In Face of Budget Constraints, State and Local Governments Find Creative Ways to Fund Subsidized and Transitional Jobs Programs

Mar 07, 2013

By Elizabeth Lower-Basch

Subsidized and transitional jobs are a proven way to give unemployed workers the opportunity to earn wages, build skills, and connect to the labor market, while also giving businesses an incentive to hire new employees when they might not have been able to do so otherwise.  A variety of non-profit, social enterprise, and city and state public entities have operated transitional jobs and subsidized employment programs for almost 30 years.  Funding from the TANF Emergency Fund in 2009-2010, part of the American Recovery and Reinvestment Act (ARRA), enabled the operation of such programs at a larger scale, and in more places, than had previously occurred.  More than 260,000 individuals were placed in subsidized positions in 39 states and the District of Columbia.

No dedicated federal funding is currently available to support subsidized employment programs.  Any entity seeking to operate such a program must therefore creatively leverage and blend multiple sources of funding.  A number of cities and states have successfully done so, and a new paper from the National Transitional Jobs Network and CLASP illustrates those strategies and makes recommendations based on their success.  This paper was supported by the Annie E. Casey Foundation and the University of California at Berkeley as part of their Big Ideas for Jobs series.  In addition to highlighting the opportunities to use block grant funding, from both TANF and Community Services Block Grant (CSBG), the paper identifies efforts to fund these jobs by averting future expenses associated with prisons and other corrections measures and by leveraging public contracting and bidding opportunities.

One example highlighted in the paper is the Chicago transitional jobs program for formerly incarcerated individuals. This began as a pilot project in 2004, as part of a package of Ex-Offender Reentry Initiatives.   Based on its success, it was expanded in 2006, and received funding through the city of Chicago's Corporate Fund, which originates from corporate taxes as well as income from leasing public assets such as toll roads and parking meters. The city later chose to expand the program with CSBG funds that became available through ARRA to support neighborhood cleanup using transitional jobs (TJ) work crews.  When ARRA funding expired, the city decided to continue funding the project through its regular (non-ARRA) CSBG block grant.

CLASP still believes that the federal government should provide dedicated funds to support subsidized employment and transitional jobs programs, such as the Pathways Back to Work Fund. However, even if such funding does not materialize, state and local governments should not abandon the possibility of operating subsidized employment and transitional jobs programs.  Such programs can be funded through a range of mechanisms and have both short- and long-term benefits to participants and society.  

 

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