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Policy Framework
In March 2007, New York City Mayor Michael R. Bloomberg announced a set of antipoverty initiatives, called Opportunity NYC, that involves new forms of temporary cash payments to poor families to boost their income in the short-term while building their capacity to avoid longer-term and second-generation poverty. The payments are referred to as conditional cash transfers, meaning that they are contingent upon family members making certain efforts to build their human capital.
A prominent example of a conditional cash transfer is the federal Earned Income Tax Credit (EITC), which goes to low-income adults who work. Another is the existing Temporary Assistance for Needy Families (TANF), which ties cash welfare to parents’ efforts to prepare for and seek employment. Opportunity NYC goes further, by offering new payments linked to a broader set of activities now that can be helpful to families in the future.
Opportunity NYC includes three separate demonstration projects, each of which takes a somewhat different approach to the idea of linking cash transfers to actions and achievements. One, called the Family Rewards program, is a comprehensive, two-generation strategy that focuses on children’s education, family preventative health care, and parents’ workforce efforts. A second, called Work Rewards, targets the workforce efforts of low-income adults living in subsidized housing. And a third, called the Spark program, focuses solely on children and their school performance.
In collaboration with Deputy Mayor Linda Gibbs, a host of City agencies, and Seedco (a private, not-for-profit intermediary organization), MDRC has helped design the Family Rewards and Work Rewards programs and is leading a random assignment evaluation of the effectiveness of each of those programs. The Spark program is being designed and evaluated by Roland Fryer of Harvard University and the New York City Department of Education. The three-part Opportunity NYC initiative is supported by a consortium of private funders, led by The Rockefeller Foundation, The Starr Foundation, The Robin Hood Foundation, the Open Society Institute, AIG, the Broad Foundation, and Bloomberg Philanthropies.
Opportunity NYC is an initiative of Mayor Bloomberg’s Center for Economic Opportunity, which was created to implement the recommendations of his second-term Commission on Economic Opportunity, also known as the Poverty Commission.
Agenda, Scope, and Goals
The Family Rewards program targets the whole family and includes a full array of effort-based or performance-based payments (including rewards for sustained school attendance and performance, preventive health care, full-time work, and for completing skills training while working). The Work Rewards program includes the same work and skills-training rewards but not the education or health components, and it targets adults in families receiving Section 8 housing subsidies. For both demonstrations, the cash transfers won’t affect participants’ eligibility for other major programs, such as TANF, food stamps, Medicaid, and public housing (that is, the cash transfers won’t be counted as income). Each pilot is slated to operate for two to three years (depending on funding considerations).
Family Rewards Pilot
The Family Rewards pilot is a two-generation initiative to reduce poverty, and it includes both short-term and long-term poverty reduction goals. It will be tested in six districts in the Bronx, Brooklyn, and Manhattan that encompass a variety of neighborhoods of predominantly black and Latino residents and that are among the City’s most persistently poor communities. Their relative disadvantage can be seen clearly in Census data: In 2000, about 40 percent of the households in these districts had incomes below the poverty level, compared with a citywide rate of 21 percent. The unemployment rate across the districts was 19 percent, on average, compared with 5 percent for the City as a whole. Considerably higher proportions of residents of these communities, compared with the City’s population as a whole, relied on public benefits, including TANF, food stamps, and Medicaid.
The plan was inspired by the model of successful conditional cash transfer (CCT) programs in a number of developing countries, including Mexico’s Progresa/Oportunidades program. The New York City program will use the offer of a new set of cash transfers in strategic ways to achieve three interrelated objectives: (1) to lessen immediate income-related hardships for poor families, (2) to help and encourage poor families to increase — or sustain — positive efforts to improve their own futures, and (3) to help poor families as they invest in their children’s futures. Thus, the payments to families are to function as a short-term income supplement to reduce the immediate hardships of poverty, but one that builds on the concept of mutual obligations that is embedded in the nation’s major income support programs for low-income families (including EITC, TANF, and food stamps), by linking the payments to steps that can improve a family’s economic security and reduce intergenerational poverty.
The monetary payments will be awarded only when households meet specific conditions in three key areas: children’s education, family preventive health care practices, and parents’ workforce efforts. For example:
- Education-based conditions include children’s superior school attendance, improved performance on standardized tests (or sustained high achievement), and parental engagement in children’s education.
- Health-based conditions include maintaining adequate health coverage for all children and adults in participant households, as well as age-appropriate preventive medical and dental visits for each family member.
- Workforce-related conditions include sustaining full-time work and participating in approved education or job training while working either part time or full time.
Work Rewards Pilot
The Work Rewards pilot will target recipients of Section 8 Housing Choice Vouchers administered by New York City’s two housing authorities: the Department of Housing Preservation and Development and the New York City Housing Authority. It will test the effectiveness of the same workforce-related CCT strategies being used in the Family Rewards pilot, but without the children’s education and family health care components. In addition, it will test the effectiveness of a New York version of the federal Family Self-Sufficiency (FSS) program — a case management and asset-building program funded by the U.S. Department of Housing and Urban Development (HUD) that is designed to promote economic advancement for low-income families receiving housing subsidies. Finally, the demonstration will test whether combining the FSS and CCT strategies is more effective than offering each intervention by itself.
