DC Council Overreacts To Lower Fund Balance

June 11, 2010

A new posting on the DC Fiscal Policy Institute blog shows that I didn’t altogether understand how the DC Council would handle concerns about the fund balance when I ranted about its real or contrived control board fears.

I assumed it would wait to start rebuilding the “savings account” until the economy improved. Turns out it won’t do anything so sensible. Instead, it’s put highly-restrictive proposals for two reserve funds into the Fiscal Year 2011 budget legislation.

One would get all uncommitted end-of-year funds until it reached 9% of the budget. These funds couldn’t be tapped for fiscal emergencies. That, says DCFPI, would put about $530 million off the table–three times as much as the District’s ever had in cash reserves.

The second reserve fund could be used for fiscal emergencies or other unexpected spending pressures. But it wouldn’t start getting funds until the other reserve had reached the required level. The maximum in this account would be about $120 million.

In short, the Council has decided to tie its own hands. Come any shortfall, no matter how temporary, it will, for the indefinite future, have no choice but to engage in another round of program cuts and/or enact new revenue raisers. If past is prologue, we know which option it will prefer.

DCFPI has issued a report that explains all this in more detail and offers recommendations for a more rational approach.


More Homeless DC Families And No Clear Plan To House Them

May 23, 2010

The new homeless count report for the Washington D.C. metropolitan region delivers mixed news. Some surprises for neighboring counties and the region as a whole. Basically, what we’d expect for the District of Columbia. And that’s a cause for concern.

The number of people who were literally homeless in late January was somewhat lower for the region as a whole than it was last year. But it was about 5% higher for the District–311 people in all.

Recall that these are only people who met the U.S. Department of Housing and Urban Development’s restrictive definition. We still have no idea how many people are living doubled up with friends or relatives or trying to make do in a cheap motel. Nor, indeed, can we feel certain that the total includes all the homeless people who were living on the street, in vacant buildings, cars or other “places not meant for human habitation.”

The number of homeless people in families also declined for the region as a whole. But for the District, the number increased by 10%–this on top of a 19.8% increase in 2009.

A closer look at the D.C. count shows 800 literally homeless families–97 or 13% more families than in 2009. Looking back to the 2008 count, when the recession had just set in, we see that family homelessness has increased by 36.3%.

It’s family homelessness that’s driving the upward trend in total District homelessness. In fact, the number of single homeless people counted was lower this year than in 2008, though 82 (2.1%) higher than in 2009.

I wonder if the Fenty administration has its mind around the problem. The District’s homeless count report again this year states that “Permanent Supportive Housing is the solution to homelessness” [emphasis added]. I’ve expressed doubts about this before.

Nothing in the latest homeless count report convinces me that most homeless families need “wrap-around” supportive services. A liberal interpretation of the “subpopulations” count would put the number at somewhat less than 400. The rest, I would wager, simply need an affordable place to live.

In any event, the District is a long way from creating enough PSH units to replace the net loss in affordable housing units. According to its draft strategic plan, it had 78 families in PSH at the time of this year’s homeless count. Its report on the count says that it’s added nearly 200 PSH units since then.

But the family shelter at DC General was packed to over-flowing until mid-March, when press exposure and a threat of litigation got the Department of Human Services hustling. As of May 18, 131 families were there. That means there were only four vacant rooms for families who urgently need shelter.

According to the Washington Legal Clinic for the Homeless, DHS has now “closed the front door to family shelter entirely,” even though it’s aware of 15 families who are living on the streets, in cars or some other unsafe place. I take it this means the agency will not make more shelter space available.

I’ve been told that 28-30 more families will soon be placed in PSH units. At a recent briefing, Clarence Carter, the head of DHS, said they planned to open 50 more units for families in 2011. Together, these will house only about 60% of the families at DC General now.

Carter also said the department would ramp up efforts to prevent family homelessness, using funds from the District’s Emergency Rental Assistance Program and federal funding under the Homelessness Prevention and Rapid Re-Housing Program.

Well, ERAP is slated for a $1.3 million cut, and it’s regularly run out of funds at higher levels. Only a portion of the District’s HPRRP funding is left. I understand DHS plans to use part of it to house about 25 families. That still leaves a lot of homeless families without a safe, stable, reasonably decent place to live. And recall that more families are bound to become homeless before the end of next year.

The District surely won’t have enough additional housing vouchers for them. The mayor’s proposed funding for the Local Rent Supplement Program would cover only vouchers already issued. No indication that the DC Council will fund more.

President Obama’s proposed budget for HUD would provide just enough more federal funding to preserve the current number of Housing Choice vouchers, plus a relatively small additional amount that could be used to fund vouchers for homeless and at-risk families with children. Doubtful there’s enough there to make much difference in D.C.

