This cost-effectiveness analysis examined the amount of money Texas invested in treatment compared to the estimated savings the State would get back in reduced reincarceration costs associated with reduced recidivism. Findings show that the State lost 83 cents for every dollar it invested in treatment for the 1992 In-Prison Therapeutic Community (IPTC) group and lost 43 cents for every dollar it invested in the 1993 group; the State made $1.85 for every dollar it invested in treatment for the 1993 Substance Abuse Felony Punishment (SAFP) group. In addition, the Criminal Justice Policy Council estimates that the State saved $1.50 for each SAFP offender diverted from prison. Based on these findings, the legislature should consider whether to: (1) keep the IPTC and SAFP programs at current size and allow 2 more years to improve the IPTC program's cost-effectiveness; (2) discontinue or reduce the IPTC program and expand the SAFP program; (3) discontinue IPTC and maintain SAFP at current capacity; or (4) discontinue the distinction between facilities dedicated to each program and allow the Texas Department of Criminal Justice to allocate capacity based on program demand. Tables. figures