Feb 22, 2022 - News

St. Paul mayor proposes expanded guaranteed basic income program

Illustration of a tiny woman looking up a giant dollar staircase

Illustration: Sarah Grillo/Axios

St. Paul Mayor Melvin Carter is looking to launch a second, expanded phase of the city's guaranteed basic income pilot program that would include expecting parents, Axios has learned.

Driving the news: The new proposal, set to be announced during the mayor's 10:30am State of the City address Tuesday, calls for using $4 million in federal COVID relief dollars to send 300 families monthly payments for two years.

The big picture: A growing number of cities across the nation, including Minneapolis, are experimenting with unconditional cash payments as a way to address poverty and income inequality.

  • St. Paul's pilot, launched in November 2020, sent 150 families $500 for 18 months.

Driving the expansion: While the current pilot is focused on low-income families of small children — it was open to those participating in the city's college savings program for newborns — Carter hopes to make round two open to expecting parents as well.

  • "Why wait until after the baby is born when you know families have these needs in the prenatal period as well?" he said. "Our goal is to impact families even before a child is born."

Plus: A recent Columbia University study exploring cash payments and babies' brain development "deepened the city's interest in supporting parents to be," Muneer Karcher-Ramos, director of St. Paul's Office of Financial Empowerment, added.

By the numbers: The city's current pilot, which is now winding down, had distributed more than $1.26 million to enrolled families as of January, according to a Feb 3. presentation obtained by Axios via a records request.

  • Initial analysis shows that about 28% of the funds, which were deposited into designated cash cards, went to food. Another 28% went to "services" and 24% to "sales and merchandise."

Between the lines: Karcher-Ramos said the bulk of those transactions were "Target runs and Walmart runs... things you need for for the household."

  • Participants also reported using the funds for expenses like "winter clothes for our baby boy," a coding program to gain skills to get a new job and Christmas presents for children who thought there would be nothing under the tree, according to testimonials.

What they're saying: City officials have also seen signs that St. Paul's program had a positive impact on job prospects for enrolled families, a finding similar to another pilot in Stockton, California, Carter said.

  • "Just having a little bit more money left at the end of the month, [or] to make it to the end of the month, gives families the cushion that they need to take a risk and maximize their economic potential," he said.

What's next: The vast majority of families enrolled in the pilot received their last cash stipend this month.

  • Once the final payments are sent, researchers with the University of Pennsylvania will do a deep dive on the data and conduct follow-up surveys to gauge the program's impact.

What to watch: Carter's proposed GBI reboot, which would be funded with remaining American Rescue Plan Act dollars, would need input and sign off from the City Council.

  • Expect debate over the best way to use that money.
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