Shriver Center: September 2005

Katrina, Poverty, and Public Budgets

2006-07-13T16:23:51Z

The news coverage of Hurricane Katrina showed tens of thousands of hungry and homeless low-income people standing up to their belts in floodwaters. Stranded on rooftops, dying slowly in nursing homes, and packed into the dark and menacing stadium, they waited for help that never came. They did not have the means to evacuate before the storm, and nobody anticipated that a plan was necessary. There was a stunned surprise at the dimensions of human need, a paralysis that caused and exacerbated a tardy relief effort. The images of Katrina were a blunt reminder about the prevalence of poverty and the racial inequality that persists in American cities. To a nation and its government used to ignoring or outright denying the existence of these problems, this was a shock.

At about the same time that Katrina hit, there was another story that captured little media coverage but offers good context. The federal government released its annual report on poverty trends in America based on updated census data. In spite of an economy said to be in recovery, there are a million more poor people in the country than last year. Among people who work, fully half a million more were in poverty than the year before. Median income did not grow at all, as most of the income growth was reserved to the wealthiest sectors. The only reason there was no growth in the number of people without health insurance was that government programs such as Medicaid and FamilyCare covered more people.

Illinois, however, gives interesting evidence of the role that the public sector can have in addressing poverty. Bucking national trends, Illinois experienced a slight decline in both the poverty rate and the number of people without health insurance. Illinois has increased its minimum wage to $6.50, and it has continued to invest in antipoverty programs in spite of the state budget crisis. Illinois has led the nation in expanded health insurance coverage over the last few years. Now the results are showing.

The compelling pictures and stories from the hurricane confirm what the census bureau documents. America has a poverty problem and for several years now may have failed to see it and allowed it to get worse. The shameful failure to include low-income people and communities in the plans for evacuation and coping with the storm mirrors a national attitude of ignoring low-income people and communities across many issues.

Most people in the country believe in personal responsibility, that is, the duty of everyone to do one’s best to care for and better oneself to the extent one’s ability and opportunities allow. Most people also believe that there is a collective responsibility, a duty of “the whole,” that is, the government, to care for its people who need care and to provide adequate opportunities for all. There is frequent debate about where these reciprocal responsibilities meet. Few dispute, however, that disasters invoke the collective duty.

Coping with the hurricane is going to require a major effort from the federal, state, and local governments on top of a vigorous private sector and persistent individual effort. Virtually every American demands this kind of government involvement, including targeted tax dollars. The government is responsible for addressing a disaster and caring for the victims and strategically helping in the rebuilding.

Poverty, too, is a daunting challenge that can be addressed adequately only with a major effort of government, including tax dollars and targeted laws (like the minimum wage). There is a substantial role for personal responsibility and a vigorous private sector, but, without significant government effort, these will not accomplish systemic change. Although there is still a long way to go, government effort is a big part of why Illinois is reversing the trend toward higher poverty rates.

On the federal level, however, the country is in denial about poverty and continues a years-long retreat from government-backed efforts to deal with poverty. The Bush administration’s budget proposals that will be debated starting this month include cuts in virtually all antipoverty programs. This is coupled with the ongoing campaign to defund the government sector through tax relief for the wealthiest few, including permanent repeal of the estate tax that affects about 1 percent of all estates.

Is this the time to defund the government? Is it the time to continue increasing the wealth gap in America and protect and enrich a hereditary economic aristocracy? Surely not. There is a better response to the call for collective responsibility—for government to do its duty. Just as you cannot hope to deal adequately with a severe natural disaster without substantial government involvement, so you cannot hope to deal with the severe social disaster of deep, pervasive, and racially unequal poverty without significant government intervention. The federal budget debates of the coming month will tell us whether our government is equal to its tasks.

Housing Discrimination Is Due to Misdistribution of Opportunities as Well as Racism, Leadership Council Report Says

2006-07-13T16:23:52Z

“The Chicago regional housing market continues to skew access to opportunities for different groups, due to overt discrimination and to the poor distribution of housing opportunities in community areas across the region,” the Leadership Council on Metropolitan Open Communities’ long-awaited report concludes.

Entitled The Segregation of Opportunities: The Structure of Advantage and Disadvantage in the Chicago Region, the report reinforces the need for much of the Sargent Shriver National Center on Poverty Law’s recent fair housing advocacy (the Shriver Center often works in tandem with the Leadership Council). Together with partners at the Institute on Race and Poverty at the University of Minnesota and the Kirwan Institute on Race and Ethnicity at Ohio State University, the Leadership Council’s John Lukehart authored the report.

