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Skeptical About Opportunity Zones? Look to Erie, PA

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By: AIF Staff

As the American Idea Foundation has previously detailed, Opportunity Zones are economically distressed census tracts that are eligible for preferential tax treatment. They were created as part of the 2017 Tax Cuts and Jobs Act and are designed to incentivize long-term investment in low-income and economically disadvantaged communities by offering a deferral of capital gains taxes for investors.

Last month, a handful of House Democrats attempted to amend an annual appropriations bill to prevent the Internal Revenue Service from using funds to oversee the development of the nearly 8,800 Opportunity Zones around the United States. This stunt, if successful, would have been a mistake – one that would have had real consequences for the people living in these zones.

To be clear, since Opportunity Zones became law, legislators from both parties have attempted to improve the oversight over these areas to ensure they meet their intended purpose of truly helping individuals and communities in need. Debates about how to refine and improve Opportunity Zones are welcomed, as many reforms are well-intentioned. However, attempts to end the Opportunity Zone program outright or to defund them are not only short-sighted, but also would harm the very individuals that legislators claim to want to help.

Rather than attempt to score partisan, political points, legislators should be united in making Opportunity Zones work. Opportunity Zones hold the potential to revitalize economically distressed areas and bring good-paying jobs, additional housing, better educational opportunities, much-needed infrastructure improvements, and critical investments to areas that need it. There are many good ideas – from both Democrats and Republicans – about how to expand economic opportunities and fight poverty, but Opportunity Zones should be given the chance to succeed. This critical tool for revitalization should not be reduced to a political football.

The main reason that policymakers should give Opportunity Zones the chance to germinate? They’re working. Communities are beginning to see real results from public and private partnerships. Investment is flowing into communities and meaningful improvements are beginning to occur. One promising example is found in Erie County, Pennsylvania.

Nestled on a Great Lake near the U.S.-Canada border, Erie, Pennsylvania is the epidemy of a small, Midwestern city. Erie has a rich industrial and manufacturing history and is currently attempting to modernize, transform, and diversify itself to meet the demands of the 21st century economy while also holding tight to the values that make it so unique.

As Forbes noted: “Battling outsourcing, automation, and seismic shifts in global supply chains, the once-thriving industrial city became a parable for the socioeconomic decline of America’s manufacturing heartland. A 2017 report described Erie in stark terms, concluding that nearly half of all Black residents live in poverty, and that the median Black worker in Erie makes a mere 43% of median white worker’s earnings.” Further, in 5 of Erie’s 8 Opportunity Zones, “more than 35 percent of families had income below the federal poverty level. In the other three, the poverty rate for families was above 20 percent.”

But now, thanks to its use of Opportunity Zones, Erie is on the rise. A video produced by the local Chamber of Commerce, “Erie Amazes,” highlights how the city is primed for revitalization.

Erie is turning itself around one building, one block, and one neighborhood at a time. It is a prime example of how innovative, local leadership, when combined with sound, federal policies can make a difference and improve people’s lives.

In February 2020, the Erie Regional Chamber and Growth Partnership presented their  “Reinvestment Roadmap” at the White House. The presentation makes clear that by effectively utilizing Opportunity Zones and partnering with relevant federal government agencies, Erie is massively accelerating its revitalization.

The White House Opportunity and Revitalization Council succinctly defined the mission of Opportunity Zones, saying: “Private capital and public investment will stimulate economic opportunity, encourage entrepreneurship, expand educational opportunities, develop and rehabilitate quality housing stock, promote workforce development, and promote safety and prevent crime in economically distressed communities.”

And as the presentation by Erie’s Chamber makes clear, the city has big plans to leverage the benefits provided to investors via the Tax Cuts and Jobs Act to improve their infrastructure, transportation systems, educational offerings, business development pipelines, and make the community cleaner and safer. All of these will enhance resident’s quality of life.  

