2014 Summary: Community Development and Policy Studies Update

In Community Development and Policy Studies (CDPS) field work throughout the Seventh District, CDPS contacts – in varying contexts – have voiced concerns about conditions impacting low- and moderate-income (LMI) populations and communities. CDPS conducts regular surveys of people representing organizations that serve LMI communities in varying ways. Our survey respondents represent organizations in the fields of: real estate development; finance; financial counseling; economic development; banking; consumer advocacy; small business development; philanthropy; law; higher education; agriculture; manufacturing; and human services. This blog is a summary of responses from the 2014 CDPS surveys based on the three charts below.

As indicated by the graph below, respondents over the course of 2014 believe that many issues are impacting the single family housing market. Over 50 percent of respondents each time we asked felt that the oversupply of vacant homes and the inability of buyers to get mortgages were the two biggest issues affecting the LMI communities in 2014.

Chart 1 2014 UpdateClick to enlarge

As indicated by the graph below, respondents over the course of 2014 differed to some degree on the primary sources of community development financing in their areas. The three sources noted the most each time we asked the question in 2014 were government, community development financial institutions (CDFIs), and banks.

Chart 2 2014 UpdateClick to enlarge

As indicated by the graph below, respondents over the course of 2014 believe that many institutions are involved in community development efforts in their region. The four leading types of organizations (over 50 percent each time we asked the question in 2014) were nonprofits, government, community based organizations, and developers.

Chart 3 2014 UpdateClick to enlarge

In addition to hearing from respondents about what is happening in community development on a periodic basis, the survey also supplemented research in CDPS and respondents comments’ were summarized in a ProfitWise News and Views in 2014, “From Classroom to Career: An Overview of Current Workforce Development Trends, Issues and Initiatives,” in addition to numerous blogs.

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What’s Missing? How Bankers and Community Development Finance Practitioners Can Reach Diverse Business Owners and Neighborhoods in Detroit

By Robin Newberger and Maude Toussaint-Comeau

The Minority Capital Access forum in October 2014, hosted by the Community Development and Policy Studies Department, brought together panels of experts to reflect on recent efforts in Detroit to support small business owners, and to identify strategies that help funders connect with minority businesses with capital.[1]

Panelists representing banks and nonprofit lenders delivered a realistic assessment of the capital landscape and structural challenges facing many small business owners. They discussed the impact of the slow recovery and depressed real estate values on equity and collateral values in certain Detroit neighborhoods and the relative paucity of credit-building opportunities for entrepreneurs of color.

Panelists, however, conveyed an optimistic message regarding the increasing assortment of offerings within the capital continuum. The organizations represented at the forum provided a sense of these opportunities. In terms of nonprofit lenders, the Detroit Development Fund described itself as a “double-A ball club for banks” – the last stop one would make before establishing a borrowing relationship with a commercial lender. Lending between $50,000 and $250,000, and requesting three years of operating history compared to the three years of profitable operations that banks typically require, the Detroit Development Fund relies heavily on low-cost (or free) capital for its loss reserves. Another CDFI, the Community Reinvestment Fund (CRF) based in Minneapolis, is one of 14 non-bank lenders with certification to originate SBA (insured) 7(a) loans of $50,000 to $4 million, but unlike most banks that offer this product, CRF targets borrowers of color or those located in low- and moderate-income census tracts in Detroit. [2] These kinds of organizations are lending to the businesses that typically do not fit bank underwriting criteria, such as start-ups (in general), franchises, gas stations, and restaurants.  Most recently, the Detroit Development Fund received additional (low-cost) capital for loss reserves, allowing the organization to lend for retail start-ups. An increasing number of requests for retail loans had come into their pipeline, and foundations understood how filling storefronts would have the potential to strengthen a community.

In terms of banks, traditional lenders are layering funds with resources from nonprofits and government to create, in their words, more “patient” sources of capital and to extend the capabilities of senior debt providers. In 2014, Urban Partnership Bank, a CDFI, collaborated with the Michigan Economic Development Corporation and Invest Detroit (a non-bank CDFI), among other community organizations, to lend $10 million to small business, nonprofits, and real-estate investors.  In the past year, Fifth Third Bank invested (with other banks and the Michigan Economic Development Corporation) in two funds, one called Grow Michigan, a subordinated debt fund of $500,000 to $3 million for lower/middle market enterprises in largely low to moderate income areas; and another called Develop Michigan, which finances commercial real estate projects with a focus on low- and moderate-income communities.

In addition, banks have gotten involved in credit-building activities such as the partnership between PNC and LISC’s Twin Accounts program, to help potential borrowers improve their credit scores.

