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  • Chapter 13 - The Role of Economic Development in Ending Poverty

    Economic development requires investment in our infrastructure. Infrastructure includes more than roads, bridges, airports and rail lines; it also includes human capital. As an economic development issue, poverty – the lack of resources to deal with problems – keeps people trapped in crisis and drains resources from our economic engine. chapter 13
    Chapter 13: The Role of 
    Economic Development 
    in Ending Poverty

    Poverty is frequently considered a humanitarian issue, and traditional approaches focus on individual behavior and choice; often overlooking structural causes. For many years, Pima County and its community partners have been providing a range of services intended to combat and mitigate poverty within this framework. These efforts often amount to managing – rather than ending – poverty. In fact, the percentage of Pima County residents with incomes below the poverty level rose from 14.7 percent to 19.2 percent between 2000 and 2014 based on American Community Service (ACS) five-year estimates. The ACS 2015 one-year estimate is 18.9 percent. As of 2014, one of every four people in the City of Tucson – and one of every three children – is living below the federal poverty level. 

    By changing our perspective and our actions, we can look at each person caught in poverty as a potential asset in the economic development of our region and move from managing poverty to ending it. Ending Poverty Now is a framework in which County Departments, community-based organizations, grassroots groups and for-profit businesses join together to make a collective impact by applying and coordinating strategies proven effective in building greater economic prosperity. It focuses on breaking the cycle of poverty by empowering people to get ahead instead of just get by, and has the following components:
    • Championing employment retention and career advancement through County/ business partnerships 
    • Engaging and empowering under-resourced people through Getting Ahead workshops, Bridges Out of Poverty tactics and other positive, anti-poverty activities
    • Employing a cross-sector strategy to address poverty – “Ending Poverty is Everyone’s Business”
    • Coordinating and bundling resources in support of people moving out of poverty. 

    A. Poverty is an Economic Issue

    Poverty keeps people trapped in crisis and unable to realize a better future. It is an economic development issue because it is expensive. It drains community resources, wastes human potential and holds back future generations. Under-resourced lives are full of instability and are unpredictable and stressful. In survival mode, concrete problem-solving focused on the moment at hand is more important than abstract planning for a better future. These “just getting by” behaviors are outside the norm of institutions and employers that expect people to be stable, predictable, future-focused, and achievement oriented. 

    Poverty is directly correlated to low educational achievement. Research shows that children who spend a year or more in poverty account for 70 percent of all children who do not graduate from high school. Educational achievement, in turn, is closely tied to earning power. In 2015, the Bureau of Labor statistics reported that people with less than a high school diploma were nearly three times more likely to be unemployed than someone with a bachelor’s degree. Those persons who did have jobs earned less than half (43 percent), on average, than those with a bachelor’s degree.

    A June 2015 forecast by The University of Arizona Eller College of Management’s Economic and Business Research Center indicates Arizona is falling behind national rates for four-year college attainment. In 2014, the State’s rates were lower than the national average in nearly all age groups. Nationally, 29.3 percent of those over age 25 have earned a bachelor’s degree or higher. In Arizona, that percentage is 27.1, which is lower than Arizona’s 1990 college attainment rate. This decreasing college attainment rate is contributing to an expanding income gap, which is expected to have a negative effect on the State’s economic development growth.

    When poverty reaches a point of critical mass in a community, the people with the most resources tend to move out of the community, leaving behind enclaves of poverty. Research shows that when a community has more than 40 percent of families eligible for the Federal Free or Reduced Lunch Program, it reaches a tipping point, beyond which it becomes ever-more unstable and unsustainable, creating a downward spiral. Tucson Unified School District, the largest school district in Pima County, currently has 59.8 percent of its students eligible for Free or Reduced Lunch.

    Poverty does not end when you get a job, unless that job pays much more than the federal threshold for poverty, which in 2016 is $20,160 annually for a household of three. In fact, many entry-level workers often face the same or increased expenses on a reduced income once hired due to the “benefits cliff,” which refers to the loss of benefits such as food stamps or housing subsidies when a person or family reaches an income above the poverty threshold. In Pima County, a single parent with two children needs to earn $46,814 per year, or $22.17 per hour, to cover basic expenses.