To be sure, Erie’s plans are ambitious, but they are already beginning to come to fruition thanks to the city’s belief in its people and its citizens. As the Washington Examiner’s Salena Zito recently wrote: “To anyone who has said it would be impossible to transform one of the poorest ZIP codes in the country into a role model for achieving economic prosperity…. They have definitely underestimated the determination of Erie’s local civic, foundation, and business leaders to not give up the ship.”

In 2019, according to the Economic Innovation Group:

“Fortune 500 company Erie Insurance, the city’s largest employer, announced its new $50 million Opportunity Fund. The first investment will support the creation of a food hall for nine local vendors…The food hall will anchor a broader $30 million transformation of the city’s North Park Row into a culinary arts district, which project sponsors Erie Downtown Development Corporation anticipate will create approximately 240 jobs.”

And because of this local commitment to rejuvenation, at the end of June 2020, Boston-based Actaris Impact Investors announced a $40 million investment in Erie’s Opportunity Zone. The hope is other capital will soon follow as investors see the potential of Erie’s workforce and the comradery of the community to improve itself. As Forbes explained:

“Erie is currently home to some $750 million in ongoing investment. The EDDC and Erie Regional Chamber and Growth Partnership are working to get even more capital into the areas where it will have the biggest impact. The first phase of EDDC’s plan will add more than $100 million in investment into downtown Erie through 2022. In that time EDDC hopes to triple the number of businesses within the development, raise job numbers from 90 to over 425, and multiply the number of residential units by more than ten.”

To be clear, the goal of Opportunity Zones is not to gentrify Erie or displace the very people that are so connected to the city’s history. The hope is to build Erie up from within, with a rising tide lifting all boats. As John Persinger, the head of the Erie Downtown Development Corporation, told the Wall Street Wall Street Journal: “When people raise fears of gentrification, I say we can’t afford to lose one more person. We don’t want to push anyone out. We want to bring more people in and raise the quality of life for everyone.”

The story of Erie makes clear that Opportunity Zones will take time to develop. They will require significant buy-in from local leaders, community organizations, and federal officials. But the promise and the potential to rejuvenate these 8,700 areas in our country is too important to be derailed by partisan fighting in Washington, DC.

Thanks to Opportunity Zones, Erie has the ability to amaze and become a model for the rest of the nation. Policymakers just need to focus on supporting these local efforts, not undercutting them.

Policy Discussion on 2nd Chances: Developing New Solutions for Returning Citizens

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By: AIF Staff

On July 16th, the American Idea Foundation held a virtual panel discussion with policymakers, private-sector leaders, and on-the-ground practitioners about how to create pathways for success as individuals exit the criminal justice system and work to become contributing members of their communities.

The conversation, led by former Speaker of the House Paul Ryan, highlighted a central premise of the American Idea Foundation: The belief that the best public policies are not made in a vacuum in Washington, DC, but rather are developed, informed, and shaped in a collaborative fashion between policymakers, individuals who are leading on the front-lines and helping vulnerable populations, and their partners in universities, community groups, non-profits, and corporations. Good public policy is not only a natural byproduct of this ongoing collaboration and dialogue, but it is also informed by the experience of individuals and experts, and the data and evidence that has been developed over years of practice. The fact that the First Step Act, which became law in 2018 and which modernized important parts of our criminal justice system, resulted from this type of policy-making process is precisely why it has the potential to be so impactful in the lives of so many.

The First Step Act, as the name implies, was simply the beginning on an ongoing effort to help individuals who made mistakes and atoned for them get on with their lives in a meaningful way. The law created conditions by which individuals could start down a path of redemption and hopefully, with the right support systems, change their ways. The authors of the First Step Act knew that the government, on its own, would not be able to solve a multi-faceted issue like recidivism, and for the law to achieve its stated aims, it would require partners in communities and in industries to assist in expanding opportunities for those trying to rehabilitate themselves following their interactions with the criminal justice system.

The American Idea Foundation wanted to highlight some of these partners who are helping policymakers realize the noble goals of the First Step Act and who are making a difference in reducing recidivism. It did so in a policy discussion entitled, Second Chances: Developing New Solutions for Returning Citizens, which featured leaders from READI Chicago, JPMorgan Chase, and United Health Care.

