The Districts Dime

DC Should Invest in Transportation Subsidies for Adult Learners

February 17th, 2017 | by Ilana Boivie

On any given day, there are adults in DC who can’t get to their GED class or other adult education program simply because they don’t have bus fare. Just as the District helps “Kids Ride Free” to school, the District should invest in transportation assistance to help adult learners achieve their educational goals, leading to better jobs to support themselves and their families.

As Mayor Bowser and the DC Council start their work on the budget for 2018, adding just $2 million for transportation assistance would improve the outcomes of the city’s substantial investments in adult education—and strengthen the DC economy by helping more residents live up to their potential.

The District of Columbia’s economic progress is undermined by an income inequality crisis. Some 60,000 DC residents lack a high school diploma or equivalent,[1] and over half of the students in adult education programs test at a sixth-grade level or below in reading and/or math. Most residents without a high school degree are black, reflecting one of the starkest aspects of racial inequity in DC.

Low literacy and low educational attainment are root causes of poverty, unemployment, poor health and homelessness. Adults without a high school credential are seven times more likely to live in poverty than those with a high school credential. D.C. residents without a high school degree are five times as likely to be unemployed as residents with a bachelor’s degree.[2]

The District invests over $80 million in local and federal dollars in educational instruction for adult learners, yet the results are undermined because many can’t get to their classes. Unlike students under age 22—who ride Metrorail and bus for free—students over age 22 pay the full price, which poses a significant financial burden that often leaves them stuck in a cycle of enrolling and dropping out.

A recent report by the Deputy Mayor for Education recommends “expand[ing] the unlimited bus and rail component of the School Transit Subsidy program to all District residents enrolled in a publicly funded adult education program.”[3]  Serving nearly 7,500 students would cost no more than $2 million. This includes adults enrolled in community-based organizations (CBOs), UDC’s Workforce Development and Lifelong Learning programs (WDLL), and adult charter and alternative education schools. The DME report notes that “the current investment in adult education could yield greater results with a reduction in transportation costs for adult learners.”

We urge the Mayor to include transportation subsidies for adult learners in her proposed budget for fiscal year 2018.

[1] DC’s WIOA State Plan. Available at http://dcworks.dc.gov/sites/default/files/dc/sites/dcworks/publication/attachments/WIOA_DC_Unified_State_Plan_Final.pdf

[2] Lazere, E., and M. Guzman. 2015. “Left Behind: DC’s Economic Recovery Is Not Reaching All Residents.” DCFPI. Available at http://www.dcfpi.org/wp-content/uploads/2015/01/State-of-Working-DC.Final_1.pdf

[3] The DME report notes that certain adult learners may have access to transportation subsidies through other programs, and provides descriptions of these various programs. However, the report goes on to conclude that due to “very narrow, specific eligibility requirements” there remains a very high unmet need in the city.

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To Make Early Learners a Priority Invest More in Child Care Subsidies

February 15th, 2017 | by Marlana Wallace

The District should take a number of steps to improve the care and education of our youngest children, infants and toddlers, but one of the key steps is to make sure providers of this care get the resources they need to offer supportive and stimulating environments. As DC’s leaders gets closer to putting together a budget for next year, they should make it a priority to invest more in the child care subsidy program for lower-income parents.

Access to affordable, high-quality early learning can reduce the achievement gap that begins before children even reach a pre-K classroom. High-quality early education—in a child care center or with a home-based provider—supports school readiness and improves health outcomes later in life, all while relieving hard-working parents.

Raise Child Care Subsidy Over 3 Yrs-01The District demonstrated an impressive commitment to advancing early education by implementing an expansive Pre-K program, with families able to choose among three sectors: traditional public schools, public charter schools, and community-based organizations. But the departure of preschool children for public school classrooms exacerbated the already-considerable financial challenges facing community-providers who serve infants and toddlers, particularly those in low-income neighborhoods.

