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FOIA Number: 2006-0466-F
-FOIA
MARKER.
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Speechwriting
Series/Staff Member:
Jonathan Prince
Subseries:
OA/ID Number:
10440
FolderiD:
Folder Title:
10/93 California
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Row:
Section:
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Position:
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�10;01/93
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'5'202 514 8639
DOJ-OPD
U.S. Department of Justice
Office, of Polley Development
Washinh>ton, lJ.C. )0:):10
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October l, 1993
1v1EMORANDU!V1
TO:
JOHN EMERSON
JONATHAN PRINCE
FROM:
MARK D. FABIANI
Senior Counsel, Offke of Policy Development
(202) 514-0052
SUBJECT:
UPDATE-- DENNY TRIAl, JURY DELIBER\.TIONS
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The LAPD called at 2:00p.m. to ~ay that the Denny jury \vill not actually begin
d.diberations until Monday morning.
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[4]002
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May 14, 1993
MEMORANDUM FOR
J?AVIQDRE~R
{-:fdNATHAN PRIN~'29
~-"-
---------·--~--
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·'
FROM:
BONNIE DEANE
SUBJECT:
PRESIDENT'S TRAINING INITIATIVES (cont.)
As per your request, I am providing the following profiling information in addition to the
previous training briefing.
• Profiling Unemployed Workers: As part of an extension of Emergency Unemployment
Compensation (EUC), the Department of Labor had planned to assist states with
implementation of prpfiling systems. Through profiling the UI system can identify earlier
those workers not likely to return to work before exhausting benefits. Those workers can be
referred earlier for extra counselling, job search assistance and retraining.
I
Key Features:-- $14.6 million was planned in the stimulus package.
-- Currently no funding is available.
-- Provides grants to states for automating identification and referrals.
-- Identification and referral by the fifth week of unemployment.
Background: Since the filibuster blocked the funding for UI profiling, the
implementation is delayed and uncertain. Decisions have not been made as to whether
to add on to 94 or 95 budget.
�SENT BY:OffiCE Of SECRETARY
5-14-93
7:06PM
DOL...,
202 456 2223:# 2/ 4
PROFILING DISLOCATED WORKERS THROUGH THE UNEMPLOYMENT INSURANCE
SYSTEM
o
The most recent extension of Emergency Unemployment
Compensation (EUC) benefits contained a new provision-authorizing the Secretary of Labor to assist states to
implement profiling systems in Unemployment Insurance program.
o
The UI system can identify those workers who will not qo back
to their previous jobs, and who are in danger of running out
of UI benefits before they find another one .•• and can refer
those workers to needed assistance in finding a job, or
training for a new job.
o
This early identification, using basic questions asked in the
application for UI, is called profiling.
o
The Department will be assisting states to implement automated
systems for identification and referral of these "dislocated
workers" over the next 18-24 months.
This assistance will
include grants to states as well as assistance in designing
the ADP systems to carry out the profiling and referrals of
claimants.
o
Doing profiling of affected workers early in the spell of
unemployment, so that they can be referred to reemployment
services, has shown to be cost effective, as well as speeding
the return to work of the affected claimants.
o
"Profiling" activities make the UI system not only an income
maintenance program, but a real force for getting people back
to work.
o
1994 costs for this program are expected to be about $14
million.
CAUTIONARY NOTE: The portions of the stimulus package which did
not pass contained about $14.6 million in FY 1993 costs for
profiling.
Decisions about how to make up the loss of this
funding, either through adding to the 1994 budget, or asking for
these amounts in 1995 have not been made. The loss of the 1993
money slowed the implementation somewhat.
�SENT BY=OFFICE Of SECRETARY
5-14-93
DOL...
7=06PM
PROPILINq UNEMPLOYED
WQR~ERS;
202 456 2223:# 3/ 4
A SttKMARY
B&ckqroun4:
Since the mid-1970's intensified international
competition and rapidly changing technologies have caused major
structural changes in the American economy. Mass layoffs, plant
closings, corporate restructurinq, defense downsizing and other
structural changes in the economy have resulted in the dislocation
of many workers from their jobs.
Workers who find themselves
unemployed due to these structural changes are often permanently
separated from their previous jobs and have no similar jobs to
which they can return. These workers are likely to exhaust their
UI benefits and have difficulty becoming reemployed •
•The Unemployment Insurance (UI) program has an integral role to
play in any programmatic effort to assist structurally unemployed
workers in making a successful transition to new jobs.
The UI
program already serves the vast majority of these workers: four
out of five of according to a Bureau of Labor Statistics (BLS)
displaced worker survey.
Between 1 and 2 million structurally
unemployed workers are served by the UI program each year.
The Department of Labor has also been conducting a series of
research demonstration projects that have tested an active role for
the UI program in assisting structurally unemployed workers to make
the transition to new jobs. The first of these projects, in New
Jersey, showed conclusively that structurally unemployed workers
can be profiled by their fifth week of unemployment using UI claims
data. Profiled workers had longer unemployment spells and greater
difficulty returning to work.
A number of States have already
begun to implement operational procedures that use the UI program
to identify these workers and refer them to reemployment services.
Conclusion:
The results of the New Jersey demonstration and
several other State dislocated worker programs clearly demonstrate
the importance, accuracy, and utility of using the UI program to
identify structurally unemployed workers
for referral to
reemployment services.
objective:
The Unemployment Insurance (UI) program has an
important opportunity to identify structurally unemployed workers-early in their unemployment spell--and refer them for immediate
assistance in finding a new job.
One of the first actions that
most of these workers take after layoff is to file a claim for UI
benefits. Data collected during the process of filing a claim for
UI benefits, such as whether an individual is subject to recall to
their pre-layoff job, can be used to identify those UI recipients
who are likely to exhaust their UI benefits and need reemployment
assistance.
The UI program will identify individuals. who are
likely to be structurally unemployed workers, select these workers
out of the general population of UI recipients, and refer these
workers to reemployment services by their fifth week after filing
for UI benefits.
�SENT BY=Off!CE Of SECRETARY
5-14-93
7:06PM
DOL-+
202 456 2223:# 4/ 4
Rep. Stokes--Question S-68d
Profilina
Question: You stated that the enactment of the Economic Stimulus
and Investment initiatives would significantly increase
ETA's responsibilities for oversight, planning, and
technical assistance.
Since we are now unsure of how
these initiatives will receive funding, how will this
impact the following programs? Unemployment Insurance
Profiling.
Answer;
Unemployment Insurance (UI) profiling will allow States
to serve the reemployment needs of dislocated workers
early in their spells of unemployment. States will be
implementing automated systems which will allow them to
identify and refer dislocated workers to reemployment
service providers by no later than their fifth week of
unemployment.
In order to build the capacity needed to conduct such
profiling, States will have to make significant changes
to their current system of taking initial claims when
unemployed workers first come to the UI local offices.
These changes will include the following: revising their
initial claims forms in incorporate data elements needed
to identify dislocated workers: changing procedures to
collect and input the new data into their data processing
systems: creating automated systems that will identify
dislocated workers and refer them to reemployment service
providers; and creating coiTllnunications systems with those
providers to exchange information on claimants referred
to services.
To accomplish this effort, the Department needs full
funding to provide funding to the States for implementing
profiling, provide Federal support for implementation,
and initiate a design center that will provide technical
assistance to States regarding automated data processing.
Funding requested for FY 1994--$9 million--will allow us
to begin implementing the UI profiling initiative but is
not sufficient to complete it. We will need full funding
as envisioned in Economic Stimulus initiative.
In the meantime, the Department has begun developmental
work on the design of profiling systems using existing
resources. The Department is now planning to launch this
initiative in October, after enactment of the FY 1994
Budget.
Implementation efforts for profiling cannot
begin until funding is available.
(_
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May 14, 1993
MEMORANDUM FOR DAVID DREYER
JONATHAN PRINCE
FROM:
BONNIE DEANE~
SUBJECf:
PRESIDENT'S TRAINING INITIATIVES
L
NEW TRAINING INITIATIVES
• Youtb Apprenticeship: A comprehensive system for helping the majority of American
youth to make a smooth transition from high school to productive lives of skilled employment
and further learning. This program will support a period of bold experimentation with states
and local communities taking the lead and the federal government playing a catalytic role.
This program has New Democrat all over it. It's based on partnerships within the government
(Labor and Ed) and with industry. It capitalizes on local creativity.
Key Features:-- $270 million in 1994, $500 m in 1997. Four year total: $1.2 billion.
-- Immediate planning grants and technical assistance to all states.
-- Since it is likely to be challenge grant based, we cannot estimate funding for CA.
-- "Work based learning" is new. Although we have vocational education in schools
and work experience for credit, we do not have programs that 1) integrate school and
work experience or 2) ensure learning takes place in work based settings.
Background: Labor representatives are sensitive about using the term "apprenticeships"
as well as the possibility of replacing their employees with subsidized wage youth.
The project team has been calling it "School to Work" rather than Youth
Apprenticeships. The President may prefer the latter, regardless.
• National Service: Educational awards of up to $5,000 per year for Americans who make
a substantial commitment to service. Support for service extends from elementary students to
senior citizens and includes everything from part-time volunteer activities to full time public
service jobs. In addition, the student loan system will be overhauled to cut costs, reduce
defaults and make public service possible for those that do not work for the government.
Key Features: --$400 million in 1994, $7.4 billion over 4 years.
--Two parts: government jobs + student loan reform.
--Will save $4 billion and lower rates that students pay by cutting subsidies to banks.
--Non-government service jobs. Flexible payment options, eg. as a percentage of
L __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
--
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income, allow people to take any low paying service job without defaulting on loans.
Background: There are concerns about elitism. However, the program applies to
training programs and proprietary schools as well as 4 year colleges.
Other concerns include creating make-work jobs and crowding out private sector or
volunteer workers.
~
•. Dislocated Workers Program: A comprehensive program to assist workers permanently
displaced from their jobs regardless of the cause. The program will provide basic assistance
~N\\ and training to help workers get a new job: interview skills, resume prep and job search
~training. In addition, assessment, long term training and income maintenance will be
available to those that need to make more fundamental career changes.
Key Features: -- $1.9 billion in 1994 rises to 2.7 billion in 1995-96.
--Almost four times the funding currently available for displaced workers under the
Economic Dislocation and Worker Adjustment Assistance Act (EDWAA) ($517 M).
--Assists workers impacted by defense downsizing, NAFfA, environmental
regulation, technical change or any other reason for permanent job loss.
--Cuts red tape and administrative overheads by combining several programs.
Currently months are wasted are wasted filling out paper work to determine eligibility
for one of several narrowly defined programs.
--An Inter-agency Task Force will report to the President by June 1.
Background: Proponents of TAA (Trade Adjustment Act), namely unions and key
members of Congress, are sensitive about combining this with other programs if it
reduces the benefit levels. Currently there is a compromise to extend TAA for 3 years
while building adequate income maintenance levels in the comprehensive program.
• One Stop Shopping: A system of franchised, retail outlets that provide easy access to
self-help job assistance as well as a clearinghouse for additional government and private
assistance. This system will provide help to all Americans to take charge of their careers and
attain lifelong advancement through lifelong learning.
Key Features: --$900 million over 4 years.
--Starts with smaller experiments. Builds nationwide system from local experience.
--An access point for information about: careers, training programs, financial aid, etc.
--Creates linkages between disperse programs such as ITPA, EDWAA, JOBS, etc.
--Builds a national career opportunity system utilizing the "Information Highway."
Background: Very New Democrat, but very sensitive because of governance issues.
At one extreme, it can be viewed as a privatization of the Employment Service.
• Note: Welfare Reform should also provide extensive new training opportunities.
�,,
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INCREASED FUNDING FOR EXISTING PROGRAMS
• Summer Youth Employment and Training Program (SYETP): Offers economically
, disadvantaged youth from 14 to 21 work experience in minimum wage jobs in public and
non-profit agencies during the summer months. It includes an enriched program of work
experience, basic skills training, testing and counseling and closer coordination with schools.
Key Features:
-- $2 billion over 4 years. $625 million in 1997.
-- 2 million additional summer youth jobs.
-- 90 hours of academic enrichment.
Background: The stimulus filibuster resulted in a loss of $ 1 billion for extra jobs for
summer 93. Currently, House Democrats are considering new ways to get the summer
jobs money through.
• Job Corps Expansion and Maintenance: Finance 50 new residential centers and renovate
the 110 existing centers for severely disadvantaged youth training. Job Corps provides
remedial education, occupational skills training, supportive and job placement services.
Key Features:
-- $450 million over 4 years.
-- Raise the number of participants from 70,000 to 104,000.
-- Returns at least $1 for every dollar spent.
IlL
APPENDIX: SUPPORTING RESOURCES
The following material is attached for your reference:
•
Preliminary Thinking on the School to Work Initiative. 3pp.
(Document used in consultations with hill and outside groups)
•
Draft of President's Congressional Speech on National Service. 3pp.
•
Backgrounder on President's National Service Initiative.
(Factual, one page summary)
•
Memo requesting formation of a Displaced Worker's Task Force. 2pp.
(Outlines broad themes of dislocated worker policy)
•
Talking Points on Worker Adjustment Initiative. 3pp.
(Until task force reports, it's the only public statement)
�_,
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llL
APPENDIX: SUPPORTING RESOURCES
The following material is attached for your reference:
, •
••
Preliminary Thinking on the School to Work Initiative. 3pp.
(Document used in consultations with hill and outside groups)
Draft of President's Congressional Speech on National Service. 3pp.
•
Backgrounder on President's National Service Initiative.
(Factual, one page summary)
•
Memo requesting formation of a Displaced Worker's Task Force. 2pp.
(Outlines broad themes of dislocated worker policy)
•
Talking Points on Worker Adjustment Initiative. 3pp.
(Until task force reports, it's the only public statement)
�..
Preliminary Thinlcing on the School-to-Work Transition Initiative
The Challenge
Many of our competitor nations have long understood the importance of creating a
diverse set of structured career routes for their young people. In many countries,
after youth complete an academically rigorous compulsory education-at around
sixteen years of age-they begin a period of structured career preparation that
combines work experience and classroom learning. They receive an opportunity to
learn by doing and to develop maturity and expertise at work under the tutelage of
skilled supervisors. By age 19 or 20, they have had several years of work experience
and training and.are equipped with the knowledge and skills they need to be
productive workers and lifelong learners.
The challenge for this nation is to create a comprehensive system for helping the
majority of American youth make a smooth transition from high school to
productive lives of skilled employment and further learning. Meeting this challenge
will require significant changes in the way we structure relationships between school
and work and technical and academic learning. It will require a period of creative
experimentation and system-building, with states and local communities taking the
lead and the federal government playing a catalytic and supportive role.
Proposed Guiding Principles of the Initiative
·
.
For the nation to move aggressively toward a comprehensive, coherent school-towork transition system, revolutionary changes in the structure of secondary schools
are required. It will also require new and closer partnerships between schools and
employers. And it will require government at the state, local, and federal levels to
work with the private sector to create new occupational skill standards, governance
structures, and guidelines for local programs.