The Leadership Council based its report on an “Opportunity Index” designed for them in 2001 by john powell, the noted academic and director of Ohio State’s Kirwan Institute. Professor powell chose numerous variables in four broad categories to measure a neighborhood’s access to opportunities: (1) transportation and jobs (e.g., proximity to jobs in a 10-mile radius); (2) education (e.g., graduation rate); (3) “quality of life” (e.g., crime rate); and (4) access to municipal services (e.g., day care slots). He then “scored” each variable and designed formulas for summarizing each category and for an overall “Opportunity Index” quantifying the neighborhood’s opportunities.

From this foundation the Leadership Council began to analyze who has access to opportunities in metropolitan Chicago. While the report cites some progress in battling housing discrimination in the real estate market, it has several troubling findings, including:

Low-income families have access to very few units in “high-opportunity” neighborhoods. In fact, for families earning $25,525 per year, 87 percent of the housing they can afford is in “low-opportunity” neighborhoods. Conversely, limited-income families can afford less than 4 percent of the housing in high-opportunity neighborhoods.
Race is a factor: 94 percent of African American residents and 83 percent of Latino residents live in low-opportunity communities, while high-opportunity neighborhoods contain only 3 percent African American and 4 percent Latino families, respectively.
Families who lived in the “highest-opportunity” community had access to 34 times as many jobs created in a 10-mile radius (from 1995 to 2000) as the “lowest-opportunity” community. Similarly the lowest-opportunity community has a total tax capacity less than one-third the size of the highest-opportunity community.
High- and low-opportunity communities mirror these disparities in terms of several quality-of-life measures.

“Our report highlights that housing discrimination isn’t limited to overtly racist acts,” says the Leadership Council’s Rob Breymaier, “but that there are structural factors that together conspire to discriminate, including state tax policy, land use and zoning, public and private investment decisions, and our governance structure.”

These striking findings highlight the overwhelming need for the Shriver Center’s fair housing work, including the Shriver Center’s campaign (with key allies including the Leadership Council) to amend the Illinois Human Rights Act to prohibit discrimination on the basis of a family’s legal source of income. If the Illinois General Assembly adopts the Source-of-Income Amendment, families with a variety of reliable but nonwage income (including disability income and Housing Choice Vouchers) could access available housing in many high-opportunity communities. The Shriver Center also works with the Chicago Housing Authority to improve access to high-opportunity areas for former Chicago Housing Authority residents through the “Enhanced Housing Opportunities Program,” part of the Wallace v. Chicago Housing Authority settlement. Through such advocacy, the Shriver Center strives to work with allies to bridge the gap between families and more opportunities.

States Begin Regulation of Refund Anticipation Loans

2006-07-13T16:23:52Z

Connecticut and Oregon have signed bills regulating refund anticipation loans, or RALs. Connecticut Gov. M. Jodi Rell signed Public Act 05-107, an Act Protecting Consumers in the Making of Income Tax Refund Anticipation Loans, on June 7. Connecticut becomes the first state in the country to regulate the interest rate for RALs. Oregon Gov. Ted Kulongski followed suit, on June 29, by signing a RAL bill, effective January 1, 2006, and giving consumers new protection measures. The Oregon law requires that the costs and terms of such loans be fully disclosed to consumers and that the loans be arranged by either licensed tax preparers or consultants. The law also authorizes enforcement of disclosure requirements by the state Board of Tax Practitioners; the board issues licenses.

In the last session of the Illinois General Assembly, Attorney General Lisa Madigan and Sen. Jeff Schoenberg introduced a bill to protect consumers who use RALs. Although Senate Bill 1958 stalled in committee, it is likely to be reintroduced in the next session.

Refund anticipation loans are made by tax preparers, issued by financial institutions, and secured by and repaid from the consumer tax refunds. When a taxpayer receives a RAL, the tax preparer lends the amount of the tax refund, minus interest and fees. When the taxpayer receives the refund check, it is direct-deposited into the bank that made the loan. It appears to be a way to get you a fast tax refund. But a RAL is a loan; the interest rate for RALs is in many cases more than 200 percent.

