Looking for Progress in America’s Smaller Legacy Cities: A Report for Place-based Funders

By: Alicia Kitsuse, The Funders’ Network & Jeremiah P. Boyle, Federal Reserve Bank of Chicago

The Federal Reserve Banks of Atlanta, Boston, Chicago, and New York recently released, in partnership with The Funders’ Network, a whitepaper presenting findings from a four-city study tour of older, legacy cities. 

This blog is the first in an occasional series stemming from that report. Future installments will reflect the views of some of the place-based funders that collaborated with Federal Reserve staff in the study tour visits and the subsequent report.  This initial blog features, as background, the executive summary of the report.  The full report can be downloaded, here.

OIC_COVERPlace-based funders can play an important role in connecting economic growth to opportunity. This paper describes a study tour undertaken by representatives from four Federal Reserve Banks and more than two dozen place-based funders, under the auspices of The Funders’ Network Fed-Philanthropy Initiative. What began as an inquiry into four small legacy cities – Chattanooga, TN; Cedar Rapids, IA; Rochester, NY; and Grand Rapids, MI — that appeared to have experienced some measure of revitalization in the post Great Recession environment, evolved into an understanding that the places are moving along two distinct paths: an “arc of growth” and an “arc of opportunity.”  In the context of these small legacy cities, growth and opportunity unfold simultaneously along these two long-term and distinct “arcs” leading to the conclusion that broad community prosperity lies in (1) recognizing that growth alone does not naturally lead to opportunity and (2) advancing deliberate policies, investments, and programs that connect growth to opportunity.

Five takeaways

Given the common narratives emerging from the study tour and the dual arcs framework for evaluating place-based revitalization, participants in the tour put forward a short, non-exhaustive, list of conclusions for funders.

Patient capital builds local capacity.  The time horizons of community revitalization require capital that seeks both social impact and financial return over a longer-term. Place based funders are uniquely positioned to address the long time horizon that this work dictates, and the resources they control may be critical aspects in its acceleration or deceleration.

State policy often limits the flexibility and authority of local leaders to connect the arcs of growth and opportunity. Funders can take an active role in identifying those policy bottlenecks or opportunities that facilitate more positive local action toward connecting growth to opportunity. Place-based funders can be catalytic change agents for both policy and practice without engaging in lobbying.

Jurisdictional authorities dictate policy to connect the growth and opportunity arcs.  The levers of power and resource allocations accorded to any number of public or pseudo-public authorities have a significant, often negative impact on the efficacy of efforts to connect the dual arcs. Funders can take an active role in helping to identify and break down or circumnavigate local jurisdictional boundaries that prevent positive action and facilitate alignment toward common goals.

Effective marketing and communication advances positive momentum. Maintaining a steady cadence on the long-term mission of community revitalization often falls to place-based leaders. In most cases, the community foundation or another place-rooted funder had a role in funding or otherwise supporting the narrative of a community’s recovery, articulating a common, inclusive vision of what is possible.

Accountability for distribution of benefits from growth is the lynch pin for connecting the arcs. Cities around the country (including the four visited) have revitalized in various ways over the last several decades. But, benefits of that growth have left many behind. Place-based funders should be strategic in holding local stakeholders accountable for connecting the growth and opportunity arcs.

OIC_MAP

Helpful tools

Despite the challenges of connecting the arcs, multiple tools or approaches in which the local place-based foundation played a lead role as a funder, convener or ‘steward’ of the effort that may be valuable to other communities were noted. These tools were observed within a local context, and were often part of a broadly articulated plan or vision. While tools are helpful, the environment in which they are most likely to succeed is also important.

  • Addressing concentrated poverty by place: Interventions in this category were geographically targeted, but multi-faceted and cross-generational. Stressed communities that were located near resources – perhaps transportation or a good school – were seen as good places to start.
  • Addressing concentrated poverty through policy: Interventions in this category were explicit in channeling more gains from growth to opportunity, through local policy either by removing barriers or being prescriptive in the intentional distribution of benefits.
  • Revitalizing downtown with greater attention to preserving and increasing affordable housing: While investments in making communities more attractive by building downtown entertainment or “innovation” districts and increasing desirable amenities has increased property values and living costs, cities are facing the need for more affordable, family friendly housing options near emerging employment opportunities.
  • Business recruitment led by business retention: Community economic growth strategies focused on strengthening existing businesses by recruiting businesses in their supply chain, placing retention and success of existing business as a higher priority than traditional recruitment alone. Coordinated workforce development was often key to this strategy.
  • Develop leaders: Concern exists about where the next two generations of leaders will come from and how they will support broad-based collaborative efforts. Strong leaders in business, government and non-profits, are critical to building a regional approach to both arcs.
  • Data collection: Data has played an important role in many of the cities visited. Data should be publicly available and granular enough to support neighborhood level understanding as well as robust enough to present an aggregated, comprehensive city – or MSA-wide – profile.

While local dynamics dictate the timing, sequence, and particularities of the interplay between growth and opportunity strategies, this study concludes that revitalization efforts that recognize the dual arcs and plan for their meaningful integration are more likely to yield robust and lasting long-term results. Because place-based funders are so integrally linked to the history and prospects of the communities they serve, they have unique roles and responsibilities not only as funders, but as local institutions and innovators to make these linkages across place and time.

Alicia Kitsuse is Director of TFN’s Older Industrial Cities Program.