However this initiative does not need to start from scratch. There are a range of
promising school-to-work transition programs such as youth apprenticeships, tech
prep, career academies, and co-op education that a new system can build on. This
initiative should enrich and expand these promising strategies so that all students
have the opportunity to participate in high quality programs.
Six basic principles should guide this initiative:
o
All students must be prepared both for work and further learning. High
schools therefore need to be restructured to afford all students the
opportunity to learn in "real-world" contexts, i.e., worksites and communities,
as well as in classrooms.
o
All students should be expected to meet high academic standards and
occupational skill standards. Students should be given every opportunity to
�meet these standards.
o
The school-to-work transition initiative must be integrated ~th strat1gies for
the reform of secondary education, workforce preparation, and work
reorganization. The nation does not need another separate program; it needs
a coherent system that helps all people make informed career choices and
prepares them for continued learning and career advancement.
.
o
A national youth apprenticeship initiative needs to be embedded in a more
universal system designed to help all young Americans make a smoother
transition from school to work. States and local communities must build on a
range of promising school-to-work transition strategies that would eventually
share a set of core program elements.
o
Employers and workers must have substantial ownership of and participation
in this system: far more than is the case in most school-business relationships
today. Employers and workers will need to take the lead in several areas
where they currently play limited roles: defining skill standards in broad
occupational areas; designing local programs; and coaching and mentoring
America's youth.
o
States and local communities must be given substantial flexibility and
discretion in shaping school-to-work transition systems to insure that they. fit
with the realities of local labor markets, existing state and local efforts and
institutions, and community needs. The appropriate federal role will be
catalytic: assisting and ]inking state and lo~al efforts through the
development of skill standards, research and evaluation, dissemination of best
practices, and technical. assistance.
Possible Core Components of the New School-to-Work System
While state and local flexibility and diversity must be at the heart of this initiative,
there are some basic components that all states and communities should be expected
to share:
o
Restructured high schools in which the current general and vocational tracks
are replaced by a program of career-oriented majors, offered to most students
in their junior and senior years. Some key features of these high schools
might be:
Diagnostic assessments at the lOth grade to identify academic
strengths and weakness of students.
Intensive career counseling throughout a high school student's career.
Integration of academic and vocational education.
o
Structured learning in the workplace, where students are provided high
quality opportunities to learn skills and knowledge in a work site that
2
�complements and enhances classroom instruction.
o
Postsecondary connections which would enable students to ·obtain an··
industry-recognized certificate in their chosen field typically at the end of a
13th year, and/or to advance in a college degree program.
o
Voluntary national skill standards, developed in broad occupational areas and
certified by a National Skills Standards Board, that will guide curricula,
assessments, and certification in this new system.
o
State and local governance structures that will give representatives of
business, education, labor, government, and communities responsibility for
overseeing the design and direction of the system, insuring responsiveness to
regional labor market needs, and monitoring program performance.
�(
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FROM HIGH s(HOOLS
To HIGH SKILLS
1------------------------------;
' A national apprenticeship progt-am is starting to take shape
1---------------r------:-------:------;
he racket is deafening as machinist
Jeff Himes helps his lith-grade pupi!, Chad Yoder, bore holes in a
truck engine exhaust manifold. This twoday-a-week tutorial in applying math
'and computer skills to production isn't
part of a machine-shop class. Himes and
Yoder are on the floor of Donsco Inc.'s
foundry in Wrightsville, Pa. And the
lesson is far from academic. If all goes
well, when Yoder, 17, finishes his train-
workers and the economy. It boosts unemployment, ~owers wages, and leaves
employers with applicants who are increasingly ill-equipped for even entrylevel jobs. The solution, many experts
say, is an apprentice system like Germany's, which fuses the last years of
high school and the first years of work.
President Clinton ran on a platform
that called for just that, and now the
outlines of what he will do are emerg-
ing and his regular schoolwork, which
ing. Given tight federal budget constraints, his proposed program
is modest: $270 million in fiscal 1994,
rising to $500 million after that. Still,
the Administration hopes to leverage
these funds by using them as seed money for getting states and school districts
to set up local programs with employers
and industry groups (table). Officials at
the Labor and Education Depts., which
are jointly responsible for the program,
hope to develop such efforts into a program of national proportions by 2000.
The Administration's plan will start
by expanding experiments similar to
Donsco's, which the Pennsylvania Commerce Dept. launched in 1.990 with local
school districts. In the past few years, a
dozen states and several nonprofit foun-
~ bas been redesigned to fit into three
~ days a week, a job will be waiting for
:i
him at Donsco or another plant that
needs sophisticated metalworking skills.
~ "I never got the opportunity these guys
~ are getting," says Himes.
~
Twenty years ago, a non-college-boWld
~-- student such as Yoder wouldn't have
;;; needed a helping hand to land a wellg paying assembly-line job. But as techno!~ ogy and global competition drive up skill
levels, a high school diploma won't get
£ many young workers onto a career lad~ der anymore. Today, many of the 20
!* million 16-to-24-year-olds who skip col~
~ lege bounce from one dead-end job to
~ another until they hit their mid- to late
il:
20s. This is a big drain on both U. S.
J
110 BUSINESS WEEK/AI'Ril26, 1993
dations have initiated similar efforts that
today include just 2,000 or so students
at some 250 companies, according to
Jobs for the Future, a Boston clearinghouse for apprenticeship programs. Clinton's program will encourage experiments to see what works best in
different schools and labor markets. "Because. local needs make one approach
more feasible than others, the Administration must focus on a broad range of
school-to-work programs, not just on apprenticeships," says Robert J. lvry, a
training expert at- Manpower Demonstration Research Corp., a New York
group that analyzes training programs.
PLIXIBIUTY 11 KIT. Even with that kind
of flexibility, creating a national program will entail solving a host of problems that Washington is just beginning
to
confront. For instance, a German-style system for the 6
million U.S. teens who don't go to college annually could cost at least $12 billion a year, estimates Anthony P. Carnevale, chief economist at the American
Society for Training & Development, a
trade group in Alexandria, Va. What's
more, for the apprentice concept to become widely accepted, proponents must
convince students and parents that kids
won't be shuttled permanently into bluecollar vocations that rule out a white-collar career-a typical complaint about the
German system. "The German approach
perpetuates a class system," says Eileen
Appelbaum, an economist at the Eco1liE WORKPLACE
�12:06
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1 am plea~ed to transm1't 'to~~Y ror yo\lr LnllflocU.ate
consideu.t.lon lll'ld cn~Qtment th~ 11 National service
Tru•l Act: of
11
1~93" and the "Stua.ent Lo~au P.c:srorm Act of 1993. ThA~A Acts
:re~resent innovative public policy toundee1 on tuaclitional
Amedr.:an "alues: otterin9 ed.uca,tional opportunHy, rewara1ng
p$raonal responsibility, and building the Ametiean community. In
.!lff1rmin; r.hese valu~:&, the Acta rejocts wPR~ttful bureaucracy
instead reinventing Government to unleuh the idea~J o.nd
init1at1ve or the Alll~tican ~6oplc.
Tllrougl"lout the presidenti~l oampalgn bst year, Atncaricans of
all bo.ckgrounds and political persuasion~ responded to the idea
of national servic~ like tcw others. The reason~ are clear.
Ji:l.gher ociuoation is fundamental to the .Puuez:ican Dr&Anl, but
r:omplex procedun~~ &U'Id inflexible x·epayment p 11ms have created
serious problemS~ f(.lr many stua&nts with cuucation lo&.Ml to pay
back. It: is a ba~ic American principle that 1nd1Vidual8 ought Lo
pay back what they borrow, })ut t.Odl.i)' I:.OO many 8tUdOntt default
leav1ng ~aKpayer~ to foot the bill. Anrl finally, Americans tod~y
o.ro yearnin~ to reaffirm an Ameri~i:ill cc;,mmunity tho.t transcends
race, reyion or religion -- and to taelclF.! the problems tllot
threaten our shared !uture.
The two Acts are C1eslgneo ~o 1ncG\o \.bl;)ee baolc Ml&d.can
neetJ~. The "NationAl Service Tru9t. Act: of 1993" establishes ea
domestic Peace Corps, ottering hund~e~' of thouc~nds of young
people the opportunity to pay for sch~~l by doinq work our
ecuntry ner:ldH. The "tS'tUdent LoAn Reform Act or 199JR overhaub
the tStut.lent loan syt~tem. Through One-Stop Direct Stut!eut Lucan~,
the Act wlll save taxpayers l>iU.J.ons of dol.l.ore, l.owQr interest
ra~es, an~ simply tho system for ~t.urlP.nts. And through new !XCE~
AccountR ~l"ld new repayment vpt.J.vus, it will offe~: ))orrowerA
y;.·eater choice onci lower month) y pnyments wnile the chance of
defaults.
The "Nat1onal Service Tl·u:ol. Act" ~o1t.~t>liohco a dofin!tion of
ucildonal :service that h clear but broad. National :se,·vJ.ce is
work that acsaresses unmet ~~ucot.ional, environmental, human, or
public: safety neods. I~ $nhanc~s the experience ot thote who
serve, instilling the ethic of civic responaibility that is
essential to our democracy. And n~tional service doas no~
diapl~c~ or duplicate the runctlon& of existing workorc.
Build1ng on the Nat10nlll aud CoiNllunity Sc"vic& Act of 19~0
the tlouriohing national se.r.vi.ce pr09rarns of nonprofit.
or.gRn12ationa anc1 States, the initiative rejects a F•c!4tr'a,
bureauc~~cy in favor of locally driven programs. And in the
sp1r1t ot reinventing 9UV~i#,:llm~nt 1 the Act will •mF'ower tholile with
tll.e groat cot 6xpertise and i ncP-nt ives to succeed in \.heir work.
Of1a
'I'he "Nationr~l Service Trust Ac't of 1993 .. eZJtcali:U.ehea brooci
categori~~ or e1i9iblli~y and requir~ments fnr th~ use ot
educational awards; hut it lets cith~n:i <It dl back9~oundo
serve and usts t.heir awuds where they see fit.
WhUe 1'1\&ny
�1::::!:0?
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participants will be rf!!~P.nt colleoe gratiul:lt"ts' Amedcocms will ba
eligible to en~er the program ~t any time in their adult live&.
Both full-tirne and part-time s~rv1ce will liE! a,ncouraged. ).nd.
wnat.ever theh· t~ducation level, those who complete a term ot
stnvioe will r.l\'~aive an awara or $5,000. The aw~rd. will be,
payable towcu·IJ put, present, or future educational expenses iu
:fOJ.\:'- and two .. ~ear colleges, trainiu~:~ pJ.:OiL"tl111S, And qr.aduate and.
profes&ion~l school~.
Th" Act demands that pro9rams meel tough quideUnes tor
e:tu:~llence, rmd requires measuz::alllt~ pertomonoe 9oala and
independ~nt ovo.luo.tions. Within thi;!~A limits, nowever, th" Act
ena.blaa the people who run pr·o9nrna to dcQi9n them. The smallest
cucrununi'ty .. basecl organhations ~tnd laroest treaeral agencies will
be llbl e to compete :ror fum.ling. A variety of protJram rnod.-lR will
be eligible, ~angin9 from youth corps that enable at-~1sk youth
t.o meet conununitY nuur.l~, to pre·profnsaional pro9'rams t.hat g-ive
college otudentB ROTC-lilt€'1 t.ni ninq and then pliscements in
specific problem areas, to dJ.vl!lrae col\VII.uni.t~ corps that involve
Ame•icans of all background~ in rneetino common goals.
With tho oconomie market as a model, tnar& is compet~t1on at
level Of tlle ~y~l.~m; prog:a:et.ma compete for State Approval,
~tates compete fo~ Feder~] Approval, anC1 programs at the nationDl
level compete against each oth&l: Gnd States for Faderal. approval.
'l'o build public/private partnerships that aarn ~uppo•t far beyond
government, the Act •eq~ires pro9r~mc to make a ca&h match and to
segk oupport trom p~yond Government as time pa~~Q&.
RVery
Tho Act aims to reduce waste C'*nO promott= cw en1;.repronou&:'iD1
At the Federal lcavel, th& Act establiSheS a
new Govc:rnment CorporAtion for ~ational St:nlce tha't comb!noe evo
exis'tinq inll~:v~mlent agencies, the Commiuion on National anc1
Community Servic~ and ACTION. With flexible per&onnel policies
and a small, bip&rtiean Doard sh~ring powo~ with a Chairparson,
the CorporBtion will opAute as much l1ke a lean nonprofi't
corporat.1on cs:s Cl Gvv~.&:nmcnt a9eney.
Govermn~mt ~;ulture.
The State level will mirror: the F•d.eral le-vel and bu1lC1 a
strot'IQ partnership between the two. aipul.hcm Stcste COIM\iaaione
on Ha~1onal ~e•vieo will be responsible for ~AlP.etinQ proorams to
be f\mclF.Id by States. To ensure genuine Fc~erol/Gtete
cou~eration, o ~cprcocntative of th~ Corporation will li't on
State commi.ss.ions, and a reprsstmt.uLJ.ve of the fitatoo on the
Corporat1on Poard..
In its efforts to buila oommunity, the "National Service
Tr-u9t Act of 1993" e~eourages Americans to juin Logether ond
serve ouz: co~ntx:y -- at all ogba and in all forms. The Act
enhances the Sarve-Amerlea program for schuul-cl9& youth/ extend.s
o.nd imru·ovea the VISTA ond older Arnariean V~lunt.eer. Programs
aut.hnrized under the Domeut1c Volunteer Service Aet; ond. pul.la
these efforta under the new Corporation. Tha Act will help
1n&t1ll an et.h1c or service in e1ementory o.nd Gooon~ary echool
stu~ente, cnooura9a thom to serva i~ thAir colleqe years, an~
;1ve tnem rurtber opput·t.uniths lo.tcr in their Hves.
�OMB LP.D./LWP
ID:
MRY Oll'93
005
9:45 No.Oll l'.ll4
The nstudent Loan ~eform hct of 1993" will aleo tak• an
important first step towCirr:l t!nmprehens1ve reform of the a\.uaent
financial aid system. It will uave money, make loan repayment
more atfordable, and hold &tudents more accountetule. 'J'he
measures will. in no way replGcc the Pall C:rant progr.am, which
will rem~in the eornArstone ot tinanc1al aid tor million& of
students. The: Adminhtration h~D :-eC!uested an nearly $2 billion
to fund the Poll shortfall ;in
amendment to the fhoal year
199<1 budqat.
an
The Act. replaces tha cu:r:-rent; •-ecleral FandJ ~ Education Loan
prorJram vi~h the One-Stop Direct Student Loan Program over a fou~:
year periud. By eliminoting ~ubBidies to privA~ft lenderS ana
mi!~ld.ni loant d.irer.t.l y to studen'ts, c11rect le:nding will save
taxpayer:s more than ~4 billion and still allow 1.nt.erest rates to
drop for student hnr.rowers. "l'he retorm will. etimplity the system
ror many stu~en~a, enabling moct to reoaive all thRir ai~ through
"one-etop sho;ppi.ng" at their 1nsti.tutlons' tinancial. eic:l offioe.
