Community Overview

The effects of the recent downturn in the economy and the events of September 11th on Austin and Travis County

A review of indicators since January shows little change over the past few months. The Travis County economy remains shaky. The unemployment rate has fluctuated but remains high. Increased demand for social services is evident, particularly in the area of basic needs. In addition, the Texas Legislature is grappling with a nearly $10 billion deficit for the next biennium. Resulting cuts could seriously impact the Austin area – further cutting resources for social services and possibly bringing about another round of layoffs, this time from state government. Implications of the War in Iraq on our local community are uncertain.

ECONOMY:

LOCAL

• Economic forecasts do not anticipate much improvement in the short term, but are more hopeful for the end of this year and into 2004:
  • After losing 4,500 jobs in 2002, forecasts are for 8,200 new jobs in 2003 and 17,100 in 2004 (Angelou Economics/TWC);
  • Retail sales grew only 2.1% in 2002, but are projected to increase 3.6% in 2003 and 4.9% in 2004 (Texas Comptroller of Public Accounts).
  • Venture capital investment in Central Texas companies jumped by 22% from the third to the fourth quarter of 2002. However, the number of deals fell, and investments in young companies declined. Also, less than 2% of the quarter’s investments went to software, compared with 53% and 41% in the previous two quarters.
• Bankruptcy filings for individuals and businesses climbed 11% last year in Austin, according to U.S. Bankruptcy Court figures. Total annual filings have climbed from 3,710 in 2000, to 4,730 in 2001, and 5,241 in 2002. Early indications are that the number could rise again in 2003. The 511 filings in January 2003 was a 46% increase over January 2002 (Austin Business Journal).
• The purchasing managers index declined to from 55.3 in December, to 52.9 in January, to 37.5 in February. A reading above 50 generally signals expansion, but it has to be sustained over several months (survey by the Austin chapter of the National Association of Purchasing Management) (Austin American-Statesman).
• In Central Texas, Commercial occupancy rates declined from 2002 to the present. Retail occupancy dropped very slightly (.5% to 95.3%), but both Industrial occupancy (down 4.8% to 84.6%) and office space occupancy (down 5.1% to 76.1%) dropped significantly. Only in multifamily units did occupancy rates increase – up 1% to 92% (Collier Oxford: NAI/CIP – Angelou Economics).
• New home construction maintained about the same pace in 2002 as in 2001, despite the sluggish economy. The year finished particularly strong – with 2,484 starts in the fourth quarter, a 72% increase from the same quarter in 2002. However, 2003 began with sales down 9% in January (compared to Jan 2002), and the median price down 7.3% to $143,690 (Austin American-Statesman).
  

STATE

• A new Toyota truck plant coming to San Antonio could be a $4.7 billion boon to the Texas economy. Toyota expects to pay base wages of about $40,000 per year – with overtime potentially boosting wages to above $60,000. According to the Center for Automotive research, the average auto job creates nearly $300,000 in total economic impact. For every job at the Toyota plant itself, another six to seven jobs will be created, from parts suppliers to retailers that will sell goods to the autoworkers. The local Chambers of Commerce are working to identify some of the companies that will supply Toyota and attract them to central Texas (Austin American-Statesman).
• State agencies have been asked to cut spending by 7% over the next seven months to help fill a $1.8 billion gap between planned state spending and projected revenue during the remainder of the 2003 fiscal year, and by as much as 12.5% for the next biennium (Austin American-Statesman).
• The state of Texas faces a total $9.9 billion shortfall from now through the end of the upcoming biennium if it passes a budget including current programs and obligations (Texas Comptroller of Public Accounts). The governor remains committed to not raise taxes – maintaining that essential services will be prioritized and maintained (Austin American-Statesman). Among the cuts possible to make up this deficit are:
  • Statewide CHIP enrollment cut in half, to a projected 250,000 in 2005; increased co-payments for remaining participants; re-application every six months, rather than annually, and reduction of the eligibility level from 200% of poverty ($36,800 for a family of four) to 150% ($27,600) (Austin American-Statesman).
  • Reduction of roughly $3 billion from the acute care portion of Medicaid – which helps more than 2 million Texans get access to hospitals, doctors, prescription drugs and other health services (Austin American-Statesman).
  • Cut Medicaid reimbursements by one third for doctors, hospitals and other providers (Austin American-Statesman).
  • Loss of more than $4 billion in federal matching money across Medicaid and CHIP (Austin American-Statesman).
  • A decrease of 240 Child Protective Services staff – increasing case loads, compromising investigations, and increasing the likelihood that more children will be permanently removed from their homes (Center for Public Policy Priorities).
  • Cutting foster care and adoption subsidies by 25% - likely meaning fewer foster parents, fewer treatment centers (Center for Public Policy Priorities).
  • Cutting Temporary Assistance to Needy Families (cash and food assistance for low income Texans) by 17%, eliminating 60,560 from the rolls statewide (Austin American-Statesman).
  • Staff layoffs across many state agencies. The first round is already being felt locally. WorkSource has provided Rapid Response Services to the State Board of Insurance, Economic Development Department, and Public Utility Commission (employers are eligible for these services if they document layoffs of more than 50 employees). (WorkSource News)
    