There is a large gap between the subsidy payments these providers receive from DC’s child care subsidy program and the actual costs of providing high-quality care to infants and toddlers, as noted in our 2016 report with DC Appleseed. As a result, many community-based organizations serving our youngest, low-income learners struggle to provide quality care. Nearly half of the providers in our study operated at a loss, some even going into personal debt to float their Center’s operations. Teachers and staff in DC’s early education centers perform critical and demanding jobs, yet they are among the lowest-paid workers, earning only $26,900 on average, which contributes to turn-over and stress in the workforce. And some providers are reluctant to take the steps needed to meet the city’s highest quality rating because they do not receive enough additional funds to meet their higher costs, according to testimony at a DC Council hearing this week.

Our research found that an increase of $38 million in the subsidy payment rates is needed to cover the actual costs of caring for infants and toddlers. This increase could be phased in over several years, such as $13 million per year over a three-year period. We also recommend the District consider differentiated subsidy rates, such as higher rates for providers in high-poverty neighborhoods, or that serve a large number of children with special needs. Community-based providers can then invest these additional funds in attracting and retaining good teachers, earning higher quality ratings, and better serving the young children in their care.

DCFPI testified on this yesterday, see the full testimony here.

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New Bill Would Untie DC’s Surplus and Put it to Use!

February 13th, 2017 | by Ilana Boivie

A new bill before the City Council would “untie” the city’s hands so that policymakers can spend a portion of the recently announced surplus for 2016 on much-needed services, rather than putting the entire amount into savings. The legislation would allow the District to spend about $90 million now, and give policymakers flexibility to spend the full amount of any future budget surpluses.

general fund balanceUnder a policy the District adopted in 2010, year-end surpluses must go into savings until the city has enough cash in reserve to fund DC government for 60 days. This takes away the choices that policymakers should have—to spend a surplus, save it, or to do a combination. The just-released audit of the District’s finances showed that DC’s General Fund balance grew by $222 million in 2016—to a record $2.4 billion—but none of that is available to be spent because of this rule. (The fund balance represents DC’s accumulated assets, including various reserve funds.)

The new Council legislation, The Reserve Fund Improvement Amendment Act of 2017, would still require the District to have enough cash to cover expenses for 60 days, but would not take out the expense of paying off DC’s bonds, since the District already sets aside money for that purpose. Under this formula, DC’s existing cash balance is $90 million more than needed to meet the reserve requirements. This would mean that some $90 million would be freed up instantly for the city to spend on services.

The additional money would be allocated to two specific programs under the bill—half of the money would go to fund the Housing Production Trust Fund, which finances new affordable housing projects, and the other half would be reserved for school modernization projects.

This proposal makes sense because it increases the flexibility DC’s leaders have when the District has a budget surplus. The bill could be strengthened even further by broadening the allowable uses to include other important one-time costs, such as start-up costs for paid family and medical leave.[1]

In fact, the proposal is very much in line with one of the recommendations made by DCFPI at the Progress Amidst Uncertainty: Making the Most of DC’s 2018 Budgetevent. DCFPI outlined three policy proposals in response to the growing city surplus: delay the tax-cut triggers, spend the surplus, and set up a reserve fund.

 

[1] Because a year-end surplus is not guaranteed every year, the District cannot use the surplus to fund programs or services that have ongoing costs, like hiring more teachers or providing permanent supportive housing to residents experiencing chronic homelessness.

 

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DC Is One Step Closer to A Stronger Inclusionary Zoning Program

February 10th, 2017 | by Claire Zippel

New apartments throughout DC that are within the reach of low-income residents got one step closer to becoming reality this week. Legislation introduced in the DC Council will allow the city to implement important improvements to the Inclusionary Zoning program that were approved last year by the Zoning Commission. The Council should approve the bill so that Inclusionary Zoning can fulfill its potential.

Inclusionary Zoning (IZ) requires nearly all new residential buildings to include some lower-cost units. That way, IZ produces affordable housing wherever development is occurring—including in neighborhoods with access to transit, good schools, and jobs—all without using tax dollars.

IZ blogIZ will soon create more apartments within reach of the families most likely to need help. Last year, the Zoning Commission approved changes recommended by DCFPI and others to make new IZ rental units affordable to households with incomes at or below 60 percent of the area median, or $52,000 for a family of two. (To date, most IZ rental units produced have only been affordable at 80 percent of the area median.) The change means that new IZ units will rent for $1,100—far less than the $1,600 rate of most existing IZ units.