The lend3.ng reform WHJ. expanO chui~,;~;~ ond 0\:0ii"~ace burdono Eo~:
all stud~nt borrowers by offorini a variety of rApayment ~lans -incl\.ldinCJ fixad, extena.ea, graduated, culcl ineof!lo eontin9ont.
schecluleo. In the s~mc way that ~ultiple financinq options help
homeo\omers, these plans will oth~ , . ~al choice to oll and lower
rnunl..hly payments to thone who ,;rant them. rncome contingent
repayments -- the new EXCEL Account~ -- will also enco~rage
servics ~1 otudento who do not participate in the domestic Peace
cor~s portion of the Act. Without la~~~ monthly paymento, more
e:~tut.it=IILS will be ablo to take jobs that pay less but co more tor
th•ir communities, wir.hout risking ut:fault. And whatovor pl.an
L.hey fir.st ohooso, otuc1ents will be abl~.t t.t'l ehange thei:r
rApayment schedule as thej.r circu•n;,lt:ane;e~ c;hllnge
The Act Will also reeluct: tlli!nmlc :~:~tte:s. Dr co•ooting !neomcco~tin9ent ~:epaymont schedulo~, atudents with lower 1ncoma5 will
he able to repay ~heir lo~m> vi1 Cl manaset:~bl$ plr.~.n, ao ca small
pe:~:ccnt~ge o! their incomg ov•r tim~. Throuqh cooperation with
t.h~:~ IRS, the Act will improve collection and monitoring of
~tudent locn~. And for thoee who are able to pay but dO not, ~he
Act will C]iVB the Secretary ot Ec1uca.tion authority to raquiro
pa.ym~:~nt. with IRS pnrticipo.tlon,
Opportunity 1 responsibil..ity, anli communit-Y gn beyond
politics. They are basic Mler1can id.ed~. ~n&.~ctment of thooc
Lwv Acts will express the Nation's commitm@nt to these 1c1eals and
to 0\lr t:~hRrf!d ruture. 1 urg-e the COnfJre~:~= tu 9ive the
legislation pZ:OJ!IP~ ond ~avorable oonel.derat!on.
wn.t.rAM .1. CLINTON
�~~NI
~T·XGrox
ISIGC0p19r
?U~U
•
~-
~-B~
16:47
ID;
FEB 28'93
Mli%01At
GIRBRAL
••tio~al
&•rviol •• aa
202 456 1605 :# 2
I hG Ulh1 tG House•
19:3~
No.006 P.02
IIIVZ~I
~~llMQ
fDI•TS
Aa~ioaD ltb1o•
*
Am•ricana have a nav senao ct determinaticn. ~h•y're
aay1raq: We val'lt our eo\Uitry baQk. An4 thay'r"a rGac!y to do
scmethin; about 1t. ~hat's why theY're suppor~inq tha Praa14ent'~
economic plan. And thAt's why they believe in national aervioe.
The Pre•ldent aaeply believaa in ••~ic:•, ancl he'• 9oin9 to
tha tremen~oua raaources at hia diapo£al to aupport it. But
thoae ro•ourc•• are worth nothin~ ~ompAracl to tha r••ou~o•tulno~•
or tha lmerical\ ~aopla.
•
US@
*
We nava a raaponsibility to fioht our country'• p~ohlems
"vo 11 the government, but •=• importantly, ve tha people.
*
So
to~ay,
we ara challenqing you, aa the Praaidant has
ohallenqll'c! hil admi.ni!lt.rat.!on, to Htt. up your oal.vcu• anc! li.,t. up
I c;:he.ll•mi& yo~ to [sp~oitio
Alibr>l••l ... I ohall9nr.JO ycu to ... A.a Martin t.ut-.ho~ XiniJ aaidt
your country throulih servio&.
"~eryQne
can be
qreat bliilcau11a ev¥1:yone
Tha Preraldent'• initiative will
•
can servo. •
HrHJ0\11:'8.98
ou:r poople te»
szarva. !t.' c An invoat!IIAnt. in our fut:ur& •• anti here 1 a tl\e
returnc
• Wa'l1 rahu!ld our oommunit!ao
• We'll ••n4 thousands of Amarioen• tc collog•
- W•'ll lift ou~ oount~y up •nd ~ring ou~ peoplo together.
~ho fi~•t
part Yill help
you~9 paople t~o
£.:arvioe joba. Qraauatee will be
a~le
low-payin9 public
to p~y ort thair losn~ a• A
eaull perconta.g-e. of t.haizo inc om• over time; we c:a1.l !.t ''pay ••
you qrow."
- The eaoon4 part w111 create
yo~ng
thcu•~nd&
ct
oppcr~un1t1aa
tor
peoplo to p~y for oo~logo ~ ae~ving o~r oountrf -fiqhtin; cri•e, teechin; young people, 9ivin~ 1mmun1~at10nl, or
aleaning ~p pollution Dn~ WG•te.
~he ~~••i4ea\'• •~~
of lervioa
•
BocQ~•o the rrc~ident dQe$n 1 t w~nt ecrvioe to wait, he'•
goin; to make ehis aummer e Summ•r of Serv1ce -- a1qh~ 1ntlnll
vcoka f~ a~ laDe~ 1,000 younv lea~o:ra f~om all ~aakgrcun~s.
They'll eerve by qettinq chi~oren at ri5~ raaay rcr acnool ••
wi~h tu~ozo!ng, ao thoy've 9ot ~etta• •kills; with moft~l."i"9, •o
they want to atay out of ;anqe Dna in cla••; an~ with
imm~nicationa An~ lead poisonin~ detaotion, ao k1dl aren't a1~.
�SENT BY:xerox Telecopier 7020 ; 3- 2-53
---- I D:
PRB8tD~'8
15:47
The White House~
202 456 1605;# 3
FEE 28'9~
19:35 Nc.006 P.03
..cacaaoVIIDu
o~r
. .~tO.&L 8KRVIOB
Timipq. The Praaid•nt will
a~bmit
%MlT%~TIV8
hia le9ialation to
cong~•••
lOOft.
TKO parts, The le;islation hae two pa~t~. o~• pa~t will
younq ~eo.pl~ to pay back their ~tudent loane as a amall
~aroentage ot ~heir income ova~ time, helping thea ~eke
but low-payinq puhlio aervioe joba. The other par~ will
opportun!~!A8 for youn~ pe~plo to earvo o~r country en4
tor oolle;a in raturn.
enable
essential
ore ate
help peay
FunC1ng. The Praaident
ha~ requaatod $?.4 billion ove~ the naxt
tour Y••~• fo~ tha aacond part of the n&tion~l eervice
initiative. ThQ fundinq level riaes e~ch year, to $3.4 billion in
1887, bocauaa this initiative aim• to support the growini work ot
Amarioa'a oommunitiea -- not overwhelm it. ~~nding starts at $400
~illion neMt year.
Humber ot Rar~iqipant~ The numbers will reflect the enthua1aa•
of tho American people and tho ingenui~y of our CQmmunitiea 1n
dav&lopin; •olid waya to put our people'• energy to work. By
ls;?, wa O.liava th•~• could b& aore than 1oo,ooo yo~ng people
p&yinq for poat-•ooondary e4uoation by eervin; their country, and
hun~rada of thouaanda mora doing low-payinq pUblic ••~vice work
hooauae loan• no lont~er block tho way.
lligibility and blntfits, St~denta before, during and attar
ooll•9e will ~ eligi~l& to se~v• fer a ye~r or two, and 1n
roturn ;et a small atipend, health and child care bener1ts Where
naoees&ry, and an eduoa~ional benefit to pay tor college or job
t~aining. [Not•• ThiD ia the se•vica-fcr-benar1ta option; anyone
who nooda an incoae-continqent loan ~ill be eligible eo get 1t.]
Agtiyitie=u The pro~rsm Qims to meet ~nmet ne•~• in cr1~1cal
are~e. I~ ia not job training. YQun9 people Will ~a a~l• ~o serve
-e teacher• in e~hocla where kida need extra hilPI in ol1n1os 1n
araoe where peoplo nesd medical care; in the police rorce,
keepin9 crimin~l• off the ~treats and ~1Cs out ot qan;a; an~ 1n
an envi~onmantal oo~p•, reoyolin9 waste and a~opp1nq pollution.
ASminiatration. The program will ~a non-bureaucratic, using
vent~ro capital to 1upport entrepreneurs and pUbl1o•private
partnerships to auppo~ qrowinq programs. States and local
organization& Will be given the opportunity to ~e1i;n innovative
vaya to meet identitiec national priorities.
B;n4iep1aotmant.
l•q1alation will include strict
provisions. National servic•
will only meet naed5 that are not otherwise ~aing met.
non~1eplacement
~~e
and
non~uplioat1on
�SENT BY:OffiCE Of SECRETARY
5-10-93
2:04PM
DOL....
202 456 2223:# 21 3
MEMORANDUM
TO:
FROM:
DATE:
RE:
Bo cutter
Larry Ratz
January 28, 1993
An Inter-Agency Working Group on Dislocated Workers and
Managing Change
I propose that you form an inter-agency working group to
coordinate work on the development of a comprehensive dislocated
, worker transition program and other policies to assit communities
and businesses adjust to major structural economic changes. I
think these issues form a natural locus for interagency
interaction within the stucture of the NEC Deputies Committee.
such a working group would also complement a Cabinet-level,
inter-agency task force being proposed to the President by Robert
Reich and Robert Rubin.
More than two million Americans lose their jobs each year to
plant closings, workplace restructurings, or production cuts.
While most displaced workers manage to find new jobs within three
months, a large fraction (roughly one-fifth) suffer more than
half a year of joblessness. Even once re-employed the typical
displaced worker faces more than a 15 percent decline in
earnings, and many end up in jobs without health care and other
benefits. Job losses tend to be geographically concentrated, and
a major plant closing or mass layoff can undermine a community's
economy and culture.
structural economic change has probably accelerated in recent
years, and with it, the pace of worker dislocation. In fact, the
relatively "mild 11 recession of 1990-91 saw a higher rate of
perm~nent job loss than the deeper 1982-83 recession.
Major
causes of labor displacement include increased international
competition, the tide of technological change driven by the
computer revolution, and major corporate restructuring. These
forces are far likelier to strengthen than to abate in the next
few years. We should also add to these the structural changes
likely to attend najor policy initiatives such as NAFTA, defense
conversion and base closings, and strengthened environmental
protection.
The policies-we inherit are inadequate to sucessfully orchestrate
adjustment. Current dislocated worker programs are fragmented
{different programs, authorized by different committees, run by
different agencies), administratively inconsistent (with widely
varying procedures, eligibility standards, and benefits), and
conceptually incoherent {with an ambiguous balance between easing
adjustment and compensating losses.)
The inadequacy of the workforce adjustment system imperils the
Clinton agenda. Change is the Administration's watchword. But
change brings with it disruption and uncertainty for workers and
communities. Without a co~lective commitment to share the risks
�and buffer the shocks of change--and without reliable
institutions to deliver on that commitment--those Americans most
threatened by change will struggle to block it. They will
frequently succeed: those seeking to derail change enjoy tactical
advantages in our political system. Bolstering our institutions
for redeploying dislocated workers is the right thing to do. It
is also essential to avoid creating an atmosphere of
vulnerability and defensiveness that smothers the Clinton agenda
for reinventing America.
A window of opportunity presents itself. The heightened
, visibility of defense conversion, environmental law reform, and
(especially) NAFTA provide an occasion for transforming the
current system into a comprehensive, coherent worker adjustment
p~ogram.
An inter-agency work group should assemble to help
coordinate the design of a universal system to address the needs
of all dislocated workers--regardless of the immediate cause of
dislocation--and to offer predictable access to transition
assistance, training, and support services. Complementary
programs that aid distressed communities or try to prevent some
2displacements could also be considered. The development of such
a system--and the reconfiguration of existing programs, each with
its own network of sponsors, defenders, and beneficiaries--will
require the involvement of the Labor Department, the Defense
Department, and the Office of the U.S. Trade Representative. !t
may also be useful to involve the Domestic Policy Council and the
Departments of commerce and Education. A broader inter-agency
group on human capital issues would also need to include HHS and
HUO.
�F(!
Talking Points
Administration's Initiative on Worker Adjustment
The Goal:
Xo establish a comprehensive program to address the needs of all
dislocated workers, regardless of the cause of dislocation, and
to ensure access of dislocated workers to an enriched arr!i?of
s~ including job search assistance, retraining,~co
~rt/and other transitional re-employment assistance.
Current Programs:
Assistance is currently available to dislocated workers through
two major programs with differing approaches to the provision of
services.
The largest program, the Economic Dislocation and Worker
Adjustment Assistance Act (EDWAA), will serve some 330,000
dislocated workers in the current program year (under
~ fk.,i.} appropriation
million). Eighty percent of the funds are
~~r±bu
formul to the states, which provide services
J/A ~
directly and
g a network of substate grantees. Among the
~·
/_J services provided are: rapid response activities at the site of
l~-~ ·major layoffs and/or plant closures: basic readjustment services
·
such as counseling, job search assistance, placement and
relocation assistance: retraining services, including basic
skills and remedial education and occupational skills training.
Needs related payments are authorized, but seldom used, and funds
available are not sufficient to serve all eligible dislocated
workers who need/desire training.
The second major program is the Trade Adjustment Assistance (TAA)
Program. TAA provides job search assistance, training, income
support and relocation assistance to workers who lose their jobs
(or whose hours;wages are significantly reduced) due to increased
imports. Department of Labor certification is required before a
group of workers is deemed eligible for trade adjustment
assistance, but once a certification is made, TAA functions as an
entitlement program. The program is capped at $80 million and
this year, approximately 50,100 persons will receive TAA
services.
There are also a number of smaller programs available to
dislocated workers in selected industries including: the Defense
Conversion Adjustment Program, the Defense Diversification
Program, and the Clean Air Employment Transition Program.
�. . • . . ··-· '-· _., •. ,-.• ~ ...... ..:.-···- · -'--'"----'''-'-'•·:;_·....;..·....;..··-·_.:_....,_;_·•;....:·.c.:··.;..;;_·-;;....··."--"""""'"""''·::.o.··...................w:·-....
-._;-"""··"'"' '........-~......,---.:.:..··'""'""';;.;.··;....··.:..·.................~
•'
The Need:
In today's dynamic global economy, developing and maintaining the
skills of our workforce is essential. We also know that
structural economic changes -- no matter what the cause -- will
require a comprehensive strategy to assist workers who are faced
with finding new jobs. A number of events will have a
p·articularly significant impact on this:
o continued reductions in defense spending will increase the
need to help workers and businesses make the adjustment to a
civilian economy;
o the ongoing restructuring of America's large corporations and
mid- and small-sized companies will continue to impact a wide
variety of worker with different backgrounds, skills and needs;
o technological changes will continue to affect skilled and
semi-skilled workers as their skills rapidly become obsolete;
o environmental concerns will continue to impact on certain
industries in ways which affect the workplace and may cause job
dislocations in certain geographic areas;
o changes in trade agreements such as the GATT andjor the
signing of NAFTA, while benefitting the economy as a whole, will
have impacts on some segments of our workforce and increase the
demand for re-employment services.