One can only hope that the District will find a way to provide more housing subsidies for homeless families. Otherwise, we could witness another winter of severe overcrowding at DC General–and perhaps more unsheltered homeless families next spring.

UPDATE: The DC Fiscal Policy Institute reports that, as of this morning, May 25, the DC Council’s budget plan would cut funding for ERAP by more than $4 million.

Proposed DC Budget Cuts Funding For Child Care (Again)

May 1, 2010

Mayor Fenty’s proposed Fiscal Year 2011 budget for programs for our youngest residents has me scratching my head.

As the DC Fiscal Policy Institute’s analysis shows, the proposed budget would increase funding for early childhood education programs operated by the public school system and preserve funding for the Pre-K for All Initiative–or nearly so.

No head-scratching here. Lots of research indicates that good preschool education helps children develop cognitive and social skills that improve their subsequent academic performance. Positive long-term returns in crime reduction and economic productivity too.

But subsidized child care is also a smart investment. How else can low-income parents with very young children hold down a job–or, for that matter, get the education and training they need to land one? Parents with older children need child care too, since the school day ends well before the conventional work day.

Yet the mayor’s proposed budget would cut funding for child care by a total of somewhat over $8 million–$4 million out of the budget approved for this fiscal year, plus $4 million more for next fiscal year. On top of prior cuts, this would leave total inflation-adjusted support for child care at $27 million less than in Fiscal Year 2007.

At a recent briefing, Clarence Carter, head of the DC Department of Human Services, said that DHS would be reducing the amount of TANF funds it transfers to the Office of the State Superintendent of Education for the child care program. The department based this decision on information from OSSE which indicated that past funds had not been used.

The OSSE budget chapter confirms this. Funding for child care subsidies, it says, has been reduced to “align with current year spending trends and detailed historical utilization data.”

This seems to mean that fewer parents are using subsidized child care. How can that be?

Part of the answer may be that appropriate child care slots aren’t available for parents to use. A 2008 study for OSSE by the UDC Center for Applied Research and Urban Policy found that 13,196 children were on child care providers’ waiting lists, most of them children under age three. Only 8.9% of family home child care providers and 28.3% of child care centers enrolled children with disabilities.

A big reason for this “mismatch between slots needed and current supply” is probably the large gap between market rates for child care and the reimbursements OSSE provides. For family home day care providers, the 2008 gap for infants was $17 per day and, for one year olds, $15 per day. The gaps were slightly less but still substantial for child care centers.

An analysis by Empower DC shows that the majority of providers, especially in Wards 7 and 8, are shy about $630 per infant per month and about $720 per month for every other preschooler. The typical center, I’m told, gets about $600,000 less a year than it would get if reimbursement rates were at the 2008 level recommended inĀ  federal Child Care and Development Block Grant guidance, i.e., at the 75th percentile of market rates.

So the demand for slots is there, but the supply isn’t keeping pace because expansion wouldn’t yield enough additional revenues. Worth noting here that about 95% of family home child care providers and 25% of child care centers are for-profit operations, thus solely dependent on what they receive in fees.

Expansion here doesn’t mean only new construction or renovation. The UDC Center found that only 78.6% of family home capacity and 86% of center capacity was being used. Lack of money for trained staff and equipment were apparently factors here.

Consider too that total capacity has decreased in the last two years because about 50 providers have closed their doors due to lack of sufficient funds.

In short, the reported “spending trends and historical utilization data” don’t justify the proposed funding cut. Far from it. If OSSE increased its reimbursement rates to reflect market trends, as the Center recommended, it might well find that many thousands more children were cared for by its subsidized providers.

This surely is what the large waiting list seems to tell us.

Adult Education And Training Get The Ax In Proposed DC Budget

April 28, 2010

True to his word, Mayor Fenty has made public education a top priority in his proposed Fiscal Year 2011 budget. As the DC Fiscal Policy Institute reports, funding would be cut in all major areas except education, which would receive a 4% increase.

Most of the increase would cover higher costs projected for special education and further expansion of charter schools. The remainder would offset the loss of federal economic stimulus funds that helped support the public school system this year.

The investment in early childhood, elementary and secondary education makes all the sense in the world. Recent improvements notwithstanding, national test scores show that the D.C. public education system is still leaving large percentages of disadvantaged children behind. Money won’t solve the problem. But the problem won’t be solved without it.

But what about the grownups the system has already failed–and those who came here without a decent basic education and/or competency in the English language?

According to 2008 Census Bureau data, nearly 13% of D.C. adults 18-24 years old and more than 14% of those 25 years and older lack a high school diploma or GED–this when 77.5% of local jobs recently posted online required at least a bachelor’s degree.