As important as capital is, panelists suggested that improving the way information about these resources is transmitted may be just as valuable to minority business owners. Bankers and community funders agreed that many small business owners would benefit from better connections to information “brokers” to let business people know about many existing resources. Currently, many start-up firms, and even existing small and medium minority-owned businesses, do not know about the types of capital or assistance available and appropriate for their businesses. An intentional effort to connect business owners and relevant resources would go a long way to help credit- and resource- impeded business (and prospective business) owners.

One innovative approach has been for institutions to fund “translators” or consultants with ties to economically and socially disadvantaged communities who provide development and mentoring services to business people. The Detroit Microloan Collaborative funded this type of technical assistance so that intermediaries could address soft skills, such as helping business people build confidence, and provide financial management and business development assistance.[3] Some panelists emphasized the need for long-term technical assistance after a loan is made, as well, particularly for nascent entrepreneurs who do not have extensive business experience.

An alternative approach to connect entrepreneurs to business resources is to use new technologies and online tools. For example, Fundwell developed an online eligibility tool to match small business owners with a spectrum of lenders. Pacific Community Ventures has an offering called Business Advisory Services, whereby a small business, for a flat fee, obtains a certain number of matches to business advisors.  In Michigan, a program called Companies to Watch highlights and brokers resources for medium-sized companies that are in the second stage of growth. For small and medium-sized businesses, panelists identified organizations like the nationally-funded Manufacturing Extension Partnership Program that offers technical assistance for new technologies to U.S.-based manufacturers.  The challenge for small business people is both to know where their business fits along the capital spectrum and to know what resources are available to them.

Another way to ensure that entrepreneurs get the information they need is to enhance the skills and capacities of the service providers themselves. One large bank recently discovered that its staff’s limited understanding of the small business ecosystem impeded them from steering potential borrowers to the correct (continuum of) services. In addition, regardless of the demographics of a business owner, an important component of mentoring is functional and industry-specific information. The same content experts who advise people on running a retail business, for example, cannot be expected to advise a manufacturing firm or a high-tech spin-off from a university. According to one panelist, only a small number of intermediaries grasp the importance of connecting minority-owned businesses to the innovations taking place at incubators, research labs, and university offices of technology and commercialization.  One way for intermediaries to get a better understanding of the particular industries and niches of their small business clients is to examine, and possibly even develop, market data. A study recently commissioned by a local foundation was able to identify the supply chains for growing industries in southeast Michigan, and the various ways that minority owned small firms can serve these industries (logistics, design, engineering, workforce development, etc.). This approach has yielded results even when the opportunities are not in the high-growth or high-tech areas. Thus, one of the most impactful ways to help businesses reduce their risk profile, according to one panelist, is for intermediaries to help small businesses identify their first, second and even third customers, to ensure that revenue is sufficiently diversified.

In addition, minority entrepreneuers need intermediaries able to provide referrals across the financing spectrum.  While the minority business community depends heavily upon debt, other types of capital, including private equity, venture capital, and even crowd funding, remain largely underutilized. Most organizations that work with minority business owners do not have sufficiently trained (or experienced) staff to advise on sophisticated transactions themselves, nor do they have the resources to contract with someone with that expertise. Consultative groups for minority-owned businesses, such as Meda in Minneapolis, rely on partnerships with corporate volunteers to advise on any type of business need that walks from access to private capital to mergers and acquisitions.  In addition, the minority-led National Association of Investment Companies represents minority-owned and managed private equity firms that invest in ethnically diverse communities. However, limits on this type of expertise mean fewer mergers, acquisitions and joint ventures take place among business owners of color. This deficiency is important given the well-documented lack of equity capital among minority entrepreneurs, according to panelists, and the fact that equity capital is often needed for minority entrepreneurs to grow.

 


[1] This forum was part of the CDPS Detroit Small Business Project, and was presented in partnership with the Asian Pacific Chamber of commerce, Michigan Black Chamber of Commerce, Michigan Hispanic Chamber of Commerce, the Michigan Minority Supplier Development Council and the Michigan Small Business Development Center.

[2] JPMorgan Chase Foundation provided the $7 million grant as part of the foundation’s CDFI Collaboratives program, a $33 million commitment to help CDFIs and small business lenders jumpstart job creation in low- and moderate-income communities in Chicago, Denver, Milwaukee, Detroit, Seattle, Buffalo and the New York City Metro area.

[3] The informal collaborative includes the Detroit Development Fund, the Michigan Women’s Foundation Detroit Micro-Enterprise Fund and is funded through a $5 million line of credit from Huntington Bank LifeLine Consultants offers the business development and mentoring services.