The Clinton Administration is committed to meeting these
challenges, but wants to do so in a coordinated fashion,
enhanced package of services made available without the
administratively cumbersome certification process. This
should both increase resources to dislocated workers and
the speed with which services are delivered.
new
with an
approach
increase
Basic Elements:
The President will propose legislation to supersede and build on
the successful components of the Trade Adjustment Assistance and
Economic Dislocation and Worker Adjustment Assistance programs.
The basic elements of the President's proposal will be:
o broad coverage regardless of the cause of dislocation and
without the need for administratively cumbersome certifications;
o increased emphasis on rapid response and early intervention as
soon as layoffs are announced and, when possible, before the
workers lose their jobs;
2
---------------------------------
�·-
.•..
. ---
._._,. ·-·-·-·
~-:............~-
......
::_~
.... -.....
_
o linkage to Unemployment Insurance profiling to ensure early
identification and referral of laid off workers who need these
services;
o a flexible array of training and support services linked to
a·ssessment;
o assistance to dislocated workers in meeting the costs of
skills training, designed in a way which provides qreater client
choice in the selection of training programs;
•
I
o income support to ensure that workers who have exhausted UI
and who need assistance can complete training;
o increased industry participation to advise on broad workforce
issues;
o demonstrations to serve workers whose jobs may be at risk so
as to avoid dislocation: and
o national discretionary funds for demonstration proqrams and
targeted responses to specific industries or large impact areas.
3
�.
'
THE WHITE HOUSE
WASHINGTON
May 14, 1993
MEMORANDUM FOR DAVID DREYER
JONATHAN PRINCE
FROM:
SHERYLL CASHIN
SUBJECT:
CALIFORNIA TRIP POLICY MATERIALS
Bonnie Deane, an NEC Director for Human Capital, will be forwarding you material
on job training programs. Attached are materials which explain the substance of four pillars
of our community development and empowerment agenda: (1) empowerment zones; (2)
community development financial institutions; (3) enhancing the Community Reinvestment
Act; and (4) community policing.
As I understand from yesterday's discussion, we intend to use the Nike site to
highlight empowerment zones (as opposed to all of these initiatives). I think this is the
proper focus because empowerment zones will receive priority on community development
banking and community policing as well as many other federal initiatives. They are the
starting point for the Clinton Agenda on distressed areas but not the entire agenda.
Attached are:
(1) a cover memo to the President from Bruce Reed and Gene Sperling which outlines
the broad themes the empowerment zones represent;
(2) a 3-page and 9-page outline of the empowerment zone proposal;
(3) a summary of the community development banking and Community Reinvestment
Act initiative which will be announced in the next few weeks;
(4) a summary of the concept of community policing;
(5) a copy of the speech Bill Clinton gave in September 1992 when he last visited
South Central Los Angeles.
Bruce Reed recommends that we play up the private-sector and job-creation angle on
empowerment zones -- i.e., the best urban policy and the best anti-poverty policy is
economic growth. He also recommends that we be sure the community policing aspect of
empowerment zones gets mentioned -- i.e., for many communities the first imperative on
�------------------------
-2-
generating economic activity is reducing crime and our community policing initiative will
offer empowerment zones and enterprise communities additional resources to attack the
problem.
Call me if you have any questions.
�----~~~
----------------------------------
.
~~
APRIL 19, 1993
MEMORANDUM FOR THE PRESIDENT
, FROM:
'
StJBJECf:
BRUCE REED
GENE SPERLING
ECONOMIC EMPOWERMENT AGENDA
Almost one year ago, you toured Los Angeles after the riots and predicted that despite
all the media attention and Presidential fanfare, a year would pass and nothing would change.
You were right. Across the country, poor communities from South Central IA to the Mississippi
Delta are still reeling from a decade of declining opportunity and rising social and economic
isolation.
Shortly after you took office, Bob Rubin and Carol Rasco asked us to set up a joint NECDPC interagency working group on community development and empowerment. We wanted a
joint effort spanning economic and domestic policy that could look at the problems of
economically distressed urban and rural areas-- not only to prepare specific proposals that could
be passed this spring as part of your initial Budget, but to develop a framework that could
incorporate other new ideas over the course of your administration.
Our first task was to focus on the economic empowerment portion of your community
development strategy. Job and enterprise development are only a portion of what your
administration hopes to accomplish in distressed areas, through health care refoi'Ill, welfare
reform, education reform, family policy, Head Start, and so on, but your campaign commitments
and your stress on economic growth necessitated that we come forth with these proposals for
FY1994.
To create this economic empowerment proposal, our group brought together policy people
from half a dozen agencies, and met with members of Congress, community leaders,
entrepreneurs, and federal, state, and local government officials. We agreed in principle on a
comprehensive, three-part strategy with a strong economic focus:
1. Enterprise Zones: A two-tier plan to create 10 resource-intensive Economic
Empowerment Zones and 100 less expensive Enterprise Neighborhoods around the country.
These 110 communities would be targeted for economic development, reinventing government,
community development banking and microenterprise, community policing, and the
administration's other empowerment initiatives.
�----···-----------------------------------
.2. Community Banking: A national network of community development banks and other
community lending institutions, spurred on by a federal Community Banking and Credit Fund
and perhaps by requiring major banks to start community development banks in return for limited
interstate branching. We also propose ways to strengthen enforcement of the Community
Reinvestment Act and fair lending requirements.
We included Community Partnerships Against Crime
3. Community Policing:
(COMPAC) -- a HUD initiative to improve safety in public housing -- along with nationwide
efforts to promote community policing with economic development. Communities will need to
demonstrate progress against crime if they are to attract and maintain enterprises.
CONGRESSIONAL OUTREACH:
We have invited the major Congressional leaders in these areas to meet with us and with
Bob Rubin and Carol Rasco -- including Maxine Waters, Floyd Flake, Charlie Rangel, Chairman
Gonzalez, Bill Bradley, Chairman Rostenkowski, Chairman Riegle, Paul Sarbanes and Chairman
Moynihan. We have also received copies of the bills pending in Congress and will continue to
see which of their ideas can be incorporated.
By way of example, pursuant to our discussions with Representative Rangel and his staff,
our Enterprise proposal includes a comprehensive approach to public and private investment and
coordinated provision of government services, a mix of tax targeted tax incentives and Enterprise
grants, and a major emphasis on safe streets. We also have included drug prevention and
rehabilitation-to-work among the new initiatives which the Agencies are actively exploring for
the Enterprise proposal.
With respect to the Community Reinvestment Act, our recommendation to move to
performance-based standards for all bank lending (including for small business and commercial
loans) adopts much of the direction and emphasis of Representative Waters' bill. In addition,
Representative Waters has also suggested exploring the possibility of making the Federal Reserve
Discount Window available for Community Development Banking to spur reinvestment in the
inner cities. Although this would require a major rethinking of the Fed's long-established policy
and practice, we have proposed including the Fed on the Board of the CD Banking Fund so that
such institutional issues may be fully considered by the Fund with full input from the Fed.
Treasury and the FDIC are exploring the impact and cost of Representative Flake's
proposal under the Bank Enterprise Act to appropriate funds to subsidize a discount in insurance
premiums paid by banks (including CD Banks) to the extent of their loans in distressed
communities. If you choose to require major BHCs to participate fully in the attached
Community Banking proposal, the potential impact will be far greater; and the issue of providing
additional support for bank lending in distressed communities can then be addressed more fully
in this new context by the Fund and by you.
2
�\
..
Finally, our Community Development Banking, Community Policing and Enterprise
initiatives incorporate ~ of central components of the Bradley bills: incentives for personal
savings and investment in the community, cops on the block and safe streets, a CD Bank fund
to nurture a network of community development financial institutions, true Community Schools,
and mobility and access to opportunity throughout the local labor market.
After you have agreed to a preliminary proposal, we will consult with these members of
Congress and come back to you with additional ideas of theirs that can be included.
MESSAGE:
The attached memos present the proposals for enterprise zones and community
development banks. These memos lay out the options and decisions you need to make for both
proposals.
We also wanted to let you know our own view of how these proposals support the themes
that you ran on and now form the underpinning of your economic plan.
First, these proposals offer a new, innov~tive approach. They move beyond the old leftright debate by taking an activist approach to empowering those in distressed areas without
assuming that the answer to every problem is more federal spending on the one hand or more
tax breaks on the other. They offer real opportunity to real people: a savings account, a cop on
their block, an employment voucher that will reward any business for giving them a job, a local
banker willing to invest in new jobs in the community. And we believe they represent a new
direction for poor communities across the country in several other important respects:
* Reinventing Government: The working group makes reinventing government a
centerpiece of our enterprise proposal. No community will get help unless they develop
a comprehensive strategic plan that involves the private sector, builds on existing
community institutions, and coordinates government efforts across program and
jurisdictional lines. The solutions to these problems must come from the bottom up, from
individuals and communities willing to help themselves. These proposals will change the
way government does business -- including the federal government, which will conduct
a competitive grant process through a single point of contact.
* Accountability
for Results: Communities will receive unprecedented flexibility to
design their own plan, but will be held accountable for real, measurable results in return.
* Laboratories of Democracy: Communities that show the initiative to make the most
of these efforts will become natural targets for other initiatives in the administration's
agenda. In exploring our proposals with other agencies and major pnvate sector
institutions, we've found a number that want to take part.
3
�•
*
Comprehensive Growth Strategy: These proposals foster efficient and
entrepreneurial government that promotes both private investment and increased
public investment in human and physical capital.
* A Bold New Experiment:
Some will point out that there is no conclusive evidence
that enterprise zones work, and that only three community development banks have been
created in the history of the republic. They're right on both counts -- because no one
has been trying such new approaches with any federal support or leadership. Our
proposals are designed to give these ideas a fair test, by targeting resources in a limited
number of places and providing clear measures of success or failure. If these new
approaches don't work, we can give up or try something else --but we shouldn't quit
before we start just because the old answers have failed.
Whatever options you choose to put forward, we believe that these proposals provide you
with a tangible platform to inspire hope and show your commitment to a new spirit of
opportunity, responsibility, and community that will empower people from Watts to Mount
Pleasant to believe in the promise of America again.
4
�USA TODAY· MONDAY. MAY 10. 1993
President Ointon's plan to help poor commuruues.
V
IEmpowennentzonescan
help poor communities
1
IJ1)(!1) $r:t1 ~y letting communl1
llllliilb~l'ii~i!~ll!li!'il.tl-11 t1es set agenda,
President Clinton can make federal help an aid, not a hurdle.
. President Ointon has found a clever
\. way to help distressed communities i by listening to them.
Poor communities said they needed
not just federal money, but also freedom
to decide how to use it They asked for
more flexibility to try novel approaches
to problems. They said tax incentives
weren't enough to lure businesses.
Ointon's plan, announced last week,
wisely tries to give them a chance to
prove they're right It improves upon a
long-touted concept - enterprise zones
- and tests it at a cost of only $6 a year
for each person in the country.
Some $800 million a year would be
distributed to 110 communities for experiments in such things as 24-hour
schools and community redevelopment
. banks.
They'd be set up in both urban and
rural communities of fewer than
200,000 people. Those with the best
plans for improving job creation, education, health care, housing and crime pre-
vention would be selected.
Many ideas would be tried. Successes
could be imitated; failures discarded.
Ten of the areas, dubbed "empowerJllent zones," would get much more.
They'd share $800 million in tax breaks
to lure businesses and create jobs - the
traditional enterprise zone approach.
But unlike previous plans, businesses
inside and outside would get breaks for
hiring people from the zones.
This is a much-needed refurbishing of
the enterprise zone concept - already
tried by several states with mixed success. In a study of Maryland zones, financial lures ranked twelfth as a reason
why businesses locate in a zone.
Listening to local leaders also should
help avoid the disasters that gave '60sera urban renewal a black eye. Then, the
federal government blindly dictated 11
what cities could get Often neighborhOOds were razed for new construction, ,
and people were relocated, not helped. 1
In Ointon's plan, once an-area qualifies for help, government would heed
community requests to get federal regulations out of the way.
Following communities' leads may be
a way to make enterprise zones work. \
!
�-------------------~-----------
.•
EMPOWERMENT ZONES
Across the country, communities are reeling from a decade of declining opportunity and
rising social and economic isolation. The Clinton Administration is introducing the Economic
Empowerment Act of 1993 as the first piece of a larger community empowerment agenda to
bring on a new era of opportunity, responsibility and community for all Americans.
The Empowerment Zone proposal represents a new approach to the problems of distressed
communities. It moves beyond the old debate that the answer to every problem is top-down
bureaucracy on the one hand or trickle-down economics on the other.
The traditional enterprise zone approach assumed that tax breaks alone can revitalize
communities without changing the way government does business. The Clinton proposal gives
local communities the incentives, deregulation and flexibility they need to work with the private
sector to develop comprehensive economic strategies to attract business, create jobs, make their
streets safe, and empower people to get ahead.
1. BOTTOM-UP, COMMUNITY-BASED STRATEGY: Empowerment Zones will
be awarded through a competitive, challenge grant process that gives communities new
opportunity, but demands more responsibility from them in return. No applicant will be
eligible for a single dollar of federal enterprise support unless it submits a comprehensive
strategic plan that brings together the community, the private sector and local government
and demonstrates how the community will reform the delivery of government services.
The challenge grant process is designed to empower local communities to be as
innovative as possible.
2. ONE-STOP WAIVER AUTHORITY: An Enterprise Board-- made up of relevant
Cabinet Secretaries -- will provide communities a single point of contact, and have broad
waiver authority to help communities use existing federal programs and resources more
effectively and efficiently to carry out their strategic plans.
3. 10 EMPOWERMENT ZONES AND 100 ENTERPRISE COMMUNITIES: A total
of 110 zones will be chosen through the empowerment challenge grant process. AllllO
will be eligible for empowerment tax incentives and receive special priority for many
innovative federal programs including Community Development Banks, Community
Policing, and education reform. The 10 Empowerment Zones will qualify for additional
tax incentives, including substantial Employment and Training Credits for businesses that
employ people who live within the zones.
4. INDEPENDENT EVALUATION AND SUNSET: The Act provides for independent
evaluation of what works and what doesn't before expanding to include other
communities. The entire Act will sunset after 10 years.
�---------------------------------------------
·.r
SUMMARY OF ZONE INCENTIVES AND INVESTMENTS:
In addition to enhanced flexibility to coordinate strategic plans, the 10 Empowerment Zones
and the 100 Enterprise Communities will receive or be eligible for five basic forms of incentives and
investments: a) Capital incentives to spur private sector investment; b) Empowerment incentives; c)
Employer wage credits that empower both businesses within the zone and businesses outside of the
zone that hire zone residents; d) Investment programs, such as community policing and enterprise
schools; and e) Zone Priority Investments: A host of federal programs will give recipients of the 11 0
zones priority status for grant applications for investments that may be essential to a comprehensive
empowerment strategy. Starred incentives (*) are available only for the 10 Empowerment Zones.