Design, Sites, and Data Sources
Family Rewards Pilot
The Family Rewards pilot aims to serve 2,550 families in the selected community districts who have incomes at or below 130 percent of the federal poverty level and who have at least one child in public school in either the fourth, seventh, or ninth grade. These grades reflect critical transition points in students’ school careers. Students who fail to navigate them successfully fall behind their peers and have difficulty recovering, increasing their risk of dropping out, especially in the early high school years.
Participating families will receive bimonthly cash payments that, for some, can exceed $5,000 per year. The payments will be available for two to three years (depending on available funding.) The actual payment amount per family will depend on the degree to which a family complies with the stated conditions and, importantly, on the number of children in the family, each of whom can be a source of substantial transfer income.
In implementing the Family Rewards program, Seedco has assembled a network of six Neighborhood Partner Organizations in the designated community districts to recruit and enroll eligible families. Although the program will have no formal case management component, participating families will have several avenues — a telephone hotline, a Web site, and an in-person help desk at the community-based organizations — to get information on services that can help them meet the program conditions (for example, information on where to get homework help for their children, how to find a doctor, and where to get help finding jobs and training). Families will also get help opening bank accounts, so that the payments can be transferred electronically and accessed via debit cards.
The demonstration will include a comprehensive evaluation involving 5,100 volunteer families, half (2,550) of whom will be randomly assigned to a control group. This sample will be allocated evenly across the fourth, seventh, and ninth target grades, with 1,700 families at each level (850 assigned to the program group and 850 assigned to the control group).
Families potentially eligible for Opportunity NYC have been identified from lists of students provided by the New York City Department of Education. These lists identify not only families with children in the target grades but also those among them who are eligible to receive free school lunches. The free-school-lunch indicator provides a practical way to identify students who meet the income eligibility criteria for the program — that is, family income at or below 130 percent of the federal poverty level.
The evaluation will have three major strands of research: an impact analysis, an implementation and process analysis, and a benefit-cost analysis:
- Impact analysis. This analysis will examine the program’s effects on a wide range of outcomes, including children’s school performance; family health care practices and health outcomes; parents’ employment and training outcomes; and family income, benefit receipt, poverty, material hardship, and quality of life.
- Implementation and process analysis. This analysis will explore the operations of the CCT programs, focusing particularly on the roles and experiences of the implementing institutions (particularly, Seedco and the community partners) and on the perceptions and experiences of the participating families.
- Benefit-cost analysis. This analysis will estimate the cost of operating Opportunity NYC, distinguishing how much was spent on various aspects of program delivery versus the amount of cash transferred to the participating families. It will also make a number of benefit-cost comparisons, examining the economic “gains” and “losses” from several perspectives, such as from the perspective of participants and their families and from the perspective of taxpayers and government budgets.
Work Rewards Pilot
Eligibility for the Work Rewards pilot will be limited to voucher holders whose household income is no greater than 130 percent of the federal poverty line. However, eligibility will not be limited to particular community districts but will be extended to voucher holders from across New York City. In addition, families with or without children under age 19 will be invited to apply.
The study will determine whether the CCT workforce component produces positive effects on labor market experiences and other outcomes. For this analysis, recipients of New York City Housing Authority Section 8 vouchers who volunteer will be randomly assigned either to a program group that is offered the CCT workforce rewards or to control group that is not. Outcomes for both groups will be tracked over five years.
Volunteers who receive their Section 8 vouchers through the City’s Department of Housing Preservation and Development will face different options. They will be randomly assigned across three groups rather than two. One group will be offered enrollment in an enhanced version of the Department’s Family Self-Sufficiency (FSS) program operated by a number of community-based organizations located throughout the city, with some additional services. A second group will be offered enrollment in FSS and the CCT program. The third group will be offered neither but will continue to be eligible to seek enrollment in the regular, centrally administered FSS program.
The analysis comparing the first and third groups — the FSS group versus the control group — will constitute the first-ever random assignment test of the Family Self-Sufficiency program, the main federal program intended to increase employment and earnings and reduce reliance on government subsidies among Section 8 voucher holders. Comparing the first and second groups in this trial — those offered the FSS program versus those offered FSS plus the CCT workforce rewards — will show whether the CCT “adds value” to whatever effects FSS (including its escrow-based asset-building strategies) produces on its own.
An effort will be made to recruit a total of 4,100 Section 8 recipients to participate in the Work Rewards pilot (2,100 volunteers for the FSS/CCT study, with 700 per research group; and 2,000 volunteers for the CCT-only study, with 1,000 per research group).
What's Next
Families are being enrolled in Family Rewards through the end of 2007 and in Work Rewards through early 2008.
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