Resource Staff
John Bourdette, PhD,
University of Central Oklahoma. Students: Robert Hardridge, Dan
Hernandes , D.J. Jones, Marcia Harris-Bourdette, Julie Rhodes, Bob
Freeman, Mark Wallraven
Table of Contents
EXECUTIVE SUMMARY
...............................................................................................................
4
Overall Summary Cost Table
...............................................................................................................
5
Section
1
HEALTH CARE
...............................................................................................................
11
Hospital
Costs
...............................................................................................................
12
Mental Health
Systems
...............................................................................................................
14
Indian Health
Service
...............................................................................................................
15
Fetal Alcohol
Syndrome
...............................................................................................................
15
Section
2
SOCIAL SERVICES
...............................................................................................................
17
Temp Assist /Needy Family (AFDC)
...............................................................................................................
18
Disability
Payments
...............................................................................................................
18
Supplemental Social
Security
...............................................................................................................
19
Food
Stamps
...............................................................................................................
20
Private
Charity
...............................................................................................................
20
Foster
Care
...............................................................................................................
20
Domestic
Violence
...............................................................................................................
21
Children’s Protective
Services
...............................................................................................................
21
Emergency
Shelters
...............................................................................................................
21
Housing
(AIDS)
...............................................................................................................
22
Housing (Mental Ill/Chem Abuse)
...............................................................................................................
22
Juvenile Corrections (State Custody)
...............................................................................................................
23
Juvenile Corrections
(Detention)
...............................................................................................................
23
Substance Abuse Prevention
...............................................................................................................
24
Special
Education
...............................................................................................................
24
Family
Court
...............................................................................................................
25
Employment
Training
...............................................................................................................
25
Section
3
CRIMINAL JUSTICE
...............................................................................................................
27
Law Enforcement (State/Local)
...............................................................................................................
28
Law Enforcement
(Federal)
...............................................................................................................
28
Adult
Jails/Prisons
...............................................................................................................
28
State Criminal
Courts
...............................................................................................................
29
Housing
Authority
...............................................................................................................
30
Prosecution (District
Attorneys)
...............................................................................................................
30
Prosecution (U.S.
Attorneys)
...............................................................................................................
30
Indigent
Defense
...............................................................................................................
31
Parole/Probation
...............................................................................................................
31
Victims (Motor
Vehicles)
...............................................................................................................
32
Victims
(Crime)
...............................................................................................................
32
Section
4
PRIVATE BUSINESS
...............................................................................................................
34
Security
...............................................................................................................
35
Insurance
Protection
...............................................................................................................
35
Worker’s
Compensation
...............................................................................................................
35
Section
5
PROPERTY LOSS
...............................................................................................................
37
Stolen
Property
...............................................................................................................
38
Fire
Damage
...............................................................................................................
38
Homeowners Insurance
...............................................................................................................
38
State
Parks
...............................................................................................................
38
Section
6
LOST PRODUCTIVITY
...............................................................................................................
40
Alcohol
...............................................................................................................
41
Illegal
Drugs
...............................................................................................................
42
Non-Employment
...............................................................................................................
43
Fetal Alcohol
Syndrome
...............................................................................................................
43
Premature
Death
...............................................................................................................
44
Section
7
APPENDICES
...............................................................................................................
46
References
...............................................................................................................
47
Productivity
Formulas
...............................................................................................................
48
Tables
1-9
...............................................................................................................
49
Section
8 ACCOMPANYING 35mm SLIDES
...............................................................................................................
53
Executive Summary
...
a study of the fiscal impacts of those who abuse alcohol and use
illegal drugs ...
for
the State of Oklahoma for 1996
Presented
March 31, 1998
Researchers
Christine Johnson, PhD
Director, Bureau of Social
Research
College of Human Environmental
Sciences
Oklahoma State University,
Stillwater, OK 74078
Phone: 405-744-6701 Fax:
405-744-7113 Email: chrisaj@okway.okstate.edu
Vivian Valdmanis, PhD
Assistant Professor,
Department of Health Administration and Policy, College of Public
Health
University of Oklahoma Health
Sciences Center, PO Box 26901, Oklahoma City, OK 73190
Phone: 405-271-2115 ext
37073 Fax: 405-271-1868 Email: vivian-valdmanis@ouhsc.edu
Editors and
Coordinators
Michael Lapolla
Director, Center for Health
Policy Research
College of Osteopathic
Medicine, Oklahoma State University
2345 Southwest Boulevard,
Tulsa, OK 74107
Phone: 918-561-8381 Fax:
918-561-8372 Email: lapolla@okway.okstate.edu
Linda Mitchell
Research Associate, Center for
Health Policy Research
College of Osteopathic
Medicine, Oklahoma State University
2345 Southwest Boulevard,
Tulsa, OK 74107
Phone: 918-561-8564 Fax:
918-561-8372 Email: lmitche@okway.okstate.edu
Summary by Source of 1996 Expendititure, State of Oklahoma
Executive Summary
Introduction
The
Governor’s Task Force on Substance Abuse has been formed to advise
Governor Keating concerning responsible public policy for
Oklahoma. The Task Force leadership approached The Oklahoma
Academy for State Goals to conduct an estimate of the costs of
alcohol and illegal substance abuse in the state. The Academy
formed a work group of researchers from Oklahoma State University
and the University of Oklahoma. The OSU group was from the
school’s Bureau for Social Research and the Center for Health
Policy Research. The OU representation was from the Department of
Health Administration of the College of Public Health.