Jeremiah P. Boyle is Managing Director of Community and Economic Development for the Federal Reserve Bank of Chicago

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Community Advisory Council (CAC) Nominations are Now Open

By Jason Keller

The Federal Reserve Board of Governors (the Board) announced on April 4, 2017, that it is accepting applications[1] from individuals who wish to be considered for membership on the Community Advisory Council (CAC). Community Development and Policies Studies (CDPS) – a division of the Economic Research Department of the Federal Reserve Bank of Chicago,[2] is working with the Board to source candidates for the CAC from the Seventh District, which consists of Iowa as well as portions of Illinois, Indiana, Michigan, and Wisconsin.

Formed in 2015, the CAC advises the Board on issues affecting consumers and communities. The CAC serves as a mechanism to gather feedback and perspectives on a wide range of policy matters and emerging issues of interest to the Board and aligns with the Federal Reserve’s mission and current responsibilities. The CAC is made up of a diverse group of experts and representatives of consumer and community development organizations and interests, including affordable housing, community and workforce development, small business, and asset and wealth building.

The CAC meets semi-annually with members of the Board in Washington, DC, and consists of at least 15 members. Its purpose is to provide a range of perspectives on the economic circumstances and financial services needs of consumers and communities, with a focus on the concerns of low- and moderate-income individuals and areas. It complements two of the Board’s other advisory councils – the Federal Advisory Council[3] and the Community Depository Institutions Advisory Council[4] – whose members represent depository institutions.

The Board is interested in candidates with knowledge of fields such as affordable housing, community and economic development, labor and workforce development, financial technology, small business, and asset and wealth building, with a particular focus on the concerns of low- and moderate-income consumers and communities. Candidates do not have to be experts on all topics related to consumer financial services or community development, but they should possess some basic knowledge of these areas and related issues. In appointing members to the CAC, the Board will consider a number of factors, including diversity in terms of subject matter expertise, geographic representation, and the representation of women and minority groups. In this application cycle, the Board welcomes applications from all areas of expertise but is keenly interested in gaining perspectives on local labor and workforce development that could speak to opportunities and challenges of low-wage workers to complement the national and regional representation on the Council.

The Board will select four members in the fall of 2017 to replace current members whose terms will expire on December 31, 2017. The newly appointed members will serve three-year terms that will begin on January 1, 2018. If a member vacates the CAC before the end of the three-year term, a replacement member will be appointed to fill the unexpired term. CAC members must be willing and able to make the necessary time commitment to participate in organizational conference calls and prepare for and attend meetings two times per year (usually for two days). The meetings will be held at the Board’s offices in Washington, DC. The Board will provide a nominal honorarium and will reimburse CAC members only for their actual travel expenses (subject to Board policy).

Candidates may submit applications[5] by one of three options:

  • Online: www.federalreserve.gov/secure/CAC/Application
  • Email: CCA-CAC@frb.gov
  • Postal mail: If electronic submission is not feasible, submissions may be mailed to the Board of Governors of the Federal Reserve System, Attn: Community Advisory Council, Mail Stop N-805, 20th Street and Constitution Ave. NW, Washington, DC 20551

Additional information about the selection process, including instructions for submitting an application, can be found in the Federal Register[6] notice.

For Further Information, Contact:

Jennifer Fernandez (for questions nationally)
Community Development Analyst
Federal Reserve Board of Governors
CCA-CAC@frb.gov

Jason Keller (for questions from Illinois, Iowa, Indiana, Michigan, and Wisconsin)
Economic Development Director
Federal Reserve Bank of Chicago
CDPSevents@chi.frb.org

Media
Federal Reserve Board of Governors
202) 452-2955

The Board will accept applications through 11:59 PM EDT on June 5, 2017.

[1] See https://www.federalreserve.gov/secure/cac/application.
[2] CDPS promotes fair access to credit and financial services and researches issues that impact low- and moderate-income communities.
[3] See https://www.federalreserve.gov/aboutthefed/fac.htm.
[4] See https://www.federalreserve.gov/aboutthefed/cdiac.htm.
[5] Required fields include: phone number; postal mail street address; postal mail city; postal zip code; organization; title; organization type; primary area of expertise; secondary area of expertise; resume; cover letter; and any additional information.
[6] See https://www.federalregister.gov/documents/2017/04/04/2017-06021/solicitation-of-applications-for-membership-on-the-community-advisory-council.

 

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ABLE Accounts: Asset Development Tool for Disabled Individuals

By Marva Williams

Community Development and Policy Studies (CDPS) works to improve the socioeconomic prospects of low- and moderate-income (LMI) people by helping to facilitate the flow of credit and financial services to their communities. This is accomplished by monitoring credit conditions within communities, but also by noting the emergence of financial products and services with the potential to remove barriers to asset accumulation and financial stability for vulnerable populations[1]. Individuals with physical and mental handicaps are more likely to be unemployed and twice as likely to be poor, than someone without a disability. In addition to lower earning rates, the disabled have lower savings rates. According to a 2016 report from the National Disability Institute, 81 percent of people with disabilities did not have an emergency fund to cover three months of expenses, as compared to 54 percent of people without disabilities[2].

A new savings and investment tool, the Stephen Beck, Jr. Achieving a Better Life Experience or ABLE Act, for disabled individuals allows qualified people and their families to save for the future, while also protecting eligibility for public benefits. ABLE accounts are savings and investment accounts that can receive contributions from multiple sources, including the disabled individual who is the owner of the account. Total annual contributions may not exceed the current federal gift tax contribution, which is $14,000 in 2017, and total account balances may not exceed $250,000.