As Speaker Ryan said when introducing the panel: “Today, we will be talking with some of the organizations that are giving concrete second chances to those who make mistakes. We’re talking to the experts in the field who are actually breathing life into [the First Step Act] and showing how it can work. These organizations are not just providing practical on the ground assistance to the least among us, but they are also developing the practical insights that will lead to the next round of criminal justice reforms, whether they be at the state, local or at the federal level.”

A few excerpts from the policy discussion follow:

Speaker Ryan on Why Criminal Justice Reform Matters & His Evolution on the Subject:

To kick off the panel, Speaker Ryan shared what motivated him to tackle the issue of criminal justice reform. He discussed how his thinking about the issue changed as evidence and research was developed and showed the benefits of giving individuals who paid their debt to society a second chance to lead fulfilling lives.

“As a practicing Catholic, one of the precepts of my faith is that we work to protect the least among us. And for too long as the society, we have ignored those who have made mistakes and paid for those mistakes and we ended up turning what is the legitimate punishment for wrongs committed into a lifelong brand, eliminating the ability for individuals to turn their lives around, permanently separating parents from children and driving millions into despair.

“America at its best is an America that provides for second chances. If a small business owner fails, they pick themselves up and they try again, but for too long, we’ve decided that individuals who break the law don’t get a second chance. Of all the things that our country has demonstrated, it is the power of redemption and so we need to make sure that we realize the power of redemption in our criminal justice system, and with the First Step Act, we have changed that paradigm and formerly incarcerated individuals are now getting a second chance to lead better and more productive lives.”

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Ryan continued, “[The passage of the First Step Act] was one of the least covered events of 2018, and yet it might be one of the most consequential from a public policy perspective. So, how did Republicans and Democrats come to agree on controversial hot button issues that they hadn’t been able to come together on and that was so difficult for so many years?

“One reason that policymakers were willing to take a political risk was because of both practical and intellectual research in the field of criminal justice. My experience was instructive: In 2007, I was one of several conservatives who voted against the Second Chance Act, but around that time, a sea change was starting to occur. If you recall, back when the 1994 Clinton Crime Bill [was being considered], you had Republicans and Democrats trying to outmaneuver each other to be “tough on crime,” with “three strikes you’re out” and things like that, which was the political movement of the time. But starting in 2007, states like Texas and a whole swath of generally conservative-leaning states began reforming their laws in ways that better protected their citizens and ensured victim’s rights while ensuring a fairer criminal justice system. These states focused on how they could reduce the need to imprison non-violent offenders and reattach these people to the workforce. And where these laws have been passed, we generally saw reduced recidivism, we saw reduced crime, and we saw reduced costs associated with jailing offenders.”

JPMorgan Chase: A ‘Bell Cow’ Reducing Barriers to Employment for Released & Reformed Individuals

In an exchange with Heather Higginbottom, President of JPMorgan Chase’s Policy Center, Speaker Ryan praised the company for leading the way in reforming its hiring practices and leading the charge in its sector to hire individuals with criminal records. Higginbottom went on to explain exactly what JPMorgan is doing to reduce recidivism and how it is working: 

“Several years ago, JPMorgan banned the box on its initial hiring application, which is now something that the federal government has done and is another piece of bipartisan legislation that passed recently for federal government contracting jobs, and that was an important step because we want to hire the best people, and that checkbox was denying us access to a diverse pool of the best talent.

“When you think about the fact that one in three Americans has a criminal record, it’s unbelievable, and you think about what the impact is, [what are] the collateral consequences of that, and what that means to the economy and to a business. But our HR leaders and our CEO wanted to go further and say: If we’re going to be really intentional about this, it’s not just “ban the box,” but we need to go further. We need to learn. We don’t have all the answers yet, but what we have is a commitment, so we started in Chicago, a pilot program and an initial effort to partner with community organizations to find a diverse pipeline and help [people] understand [how to get a job].