    B. The Direct Financial Impact of Poverty on the County Budget

    Pima County funds many services across various departments that combat and mitigate poverty, including: 
    • The Community Action Agency, which assists about 6,000 households annually to avert financial crisis and homelessness.
    • Pima County One-Stop (now known as Arizona@Work), which offers employment and training services to under-resourced persons.
    • The Health Department, which provides nutrition assistance, nurse home visitations, access to clinical services, health insurance support, coordinated school health programming and chronic disease self-management. 
    • Public Works, which provides subsidized employment opportunities and a discount program for low-income utility customers.

    A preliminary analysis produced a conservative estimate that at least $28 million, or 15 percent of the sum of the budgets of the units mentioned above, could be saved if poverty were eliminated in Pima County. Part of such savings could be repurposed to help fund aspects of Ending Poverty Now, but the rest of the savings could reduce the County budget and levied property taxes. This analysis is the first step to study the effect poverty has on Pima County’s budget. A more comprehensive methodology may be gleaned from reviewing poverty research conducted by other governmental units, such as Pinellas County in Florida or the Province of Alberta, Canada.

    C. The Indirect Financial Impact of Poverty on the County Budget

    A very large component, as much as $230 million of the County budget, is spent as an indirect result of poverty. The best example is the funds the County spends in the area of public defense. Criminal case defendants and individuals involved in mental health and child dependency cases are entitled to legal representation at government expense if they are determined to be indigent based on federal poverty guidelines.  Where possible, individuals who are provided legal counsel pay a small portion of the cost of their defense.  Overall, the County spent$29 million in the 2015/16 fiscal year for required legal services for low-income individuals. Such an expenditure is directly related to poverty in our community. 

    On any given day, the inmate population in the Pima County Adult Detention Center (PCADC), or jail, is in the range of 1,800 to 1,900. About 48 percent of those booked into the jail typically are covered by Medicaid at the time of booking, which means their income was at or below 138 percent of the federal poverty level. This number does not include low-income inmates who were eligible for Medicaid but not covered at the time of booking, meaning that at least half the jail inmates typically are at or below the federal poverty level.  PCADC costs over $60 million to operate each year; at least $30 million (or half) of the County’s jail budget can be correlated to poverty. If we assume poverty underlies the same proportion of expenses incurred for prosecution of crime by the County Attorney and the adjudication process conducted by the Courts, the indirect cost of poverty to the County’s budget for the criminal justice system rises to over $150 million.

    Poverty is intertwined with the criminal justice system, and incarceration in particular has far-reaching economic impacts on inmates and their families. An individual who is incarcerated even for a short time will likely lose his or her job and have difficulty finding a new one. Housing may also be difficult to obtain. A national study conducted by the Pew Charitable Trusts in 2010 showed that incarceration reduces hourly wages for men by approximately 11 percent, annual employment from 48 weeks to 39 weeks and annual earnings by 40 percent (from $39,100 to $23,500). Of former inmates who were in the lowest fifth of the male earnings distribution in 1986, two-thirds remained in the lowest fifth in 2006, twice the number of those who were not incarcerated.

    The Pew study also showed that nationally 54 percent of inmates are parents with minor children and those children are seriously impacted by the parent’s incarceration. Children with fathers who have been incarcerated are significantly more likely to be expelled or suspended from school (23 percent compared with 4 percent), and family income while a father is incarcerated is 22 percent lower than family income was the year before the father was incarcerated and remains 15 percent lower after he is released. In addition to these impacts, many former inmates are deeply in debt due to financial obligations that have accumulated during incarceration, such as child support, restitution and court-related fees.

    Pima County is engaged in examining more closely how we can reduce both the direct cost of incarceration to the County and the larger indirect impact of incarceration on the economic wellbeing of the community. Since 2015, the County has been one of only 20 jurisdictions nationally participating in the MacArthur Foundation’s Safety & Justice Challenge, which is a $100 million initiative to reduce over-reliance on incarceration. Pima County is one of only 10 Safety & Justice sites that received grant funding to implement plans to divert low-risk offenders from jail, improve treatment for substance abuse and mental health problems to reduce recidivism, and reduce arrests related to failure to appear in court by improving court reminder systems and holding weekend and night courts. 

