Cities seek ways to put the welfare dollars to work

February 12, 1996|By Neal R. Peirce

CHICAGO -- No matter what happens with federal budget negotiations, the Devolution Express -- massive transfer of power from Washington to the states -- is unlikely to be derailed.

But so what? Will state bureaucracies be more effective than federal bureaucracies in reforming welfare, merging social services and remaking the budget-buster of them all -- Medicaid? Can they get on the prevention side, actually help poor communities and their people break out of poverty and be healthy?

Like so many of the best ideas of these times, answers seem most likely to bubble up from the grass roots. In Chicago and elsewhere, a growing number of policy entrepreneurs are focusing on how welfare and Medicaid dollars could be turned around to give new life to the economies of troubled neighborhoods.

Welfare dollars can actually be used to transform communities, claims Neighborhood Works, publication of Chicago's Center for Neighborhood Technology, in a roundup of fresh experiments.

The central thrust: Ease back on having services provided to people by middle-class professional workers, who don't live in and surely don't spend their paychecks in the poor neighborhoods.

Instead, focus on training and hiring neighborhood residents to work with their fellow citizens, so that government dollars help ignite a workable economy.

Social-service jobs

''Invest in social-service jobs and let community residents get access. The community can perform some functions better than a state social-services office,'' says Malcolm Bush, president of Chicago's Woodstock Institute.

Prima-facie evidence of how askew today's incentives are comes from a study of the $1 billion that Milwaukee County, Wisconsin, spent fighting the effects of poverty in 1988. The cumulative outlays for Medicaid, welfare, Head Start, food stamps, housing subsidies and other social services came to $10,793 for every low-income man, woman or child in the county. For an average family of three, that was $32,379.

But after the payrolls for doctors, nurses, welfare case workers and associated bureaucrats were extracted, only 37 cents of every dollar was left to go in direct cash assistance to the poor.

Says Art Lyons, who directed a similar study in Chicago: ''Who'd ever take a job in which two-thirds of your income came in fringe benefits, and you had just a third in cash? Today's system creates a self-contained prophecy of poverty and deprivation because no trading can go on in the community.''

A top example of a potentially superior system is Baltimore's Healthy Start, which employs 62 percent of its staff from the neighborhoods it serves. Reinvestment becomes the mission, fostering -- as the Woodstock Institute recently reported to the Annie Casey Foundation -- ''successful collaboration, creative funding, better service, local job creation and business partnerships.''

A Neighborhood Innovations Network is now functioning at Northwestern University, led by John McKnight and Jody Kretzman -- long-term exponents of the transforming idea of assessing neighborhoods based on their residents' assets and potentials, not the dreary list of pathologies social-service bureaucrats use to justify programs.

They are not so naive as to believe that very poor neighborhoods don't need infusions of investment and assistance from outside. But they point to an experiment in Chicago's poverty-plagued Grand Boulevard neighborhood that identified 320 local associations and made them the cornerstone of a collaboration with state agencies. The groups are providing mentoring, job training and high school equivalency programs, plus after-school, day-care and other services to families who in turn are eligible for one of 50 part-time jobs United Parcel Service has set aside for them.

''Such approaches only make sense,'' says Robert Stumberg of the Washington-based Center for Policy Alternatives. ''We need to get double and triple benefit out of every tax dollar.''

Mr. Stumberg focuses on preventive health care, noting that while everyone gives lip service to prevention, it's in no one's legislative package. He advocates community health providers, including neighborhood residents themselves, who would be active on every front from nutrition to alcohol or drug counseling to teen pregnancy prevention.

''Such a person is not a physician, probably not even a nurse. He or she is more likely, though, to communicate in a way people on the street can understand,'' notes Mr. Stumberg.

A bias toward the costly

In today's budget climate, he adds, neither ''managed care'' nor Medicaid support for poor and ill persons in emergency rooms will be affordable. But community health care -- the economical, prevention-oriented strategy -- is discriminated against because federal and state rules favor expensive standard hospital- and doctor-oriented treatments.

It's clear the states, catching the ball on its devolution bounce, will have a momentous task on their hands. They will have to encourage the invention of new, strategies of preventive health and mutual care, using scarce government dollars to foster viable neighborhood economies.

It will be an even tougher task than simply devolving programs out of Washington.

Neal R. Peirce writes a column on state and urban affairs.

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