Title
Status Report on the City’s Guaranteed Basic Income Pilot Program
Body
To: Members of the Mayor’s Economic Development Advisory Panel
EXECUTIVE SUMMARY
At its May 17, 2022 meeting, the Alameda City Council approved a Guaranteed Basic Income (GBI) pilot program for the City of Alameda. The $4.6 million program will provide 150 low income residents with monthly payments of $1,000 for two years. The City will use funds from the American Rescue Plan Act of 2021 (ARPA) for the program.
The pilot program will provide the recipients with a steady, predictable stream of cash payments to spend without any restrictions, which allows the recipients the autonomy and judgement of how best to use the funds to meet their unique needs. Other local pilot GBI programs have proven to be an effective tool to provide financial, food, and housing security to vulnerable segments of the community.
The City anticipates to launch the program in the Spring/Summer of 2023. This status report is for discussion purposes only; no action is recommended.
BACKGROUND
Basic income programs provide a flat monthly cash payment to a defined population of residents. These programs are distinct from other financial assistance programs in that they are:
• unconditional;
• unrestricted; and
• include regular payments for a period of time.
This flexibility empowers recipients to make their own decisions on spending the money in a way that best meets their basic needs allowing for dignity and self-determination. The defined period of time associated with a pilot program allows valuable data to be collected, which may help inform larger policy and program development designed to alleviate poverty.
Research indicates that basic income programs increase expenditure on education and training, improve food security, and improve measures of well-being among the recipients. The City of Stockton’s pilot program is the most well-known local example. This program demonstrated increased financial stability among the recipients compared to a control group established to evaluate the effectiveness of the program.
DISCUSSION
A guaranteed income program aligns with the City’s multi-pronged approach to reducing poverty and inequity and would serve as a direct response to some of the negative impacts of the COVID-19 pandemic. Monthly support received by residents that have been disproportionally affected by the COVID-19 pandemic will generate a wide range of benefits, as described in the above Background Section.
Program Elements
The 15 pilot programs in California contain the following common elements:
• Size of the program-The number of program recipients depends upon the available funding and scope of the pilot. Based on conversations with the City of Mountain View and the advocacy/research organization Mayors for a Guaranteed Income (MGI), a minimum of 110 recipients is required to create a statistically significant sample size to support the research component of these programs. The benefits of the research component are discussed below.
• Cash payment amount- The vast majority of GBI pilot programs in California and around the country provide payments of between $500 to $1,000 per month.
• Length of pilot programs-Most pilot programs provide cash payments between 12 to 24 months.
• Recipients-Most pilot programs in California and around the United States have targeted specific populations that may face particular challenges. Common target groups include youth aging out of foster care benefits, low-income (30-50% area median income) individuals and/or families, artists, and pregnant and perinatal women.
Impact on Other Benefits. A major concern in creating a GBI program is how it may affect other benefits a recipient may also be currently receiving. A goal of a GBI pilot is to provide participants with additional economic stability. Therefore, program design will seek to limit any potential negative impacts on recipients’ economic situation due to participation in the program. Receiving money through a guaranteed income pilot program may contribute to a “benefits cliff,” where a small increase in earnings or savings can lead to a reduction in public benefits such as health insurance (e.g. Medicaid/Medical), housing assistance (e.g. Section 8), and food assistance (e.g. SNAP/CalFresh).
Eligibility for safety net programs vary significantly and can include calculations of both earned and unearned income and savings.
• Securing Income Exemptions. At the State level, GBI pilot programs can request that income from a GBI program be exempted for purposes of eligibility for certain programs including CalWORKS and CalFresh. It may be also possible to secure income exemptions for housing assistance benefits from the Alameda Housing Authority (AHA).
Exemptions granted by the State require that the pilot program includes an approved research design. Only a few research organizations have experience in both partnering with local governments on GBI programs and working with the State to secure income exemptions. For example, the University of Pennsylvania’s Center for Guaranteed Income Research (CGIF) is currently overseeing numerous pilot programs in California and has gained income exemptions based on its State-approved research designs.
• Hold Harmless or Benefit Conservation Fund. To ensure that pilot participants do not suffer economically from participation, in addition to/in place of applying for income exemptions for benefit programs, other pilot programs have created a “Hold Harmless Fund” or a “Benefit Conservation Fund” that is intended to provide compensation to recipients if they become ineligible for Federal, State, County, and/or local benefits due to receiving payments.
• Communication to Participants about Potential Reductions in Other Benefits. Other pilot programs have pointed out the importance of being transparent with payment recipients about the potential risks of reduced or lost benefits if exemptions are not received. Recipients in the pilot program should be fully aware that their participation may result in reduced safety net benefits and should be encouraged to do their own due diligence prior to program enrollment. Many programs provide benefits counseling to answer individual eligibility questions. An Alameda pilot program may involve collaborating with other local organizations or a non-profit organization to help answer questions related to housing assistance benefits.
Administrative Structure
The most common administrative structure for GBI pilot programs involves three to four components:
• City Sponsor: As the anchor for the community, city staff provides oversight and promotion for the program, but may not necessarily be engaged in its day-to-day administration.
• Implementing Partner: Often a non-profit with existing ties to the target community serves as the implementing partner responsible for administering the program. Responsibilities often include: program support, collecting applications from potential recipients, selection and enrollment of recipients, and collaboration with other partners (e.g. the City) on outreach and communication efforts.
• Funding Partner: In some programs, usually when an implementing partner does not have the capacity to administer the financial components (such as the monthly payments), an additional funding or fiscal payment partner is engaged. In the City of Mountain View, the implementing partner (Community Services Agency) did not have the staffing capacity or the experience to take on the financial aspects of the pilot program. The City of Mountain View decided to contract with Community Financial Resources (CFR). Depending on the experience and capacity of its implementing partner, the City may similarly decide to work with a separate financial partner.
• Research Partners: As mentioned above, a research component is important to secure a benefits waiver so that GBI participants do not risk losing benefits from other assistance programs. The State will not grant a waiver without the research component. A research component will also determine how the GBI program contributes to creating financial stability to its recipients. In addition, the information will contribute to the knowledge obtained regarding guaranteed income programs as an anti-poverty policy tool.
Preliminary Timeline
|
Action |
Estimated Timeframe |
|
Identify program partners (e.g. Implementing Partner, Funding Partner, Research Partner, and MGI); define roles and responsibilities |
June to September 2022 |
|
City Council to consider and approve contracts, agreements, and scopes of work for project partners |
September 2022 |
|
Work with Research Partner to secure benefit waivers and exemptions (estimated six to nine months) |
September 2022 to March/June 2023 |
|
Work with program partners to develop program structure, including: • Program administration • Distribution mechanisms for payments to participants • Benefits Communication Plan • Outreach Plan to general public and potential participants (possible advisory panel and/or focus groups to help inform approach) |
September 2022 to March/June 2023 |
|
Launch program |
Spring/Summer 2023 |
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Social Services Human Relations Board Charter and Ordinance authority “to improve social services in the community” (Alameda Municipal Code Section 2-11.5).
RECOMMENDATION
This item is for discussion purposes only. No action is recommended.
Respectfully submitted,
Lois Butler, Economic Development and Community Services Manager
By,
Eric Fonstein, Development Manager