Why One City is Prioritizing Financial Empowerment

St. Paul, Minnesota, calls itself “the most livable city in America.” As a capital city with a bustling job market, lots of new green space, and a bevy of transit-improvement projects, St. Paul, along with neighboring Minneapolis, frequents top ten lists of the best cities in the country. 

But these benefits and amenities aren’t equally spread to all residents. The poverty rate for black, Hispanic, indigenous, and Asian residents is two to four times higher than it is for white residents. Unemployment in the black community is triple that in the white community. Along with the entire Twin Cities region, St. Paul is highly segregated. 

In his inaugural address in January 2018, Mayor Melvin Carter promised that making opportunities available to everyone in St. Paul would be a pillar of his administration. “In a city where a child’s life outcomes can still be better predicted by her race than by her work ethic, we need a new approach to city-building,” he said. “We must examine every law, every system, every policy and process to eliminate structural inequity and give every child born in St. Paul the opportunity to achieve her full potential.”

One of the main ways Carter is looking to follow through on that systematic review of inequality is through the creation of the state’s first Office of Financial Empowerment. “At the end of the month, we want folks to still have dollars in their pocket,” said Muneer Karcher-Ramos, who has served as the director of the office since its launch in March 2019. “This isn’t something we can policy our way out of. It takes the right combination of interventions.”

The OFE’s goal is to develop a city-wide strategy to boost the financial health of residents while tearing down common barriers that prevent the most vulnerable people from building wealth. That work has taken a variety of different forms, from individual interventions with certain groups of residents to broad, systemic changes in the city government.

Karcher-Ramos said that several of the OFE’s biggest efforts will launch in early 2020. In January, the city will begin a college savings account program that will reach every child born in the city. In February, the city will roll out a volunteer task force to help residents avoid city fees stemming from violations of “quality of life” codes, like those that get issued to neighbors with overgrown yards or people who don’t shovel the sidewalk outside their house when it snows.

Instead of fining people when a complaint comes in, the city will now alert a team of volunteers who can help take care of the issue, especially when an elderly resident or someone with disabilities can’t easily do the task. “It’s really about neighbors helping neighbors,” Karcher-Ramos said. 

One of the department’s central priorities is evaluating residents’ financial pain points, especially when people are dealing with fines or fees imposed by the city. Karcher-Ramos said the office staff is “broadly conceptualizing fines and fees” to also include necessities certain people might pay disproportionately more for, like water bills in houses that can’t afford a plumber to fix a leaking sink. For that particular case, the OFE is working on a program that will flag houses that have unusually high upticks in their water usage and dispatch a team of plumbers. 

The biggest challenge the OFE has faced in implementing these ideas has been the cross-departmental nature of the work, Karcher-Ramos said. So far, office employees have collaborated with the city attorney, the police department, the water department, the mayor’s office, and the city council, among others. “Everyone has their languages, and acronyms, and mental models for why they do what they do,” he said. “Our job is to get people off auto-pilot, and to make them rethink their idea of justice, their idea of safety, their idea of revenue. We’re centering the resident at all times.”

As mayor, Carter made the city’s first big move to wipe out residents’ public debt in January 2019, when he ordered the library system to be the first in the state to eliminate late fees. Speaking at the CityLab conference in October 2019, Carter said that the city had previously been spending $250,000 per year in staff time to collect on $215,000 in late fees. “The taxpayers turn on the lights in the library in the first place,” he said. “Late fees don’t make people bring a book back, they make them stay away.”

In addition to eliminating late fees, the city also forgave the debt of 51,000 patrons with suspended cards, usually for fees totalling $12 to $15. Since then, traffic to libraries in low-income neighborhoods has increased by almost 20%, and 65,000 books have been checked out by patrons whose cards were previously suspended. 

Carter said the city faced some resistance from those who questioned how children would learn personal responsibility without late fees. “They can read a book about it,” he replied. “The absolute worst case scenario in eliminating late fees is that kids have books.”

St. Paul’s move has since inspired other localities across the state to adopt similar policies, and has been replicated in much larger library systems, like those in Chicago and Boston.

Carter said more cities could take on similar initiatives if they dedicate themselves to a culture shift. “Replacing the money is the easy part,” he said. “The hardest part is shifting the psychology that we need to be punitive.”

Karcher-Ramos said achieving that culture shift in St. Paul has been easier due to the early success of the library program, which made other departments more willing to look at their own fines and fees. “That retired some concerns about lost revenue right away,” he said.

Karcher-Ramos also said that cities are starting to learn from each other about how to keep programs going without fines. “Some cities, like San Francisco, are way ahead of the curve,” he said. “So when you’re trying to reimagine city infrastructure to fit this idea of financial empowerment, it helps to have examples.”

St. Paul is part of organizations like the Minnesota Asset Building Coalition and Cities Addressing Fines and Fees Equitably, or CAFFE, a network run by the National League of Cities that challenges local governments to understand the landscape of local fines and fees that their residents struggle to pay. Heidi Goldberg and Denise Belser, who run the Economic Opportunity and Financial Empowerment project at the National League of Cities, said that St. Paul is an example for other cities. 

“Medium-size cities are a good place for this relatively new type of work because you can usually get high-level city leadership to buy in,” said Goldberg. “That’s really important to the success of financial empowerment projects. Otherwise it can be difficult to make change happen.” 

Belser said that the mayor’s involvement, and the creation of the Office of Financial Empowerment, have allowed the city to think long-term about systemic change. “They’re taking this time to think this through,” she said. “They’re making sure city staff is rallying around change. They really understand the goals of financial empowerment.”