To qualify for an ABLE account, the account owner must have developed the disability before the age of 26 and must qualify for Social Security Administration benefits, or received a waiver from the IRS. States, which provide ABLE accounts, offer a wide range of investment options. Accounts can range from aggressive investments that promise higher returns to conservative investments that have an emphasis on capital preservation rather than growth. In addition, some states like Iowa and Illinois are offering checking accounts with a financial institution as a component of their ABLE products.

ABLE accounts offer several benefits:

Preferential federal tax benefits: In general, ABLE programs are exempt from federal taxation. Withdrawals are tax-free when used for qualified expenses and contributions to accounts are a deductible charitable expense.

Disability related expenses: Qualified expenses include rent, medical costs, and other living expenses such as education, housing, transportation, employment training and support, assistive technology, personal support services, medical and wellness services or products, financial management and legal services.

Federal program eligibility: ABLE assets will be disregarded or receive favorable treatment when determining eligibility for most federal means-tested benefits, including Supplemental Security Income (SSI), and Medicaid.

ABLE products are established at the discretion of the state treasurer in each state. Of the five states that are part of the region of the Federal Reserve Bank of Chicago, Illinois, Iowa, and Michigan currently offer ABLE Accounts. In fact, Iowa and Illinois are members of the National ABLE Alliance, a partnership of 15 additional states that offers ABLE accounts with multiple financial options. Indiana recently joined the partnership and will offer an ABLE product soon. Wisconsin does not offer an ABLE program although residents may open an account in another state if that state allows nonresident accounts.

ABLE account policies can be very complex. Up-to-date information on each state ABLE program in the Seventh District can be found at:

Seventh District State Able Program Name Website
Illinois Illinois Able https://savewithable.com/il/home.html
Indiana Forthcoming program N.A.
Iowa IAble IABLE.gov
Michigan MiAble miABLE.org
Wisconsin No current program N.A.

 

The author of this blog would like to thank the following for information on ABLE services, including Jill Crosser of Iowa Able;  Chasse Rehwinkel of the office of the Illinois State Treasurer; Chris Rodriguez, Senior Public Policy Advisor of the National Disability Institute; and Karen Austin and Adam Phillips of the office of the Iowa State Treasurer.

 

[1] See, for example, https://www.chicagofed.org/publications/profitwise-news-and-views/2016/universal-csas-in-illinois-addressing-the-racial-wealth-gap and https://www.chicagofed.org/publications/profitwise-news-and-views/2016/tax-time-savings-an-antidote-to-financial-insecurity both from ProfitWise News and Views, No. 3 2016.
[2] NDI Report Finds Adults with Disabilities Continue to be Economically Shortchanged Despite ADA’s Guarantee.  National Disability Institute.  July 22, 2016.  http://www.realeconomicimpact.org/newsletters/rei_news_08_14.html
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Workforce Development for the Next Generation: Early Childhood Education

By Emily Engel

Workforce development, long thought to be the purview of community colleges and other vocational programs increasingly extends into early childhood education and elementary school. In fact, many practitioners today believe that workforce development and early childhood education go hand in hand, with many of the skills that bode well for career success developed early in life[1]. Given that one aspect of the Federal Reserve’s dual mandate is full employment, the Community Development and Policy Studies Department has highlighted workforce development as a priority in its 2015-2020 strategic plan.

In addition, the most recent Federal Reserve System Community Development Research Conference, “Strong Foundations: The Economic Futures of Kids and Communities,” explored the link between early childhood interventions and later in life outcomes. During the conference, three sets of concurrent paper sessions – “Early Childhood Development,” “Community Conditions,” and “Education and Workforce” – highlighted the latest research and thinking on the conference topic. Three plenary sessions – “Early Childhood Development and Return on Investment,” “Shaping Economic Futures: The Role of Communities,” and “Skill Development and Workforce Outcomes” convened prominent leaders and speakers. Links to papers and presentations are available on the symposium website.

One of the key themes of the conference is that children from disadvantaged situations face numerous obstacles throughout their lives, but one of the most important is the ability to be ready for kindergarten and early grade learning. Evidence exists that children who are not ready for school face significant struggles ‘catching up,’ and these struggles remain with them throughout their lives.

Chair Janet Yellen’s remarks highlighted the importance of the first five years in a child’s life: “A growing body of economic and education literature has focused on the relative efficiency of addressing workforce development challenges through investments in early childhood development and education compared with interventions later in life.”

The “Early Childhood Development and Return on Investment” panel, which featured leaders from philanthropy, academia, and practice highlighted the urgency of capturing early development opportunities. Aranthan “AJ” Jones II, Chief of staff at the W.K. Kellogg Foundation, moderated the panel, “Early Childhood Development and Return on Investment” with Katherine Magnuson, Jack Shonkoff and Arthur Rolnick. Katherine Magnuson, Professor at the School of Social Work University of Wisconsin Madison, talked about how the key to becoming a productive worker is rooted in early childhood because the early years of a child’s life is when 700 synapses are formed per second. Building off of Magnuson’s presentation, Jack Shonkoff, Director of the Center on the Developing Child at Harvard University, stressed that learning from other industries like science, would help improve the impact of early childhood programs. He also highlighted that disadvantaged children need supportive caregivers and talked about how building adult capabilities will improve outcomes for children through a multi-generational approach. Arthur Rolnick, Senior Fellow and Co-Director of the Human Capital Research Collaborative at the Humphrey School of Public Policy, concluded the panel by highlighting the return on inflation adjusted investment of 18 percent for the Perry Project. He explained that initiatives need to be scalable in order to help more disadvantaged children succeed, like the program in Minnesota, The Minnesota Model for Early Childhood Education[2].

