Community Overview

May, 2004

The effects of the downturn in the economy on Austin and Travis County

Local economic indicators over the past two months appear to be holding steady. Incremental economic growth is accompanied by a gradual downward trend in unemployment. The unemployment rate for Travis County declined from January to March, and remained below the rate for March of last year. Demand for most social services, including basic needs and medical assistance continues to rise. Legislative cuts to CHIP and mental health funding are causing increases in demand for local services and programs.

EMPLOYMENT:

LOCAL

• The unemployment rate for Travis County dropped from 5.4% in January to 4.8% in March. March’s rate of 4.8% is significantly lower than 6.1% in March of 2003 ( Texas Workforce Commission) .
• The Texas Workforce Commission released a report in early March showing that for 2003 Central Texas lost jobs at about the same rate jobs were added (Austin American- Statesman).
• As of March 31, 1265 people have been laid off in the Greater Austin Area in 2004 . Of the layoffs in 2004, 61 percent or 768 of the individuals laid off were employed by call centers (WorkSource).
• Although the Austin unemployment rate has improved, many local business continue to lay off employees:
• • Austin call centers eliminated 768 local positions so far this year, representing 61% of Austin’s 1265 total lay offs for 2004 (WorkSource).
  • Forgent Networks Inc. cut 45 of 109 total Austin jobs in February.
  • Zimmer Holdings Inc. will cut 48 jobs at its Austin manufacturing plant in June.
  • In late April the Seton Healthcare Network announced a budget shortage and plans to cut 275 local jobs.

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STATE

• According to a recent report by the Center for Public Policy Priorities, jobs in Texas are not rebounding quickly enough to keep pace with the growing working age population. In addition, jobs being created are in industries with wages 35% lower than industries that have lost jobs (CPPP, “Workforce Development: The key to creating opportunity and building prosperity in Texas ”)

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NATIONAL

• The U.S. Department of Labor reported that 83,000 jobs were added in February and 337,000 in March. Back-to-back monthly gains in March and April were the strongest in four years. (Reuters)

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ECONOMY:

LOCAL

• Sales tax receipts for the City of Austin were just over $8 million in April , a 6.7% percent increase from April of 2003 ( Travis County Auditor’s Office, Economic Outlook).
• The rise in local sales tax marked a fourth straight month of growth after two-years of flat or negative returns ( Austin American-Statesman).
• TheNational Association of Purchasing Management’s Austin Branch showed growth in the Austin economy with a 4.9 point economic index increase. The index, which tracks Austin area business activity, was at 73.9 points in April (numbers greater than 50 indicate growth). The index was at 43.2 points in June of 2003 (Austin American-Statesman).
• Austin ’s venture capitol investments rose 40% compared to the first quarter of 2003. Nineteen companies raised $115.8 million in the first quarter of 2004 (Austin American-Statesman).
• In February, the Austin Bergstrom International Airport saw a 7.7% rise in travel in comparison to February of 2003. This was the first passenger increase in February since 2000 (Austin American-Statesman).
• A number of local businesses continue to show signs of economic recovery, while some continue to struggle :
• • Motorola’s Austin-based semiconductor unit made $1.4 billion in sales – up 21% from the first quarter of 2003.
  • Dell showed $11.4 billion in first quarter revenue - $200 million more than the company had originally forecast.
  • After losing $10.5 million in 2002, Motive Inc. showed a sharp recovery in 2003, with $92.3 million in revenue.
  • In March, Lombardi Software Inc. secured $10 million in venture capitol.
  • Forgent Networks Inc. showed an $11.8 million net revenue loss in its last fiscal quarter.
  • Sclotzsky’s Inc. reported a loss of $11.7 million on $56.2 million in revenue for 2003 (Austin American-Statesman).
• The Austin City Council plans to cut spending by $19 million in 2004-05 , after cutting $70 million over the past two years (Austin American-Statesman).

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STATE

• State sales tax revenue was up in March by 14% compared to last year. The state collected $1.18 billion in March, compared to $1.01 billion in March of 2003. Year-to-year comparisons show between five and 9% increases in recent months. ( Texas Comptroller of Public Accounts).
• The State Comptroller’s office sent $295 million to Texas cities, counties, and special purpose taxing districts in April , an 11.4% increase from 2003 ( Texas Comptroller of Public Accounts).
• The Federal Reserves latest “beige book” indicates that the Texas economy is growing, but rising costs of production are beginning to impact consumers . Restaurant prices are up 1 to 2% statewide; law firms have raised fees 5 to 10%; and trucking firms report that they will soon pass higher fuel costs on to customers (Austin American-Statesman).