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Community Development and Policy Studies Update

In Community Development and Policy Studies (CDPS) field work throughout the Seventh District, CDPS contacts – in varying contexts – have voiced concerns about conditions impacting low- and moderate-income (LMI) populations and communities. CDPS conducts regular surveys of people representing organizations that serve LMI communities in varying ways. Our survey respondents represent organizations in the fields of: real estate development; finance; financial counseling; economic development; banking; consumer advocacy; small business development; philanthropy; law; higher education; agriculture; manufacturing; and human services. This blog is a summary of responses from the latest CDPS survey.

As indicated by the graph below, respondents in the most recent survey believe that many institutions are involved in leading to community development efforts in their region.
Click to enlarge
Click to enlarge

It is important that a wide array of institutions is helping people build the skills that are needed in the workforce, because most contacts noted that this continues to be an issue in their respective markets. Contacts noted that this issue could arise from a variety of circumstances including: (1) a dearth of students choosing science-based subjects in school; (2) lack of basic writing skills; and (3) too many students without a high school diploma. While community colleges cannot directly address all of these issues, according to almost all contacts, they are stepping in to tailor curricula to align with critical jobs skills in demand by (local) employers address these issues by: (1) identifying high demand local/regional employer skills; (2) focusing on developing critical thinking skills and improving communication skills; and (3) collaborating with other organizations. One example of collaborating with other organizations would be Milwaukee’s Green Skill Project that wrapped up this summer. It brought together industries, a technical college, community-based organizations as well as public and private funders. The program also partnered with Jobs for the Future to win a U.S. Department of Labor Green Jobs Innovation grant award.

The Federal Reserve Bank of Chicago is engaged in the workforce development discussion and is hosting a conference, Future Focus: Preparing for Workforce 2020, on February 19, 2015. The conference will be held in conjunction with The Center for Governmental Studies at Northern Illinois University. The one-day conference is designed to promote cross functional collaboration to support decision-makers and practitioners in identifying and implementing future-focused workforce development strategies. Attendees will learn more about the latest research and information on workforce trends, policies and practices. Please look for registration on ChicagoFed.org in January 2015.

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From classroom to career: An overview of current workforce development trends, issues, and initiatives

By Emily Engel and Daniel DiFranco

Community Development and Policy Studies’ (CDPS) most recent Profitwise News and Views (PNV) entitled, “From classroom to career: An overview of current workforce development trends, issues, and initiatives,” derives from CDPS’ Industrial Cities Initiative (ICI). Since workforce development was the most common and the most vexing issue identified by leaders in every ICI city profiled in the report, CDPS decided to examine the issues in greater depth. This PNV issue has four main articles and four insets, each revolving around a different aspect of workforce development:

  1. “Employment polarization and its discontents: A tale of two tails” describes the steady replacement of middle-wage (and presumably middle-skilled) jobs by low- and high-wage jobs.
  2. “Is there a skills mismatch: A technical view” reviews the term mismatch.
  3. “Employer involvement” describes employers’ efforts to address what they see as a skills gap.
  4. “Is a college education worth the cost? A risk/reward perspective” examines the puzzling trend of slowdowns in educational attainment despite rising demand for high-skilled workers.
  5. “Integrated Postsecondary Education Data System” describes the strengths (and limitations) of a dataset well suited for tracking educational outcomes among postsecondary institutions.
  6. “Skills for a stronger middle class” gives an example of how the executive branch is getting involved in workforce development.
  7. “The Cara Program: Workforce development one life at a time” highlights a Chicago-based community organization that provides a persistently challenging — yet highly supportive — environment within which individuals may cultivate the soft skills necessary for navigating the modern workplace.
  8. “Second chances in the land of opportunity” details a smaller Cara program that focuses on formerly incarcerated individuals, since the barriers to employment this group faces are often so high.
  9. “Early childhood education: ‘Workforce development’ for the long run” highlights the work of advocates to bring early childhood education into the policy spotlight.

The Chicago Federal Reserve is not the only Reserve Bank that is focusing on this important topic. Workforce development is guiding community outreach efforts across the Federal Reserve System. The Kansas City and Atlanta Feds cohosted a conference entitled, “The Future of Workforce Development: Where Research Meets Practice,” in September 2012. They recently extended this discussion in a similar conference entitled, “Transforming the U.S. Workforce Development Policies for the 21st Century.” In the same vein, the Philadelphia Fed spearheaded efforts to convene community development professionals, academics, and leaders from the public and private sectors in a “Reinventing Older Communities: Bridging Growth & Opportunity” conference held in May 2014, an event co-sponsored with seven other Federal Reserve Banks – Atlanta, Boston, Chicago, Cleveland, New York, Richmond, and St. Louis.