Viewing Our Children as Emerging Leaders (VOCEL) is a local example of this approach. It works with very young children and their parents on Chicago’s west side including many of the factors mentioned in the panel. In VOCEL’s founding preschool classroom, 88 percent of the children lived in poverty, 66 percent of the children lived in single-parent households, and 66 percent of the children had parents who were unemployed or experienced significant job instability.

VOCEL endeavors to positively impact the low- and moderate-income communities on the west side of Chicago through education, using a combination of the following area of focus depending on the needs of the children and their families:

  • Early leadership skills;
  • Communication and language exposure;
  • Parents programming supported by social workers;
  • Home visiting and individualized support; and
  • Research, evaluation and continual growth.

Two key programs support children in this community: VOCEL Early Learning Center and VOCEL Child Parent Academy.

The VOCEL Early Learning Center currently serves 18 children and is expanding to 44 children in 2018 due to high demand. Enrolled children range in age from 6 weeks to 5 years. It is a full day, year-round program helping support low-income working families.  A new partnership with New Moms, will enable VOCEL to also work with young mothers and their children who are living in poverty or facing homelessness.

The VOCEL early learning center also works with the LENA Foundations, whose research, digital language processors and accompanying systems are used to measure early language environments and track children’s communication skills. The data shows the effectiveness of VOCEL’s innovative methods in comparison to preschool environments in LENA Foundation’s current data sample[3]. For example:

  • Children at VOCEL hear an average of 2,529 words per hour from the teachers and volunteers. (800 – 1100 is typical adult word count in day care / preschool environments in LENA Foundation’s current data sample)
  • Conversational turn count: Children at VOCEL have an average of 99 back-and-forth conversational turns per hour. (15-30 is typical conversational turn count in day care / preschool environments in LENA Foundation’s current data sample)
  • Child vocalization count: Children’s hourly vocalization count is 335 vocalizations (similar to words) per hour. (100-200 is typical conversational turn count in day care / preschool environments in LENA Foundation’s current data sample)

The VOCEL Child Parent Academy hosts parent-child classes that help both grow together. It is an intensive three month program for children from birth to three years old. This program incorporates learning and education throughout the program for both generations. One example is “brain bags” that circulate educational materials between the program and home. Another example is the simple text reminders that the parents receive multiple times a day reminding them of things they can do with their children every day to form positive habits. By building a strong, secure, attachment between parents and child, the child’s cognitive and language skills will start to grow exponentially at a young age.  Additionally, there are parent discussion groups and teacher-child classes, the first to transfer knowledge to parents about parenting practices that will help their child succeed and the later to help children separate from parents in a healthy way. These two occur simultaneously to reduce the amount of time the parent and child need to be at the academy, given the scheduling demands of working parents.

VOCEL also knows that creating a healthy, educated, and well-rounded child takes more than love, education and books.  It also takes a healthy community[4]. In 2015, VOCEL created a partnership with Good Sports to help their students gain the health benefits that sports offer.

VOCEL is just one example of an organization that is positively impacting the lives of children. With their work and the work of similar organizations, children will develop the skills to succeed in life.

 

[1] In 2014, the Chicago Fed highlighted early childhood education: “Workforce development” for the long run in a ProfitWise News and Views article
[2] Please see Art Rolnick’s TEDxTC, Economic Case for Early Childhood Development, since the paper will not be published until later this year.
[3] The LENA Natural Language Study, available at: http://lena.org/wp-content/uploads/2016/07/LTR-02-2_Natural_Language_Study.pdf
[4] To learn more about the Chicago Federal Reserve’s healthy communities initiative, please read the CDPS blog Organizations Focused on Children and Creating a Healthier Chicago
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Branch Office Closings and Access to Financial Services in Low- and Moderate-Income Communities

By the Consumer Compliance Division of the Supervision and Regulation Department

Bank branches are an integral component of the financial infrastructure of a community. In low-and moderate-income communities, the presence of a bank branch might be one of only a few mainstream financial resources available to residents. Therefore, the impact of the closing of a bank branch must be carefully considered.

This brief essay explores the regulatory requirements of closing a branch and provides insights for customers and consumers as to what they can expect during a branch closing process.

Banks are required by the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) to take several steps before closing a branch office. Banks that choose to close branch offices must notify their primary federal regulator[1] and their customers at least 90 days in advance of the proposed closing; customer notifications may occur through any regularly-mailed account statement or in a separate mailing. Additionally, they must notify the public by posting a notice of the branch closure in the affected office at least 30 days before it closes. Banks must provide their customers with the location of the branch to be closed; the date the branch will close; and a list of alternative banking locations or a phone number where a list of alternative locations may be obtained.

In addition to the steps outlined above, interstate[2] banks that choose to close offices in low- and moderate-income neighborhoods are required to provide the affected consumers and community an opportunity to comment on the proposed closure[3]. Banks accomplish this by including the mailing address of the applicable regulatory agency in the notice and informing the affected customers that they may send written comments to the identified regulatory agency.

