Innovation Ecosystem

The high cost of budget decisions

Rachel Flum of the Economic Progress Institute shared her group's view of budget priorities: a rising tide does not lift all boats; if the boat is filled with holes, a rising tide will sink it

Photo by Richard Asinof

Rachel Flum, executive director of the Economic Progress Institute, discusses budget priorities in an interview with ConvergenceRI

By Richard Asinof
Posted 6/6/16
On Tuesday, the R.I House is scheduled to vote on the FY 2017 budget, and the public will get its first look at the document. While much of the conversation in the news media will focus on taxes, tolls, legislative grants and tourist funding for CommerceRI, the budget will also address programs that affect many of Rhode Island’s low-income, low-benefit workers. An interview with Rachel Flum, the executive director of the Economic Progress Institute, provides insights into the economic choices for families that often get left out of the discussion strategies, policies and priorities with the state’s future economic development plans.
Will the R.I. General Assembly give CommerceRI a closer shave in its budget after the failed rollout of the cooler, warmer tourist slogan debacle? Will the legislators step up to the plate and grant a larger increase than the governor proposed for nursing home workers and home health care workers? Will there be more, significant resources devoted to combating the epidemic of overdose in Rhode Island? Will there be any additional financial aid for Providence as the city struggles with its finances?
Much of the buzz around the budget deliberations this year has been focused on how best to finance investments in infrastructure, in particular, the repair of the state’s disintegrating roads and bridges. There is a constant drumbeat, too, from the business community, about the need to decrease regulation and decrease taxes in order to make the state more business friendly, to attract more companies and create new jobs. And, to increase tax incentives for commercial real estate deals.
What’s been largely missing from the discussion are three things: an appreciation of the growing economic value of the state’s diversity; the dire need to increase access to healthy, affordable housing; and an analysis of the comparative return-on-investment from community-based economic development vs. corporate-based economic development.
When Rhode Island finally figures out how to create its own Index of the Innovation Economy, it may discover that many of the economic shibboleths it has become captive to do not work in an inclusive, more diverse 21st century economy.
Just as there is a profound difference between health and health care, there is also a big river between investing in commercial real estate and investing in community infrastructure that puts a greater value on achieving equity.

PROVIDENCE – The Economic Progress Institute functions very much as the economic conscience of Rhode Island, particularly around policy, revenue and spending issues in the state budget, focused on representing the interests of so many who often do not have any voice in the deliberations on Smith Hill, including those Rhode Islanders who have fallen through the gaping holes in the porous safety net.

That focus has shifted a bit in recent years, following the steep economic downturn known as the Great Recession, to look more closely at the issue of employer-sponsored benefits and the growing gap between the kinds of benefits offered high-end workers but not accessible to lower-wage workers.

From generous health insurance packages to paid sick leave, from child care benefits to paid family leave, from fair scheduling to temporary caregiver insurance, these “benefits” have become, in so many ways, the dividing line between the ability to make it or not make it in Rhode Island, particularly as the economy shifts in its definitions around what it means to be an employer and an employee.

With more than 20 percent of Rhode Island’s children living in poverty in 2015, the equation around achieving economic prosperity involves much more than the state making investments in big companies in order to create good-paying jobs. and then measuring the relative yardstick of job growth as an indicator of the state economy’s health.

A rising tide does not lift all boats, particularly if those boats are riddled with holes, as Doug Hall, the director of Economic and Fiscal Policy at the Economic Progress Institute, told a gathering on March 3 at the Brown Faculty Club, at an event to talk about “strategies” for the local economy. [See link to ConvergenceRI story below.]

“For a boat riddled with holes, there is not much a rising tide can do, other than sink it,” Hall said. Further, Hall continued, the effort to close the gaps across a wide range of socio-economic indicators in Rhode Island “will not happen without an intentional commitment to do so.”

In Hall’s view, “We need to build an economy that places a premium on improving the lives of working families in Rhode Island, and in doing so, we need to be intentional, so that we don’t leave anyone behind, because of their gender, or because of their race and ethnicity.”

At the organization’s annual policy and budget conference, held on April 26, entitled “The Rhode To Economic Progress: An Agenda for Workers,” the event began with remarks from Gov. Gina Raimondo and Senate President M. Teresa Paiva Weed, discussing the importance of investing in Rhode Island’s workforce, and perhaps more importantly, speaking to the organization’s ability to gain an audience with state leaders.