“You know, banks are highly regulated and appropriately so. A lot of people think that “I can’t get a job. I don’t know how to get a job since I have a criminal record. What is the process? How do I go about doing this?” And so, we’re partnering with community organizations to help people navigate that process. They’re going through the same door as anyone else to get a job, but they’re prepared. They understand what they qualify for and what they wouldn’t and it’s been a good success. It’s one that we’re going to replicate in other places.

“I’ll say two things: One, JPMorgan can’t solve this problem on its own and that’s why we really are making a call for all businesses to stand with us and to learn together about how to do this and how to tap into this incredible source of talent and how to understand that a criminal record should not stay with someone forever, and that you are missing out on a whole suite of professionals when that’s a limiting factor.

“10% of our new hires last year, in 2019, are people with criminal records and in 2019, we hired 1,000 people more than the year before with criminal records. We are learning. We are intentional. We are focused and we are finding this to be a very successful effort for our firm. We know that it’s possible for others and that we need to kind of band together and do this….

“This impacts everybody, and you start to say this system just doesn’t make sense. It doesn’t make sense for employers, it doesn’t make sense for families, and this system is designed in such a way that we’ve got to make changes and adjustments and I think, in addition to the research and folks really understanding that means that change needs to happen, we also see how directly this impacts so many people across the country.”

Following Higginbottom’s explanation of JPMorgan’s efforts, Speaker Ryan noted: “JPMorgan Chase is a bell cow…. You need bell cows to lead the herd to the right place and…. having a place like JPMorgan Chase do this is really important. It’s a trendsetter, and it’s exactly the kind of follow through you need after passing a law like this.”

Discussing READI Chicago’s Work to Reduce Violence and Transform Lives in Chicago:

Bringing another practitioner’s voice to the panel was Eddie Bocanegra, who is a senior director of the Heartland Alliance and a leader at READI Chicago, where he works to decrease gun violence in the Chicago area and to help give individuals a second chance at life. You can read more about Eddie’s transformative story here. Bocanegra shared his powerful, personal experience with the criminal justice system and how it motivates him to assist others. He also detailed READI Chicago’s randomized controlled trial (RCT) which is helping to evaluate the best way to reduce recidivism.  

Bocanegra said: “There is plenty of research out there that really has looked at both the issue of violence but also useful re-entry work examples. There is a lot of good, promising information out there on what’s working and what’s not working, but for whatever reason or another, it seems that sometimes that information is not communicated effectively to the people who are in a position to write the policy or the lawmakers might interpret in a very different way. Sometimes, I will even make the argument that people are not willing to put their political capital to really make these changes so to hear about the steps that you have taken to move forward in that direction, I think it’s extremely important for us to continue to build on that….

“[A Randomized Controlled Trial] is really the gold standard of research. It’s what we do in medicine to see what’s working and what’s not working. In fact, right now with COVID, we are using that [approach]…. so, imagine that we did the same thing with people. Imagine if we did the same thing in areas where [violence] was extremely concentrated, and that violence typically is driven by 70-80 people who are driving that violence. So, imagine if you were able to test one supportive population and, in our case, what we’re doing is testing whether or not jobs and this kind of behavior therapy really helped us.”

Speaker Ryan discussed why having randomized controlled trials, like the one being conducted by READI Chicago, makes a difference to policymakers as he recounted an episode during the consideration of the First Step Act: “I remember when we were pushing this bill in the House, a senior person in my party showed me some campaign commercials that were going to be run against us if we passed this legislation. [The commercials were] showing that we were soft on crime, showing that we were going to be harming our constituents and this and that. There was a lot of political intimidation against doing things like this and that’s how typical issues work. It was because we had all of this evidence, frankly, from states like Texas which showed we can actually make a difference on all fronts by reducing violence, by creating redemption, by getting people back to work and because we add unassailable evidence from randomized controlled trials that proved if you do it this way, it will work and make a difference.

