CHAPTER 2: THE GATEWAY PROGRAM

This chapter discusses the elements of the Gateway Program and then examines the program’s implementation. It compares Gateway’s elements to those of the Family Self-Sufficiency Program, discusses the importance of the various elements in attracting participants, follows and ends with a description of participant demographic characteristics.

• Program Elements
• Clustering
• Recruitment
• Educational Opportunities
• Staffing and Services
• Benefits-Freeze
• Comparing Gateway and FSS
• Importance of Program Elements
• Characteristics of Gateway Participants

Program Elements

To qualify for the Gateway Program, a family must meet several criteria. The family’s annual income must be no more than $12,500, [ The CHA has a separate program for those whose incomes are above $12,500, called the Stepping Stone Program.] and the head of the household must have a high school degree or a high school equivalency diploma and be willing to commit to educational and vocational goals aimed at long-term upward mobility. The family must already be living in public housing or be on the waiting list, where they will be given priority for public housing over those on the waiting list who have not applied to participate in the program. Lastly, the family must be willing to commit to leaving public housing in five to seven years.

The Gateway program has two stages -- remediation and transitional. The remediation stage is designed to address deficiencies in the participants’ educational and vocational skills and begins with a diagnostic test to identify reading level, occupational preferences, and skill levels. During the first four years of the program, the tests were administered by both CHA staff and the city Employment and Training Department, but since 1994, the tests have been entirely the function of the CHA. Based upon the test results, the program staff and the participant then put together an Employability Development Plan for additional education and job training. The program entrant signs a contract, in the form of a lease addendum, specifying both the services the housing authority and other city agencies will provide and the family’s participation in the plan for up to two years.

The goal for participants in the remediation phase is to develop the skills necessary to obtain the jobs that will pay them enough to move out of public housing and into their own homes. This phase is designed to last up to two years, because program designers believed that would be the time needed to complete a remedial education program. Those needing more than two years of education or training to qualify for a job paying at least $8 an hour, considered the minimum wage that makes owning a home feasible, are not accepted to the program. Thus, nearly everyone has a high school degree on entering the program. [ When the program first began, having a high school diploma was not mandatory. However, as the program participation progressed, the staff soon realized that, without a high school diploma, participants would not be able to meet the program goal of earning $8 or more by the end of the two-year remediation period. Therefore, the majority of initial participants have a high school diploma. Later participants all have high school diplomas.]

During the remediation phase, a rent freeze is in effect, holding the participant’s maximum rent to the level she or he was paying upon entering the program. If the family’s income goes down during the remediation phase, the rent is reduced, but an increase in wages does not trigger a corresponding rent increase. At the same time, the amounts received in AFDC and Food Stamps also are frozen, as long as the family’s income does not exceed 50 percent of the local median income.

The transitional stage is designed to last up to five years. The purpose of this phase is to allow participants time to strengthen their employment skills and increase their incomes. Rents are unfrozen and set at 30 percent of participants’ incomes. However, any amount paid over $274, the average operating cost for a public housing unit in Charlotte, goes into an escrow account to be used for a down payment on the purchase of a home or for a security deposit on a private rental. Thus, if a participant’s rent is $324 a month, $50 would go into the escrow account. During the transition phase, participants also receive home-buying assistance, homeownership counseling, and financial management training.

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Clustering

The program began with an attempt to cluster some participants in one housing development. Of the first 100 participants, 50 were clustered in a section of a 250-unit development called Piedmont Courts, with the remaining participants scattered throughout the city’s other public housing developments. In 1985, Piedmont Courts had experienced city-wide publicity about violent and drug-related crime. In an effort to change its image, a portion of the development had been modernized recently, making 50 contiguous units available. The CHA saw clustering as a way to test the importance of peer counseling and support on participants’ success.

Unfortunately, the experiment in clustering broke down. Many early participants dropped out of the program, remaining in Piedmont Courts as neighbors to people in the program. In focus groups, many participants talked about their desire to be clustered with people who had similar goals. Having neighbors who left the program did not help them meet their goals. Furthermore, these participants wished they could have had units in a development that was more desirable than Piedmont Courts.

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Recruitment

The program began on January 1, 1989, with the goal of having 100 new participants each year. However, it took nearly two years to enroll the first 100 participants. To recruit participants, the staff asked for referrals from public housing managers, distributed flyers, informed tenant leaders, sent letters to residents and other agencies, and made presentations at tenant meetings. Interested applicants were required to complete both an application and an employability assessment before being screened for selection into the program.

There were several reasons for the difficulty in recruiting qualified participants. First, the program required participants to have a high school degree. Most of the public housing residents who applied did not have a high school degree. Thus, this requirement eliminated a large portion of public housing residents. The staff expanded the application pool to include people on the public housing waiting list so that they might have a larger pool from which to draw qualified applicants.

