St. Paul experiments with guaranteed incomes

Courtesy of City of St. Paul

150 families to be selected for 18-month pilot

On September 3, St. Paul Mayor Melvin Carter signed Executive Order 2020-24 authorizing the creation of the People’s Prosperity Pilot, Saint Paul’s Guaranteed Income Demonstration Program. Led by the Office of Financial Empowerment, the People’s Prosperity Pilot will provide up to 150 Saint Paul families with $500 per month in guaranteed income for a period of up to 18 months.

The projected budget of up to $1.5 million will be supported through a combination of the Mayors for Guaranteed Income national network, philanthropy, and City of Saint Paul CARES funds. Households will be randomly selected from CollegeBound Saint Paul, a college savings account program.

Saint Paul families from the city’s most racially diverse and lowest wealth neighborhoods. Cash payments to participants are expected to start this fall.

“More than ever before, this economic crisis has pushed families into crisis, struggling to maintain basic necessities for their children,” said Mayor Melvin Carter. “This demonstration pilot is an exciting new approach to support our most vulnerable families while helping build the case for permanent guaranteed income programs at state and federal levels.”

“The divide between the ‘haves’ and ‘have-nots’ has never been more clearly on display,” said St. Paul City Council President Amy Brendmoen. “In our rich, developed nation, billionaire employers hire people at poverty wages and government programs are errantly designed to keep people stuck in low-wage jobs with no path upward.

“I am proud that leadership in Saint Paul continues to create innovative ways to break cycles of poverty,” Brendmoen said. “The guaranteed income pilot program gives us an opportunity to directly impact our most vulnerable community members by leveraging private partnerships and non-local funding sources. It is my hope that this 18-month test will demonstrate a new approach that can be taken to a broader level.”

“A guaranteed income for Saint Paul families who are struggling more than ever is an essential step for the stability our residents deserve,” said Ward 4 Councilmember Mitra Jalali. “Our city has the chance to both help our residents in a crisis and contribute to national research that could restructure a more fair economy for all.”
The Office of Financial Empowerment will randomly select from families enrolled in CollegeBound Saint Paul families located in the 55104, 55106, 55119 and 55117 St. Paul zip codes.

Of the more than 1,800 families already enrolled in CollegeBound Saint Paul, more than 1,000 households are in these zip codes. These areas have been identified as neighborhoods that have been disproportionately impacted by COVID-19, as defined by unemployment insurance claims and cost-burdened households from a report conducted by Wilder Research and Family Housing Fund on the economic impacts of the pandemic.

The median household income in these neighborhoods is approximately $35,000 per year.
Once selected, households will be contacted to complete enrollment and must verify they have a COVID economic impact to be eligible. These criteria include demonstrating a COVID-19-related adverse financial impact, such as adverse financial consequences experienced by the applicant as a result of being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19.

Other criteria for participation are adverse financial consequences experienced by the applicant as a result of being unable to work due to the applicant’s COVID-19 diagnosis, or a spouse’s or dependent’s COVID-19 diagnosis; or other demonstrable adverse financial consequences experienced by the applicant due to COVID-19.

The Office of Financial Empowerment will staff and support the demonstration pilot using a web-based platform currently employed for CollegeBound Saint Paul, which coordinates enrollment, logistics and program information between participants and staff.

Households will receive a monthly cash benefit through a U.S. Bank financial product called the Focus Card, which many public benefit programs and employers use to make cash transfers. Participating households will agree to provide transaction information about expenditures on the Focus Card and will complete surveys about their participation to contribute to the evaluation of the program.

The City is working to determine tax implications for participants and is pursuing an income and asset exclusion from the State of Minnesota to minimize impacts on public benefits. The budget for the program is projected to be up to $1.5 million, with up to $1.35 million of the total budget designated for direct cash benefits to participants.

A guaranteed income is a monthly, cash benefit distributed directly to participating individuals. It is unconditional, with no strings attached and no work requirements. A guaranteed income is meant to supplement, rather than replace, the existing social safety net and can be a tool for achieving racial and gender equity.

Mayor Carter joined Mayors for a Guaranteed Income along with a cohort of mayors from across the country earlier this year to advocate for guaranteed income policy at the state and federal levels.