Stay Informed!

By Jade Olson, Guest Contributor on 08/24/2011 @ 11:30 AM

Tags: Federal Policy

Now that the drama of the eleventh-hour budget deal is over, those of us in the asset-building, economic opportunity and anti-poverty networks have our work cut out for us.

In case you missed it, or were too frustrated to keep following, here’s the short version: The Budget Control Act of 2011 has provisions for two key mandates, which are raising the debt ceiling and reducing the national debt/deficit. The debt ceiling increase is split into two stages, allowing a total increase of up to $2.4 trillion. The deficit and debt reduction component establishes a 12-member “supercommittee” (also called the Gang of Twelve) charged with finding at least $1.2 trillion in cuts over ten years, $21 billion of which is applied to FY 2012. The supercommittee must report back to Congress by November 23, and Congress must make a decision by December 23. In other words, our representatives must do in just a few weeks what they have been unable to do for this entire legislative session.

But for us, that’s not even the tricky part. If they fail, the Office of Management and Budget must “sequester” however much it takes to fill the gap, and that means putting social programs on the chopping block. Now, here we have good news and bad news. First, the good news: a number of low-income programs are exempt from sequestration, including Temporary Assistance for Needy Families (TANF), the Earned Income Tax Credit (EITC) and food stamps (SNAP). When combined with entitlement programs, these form the most basic social safety net that low-income families and individuals rely on, and it looks like this net will remain mostly intact.

Now for the bad news: crucial programs that help people and communities achieve economic independence are in trouble. Very few housing assistance programs, and no community action programs, are immune from sequestration. These programs will face deep cuts, directly hindering their ability to provide needed services.

I want to focus on community action programs for a moment, and not just because they are my organization’s primary responsibility. Rather, it’s because they are a rare breed among social programs. No two community action agencies are alike, and it is their flexibility and adaptability that make them effective. Community action programs depend especially on the Community Services Block Grant (CSBG), which is for most agencies the primary source of discretionary federal funding. Put simply, CAAs choose what services their communities need most, so they are able to provide a tailored, locally-driven set of programs that address their communities’ specific issues. For many of these agencies, those issues include housing counseling and financial education.

Hundreds of CAAs provide housing counseling, and a great many are HUD-certified. For example, take Skyline Community Action Partnership in Virginia. Last year, they provided 641 households with housing counseling and helped 18 families successfully avert foreclosure. If CSBG and other low-income program funds are cut enough to force Skyline to close its doors, executive director Kim Frye Smith notes that clients will be forced to drive 25 or more miles to locate another housing counseling program (and will likely be turned away due to geographic restrictions). In Illinois, the Will County Center for Community Concerns provided default/loss mitigation counseling for 204 households last year. And in Maryland, United Communities Against Poverty saw 40 out of 49 clients successfully graduate from their pre-purchase housing counseling program. These are just a few examples, and they are not the exceptions—they are the rule.

The story is much the same when it comes to financial education and debt counseling. In New Jersey, NORWESCAP’s executive director Terry Newhard reports that the agency’s family loan program provided 53 loans to low-income families in 2010. This program has seen a 100% payback rate so far. On the other side of the country, Kitsap Community Resources in Washington had 853 participants in its asset-building and financial education programs last year. And in the Midwest, Central Nebraska Community Services saw their 202 debt counseling clients pay off more than $450,000 last year. Hundreds more programs provide similar services, along with IDAs, small business loans and more innovative financial programs for the low-income population.

I could go on. The examples I have provided (and believe me, we have hundreds of them) demonstrate the bracing reality that programs providing financial education, housing and debt counseling, and other services geared toward expanding economic opportunity are vulnerable under the budget deal. Times have been lean for community action agencies for years, and unless the Gang of Twelve is convinced of the central importance of these elements to a prosperous future, I’m afraid it’s only going to get tougher.

The Democrats want jobs. The GOP wants fiscal responsibility and self-sufficiency. President Obama wants to “win the future.” Anybody who has worked in the economic opportunity field for any length of time knows that educating our citizenry to make good financial choices and to be in control of their own economic destinies is a clear means to achieving all of these goals and more.

Jade Olson is Policy Fellow at the National Community Action Foundation (NCAF). For more information about Jade's work or about NCAF, please visit www.ncaf.org.

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