Duplication, Like Beauty, Is In the Eye of the Beholder

| Posted: November 14th, 2012

Congress has kept up a drumbeat about duplication of federal government programs, resulting, ironically, in a stream of largely duplicative GAO reports examining the issue. The concern is that duplication may result in inefficient and wasteful uses of public funds. In its latest look, GAO identified 80 programs that support economic development in four agencies and departments: HUD, USDA, Commerce, and the Small Business Administration—and they could have identified even more if they had expanded their search to include Treasury, HHS, DOT, and others.

Federal agencies are responding to pressure from OMB and GAO to evaluate whether and how their programs overlap with other federal efforts. I have now contributed to two independent reviews of duplication in economic development. In 2008 we examined duplication in small business loan programs for the SBA. And we contributed to a Section 108 study that HUD released this month. A cousin of the better known Community Development Block Grant (CDBG) program, the Section 108 program provides an advance on CDBG funds, structured as a loan guarantee, to support local economic development.

What I’ve learned is that duplication, like beauty, is in the eye of the beholder. The voices asserting and denying duplication have been forceful, but the volume of the debate has not been matched by an understanding of the difficulties in making such determinations. While GAO has found that multiple programs are funding similar activities, these programs can often be differentiated on the basis of who receives funding, how it is used, and what outcomes are achieved. Complete overlap among economic development programs appears rare, but it is also clear that some programs partially overlap. Rather than just asking whether duplication exists, rigorous research can do more, informing policymakers of the value of operating separate programs and the costs of consolidation.

How do program participants view the Section 108 program? They overwhelmingly reported that the program was unique in the federal economic development landscape, claiming it allows local governments to take on riskier projects early in the development process, while other federal programs, only fund relatively safe projects. Stakeholders also said that Section 108’s repayment structure is more flexible than other federal programs and that it supports large-scale projects that other federal, state, and local programs cannot.

Where GAO sees duplication, the agencies see complementary programs. When making a sandwich, are peanut butter and jelly substitutes or complements? How about ham and turkey? Most dispassionate observers would say sometimes yes, sometimes no. Will the reasons cited by Section 108 participants be enough to convince skeptics about the unique contributions of the program? Probably not. Expect more duplication of the duplication battles.

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How Do We Decide Who Gets the Cadillac?

| Posted: October 22nd, 2012

In our present era of constrained federal and state budgets, the tired mantra of doing more with less has been trotted out again and again. While doing more with less is seldom possible, there are ways that we can better target the resources we have.

Figuring out how to best target resources is one of the major challenges in serving vulnerable families. Not every family needs intensive services, but determining who does and who may benefit from a less expensive approach can be difficult. In an article published last week in Social Service Review, we demonstrate a way to identify groups of residents that informs the targeting of effective, streamlined service delivery. This work was developed during our evaluation of the Chicago Family Case Management Demonstration, which provided intensive case management services to residents of two distressed public developments on the south side of Chicago. These lessons don’t just apply to public housing, however, but also to social services for the elderly, ex-offenders, low-income dads, homeless individuals, and youth.

Deciding which families received intensive, expensive services (like inpatient drug treatment, transitional jobs, or mental health counseling and medication provided by psychologists) and which families required light-touch services (like job-search assistance or work-related child care support) was a critical question that emerged for the case managers in the demonstration. Service providers—particularly those in the homelessness, child welfare, mental health, and criminal justice systems—have encountered similar questions and typically target services on the basis of clinical assessment questionnaires, structured interviews, self-report questionnaires, or actuarial assessments.

While some of these tools are long-established, few have ever been empirically tested for their predictive value. Given this lack of rigorous research, practitioners have little besides their intuition to guide them.

The public sector, philanthropic community, service providers, and researchers must do more to develop and critically test assessment and analysis tools to aid in targeting. This process must be coordinated across different policy areas, as many offer, at their core, variants on the same social services. Creating evidence-based targeting tools will require effort—for example, requiring a commitment to integrate administrative data across different social service systems. But the dividends will be better processes for ensuring that families in need of a Cadillac get one, and that others, only in need of a scooter, get that instead.

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Do Personal Vulnerabilities Predict Who Lives in Precarious Housing?

| Posted: July 12th, 2012

People who are disabled, living in poverty, or have little education can be particularly vulnerable to shocks that can affect their life chances. But another class of vulnerabilities has to do with where people live—for example, old housing may be more precarious as it costs more to maintain and overcrowded conditions can have adverse effects on children and parents. We took a look at this connection to ask whether personal vulnerabilities are good predictors of living in precarious housing.