Please read the 2014 Fall PNV Edition to learn more about system efforts regarding workforce development, as well as current trends, issues, and initiatives on the topic.

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Healthy Communities – Milwaukee

By Steven Kuehl

Building off the 2013 Healthy Communities Chicago Regional Summit, the Federal Reserve Bank of Chicago will be cohosting a conference, “Healthy Communities – Milwaukee,” on December 2, 2014, that explores the converging visions of community and economic development, public health, and the public safety/criminal justice system. This conference is part of the Healthy Communities Initiative[1] created by the Federal Reserve System and the Robert Wood Johnson Foundation. This initiative, under the leadership of David Erickson from the Federal Reserve Bank of San Francisco, raises awareness about research indicating that people who live in supportive, socially connected, and economically thriving communities tend to be healthier[2]. Erickson has proffered that community development finance provides, through various interventions designed to improve local conditions, the opportunity for otherwise disenfranchised populations to engage in their local ecnonomies, access critical services, and therby become more healthy productive citizens. Neither the economic nor health impact of these interventions are easily measured, but strong correlations between social/economic and physical health across large populations support the argument for improving conditions through this work[3].

However, unique to the Milwaukee gathering will be an exploration of the intersection of the community development field with the public safety/criminal justice system in order to secure positive public health outcomes. 

In Milwaukee, many concerned with the long-term welfare of the city want to explore linkages between public health, safety, and economic conditions. The district attorney and Wisconsin State Public Defender’s Office have long recognized that the individuals in the criminal justice system disproportionately come from communities with high rates of infant mortality, teenage pregnancy, lead and other environmental toxins, and communicable diseases. Further, many of residents of these communities also often suffer from chronic mental illness and/or substance abuse issues, which leads them to incarceration for minor, non-violent crimes. Many of these negative outcomes are driven by environmental factors, such as poverty, failing schools, unemployment, racial isolation, etc. These factors are commonly referred to as the social determinants of health.

More than $1 billion has been spent through various federal, state, county, and city programs over the past 10 years in Milwaukee’s low- and moderate-income neighborhoods. Despite this investment, socioeconomic condtions in these communities has not improved.

Erickson, while visiting Milwaukee in April, stated that Milwaukee is uniquely positioned among American cities; among other assets, it is small enough that all the representatives of key community resources know one another. This fact alone increases the odds for aligning resources and expectations toward productive policies and programs.

In Milwaukee, many concerned with the long-term welfare of the city want to explore linkages between public health, security, and economic conditions. The District Attorney and Wisconsin State Public Defender’s Office have long recognized that the individuals who disproportionately populate the criminal justice system come from communities highest in infant mortality, teenage pregnancy, and with (evidence of) lead and other environmental toxins, failing schools, and high rates of communicable diseases. Additioanlly, others who enter the criminal justice system suffer from mental illness and addiction. 

In response, court systems have begun to implement specialty courts like Drug Treatment, Veterans, Mental Health, and Alcohol to treat a broader spectrum of responses to problematic behavior. The recent advent of evidence-based practices has enabled courts and corrections to collect statistically valid information about every individual entering the system. This information permits a robust, data-driven analysis of subpopulations entering the criminal justice system. 

What has become increasingly clear is that persistent, complex community problems in Milwaukee – poverty, poor health, incarceration – cannot be solved by agencies or sectors working in isolation. Greater alignment and collaboration is needed among institutions relative to the deployment of resources and strategies if significant change and improvement is to occur. To establish the groundwork for the December 2nd Federal Reserve Bank of Chicago cosponsored conference, a series of community conversation “cafés” are being held in Milwaukee throughout October. The purpose of the cafés is to ensure that the conference and its follow-up activities reflect and address the perspectives and concerns of people from different sectors of the community.

The December 2, 2014, conference will bring together professionals from community and economic development, public health, the criminal justice system, and philanthropy to shed light on the social determinants of health and explore community-based models and strategies that address the socioeconomic conditions of a place through evidence-based practices. The agenda will be constructed, in part, from the outcomes of the cafés. A major component will be to connect emerging data about criminal justice system subpopulations with work being done in the fields of community and economic development and public health. The conference goal is to engage the whole community in a conversation on how different sectors can work together more effectively to make Milwaukee safer, healthier, and more prosperous. Additionally, appropriate follow-up activities that continue to shape new solutions will be discussed and planned.

Please visit the website for further information and to register for the conference on December 2.