CAPITAL INCENTIVES
Tax-exempt private activity bonds for investments in tangible property in zone
•
•
Expansion of Low Income Housing Tax Credit
•
Increased Property Expensing under Section 179*
•
Accelerated depreciation for tangible investments*
EMPOWERMENT INCENTIVES
•
Resident Empowerment Savings Accounts -- tax credits for employer contributions;
penalty-free withdrawals for education, purchase of first home, starting a small
business or investing in community investment corporation or fund
•
Resident Empowerment Opportunity Card
•
Private activity bonds for zone businesses, community investment corporations and
funds, and Worker-controlled Enterprises owned 50% or more by zone residents*
EMPLOYMENT AND TRAINING CREDITS ("ETC") FOR ZONE RESIDENTS
•
A multi-year ETC for zone employers*
•
A one-year Targeted ETC for non-zone employers*
INVESTMENTS UNDER THE ACT
•
Enterprise Grants
•
Community Policing
ZONE PRIORITY INVESTMENTS
Community Partnerships against Crime
•
•
Community Development Financial Institutions and Banks
•
.HUD Matching Fund for CDCs
•
Up to 30 Enterprise School Communities
•
SBA, Commerce and EDA funds and technical assistance
•
School-to-Work, Apprenticeship, Youthbuild, Youth Fair Chance, Job Corps
•
Drug Prevention and Rehabilitation-to-Work
•
"One Stop Shop" Career Centers (JPTA), Access and Moving to Opportunities
•
Distressed Public Housing, McKinney Homeless Shelter Assistance
�:
-3-
COSTSANDPLACEMENT
COSTS
Tax Incentives: The President's FY1994-1998 Budget includes a total $4.1 billion over
five years in tax incentives. Approximately 80% of the cost comes from the Employment
and Training wage tax credits.
Investments: The Empowerment Zone Proposal aims to match that amount by targeting
existing investments towards Empowerment Zones and Enterprise Communities. Over
the next two years, $500 million currently in the budget will be allocated to Enterprise
Grants for empowerment zones and communities. An additional $500 million will go to
community policing, of which a substantial amount will be targeted toward the 110 zones.
Innovative Programs: In addition, the President has requested that his Cabinet come
forward with proposals to target at least $3 billion of existing funds within the zones and
communities so that there can be an equal amount of investments and tax incentives.
Several departments have already made that commitment. For example, the Department
of Education has already committed funding and support for local communities to create
30 Enterprise Schools -- 24-hour, year-round community centers -- within the zones.
HUD has agreed to target $200 million of its Community Partnership Against Crime
funds --public safety and drug prevention-- in the zones.
PlACEMENT
100 Enterprise Communities: Of the 100 Enterprise Communities, 65 will be in urban
areas, 30 will be in rural areas, and 5 will be on Indian reservations.
10 Empowerment Zones: Of the 10 Empowerment Zones, 6 will be reserved for urban
areas, 3 will be rural areas and 1 will be an Indian reservation.
�EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES
Details of Legislative Provisions
A.
Change the Way Government Works in Distressed Areas-- This proposal offers
local communities the incentives, targeted investments, deregulation and flexibility
they need to work with the private sector to develop comprehensive economic
strategies to generate business, create jobs, make their streets safe, build community,
and empower people to get ahead. No community will be eligible for a single dollar
of federal enterprise support, however, unless it submits such a comprehensive
strategic plan that brings together the the community, the private sector and local
government .and demonstrates how it will reform the delivery of government services
to achieve these goals. All designations, grants, awards, and waivers will be made
through a single, competitive designation process open to all distressed communities,
rural and urban, across the country.
B.
Enterprise Board and Waiver Authority
•
Composition of Enterprise Board: The Act creates an Enterprise Board
composed of the Secretaries of HUD, Agriculture, Interior, Treasury, HHS,
Education, Labor, Commerce, Veterans Affairs, Transportation, the Attorney
General, EPA Administrator, Small Business Administrator, and Director of
Office of National Drug Control Policy. Up to 11 other members may be
designated by the President.
•
Single Point of Contact: One Cabinet Secretary will provide a single point of
contact for issuing the request for proposals, reviewing the comprehensive
strategic plans, and receiving requests for assistance and regulatory waivers for
each local community.
•
Authority to Develop Selection Criteria: The Enterprise Board is charged
with developing the selection criteria for designating empowerment zones and
enterprise communities. The criteria must include consideration of the
effectiveness of the strategic plans, the assurances and measurable benchmarks
to implement such plans, and their innovation and promise in achieving the
goals of the Act.
•
Waiver Authority: The Enterprise Board is authorized to waive any provision
of Federal law or regulation administered by the Secretaries of HUD,
Agriculture, HHS, Labor, or Education, if the Board determines the waiver is
necessary for achievement of the purposes of the Act with respect to
implementing the comprehensive strategic plan of an empowerment zone or
enterprise community. .The Board must consult with the relevant agency before
1
�granting any waiver. Any disputes will, ultimately, be resolved by the
President..
•
C.
D.
Exceptions to Waiver Authority: Excluded from this waiver authority are
rules for eligibility and benefits under the Social Security Act and Food Stamp
Act, and laws and regulations concerning public or individual health, safety,
civil rights and non-discrimination, environmental protection, labor relations,
.labor standards, occupational health or safety, pensions, taxation or any other
law that the Attorney General shall by regulation exclude.
Competitive Designation Process
•
Designating Secretaries: In consultation with the Enterprise Board, the
Secretary of HUD will designate the urban zones, the Secretary of Agriculture
will designate the rural zones, and the Secretary of Interior will designate the
Indian zones.
•
Comprehensive Strategic Plan: Applicants must meet the eligibility criteria
and put forward a comprehensive strategic plan for coordinated economic,
human, community and physical development for the proposed nominated area.
The plan must describe: (1) how the affected community is a full partner in
the process of developing and implementing the plan; (2) the extent to which
the State, local, and private resources will be available in the nominated area;
(3) the baseline, methods of evaluation, and benchmarks for measuring success
in carrying out the plan.
•
Revocation of Designation: The Designating Secretary, in consultation with
the Enterprise Board, may revoke the designation if the local government
modifies the boundaries of a zone or is not complying substantially with, or
fails to make progress in, achieving benchmarks in the strategic plan.
Performance Review, Independent Evaluation and Sunset
•
Annual Reviews: Each designated area will be reviewed annually for
performance in achieving benchmarks contained in its strategic plan. We will
learn from the best efforts of 110 communities all across America what works
and what doesn't.
•
Requiring Results: In the event of substantial noncompliance or failure to
make progress in achieving benchmarks, the Designating Secretary may
withhold or reduce enterprise grant amounts or require appropriate changes in
the strategic plan.
2
�E.
•
Independent Evaluation: The National Academy of Sciences will conduct an
independent study of the effectiveness of empowerment zones and enterprise
communities and publish interim and final reports in 1997 and 2003
respectively. Based thereon, the Congress may modify, extend, expand, or
reopen the Act.
•
Sunset: Ten years after enactment, this Act will sunset. This will assure
careful consideration of what works and what doesn't.
Number of Designated Areas (Zones)
Empowerment Zones:
•
10 zones with 6 urban (and a total resident population at the time of
designation of 750,000 or less), 3 rural (total population of 90,000), and 1
Indian reservation.
•
All may be designated as early as 1994. Designation runs for 10 years, subject
to early termination for non-compliance or failure to achieve results.
Enterprise Communities:
F.
•
100 zones (65 urban, 30 rural, and 5 Indian).
•
All may be designated as early as 1994. Designation runs for 10 years, subject
to early termination.
Eligibility Criteria
1. Geographic and Population Restrictions
•
Urban zones can consist of up to 3 noncontiguous areas in 2 or fewer
states.
•
Rural zones can consist of up to
3 noncontiguous areas if located in 1 state, or
1 contiguous area if located in up to 3 states.
•
Size limits:
20 square miles for urban zones.
1,000 square miles for rural and Indian zones.
3
�•
Maximum population:
For cities with populations of 500,000 or above, the lesser of
200,000 residents or 10 percent of city population.
For cities with populations less than 500,000, zones can have a
maximum population of 50,000 residents.
For rural areas up to 30,000 residents.
2. Poverty Rates:
Generally, within each zone,
•
•
•
50 percent of census tracts must have a poverty rate of 35 percent or
more,
90 percent of census tracts must have a poverty rate of 25 percent or
more, and
100 percent of census tracts must have a poverty rate of 20 percent or
more.
Subject to the following exceptions --
G.
•
The Designating Secretary has discretion to reduce by 5 percentage
points the 35 percent, 25 percent, and 20 percent thresholds for not
more than 10 percent of the tracts in the zone (or, if fewer, 5 tracts).
•
There is also a special exception for census tracts having either (i) no
population, or (ii) population less than 2,000 residents where more than
75 percent of the tract is zoned for commercial or industrial use.
•
Central business districts can be included in zones but any tract
including part of the central business district must have a poverty rate
of 35 percent or more.
Investments Under the Act-- Approximately $4 billion in existing investments will
be targeted with approximately $4 billion
zones and enterprise communities.
in~
tax incentives on empowerment
1. Enterprise Grants -- a total of $513,500,000 is authorized for FY 1993 and 1994
for enterprise grants.
•
Amount of Grants in Empowerment Zones: up to $30 million per year for
urban and up to $10 million per year for rural or Indian zones.
•
Amount of Grants in Enterprise Communities: Up to $3 million per year
4
�for urban and up to $1 million per year for rural or Indian zones.
•
Uses of Grants: Applicants must state in their coordinated strategic plan how
they will invest enterprise grant monies. Once zones and communities are
designated, spending must conform to the approved plan. Communities will be
free to propose uses that they feel are most needed .and effective in achieving
the enterprise mission. Possible examples of uses include:
creating new, coordinated delivery systems for relevant government
services
creating community lending or micro-enterprise loan funds
providing technical assistance, entrepreneurial support, workforce skill
programs and job-search and job-matching networks in the labor
market
leveraging private matching support
matching funds for community development corporations
2. Community Policing -- A total of $500,000,000 is authorized for FY 1993 and
1994 for public safety and policing grants.
•
The Attorney General may award grants to enterprise zones or enterprise
communities to increase police presence, expand cooperative efforts between
law enforcement and the community and assure public safety.
•
In making community policing awards, the Attorney General will give priority
to empowerment zones and enterprise communities and will consult with the
Enterprise Board in making such grants.
3. Innovative Programs and Zone Priority Investments -- In addition to priority
participation in the new funds for the proposed Community Development Banking
Fund, the President has also requested his Cabinet to offer proposals to target at least
another $3 billion of existing funds within the zones and communities. Several
departments have already made commitments for innovative programs equalling this
amount, while other agencies have offered to give priority designations for additional
agency initiatives to zones and communities. All of these programs and initiatives call
for substantial, community-based, bottom-up planning. They will all be made
available through the designation process so that applicants may integrate these
programs into their comprehensive strategic plans. Examples include:
•
Community Partnerships Against Crime (HUD)
•
Up to 30 Enterprise School Communities (DoEd)
•
Matching Fund for CDCs (HUD)
5
�•
SBA, Commerce, and EDA funds and technical assistance
•
School-to-work, Apprenticeship, YouthBuild, Job Corps (DoEd, DOL, HUD)
•
"One Stop" Career and Opportunity Centers (JPTNDOL)
•
Drug Prevention and Rehabilitation-to-Work (HHS/DOJ)
•
Distressed Public Housing, Access and Moving to Opportunities (HUD and
DOT)
•
McKinney Homeless Shelter, Training, Self-sufficiency (HUD)
4. Flexibility over Existing Federal Funds -- Perhaps most valuable, waivers will
be granted by the Enterprise Board as appropriate to allow each zone or community to
implement its own strategic plan. This will allow local communities to make existing
federal dollars from many sources and programs go further and accomplish more.
Zones and communities will then be judged not on whether they adhere to a maze of
often conflicting federal regulations, but on the extent to which they perform in
achieving the benchmarks established in their own comprehensive strategic plans.
H.
Tax Incentives for Empowerment Zones and Enterprise Communities
1. Zone Resident Empowerment Savings Credit
•
Provide a 50 percent credit on zone employers' retirement plan
contributions (for their employees who live and work in the zone) up to
2 percent of compensation not in excess of $35,000.
•
Employer's contribution may be in the form of an employer match or
non-elective contribution (i.e..., it may not be in form of a salary
reduction).
•
Retirement plan must be a qualified defined contribution plan, other
than an ESOP or stock bonus plan, and for small employers may be a
simplified employee pension.
•
Penalty free withdrawals could be made to pay for education, health
expenses, and purchases of new homes (or start a business).
•
Credit would be in lieu of employers' deduction of contribution.
•
Credit would be in addition to the ETC.
6
�•
Employer contribution must be 100 percent vested.
•
No AMT offset.
2. Low-income housing credit expanded for construction
•
For purposes of low-income housing tax credit, zone tracts with at least
30 percent poverty levels qualify as "difficult to develop" area, so credit
is increased by 30 percent. Effect is the same as providing 91 percent
credit instead of 70 percent, or 39 percent credit instead of 30 percent.
•
Subject to existing volume caps.
3. Tax-exempt enterprise zone facility bonds for zone businesses
I.
•
New category of exempt activity bonds created for facilities of qualified
zone businesses located in zones.
•
Up to $3 million per business per zone in bond funding and $20 million
per business for all zones.
•
50 percent of financing subject to existing volume cap.
•
Bonds are excepted from section 265 bank deductibility prohibition.
Tax Incentives Available only for Empowerment Zones
1. Employment and Training Credit (ETC)
•
From designation through 2000, employer credit of 25 percent of the
first $20,000 of wages earned by employees who are zone residents and
perform all services in the zone.
•
Rate of credit phases-out 5 percent per year from 2001 through 2004.
in
in
in
in
2001,
2002,
2003,
2004,
the
the
the
the
credit
credit
credit
credit
is
is
is
is
20 percent
15 percent
10 percent
5 percent
•
25 percent AMT offset.
•
Qualified wages include certain training and educational expenses paid
on behalf of the employee.
7
�•
Available to all businesses that employ zone residents to work in the
zone.
2. Targeted Jobs Tax Credit (fJTC)
•
Zone residents would become a targeted group. Employers (including
employers outside the zone) would claim the 40 percent TJTC credit on
up to $6,000 of first-year wages of zone residents.
•
Zone employers not eligible for both ETC and TJTC on first-year
wages (may choose on employee-by-employee basis).
•
Available to all non-zone businesses.
3. Property expensing
•
Increase section 179 expensing for depreciable property for qualified
zone businesses from $10,000 to $75,000 per year.
•
Expand expensing to include buildings used in qualified zone
businesses.
•
The end of the phase-out range of section 179 applying to personal
property extended from $210,00 to $350,000 of property placed in
service.
•
Section 179 increase also applies for AMT purposes.
•
Among other requirements to ensure close ties to the zone, qualified
zone businesses must have at least 35 percent of employees who are
zone residents, and do not include certain types of businesses.
