January « 2011 « Policy Matters

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Regional Sector Initiatives: Meeting the Challenges of Regional Industries

January 31, 2011

Filed under: Income & Working Families,Self-Sufficiency — admin @ 1:05 PM

How do we ensure the skills of Mississippi workers meet the needs of Mississippi businesses?
What groups must collaborate to ensure the vitality of Mississippi’s regional industries?
How can these groups collaborate to move the region’s economy forward?

A framework called regional sector initiatives is being used across Mississippi and the nation to meet each of the challenges mentioned above.

The Basics of Regional Sector Initiatives
A regional sector initiative formally connects a region’s organizations and leaders involved in workforce development and training. Invested groups include workforce agencies, workers, employers, training providers, political leaders, and economic developers.

Through building partnerships regional sector initiatives create clear pathways for communicating the needs of an industry’s employers, workers, and training providers. Sector initiatives are able to come together to ensure that the skills of workers align with the skill demands of the region’s employers. Initiatives broaden the focus on training to pool needs of all the employers in a particular industry. Sector initiatives will typically focus resources on a few industries that exhibit growth opportunities. In Mississippi and other states, selected sectors cover a broad range of industries like healthcare, advanced manufacturing, aerospace, maritime transportation & forest products.

How are industries selected?
Often, regional sector initiatives choose to focus on a few industries that meet the criteria for job growth and quality wages. While criteria vary, some of the more common are:

The industry demonstrates current and future job openings and a demand for more skilled labor
The industry offers job opportunities that provide quality wages for employees
The industry offers opportunities for workers to move up career ladders and advance to higher earnings with additional training and postsecondary credentials

What are the goals of a regional sector initiative?
A regional sector initiative develops policies and partnerships to support all invested groups with the goal of streamlining education and workforce development efforts to meet an industry’s need for skilled labor. The end result is a better understanding of workplace needs and a training infrastructure that adapts quickly to train and advance low-skill workers into jobs with higher wages.

Author: Sarah Welker, Policy Analyst
Sources: Building Pathways to Credentials and Careers. Mississippi Economic Policy Center.
Employers, Low-Income Young Adults, and Postsecondary Credentials: A practical Typology for Business, Education, and Community Leaders. Workforce Strategy Center.

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Improving the Financial Health of Mississippians

January 28, 2011

Filed under: Budget & Tax,Events — admin @ 8:20 AM

According to research from the FDIC, over 40% of Mississippians are unbanked or underbanked. This research was presented at an event earlier this week held by the Federal Reserve Bank of Atlanta, the Mississippi Development Authority, and the University of Southern Mississippi to discuss ways to improve the financial health of Mississippians.

Unbanked and Underbanked Residents in Mississippi Compared to United States

Residents who are unbanked do not have a checking account and those considered underbanked have a checking or savings account but rely on alternative financial services. The unbanked and underbanked are more at risk of using alternative financial services that are “asset busters” like payday lending.

Participants discussed alternatives to payday lending. Participants also discussed ways that financial institutions can be more friendly to unbanked consumers including consumer education and providing products that compete with alternative financial services, but without the high cost to families and communities.

Author: Sara Miller, Senior Policy Analyst
Source: FDIC National Survey of Unbanked and Underbanked Households, December 2009

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FY 2012 Budget Recommendation to Account for Loss of Over $700 Million in Non-Recurring Funds

January 26, 2011

Filed under: Budget & Tax — admin @ 2:22 PM

With budget discussions for the next fiscal year well underway, there appears to be some agreement that the budget doomsday scenarios may not emerge. On January 13, the Legislative Budget Office provided an overview of the Joint Legislative Budget Recommendation for the upcoming year.

One of the issues raised included the need to develop a strategy to replace non-recurring funds from the current year. Most of the non-recurring funds used in FY 2011 were funds made available to the state through the American Recovery and Reinvestment Act. The following table illustrates the non-recurring line items targeted:

The budget recommendation addresses the loss of the non-recurring funds through savings generated from targeted budget reductions, tapping available cash balances (such as the Working Cash Stabilization Reserve and the Health Care Trust Funds) and anticipated revenue growth.

With a road map to address the loss of non-recurring funds established for this year, questions remain about future budgets. Will revenue growth reach the levels needed to cover future gaps? Will additional cuts be needed as reserve funds are depleted?

The looming budget questions will likely require a structural response that brings in additional revenue to provide a quality education for our children, a healthy workforce and infrastructure for business development.