 


[1]The Healthy Communities Initiative was designed to enrich the debate on how cross-sector and place-based approaches to revitalize low-income communities might both revitalize neighborhoods and improve health.  The Federal Reserve System and the Robert Wood Johnson Foundation created the Healthy Communities Initiative to encourage stronger linkages between the two sectors and move them forward towards a healthier future.  Please visit the Healthy Communities Initiative website for more information. 

[2] David Erickson, et al., 2009, Community Development Investment Review, Volume 5, Issue 3.

[3] Ibid.

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CDPS Update

In Community Development and Policy Studies (CDPS) field work throughout the Seventh District, CDPS contacts – in varying contexts – have voiced concerns about conditions impacting low- and moderate-income (LMI) populations and communities. CDPS conducts regular surveys of people representing organizations that serve LMI communities in varying ways. Our survey respondents represent organizations in the fields of: real estate development; finance; financial counseling; economic development; banking; consumer advocacy; small business development; philanthropy; law; higher education; agriculture; manufacturing; and human services. This blog is a summary of responses from the latest CDPS survey.

As indicated by the chart below, contacts believe that many issues impact the single family (1-4 units) housing market in their region. Some contacts explained that lenders are finding the new rules and regulations too cumbersome to continue lending at the same rate as before the recession. However, many home owners are still underwater and there is little home buyer demand given: job losses; wage stagnations; neighborhood deterioration; and vacant homes that blight many LMI communities.

September Blog ChartClick to enlarge

In the rental market, there were mixed comments, depending on the area the contact was describing. In stronger markets, where new rentals have recently come on the market, occupancy and rents are high. However, in LMI areas, occupancy rates are lower and rents are more affordable.

Many contacts also mentioned in open ended questions that the housing market (e.g., vacant building and foreclosures), in conjunction with employment issues (e.g., high unemployment and low wages), are still two of the biggest challenges to sustained growth/revitalization in their communities.

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CDPS hosts a conversation on apprenticeships in manufacturing

By Jason Keller

According to the U.S. Department of Labor’s Employment and Training Administration (ETA), registered apprenticeship, a model for preparing new generations of skilled workers that can be traced back to the Middle Ages, remains an important method for training and placing workers. The current surge in apprenticeship has evolved from emphasizing learning in the traditional construction trades toward a focus today on new and emerging industries, such as energy, health care, and information technology for example. Today’s apprentices are registered in “earn and learn” work programs with expert mentors in their fields, allowing them to accumulate knowledge and build skills over time. The apprentice benefits by earning a fair wage as well as obtaining industry-recognized credentials and/or college credits. The 150,000 employers and other labor management organizations who already participate in the program also benefit because apprentices are not only placed on a structured learning track, but the industry-based training is specifically designed to meet employers’ current standards and practices. The various programs also have the capacity to track trends in demand, deploy resources, and match workers according to need. The success of apprenticeships’ on-the-job learning, combined with related technical instruction, leads toward a more highly skilled and highly productive workforce.

The Federal Reserve Bank of Chicago has long been interested in employment conditions as it seeks to promote the Fed’s dual mandate of maximum employment and sustainable economic growth.[1] For example, in 2011, Community Development and Policy Studies (CDPS), a division of the Chicago Fed, launched its Industrial Cities Initiative.[2] Known as ICI, this study took a closer look at ten former industrial/manufacturing hubs and their economic evolution over the last 50 years. The ICI paid particular attention to the labor force in these cities and the steps taken by local leaders, community colleges, and other labor organizations to meet demand for vocational and technical training by major employers.

In April 2014, the White House announced that the United States Department of Labor (DOL) will make $100 million in existing H-1B funds[3] available in the form of American Apprenticeship Grants. Expected to launch in the fall, this will be a competitive application process to award grants to partnerships that help American workers participate in structured apprenticeship programs. The grants are intended to encourage new apprenticeships by incentivizing employers, labor organizations, and training providers to work cooperatively. Awards are also intended to promote apprenticeships as pathways for further learning and career advancement, as well as to bring-to-scale exemplary models that work.[4]

To better inform the business and civic communities about this renewed commitment to the apprenticeship model and solicit feedback, the DOL worked with local intermediaries to hold a series of industry roundtables across the country throughout the month of June. The meetings brought together local leaders, employers, and labor organizations each with a vested interest in workforce development. The sessions were segregated by cluster: transportation and logistics (Atlanta), health care (Boston), construction (Washington DC), energy (Houston), and information technology (San Francisco).[5] The session held at the Federal Reserve Bank of Chicago on June 19 focused entirely on manufacturing by bringing together nearly 100 policymakers and practitioners on the topic of apprenticeship.