    In addition, Pima County is one of approximately 50 communities in the United States to investigate Pay for Success or Social Impact Bonds as a way to address social issues. Pay for Success projects involve public-private partnerships in which it is possible to invest in innovative best practices. In 2015, the County initiated a contract with the Sorenson Impact Center to conduct a Pay for Success “readiness assessment” for Pima County. This work led to the 2016 award of $1.3 million by the US Departments of Housing and Urban Development and Justice to the Sorenson School and Pima County to develop a Pay for Success model to provide permanent supportive housing for the chronically homeless, who are generally users of costly services such as jails and mental health and housing services.

    In the fall of 2016, Pima County was awarded a grant by the US Department of Labor to provide workforce services to individuals serving out their sentences at the Minimum Security Facility of the Pima County jail and preparing to re-enter the community. Nearly $500,000 will be earmarked for training and career counseling, and other employability skills efforts for inmates – both in-jail and post-release. Funds will bring employment preparation from the One-Stop Career Center to these individuals before they leave jail to help them find employment more quickly. The program will also identify those in danger of homelessness upon re-entry and connect them with emergency shelter.
    Spending public funds to reduce the poverty rate is a cost effective strategy to reduce the cost of County government for the taxpaying public. It makes good economic sense.

    D. Our Solution: Ending Poverty Now

    Ending poverty will require an articulated set of core public policies related to 1) affordable housing, 2) food security, 3) transportation, 4) education/training and skills enhancement, 5) parenting and childcare, 6) healthcare and medical services, 7) early childhood development, 8) income security and 9) asset preservation.

    Without very clear public policy strategies in each of these areas, ending poverty will be difficult. It is important that community dialog across all sectors of the community articulate and agree upon these core public policy principles that will become important in reducing or ending poverty and preventing individuals in the community from becoming trapped in inter-generational poverty.

    Breaking the cycle of poverty requires every segment of the County community to participate, including schools, public safety and healthcare institutions, government and especially industry. Expecting behavioral changes from people in poverty is only part of the solution; we also need economic leadership from all employers. 

    Pima County must use a sector-based strategy with employers focused on the economic potential of a stable and upwardly-mobile workforce and a stronger tax base. Additionally, the County must engage under-resourced people as drivers of change that is systemic and structural. These are key to the success of the Ending Poverty Now initiative, which includes the following four components. 

    1. Establishing County/Business Partnerships

    Businesses and employers are fundamental stakeholders in the effort to end poverty. It is not enough for someone to get a job. Just as important, if not more so, is keeping that job and doing well enough that you can be promoted or use that job as a stepping-stone to another. We need to empower and equip people so they can move from dishwasher to electronics technician to electrical engineer to manager. 

    As an employer of over 7,000 people, Pima County has a role to play in championing and modeling practices that foster employee retention and career advancement. The Pima County Human Resources Department will form an interdepartmental committee to develop recommendations to the County Administrator and Board of Supervisors on needed policy changes and internal employee-development programs.

    Additionally, the County will partner with local businesses to create programs delivered in the workplace aimed at improving retention and upward mobility for entry-level employees. This partnership will include current Pima County programs such as On-the-Job training, the New Employee Transition Program, and the Incumbent Worker Training Program. Additionally, the County will encourage businesses to implement the following strategies:
    • Employer Resource Networks (ERN), industry-sponsored programs that will employ a Resource Navigator to work with employees to address problems that would otherwise pose a barrier to employment. The Resource Navigator meets with employees at a time and place convenient for both workers and the business operation – for example, at the plant during shift change – and connects those employees to a wide variety of community services and benefits through information, advocacy and referral. Pima County has piloted an ERN with a local manufacturing company and additional companies are expected to join soon.
    • Expanding and improving utilization rates of Employee Assistance Programs, which offer employees confidential counseling services at no cost. 
    • Payroll-advance programs and emergency loan funds for employees who meet certain eligibility requirements, addressing or averting emergencies that might otherwise cause an employee to miss work or lose their employment. 
    • Time and attendance polices may be crafted to balance sensitivity to challenges faced by low-wage workers with the needs of the business operation. 
    • Adoption of a minimum compensation package to ensure employees meet basic needs, thus stabilizing a company’s workforce and helping the company become an “employer of choice” in the County.