4. Accelerated depreciation
•
Allow shorter recovery periods for section 168 depreciation of
investment in tangible property, including buildings, used in qualified
zone businesses.
3-year property depreciated over 2 years.
5-year property depreciated over 3 years.
7-year property depreciated over 4 years.
10-year property depreciated over 6 years.
15-year property depreciated over 9 years.
20-year property depreciated over 12 years.
8
�Non-residential real property depreciated over 22 years.
•
Shorter recovery periods would be used for AMT purposes.
•
Among other requirements, qualified zone businesses must have at least
35 percent of employees who are zone residents, and do not include
certain types of businesses.
5. Tax-exempt Financing for Resident Owned Businesses and Community
Investment Corporations and Funds
•
Provide tax-exempt bond financing for businesses and community
investment corporations and funds that are more than 50 percent owned
by individual zone residents.
•
Up to $3 million per business per zone in bond funding and $20 million
per business for all zones.
•
25 percent of financing subject to existing volume cap.
•
Bonds are excepted from section 265 bank deductibility prohibition.
The labor incentives -- ETC and TJTC -- account for approximately 80% of the FY94FY98 $4.1 billion in tax incentives.
9
�Across the country, rural and urban communities are starved for affordable c:rec:ut,
capital, and basic banking services. Millions of Americans in low-income neighborhoods
have no bank where they can cash a check, borrow money to buy a home, or get a small loan
to start a business or keep one going. Perhaps more than any other proposal, the network of
community development banks you promised in the campaign - coupled with reform of the
Community Reinvestment Act (CRA) - have the potential to transform these communities
by empowering people and businesses to join the economic mainstream.
D.
BACKGROUND
Over the last two months, the NEC-DPC Interagency Working Group on Community
Development and Empowerment has been developing a community banking initiative that
tries to fulfill the basic principles you outlined during your campaign. This memorandum
reflects ideas from HUD, Treasury, Agriculture, Commerce, OMB, CEA, NEC, and DPC, as
well as outreach efforts to community groups and the banking industry.
A. The Problem. As you know, low-income communities face several c:bronic
banking problems:
•
InadeQuate Basic Hankin& Services - Millions of poor Americans have DO
access to nor relationship with a bank. They live in neighborhoods with Do
ATM machines, no drive-through windows, no checking or savings accounts.
1
�----------------------------------~
Instead, they are forced to deal with cash-checking operations that charge an
exorbitant fee for a simple service;
•
No Loans for Small Borrowers - Most commercial lenders shun low-income
communities because small loans have higher transaction costs and lower profit
margins, and require more labor and attention, if not more risk;
•
Lack of Expertise Among Lenders - Lending in distressed communities,
particularly for small business, is difficult. It requires specialized underwriting
expertise and knowledge-- of the borrower and the community, credit
products, subsidies, and secondary markets;
•
Lack of Expertise Among Borrowers -- Small businesses, particularly those in
distressed areas, often lack expertise in the basics of small business
management, including accounting, borrowing, managing and repaying money.
When commercial lenders abandon these communities, there is often no place
to tum for essential capital, credit or information;
•
Discrimination -- Home Mortgage Disclosure Act (HMDA) data suggest that,
deliberately or not, home mortgage lenders deny loans to middle- and upperincome minority borrowers more often than to moderate- and lower-income
whites. Anecdo~l evidence suggests that the situation is even worse for
commercial and Consumer loans;
•
Shortage of Credit and Capital -- The unmet demand for credit and capital in
poor communities is therefore substantial. In too many low- and moderateincome neighborhoods, loans are unavailable for even the most credit-worthy
housing and business purposes. A recent study found $360 million in unmet
demand for credit-worthy small business loans in the City of Oakland alone.
In New York City's distressed communities, several billion dollars in demand
for housing loans that would qualify for federal insurance went begging.
Economic revitalization cannot take root in these communities where good
risks and sound businesses cannot get loans.
B. Promising Responses to the Problem. Many enterprising communities have come
up with their own ways to fill the void in community development and banking services. We
have looked at a variety of promising alternatives under way around the country, including
community development banks, credit unions, corporations, and loan funds; loan consortia and
other community development intermediaries; and community reinvestment by mainstream
commercial banks.
1. Community Development Banks (CD Banks): South Shore Bank in Olicago,
Elkhorn Bank and Trust in Arkansas, and Community Capital Bank in Brooklyn offer
a comprehensive range of assistance to the communities they serve. Through for2
�profit and non-profit affiliates, they provide basic deposit, saving, checking, and
consumer and mortgage lending services; venture capital for small business;
microenterprise loans; and technical assistance. They also develop rental and
cooperative housing for low-income residents and commercial real estate for small
businesses. Three such integrated, full-service financial community development bank
holding companies have emerged over the last twenty years.
l. Community Development Financial Institutions (CDFI's): A variety of other
community-based organizations have found their own financial service niche:
•
Community Development Credit Unions (CDCU's) are regulated
financial cooperatives owned and operated by lower-income
persons to serve the deposit, check-cashing, and small consumer
loan needs of their members. A growing number of CDCUs are
making development loans for small business expansion and
start-up. Uke CD Banks, CDCUs can offer federal deposit
insurance up to $100,000. The largest CDCU is the Self-Help
Credit Union in North Carolina. With more than $40 million in
assets, it is second only in size to South Shore Bank among
community lending institutions. Self-Help is part of a larger
holding company that includes independent, non-depository
credit and support mechanisms. There are over 100 CDCUs
across the nation, and one the newest was chartered in South
Central Los Angeles last November;
•
Over 1000 Community Development Corporations (CDCs) have been
created by civic and community groups, local or state development
authorities, and banks to provide small business or micro-enterprise
lending, large community development projects, or affordable housing.
Their sources of capital and loans include other banks, federal small
business and housing programs, local corporations and foundations, and
major national assistance corporations such as USC or Enterprise;
•
Scores of specialized Community Development/Micro Loan Funds
(COLEs), both for-profit and non-profit, aggregate capital and
contributions from socially conscious banks, investors, and foundations
to provide equity, bridge loans, or below-market financing for
affordable housing, revitalization of retail stores, or small businesses in
distressed communities. Much or their lending is to microentex:prises - small businesses of five or fewer employees, with owners that have
income no higher than twice the poverty level.
3. Community Development Intennediaries (CDI's): A number of state and local
governments, community groups, and financial consortia provide specialized services
3
�that link communities, COB's, and CDFI's to mainstream banking, credit, capital, and
government insurance and subsidy programs and secondary markets. These
intermediaries underwrite, guarantee, or repackage credit-worthy business and
individual loans in distressed areas.
4. Community Reinvestment by Mainstream Banks: Either in response to pressure
from community groups to meet their obligations under the Community Reinvestment
Act or out of their own self~interest to learn how to better serve underserved markets,
many mainstream commercial banks and thrifts have begun to provide essential
financial services to distressed communities. Some have formed loan consortia, loan
loss reserve funds, and community lending networks; others provide capital, loans, or
contributions to the community development institutions described above. A few Bank
Holding Companies (BHCs) have recently created and capitalized Community
Development Banking subsidiaries to serve the financial needs of distressed
communities.
In those low-income communities that m receiving credit, both lenders and
borrowers have experienced a major uplift. Learning that low-income people will work to
pay off a home mortgage or a small business loan can have a profound impact. As one of the
founders of a CD Bank said, "One of the untold stories is that poor people with small loans
can be better credit risks than rich people with large loans. And the personal reward to me is
that my character loans provide a hand-up to enable the poor family to build a better life and
a better community." That is what community development banking is all about.
ill.
PROPOSALS
Given the variety and promise of these local efforts, we advise against mandating any
single model for community development banking -- although the program should encourage
CDFis which have reached a certain size and level of sophistication to eventually become
chartered depository institutions. Instead, we recommend a flexible community lending
initiative based on the principles you outlined during your campaign.
The community empowerment strategy we have proposed includes four pillars:
economic empowerment zones; community development financial institutions (CDFis);
strengthened Community Reinvestment Act and Fair Lending laws; and community policing
and community partnerships against crime. Together, they will help to stimulate the publicprivate-community partnerships that are essential to empowering poor people to join the
economic mainstream and businesses in distressed communities to become engines of
economic growth. These four initiatives are the first in a series of proposals to address the
unique needs of urban and rural America.
In this memorandum, we present detailed options (1) to strengthen CRA and Fair
Lending requirements by demanding performance instead of paperwork, and (2) to develop a
4
�·-
····- ....... .__. ··--
--------· ----
···-·'·-----~------~-------
national network of community financial institutions -- community development banks, credit
unions, revolving loan funds, microenterprise loan funds, and more.
A.
Community Reinvestment Act (CRA) Reform
1. History
The Community Reinvestment Act requires regulated financial institutions to "serve
the convenience and the needs of the communities in which they are chartered to do
:business. "1 Under CRA, regulators of financial institutions - the Fed, the Comptroller of
the Currency (OCq, the Federal Deposit Insurance Corporation (FDiq, and the Office of
Thrift Supervision (OTS) --undertake periodic examinations of each federally chartered
institution. Using a twelve-factor analysis, an examiner assesses the institution's lending
practices and assigns the institution a CRA rating of "outstanding," "satisfactory: "needs to
improve," or "substantial noncompliance." The examiner's CRA report is available for public
inspection and an institution's CRA rating is taken into account in a regulator's evaluation of
the institution's application for a charter, new branch, merger, or acquisition.
During the campaign, you promised to focus CRA evaluations on "performance, not
paperwork." Both banks and community groups argue that current CRA policy suffers from
several shortcomings:
•
Vagueness --The current evaluation process provides insufficient guidance for
both regulators and regulated institutions on precisely which practices
demonstrate CRA compliance. This vagueness is one source of the highly
subjective nature of CRA evaluations and the "grade inflation" perceived by
community groups;
•
Paperwork, not results -- In the face of this uncertainty, both regulators and
regulated institutions have focused on an institution's processes and paperwork,
1
CRA focuses only on a limited set of financial institutions. A considerable amount of
basic banking, lending and other financial services are provided by other entities, including
•
car loans extended by the credit arms of car companies
•
personal and home loans by consumer finance firms
•
commercial loans by commercial finance agencies
•
basic deposit and checking by money market funds.
The total of such non-bank financing exceeds $1 trillion. The total assets of other financial
sectors (insurance companies; investment companies, broker-dealers, mutual funds, money
market funds; and pension funds) almost double the total assets of the regulated banks, thrifts,
and credit unions. None of these other financial institutions is sukject to CRA. At a later
date, we will therefore explore how these other financial institutions might also play a
constructive role in reinvesting in distressed communities.
5
�such as meetings with community groups and minutes from board meetings,
rather than on results. This has created substantial burdens for both regulated
institutions and regulators, without any corresponding gain in CRA
effectiveness;
•
Poor performance -- Although more than 90% of all regulated institutions
receive "satisfactory" or better CRA ratings, redlining persists in low- and
moderate-income neighborhoods;
•
Inequity -- Although some institutions reinvest heavily in their communities
and others only lightly, almost all institutions receive passing CRA grades.
This not only hampers the ability of regulators and community groups to
monitor reinvestment practices, it also deprives responsible institutions of
recognition for their performance.
2. Stronger, More Focused CRA Enforcement
We recommend three measures to improve CRA enforcement, none of which requires
legislative action:
1) IBetter examiners: Many examiners lack experience in conducting CRA
examinations. Bank regulators need to develop a well-trained corps of examiners who
specialize in CRA examinations;
2) Stronger sanctions: Regulators should use supervisory letters, letters of
reprimand, and civil money penalties to enforce actions against institutions with
persistently poor CRA performance;
3) Performance-based standards: The most sweeping step we can take is to reform
the CRA examination protocols to focus on quantifiable measures of an institution's
actual performance in providing credit and other financial services to its community.
Banks should be judged on the basis of the magnitude and distribution of affordable
housing and community development lending and investment, especially in low- and
moderate-income neighborhoods, and the provision of basic banking services. For
example, banks should receive partial CRA credit for investing in community
development institutions (see below). Banks should also be subject to fair lending
examinations to determine whether they engaged in a pattern or practice of
discrimination. 2
2
By the time of your announcement of your initial wban initiatives, we should also be
able to include several other important contributions to augment community reinvestment and
fair lending -- including new objectives and programs for the major GSEs like Fannie Mae
and Freddie Mac.
6
�The first two steps are relatively non-controversial. The third measure, performancebased standards, will draw criticism from some financial institutions who are worried about
"credit allocation" and increased paperwork, and a few community groups who have used
vague standards to pressure banks into more specific agreements on community lending.
We believe that neither concern is well-founded: The proposed regime does not
prescribe lending or investment quotas, and remains sensitive to the varied needs and
strengths of financial institutions. Over time, performance-based standards will reduce
uncertainty and paperwork for banks and regulators alike, by giving them measurable goals
and clear guidance. A streamlined examination procedure will be developed for the
examination of small and rural institutions.
Most community groups will support the new standards because of their potential to
increase access to basic banking services, as well as lending and inveStment. The real
concern of community groups is that after 12 years of strained relations, they don't trust the
regulatory agencies. Affected communities need to know they will have a strong voice in the
examination process. In conducting CRA and fair lending examinations, regulators should
actively solicit the views and comments of residents, small businesses, and citizen's groups.
B.
A National Network of Community Development Institutions
To date, with almost no government support, community development financial
institutions (CDFis) have proved that it is possible to mobilize and lend significant amounts
of capital for development in credit-deprived communities. We propose creating a
Community Banking and Credit Fund {the "Fund") to provide federal capital assistance that
will dramatically expand the amount of capital available for CDFI start-up and expansion
without creating enormous financial liabilities for the federal government. The Fund
would also serve as a national information clearinghouse and support system to help
prospective CDFis get off the ground and existing ones to expand; better meet their mission,
and operate sound! y.
1. The Community Banking and Credit Fund
In addition, HUD bas prepared a proposed executive order to commemorate the
twenty-fifth anniversary of the Fair Housing Ad which is this month. The executive order
would: (1) establish a Presidential Fair Housing Council consisting of selected cabinet
members; (2) develop a pilot program to coordinate cabinet programs to promote equal
housing opportunity; (3) mandate a review of all HUD programs to assure that they provide
equal opportunity and promote economic self-sufficiency for their ultimate recipients; (4)
direct the Secretary of HUD to issue regulations defining discriminatory practices in mortgage
lending, the secondary mortgage market, property appraisal, and (5) property insurance; and
update Executive Order 12259 to take account of changes made by the Fair Housing
·
Amendments Act of 1988.
7
�The Community Banking and Credit Fund would be a federally-chartered, quasipublic enterprise, responsible for overseeing the development of a nationwide network of
community development financial institutions. The Fund would be governed by an elevenmember Board of Directors that would be appointed by the President and confirmed by the
Senate. The Board would include the cabinet secretaries or designees of the Departments of
Treasury, HUD, Commerce, and Agriculture, a representative of the Small Business
Administration, two representatives of the CDFI industry, two representatives from
community groups, and two representatives of the mainstream banking sector (including one
of the regulators, e.g., the Federal Reserve or Federal Deposit Insurance Corporation). The
Chairman would be appointed by the President. The Board would serve as a corporate board
• of directors to establish policy and would retain a full-time President/CEO to manage
operations of the Fund. The size and composition of the Board could be expanded or altered
to reflect the public purpose and the mix of public and private capital.