Based on Internal Revenue Service data from 2003, a report from the National Consumer Law Center and the Consumer Federation of America says that the average RAL had $281 deducted—$120 for tax preparation, $107 for loan and application fees and, $54 for check-cashing fees. The IRS data also showed that mostly low-income individuals and families are getting RALs; 57 percent of RAL recipients claim the federal earned-income-tax credit.

The Illinois Asset Building Group, or IABG, identifies financial security, including consumer protection issues, as one of its top priorities. IABG is a statewide coalition invested in building the stability and strength of Illinois families and communities through increased asset ownership. The Sargent Shriver National Center on Poverty Law and Heartland Alliance are IABG cochairs.

For more information, contact Rick Rand, Shriver Center, at 312.368.1091.

Poverty on the Rise, According to New Census Bureau Report

2006-07-13T16:23:52Z

The number of people living in poverty in the United States grew by more than one million in 2004, according to the U.S. Census Bureau’s annual poverty report released last month (Income, Poverty, and Health Insurance Coverage in the United States: 2004). Thirty-seven million Americans, 12.7 per cent of the population, now live in poverty, up from 12.5 per cent in 2003. Poverty grew even though real median household income remained the same in 2004 and the nation was in the third full year of economic recovery. The official poverty line for a family of three is $15,067.

Work was less effective as a means of escaping poverty in 2004. The number of people who work but live in poverty grew by more than half a million, increasing the poverty rate among this group from 5.8 percent to 6.1 percent. The real median earnings of full-time year-round male workers fell by nearly $1,000, a decline of 2.3 percent.

The news about the growth in poverty comes as Congress is considering deep cuts in basic safety-net and work-support programs for people living in poverty. The Sargent Shriver National Center on Poverty Law opposes any such cuts, whose effect would be magnified at this time.

The Census Bureau also reported that 45.8 million Americans were without health insurance coverage in 2004. The percentage of people without health insurance, 15.7 percent, remained the same as in 2003. However, the number of people with employer-provided health insurance coverage continued to decline, falling below 60 percent for the first time since 1993. The percentage of Americans with health insurance coverage would have declined if not for the growth of coverage in government health insurance programs such as Medicaid and FamilyCare.

Illinois bucked the national trends in 2004, with the number of people in poverty falling by 58,000, or 3.5 percent, and the percentage of uninsured Illinois residents falling by 54,000, or 3 percent. While Illinois has done better than the rest of the country in adapting public policies that address the needs of its poorest residents, it still has a long way to go with over 1.5 million people living in poverty and 1.8 million uninsured residents.

For more information, contact John Bouman.

Banks and Credit Unions Have No Alternatives to Payday Loans

2006-07-13T16:23:52Z

Despite the high demand for payday loans in low- and moderate-income communities, most mainstream financial institutions have not developed a low-cost, short-term, small-dollar loan as an alternative to payday loans. While the new Payday Loan Reform Act recently signed by Gov. Rod Blagojevich will help limit the unfair and extremely costly practices of payday lenders in Illinois, banks and credit unions have yet to do their part to reduce the use of unethical payday lenders.

Incentives from bank regulators would entice more institutions to offer alternatives to payday loans, according to Prof. Sheila Bair of the University of Massachusetts in her presentation at this year’s Federal System Research Conference. For example, the Office of the Comptroller of the Currency and the Office of Thrift Supervision should clarify policies that are viewed as discouraging alternative payday loan products. Bank regulators could offer Community Reinvestment Act credit for low-cost alternatives.

Professor Bair cites products at North Carolina State Employees Credit Union and Citibank as examples of ways institutions are creating flexible credit criteria, reducing credit risks, and making a profit.

Another step in assisting low-income and moderate-income loan recipients is for advocates and consumers to continue a campaign against alliances between banks and payday lenders. These alliances tend to result only in large profits for the companies rather than real assistance for those in poverty.

To view Professor Bair’s presentation notes, go to www.chicagofed.org/cedric/files/2005_pres_session1_bair.pdf. For more information, contact Dory Rand, Sargent Shriver National Center on Poverty Law, at 312.368.2007.

First Health Care Justice Act Hearing Set for October 5

2006-07-13T16:23:52Z

The Illinois Adequate Health Care Task Force will hold its first public hearing on October 5 in the first Illinois congressional district. Starting at 4:00 p.m. and lasting until approximately 7:00 p.m., task force members will hear from the public about their health care access problems in Illinois and their ideas about how to structure a comprehensive health care access plan for Illinois.