Scope
The
Workgroup was requested to parallel a cost identification
methodology published by the Center on Addiction and Substance
Abuse (CASA) at Columbia University. The CASA study took several
years to complete and was backed by significant research funding.
The Oklahoma workgroup study was time-limited to 5 months,
including planning, and the budget was limited.
Any study
of substance abuse costs represent estimates. Some estimates are
more complete than others. Various studies represent different
cost perspectives. This study used the CASA model as a starting
point, but used more direct costs when they could be identified.
Exclusion of Tobacco
The
Oklahoma study differs from many others in that tobacco costs have
been intentionally excluded. This exclusion was pursued for
several reasons. The first is that costs related to tobacco use
require many soft and questionable assumptions concerning primary
and contributive causes and effects. More importantly, it was felt
that any valid cost finding would require the computations of
offsetting tax revenues and foregone public benefits due to
premature death. These offsets were well beyond the scope and
resources of this study. And finally, there is no clear consensus
on the definition of the abuse of a legal substance as there is
with alcohol. For these reasons, we encourage a separate study for
those who must approximate the net costs of tobacco to society.
Loss of Productivity Calculations
The
adverse economic effects of substance abuse are often masked by
other life variables. To pretend that there exists a definitive
and universal cost finding methodology for the impacts of
substance abuse is to be disingenuous. To pretend that
contemporary society does not mask adverse effects (for insurance
or confidentiality purpose) caused by substance abuse is to be
naive. And we suggest that any mega-resources appropriated to
develop methodologies and data bases that precisely measure all
calculated effects of substance abuse may be wasteful. As an
acquaintance once said, Òit may be like counting telephone poles.
One may be totally accurate, but for what greater purpose?Ó
The most
difficult cost to estimate is that of Òlost productivity.Ó This
requires an extensive linear set of assumptions about the economy,
employability, wage levels, earnings potential, value of work
outside the labor force ... and many others. Even so, a study such
as this must apply standard cost finding methodologies as
appropriately as possible. Regardless of cash expended on these
problems, the loss of productivity is likely to be as much or
greater. And its effects are seen on the overall state economy,
not within state expenditures.
Other
studies, including the Columbia University CASA analysis, value
lost productivity by assuming a percentage of people would be
employed at a low wage. This Oklahoma analysis uses the Òhuman
capitalÓ estimations which use higher employment and earnings
estimates.
Executive Summary
Principles
and Overview
There are
some who may argue that the use of drugs is a ÒvictimlessÓ crime.
And that if others choose to use drugs it doesn’t impact the rest
of society. That would be true if family, friends, and taxpayers
were not considered! Abusers of alcohol and illegal substances
(drugs) write ÒchecksÓ for almost a third of a billion dollars
against the Oklahoma treasury ... and for much more against the
federal government, private business and overall economy.
The costs
of substance abuse to Oklahoma have several definitions and layers
of complexity. In the overview, the costs are more than society
should tolerate ... and much more than many citizens think. There
are several types of costs that are of interest. They are:
• The
direct costs to Oklahoma taxpayers and state government.
• The
direct costs to all government functions.
• The
costs to private business.
• And
finally ... the overall impact upon the state economy.
Each of
these costs has a different public policy meaning. Each cost has a
separate calculation. Regardless of the costs that are calculated,
they are always estimates. Some are more precise than others. And
none calculate the adverse effects upon individuals, family or
friends.
Federal Costs
The major
costs related to health care and social services are fairly easy
to quantify. However, this analysis has been unsuccessful in
identifying the myriad of public safety/law enforcement costs.
Selected costs were included but it is assumed that the federal
costs are somewhat underreported here.
State Costs
All state
expenses are borne by state taxes in all of their forms. In
addition to the state income tax, and the state sales tax, there
are 72 additional taxes, fees, licenses & permits, and special
funds that generate state revenue in Oklahoma. They range
alphabetically from the Admission Tax (a 10% tax collected on
admission tickets at race tracks) to the Worker’s Compensation
Fund (a 1% tax on all gross adjusted premiums for worker’s
compensation insurance).
The state
of Oklahoma annual expenditures for 1996 were $8.17 billion. Only
56.3% of these expenditures were state tax receipts. All other
revenue expended by state government was from other external
sources such as the federal government. Therefore, the FY 1996
State tax receipts were an estimated $4.6 billion.
County/Local Costs
Identifying county and municipal costs are beyond the scope of
this analysis. A major cost, the aggregated local law enforcement
is a matter of public record and is therefore included. Other
costs such as local shelters, counseling centers etc. could not be
reported. It is assumed that county/local costs are somewhat
underreported here.