At the Chicago roundtable, Labor Secretary Thomas E. Perez[6] explained that the apprenticeship model is a “linchpin” and a “catalyst” toward sustainable economic vitality and job growth in this country. His remarks set the stage for an informative discussion on the needs, challenges, opportunities, and solutions for using apprenticeships in both traditional and advanced manufacturing.

Roundtable attendees were asked to comment on the following questions:

  • What are your current and future talent needs?
  • How can registered apprenticeships meet those needs?
  • What are the challenges to using registered apprenticeships?
  • What innovative solutions could be expanded and replicated?
  • What support is needed to advance registered apprenticeship efforts?

Results from the June roundtables will help the DOL determine if current federal policy pertaining to apprenticeship programs is effective or if additional enhancements are needed.

The Federal Reserve Bank of Chicago appreciated the opportunity to engage with the DOL in this important discussion. For more information on CDPS, please visit the Community Development & Policy Studies home page.[7] Additionally a recent ProfitWise News and Views article, Community Colleges and Industry: How Partnerships Address the Skills Gap[8] provides more information about community college and industry partnerships in the Seventh Federal Reserve District states of Iowa, Illinois, Wisconsin, and Michigan.


[1] See the Federal Reserve System mission statement, available at http://www.federalreserve.gov/aboutthefed/mission.htm.

[2] See the Federal Reserve Bank of Chicago’s Industrial Cities Initiative, available at http://www.chicagofed.org/webpages/region/community_development/community_economic_development/ici/ici_profiles.cfm.

[3] H-1B funds projects that provide training and related activities to workers to assist them in gaining the skills and competencies needed to obtain or upgrade employment in high-growth industries or economic sectors.

[5] American Apprenticeships: Industry Roundtable, available at: http://www.doleta.gov/oa/pdf/industry-FS-4.pdf.

[6] Thomas E. Perez biography, available at: http://www.dol.gov/_sec/.

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Redefining Rustbelt: Opportunities for city revitalization and educational reform

By Robin Newberger and Maude Toussaint-Comeau

The fourth and final meeting in the Redefining Rust Belt series among the Federal Reserve Banks of Chicago (Detroit branch), Richmond (Baltimore branch), Philadelphia and Cleveland brought together public school superintendents to discuss the central role that quality schools play in making urban communities stronger.[1]  (For more information on the initiative, please visit Redefining Rust Belt.)  The role of public schools as institutions in community development is well recognized.  Schools employ local residents, impact local housing markets, and influence the aesthetic character of a community (Chung, 2005). The educational system also helps determine the quality of the labor force and, therefore, the health of the local economy (Weiss, 2004). When experts in metropolitan redevelopment are asked what things are most important for metropolitan regions in the United States to be considered “world-class”, the issue that consistently tops the lists is having an educated workforce capable of adapting to changes in the economy. 

STRUGGLING SCHOOL SYSTEMS AND AN INCREASED “ACCESS GAP”

In the cities represented at the final “Redefining Rust Belt” session (Detroit, Philadelphia, Baltimore and Toledo[2]), superintendents spoke of common longstanding challenges to their school systems.  Each has wrestled with financial instability, declining enrollment, and uneven educational opportunities across their districts.   An emergency financial manager has led Detroit public schools since 2009.  Each of the cities has had to close buildings due largely to the migration of students to charter and suburban schools.  On average, about 65 percent of students graduate in four years from these school systems, according to the superintendents.  Among male Latino and black students, fewer than half graduate in four years. (See Chart 1 showing trends in the number of students enrolled by charter and non-charter schools).

Chart 1 educationClick image to enlarge

Source: U.S. Department of Education, National Center for Education Statistics

Superintendents report a talent gap in the classroom as well.  Urban settings tend to be places with the most job openings, but they are often the places with the most challenging environments in which to teach.   Some of the school districts rely on recruits from Teach for America to fill these positions, requesting hundreds of teachers per year.  But superintendents also recognize the importance of teachers having years of experience in difficult classrooms.  What is missing, according to the superintendents,  are “prep” programs designed to give new teachers apprenticeship opportunities to build an effective inventory of interventions from which to troubleshoot, regardless of where teachers are placed.  

More generally, there is an “access gap” across different neighborhoods and schools.  Every school system represented in the panel has some extremely high-quality schools, but not enough seats exist at those schools to accommodate every student who wants to be there. While some schools may offer college-level courses starting in 9th grade, other schools may not even have an honors class.  Open enrollment policies allow students to attend schools outside of their neighborhood boundaries, but students often have no means of transportation to travel farther distances. The gap in resources between different communities affects teachers, curricula and facilities, as well as an untold number of opportunities outside of the classroom. 