Under the Health Care Justice Act passed by the General Assembly in 2004, the task force is charged with developing a health care access plan that insures that “all residents have access to quality health care at costs that are affordable.” In the months after the Act’s passage, Gov. Rod Blagojevich and Senate and House leaders appointed 29 people to the task force. With appointments complete and operational funding of $1 million included in the 2006 fiscal year state budget, the task force met in August and early September to plan the hearing process. The task force will hold nineteen public hearings, one in each of Illinois’s congressional districts, between now and next spring. It also will hold meetings to hear from health care advocates, provider groups, and various experts on selected topics. All hearings and meetings are open to the public. Information about the task force and its schedule as well as written transcripts of the hearings will be available on the Illinois Department of Public Health website, www.idph.state.il.us.

For more information, check the Campaign for Better Health Care’s website, or contact Margaret Stapleton, Sargent Shriver National Center on Poverty Law, at 312.368.3327.

Let's Get It Right! Shriver Center Collaborates with Local IDHS Office and Chicago-Area Domestic Violence Agency

2006-07-13T16:23:52Z

The Sargent Shriver National Center on Poverty Law recently met with advocates from a shelter for victims of domestic violence and their children and the Western Local Office of the Illinois Department of Human Services (IDHS) to address persistent problems that shelter residents have in accessing public benefits. The positive results of the meeting underscore the benefits of collaborating to foster understanding between state agencies and community organizations.

Shelter staff had reported on the difficulties that residents had in timely obtaining Crisis Assistance and Temporary Assistance for Needy Families (TANF) benefits, in transferring their cases to the nearby office, and in obtaining child care assistance and other supportive services. To improve the delivery of services, the meeting with the IDHS local office was arranged. Victor Rosario, the Western administrator , brought key members of his staff to the meeting to discuss critical issues regarding coordinated service delivery to families who are homeless due to domestic violence. These staff members supervise the frontline workers who are responsible for the administration of benefits at the local office. We are focusing on this meeting because it exemplifies how local service providers can bring their clients’ needs to the attention of IDHS staff members and collaborate with them to ensure that these needs are better met.

Shelter staff had reported to the Shriver Center that residents (1) were having trouble obtaining timely processing of TANF and Crisis Assistance applications, (2) were being discouraged from transferring their active benefit cases to Western, and (3) were in need of child care assistance and supportive services to enable them to look for work or enroll in courses to bolster their basic skills. All three areas were discussed at the meeting, and the IDHS staff helped brainstorm solutions to meet the shelter residents’ needs better.

Processing applications in a timely manner

Families who are forced to flee their homes due to domestic violence often must leave all their belongings behind. They arrive at the shelter with little or nothing more than the clothes they are wearing. Many are mothers who have young children and cannot work or had to leave their jobs to escape their abusers. They may stay in the shelter only for a short time. They need rent money, furniture, clothing, and household supplies in order to establish a new home. They also often need TANF if they have no other income, in part to enable them to apply for transitional housing. TANF applicants and active TANF clients may apply for Crisis Assistance to meet these basic needs. As we explained in earlier Let’s Get It Right! columns, w hen a TANF applicant requests Crisis Assistance, the TANF application is to be processed along with the Crisis Assistance application within expedited time frames and without a thirty-day wait for approval. This means that a decision must be made within five work days, a written decision notice issued within the subsequent two days, and a payment approved within two days after the notice (PM 06-03-01c). This is a very tight timeline for understaffed IDHS offices, but typically there are not many requests for Crisis Assistance. Perhaps because such requests are not routine, some IDHS staff members are not fully aware of Crisis Assistance policy and procedures.

Mr. Rosario assured us that shelter residents who came to the local office to apply for TANF or to swap their Medical Only cases for TANF would be seen that same day. If that is not possible for any reason, the shelter resident would be given an application to sign immediately and offered an interview appointment for the following workday. This is especially important when the applicant is also requesting Crisis Assistance. Clients who have active TANF cases and need Crisis Assistance would also have their requests processed timely, Mr. Rosario assured us. To fulfill these assurances, Mr. Rosario and his administrative staff need to convey accurate information about the Crisis Assistance program to all local office staff, especially those who work at intake.

