The Indianapolis Private Industry Council۪s Cash Voucher Program for Disadvantaged Youth, By Andrew Hahn, Professor, Brandeis University, Center for Youth and Communities, Heller School for Social Policy and Management

The Context

Anti-poverty activists sometimes confront foundation officials with the question, “Why don۪t you just give money to the poor rather than support new programs? People need money, so why not give some to them?” The answers often include the following points:

л A foundation could spend down its entire endowment while giving only small amounts of cash to huge numbers of people

л Such a strategy would let government off the hook for meeting human suffering

л People might not spend their cash assistance on the right things. Images of homeless men sitting in front of a package store, drinking after using their federal Katrina debit cards to pay for booze, come to mind

л Giving away money could create dependence and rob people of self-reliance

л The mechanics of cash transfers often lead to “gaming” and schemes to fool the administrative systems to get undeserved cash

Still, there is a kind of warming up in the field to the idea of cash assistance. Of course, the most dramatic example is the experiments that fall under the banner of conditional cash transfersproviding cash payments pegged to behavioral change goals such as helping with children۪s homework or taking a child to a doctor for a routine exam or immunization. Spotlight on Poverty has described these efforts in previous research and commentary.

Another less well-known approach is the focus of this commentary. A promising six-year effort in Indianapolis made cash vouchers for emergency or compelling expenses available to participating community-based organizations (CBOs) and social service agencies to help their young adult clients pursue employment, education, and training goals. Since its inception, the Indianapolis Private Industry Council۪s (IPIC) voucher program, with support from the Lilly Endowment, has provided over 2,400 young adults in its Youth Employment Service (YES) program with bill paying assistance.

As a professor at the Brandeis۪ Heller school, I have observed this program through an evaluation I am leading. The results of this evaluation suggest its genuine potential as a pathway out of poverty.

IPIC۪s Voucher Program

As an integral part of its YES Program, IPIC, in partnership with over a dozen CBOs, offers cash vouchers for a range of short-term expenses (such as utility bills, uniforms, and car repairs) that if left unaddressed tend to knock young workers off the path to gainful employment. It also helps with expenses that pay off over the longer term, such as tuition in approved education and training programs that allow youth to advance toward a career.

These vouchers complement a wide range of YES services, including needs assessment, skills training, and job placement. The idea behind these “barrier busting” vouchers is to attend to relatively small financial issues that too frequently balloon into large problems that can mire young workers in a cycle of unemployment and dead-end jobs.

Young, low-income, and out of school youth (ages 15 to 24) enrolled in the YES program are eligible to receive vouchers. The median amount of all vouchers received per participant sums to $571 in 2006. These vouchers are paid efficiently and directly by the CBOs participating in the YES network. They can be used for training and education expenses, housing and utility bills, child care expenses, legal costs, and more, as long as they can be shown to help young workers stay on the path to gainful employment.

This is not about handouts; youth must be demonstrably working toward self-sufficiency to be eligible for help to ameliorate a barrier that stands in their way. All YES program participants are eligible to request vouchers. A hallmark of the program is its focus on quickly processing these requests via CBOs with a minimum of red tape.

Youth Served and Voucher Use

The YES program, as noted above, serves out of school youth ages 15 to 24. Participants must also meet “at risk” criteria, such as deficiency in basic literacy skills, homelessness, being former foster children, being pregnant, having children, having a criminal record, or requiring additional assistance to complete either an educational or training program or to get, and hold on to, a job.

The majority of YES participants have been significantly disconnected from the labor market mainstream. According to survey data, 62 percent were unemployed prior to entering the program and only a third were in educational programs, such as GED preparation programs. Nearly one-third had never held down a job. More than a third, 37 percent, reported that they did not have the education or skills required to get a job. Many program participants cited more mundane, though not less problematic, barriers to work, such as paying for childcare, finding and paying for reliable transportation, legal issues, and paying for uniforms or workplace-appropriate clothing.

From 2003, when the program began, through mid-2009, 10,694 vouchers were issued. The average voucher value for this time period is $204. An average of 4.0 vouchers were provided to each participant. Most vouchers (3,227) have been issued for transportation assistance; the average transportation voucher value has been $79. The highest voucher expenditure per category has been in education assistance at $360 per voucher.

Effectiveness of Voucher Initiative

By many measures, the voucher program has been effective in addressing the needs of young workers trying to secure a place in the labor market:

In one survey, voucher recipients who work are earning $9.25 an hour on average, many of them in occupations that offer opportunities for advancement. More than four fifths of recipients, 81 percent, are working in full-time jobs, with nearly 80 percent of this group taking courses or participating in a skill-building program while they are working.

Over half of IPIC voucher recipients in a 2006 survey (Brandeis University, Center for Youth and Communities) stated that were it not for the vouchers, they would not have been able to continue their education, training, or work. A large majority said that because of their ability to remain in school, training, or work, their plans and hopes about their own futures had changed for the better.