An additional challenge to neighborhood stability comes with the closure of school buildings.  Half of Detroit’s public schools were closed between 2011 and 2014. Philadelphia closed 31 schools over an 18 month period.  The closing of school buildings constitute one of the biggest sources of blight across neighborhoods (see Chart 2).

Chart 2 educationClick image to enlarge

Source: U.S. Department of Education, National Center for Education Statistics

RESPONDING TO THE CHALLENGES

School systems are attempting to address these challenges in a variety of ways.  

Attract quality teachers:

Districts are rethinking the opportunities for high-performing teachers, developing housing for new teachers who come into a district, and attempting to brand their localities as exciting places to work for people interested in teaching in the K-12 environment.  School systems are looking to provide employer-assisted housing not just for teachers but for other talent related to the education sector as well. Another approach to retain the most qualified teachers has been to suspend teacher seniority rules. One school district recently filed a petition with the state Supreme Court to get clarification of the School Reform Commission’s powers in this regard.  According to the superintendents, the goal is to bring and retain the most talented teachers for the benefit of schools that need the most support. Schools are also looking to reinforce relationships between teachers and students.  One district eliminated the grade 6 through 8 middle school institution and instead created a K-8 environment in all schools.  The same district started a program to bus fifth and sixth grade students to high school for music and band/orchestra, and seventh and eighth graders to high school for advanced credit, so that these elementary school students develop relationships with teachers in high schools they will eventually attend.

Provide a unique educational experience and ease the transition to higher education:

School systems are looking to adopt models that provide students with unique educational opportunities.  These include project-based schools where the curricula focus on real-world problem-solving in their communities, and school “boutiques” that specialize around the types of industries in which students want to work. School districts are also seeking to build support for students transitioning from high school to community college.  One superintendent reported offering courses for credit at the community college.  Another district has instituted a pilot program for high school seniors to take the same remedial courses in math, English and writing that they are often required to take during their first years of community college. The purpose is to make it easier for students to pursue a two-year degree, prevent them from getting lost when leaving high school, and lessening the need for financial aid for courses that do not count for credit.  An increasing number of external institutions are also helping to develop learning environments that create a continuum between classrooms and industry.  The Toledo school system hired someone from the Chamber of Commerce to act as a liaison between industry and classroom for the industries that are looking to connect with high-school graduates.  In Philadelphia, the superintendent’s department has an office of strategic partnerships that operates as a point of entry for individuals, businesses, philanthropies, and others to support the work that schools are doing.  Detroit has full-time staff to manage the entities interested in getting involved with the school system. 

Improve quality of life through repurposed school buildings:

School districts are using many of the closed school buildings to improve the quality of life and the quality of neighborhoods for people who live in the surrounding communities. In 2013, the Detroit school system selected 21 sites to serve as “community schools” that house programs such as job skills training, child/elder care, financial literacy and other programs that are offered beyond the traditional school day.[3]  The Detroit mayor is working with school principals to encourage families to move to promising neighborhoods – neighborhoods that have experienced blight but have potential for improvement given their high-quality housing stock. The school systems are looking to convert other unused school buildings into housing for the parents of school-age children, as well as for professionals and businesses in these neighborhoods.  Leveraging New Markets Tax Credits and Historic Tax Credits, some districts have converted closed schools to senior centers.  The Detroit superintendent’s office has been working to turn a shuttered high school into a farm and food processing center for school programs and a farmers market (Eastern Market) in downtown Detroit.

SUMMARY AND CONCLUSION

According to the superintendents who participated in the panel discussion, there isn’t a one-size-fits-all theory of action to implement reforms.  The challenges that schools face stem not only from the classroom but, in many instances, from circumstances that students face at home.  School systems, therefore, recognize the need to develop students from early pre-school stages through the K-12 system.  Perhaps most importantly, school districts must embrace new approaches.  As the superintendents explained, that means on one level, creative reuse of buildings and other assets, sometimes leveraging government funding not traditionally targeted to schools for supportive services, and even converting vacant facilities to housing and other non-educational purposes to avert blight and decay of vacant schools and surrounding neighborhoods.  On another level, it means expanding the process of articulation[4] from ensuring that coursework in elementary and middle schools prepares students for high school, to familiarizing students with facilities, faculty, and coursework at the high school level, and ultimately strengthening links to and coordination with employers.  From a labor standpoint, school districts are also working to broaden measures to attract good teachers, such as providing housing assistance, and placing less emphasis on tenure and more on performance.   Economic conditions are forcing school districts to redefine and expand their roles, and take unprecedented steps to ensure their viability while placing primary emphasis on student success.