If customers or representatives of the affected community have concerns about the loss or potential loss of financial services in the affected neighborhood, they may send written comments to the applicable regulatory agency requesting a meeting to discuss the impact of the proposed closure on the affected community. The written request should include the specific reasons for the requested meeting and discuss the adverse effects of the branch closure on the availability of financial services in the neighborhood.

Once received, the staff of the regulatory agency will evaluate the comments and the request for a meeting. If the agency decides to convene a meeting, it may include participants from the neighborhood, depository institutions, community-based organizations, and other regulatory agencies, as appropriate. Together, the meeting participants will explore alternatives that would permit the community to retain access to financial services once the branch office is closed.

Facilities excluded from branch closure notification requirements include automated teller machines (ATMs); main offices and remote service facilities; loan production offices; insured branch offices of foreign banks; and offices closed or acquired by the FDIC to maintain the continued safe and sound operation of the financial institution.

All banks – both interstate and intrastate – are expected to maintain branch closing policies. Under the Community Reinvestment Act, bank management teams are encouraged to be responsive to community credit needs and concerns about the local banking environment, including the availability of services through branch offices.

Affected customers and representatives of a community may contact the primary federal regulator of the bank proposing to close an office to discuss the negative effect a closing may have on the community.  While, the agency is not required to take the same steps as in the case of an interstate institution, such comments may be taken into account during the bank’s next Community Reinvestment Act examination.

 

[1] Primary federal regulators are the Board of Governors of the Federal Reserve System (FRS), the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation.
[2] An interstate bank is an insured depository institution (bank or thrift) that operates branch offices in at least two states. By comparison, an intrastate bank is an insured depository (bank or thrift) that operates branch offices in one state.
[3] Section 42 of the Federal Deposit Insurance Corporation Improvement Act of 1991.
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Organizations Focused on Children and Creating a Healthier Chicago

Community Development and Policy Studies (CDPS) continues to be engaged in the System-wide Healthy Communities Initiative  which explores the shared interests and goals of the community development and public health fields, with particular focus on the social determinants of health. Most recently, CDPS has focused on rural communities with a Healthy Communities event in Wisconsin at the end of 2016 entitled, Investing in Healthy Communities: Ideas to Action to for Healthy People, Places and Planet. Over the past few years, CDPS has devoted time to healthy communities and published many pieces, including two ProfitWise News and Views articles: “Exploring the Correlations between Health and Community Socioeconomic Status in Chicago” and “The Converging Visions of Public Health and Community Development.” Going forward, as mentioned in our strategic plan, CDPS plans to continue its research on healthy communities. This blog will focus on two different organizations that promote fitness among Chicago school children by creating opportunities for participation in organized sports activities.

Urban Initiatives: Engage a child. Energize the community. Embrace Chicago.

Urban Initiatives (UI) is an organization in Chicago that works with 51 Chicago Public Schools to bring sports into a child’s life to help “empower Chicago’s youth to become agents of community change through academic success, healthy living, and leadership development.”

UI-blog

Since 2003, UI has learned that empowering kids on the field with a healthy snack and a new outlook has helped them succeed in the classroom. UI provides a continuum of programming including, Work to Play, Take the Lead, and Play with Potential. With 92 percent of UI participants coming from low-income families, UI utilizes sport and play as a means to help students succeed in life as well as in school. Students start on the soccer field in UI’s Work to Play Program. This program serves students from kindergarten through fourth grade. Each week throughout the school year students have two practices and one game. Being on a team with UI helps the students promote accountability, discipline, physical fitness, good nutrition, and academic focus. Students in the program are 20 percent more likely to meet or exceed state standardized test results than their classmates.

Students in the fifth through eighth grades participate in the Take the Lead Program as captains for their former Work to Play teams. This program teaches leadership and responsibility to help guide them to a more successful high school experience. On a whole, 58 percent of participants who are obese or overweight at the beginning of the program year decrease their body mass index percentile by the end of the year. Additionally, 73 percent of all participants engaged in at least one hour of physical activity five to seven days a week (up from 53 percent at the beginning of the program).

UI’s recess program, Play with Potential, utilizes the recess period for kindergarten through eighth grade to create more structure. The program’s goal is to maximize the health, academic, and social and emotional learning benefits of recess periods, as well as improve the overall health environment of school communities. UI has dedicated on­site staff for each school that participated in the program and a broad recess curriculum to engage all ages and at any time of year. For the 2017 fiscal year, Play with Potential will serve over 13,000 students in 22 schools. Also, 45 percent of Play with Potential students are more likely to engage in moderate to vigorous physical activity than students at other schools.

Chicago Run: To Promote the Health and Wellness of Chicago Children through Innovative, Engaging, and Sustainable Youth Running Programs.

Chicago Run is another organization geared to promoting improved health among low- and moderate-income populations by providing students from early childhood to high school with a structured running and fitness program. When the organization was founded, roughly 79 percent of CPS students were only getting an hour a week to play during school hours. Their mission is to help the students become the “best versions of themselves” by creating and achieving running goals. Through this process they are also helping students achieve higher self-esteem and inspire their families to be more active.

For the 2016-2017 school year, Chicago Run is in 40 Chicago Public Schools (28 neighborhoods) and works with over 14,000 students; 84 percent of the organization’s participants qualify for the federal/free reduced lunch program and have limited opportunities for physical activity and play.