“This helps take the politics out of it and it helps get over the criticisms that you’re getting something done. So, personally, this is why at the American Idea Foundation, we are basically focusing on RCTs and building a big bank of evidence so that communities and charities and local governments can replicate successful models that have been proven to work and they can overcome the partisan gridlock that usually engulfs issues. Having something like an RCT in Chicago, which is a place that everyone is paying attention to and showing your proven results, I really think that is exactly what is needed to get to the next wave of reforms of redemption and criminal justice policies.”

Examining United HealthCare Community Plan of Washington’s Model:

The policy discussion also featured Cindy Spain, the Chief Clinical Officer from United Healthcare Community Plan of Washington, who shared her company’s experience taking a circumspect view towards caring for individuals and in the process, helping those exiting the criminal justice system land on their feet.

As Speaker Ryan noted: “Eight years ago, I went up to UnitedHealthcare, which is headquartered in Minneapolis, and met with Steve Helmsley and his team to talk about treating the whole person in healthcare. If you just only deal with the momentary problem of a health issue that is affecting a person, you’re not going to solve the underlying problem which is the whole person…. I think so many criminal justice issues can be resolved through access to high quality health care and by dealing with the whole person, you really created a really interesting model out there in Washington State…. that really needs to be replicated throughout the country.”

As Spain explained, the local partnerships that United HealthCare created in Washington has led to tangible results and improved outcomes for individuals and families. In describing their model, Spain said: “We actually work with the Health Care Authority and part of our contract is to do some jail transition services work. Previously, it was focused on the behavioral health aspects of mostly incarcerated folks. However, we decided to go into the jails and meet with our former members because they’re in a suspended state of Medicaid at that time, and talk to them about the issues that they’re [battling] to have a successful release to the community and as part of that, our community health workers identify social determinants of health (SDOH) issues that are ongoing, such as homelessness, an inability to connect with their primary care physicians, an inability to get into treatment that they might need, and we help facilitate that as they get released back into the community.

“Many of our members end up getting released directly into substance use disorder treatment [programs]. Some of them get released directly into mental health settings. We facilitate that as well as keep engaged with them after they are released into the community to make sure that they can get their medications, that they have someplace to live….

“We have partners within our health plan on the behavioral health side, and we work very collaboratively with them on mental health as well. We make sure that everything that’s been identified while they’re incarcerated, such as their substance use but also schizophrenia or bipolar, if they need to be connected to those services as they are released back into the community, we work with our partners to make sure that they get those systems set up for them before they are released. We make sure that we have identified providers of those services and that they have agreed to take the returning citizen into those services immediately so that there isn’t any delay and so as they step out that door, they step into a taxi and they get delivered to the door of those behavioral health organizations or primary care physicians or a substance use treatment facility.”

As Spain elaborated, United Healthcare believes that continuity of care and providing individual assistance to returning individuals is key to long-term success for those reentering society. When discussing the duration and nature of the care model, she said: “We stay connected via community health workers who are actually meeting face-to-face with these citizens before they are released. We’ll follow them as they go back [into society] …. and give them all of our contact information, meet with them in the community as they are released and continue to evolve with them if they need to have ongoing care management. We will follow them as long as they need to be followed and as long as they’re agreeable to doing so and gain benefit from it.”

Creating the Foundations for Utilizing Evidence in Federal Policymaking

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By: AIF Staff

Nearly a year and a half ago, President Trump signed into law the Foundations for Evidence-Based Policymaking Act, which was originally introduced by former House Speaker and American Idea Foundation President, Paul Ryan, and Democratic Senator Patty Murray of Washington. The Bipartisan Policy Center described the reasoning behind the legislation succinctly:

“Whether developing regulations, setting funding levels, or determining which policies to advance, policymakers constantly demand that evidence be generated and available to meet this need. But too little evidence is produced to satisfy this demand.  This legislation will improve the ability of researchers, evaluators, and statisticians both inside and outside government to securely use the data government already collects to better inform important policy decisions.”