Second, some applicants were rejected because they had a history of drug use, criminal behavior, or late rental payments.

Third, a number of applicants did not attend all of the meetings required to qualify for the program. Applicants first met with the staff to discuss the Gateway Program, returned for reading skills and occupational preference tests, and returned again to discuss their personal improvement plans. They also had to complete the application forms and provide additional information, all requirements that were used intentionally to eliminate applicants who were not highly motivated.

Fourth, in focus groups of qualified applicants who did not follow through with their applications, a number said they felt that the program did not meet their needs. Some were more interested in on-the-job training than the educational opportunities offered through the program (primarily community college degree programs). Others said they were reluctant to leave their children in day care or that working, going to school, and managing a home with children was too much for them to handle. Still others did not want to leave their current jobs to go back to school for two years.

Fifth, many people were reluctant to participate in the program because it meant moving to a new public housing unit, a requirement of the program’s enabling legislation as interpreted by HUD officials. Many liked where they were living. Others simply were unwilling to move to Piedmont Courts, which despite its recent modernization, had one of the worst reputations among the city’s public housing developments.

Sixth, public housing residents, who had seen many programs come and go, were skeptical about yet another new program and distrustful of housing authority programs in particular.

Finally, many residents may have feared leaving the security of public housing. In focus groups, participants said that some site managers discouraged participation by telling residents they would not be able to get back into public housing if they lost their homes.

In spite of these problems, the staff felt that once there were some individual success stories, more public housing residents would become interested. In fact, by 1991, recruitment was no longer a problem and there was a backlog of applicants. However, many participants came from the public housing waiting list rather than from existing public housing rolls, as was the program’s original goal.

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Educational Opportunities

Most of those in the Gateway Program who attended school participated in two-year programs at Central Piedmont Community College, ranging from respiratory therapy to automotive body repair. Initially, the program staff steered some students away from traditional female occupations, such as day care workers, hair stylists, and secretaries, in favor of higher paying, traditionally male occupations, such as automotive body work and welding, in order for participants to maximize their earnings. However, after the first two years of the program, the CHA dropped this emphasis because many participants had become disenchanted with these programs and had switched to more traditional female occupations. This disenchantment seemed to be caused by both a lack of real interest in the occupations and a perceived discrimination against women in these fields. In one focus group, for example, a woman who majored in auto body repair recalled being laughed at when she went for informational interviews at body shops.

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Staffing and Services

From 1989, when the program started, until mid-1993, one full-time staff person managed the entire program, including acting as case manager for all program participants. Occupational tests for new participants were administered by the staff of the city’s Employment and Training Department. Since 1994, however, the City of Charlotte has provided funds for an expanded staff. A manager now oversees all CHA self-sufficiency programs, with the Gateway Program demanding about half of that time. There are two and a half full-time equivalent case managers, and the occupational testing is done by an in-house intake person. Since the program’s inception, case workers with the Department of Social Services (DSS) have consulted with the Gateway staff on Gateway participants receiving AFDC. Child care arrangements for program participants are made by Child Care Resources, the local nonprofit agency that manages child care for Jobs Training Partnership Act (JTPA) participants.

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Benefits-Freeze

The freeze on AFDC and Food Stamp allotments created confusion among many participants. During the remediation phase of the program, the amount of the allotments were frozen as long as participants’ incomes remained less than half of the local median income. Although this qualification was explained at the time people entered the program, many did not understand it. For example, when the first family in the program bought a house, the head of the household thought she would continue to receive all her benefits, but she lost the Food Stamps because her income had risen above the 50 percent cutoff. She was working two jobs, but when she lost her Food Stamp benefits, she found she had to struggle to make ends meet. Others still in the program saw her situation and became discouraged. In response, the DSS case manager met with the other families to explain the regulations and how they could receive the maximum Food Stamp benefit. However, the termination of benefits remained a cause for confusion within the program.

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Comparing Gateway and FSS

The Gateway Program differs from the current Family Self-Sufficiency Program in a number of elements. Both have local oversight boards, escrow savings accounts, and case management. However, the benefits-freeze and the emphasis on homeownership are unique to Gateway. The Gateway program works toward moving people from public housing dependency to homeownership or private market rental. The FSS program attempts to assist people to end their dependency on welfare. The FSS program has a greater emphasis on case management and emphasizes increasing wages so that 30 percent of a family’s adjusted gross income equals or exceeds the fair market rent for the area. In the FSS program, escrow funds are dispensed after a family has remained independent of welfare assistance for one year. In order for Gateway entrants to receive their escrow funds, they must use them to move out of public housing.

Participants in the Gateway Program have up to seven years to complete the program and leave public housing. Typically, FSS Program participants must finish the program in five years; however, they may also take up to seven years to finish with good cause. Entrants to the FSS program must be current public housing tenants or Section 8 recipients; they cannot, as is possible in the Gateway Program, come from the public housing waiting list. However, FSS participants are not subject to the high school degree educational requirement of the Gateway Program; any public housing resident or Section 8 recipient can enter the FSS Program, as long as slots are available. This is an attempt for the FSS program to be more inclusive. There is a need to assist more people, especially with welfare reform when people may be faced with losing benefits.