 

Chicago-runs

 

Chicago Run has four programs: Little Strides, Chicago Runners, Running Mates, and L.A.C.E. Up!

Little Strides focuses on developing gross motor skills in early childhood. This program instills the importance of daily exercise and incentivizes students to achieve their goals with stickers and rewards. The students exercise three to five times a week throughout the day in their classroom.

Chicago Runners was created to get elementary students active on a regular basis during the school day. Each student participates in physical activity three to five times a week. Like the younger group, students are incentivized to reach their mileage goal on the website myChicagoRun.org, a mapping software tool that features nutrition facts, historical landmarks, and cultural points of interest to increase participants’ community pride and awareness.

Running Mates supports students as they get older and transition into middle school. This group helps the students to train for and enter a local Chicago race. Running Mates goes beyond helping students learn about proper nutrition and running, offering after-school programs on how to become leaders, set goals, and meet other students from other Running Mates programs across the city, something that is typically hard for lower income families given the geographical boundaries. In the 2014-2015 school year, Up2Us Sports, a national sports-based youth development program conducted a national evaluation of athletic enrichment programs throughout the country. Running Mates scored high on many of the metrics, but the most impressive result was from the Baseline PACER Test (Progressive Aerobic Cardiovascular Endurance Test), that tests students’ ability to stay on pace. Prior to the program the Chicago Running Mates average was 26.19 and the national average was 25.5. After the Running Mates season their average was 40.07 and the national average was 29.70. Meaning that the students were close to the average at the beginning of the season, but surpassed the average by the end of the season.

L.A.C.E. (Leadership, Action, Community, Endurance) Up! is designed for runners who have graduated from Running Mates or Chicago Runners and have entered high school.  Each of the four words in its name represent a focus of the program. For “leadership”, the students serve as mentors and junior coaches to the programs for younger kids. In “action”, the students are exposed to professional development opportunities. The “community” aspect encourages students to engage in service projects that emphasize healthy lifestyles and foster stronger relationships. Lastly, “endurance” is addressed by training for and running in races.

All four of these groups come together twice a year for the Fall and Spring running events.  These runs not only bring together students from across the city, but also their families and communities, helping to promote the importance of physical activity, team participation, and leadership skills to life success.

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Federal Reserve System Community Development Research Conference

2017-CD-horiz-conference-logo

Please join us next month at the Federal Reserve System Community Development Research Conference on March 23 & 24 in Washington DC. This event happens every other year and brings together a wide array of people from academia, researchers, policymakers, and practitioners from the public and private sectors. In line with the Community Development Department’s mission, the conference will focus on the economic futures of kids and communities by working to improve the socioeconomic prospects of low- and moderate-income (LMI) people in addition to working with community leaders to bring development and investment opportunities to underserved communities.

The 2017 conference will explore the interplay between the development of kids and their communities, with an understanding that “development” factors into key economic and social aspects of kids’ lives. High-quality and emerging research from multiple disciplines will be presented in a dialogue with policymakers and community practitioners who can utilize the lessons gleaned from the research. This event will spotlight research that can inform questions about key drivers to success, differences across subpopulations, scalable intervention strategies, and policy considerations.

There will be three sets of concurrent paper sessions over two days tied into three different topics: Early Childhood Development; Community Conditions; and Education and Workforce. There will also be three plenary sessions: 1) Early Childhood Development and Return on Investment; 2) Shaping Economic Futures: The Role of Communities; and 3) Skill Development and Workforce Outcomes. The event will conclude with a key note address by Geoffrey Canada from the Harlem Children’s Zone.

The conference will also feature remarks by three Federal Reserve leaders, including Federal Reserve Chair Janet Yellen; Neel Kashkari, President and CEO, Federal Reserve Bank of Minneapolis; and Charles Evans, President and CEO, Federal Reserve Bank of Chicago.

To learn more about the conference, please check out the agenda, speakers, and the conference’s home page.

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The Workforce Development Challenges of Returning Citizens: A Simulation from Mitchellville, Iowa

By Marva Williams

Iowa, like many other states has a growing prison population. In 1991, the state had roughly 4,500 inmates. By 2016, the number of prisoners had grown by 85 percent to about 8,300. Reducing recidivism in Iowa is a major concern. Prison officials have learned that high quality, coordinated services and supports before, during, and after release are required to reduce recidivism. It is also critical to understand the challenges of newly released prisoners for interventions to be effective.

CDPS was invited to participate in a meeting last fall organized by Central Iowa Works to participate in Community Connections Supporting Reentry training (CCSR). CCSR is an interactive simulation developed by the US Attorney’s office to help employers learn about the challenges of recently released citizens.

The simulation was offered at the Iowa Correction Institution for Women (ICIW) located in Mitchellville, 15 miles west of Des Moines. The simulation was attended by employers, including banks. In addition, there were federal and state workforce development staff and representatives from social service agencies.

The day began with presentations by Pat Steel from Central Iowa Works, Patti Wachtendorf, the warden of ICIW, and Kevin Vanderschel of Iowa’s U.S. Attorney’s Office. Mr. Steel said that many of the difficulties that job training and placement agencies have with former convicts is due to the multiple responsibilities that they have. Central Iowa Works and America’s Job Honors program decided to host the summit to assist employers in recruiting and hiring returning citizens by offering a reentry simulation to shed light on the barriers they face. Mr. Steel asserted that sending returning citizens back to their communities with no ability to get a job or manage life’s responsibilities, is a recipe for recidivism and a costly mistake.