    2. Engaging and Empowering Under-Resourced People

    People who struggle to get by – both those with incomes below the official poverty line and low-wage workers who do not earn enough income to meet basic needs – may represent 50 percent of the population of Pima County, based on statistics from the free and reduced school lunch program mentioned above. 

    Getting Ahead in a Just-Gettin’-By-World is a 45-hour curriculum that provides people in poverty access to a participatory process in which people investigate their own experience of poverty. Participants explore issues in the community that impact poverty − banking, housing, jobs − providing critical information to take action to improve their own situation. They also make an assessment of their own resources and how to build those resources as part of their move to self-sufficiency.

    More than 100 individuals have graduated from Getting Ahead through classes offered by Pima County and by community partners such as Catholic Community Services, Grace Temple, and St. Vincent de Paul. Five new partners will be added in 2017. Donations from the County’s Employee Combined Appeal Program (ECAP) in partnership with the United Way of Tucson and Southern Arizona designated for Ending Poverty Now will support these partners’ Getting Ahead efforts. With these partners, Pima County is coordinating an effort to create a high quality program with follow up supports. For example, a Pima County One Stop representative connects with each graduate to make sure they are aware of employment and training opportunities. In 2017, we will begin using a platform to identify and track resources that can assist people in building resources and pursuing economic goals, as well as some common evaluation tools and data elements to track across allied programs and services to measure impact over time. 

    Pima County is growing its own approach that links Getting Ahead with ongoing coaching using social service practitioners, business people and volunteers meeting regularly with graduates. This is being piloted at Las Artes GED Arts and Education program and through a new initiative called Mothers in Arizona Moving Ahead (MAMA). Both of these programs will have systems in place where participants report on their progress and identify barriers to success. These meetings will create a feedback loop and longitudinal data source for policy makers, even as they offer ongoing concrete problem-solving support on a potentially larger scale than is currently possible through traditional case management approaches. Ultimately, a significant long-term dividend is the leadership and insight people in poverty can provide toward building long-term solutions for Ending Poverty Now.

    Pima County views this type of engagement as a critical component of an effective community anti-poverty strategy. Ending Poverty Now will support expansion of Getting Ahead and other programs that engage low-income people in exploration of causes of poverty and resource building to help them move from poverty to sustained self-sufficiency.

    3. Employing a Cross-sector Strategy – Ending Poverty is Everyone’s Business

    With Ending Poverty Now, Pima County rejects the notion that poverty is inevitable or a necessary evil and recognizes it is complex and evolves over generations. It will require a sustained, multiyear commitment by business and industry, the nonprofit sector, government, healthcare, faith-based communities and educational institutions to break the cycle. A flexible approach is needed to shift strategies, link related efforts across different systems and unite diverse leaders in collective impact. 
    Pima County established a multi-departmental Addressing Poverty Work Group that meets monthly to become informed on key issues related to poverty, look for opportunities to use County resources more effectively and efficiently and to strengthen community partnerships around shared data, strategies and resources to reduce poverty. 

    4. Resource Coordination and Bundling

    A final element of Ending Poverty Now will build on the success of Pima County’s robust One-Stop workforce system and other partnerships that streamline multiple services into a single solution, resulting in greater effectiveness than any one service would have alone. Implementation of the new federal Workforce Innovations and Opportunities Act, which encourages federally funded workforce partners to increase collaboration, is key to this goal.

    To make this happen, partners do not have to be co-located, but they must agree to coordinate resources. Each partner identifies resources it can offer and assigns a point of contact for each service. Partners work as part of an interagency team with accountability for service delivery. Such teams combine varied expertise so that no one organization must attempt to be all things to all people. The results are enhanced customer service due to richer service menus, streamlined access, team approaches and strengthened institutions due to leveraged resources, mutually reinforcing effort, better outcomes and greater impact.

