The city of St. Paul is expanding its guaranteed basic income experiment, giving monthly checks to more families while also making deposits into some of their children’s college savings accounts.
With the city council’s support, Mayor Melvin Carter launched the People’s Prosperity Guaranteed Income Pilot in November 2020, spending $300,000 in federal coronavirus relief grants and $1.2 million from donors.
That provided $500 a month for 18 months to 150 low-income families with no strings attached.
Carter announced Wednesday that the next phase, which he’s calling CollegeBound Boost, will send money to two groups:
— 333 families will get $1,000 added to each of their children’s College Bound St. Paul savings accounts.
— 333 additional families will get the same $1,000 for college, plus two full years of monthly $500 checks.
The city will compare the outcomes for those families against a third “control” group of 333 families enrolled in College Bound St. Paul without the boost or monthly checks.
The city created the college savings program two and a half years ago in hopes of growing the share of city residents who go on to college while also improving young families’ financial and general wellbeing.
Since 2020, every child who either is born in St. Paul or moves to the city before age 6 has been eligible to receive $50, plus occasional bonuses, in a college savings account earning modest interest. However, a state law that restricts information sharing on the children of unmarried mothers has made it difficult for the city to enroll many of its newborns.
To become eligible for monthly checks from the basic income program, a family must be enrolled in College Bound St. Paul and have an income of no more than three times the federal poverty limit. The 666 recipient families will be chosen at random from that group, and the initial 150 families that received checks will not be excluded.
Pending approval from the City Council next month, the expanded program will start around the end of August and will be funded with $4 million in coronavirus relief grants plus $1 million from philanthropists, the city said.
The mayor said early evidence from a similar guaranteed-income project in Stockton, Calif. found that offering cash assistance without limiting what the money could be spent on helped some recipients take time off from a part-time job to interview for a full-time job, or buy a suit for a job interview, or purchase medicine.
The mayor, addressing conference-goers at the St. Paul RiverCentre on Wednesday, recalled how his family received public food support, or WIC, when his 16-year-old daughter was born, but the requirements limited purchases to milk, eggs, peanuts and other foods she was allergic to.
“That’s not the way families work,” said Carter, during the Midwest Asset Building Conference, which was focused on racial wealth gaps. “Particularly during the pandemic, one family might need food support and one family might need childcare support. … I would be so angry, so offended every time we walked through the grocery store.”
The program will be evaluated by University of Michigan professor William Elliott, a prominent researcher of children’s college savings accounts who has worked with the city since the 2020 launch of College Bound St. Paul.
“Guaranteed income helps parents make it through a month. But savings for the future — through savings deposits from the city — gives families tangible hope for their kids’ future,” Elliott said in a statement released by the city. “Both sides of the equation are crucial, and families will benefit immensely.”
Carter expects the study of St. Paul’s initiative will demonstrate that negative tropes about poor people are untrue.
“If we understand that people aren’t poor because they lack character, they’re poor because they lack money, then all the things that we correlate with poverty suddenly aren’t acts of God anymore,” Carter said, while announcing the expansion Wednesday.
“They’re this fungible thing that we can impact just by making sure that people can get to the end of the month.”
An evaluation of the impact the monthly checks had on the first 150 recipients is not yet complete, but Carter said the country’s first basic-income program in Stockton produced “significant” gains in employment.