Ms. Wachtendorf described ICIW as a minimum and medium security prison for women with a population of about 850 inmates, 236 staff, and a budget of $22 million. The offenses of the inmates are varied. The most common offenses are drug-related, with others being violent crimes and crimes involving property. Most of the offenders have some form of mental illness and/or suffer from substance abuse problems, and generally have experienced some form of trauma. ICIW staff endeavor to improve the opportunities of inmates by providing work, computer, and other life skills training, including money management and emotional coping strategies.

Mr. Vanderschel explained that CCSR simulation is a way to demonstrate the challenges experienced by returning citizens. The simulation allows ex-offenders to experience four weeks of post-incarceration life in 15 minute segments. Each participant visits stations with volunteers acting as staff from banks, homeless shelters, courts, substance abuse testing and counseling agencies, businesses, transportation offices, probation offices, etc.  In preparation for the simulation, each participant receives a fictional profile that describes the life of a former prisoner and the responsibilities to be met within four weeks. Tasks included visiting these stations to obtain state identification, establish a bank account, buy transit tickets, get tested for drugs, attend a substance abuse meeting, and meet with parole officers. In addition, participants had to find housing, search for a job, and address outstanding warrants.

At the end of the first “week,” many felt frazzled. One participant had not reported to work or paid rent because it took so long to obtain a state-sanctioned ID, report for drug counseling and testing, and to purchase transit tickets. As a result, they had to live in a shelter until the end of the second “week.” As the simulation progressed, participants experienced further challenges including court appearances, failing a drug test, and the task of budgeting to pay for basic needs, such as groceries, rent, and transportation.

The simulation provided an opportunity to experience the exasperation and frustrations that a newly-released prisoner may feel. Prison life does not allow people to manage their lives—decisions are made for them. In addition, many are experiencing these challenges for the first time. Some former prisoners have never held a job or been responsible for paying rent and managing their finances.

After the simulation there was a facilitated debriefing that allowed participants to share their immediate reactions. Many were surprised by the number of responsibilities that former prisoners must meet, in addition to every day responsibilities. They also expressed empathy and understanding of these challenges.

The program ended with three presentations. The first was by two inmates who talked about their sentences and experiences in ICIW, some of the programs they participated in, and hopes for their lives after release. The second presentation was by Kyle Horn, the Director of America’s Job Honors, which makes awards to companies that hire former prisoners and to returning citizens that have sustained a path to self-reliance. Last, a former convict talked about his experiences with prison and his struggles to build a life that embraces work, family, and self-sufficiency.

There are a myriad of challenges in the path of released citizens seeking to build a better life for themselves and their families. Obtaining jobs that pay a living wage is key to their success. Therefore, encouraging employers to participate in the training is integral to reducing recidivism.

Workforce development programs which serve returning former prisoners must take into account the obstacles faced when seeking employment. CDPS has several publications on workforce development, including:

Employment Challenges for the Formerly Incarcerated
Emily Engel, Steven Kuehl, Mark O’Dell | 2016 | ProfitWise News and Views | No. 2

Workforce 2020: Is It Time for Disruptive Innovation?
Jason Keller, Diana Robinson, Norman Walzer | 2015 | ProfitWise News and Views | No. 4

From Classroom to Career: An Overview of Current Workforce Development Trends, Issues and Initiatives
Daniel DiFranco, Emily Engel, Ryan Patton | 2014 | ProfitWise News and Views | December | 4th

Community Colleges and Industry: How Partnerships Address the Skills Gap
Emily  Engel  | 2013 | ProfitWise News and Views | November

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Community Development and Policy Studies (CDPS) Strategic Plan 2016-2020: Year 1 Recap

Beginning in 2015, CDPS undertook an ambitious information gathering process as a first step in developing a five-year strategic plan. When the Fed’s Board of Governors first created the community development function in 1981 shortly after passage of the Community Reinvestment Act (CRA), its core mission was to help facilitate the flow of credit and financial services to places and people out of the economic mainstream. The mission has become more nuanced over time, but this fundamental aspect remains constant. Responding to the needs of a geographically and demographically diverse district is a challenge for the community development function at every Reserve Bank.  This strategic plan ensures that CDPS’ efforts are aligned with and informed by direct feedback from our constituents and stakeholders.

Nine focus groups were conducted in cities around the Seventh District; also undertaken were numerous one-on-one interviews with key stakeholders, including senior Chicago Fed officials, nonprofit directors, CRA officers of large and small banking institutions, policy/advocacy organizations, and others. Further, CDPS undertook an extensive review of current conditions as documented in various policy and research publications. This process laid the groundwork for the plan, which incorporates both an updated statement of core functions, strategic priorities, and key findings from our information gathering process. This information is summarized in the strategic plan summary document linked below.

Key contacts expressed a lack of familiarity with our roles and functions and a desire to hear more from us. To this end, we began developing and implementing a communications strategy that will leverage digital tools such as converting ProfitWise News and Views to an e-publication and coding our past articles using Journal of Economic Literature – JEL– codes to make this content more searchable and accessible to researchers, practitioners, and policymakers, among others. We are also working to make our data tools more relevant and available, especially to smaller, remote places. Currently under development is the Peer Cities Identification Tool (PCIT), which derives from our Industrial Cities Initiative and much inquiry from more remote cities in the district as to how their economic fortunes compare to places with similar manufacturing legacies. The PCIT, previewed in the current edition of ProfitWise, allows users to compare a subject city across various parameters such as housing affordability and income inequality.