Author: Ed Sivak, Director MEPC
Source: FY 2012 Legislative Budget Recommendation

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Community College Enrollment in Online Courses Rises Substantially this Decade

January 25, 2011

Filed under: Uncategorized — admin @ 2:09 PM

Over the last decade, increased internet access and a growing number of online course offerings have led to a rising number of students enrolling in online courses offered by community colleges and universities. Mississippi’s community college system has been no exception to this trend.

The combination of increased availability of online courses and more adults seeking additional training and education during the economic downturn has resulted in a substantial increase in online course enrollment through the MS Virtual Community College (MSVCC). In 2001, headcount enrollment in online courses was 4,781 students. By the fall of 2010, MSVCC’s headcount enrollment had grown to 28,427 students taking a total of 65,096 courses.

As enrollment in online classes has risen sharply this decade, the average number of classes students take online is rising as well. Average courses taken per student grew from 1.73 courses in Fall 2001 to 2.29 courses per student in Fall 2010.

Students enroll in online courses by registering at their local community college, and tuition for online courses matches the cost of taking courses on a community college campus. Courses varying from “Remedial English” to “Medical Terminology II” can be taken online, and students can complete assignments at any time of the day or night. Students complete all assignments online with the exception of at least one proctored test that students taken on their community college campus.

For Mississippi’s adults that are working, caring for children, or living in communities far away from the nearest community college campus, online courses may play a valuable role in helping adults gain skills and in receiving course credit building to a postsecondary certificate and degree.

Author: Sarah Welker, Policy Analyst

Source: “Facts about Mississippi Community and Junior Colleges”. Handout from January 20, 2011 at House of Representatives Appropriations Committee hearing for the State Board for Community and Junior Colleges. Mississippi Virtual Community College Online. http://www.msvcc.org/.

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Loan Splitting: How an Emergency Loan Can Become a Debt Trap

January 24, 2011

Filed under: Predatory Lending — admin @ 2:37 PM

On Friday, January 21, the Mississippi Senate enlarged a loophole in the original version of the House payday lending reauthorization legislation.

Despite efforts to increase consumer protections by implementing a 28 day repayment period on larger payday loans, the current bill’s payday lending provisions allow lenders to get around the 28 day repayment term through a process called loan splitting. The table below illustrates the proposed changes to payday loan repayment terms:

The “up to” language for smaller loans allows the loophole to exist:

While the fees paid on the two loans would drop slightly, the consumer protection provision of a 28-30 day repayment term is easily circumvented. While there has been some discussion of a regulatory ruling requiring that multiple loans taken out simultaneously be considered one loan, Mississippi lacks the infrastructure to enforce this ruling at the time the loans are made.

To enforce this law and to prevent borrowers from taking out multiple loans beyond legal limits, a statewide system, or database, is the single-most effective way to prevent emergency loans from turning into debt traps. Thirteen states already use a statewide system to enforce responsible lending.

Author: Ed Sivak, Director MEPC

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New Report Shows Depth and Breadth of Recession’s Affect on State Budgets

Filed under: Budget & Tax — admin @ 8:31 AM

A new report from the Center on Budget and Policy Priorities shows the continuing effects of the recent recession on state budgets across the nation. According to the report, 44 states are already projecting budget deficits for the next fiscal year. Projected budget shortfalls in those 44 states total $125 billion. Despite the nation’s fledgling economic recovery, for many states the FY 2012 budget year will be the toughest yet as most federal stimulus funds are ending in FY 2011.

According to the report, the recent recession has brought states the largest state budget shortfalls on records. The figure below shows the current state budget shortfalls compared to those stemming from the last recession.

Mississippi is not immune to the national trends and next year’s budget will likely leave many priority areas underfunded. A budget crisis of this breadth and depth requires more than a cuts only approach. Spending cuts reduce the quality of and access to state services and harm the state’s economy. The budget crisis stems from a revenue problem, not a spending problem. A balanced approach that includes raising revenue is required to allow the state to maintain its vital investments in public services and be ready when prosperity returns.