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NATIONAL

• The nation’s economy grew at a 4.2% annual rate in the first quarter of 2004 . This is a lower growth rate than predicted, but strong enough to indicate recovery (Austin American-Statesman).
• Wages are falling behind the nation’s inflation rate . The national mortgage rate has risen to 5.89%. Gas, hotel and beef costs are also rising sharply (Austin American-Statesman).
• The economy produced a net gain of 126,000 jobs from January to March of this year , which islower than expected. Economists say 150,000 per month indicates healthy growth (Austin American-Statesman).
• Nationally, women-owned businesses are growing at double the rate of small businesses, and spend $550 billion annually on payroll and benefits. Women owned businesses have $2.46 trillion in sales and employ over 19 million people nationwide (Austin American-Statesman).

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DEMAND INDICATORS:

Basic Needs:

• The local 2-1-1Texas call center reported an overall increase in the community’s demand for basic need services in the 3 rd quarter (January to March 2004):
• • There was a 30% increase in need for rent payment assistance.
  • Callers requesting assistance with other basic needs rose 23% ( 2-1-1 Texas ).
• Since its opening March 10, the Eastside Community Connection food pantry has served more than 774 families – 50-60 families per week. The food pantry serves residents in the 78702,78721, 78722, and 78723 zip codes (Eastside Community Connection).
• Mainspring School maintains a waiting list with about 400 families in need of subsidized childcare. The agency takes 20 to 30 new waiting list calls per week ( Mainspring School ).

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Housing:

• The 2-1-1Texas call center reported an overall increase in the community’s housing needs:
• • Callers requesting emergency shelter assistance rose 46%.
  • There was a 60% increase in households seeking affordable or subsidized housing ( 2-1-1 Texas , Community Needs and Trends Report)
• In March, previously owned home sales in Central Texas increased 14.5% from March of 2003 (Austin American-Statesman).
• TravisCounty home appraisals have remained stable for 2004. However, County property taxes rose in comparison to 2003, and are predicted to rise again in 2004 (Austin American-Statesman).
• National 30-year mortgage rates rose from 3.7% in March to 5.89% in late April (Austin American-Statesman).
• TravisCounty foreclosures were at a 13-year high in April. Travis County listed 408 foreclosures. Williamson County listed 284 – a record high (Austin American-Statesman).
• A recent report by the Urban Institute reported that in 2001, the largest share (37%, or 490) of released state prisoners returning to TravisCounty went to a halfway house for parolees and probationers. In 2003 the halfway house served approximately 650 individuals (The Urban Institute).

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Physical and Mental Health:

Medicaid enrollment in Travis County has increased to 67,404 people in March of this year - up from 62,997 people in January. CHIP enrollment has steadily declined - from 12,130 children in October of 2003 to 8,671 children in March 2004. Due to legislative changes in Medicaid rules, MHMR has reduced the availability of counseling from over 460 counseling hours each month to 180. In addition, the Adult Mental Health Division (serving persons over the age of 18 who are part of a crisis population) is currently serving 180% of the target number required by state funding sources, or 2,388 served over the target number of 5,381. The Center's Child and Family Services Department reports 40 children and families are waiting for services (MHMR).

• In September of 2003, legislative spending cuts went into effect. Since then 500,000 Texas children have lost medical coverage through cuts to the Children’s Health Insurance Program (K-EYE Austin News).
• Children’s mental health service providers are facing an increasing resource shortage. In November of 2003 Austin Child Guidance Center had a waiting list of 3. As of late April 2004, the ACGC waiting list has grown to 26 children who have been diagnosed with a mental disorder, but are having to wait for a therapist to become available to begin treatment (ACGC).
• According to a Texas Department of Insurance report, 33 Texas HMOs had a combined profit of $166.6 million, marking the first year of profit for HMOs since 1996 (Austin American-Statesman).
• Children’s Hospital of Austin provided $14 million in charity services to patients outside of Travis County , but the State County Indigent Program paid for only $350,000. The Children’s Hospital currently serves 46 counties, and its trauma center serves 11 (Austin American-Statesman).
• Annually, city-run health clinics currently treat about 50,000 people with incomes at or below the federal poverty guideline. Due to city budget cuts, the clinics no longer have the capacity to take outside referrals for pregnant women needing prenatal care (Austin American-Statesman).
• A newly released report shows an overall teen pregnancy rate in Travis County of 27.1 per 1000 girls 13 to 17 years old (Texas Department of Health Bureau of Vital Statistics). The rate for the state is 54 per 1000 girls (Texas Department of Health).
• Based on current trends, obesity will surpass smoking as the leading cause of death in the United States by 2005 (Austin American-Statesman).
• A recently released report indicates that Travis County had a higher suicide rate between 1999 and 2002 (11.9 per 100,000, than the overall rate for the rest of Texas (10.7) ( Texas Suicide Prevention Community Network)

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Education and Workforce Development

WorkSource Career Centers had an average of 864 visits per day in March of this year. As of March 31, there have been 55,490 customer visits to the Career Centers – a 12% increase from the first quarter of 2003 (WorkSource). Third grade reading scores climbed from an 89% pass rate last year, to a 91% pass ratethis year despite tougher standards. Students who speak limited English made the broadest gains, improving to an 82% pass rate from 70% in 2003. Black students also made gains, improving to 86% passing in comparison to 77% last year (Austin American-Statesman).