We learned more about the serious shortage of resources to bring about comprehensive community development, that is, efforts to coordinate strategies to link job creation, education, housing, and access to public transportation. As always, quality affordable rental housing is in short supply, but the situation is much worse post foreclosure crisis, as households with blemished credit are now essentially shut out of mortgage markets; the ratio of available units to households earning below 30 percent of area median income as defined by HUD is as low as 0.26 (the ratio in Wisconsin) in Seventh District states according to a recent report by the National Low Income Housing Coalition.  Idiosyncratic and place-specific shortages deriving from various factors also present challenges, we heard.  The current ProfitWise explores the case of Iowa City, where a very large student population competes with local residents for housing. This will be an area of renewed focus for CDPS for the foreseeable future with various CDPS partners, in addition to supporting efforts to promote affordable and responsible mortgage credit lending.

The small business lending landscape has also changed. While community banks historically have had an outsized share of this credit market, regulatory and supervisory changes and a generally cautious post-recession lending climate have constrained banks, while non-bank lenders have flourished, offering products with different underwriting standards, but often higher costs. CDPS is working with industry leaders, and the regulatory and advocacy communities to foster better understanding of this critically important emerging trend, which resonates across our district according to stakeholders.

Many longstanding community development issues, in both urban and rural areas, were intensified by the Great Recession, and have been exacerbated in the aftermath by reduced tax revenue resulting in part from the staggering foreclosure and financial crisis. Contacts reminded us of these conditions and the need to continue to explore and highlight strategies and solutions. Among the issues we have explored in both formal research and descriptive articles are the impacts of lack of employment opportunity, unsafe neighborhoods, and low educational attainment on physical health of large populations.  We have explored the ramifications of bank branch closings and consolidations in our district, and will issue further and more expansive research on community banks serving LMI populations, in particular minority-owned institutions, in 2017.

The Strategic Plan overview captures the essence of our strategic direction.

plan5.indd

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Student Debt, Wealth Inequality, and the Return on a College Degree: The Role of Children’s Savings Accounts

By William Elliott

Note: Dr. William Elliott is an Associate Professor and the Director of the Center on Assets, Education, and Inclusion at The University of Kansas. He recently participated the “Post-Secondary Education Option” panel  at the “Exploring Prominent Issues in Financial Resiliency and Mobility in Low- and Moderate-Income (LMI) Communities” conference sponsored by the Federal Reserve Bank of Kansas City. This blog reflects his presentation and not necessarily the opinion of the Federal Reserve Bank of Chicago or the Federal Reserve System.

Research shows that in time, an investment in higher education eventually pays off. However, the payoff of investing in higher education varies greatly depending on whether one graduates with or without student debt. This blog summarizes the disparity of investment returns in education between those with and without student debt, and ways to make such returns more equitable.

The book, State of Working America, states that home ownership is the main source of wealth accumulation for the American middle class. However, according to Brown and Caldwell, students who graduate with debt may be forced to delay homeownership early in their careers. In fact, the homeownership rate for 30-year-old-headed households with student debt has decreased by more than five percentage points than those without student debt between 2003 and 2013. Further, homeownership is not the only arena where student debt holders are disadvantaged. Hilton Smith found that households headed by college graduates who had accumulated median student debt have about $134,000 less in retirement savings than those without student debt. Not surprisingly, families with college debt may have as much as 63 percent less net worth than those without outstanding student debt .

Evidence further shows that problems related to indebtedness are not confined to those who do not complete college or among those with large amounts of debt. For example, the fear of debt may deter students from higher education. Other research suggests that student debt may compromise (long-term wealth accumulation) outcomes by deterring college enrollment altogether or derailing completion.[1]

Children’s Savings Accounts (CSAs) are a policy tool that may help level the playing field. CSAs restore equity in returns on investments in education, improve the life chances of disadvantaged students, and help combat wealth inequality. CSAs are understood to improve children’s well-being by strengthening parents’ expectations of educational attainment, according to Child Development Accounts and Parental Educational Expectations for Young Children: Early Evidence from a Statewide Social Experiment . Students who have designated savings for college are more likely to end up actually enrolling in and completing college than those with the ambition but not the means, according to Elliott, Song and Nam. The impact of CSAs was most acute among low-income families, suggesting the potency of this policy tool. CSAs also serve as a gateway to a more diversified asset portfolio that may result in greater wealth accumulation, according to Friedline, Johnson and Hughes. Financial inclusion is essential to closing the wealth gap, as demonstrated by researchers at the Pew Charitable Trust, who found that income from assets has a strong relationship with moving up the economic ladder.

The Annie E. Casey Foundation estimated that children’s accounts could reduce the racial wealth gap by 20 to 80 percent, depending on participation and investment. Just as the 19th Century saw the Homestead Act and the 20th Century the GI Bill, both of which offered real promise to change systems and transform pathways to prosperity for generations, CSAs provide just such an opportunity for today’s reality—and tomorrow’s college students.

Note: To learn more about CSAs and other tools for financial resilience see the most recent issue of ProfitWise News and Views.

[1] Kim, Y., Sherraden, M., Huang, J., and Clancy, M. (2015). Child development accounts and parental educational expectations for young children: Early evidence from a statewide social experiment. Social Service Review, 89(1), 99-137.

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