Federal Funds Could Be Used for Milwaukee Universal Basic Income Program

Alderwoman Chantia Lewis continues to advance a proposal to create a universal basic income (UBI) pilot program to provide cash grants to low-income Milwaukee residents. The latest effort involves allocating $400,000 in federal funding to formally create the program.

Private funds totaling at least $450,000 would still need to be raised to fund the cash grants. An initial pilot group of 50 households would receive $500 per month for 18 months.

“A tremendous amount of work and research has gone into the universal basic income program legislation during the past few years, and I am very proud to be the primary sponsor of the file,” said Lewis in a statement Wednesday. She first introduced the idea in October 2019.

The Community & Economic Development Committee advanced Lewis’ $400,000 proposal Wednesday for a portion of the city’s $394.2 million in American Rescue Plan Act funds. The full council will consider the proposal on July 27, likely alongside a $93 million plan from Mayor Tom Barrett.

“After the initial benefit of the American Rescue Plan Act has begun to fade, people will still be in need of further assistance. Unemployment fueled by the pandemic is still a reality. This is when we will truly see the benefit of a universal basic income payment for low-income and working-class families and individuals,” said Lewis.

A portion of the UBI allocation would create a new city job, the UBI program coordinator. The resolution calls for the United Way of Greater Milwaukee and Waukesha County to serve as the fiduciary agent for the program, accepting the private donations and releasing funds to residents. But the organization, according to a representative, has not formally accepted the role.

Lewis’ inspiration for the program comes from Stockton, California’s SEED program, the first city-level universal basic income program. It provides 125 families a $500 monthly grant.

“We have really learned a lot based on the Stockton, California experience,” said Department of Administration director Sharon Robinson in September 2020 when she presented a council-requested program proposal. She said potential issues remain with how to select the participants and the potential impact on eligibility for other assistance programs for those receiving funds. Lewis said she has contacted Governor Tony Evers about a waiver for participants.

Robinson, in September, said the bigger Stockton program cost $3 million and Milwaukee’s could cost $1 million when administration and grant costs are considered. “It still took them two years and a coalition of many people to get the program off the ground,” she said. “I am hoping Alderwoman Lewis is going to be able to leverage her influence on a national level because if we can $3 million like Stockton had we won’t even need to pull in local philanthropy.” The ARPA funds now offer the city a pathway to speed up implementation, provided the private funds can be raised.

Under Lewis’ framework, approved by her colleagues in January 2020, participating families in the 18-month program would need to be meet certain income restrictions, live in the city and consent to having the city monitor how they spend the money. Financial coaching would also be provided. Funds would be provided on a debit card.

The alderwoman, in early 2020, said the early results from the Stockton proposal show people don’t spend the money frivolously. An independent audit of Stockton’s progam shows that, broadly categorized, participants have used their funds on food (36%), sales/merchandise (22%), utilities (10%), auto care (10%), services (7%), medical (3%), transportation (4%), insurance (3%), self care/recreation (3%), education (one percent) and donations (one percent). The Stockton program has found that less than one percent has been spent on alcohol or tobacco each month.

But that tracking represents only 60 percent of the funds awarded in Stockton. The audit of the Stockton program has found that approximately 40% of the funds loaded onto the debit cards have been transferred off. Interviews with participants reveal that participants didn’t trust the program and wanted cash, preferred cash as their primary spending method or transferred the money to another card.

According to a Common Council report, Chicago, Minneapolis, St. Paul and Mountain View, CA are pursuing using ARPA funds for UBI programs. A number of other cities have approved UBI programs, including Pittsburgh, Newark and Denver.