2. Selecting Network Participants
To receive financial or technical assistance from the Fund, an institution would have to
be a member of the national CDFI network, and meet several stringent standards:
•
Demonstrated ability to manage a CDFI;
•
A primary, explicit and highly public commitment to community development.
To qualify, a CDFI's loans and investments would have to go toward
community development, and serve an area that needs it;
•
A realistic, specific strategy to achieve the CDFI mission, consistent with the
local community development plan, and become self-sustaining;
•
Leverage -- private capital or other support to match Fund support. George
Surgeon of Elk Hom recommends, for example, a one-dollar federal match for
every two dollars of private money;
•
Expertise in providing technical assistance to low income/small borrowers.
Many small borrowers default not because their businesses are not viable, but
because of a lack of knowledge about management, financial, and legal matters.
Existing CDFis have shown that with active guidance and credit counseling,
low-income residents of distressed areas can be extremely credit-worthy.
Attached at Tab A is a summary of the criteria for eligibility.
The Fund would solicit proposals for CDFI matching funds and other assistance on a
competitive basis. Relevant federal agencies and existing CDFis will be available to assist
applicants in developing their strategic plans. A review board, comprised of agency,
community and private sector representatives, would review and make recommendations for
8
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JOHN CONYERS. JR.. MICHIGAN
ROMANO L WAZZOU,lENTVCICY
WlLLJ.Uol J. HUGHES. NEW JERSlY
'{'"MIKE SYNAR. OKLAHOMA
'ATRICIA SCHROEOEII. COLORADO
DAN GUCKMAN, KANSAS
IARNlY FRANK. IUSSACHUSmS
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EDWARO F. FEIGHAN. OHIO
HOWARD L BERMAN, CAUFORNIA
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HAALlY 0. STAGGER$, JR.. wtST YIIIGINIA
JOHN 111"1' ANT, TlXAS
MEL LlYINl. CALIFORNIA
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JOHN F. IIUD, RHODliSLAND
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COMMITTEE ON THE JUDICIARY
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HAMilTON RSH, A. lllW YOM
CAIII.OS J. MOOIIHU.O. CAUFOIINIA
H(NII"t J. HYDl. ILUNO<S
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D. FRENCH SLAUGHTtR. JR., VIRGINIA
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CRAIG T. JAMES. FLORIDA
TOM C.O.MPIEU.. CAUFORNIA
STEVEN SCHIFF, NEW MEXICO
JIM RAMSTAD, MINNESOTA
loiAJOIUTY-22~111
RAYBURN HOUSE OFFICE BUILDING
MINOIUTY-221-41101
WASHINGTON,
DC 20515-621£1
ME M0 R A N 0 U M
TOtl
Members of the subcommittee
on Crime and Criminal Justice
FROM:
Charles E. Schumer, Chairman
Subcommittee on Crime and criminal Justice
DATE:
July 9, 1991
RE:
Putting the Cop Back on the Beat:
Community
Working with the
On July 10, 1991, the Subcommittee on Crime and Criminal
Justice will hold an oversight hearing on the topic of "Putting
the Cop Back on the Beat: Working with the Community."
Approximately 300 police departments nationwide are
working to put the cop back on the beat. This is part of a
movement becoming more widely known as "community policing."
With certain unique variations in method departments are changing
the way they deliver police·.services and are working hard to
build a rapport, and more importantly a working partnership, with
the residents of their jurisdictions.
Criminal Justice experts believe that when the officers
and the citizens of a neighborhood know each other it is harder
for both to act in unlawfully. Community policing efforts serve
to strengthen the relationship between the people and the police,
increase "accountability" of both to each other.
Part of community policing is a focus on community ·
involvement in the policing process. When a neighborhood
supports and assists the officer assigned to that area to attack
the crime problem, they both have a stake in the future of that
neighborhood. They work together to identify and develop
solutions to problems ranging from broken windows on abandoned
buildings (which provide haven to drug dealers or juvenile
delinquents reeking havoc in a community), to helping
neighborhoods get their street lights fixed, vacant lots cleared
of rubbish, and streets paved. These efforts do not result
directly in arrests, but are geared toward helping people to take
�back their neighborhoods from criminals who have claimed it as
their turf and reduce the potential for crime.
As communities come to trust that officer, he has a
professional interest and stake in the future of that community.
Through the use of extended period permanent beat assignments,
rather than constant rotation, officers are more likely to know
the people in that beat area. This familiarity increases his
accountability to those, his knowledge of the criminal element in
that area and the problems it causes. It also increases his
ability to obtain helpful information and cooperation of
residents in dealing with the problems.
If a~ officer worked closely with residents and was out on the
beat in that neighborhood every day, he would lose his anonymity.
He would no longer be an insurgent force imposing order. He
would be known by the residents. Research indicates that this
contributes to a community's level of fear perception of
disorder.
Evolution of Community Policing:
In early America the police were multi-faceted public
servants who performed a number of different functions beyond
just enforcing the criminal laws. True, they were always keepers
of the peace, but they also did such things as keep street lights
well supplied with oil, assist the hurt and disabled, and
addressing such issues as rounding up stray animals. In those
days police power was decentralized and the officer was not
closely supervised by a central command. He became well known in
his beat area and in appointment was subject to local political
control. Under this rubric, officers often imposed harsh
treatment on those who were different from the norm or political
order to whom they were accountable. These factors lead in many
cases to allegations and proof of corruption and abuses.
In the 1920's and early 1930's a reform movement emerged
which reorganized the structure and methods of policing. The
reforms of this era relied predominantly on removing political
influence and emphasizing the professionalization of policing.
The police officer was stripped ot all but his law enforcement
responsibilities and departments strove to improve the image of
the police officer through exercise of greater control over his
actions. This was the foundation of the legitimacy of modern law
enforcement. From then on, it was thought, the police function
was to control crime and apprehend criminals. Community input
was shunned as "social work".
Through division of labor, the restriction on the
..
officer's role in the neighborhoods by increased central control,
the widespread use of the automobile and the advent of increased
radio technology police officers became further and further
2
�removed from the communities they were supposed to protect. And
finally, with 911 telephone systems, the police were able to
rapidly respond to calls for service. The orientation of
policing toward incident-driven calls for service became the
widespread practice through the middle portion of the century.
As a consequence, police were relegated to scurrying from call to
call. The race to respond to crimes which have already occurred
and where the perpetrator has long since fled has made the job of
a modern day officer increasingly futile. One recent study shows
~hat in New York City officers spend 90% of their time going from
'call to call taking complaints and submitting them to the
department. According to that same study, they once spent only
50% of their time in this mode. The present level of demand
le!ves little time for solving crimes and conditions which result
in crime.
Experts say that this leaves no time to address quality of
life issues or minor disturbances which trouble residents most
and lead to an environment of fear and ultimately breeds crime.
Residents no longer frequent the businesses located near their
homes, stay locked up inside their homes, and lose ties to their
neighbors. It is under these circumstances that neighborhoods
deteriorate; those residents who can afford to relocate do so.
The result is a descending cycle of more crime leading to more
fear leading to more crime.
Holes began to be punched in the foundation which
supported the development and sustaining of the incidentdriven/patrol model of police job performance. During the period
of increased technology, centralized control, and growing
anonymity of officer who served only as law enforcer, the police
were unable to meet their objectives in crime control. Crime
continued to spiral despite the efforts of departments to add
more patrol cars and maintain quick response time to calls for
service. In 1988, reported crimes reached 14 million, four times
the number in 1960. As further evidence of the escalation, there
were 1.5 million violent crimes in 1988. This is five times the
amount reported in 1960. Violent crimes rose by 14% alone
between 1980 and 1988.
The most serious criticism of the effectiveness of "911"driven police service is the ''clearance" rate for violent crimes,
or the rate of crimes for which an arrest is made. From 1960 to
1988, the national clearance rate for homicides dropped from 92%
to 70% and for rapes from 70% to 50%. At present only about 25%
of reported robberies result in arrest. These low numbers do not
reflect the even smaller number of these cases in which a plea of
guilty or conviction results.
Research during the 1970's on preventive patrol and.rapid
response to calls for service found that neither was an effective
crime control tool. Studies in two major cities found that 60%
3
�of the 911 calls for service came from 10% of the households.
This communicates that these responses are doing little to
effectively address the causes of the calls and thereby reduce
them. In New York City, 90% of the patrol force is deployed to
respond to approximately 4 million calls per year, while only 10%
of the force does any investigation. Not all "911" calls are
emergencies or merit immediate emergency response. For example,
in Aurora, Colorado determined that only about 25% of its calls
were emergencies. As part of their innovative community policing
programming they have devised a "911 triage" where they will
analyze the need.for appropriate forms of police or other
governmental agency response. This cuts down on the noness~ntial calls and frees the officer to engage in other
proictive policing activities. Another example of innovative
service demand control is used by the Houston Police Department.
The department has developed a "911" call management system which
prioritizes calls for service and allows Houston's street
officers more time to devote to neighborhood oriented policing.
In addition, researchers also measured increases in fear
of crime and found that fear was more closely correlated with
disorder than with crime. Finally, the regard in which police
were held by those who they were charged with protecting and
those they were to keep in line began to diminish. The low
perception of the police inhibited their ability to maintain
order in an increasingly unstable environment.
Community Policing:
Community Policing combines a variety of policing tactics
which intensively involve the same officers in the same community
on a long term basis. By developing continuity of beats in
specific geographic areas officers have the opportunity to know
the residents, the streets, the alleys, and the spots ripe for
criminal activity. It calls on departments to use a bottom up
approach to maintaining law and order: community input and
involvement in identifying criminal problems and crafting
solutions to those problems.
Community policing goes beyond involving the community in
problem-solving police techniques, although that is a major part
of the philosophy and practice. It goes further by broadening
the police mandate beyond a narrow focus on response to calls for
service as· the mode of dealing with crime. It also restructures
the department to decentralize most relevant decision making
authority to the individual most familiar with the nature of the
conditions in the problem area.
Although serious crimes are worthy of substantial police
efforts, serious crimes are like the heart attack that the police
must treat., They must also find a way to deal with the
underlying causes. They must involve the patient in the efforts
4
�to promote good health. The police through implementing
community policing shift the focus of efforts away from coping
with the illness in a community to promoting wellness through
educating people on how they can combat crime and enlisting their
assistance in identifying and reversing the tide of deterioration
in their neighborhoods.
Community Policing requires crime to be analyzed in the
broader context, not as isolated incidents, but as manifestations
of underlying problems. Creative intervention might attack the
~nderlying cause and reduce the overall crime patterns which
result from allowing conditions to remain as they are.
The community policing-problem solving era evolved from
the frustration with the ineffectiveness of 911 service police
operational model. During the same period of the 1970's when
research was revealing infirmities in the police ability to
control crime and maintain order, some of the early experiments
of community policing were showing small amounts of promise. New
Jersey's Safe and Clean Neighborhoods Program in cities like
Newark; Boston, Massachusetts; and Flint, Michigan began a return
to foot patrol programs which proved to be very popular with the
communities in which they operated.
As foot patrol programs developed in various jurisdictions
around the country, researchers found that foot patrols reduced
fear, increased citizen satisfaction with police, improved police
attitudes toward residents, and bolstered morale and job
satisfaction of police. Fear reduction was found directly
related to foot patrol and other programs which at least in part
focused on improving the quantity and quality of police-resident
interaction. cumulatively viewed, the favorable findings for
foot patrol/fear reduction and the value of citizen input in the
process gave promising opportunities to departments willing to
experiment.
·
At about the same time, problem oriented policing
techniques were being developed and implemented by departments in
Madison, Wisconsin; Baltimore County, Maryland; and Newport News,
Virginia. Problem oriented policing rejects the view that police
should deal with an incident as an isolated event. Studies
analyzed calls for service and found that most of the calls were
corning from a small number of sources in the jurisdiction.
Experts reasoned that if police could attack the underlying
causes of these repeat calls, then the number of calls for
service would go down. This would allow the officer more time to
deal with other problems and more time to respond to other more
pressing calls.
Contemporaneously, researchers were also finding that
information about crimes could be obtained from citizens more
easily by foot patrol officers and face to face contact between
5
�officers and the community. This information, when properly
managed, could result in significant increases in a department's
effectiveness in dealing with the crime.
Several jurisdictions experimented with pilot projects or
special units devoted to building police - community
partnerships. Currently, there are approximately 300
jurisdictions applying some principles of community policing.
And several jurisdictions, like New York City, Houston, Aurora,
Me Allen (Texas), Tulsa (Oklahoma), Madison (Wisconsin), East
Lansing (Michigan), are attempting to convert their entire
department into community policing departments.
~
•
There are many success stories. For example, in Houston,
when a drug dealing gang set up shop at a bank of public phones
outside a convenience store, the beat officer had the phones
removed. In Tulsa, drug dealers began to strangle the life out
of a housing complex through a rein of criminal acts against the
residents and their property. In response, the department
established a substation in the complex, began regular foot
patrols, and directed the officers to work with the tenants in
identifying and solving the troublesome conditions. The officers
gained the trust and support of the residents and with their help
identified the dealers. several jurisdictions are moving beyond
foot patrols and requiring motorized patrol officers to get out
of their vehicles by successfully including horse mounted and
bike patrols in appropriate areas as a part of their policing
tactics.
WITNESSES
The first panel consists of one witness who will discuss
in general terms the principles, organizational requirements,
tactics, and implementation of community policing. New York City
Police Commissioner Lee Brown will discuss his efforts to
transform his department to a neighborhood based police
organization. He proclaims that this is a cost-effective and
efficient organizational strategy which will help create an urban
environment free from fear, .with minimal cr.ime and disorder.
Currently, the NYPD has 10 foot patrol officers in each of its 75
precincts and under the reorganization plan being implemented
more than 21,000 department officers would be available for
neighborhood based crime fighting. Also a part of the
Commissioner's plan is a revamping of the 911 emergency call
system which is being overused for non-emergency requests for
service. Under the Brown plan, officers would go from currently
spending 90% of their time answering calls for service to 60% of
their shift time. The remaining 40% of their duty would be
devoted walking their neighborhoods to detect and resolve .
situations which are leading to or heightening the potential
likelihood of criminal activity.
6
�Before becoming Commissioner in the nation's most populous
city, Commissioner Brown served as Police Chief in Houston, the
nation's fourth largest city where he initiated neighborhood
oriented policing as well. Commissioner Brown is recognized as
the leading policing practitioner in the area of community
oriented policing and is also a member of the Harvard University,
Kennedy School of Government, Executive Session on Policing.
The second panel will highlight the work of several police
departments putting the cop back on the beat, with examples of
community policing in practice. Particular attention will be
paid to the interaction of the police ofticer and the community
thrqugh testimony a community resident from Tucson Az., Aurora
co., and New York City and the officers they have worked with in
addtessing a particular problem.