The legislation introduced Tuesday will update the DC law on how Inclusionary Zoning is administered and enforced to match the zoning code changes approved by the Zoning Commission. During the legislative process, it’ll need to be determined how existing IZ units, which were created under the old rules, can continue to be administered under those rules, even as the law is changed to match the new requirements.

The Inclusionary Zoning program enjoys strong support from DC policymakers. Nine Councilmembers joined in introducing or co-sponsoring the legislation, and the Bowser administration has placed a priority on strengthening the administration of IZ. The division of the Department of Housing and Community Development (DHCD) that oversees the IZ program has a new, full-time director, and the division is currently working to improve and streamline its processes. That work is especially important because DHCD’s issuance of revised administrative regulations is the final step, once the legislation is passed, before the new IZ rules can take effect.

With legislation and administrative preparation in the works, it’s clear that Inclusionary Zoning is getting closer to fulfilling its potential. Policymakers should stay on track and avoid delays, so that the necessary legislative and regulatory changes are in place by June 5, the effective date set by the Zoning Commission. DC can’t miss any opportunity to create much-needed affordable apartments.

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Ever Wonder Where DC Gets Its Money? Read Our New and Improved Revenue Primer!

February 9th, 2017 | by Chaz Rotenberg

DCFPI’s latest report, Revenue: Where DC Gets Its Money, details how and where the District gets its revenue to pay for everything from library books, to teacher salaries, to health care for lower-income residents. Our new and improved revenue primer also compares key DC taxes to those levied in surrounding Maryland and Virginia suburbs.

Along with our recently updated Budget Primer, A Citizen’s Guide to the DC Budget, DCFPI is working to give residents and other stakeholders alike a better understanding of how the city collects money, and how that money is spent.

DC government collected $10.5 billion in revenue in fiscal year (FY) 2015. Local tax revenue totaled some $6.4 billion, and most of the rest was federal funding. The three largest sources of tax revenue are property, individual income, and sales and use taxes.

Individual Income Taxes

Individual income taxes account for more than one quarter of the city’s tax revenue and raised $1.9 billion in FY 2015. The District’s individual income tax is the city’s most progressive tax; a series of tax brackets ensures that higher-income residents pay a higher tax rate than lower-income residents.

revenue prmier 1.2

The District’s individual income tax rates are similar—and in some cases lower—than Maryland’s, and higher than those in Virginia. It’s worth noting that many lower- income households get an income tax refund, mostly due to DC’s local Earned Income Tax Credit (EITC). A family of three earning $25,000 in the District, for example, receives a refund of $732. Thanks to DC’s substantial EITC, DC’s taxes at this income level are the lowest in the region. Over 57,000 households in the District benefit from the EITC, lifting 14,000 people out of poverty each year.

Property Taxes

revenue primer 2.2The District collected $2.2 billion in real property taxes in 2015, making it the city’s single largest tax source. For homeowners, property taxes in the District are far lower than in any other part of the region. This reflects the fact that the District’s residential property tax rate is the lowest in the region, and that the District offers property tax relief that many jurisdictions do not. DC’s commercial property tax rate is higher than in the suburbs.

Sales and Use Tax

The sales and use tax is the District’s third largest revenue source. In FY 2015, the District collected $1.3 billion in sales and use taxes, including cigarette, alcohol, motor vehicle, and fuel taxes. This accounted for 20 percent of total tax revenue. The District’s general sales tax rate of 5.75 percent is lower than that in Maryland and Northern Virginia.

Business Income Taxes

The District also collects taxes through business income taxes and commercial property taxes. Business income taxes raised over $447 million in FY 2015, which accounted for just under 7 percent of the city’s tax revenue. While DC’s business income tax rate is technically higher than in the suburbs, simply comparing rates can be misleading. This is because, first, most DC businesses actually pay the minimum tax, and also, other jurisdictions may have additional taxes that DC does not, such as the gross receipts tax that businesses in Virginia pay.

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