The keynote speaker, Sarita Gupta, the executive director of Jobs With Justice, and co-director of Caring Across Generations, addressed the economic and labor issues affecting working people across low-wage sectors.

The Economic Progress Institute also recently released a report, “State of Working Rhode Island 2015: Workers of Color,” which identified what it called a job crisis in the state’s urban communities that disproportionately has impacted workers of color.

“As our workforce becomes older and more diverse, harnessing the talents and potential of all Rhode Islanders is imperative,” the report’s introduction said, noting that by 2040, the share of the labor force comprised of workers of color will have increased by 80 percent from 2010.

To be competitive in the global economy, that report’s introduction continued, referencing the state’s future strategic economic development plans, it will require a bold action plan that purposely leverages all of the state’s human resources – “including those populations who have had limited access to well-paying, quality jobs.”

Budget, budget, who’s got the budget?
This week, the long-awaited budget legislation will be introduced to the R.I. House for approval, with many of the deliberations and negotiations and compromises having already occurred behind the scenes at the State House. What follows, no doubt, will be a rush by the members of R.I. General Assembly to enact the budget ASAP and then head toward the exit doors.

To get a better understanding of some of what is at stake, ConvergenceRI sat down with Rachel Flum, executive director of the Economic Progress Institute, the conversation taking place at Olga’s Cup + Saucer.

ConvergenceRI: What is your view of the role that the Economic Progress Institute plays in the state? What’s the value you of what you’re doing? What are you trying to bring to the table?
FLUM:
Our mission is to work to improve the economic opportunities for all Rhode Islanders.

We try and do that both from the revenue perspective, to make sure that the state has adequate revenue to fund the services [it] provides. Then, on the flip side, to make sure that people are able to meet their basic needs. And, if they can’t that through work, then through public benefit programs.

We are seeing our role shift, a little bit, from just focusing on those public benefit programs and the revenue piece, to a third piece, looking at employer-sponsored benefits that higher-end workers have benefited from but lower wage folks usually don’t.

We have been looking at [issues of] temporary caregiver insurance and the paid family leave program. I think, in the future, we’re really going to focus on fair scheduling and earned sick leave. Which really affects the health and overall well-being of individuals and families, but often are not part of that conversation around jobs – but should be.

ConvergenceRI: What do you see as your most effective voice in the debate?
FLUM:
We have traditionally been the [only] voice talking about the [need to generate] revenue.

We are often the only person who is testifying against lowering the estate tax. We think that this is a role that we really need to play.

We have, with Linda Katz, our policy director, who has being doing this for more than 30 years, [an advantage]. She brings that history – and her brilliant mind – to the table, to analyze gaps in policies, and to think about how structures can work better together.

ConvergenceRI: You’ve partnered with other groups and agencies, including the recent conference about the benefits of an integrated eligibility system.
FLUM:
Yes. [Flum, well-prepared, handed background documents to ConvergenceRI.]
One of the things we do at the Economic Progress Institute is that we have the health coverage project, an initiative with Rhode Island KIDS COUNT. We’re in our fifth year of doing that.

That has been focused, up to now, about making sure that people know about health insurance coverage and have access to affordable coverage.

But now, with the state looking at a unified eligibility system, we thought that we should broaden our scope a little bit and really talk about that.

This is the huge thing that’s going on; we think we’re only one of two states that are really trying to do this.

ConvergenceRI: Are you talking about the Unified Health Infrastructure Project effort, UHIP, now known as RI Bridges?
FLUM:
Yes. The first step of the unified eligibility system was with HealthSourceRI, integrating all of the health insurance programs you could access through HealthSourceRI.

[The second step] involves the other Medicaid programs that were not in HealthSourceRI but are part of the Department of Human Services, including dual eligibles, both Medicaid and Medicare members, foster youth, people who need long-term services, and folks with disabilities who have gotten Medicaid through DHS.

So, now, it will integrate them together through one system.

And, it also brings in programs, such as the work support for childcare, and Rhode Island Works, into one system.

We think, when the state does this well, it will be great – both for clients, and for data-processing purposes.

ConvergenceRI: There have been, in the past, reports of lots of glitches at HealthSourceRI, with what used to be called UHIP, and complaints about Deloitte, which was responsible for managing the project. Two years ago, Christine Ferguson [former HSRI executive director] was apoplectic because the agency had to manually override what the system was doing.

Let me ask you a pointed question. If HealthSourceRI gets absorbed into the federal exchange program, does that create a problem with how the integrated eligibility system grows out?
FLUM:
Yes, I think it would. However, I don’t think anyone expects HealthSourceRI to be rolled into the federal system, at least in the near future.