The issue is not just a missing piece of paper. A 2007 report for the State Education Agency estimated that about 36% of D.C. adults functioned at the lowest literacy level. This means they probably couldn’t read well enough to fill out an application, let alone understand an instruction manual.

These adults will, at best, be stuck in low-wage jobs, unless they have opportunities for further education and training. They won’t be able to do much to help their children with schoolwork either.

So what does the mayor proposed for them?

  • A $965,000 cut in local funding for adult and family education grants. These are the grants that fund programs for the left-behinds and left-outs, e.g., basic education, English literacy and GED preparation and testing.
  • A $5 million cut in local funding for adult training.
  • About $600,000 less for the transitional employment program, which combines work-readiness training and short-term subsidized jobs. Added to previous cuts, the budget would be $2.3 million less than in Fiscal Year 2009.
  • A $1.5 million cut for year-round youth employment programs. These are the programs that can help out-of-school, out-of-work 16-24 year olds get the education and skills they need to compete in our job market.

We understand that this is a tough budget year. But cutbacks in programs that can move low-income District residents into good, full-time jobs is hardly the way to cope with the shortfall.

Consider, among other things, the lost tax revenues as two-thirds of the jobs here continue to be filled by non-residents. Consider how the egregiously high unemployment and under-employment rates in our poorer wards are deepening the divide between the haves and the have-nots.

NOTE: I am, as always, indebted to DCFPI’s budget fact sheets for figures. Thanks also to DCFPI Policy Analyst Katie Kerstetter for helping me parse the administration’s budget tables and to Jeff Carter, Executive Director of DC Learns, for insights into the implications of the proposal for adult education.

New York City Grapples With Housing Voucher Crisis

April 21, 2010

Seems as if New York City has an affordable housing crisis writ large. The local housing authority is short $45 million and may have to revoke as many as 10,500 already-issued Section 8 housing choice vouchers. Alternatively, it may reduce the value of existing vouchers, leaving landlords, tenants or both to cover the costs.

It’s hard not to see mismanagement here. The U.S. Department of Housing and Urban Development reportedly warned the authority last May that it was in danger of exceeding its annual voucher allotment. But the authority went on issuing vouchers anyway, though at a lower rate.

That said, it’s hard, at least for me, to put all the blame on the housing authority. First off, consider the conditions that led to the crisis. Under the Section 8 program, voucher recipients are generally responsible for paying 30% of their income for rent. The voucher makes up the difference. As recipients lost their jobs or had their hours cut, the authority’s rent liabilities increased. At the same time, rental costs increased, again driving up per voucher costs.

Notwithstanding rising demands for vouchers, Congress provided less voucher funding in 2009 than what agencies would have received under the formula it used for the 2008 appropriation. The New York City housing authority got $58 million less. And, as I wrote before, it didn’t learn of the cut until May because Congress didn’t finished the HUD budget on time. The authority could hardly put its whole voucher program on hold while waiting for its final mark.

And what was the authority to do when it learned of the cut? Good fiscal management would say it should have immediately reduced its voucher commitments to what its budget would cover.

Consider the hardships that would have exacerbated. Blogger Harry Moroz reports that the average income of Section 8 housing vouchers in New York City is $14,706. Last year, the annualized fair market rent on a one-bedroom apartment in the city was only $42 less than that. Balancing the budget would thus obviously have put more people out on the streets or into the city’s emergency shelters.

Ultimately, the authority did act on its voucher crisis. In December, it notified voucher holders who hadn’t yet found an apartment that they wouldn’t receive housing assistance after all. Before that, it apparently restricted new vouchers to victims of domestic violence, families referred by the child welfare agency and certain other emergency cases. As of December, no new housing vouchers for them either.

The New York City voucher crisis is big in part because the city is big and has some of the highest rental costs in the country. But it’s unfortunately not unique. As the New York Times reports, some other housing authorities have terminated vouchers, and some of cut their contributions to rents. Who knows how many have enormous waiting lists–or don’t only because they’ve closed them?

It’s from this perspective that I look at President Obama’s proposed housing assistance budget for Fiscal Year 2011.

For Section 8 vouchers, he’s proposed a modest $875 million (0.5%) increase. The Center on Budget and Policy Priorities estimates this would be just about enough to renew all vouchers in use this year. An additional $85 million would provide about 10,000 new vouchers for individuals and families who are homeless or at risk of homelessness. That’s 10,000 nationwide.

So much for the 124,760 households on New York City’s voucher waiting list–and the emergency cases in the days ahead. So much for the 8.5 million or more U.S. households who are paying more than half their income for rent and utilities.