    Pima County has been working with outside organizations and across its own departments to identify opportunities to expand coordination and bundling. The County will explore ways to build support for these approaches with its private and intergovernmental partners. Possible supports could include scholarships from institutions of higher education, paid internships within County departments, work-release time for employees participating as mentors and employee donation programs.

    The Pima County Health Department has identified poverty and access to services as one of the fundamental determinants of morbidity and mortality in this County. The Department’s efforts to coordinate and collaborate to address this issue are most evident in programs such as Women, Infants and Children (WIC), our nurse home visitation programs (Nurse Family Partnership and Healthy Start), and Correctional Health. Individuals participating in these programs are being targeted as possible participants in the Getting Ahead curriculum as well as other Health Department classes; health insurance assistance; support through the Pima County Public Library and Pima County One-Stop; and financial management classes; adult remedial education courses, assistance with GED/High School Equivalency attainment and post-secondary education; access to Pima County Housing Center resources and classes; and mentoring. Such cross-sector efforts are still in their infancy but may well provide the County with long-term data to track the outcomes of the Ending Poverty Now initiative. 

    These efforts to collaborate, particularly efforts to assist young pregnant women in poverty, have most recently been recognized by the Vitalyst Foundation, which has funded a demonstration project, and by the Robert Woods Johnson Foundation and Ideas43, which have awarded Pima County a technical assistance grant to allow these programmatic partnerships to mature and grow. 

    E. The Role of the Faith-Based Community in Ending Poverty

    Over a decade ago, Pima County was an early proponent of efforts initiated by President George W. Bush to actively solicit partnerships with faith-based organizations. As unique and trusted partners, faith-based groups play an important role in ending poverty by connecting disconnected or disadvantaged job seekers to key training programs and, ultimately, jobs.

    Recognizing that faith-based groups can be an effective – and frequently the only – avenue to reach individuals in poverty, Pima County’s Office of Faith-Based Initiatives assists community residents by encouraging collaborations between faith-based groups, community serving organizations and the private sector. This ongoing initiative provides grant writing, capacity building, and leadership training to help ensure that all individuals have access to employment and training opportunities.

    Two major faith groups, the Diocese of Tucson and 4Tucson, are leading efforts to address poverty, and both are integrating Getting Ahead classes. In addition to assisting with training and job placement, faith-based organizations are at the forefront of income enhancing efforts and programs that fill emergency needs. Gaps in income, food and shelter that may lead to poverty can be addressed effectively by these groups.
    13.1 Forge a homegrown model to be used as a template for County and community-based programs that have the goal of bringing about economic sustainability for people living in poverty.

    13.2 Become an “Employer of Choice” by establishing Employer Resource Networks in County departments and bundling County One-Stop, Library, and Health Department services to clients.

    13.3 Engage businesses as partners in the Ending Poverty Now initiative to establish Employer Resource Networks that:
    A. Provide employers with resources to help employees deal with immediate poverty-related issues.
    B. Help new employees understand and meet employer expectations.
    C. Provide training and career path opportunities.

    13.4 Develop community consensus on core public policies related to 1) affordable housing, 2) food security, 3) transportation, 4) education/training and skills enhancement, 5) parenting and childcare, 6) healthcare and medical services, 7) early childhood development, 8) income security and 9) asset preservation to reduce and/or end poverty.

    13.5 Partner with United Way of Tucson and Southern Arizona to align the County’s Employee Combined Appeal Campaign with the initiative to address poverty and educate County employees about the poverty initiative.

    13.6 Support faith-based partnerships as a means to fill gaps in providing essential services for low-income families and individuals.

    13.7 Support partnerships between education and training programs and institutions and faith-based organizations to better serve job-seekers.

    13.8 Encourage collaboration between faith-based organizations and the private sector on strategies to combat poverty. 

    13.9 Develop an objective and fact-based analysis of poverty and its geographic locations within the community.

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    Economic Development Plan, 2015-2017

    Chuck Huckelberry,
    County Administrator

    (520) 724-8661

    130 W. Congress, 10th Floor
    Tucson, AZ 85701

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