I think, if and when the state does this well, it will be a real argument for HealthSourceRI not to be folded back into [the federal system], because it will be an example for the rest of the nation of how the state is really doing this well, providing services for clients in one integrated system.

It won’t be just for applying for services. It’s meant to be a well-functioning system.

ConvergenceRI: In this year’s budget, what are the key issues, what would you like to see happen, and what are you fighting for?
FLUM:
Our agenda this year has really been focused on the work support programs that we believe help a lot of working families, primarily the earned income tax credit, which helps 83,000 Rhode Islanders to get money back.

Last year, the legislature increased the Rhode Island percentage to a 12.5 percent share of the federal EITC.

This year, we’ve been pushing hard, along with a coalition of some 30 groups, to increase that up to 20 percent. The governor had it in her budget to increase it to 15 percent. We’ll see where that number falls.

The other pieces of legislation that we’ve been working on are about childcare assistance. The state has a childcare assistance program, like most states do, which is largely a federally funded program allows low-income families to get assistance paying for their childcare.

The Rhode Island system used to be a real leader in the country; but in 2008, due to budget cuts, it was rolled back.

We have two steps the legislature can take toward improving that system again, because we know that families really struggle with the cost of that care.

ConvegenceRI: The folks who work within the home health care industry and who provide day care for seniors have gone before the legislature to complain that the low amounts of money they are being paid in reimbursements for state programs is ridiculous. Are you supportive of those workers and their attempts to be paid more money?
FLUM:
We are supportive. There are two different pieces; there are the nursing home workers, and then there are the home health workers. We are supportive of both of those [to be paid higher reimbursements].

We know that there are a lot of low-income folks [doing this work] and their jobs are very difficult.

At our budget conference at the end of April, our team met with Sarita Gupta, the executive director of Jobs With Justice, and she spoke to use about how, with the [growing] aging population in the nation, these workers in nursing homes and in home health care are an industry that really needs to be supported.

We are supportive of increased wages for these folks. It’s an overall system problem, where the state has cut back and made changes around how to fund some of these programs, and the results have been that the workers are seriously underpaid.

ConvergenceRI: In terms of advocacy, do you find that you have need to have a fine line between what you say and your ability to work within governmental structures? How do you navigate between being “cooperative” and, the same time, being able to say: “Yes, but…”
FLUM:
Rhode Island is a really unique place because it is so small, which is great, because we do have access to leaders at different agencies, and I think that they are very understanding of our role as being both advocators and advocates.

When we push for change, we try and do it in a respectful tone. There are tactics that we don’t engage in, because we feel that it would hurt those relationships. So, we try to be very forthcoming, and write long emails about our concerns to folks, even before we say them publicly.

ConvergenceRI: How do you see your role in interacting with the business community?
FLUM:
We are always trying to engage with the business community and grow those relationships; we try to meet with the chambers and have conversations about our differing perspectives on policy.

We don’t see that as one of our core missions.

We think that there are certainly policies that we work on that they agree with more than others. But we don’t believe that everything we talk about is in direct contrast with the business community.

If you look at the studies of what CEOs want – there was a national Chamber of Commerce report that interviewed CEOs and found that they were supportive of paid family leave and earned income tax credits – they want the same things that we want: a thriving state.

ConvergenceRI: In Rhode Island, is there a disconnect between the priorities around job creation and job skills, particularly for communities of color, that tend to magnify the social, economic and health disparities?
FLUM:
That’s exactly what our annual conference in April was about. We came out with this report in December, “Workers of Color.”

What we found was really striking: that workers of color have been left behind in Rhode Island, and we need to be intentional about how we help workers of color to succeed, so that the whole state can succeed.

What this report also says is that our demographics are changing, whether you like it or not.

One of the things we are trying to pull together is a coalition, called the Equity Coalition, which is a group of stakeholders that represent organizations of color in the state.

In the governor’s budget, there is funding for an improved Office of Diversity and Economic Opportunity. So, we look at this as an opportunity to have a discussion about how to add an advisory council to that so that there is a community voice.

ConvergenceRI: Any questions that I haven’t asked that I should have asked? Anything that you’d like to add, as the last word?
FLUM:
To go back to the questions around business, I do think that we would really like to focus in the next couple of years on turning the conversation toward ensuring that the state is able to thrive, and making sure that everyone has the access to the educational and training opportunities that they need to succeed – and focusing on the needed revenues to support those efforts.

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