Over 2,500 16 to 24 year olds have been enrolled in YES. Of these:

л 1,492 participants have secured job placements or post-secondary placements

• 873 have been on the job at least 60 days

• 530 have been on the job over 180 days

• 290 have been employed for at least a year

• 410 have earned their GED

• 442 have completed training to earn an advanced training certification

While vouchers are not a silver-bullet solution to joblessness and poverty, the “barrier-busting” focus of IPIC۪s program addresses a number of the issues that tend to derail young adults in their efforts to succeed. Among many other things, IPIC۪s voucher program shows that, whatever naysayers might contend, the will to succeed is not what is generally missing from programs designed to serve disadvantaged youtha helping hand through a tight spot can make a big difference.

IPIC۪s voucher program demonstrates that, sometimes, simple solutions are the most effective. Strong leadership, an emphasis on accountability, and tight links between immediate cash assistance and education, training and work seem to be elements of an effective approach whose time has come.

Can the voucher program work in other communities?

Adopting a voucher program similar to IPIC۪s will depend on local characteristics and population needs. While there are many questions about its applicability to other communities, one could imagine United Way affiliates, local foundations, other Private Industry Councils, faith-based groups, juvenile justice groups, and other organizations that may be interested in this model of flexible and targeted emergency bill paying to erode barriers standing in the way of progress through a community program, all under a “quid pro quo” agreement in which trainees agree to meet their employability goals in return for the financial assistance.

The assistance itself is monitored carefully by a local intermediary with appropriate rules, guidelines, and partnerships with community groups. The following box highlighting critical elements of IPIC۪s voucher program that would be worth considering if the program were to be implemented elsewhere.

Critical elements of IPIC۪s voucher program

· Effective intermediary. For CBOs with limited administrative capacity, operating a voucher program would likely not be possible were it not for the intermediary functions provided by IPIC. In addition to serving as the fiscal agent, IPIC provides training to the CBOs and technical assistance on program design, development and implementation; facilitates networking among YES providers through quarterly meetings; and conducts spot checks to ensure compliance. Due diligence, quality control, and anti-gaming monitoring are essential. IPIC monitors participant progress with a high-quality management information system designed for this purpose along with formal guidelines on voucher access and use, file and case review procedures, and more.

· Autonomy and flexibility in eligibility determination. Program managers in local CBOs are granted substantial flexibility in determining whether a request for a voucher is appropriate and necessary, i.e., that it will be used to remove barriers to work, training, or education. The CBO can make an immediate decision, taking into account its voucher budget and the needs of all its clients. This combination of IPIC۪s centralized intermediary functions and flexible local decision-making authority permits some customization of IPIC۪s voucher program to the needs of program participants while remaining compliant with the program۪s overarching goals. It also reduces red tape and is more likely to provide timely assistance.

· Workforce development capacity-building. In addition to the obvious benefits of assisting youth to succeed in training programs and on the job, IPIC۪s voucher program is also strengthening the local workforce development system. By including a number of organizations in the voucher program without a workforce development focus, but with a willingness to take one on, IPIC helps to ensure that the voucher program reaches as many in its target population as possible, and that a new cadre of workforce development providers is developed.

· Network of providers. IPIC embeds the voucher program in a structured network of CBOs and social service agencies called YES. Vouchers are seen as sweeping away barriers that stand in the way of the programs in the network doing their jobs for their clients. It might be interesting, however, to experiment in other communities with a version of vouchers that serves an array of programs not necessarily formally networked or targeted for special services, such as in-service training, capacity building activities, and peer learning. On the other hand, the capacity of some CBOs in the YES network to administer vouchers was uneven, thus arguing for a formal network to monitor and strengthen member groups. In any case, there are strong arguments in support of a network concept, but local experimentation might be tried too

· Limits on voucher assistance. YES voucher policy limits annual voucher assistance, but some network CBOs are considering setting even tighter limits on the total amount for which any one recipient can be eligible. This will allow CBOs to meet the cash assistance needs of a larger number of youth, as well as send the signal that the assistance is limited and conditioned on recipients holding up their end of the training and working bargain. In addition, many CBOs are considering policies that may set limits on the number of times a single recipient can be awarded a voucher

Conclusion

Promising approaches to reducing poverty deserve consideration on a broader level. The IPIC initiative in Indianapolis has shown significant success in helping low-income youth succeed in school, job training, and work. While more thought and further research is needed, it۪s a promising approach to achieving self-sufficiency and deserves real attention from policymakers.

Andrew Hahn is a Professor at Brandeis University۪s Heller School for Social Policy and Management and co-founder of the Center for Youth and Communities.He oversees the Heller School۪s evaluation of IPIC. He can be reached at ahahn@brandeis.edu. For information on the Youth Employment Services (YES) voucher program in Indianapolis, contact Matthew Rager at mrager@ipic.org. Funding for the program and research provided by the Lilly Endowment