The bill codified many of the recommendations offered in the final report of the Commission on Evidence-Based Policymaking. The bipartisan commission, which was created in 2016 as part of legislation authored by Ryan and Murray, was made up of 15 members and consisted of leading researchers and social scientists who were tasked with inventorying the data collected by the federal government and determining how best to use that data going forward. The Commissioners envisioned “a future in which rigorous evidence is created efficiently, as a routine part of government operations, and used to construct effective public policy.”

In an effort to make that vision a reality, the Foundations for Evidence-Based Policymaking Act took a big step forward in outlining how the federal government collects data, analyzes and distributes information, and safeguards this material. The American Idea Foundation believes that the Foundations for Evidence-Based Policymaking Act, over the long-term, has the potential to help legislators develop solutions to the challenges before our nation, and allow them to approach public policy problems with an eye on unbiased facts and figures, rather than partisan soundbites and preconceived notions.

Arguably, the most informative comprehensive section-by-section analysis of the Foundations for Evidence-Based Policymaking Act was produced by Results for America and is accessible here. The Data Coalition also produced a worthwhile summary of the key provisions, which is accessible here. 

A few aspects of the legislation in particular are worth highlighting:

  • Systemic Evidence-Building Plans by Agencies: 24 federal agencies are required to develop a blueprint of the data that they plan to collect and the evaluative questions that they will answer using this data.
  • Appointment of Evaluation Officer: Each agency will designate an “Evaluation Officer,” who will assess the quality, effectiveness, and consistency of the evaluation activities, establish an agency-wide policy and develop individual evidence-building plans.
  • Advisory Committee on Evidence Building: The Office of Management and Budget will establish an advisory group, consisting of 16 senior officers from across government, to make recommendations on the future use of data by the federal government. This Committee will be diverse in its make-up and members will help review the coordination of data-sharing across agencies and identify improvements for data collection and analysis.
  • Promote Transparency through Open Data: All federal agencies must develop an open data plan that is publicly available and regularly updated. The legislation also encouraged collaboration and information-sharing of data assets with the public.
  • Designation of Chief Data Officers: Every agency must appoint a Chief Data Officer who is tasked with managing data, making it accessible and shareable, and securing that data. These officers will ensure that best practices are implemented across government and will work to increase the sharing of data and strategic information assets between agencies.

The goal of the Foundations for Evidence-Based Policymaking Act is to increase the information that the federal government has at its disposal, because having that information should ultimately result in better public policies being developed. The legislation modernizes how the federal government systematically collects data and how it organizes this information so it is better positioned to answer key evaluation questions. The legislation brings the federal government into the 21st century in terms of data management, making it both more secure and more accessible across government agencies.  

The Commission on Evidence-Based Policymaking summed up the rationale for this legislation in its final report, saying: “Policymakers must have good information on which to base their decisions about improving the viability and effectiveness of government programs and policies. Today, too little evidence is produced to meet this need.”

The Foundations for Evidence-Based Policymaking Act marked a major advancement in addressing this need and subsequent steps have been encouraging. The Office of Management and Budget recently published implementation recommendations and guidance for agencies to follow. Groups like the Data Coalition and Results for America have convened regular gatherings among data experts and practitioners to collaborate on best practices. And last year, Results for America recognized nine agencies as part of their Invest in What Works Federal Standard of Excellence evaluation.

To be clear, this is a long-term project that requires constant maintenance. The federal government will have to methodically collect and build repositories of evidence and data in the years to come, but the Foundations of Evidence-Based Policymaking Act has laid a cornerstone upon which agencies can build.

With systems in place to collect, store, share, protect, and evaluate data, the federal government can better understand what solutions are working and achieving measurable levels of success. This information can then be utilized by policymakers who are tackling the pressing challenges facing our communities, which will in turn help Americans grow and prosper.

The idea of letting evidence and data inform government decisions is a high-minded goal, particularly in our current, polarized political environment, but the bipartisanship that has led the federal government to this point is a reason for optimism. Going forward, if agencies and policymakers build on the progress of the Foundations for Evidence-Based Policymaking Act to further modernize data systems, the federal government and citizens will reap the benefits.