementation of Instructional Support Teams in place of traditional special education programs would promote instructional improvement and reduce cost.

Does the study delineate the alternatives under consideration? Are the alternatives ostensibly related to the probable causes of the problem? Are these the only relevant alternatives, or are there others that ought to be considered? The two alternatives the study discusses is the continuation of traditional special education programs and Instructional support teams.(Pg. 561)The traditional special education programs consist of referral, evaluation and placement into special education classes. A teacher refers students that are having difficulty learning so that there can be an assessment of the learning problem. The assessment includes a Multidisciplinary evaluation, the evaluation determines if the student meats the states criteria for special education and if the student demonstrates the need for special education. If both of these factors are true then the student is placed in special education. (Pg. 557) On the other hand the IST alternative is a 60-day process consisting of four phases, which are entry, hypothesis forming, verifying and outcome.

During the entry phase there is a curriculum-based assessment of the students difficulties. During the hypothesis-forming phase a complete picture of the students strengths and weaknesses are developed which leads to a systematic effort to find instructional strategies that fit the needs of the student within the regular classroom. The verifying phase allows for a support teacher to assist the regular classroom teacher in carrying out the instructional strategies that were developed in the second phase. The outcome phase determines whether or the student has benefited from the use of instructional strategies if not the student receives a referral. (Pg.559) The alternatives as represented in the text is related to the aforementioned problem in that traditional special education program are seen as costly and lacking educationally and IST is seen as a way to eliminate the problem. There are no other relevant alternatives because this study is based on a specific state and the methods used in that state.

What is the analytical technique designated to choose among the alternatives (CE, CU or CB)? Is it the appropriate one? Cost Effectiveness is the approach used by Hartman and Fay in this study. They sought to evaluate the cost effectiveness of Instructional support teams in the state of Pennsylvania. The IST requires a substantial amount of prerefferal activity so that students can remain in a regular classroom. This front-end investment is designed to improve instructional services and reduce long-term cost in special education. (Pg. 560) The IST is only cost effective if the cost of the approach does not exceed the cost of the traditional program. In addition all relevant cost must be examined which includes prerefferal, referral and placement costs. (Pg.561)


Are the ingredients for each alternative set out carefully (e.g. personnel and facilities)? Are all the ingredients included in the costing exercise, or does it include only those that are paid for by the sponsor? The ingredients set for each alternative are set out carefully. For both the traditional and IST alternatives the ingredients set forth included prerefferal, evaluation processes used by each alternative. The study viewed any reductions in retentions as a result of the IST alternative as savings. (Pg. 574) All of the ingredients for the program are included in the cost.

Are the methods for costing these ingredients appropriate? The methods for costing these ingredients are appropriate. Hartman and Fay the cost comparison estimated the cost for both programs for a total of ten years. This included first year cost of implementation and long-term costs for students placed into special education classes. The cost comparisons are presented in the study as dollar amounts and as cost ratios. (Pg.575)

If relevant, is there any analysis of the distribution cost burdens among the constituencies (e.g., sponsor, government, and clients)? This is not relevant to this study because the cost for both programs would be absorbed by the same entity.

Is the cost analysis differentiated for different level of scale of the alternatives? Is the appropriate cost concept (e.g., total, average, or marginal cost) used in the comparison? Hartman and Fay-based cost effectiveness on average cost estimates. The outcomes were based on the average results and the cost associated with each type of school. The components for IST schools included; costs of IST, MDE, first year and long-term cost of special educations and savings from reduction in retentions. Traditional special education costs included MDE, first year and long-term cost of special education placement.

If necessary, are costs that occur over a number of years annualized? If necessary; are cost discounted appropriately for their distribution over the time horizon? The authors of this study do annualize the cost. During the first year the traditional school alternative cost less than the IST approach by over $38,000. This outcome was expected because of the cost of the IST support teacher.(Pg. 575) To calculate the long-term cost discount rates of 5% and 10% are used. When the 5% discount rate was used the IST alternative was shown to have a lower cost than the traditional program over a period ten years. At the 10% discount rate the costs of the two programs was found to be equal. The reason why long-term cost were lower for the IST alternative than for the traditional alternative was due to the fact that more students were placed in special education programs through the traditional alternative. (Pg., 576)


Is the measure of effectiveness appropriate? Does it neglect important outcomes of the alternative that should be taken into consideration? If there are multiple outcomes, how are they taken into account? In a CB analysis, are all the important benefits included in the analysis? The specific effectiveness measures presented in the study were collected form the IST data files. These files included; the number of referrals to IST, the number of referrals for psychological evaluation, the number of students placed in special education, and the number of retentions reported. (Pg. 562) The study did not neglect any relevant outcomes of the alternative. The last question is not applicable as this study uses cost effectiveness as a means of measurement.

Is the experimental, quasi-experimental, or correlational study, is the alternative evaluational design sufficient to ensure that estimates of effectiveness (or benefits) are internally valid? This study used data from previous years to calculate the cost effectiveness. The cost of special education placement was based on the 1993-1994 school year regular education expenditure. In addition a hypothetical school composed of 500 students showed retention rates before and after the IST program was implemented. To compare the effectiveness of each alternative average values of the measures were taken from the IST and traditional approaches and applied to the hypothetical school of 500 students. (Pg. 562) This hypothetical model showed that the IST schools had five fewer students retained than did traditional schools. (Pg. 574) Also the study examined the prerefferal experiences of 1074 schools in IST phases I through IV during the school years of 1992-1993 and 1993-1994. (Pg. 562)

The authors use these factors to show the validity of the effectiveness results.

If benefits are not derived from an experiment, quasi-experiment, or correlational study, is the alternative methodology clearly described (e.g. contingent valuation)? The benefits derived in this study are a result of both a correlational study and a hypothetical model.

In a cost-utility analysis, is the methodology (e.g., for assessing importance weights) clearly described? Whose preferences are employed (e.g., community members, school parents, or school personnel)? Not Applicable as this study examines cost effectiveness.

Is there an adequate analysis of distributional effects of the alternatives across different groups? The analysis involves data that is taken from two different school years, 1992-1993 to 1993-1994. However the distributional effects of the analysis are not adequately addressed in the study. The only mention of distribution that is addressed has to do with the differences between that first year of implementation of the IST alternative and the subsequent years after IST has been implemented. The authors noted that the results of the first year data would be conservative as both students and teachers adjusted to the new program.

If necessary are the effects, utility, or benefits discounted for their…

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