FSS does not offer the up-front financial incentives of the benefits-freeze of Gateway. Gateway allows participants to remain on AFDC and Food Stamps at levels they received upon entry to the program as long as their incomes do not exceed 50 percent of the area median. That way, if people get jobs, they will not loose their AFDC or Food Stamps. This is an incentive for participants to work for additional income, rather than have their AFDC and Food Stamps replaced by earned income.

The timing of saving in an escrow account is also different in the two programs. In Gateway, participants do not begin saving in an escrow account until after the first two years of the program and when their earned income increases their now unfrozen rent above the average operating cost of CHA units. In the FSS program, people begin to save as soon as their incomes allow for savings. Any increase in rent caused by an increase in earned income is deposited in the escrow account. Once the family reaches 50 percent of the area median income, the monthly escrow deposit amount is frozen. The escrow account ends when the family reaches 80 percent of the area median income.

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Importance of Program Elements

One goal of our research was to identify the elements of the Gateway Program that were particularly important in attracting participants. Thus, entrants were asked in their first interview to rate how specific elements affected their desire to participate in the program, and the most frequently cited element was the possibility of owning a home (see Table 1). A full 94 percent of program entrants reported that this element was very important in their desire to participate in the program. This feeling was echoed in focus groups, where one woman commented, "[Homeownership] was the number one reason.... I wanted a home, you know,...ever since I came out of high school, I wanted a home. And I was always saving for it."

Table 1: The Importance of Program Elements in Participants’ Desire to Participate (n=128)

Rows may not add up to 100% due to rounding.

The next most critical element was the job training or education offered. Eighty-six percent said this was very important in attracting them to the program. The freeze in benefit levels, cited as very important by 69 percent of program entrants, was not as compelling. Less frequently cited as very important were the immediate availability of a public housing unit (56 percent) and the day care provided (51 percent).

Information about the importance of the escrow accounts came from interviews and focus groups rather than from the survey. This is because the escrow accounts, which did not begin until the transition stage, did not mean much to the families when they entered the program. Graduates, however, found that although they had prized the rent and benefits-freeze more highly, the escrow account helped them when it came time to move out of public housing.

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Characteristics of Gateway Participants

Just over half of the program participants and half of the comparison group members came from the public housing waiting list (see Table 2). Large majorities of both groups were African-American, female, and single. The majority of both groups also were receiving AFDC at the time they applied to the program. About two-thirds of both groups were working, although a larger proportion of the control group were working full-time than among program entrants. Almost all had children under the age of 17 when they were first surveyed, while 91 percent of program entrants and 87 percent of the comparison group had children younger than 12 years of age. Income among 84 percent of participants and 93 percent of the comparison group were below $1,000 a month at application, in compliance with the program requirements limiting an applicant’s income to less than $12,500 a year. The only significant difference between the participant and the comparison groups is that program entrants had more education, likely due to the program screening requirements. [A chi - square test indicated a lack of fit between the expected frequencies and actual distribution of educational attainment (X 2 =90284, alpha>1%). ] This may be a difference that can explain the variation in outcomes between the groups. [ In Rohe and Kleit (Forthcoming) education at application is not a significant explanatory variable in explaining all program outcomes. We performed regression analyses on program outcomes including: hourly wages, hours worked per week, monthly welfare payments, monthly Food Stamp payments, receipt of housing assistance, and homeownership. In each of these analyses, we controlled for education at application, as well as the application value of the dependent variable and the time between observations. We also included dummy variables and identified graduates, withdrawals, and continuing participants, with the comparison group as the reference category. We found that education did not explain differences between application and last observation for hourly wages, hours worked per week, Food Stamp levels, housing assistance receipt, or homeownership. Education was only a significant explainer of changes in the amount of AFDC received at last observation. Those with more than a high school education received an average of $63 less than those without a high school education; those with only a high school education received on average $73 less than those without a high school degree. Thus, while the program participants and comparison group differed in their level of education, this difference does not appear to explain differences in most of their program outcomes.]

Table 2: Characteristics of Program Entrants and Comparison Group Members

¹ Significant difference between comparison group and program entrants.

² Wage income is calculated by multiplying reported hourly wage and hours per week at application by 4.5, the number of weeks in a month. However, respondents general did not have full-year employment. Their incomes, therefore, would not have exceeded the program’s income guidelines. Data for wage income at application were taken from application forms. Distribution is based on forms for 82 people. In some cases, employment information was written into the application form, but the wage information was blank. In one case, the application was not available.

³ Data taken from application form. Application form not available for all 128 respondents.

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