Transferring active benefit cases

Shelter residents reported difficulty in getting their cases transferred to Western from other IDHS offices in Chicago and around the state as well as problems in applying for benefits for the first time at Western. When traveling back to an office in an old neighborhood, domestic violence victims, who must relocate to escape abuse, may be exposed to danger, not to mention the traveling time and expense involved. Despite their need, some shelter residents have been discouraged by Western staff from transferring their case to Western; others have been told that they are ineligible for a transfer. Under IDHS policy, clients who live in a shelter for at least 90 days with no immediate plans to move have a right to have their IDHS case transferred to the local office closest to the shelter (PM 06-04-06 ). For clients who are applying for benefits for the first time or applying for TANF because they receive only food stamps or Medicaid, IDHS policy is even more favorable. Such clients “must apply for benefits at the local office serving the area where the shelter is located” (PM 06-04-06 ).Mr. Rosario and his staff agreed that helping victims of domestic violence transfer their cases to the office nearest to their shelter was advisable and suggested that clients report to the Western service desk to request that their case be transferred. He agreed that Western staff would take steps to obtain their records.

Providing child care and services for self-sufficiency

Shelter staff explained that, in some cases, a resident might appropriately start looking for a job or enroll in a class designed to increase basic skills. The shelter, however, does not provide child care and has very limited resources for transportation. However, IDHS staff may issue child care payments for active TANF cases (Front Door Provider for intake cases) for 30 days or less to enable a participant to seek employment (PM 06-16-02b, 06-16-05b). Such payments would be redirected to the child care provider (PM 06-16-05c). An application for child care assistance for more than 30 days must be filed with the appropriate Child Care Resource and Referral Agency. A job search allowance might also be issued to help with transportation costs (PM 21-05-06 ).

Shelter staff agreed to refer residents to the local office to facilitate their employment. These are residents who are TANF recipients or applicants and who are interested in seeking employment, ready to attempt job search, and in need of supportive services. Obtaining child care and supportive services do not in any way stop or remove the shelter resident’s Domestic Violence Exclusion. The Domestic Violence Exclusion ensures that the TANF counter is stopped and excuses the client from having to participate in work and training activities (PM 21-01-05 ). If the shelter resident has to discontinue job search due to barriers related to the domestic violence, no sanction penalty is to be imposed (PM 21-01-03 ). Western staff agreed to help interested shelter residents in their efforts to attain economic self-sufficiency.

As the results of this meeting show, collaboration between IDHS local offices and nearby community service organizations can greatly improve service delivery to IDHS clients. We are encouraged by the results and hope to see more collaboration of this type across the state.

To report public benefits–related problems to Let’s Get It Right!, contact Jennifer Lee, Shriver Center , at 312.263.3830 ext. 237.

Announcements

2006-07-13T16:23:52Z

Support the Shriver Center ’s efforts in taking action to end poverty!

Save the date for the Shriver Center Seventh Annual Awards Dinner, December 1, 2005, at the Palmer House Hilton in Chicago, honoring Jeffrey Sachs and Morgan Spurlock. For more information on this year’s honorees and ticketing information, visit www.povertylaw.org

Clearinghouse Review

The July-August 2005 issue of Clearinghouse Review focuses on youth in poverty and encourages advocates to apply creative thinking and creative advocacy on behalf of these young people. Single issues of this special Review issue are now available to nonsubscribers! Nonsubscriber costs: $30 per copy for nonprofit organizations; $60 per copy for others. For more information, click here.

Train-the-Trainer Workshop Set for October 3-4

A financial education instructor training session featuring the updated edition of Your Money & Your Life will be held on October 3–4 from 9:00 a.m. to 5:00 p.m. at the Sargent Shriver National Center on Poverty Law ( 50 East Washington Street, Suite 500, Chicago).

The fall train-the-trainer session is an ongoing project of the Financial Links for Low-Income People, or FLLIP, coalition coordinated by the Shriver Center. The fee is $116 per person and covers instruction, the instructor manual, materials, handouts, and food. To register, contact Hannah Avellone at 312.368.8575 by Wednesday, September 21.

Interested in All My Money instructor training? Contact Karen Chan for information on upcoming sessions in Chicago (September 23) and Lake County (September 23, October 5).

Disaster Assistance Legal Resources

Resources are available to help legal aid lawyers, victims, and others recover from Hurricane Katrina. http://www.povertylaw.org/disaster_assistance.htm.