NATIONAL

• After a strong January, the number of US jobs dropped 308,000 in February. The US economy created new jobs in January at the fastest rate in more than two years while the unemployment rate dropped to a four-month low of 5.7%. February followed with the single largest one-month loss since November 2001 and unemployment edged back up to 5.8%. Severe winter weather and the call-up on military reservists and National Guard members contributed to the poor month (Austin American-Statesman, Reuters).
• War fears, consumer uncertainty and volatile energy prices sent the Index of Leading Economic Indicators down .4% in February, the first drop in five months. Also this month, Consumer Confidence - an indicator of consumer spending – dropped to its lowest level in almost 10 years (Reuters).
• The latest National Associaltion for Business Economics quarterly outlook forecast steady economic growth in 2003. The panel of 37 economists responsible for this forecast project that the gross domestic product will expand 2.7%. In part because of war worries, this estimate is down from 2.8% in November (Associated Press).
  

EMPLOYMENT:

• The Travis County unemployment rate dropped to 5.0% in December (from 5.4% in November), but jumped back to 5.8% in January. This seasonal variation closely mirrors the same months a year ago. At 5.8%, unemployment in Travis County remains well below the state (6.8%). It is worth noting that there were actually more people employed in January 2003 (480,832) with a 5.8% unemployment rate than there were in January 2001 (475,232) when unemployment was 2.2%. February unemployment data is expected March 28 (Texas Workforce Commission).
  
  
  
• In January 2003, 11 companies laid off 1,026 people in the greater Austin area. The largest one month total since May 2002, raising the total number of layoffs to 26,599 since January 2001. These figures only include layoffs reported to the Texas Workforce Commission (WorkSource).

This year’s layoffs already include: 67 at Cirrus Logic (announced 1-15-03) 85 at Holt Reinhart (announced 1-27-03), 165 at Applied Materials (announced 1-29-03), and 350 at Advanced Micro Devices (announced 2-21-03) (Austin Business Journal). In addition, another 85 jobs will be lost when the last Kmart store in Austin closes sometime this year (Austin American Statesman).

• In February, WorkSource Career Centers received 15,072 visits for an average of 837 per day, up from a daily average of 826 visits per day in January. In all of 2002 there were 187,253 customer visits to the centers, a 26% increase over 2001. (WorkSource).

COST OF LIVING:

• Median family income in Travis County has increased from $42,200 in 1994 to $71,100 by 2002, a 68.5% increase.
• Revised federal guidelines set the Poverty Income Guideline at $18,400/year for a family of four, an increase of $300 (1.7%) over the 2002 level, and a 10% increase over the past five years (Federal Register).
  

DEMAND INDICATORS:

Housing, Homelessness, Basic Needs:

• First Call for Help/2-1-1 Texas compared 2002 with 2001. They report a 44% increase in households needing rent assistance, 115% increase in families requesting mortgage assistance, a 57% increase in people needing food, and a 36% increase in those needing transportation assistance. The top three types of calls received were for utility bill assistance (4,617 calls), rent assistance (3,709 calls), and food (3,231 calls) (United Way’s First Call for Help/2-1-1 Texas).
• Comparing 2001 to 2002, Travis County Health and Human Services experienced increases in the number of households receiving most types of county funded assistance: Prescriptions +74%, Rent +41%, Food +33%, Burial +13%, Utility –12%, Transportation –75%. This reflects only Travis County funded assistance, not grant funds that primarily fund utility assistance. (Travis County HHS&VS).
• January 2003 foreclosure sales in Travis County are up 68% in comparison to January of 2002. Fourth-quarter foreclosure postings were up 50% from the previous year. Williamson County’s January foreclosures are up 133% (Austin American-Statesman).
• In 2002, the Capital Area Food Bank distributed 15.5 million pounds of food to 360 non-profit organizations in 21 Central Texas Counties. Requests for more than 17 million pounds are expected this year. (Austin American-Statesman).
• In the Fiscal Year ending September 2002, the Salvation Army served 255,000 meals at its downtown shelter; a 32% jump from the 193,000 served in 2001 (Austin American-Statesman)

Physical and Mental Health:

• In February 2003, there were 57,605 Medicaid enrollees of all ages in Travis County, 37,963 of them age 18 or younger. This represented an increase of 246 in total enrollment, and an increase of 341 in enrollees 18 or younger (Texas Health and Human Services Commission). The Center For Public Policy Priorities estimates that more than 10,000 Travis County residents will lose benefits if the worst case (12.5% cut) budget scenario becomes reality.
• As of February 1st, there were 12,280 Travis County children enrolled in the Children’s Health Insurance Program (CHIP), down slightly from 12,384 on January 1 (Insure-a-Kid News).
• Based on a report compiled by the Centers for Disease Control, Austin ranked among the nation’s Top 10 “Sex-Savviest” Cities. The 10 were picked for recording the greatest decreases in sexually transmitted diseases from 1997 to 2001 (Austin American-Statesman).
• In 2001 and 2002 nationwide, about 75 million people under age 65 went without health insurance for at least one month. More than 70% were in working families, and more than 50% were between the ages of 24 and 44. The same study found 40% of Texans under age 65 were uninsured, the highest rate in the nation (Austin American-Statesman).
• National spending on health care is increasing at the fastest rate in a decade, reflecting greater use of hospitals and prescription drugs and the declining influence of managed care. In 2001, health spending rose 8.7%, to $1.4 trillion, and accounted for 14.1% of the total economy, the largest share on record (New York Times).
• Reductions in government expenditures on health care shift higher costs to private employers and individual consumers. The US Chamber of Commerce estimates that “When the government programs pay 65 or 80 cents for a dollar of hospital care, employers end up paying $1.15 or $1.25 for that care” (Austin American-Statesman).
  

Education:

• Policy changes under consideration at the state level may have significant impacts on child care for low-income families in Travis County. In particular, TWC is discussing a new requirement that low-income parents and the parents of disabled children work at least 36 hours per week to be eligible for a child care subsidy. Also under discussion is a new lifetime 12-month limit on transitional child care for working parents leaving welfare (United Way or Texas).
• Reductions in state funding (7% or $3.2 million this year, even more, including $4.3 million in insurance costs in the next biennium) are forcing Austin Community College to choose among program and staff cuts, tuition increases or raising taxes to balance the budget. If the proposed state cuts are approved by the legislature, ACC could face a multimillion-dollar shortfall even if voters approve a 5-cent property tax increase (Austin American-Statesman).
• In the face of a state budget deficit of nearly $10 billion, momentum is rapidly growing among lawmakers to give state universities the freedom to set their own tuition, a change that could put a greater burden on students instead of other taxpayers (Austin American-Statesman).
• Early estimates were that one in six Texas third-graders is projected to fail the first attempt at the state’s new reading test in March, however, early results indicate that Texas students are doing better than expected. Fail it three times, and a student probably won’t be promoted to the fourth grade (Austin American-Statesman).
• The House Public Education Committee quickly voted to abolish the “Robin Hood”/Chapter 41 school funding system. However, while 116 of 1,033 school districts (including many in Central Texas) are considered property rich and are required to send local money to the state, 887 districts receive part of the $2.5 billion allocated through the system, making quick resolution unlikely. Proposed legislation currently under debate will give the state until 2005 to enact a new school funding system. A related proposal will provide an additional $1.2 billion for public school statewide. (Austin American-Statesman)
  

Public Safety:

• Austin experienced fewer homicides in 2002 than in any year since 1976. Twenty-five people were killed in Austin in 2002 – an 11% decrease from 2001. Eight of the 2002 homicides were domestic violence cases, one more than in 2001. Austin also experienced a slight drop in the total number of traffic fatalities – from 76 in 2001 to 71 in 2002. Intoxication (up 16%) and excessive speed (+7) caused an increased portion of these fatalities (Austin American-Statesman).
• The Travis County justice system has experienced the following changes since 1999 (Travis County Justice and Public Safety):
  • New felony cases in criminal district courts up 31% from 6,140 to 8,061;
  • New misdemeanor cases in criminal courts at law down 9% from 27,858 to 25,230;
  • Total bookings down 7% from 57,534 to 53,231.
• The rate of index crimes in Texas climbed 4% in 2001, and another 1.3% in the first six months in 2002. Rates of violent crime rose even faster, up 5.1% in 2001 and 2.2% in the first six months in 2002 (Community Justice Council).
• The Texas Criminal Justice Policy Council projects that state prison capacity will be exhausted as soon as April 2003. Among the options being considered to address this potential crisis are: building more prisons, paroling more prisoners, sending inmates to county jails again, spending more on treatment, or privatizing (Austin American-Statesman).
  

Population Projections:

• Hispanics have edged past African-Americans as the nation’s largest minority group. The Hispanic population in the U.S. is now roughly 37 million, while African-Americans number about 36.2 million. More than 50% of the Hispanic population remains concentrated in Texas, California and New York (New York Times).
• The City of Austin demographer thinks that area population growth “has approached zero”. Slower population growth will have implication for both revenue and demand for public services of all types (Austin American-Statesman).
  