Private Business Costs
It is
assumed that private business and property loss costs are somewhat
underreported here as so many private costs are not a matter of
public record. However, we were able to gather data concerning
health care costs and property/business insurance. These are
likely the two largest cost components for private business.
Executive Summary
Significant Study Findings
Introduction
The
following estimates are for 1996. The cost estimates are those
expenses incurred as a result of the behavior of those who abuse
alcohol and/or illegal drugs. Unless specifically indicated, the
costs do not include the costs related to tobacco use and abuse.
Direct Expenditures
The direct expenses in
Oklahoma were estimated to be over $1.8 billion in 1996. They were
paid by:
|
Federal Taxpayer |
$860 million
|
47% |
|
State Taxpayer |
$329 million
|
18% |
|
Local Taxpayer |
$130 million
|
7% |
|
Private Business |
$526 million |
28% |
|
Total Expense |
$1,845 million |
100% |
Indirect Cost
When
people become disabled and non-productive, their loss to the
economy has a value. It is estimated that $5.8 billion of
productivity has been lost due to alcohol and substance abuse.
This number is higher than other models may estimate. That is
because we assumed that these costs are equally distributed in the
population rather than being concentrated at the lower income
levels. Therefore, we assumed lost wages to be the state median
income rather than the minimum wage.
In any
respect, this number is calculable ... but we wonder how
measurable it really is.
|
Alcohol |
$3,549 million |
61% |
|
Illegal Drugs |
$2,148 million |
37% |
|
Non-Employment |
$37 million |
--- |
|
FAS |
$17 million |
--- |
|
Premature Mortality |
$12 million |
--- |
|
Total Loss |
$5,764 million |
|
Direct Expense to Oklahoma Taxpayers/State Government
The state
budget (expenditures of all sources of revenue) for Oklahoma was
about $8.2 billion in 1996. This was about $2,485 for every man
woman and child living in the state.
About
half of that amount were tax receipts. The remainder was sales tax
income and income from licenses and fees. The income, sales and
other revenue are fungible. Therefore one cannot indicate which
kind of tax revenue was applied toward which expense.
This
Oklahoma cost of almost $330 million is hardly a voluntary
expenditure. Rather it is a cost that must be borne after the fact
to provide a variety of services to substance abusers ... or to
society as a result of the behavior of substance abusers. The
majority of state costs were in the areas of criminal justice
($191 million) and social services ($117 million).
Should substance abuse be
dramatically reduced, what could Oklahoma do with $330 million?
• Every Oklahoma college
and university could be fully funded with their ÒpeerÓ
institutions.
• Every student could
receive a tuition free education ... with $100 million left over.
• The operating budgets of
either OU or OSU could be increased 150%.
Costs to All Government
If the
costs to state government are high, the costs to the federal
government are even higher. It is estimated that the Oklahoma
costs to the Oklahoma taxpayer are $330 million. The estimated
federal costs are more than twice as high ... $860 million.
Additionally, local governments contribute an estimated $130
million, mainly in public safety costs.
Costs to Private Business
Many will
assume that costs related to substance abuse are mainly borne by
public agencies and public revenue. That is true as $1.2 billion
is incurred by government. However, an additional $547 million is
also borne by private business.
Costs to Oklahoma Economy
The
annual Oklahoma economy (real Gross State Product) is estimated to
be almost $58 billion. The direct expense caused by substance
abusers is almost $2 billion. There is another cost that cannot be
accounted in cash ... but can be estimated. That is the loss of
productivity by citizens incapacitated by substance abuse. The
estimated amount of lost productivity is even greater than the
actual cash costs ... it is just about $6 billion in Oklahoma for
1996. By combining both ... the overall impact on Oklahoma is an
estimated $7.6 billion. This represents over 13% of the Oklahoma
economy.
Key
Observations
• These costs are likely
to be underestimated by 10-15% due to a host of hidden costs that
are known but not possible to isolate.
• Substance abuse costs
the economy of the state of Oklahoma over $7.6 billion. That is
13% of Oklahoma’s $58 billion Gross State Product. The GSP is the
total value of all goods and services produced by the state’s
economy.
• Substance abuse costs
Oklahoma $459 million in state and local taxes.
• The state taxes
attributable to alcohol and substance abuse were $329 million ...
or $100 in state taxes alone for every man, woman and child in the
state ... or $260 for every Oklahoma household. These expenses
accounted for more than 7% of all state taxes collected in 1996.
• Of the total costs,
about $1.8 billion are direct expenses with the remaining $5.8
billion lost to the economy as a whole.
• Everyone pays ... the
Oklahoma state/local taxpayer pays about 25% ... Oklahoma private
business over 25% ... and the federal taxpayer a little less than
half. Oklahomans pay more than $1,000 per household in federal,
state and local taxes to pay for substance abusers.
• 20% of all Oklahoma
hospital inpatient charges are estimated to be associated with
substance use and tobacco ... excluding tobacco, over 7% of all
hospital costs are attributable to alcohol and illegal substances.