We found that vulnerable people live in precarious housing more often than those without vulnerabilities, controlling for other demographic and regional factors. Some of this concentration was a result of income, some a result of personal and household traits, including race, that still hinder equal housing opportunity. Some vulnerabilities led to different precarious housing conditions. For example, blacks are less likely to overpay or live in overcrowded housing, but more likely to live in multifamily housing (controlling for other factors). Hispanics are more likely to live in overcrowded housing (controlling for other factors).

We find that income matters more than any other single factor in Americans’ ability to avoid precarious housing. Poor families stand out as especially disadvantaged. While perhaps not surprising, it is alarming because these households have the least financial cushion should something go wrong in their housing situation—say if they are forced to move or to make expensive repairs. Individuals and families at the intersection of precarious housing and personal vulnerability are most at risk. They are the households most likely to move frequently as a result of financial stress, leading to potentially damaging instability.

What can be done? Federal support for housing, neighborhoods, and transit systems is key. State and local policies and programs also matter. Regions should play a larger role, but few have developed a robust capacity to act in a coordinated way. And our findings affirm that income supports for the poor (whether in-kind or monetary) will continue to be critical for vulnerable households.

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Disappearing Households and Vacant Housing in Metropolitan Areas

| Posted: May 2nd, 2011

The economic crisis soldiers on.  A friend’s daughter, her boyfriend, and their two kids recently moved back home because they don’t have the money to pay rent on their own place.  Now 9 people are sharing a 900 square foot home.  When we talk in statistics, we sometimes lose sight of the real, complex lives behind them.  But other times, numbers can convey the enormity of a problem.

Between 2000 and 2007, the U.S. population increased by about 1 percent per year, and the number of households expanded by 1.4 percent a year—an extraordinary occurrence. For household formation to outpace population growth meant that the average household size was shrinking; more people living alone rather than sharing homes with parents, friends, or adult children. This expansion wasn’t sustainable. Looking at the past two years, household formation has fallen dramatically and now stands well below the rate of population growth.  If the household formation rate had stayed at its 2000-2007 average, we’d have seen another 1.8 million households by 2009. The shortfall explains why, over the past few years, vacancy rates have reached their highest levels on record.  One in 10 rental units is now vacant, as are 2.5 percent of homeownership units.

What’s happened to these disappearing households?  The same thing that happened to my friend’s daughter—they’re moving in with parents, aunts and uncles, or siblings.  For some, the stay will be short, but for others it will stick.  And what does this mean for children?  In most cases, it’s better than living in a shelter.  But several studies link overcrowded homes with poor parenting and mental health, and children growing up in crowded housing are more likely to fall behind in school.  I’m not telling my friend; I think she knows already.

Vacancy Rates in Metropolitan Areas

See Bob Lerman’s recent post for more on the apparent paradox between families living in substandard conditions alongside record-high home vacancy rates.

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Many Urban Poor File Their Taxes Early, Using Rapid Refunds

| Posted: April 18th, 2011

It’s tax day, and gauging by past years, nearly 20 percent of us have yet to file. But something very different is going on for low-income families. Many were among the first to file, even giving up 5 percent of their refund to get their money sooner. These families relied on Refund Anticipation Checks (RACs) and Refund Anticipation Loans (RALs), controversial financial products.

Proponents claim that these tax refund advances afford low-income people an inexpensive way to pay their tax- preparation fees and get their refunds quickly. Opponents say that the RAC/RAL industry takes advantage of unsophisticated tax filers, offering unneeded products and charging too much for the marginal benefit of receiving money a little earlier.

This is not a small business. Twenty million filers used RACs and RALs in tax year 2009. But national statistics mask some wide city-by-city variations in use. In metropolitan Memphis, more than one-in-four tax filers uses these products. In the San Jose area, just 6 percent do.

What explains this variation? Financial literacy, bank access, economic distress, racial discrimination, or something else? Unfortunately, local financial behavior has been understudied, so we don’t really know.

But new research on the take-up of RACs and RALs finds that living in a poor neighborhood is hugely consequential, even after controlling for a taxpayer’s own financial and demographic characteristics. A similar story emerges looking at larger areas: as the figure below shows, a metropolitan area’s poverty level correlates strongly with residents’ use of RACs and RALs.

Refund Anticipation Check/Loan Use & Poverty in the Top 100 Metropolitan Areas

Promising policy proposals and administrative improvements on the table include greater regulation of these products, allowing the splitting of tax refunds to pay tax preparation fees, and reducing the time it takes for a refund to be processed by the IRS. But to truly improve the lives of poor taxpayers, policies must address the forces driving the place-based concentration of RACs and RALs.

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