From Tucson, Chief Peter Ronstadt will discuss his
department's efforts to build police-community partnerships in
the war on crime. Ms. Betty Liggens and Tucson P.O. Sergeant Ron
Zimmerling will describe their cooperative efforts to rid Ms.
Liggens' neighborhood and local park of gangs and drugs. During
the course of this effort Ms. Liggens' life was threatened by
these same gangs and drug dealers.
From Aurora, Uniform Division Chief Ronald Sloan will
describe the Aurora Police Department's version of community
policing and their belief in the importance of putting the cop
back on the beat. As part of the Aurora program, a domestic
violence program was suggested, designed, and implemented as the
result of line officer John Brungardt's frustration with the
inability of the police department to effectively prevent such
abusive conduct. He grew impatient with the all-too-frequent
situation of having to make 8-10 repeat calls to the same
location. Now as a result of his efforts, there is an effective
early intervention system in place which drastically reduces the
number of times officers will be called to the same household.
He devised a system where both the perpetrator and victim are
ordered to appear in court on the day following the initial
incident. Testifying with Officer Brungardt about Aurora's work
in domestic violence will be Ms. Emma Webster of the Gateway
Battered Woman's Shelter. She will provide insights into the
value of the new police initiated approach to the problem of
· domestic violence and be able to share with the Subcommittee the
views of woman who have been helped by the police department's
program.
Sergeant Andrew McGooey, assigned to the 72nd Precinct of
New York City for several years. He has been there since 1977
and is Sergeant responsible for the CPOP program in that precinct
which has been operational since 1984. sergeant McGooey can
describe the long-term impact of community-police cooperation.
The 72nd Precinct was recently selected as the model precinct for
7
�New York's transition to a total community policing force -- a
system of specific foot patrol beats designed to detect and
prevent crime before it happens. Testifying with him will be Mr.
Jose Vega of Sunset Park, Brooklyn. They will share with the
Subcommittee examples of how they have worked together with Mr.
Vega's block association to rid his community of drug dealers.
They also established a court-watching program with the local
merchants' group. This program makes sure that the court foilows
through on the prosecution of arrestees from the area.
Finally, policing experts have played an important role in
the evolution of police departmental efforts to put cops back on
t-he beat and develop police-community partnership. Dr. Robert
Troianowicz, Director of both the School of criminal Justice,
Michigan State University and the National Center for Community
Policing located there, will explain the underlying ·
justifications for making the transition to neighborhood oriented
policing. Dr. Trojanowicz, like commissioner Brown, is a member
of the Kennedy School's Executive Session on Policing. Through
his work with the National Center for Community Policing Dr.
Trojanowicz will be able to describe programs implemented in
different jurisdictions around the country and some of the
difficulties of community policing efforts. Also testifying on
this final panel will be John Eck, Associate Director for
Research at the Police Executive Research Forum. He will be
discussing different police departments' work with community
oriented problem solving and can testify about different
departments which have utilized this component of policecommunity cooperative partnership.
8
�1-
Remarks by Governor Bill Clinton
Maxine Waters Employment Preparation Center
Los Angeles, CA
September 16, 1992
Thank you.
Thank you very much.
Thank you. I want to thank
Congresswoman Maxine Waters for her leadership and support of this project and of
my campaign.
I'd like to thank Warren Puritani and all the people from the school board
and the school district who have supported this fine project.
I want to acknowledge the leaders of my campaign in California. My campaign
director, John Emerson. Ed Waters. And my campaign chairman, nationally, Mickey
Kantor from Los Angeles who is here.
I want to say a special word of thanks to the school principal, Dr. Alton Arnold
who is from Arkansas. And I'm proud of that.
I want to thank your student body president who led the pledge of allegiance,
and all the students who helped me understand the work that's going on here today.
I was looking at him up here leading the pledge of allegiance, and I was thinking that
he might be asking you to vote for him someday. He looked pretty good to me.
I want to introduce some other people whom I met this morning, along with all
the elected officials, and the entertainers, and the community developers, I met four
young men and their pastor today who have been in large measure responsible for the
truce that has existed on the streets for the last four months in this community
between the gangs. And I want to bring them up here.
Their names are Charles Ratchell, Leon Gullet, John Payne, Victor Salisbury,
and the Rev. Carl Washington. Let's give them all a big hand.
Rev. Washington and Rev. Ewell, who worked with these young men. Let's
give them all a big hand. Let me tell you, these young men who used to worry about
how they could fight each other are now worrying about how we can ail build up one
another. They're doing voter registration.
Supporting education. And it's up to me and the rest of the people in this
National Campaign Headauarters • PO. Box 615 • Little Rock. Arkansas 72203 • Telephone 1501) 372·1992 • FAX (501) 372-2292
Paio lor by the Clinton/Gore ·gz CommJttee
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country who can make a difference to give them and the people they represent some
opportunities so we can prove they did the right thing by bringing a truce to the
streets.
I'm glad to be back in South Central LA. I want yo·u to know unlike most
politicians, I came here three years before the disturbances of last spring.
I was here twice before I started running for president, once along with my wife
to meet with community leaders. And I want to introduce her. She's the person who
got the good cover in Time magazine.
Let me tell you--folks, when I came here last spring and met with community
• leaders, some of them in Maxine Waters' home, and she and Sidney opened their
home to me. And then I walked down the street, and I met with African-Americans,
I met with Asian-Americans, I met with Latinos. And everybody I talked to said there
would be a lot of pretty words said, but they were afraid that after a year had passed,
that nothing had changed.
And let me say that I think that what is at stake in this election is whether
anything is really going to change.
I do not want to win this election in 48 days, simply to change my address and
to go to Camp David on the weekends. I want your life to change. I want it to be
better.
The students I met today know that we can't go on for four more years without
a national economic strategy to rebuild our cities and our country.
Without a program to provide education and training and opportunity for all of
our people.
Without a way to make our streets safer, and to bring our people together
again. They know that, or they wouldn't be here in school.
I have found all over America that people know they need independence, not
dependence. They want a hand up, not a hand out.
They want empowerment, not entitlement. But somebody has got to get about
the business of doing it, and quit talking about it.
I have offered a. plan to rebuild this country that would focus significant
resources on communities like Los Angeles and south central Los Angeles, and give
the people that I met in this fine education center today a chance to make it in life.
Give your communities a chance to be revitalized. And I want to talk to you
today about it in very clear, specific terms. When I met with people here after the
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disturbances, and I walked the streets, I found that nobody really expected salvation
from the federal government, but they did want the opportunity to get education, the
opportunity to get a job, the opportunity to borrow money to start businesses, and the
opportunity to see that when investment is made in these communities, that the
people who live here are put to work. That's what people said to me that they
wanted.
And that is what my plan does. It's based on three fundamental ideas.
First of all, that people everywhere have good ideas and could start businesses
if they could borrow the money to get into business, and we need to bring free
enterprise to south central Los Angeles and to the inner cities of America and to the
• rural communities of America.
Second, that people everywhere can learn, and everybody ought to have the
opportunity to get the education and training they need to compete in a global
economy like they're getting in this institution here.
And third, the best social policy anybody ever devised was economic growth
and a job for everybody who wanted to work. And I'm going to give you that kind of
economic program, if you'll give me the election in 48 days.
For the last 12 years, we've tried it another way. It's been called trickle-down
economics. The theory of trickle-down economics--now listen, this is a serious deal,
the serious theory of trickle-down economics is that if we keep taxes low enough on
the richest Americans, they would make wise investment decisions
and put all the rest of you to work.
Now, we tried it their way for 12 years. In 1980, we had the highest wages
in the world. Now we're down to 13th.
For the last 10 years, more than two-thirds of the American people have
worked longer hours for less money to pay more for the basics of life.
Unemployment has gone through the roof. There are more people working for
government now than are working in factories in America.
I say we can do better. It's time to try a new idea. What I want to do is to
give you the ability to take care of yourselves. I want to put education and skills and
money in your hands and
see if you can do better than trickle-down did. I believe you can.
I believe we also ought to give incentives to people with money, too. But the
tax incentives I offer could be claimed by them only if they invested money and made
it the old fashioned way in creating jobs for Americans here at home--new factories,
new businesses, new investments in our cities.
·
3
�I know this will work. For 10 years and more I've worked hard in my state to
develop an economic strategy that put people first. Our state is ranked first in the
nation for the last year and a few months in job growth in the private sector. Our
income has been growing much more rapidly than the national average, and we have
dramatically increased the education and training opportunities available to our people.
:
I know we can do it, but we have to have national leadership to do it.
You cannot have capitalism and free enterprise without capital. One of the
problems with poorer communities is, the people there are capital poor, because no
one wants to give them a chance to prove that they can make free enterprise work
too. And I want to
change that.
The first thing I want is a national network of at least 100 community
development banks set up in the biggest inner city areas in this country, and in the
poorest rural areas, to make loans to the people who live in those communities. They
can make money doing it, and they can create jobs.
By my count there are only five such banks now, the first one in Chicago
helped to revolutionize a poor community there on the South Side of Chicago. We
started a bank like it in Arkansas, and made money with poorer people in rural areas,
and we proved they could make money, hire people, and pay their loans back too.
And if had 100 banks like that where people had the old fashioned idea that
they ought to loan money to the people who lived in their neighborhoods, who were
known by their neighbors, who could be trusted to pay their bills, and who had good
ideas to start businesses in the community, we could revitalize South Central LA in
a very short time.
And I don't mean just starting businesses that are big. I think we ought to
make small loans to little folks who have good ideas.
Not long ago the community development bank in my state has a good faith
fund that makes real small loans to poor people. They loaned $575 to a woman on
welfare to start a daycare center. And guess what? She started a day care center.
We need this kind of approach. She didn't have a balance sheet. She didn't
have a credit rating. But the people in her community knew she could take care of
children, knew she was an honest woman, knew she could be trusted to pay her bills.
And they made a decision based on that.
{.
She hasn't missed a payment, and she's got a chance to start a business that
will succeed. That is the kind of thing we ought to be doing all over America. We
can move people from welfare to payrolls and businesses if we've got a system to do
it.
�).e.· .
At the same time, I want to give people incentives to invest in all of our
communities. I want the banks in this country who are supposed to be reinvesting
in their communities to either invest or put their money in a community development
bank and let them invest.
There's enough money to go around. We can put $100 million from the federal
government into it, and then we can get people in private banks to put the money in
too. Because they should be required to invest some of their money in their
communities.
And if they don't want to do it, let the community development banks do it.
But let me say, all of you know, particularly those of you who are students here, that
: even if you get money, if you don't know what to do with it, you can't go very far.
So we've got to have more education and training, starting with Head Start for every
child who needs it.
Going up through public schools. And then having funds that will be able to
flow into centers like this one. And look at our program (technical difficulty).
Is it on? Is it on? You know, folks, I'm not paranoid, but this has happened
the last three times I've spoken. But I'll wait if you will. I've been waiting for 12
years to change this country. I can wait a little while longer.
I want to make it possible for funds to flow into centers like this one. We need
a national apprenticeship program. Ten percent of the students in this institution are
from local high schools. They're doing their academic program at their high schools.
They're coming here for skills training.
We ought to make it possible for every student in the country who is not going
to a four-year college to do two years in high school and two years after high school
of apprenticeship training to get good jobs, not dead end jobs.
Ten percent of the people in this school are from the GAIN program, they're on
welfare and they're trying to educate and train themselves into the workforce. But
that program is not funded fully.
We ought to provide enough money so that nobody is ever encouraged to stay
on welfare. Fund their education, fund their child care, fund the medical coverage for
their kids, and they'll move into the workforce through centers like this.
And finally let me say, we have funds through a job training program for a lot
of the other adults that are here, but the funds are inadequate, and they're mired in
hopeless federal bureaucratic requirements that make it very difficult for a lot of these
students to comply with the requirements of the federal job-training act.
I want to clean that act up, and make it flexible so these people can get this
5
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.,
education that they need. And we're going to do it.
.···;
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No discrimination: that's what we're talking about here.
opportunities.
Giving you
Let me tell you, I've got one other idea that would affect
a lot of people in this school. Today, a person on welfare loses that welfare if they
have more than $1 ,000 in assets.
This administration wants to give a capital gains cut to encourage the
wealthiest Americans to save more and invest more. We're ready to spend billions
• of dollars to do that. But we won't spend one red cent to help the poorest Americans
save for their own welfare.
My friend, Mike Espy, the first African-American congressman from Mississippi
since the Civil War, has come up with a way to give the poor a chance to get ahead.
It's called an individual development account. It would encourage poor Americans to
set money aside in special savings accounts that they can use for their education,
their training, or starting a small business.
I
•
My plan provides for $100 million to match with the money that poor people
save for themselves, and would let even people on welfare have $10,000 worth of
assets before they lose their benefits. That would give poor people a chance to
participate in the free-enterprise system.
Last thing I want to tell you is, we've got to put the American people back to
work. Unless we have a growing economy, making capital available to business, and
educating and training workers will still not create the jobs. We've tried trickle-down
for 1 2 years. I want you to give AI Gore and Bill Clinton a chance to invest, to
educate, to cooperate, and to compete.
We're going to create millions of new jobs in America, and opportunities, so
that people we educate and train, people we give the capacity to go into business,
can make a Jiving and bring this economy back.
Don't you know that we would diminish the racial tensions in this community.
Don't you know we would diminish the tensions between rich and poor in this
community if everybody thought that if they worked hard and played by the rules,
they could get ahead.
I'm tired of seeing people who do this ground down. And I want them to be
lifted up.
I ask you now if you want to see the backlog ended in institutions like this, and
everybody who's lined up for these educational services gets them; if you want to see
loans being made to people in your neighborhood; if you want to see businesses
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starting up again; if you want to see this economy going again; if you want to see us
creating jobs in the private sector, not just in government again, vote for Bill Clinton
and AI Gore in 48 days, and
we'll revitalize this community and all the
***MICROPHONE FAILURE***
1
�
Dublin Core
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Title
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Jonathan Prince
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Office of Speechwriting
Jonathan Prince
Date
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1993-1998
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<a href="http://clinton.presidentiallibraries.us/items/show/36296" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7763293" target="_blank">National Archives Catalog Description</a>
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2006-0466-F
Description
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Jonathan Prince served in various capacities during the two terms of the Administration. He was one of President Clinton’s speechwriters, Deputy Assistant Secretary of State, and directed the public relations effort related to the fallout from the bombing of refugees by NATO forces during the war in Kosovo. This collection consists his speechwriting files which contain speech drafts, handwritten notes, memoranda, correspondence, publications, and schedules. Prince wrote most of President Clinton’s radio addresses from 1993-1997. He also specialized in dealing with domestic issues such as crime, gun control, unemployment, urban development, and welfare.
Provenance
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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187 folders in 11 boxes
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Paper
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10/93 California
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Office of Speechwriting
Jonathan Prince
Identifier
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2006-0466-F
Is Part Of
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Box 2
<a href="http://www.clintonlibrary.gov/assets/Documents/Finding-Aids/2006/2006-0466-F.pdf" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7763293" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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12/15/2014
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42-t-7763293-20060466F-002-001-2014
7763293