Author: Sara Miller, Senior Policy Analyst

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Across the South, Households Use A Larger Portion of Their Income for University Tuition

January 20, 2011

Filed under: Budget & Tax,Income & Working Families,Mississippi Economic Recovery Resources,Self-Sufficiency — admin @ 1:12 PM

Accessibility and affordability of higher education remain critical to ensuring residents of Mississippi, and the South, have opportunities for economic advancement. The portion of a median household’s income needed to cover tuition and fees at Mississippi’s universities increased from 8.1% to 12.6% from 2000-01 to 2008-09. Across the South, families and working adults are spending a larger portion of their income to cover the cost of pursuing higher education. Ample state funding of universities ensures that tuitions remain in reach for Mississippi’s families and adults returning to school to gain a degree and economic advancement.

University Tuition Rises as a Portion of Median Household Income

Increasing educational attainment opens doors for higher incomes, more stable employment and ultimately economic self-sufficiency. As Mississippi moves forward from the current recession, it will remain important that higher education remains within financial reach of the state’s residents. Adequate state support of higher education is important for keeping tuition affordable and providing universities with the resources they need to serve students. In the absence of adequate support, university tuition may continue to rise for Mississippi’s working families.

Author: Sarah Welker, Policy Analyst
Source: Southern Regional Education Board. Tuition and Fee Trends

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Missed Opportunity – Payday Lending Enforcement

January 19, 2011

Filed under: Predatory Lending — admin @ 9:00 AM

On January 18, the Mississippi House of Representatives voted down several amendments to a bill to reenact the Check Casher’s Act that would protect consumers. Among the issues voted down included provisions to lower the APR to 36% and extend the repayment term to 90 days. The House also voted down a provision to implement a statewide system to enforce the law before passing its updated version of the Check Casher’s Act.

Without a statewide system, or database, there is no way to track, in real time, whether or not a borrower has multiple loans or if a lender extends multiple loans. Thirteen states have implemented statewide systems effectively including the southern states of Alabama, Florida, Kentucky, South Carolina and Virginia.

In Florida, the loading of historical transactions prior to database implementation showed that 16 percent of customers were out of compliance – they had multiple loans outstanding.

In the states that have implemented a database, appropriations have not been needed. Lenders typically pay a fee of $0.50 – $1.00 per transaction which covers to costs of the system.

As the House bill moves to the Senate, a database represents an important tool to protect consumers, weed out bad actor lenders and enhance the efficiency of the regulatory infrastructure. In its absence, the limited provisions to extend the repayment terms of payday loans to 30 days will remain unable to be enforced at the time of extending or receiving a loan.

Author: Ed Sivak, Director MEPC
Source: Florida Department of Banking

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Understanding the Payday Loan Debt Trap

January 13, 2011

Filed under: Predatory Lending — admin @ 12:45 PM

Once a borrower takes out a payday loan, he or she could quickly find themselves in a situation where they need multiple payday loans to cover expenses. Table 1 illustrates how a family could find themselves caught in the debt trap. A family earning $35,000 a year receives approximately $1,344 every two weeks in take home pay. After taking out a payday loan and repaying it with fees for a total of $365, the family has only $979 left to cover $1,107 in expenses.

Still short, the family will either need to take out another payday loan or choose to skip paying certain bills. On average, borrowers take out 8 payday loans per year. A 36% rate cap in Mississippi with 90 days for repayment would allow working families to avoid the debt trap.

Author: Ed Sivak, Director MEPC

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Moving Backwards

January 6, 2011

Filed under: Budget & Tax — admin @ 10:51 AM

As the legislature reconvenes for another year, Mississippi is facing an environment of declining resources and increasing needs. Mississippi’s community and junior colleges, in particular, capture this challenge. The colleges’ full time enrollment increased from 58,592 students to 65,069 from 2008- 2009; however, funding per student dropped by 14% during the same time period.

Funding per FTE Student at Community and Junior Colleges*

Enrollment in the colleges has increased substantially as people continue to go back to school to gain the skills needed to compete for jobs and earn higher wages in the post recession economy. Long term, the community colleges represent one of the state’s most important tools for addressing the state’s long standing poverty. The decrease in funding per student means that community colleges have fewer resources per student to cover the cost of providing education in a time of rapidly growing enrollment.

Keeping the colleges accessible and in a position to offer high quality instruction is critical for moving the state forward and ensuring that they have adequate resources remains an important goal to work towards in the current and future Legislative Sessions.

Author: Ed Sivak, Director MEPC
Source: Southern Regional Education Board (www.sreb.org), January 2011

* FTE is defined as full-time enrollment and is calculated by adding all semester hours taken at community and junior colleges during an academic year and dividing by 30 (two – 15 hour semesters)

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