RESOURCES

RESOURCE ISSUES IN THE COMMUNITY:

• Initial cuts at Austin Travis County MHMR have cost $287,674 and resulted in:
  • Elimination of in-home family support assistance for 37 clients;
  • Reduced flexible funding to provide support services;
  • Elimination of 8 positions, including four direct services;
  • Loss of six beds from MHMR dual diagnosis, substance abuse treatment program, formerly funded by the Texas Department of Criminal Justice.
• Projected cuts to MHMR for the next fiscal year (up to 12.5% = $138 million) will require numerous cuts, including (ATC MHMR Center):
  • Closure of one state hospital, costing 250 beds and 13,000 fewer opportunities to provide acute Mental Health care for Texans;
  • All medicaid funding would be cut for adults with severe and persistent mental illness – 45,338 statewide, 1,913 in Travis County;
  • Reduce or eliminate community services for adults with severe mental illness – 10,000 state wide, 357 in Travis County;
  • Reduce or eliminate community services for children – 2390 statewide, 84 in Travis County;
  • Cut in home mental health services for people with mental retardation – 3,697 statewide, 152 in Travis County.
• Due to continued high need in Travis and Williamson counties, the Federal Emergency Management Agency (FEMA) has increased funding for emergency food and shelter by 74% for the coming year, from $373,431 to $651,695 (Catholic Charities of Central Texas).
• Due to declining revenue and rising contribution to the state under Chapter 41/Robin Hood, many area districts are contemplating substantial budget cuts and new revenue options (Austin American-Statesman).
  • Due to lower than expected property values, Austin ISD now projects a deficit of $51 million for 2003-04, down from an early estimate of $58.9 million. However, This budget deficit may still lead to cuts of several hundred full-time and part-time teachers and teaching assistants, bigger classes, and fewer fine arets and physical education teachers. Additional cuts in central office personnel and support staff could bring total cuts to more than 600 positions. The superintendent’s final plan will not be presented until mid March.
  • Round Rock ISD is contemplating $11 million in budget cuts and revenue options, including changing from 8 periods per day to 7 slightly longer periods – reducing the number of teachers needed, saving about $4.6 million.
  • Eanes ISD is facing a $7.9 million shortfall,
• Since late December, the Salvation Army received more than $110,000 in donations – more than offsetting a red kettle campaign that had raised $80,000 less than expected (Austin American-Statesman).
• Proposed changes in federal policy will significantly alter public assistance to poorer residents:
  • The US House of Representatives passed TANF reauthorization that would impose stricter work requirements. Where recipients are currently required to participate in “supervised activities” for 30 hours/week, including 24 hours actual work, the house bill would raise the requirement to 40 and 30 respectively (NY Times);
  • The executive branch proposes to change federal law for federally subsidized housing so that the minimum rent for tenants, which is currently “not more than $50”, will become “at least $50”. In addition, federal subsidies for operations at local housing authorities could be cut by up to 30% in the first quarter of this year due to a $250 million shortfall that resulted form government accounting errors and miscalculations (NY Times);
  • Bush administration proposals to reform Medicare and Medicaid will give states far more power to determine who receives what benefits in Medicaid, and the elderly would rely more on private health plans for their health benefits (NY Times).
    

WHAT CAN YOU DO TO HELP

• ? Choose a local social services agency to support financially.
• ? Give to the United Way Capital Area’s Community Fund or the Austin Community Foundation’s Urgent Issues Fund.
• ? Contact the United Way Capital Area’s Volunteer Center at 512-323-1898 or search for volunteer opportunities on United Way Capital Area’s website at www.uway-austin.org.
• ? Also see the 2001 CAN Urgent Issues Action Plan at caction.org for additional information about community-wide approaches to addressing these issues in our community.

ACKNOWLEDGEMENTS

The Community Overview was researched and written by the Research & Planning Division of Travis County Health and Human Services & Veterans Services, with assistance from numerous individuals in the community. We attempted to include all those who had a part in this undertaking, but if we have inadvertently omitted anyone, we apologize and ask that you inform us so that we may recognize you appropriately as the process continues.

TRAVIS COUNTY HHS & VS RESEARCH AND PLANNING DIVISION:

Blanca Leahy, Director
Joy Stollings, Jennifer Sabolcik, Ellen Richards, Judy Cortez, Charlotte Brooks, Lawrence Lyman, & Christine McCormick

CONTRIBUTORS:

Marco Galvan – United Way’s First Call For Help/ 211 Texas
Fred Butler, Sam Woollard – Community Action Network
Sister Mary Lou Stubbs – Catholic Charities of Central Texas
Mildred Virus, Beverly Scarborough – Austin Travis County MHMR

COMMUNITY ACTION NETWORK PARTNERS: