Demonstration evaluations and cost neutrality: Using caseload models to determine the federal cost neutrality of New Jersey's reach demonstration

The Reagan Administration's Interagency Low Income Opportunity Advisory Board (ILIOAB) requirement that states conduct impact evaluations of their welfare reform demonstrations no doubt led some states to conduct evaluations when they otherwise might not have. The ILIOAB requirement that demonstrations be cost neutral to the federal government, on the other hand, limited the ability of states to test promising approaches that require more resources. The New Jersey experience with REACH clearly demonstrates the limitations of caseload modeling for assessing cost neutrality. In retrospect, too much might have been asked of a fairly crude forecasting technique. If carefully designed, experiments can provide better information on participant impacts and cost neutrality, although different experimental designs are preferred for estimating participant impacts than for estimating cost neutrality or overall impacts.