References

Chung Connie, “Connecting Public Schools to Community Development,” https://www.bostonfed.org/commdev/c&b/2005/winter/Public.pdf

Jonathan D. Weiss, “Public Schools and Economic Development: What the Research Shows,” http://www.mea.org/tef/pdf/public_schools_development.pdf

 


[1]The meeting took place as a plenary session at the national conference “Reinventing Older Communities” in Philadelphia in May 2014.

[2] Detroit was represented by Jack Martin, Emergency Manager of Detroit Public Schools; Philadelphia was represented by William Hite, Superintendent of the School District of Philadelphia; Baltimore was represented by Gregory Thornton, Superintendent of the Milwaukee Public Schools and incoming CEO of Baltimore City Public Schools; and Toledo was represented by Romules Durant, CEO and Superintendent of Toledo Public Schools.  Toledo was represented instead of Cleveland in the final meeting of the series. However, all the charts in this blog reference Cleveland for consistency in the project.

[3] For more information, see DPS announces 21 schools to serve as “12/7 Community Schools” and hubs of their neighborhoods, available at: http://detroitk12.org/content/2013/08/15/dps-announces-21-schools-to-serve-as-127-community-schools-and-hubs-of-their-neighborhoods/

[4] Defined by the U.S. Dept. of Education as “systematic coordination of course and/or program content within and between educational institutions to facilitate the continuous and efficient progress of students from grade to grade, school to school, and from school to the working world.”

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Community Development and Policy Studies (CDPS) Update

In Community Development and Policy Studies (CDPS) field work throughout the Seventh District, CDPS contacts – in varying contexts – have voiced concerns about conditions impacting low- and moderate-income (LMI) populations and communities. CDPS conducts regular surveys of people representing organizations that serve LMI communities in varying ways. Our survey respondents represent organizations in the fields of real estate development; facilities financing; financial counseling; economic development; banking; consumer advocacy; small business development; philanthropy; law; higher education; agriculture; manufacturing; and human services. This blog is a summary of responses from the latest CDPS survey.

While the survey provides, by virtue of its nature and scope, more qualitative than quantitative insights, most contacts noted that in their communities many people lack skills that are needed in the workforce. Additionally, the contacts highlighted that community colleges are partnering with industry and non-profits to make sure they are customizing their curricula to correspond with skills sought by local employers. A recent ProfitWise News and Views article, Community Colleges and Industry: How Partnerships Address the Skills Gap provides more information about community college and industry partnerships in the Seventh Federal Reserve District states of Iowa, Illinois, Wisconsin, and Michigan.

On a different note, CDPS is interested in learning about the institutions in your community that create, lead, and finance community development. The two charts below break down which organizations create and lead community development and organizations that help to finance community development. Additionally, it was noted that Community Development Financial Institutions (CDFIs) and farm service agencies helped create, lead, and finance community development, respectively.

Chart one
Click image to enlarge
Chart two
Click image to enlarge
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Industrial Cities Initiative Profiled in New Report

Community Development and Policy Studies at the Chicago Fed recently published profiles of a group of 10 cities that experienced significant manufacturing job loss in recent decades.

The Industrial Cities Initiative (ICI) includes, Aurora and Joliet in Illinois; Fort Wayne and Gary in Indiana; Cedar Rapids and Waterloo in Iowa; Grand Rapids and Pontiac in Michigan; and, Green Bay and Racine in Wisconsin.  While each city has been blogged about before (see the “BLOG” tab), a complete set of more detailed profiles are now compiled into one report.

Collectively, the profiles provide insights from local economic development leaders on the cities’ actions in the wake of the job loss that have either helped or hindered redevelopment efforts.

The authors and contributors to the ICI do not pass judgment on individual cities. So, while we understand the temptation to simply link directly to just one city’s profile, we encourage readers to start their exploration of the ICI with the Summary.

The ICI looked at cities’ conditions, trends and experiences and concluded that efforts to improve their economic and social well-being are shaped by:

  • Macroeconomic forces: Regardless of their size or location, these cities are impacted by globalization, immigration, education, job training needs, demographic trends including an aging population, and the benefits and burdens of wealth, wages, and poverty;
  • State and national policies: State and national policies pit one city against another in a zero-sum competition for job- and wealth-generated firms; and
  • The dynamic relationship between the city and the region in which it is located: Regional strengths and weaknesses to a large extent determine the fate of the respective cities.

The ICI homepage provides access to the full ICI report, individual ICI city profiles and related research, and blogs from around the country about cities that share a manufacturing legacy.

Posted in Aurora, Cedar Rapids, Fort Wayne, Gary, Grand Rapids, Green Bay, Industrial Cities Initiative, Joliet, Pontiac, Racine, Waterloo | Comments Off