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Public Safety:

• Recent numbers from the Texas Department of Public Safety show that major crime in Texas is down:
• • Overall crime is down 1% from 2003.
  • Violent crime is down nearly 5% from 2002.
  • Property crime is down 0.5% (K-EYE News Austin ).
• Child deaths rose from 132 in 2002 to 140 in 2003. 79% died of natural causes. Five were homicides – two more than in 2002. Four of the five homicides were a result of child abuse (Austin American-Statesman).
• Austin and Georgetown police recently reported that with few exceptions, minorities throughout Central Texas were more likely to be stopped and searched by law enforcement in 2003 than whites. The departments reported that searches of blacks and Hispanics were at rates two to three times higher than that of whites (Austin American-Statesman).
• APD also reported that when using force in any situation other than resisting arrest, Austin officers were more likely to show restraint when handling white subjects than when handling minority subjects in similar situations. Blacks were 21% more likely than whites to be met with more force than department training would typically recommend. Hispanics were 16% more likely than whites to be met with higher levels of force (Austin American-Statesman).

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Demographic Changes:

• Tarrant, Harris, Bexar and Dallas Counties were among the 38 fastest growing counties in the U.S. between 2002 and 2003 ( U.S. Census Bureau).
• The state of Texas has the fastest growing young population. Between 2000 and 2003, Texas added 350,000 more residents under 18 than any other state ( Houston Chronicle).
• The city of Manor is rapidly growing. The city issues 30 to 40 new building permits per month. City official anticipate that new development will include 4,000 new homes and 2,000 new residents (News 8 Austin).
• The Census Bureau predicts that by 2050 the U.S. population will increase by close to 50% to 420 million, and the Hispanic and Asian populations will nearly triple (Austin American-Statesman).

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RESOURCES:

• In April, the Austin Resource Center for the Homeless (ARCH) opened the doors to a 26,280 square foot facility to meet the needs of Austin ’s homeless population. The city of Austin invested $625,000 city dollars and more than $7.4 million federal dollars into the construction of the center. The facility has a day resource center, health clinic, 100-bed shelter for men, and the capacity to shelter up to 250 men in extreme weather (ARCH).
• Prevent Blindness Texas, the Salvation Army, and a city-run homeless health clinic provided 81 of Austin’s homeless with prescription glasses in late March (Austin American-Statesman).
• The City of Austin has been awarded afederal grant in the amount of $650,000 to provide homeless health care services, and bring the homeless health care budget total to $710,000. The grant will increase the number of homeless who can get care from 1,200 to 5,500 patients per year (City of Austin ).
• The Caring Family Network, a child-placing agency for abused and neglected children, lost $600,000 in state funding in 2004 . The organization has a $5.5 million annual budget. This year, for the first time since its inception in 1992, the agency must raise funds or face cutting services (Austin American-Statesman)
• In April, eight immigrant workers recovered $10,000 in unpaid wages, with the help of the Central Texas Immigrant Worker Rights Center . The center has recovered close to $100,000 for 115 workers so far this year (Austin American-Statesman).
• Professional Liability insurance premiums are on the rise for non-profits. As a result of a rise in national child molestation charges, nonprofits are increasing volunteer background and driving record checks (Austin American-Statesman).
• The Foundation Center reported a decline in foundation giving for the third year in a row:
  • National grantfoundation giving decreased 2.5% from over $30 billion in 2003 to $29.7 billion in 2004.
  • Independent foundation giving decreased 3.3% from $23.3 billion in 2003 to $22.5 billion.
  • Corporate foundation giving saw a decline (of 2%) for the first time since 1987.
  However, community foundation giving increased 1.5% - although 2004 represents the slowest year in giving growth since 1994 ( Foundation Center News Flash).

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WHAT CAN YOU DO TO HELP?

• Choose a local social services agency to support financially.
• Copy and distribute this document in order to increase public awareness.
• Support the local economy by shopping at local businesses.
• 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 http://www.unitedwaycapitalarea.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

Brook Son, Lead Writer

Charlotte Brooks, Korey Darling, Lawrence Lyman, Meg Poag, Ellen Richards, & Joy Stollings

CONTRIBUTORS:

Fred Butler, Sam Woollard,– Community Action Network
Deedy Atkins – Mainspring School
Graham Davis – East Austin Community Connection
Marco Galvan – 2-1-1 Texas
John Gilvar – City of Austin
Leanne James – Work Source
Mildred Virus – MHMR
Merily H. Keller – Texas Suicide Prevention Community Network
Mary Rychlik – City of Austin
Donald Zappone – Austin Child Guidance Center

COMMUNITY ACTION NETWORK PARTNERS:

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