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Amid questions about equity grants, Walz administration focusing on different ways to address disparities in Minnesota

DEED Commissioner Steve Grove said there was a move away from putting more money into grants he described as “siloed, carve-out programs,” but instead to “bring the philosophy of equity to all that we do.”

Gov. Tim Walz and his fledgling administration are contemplating the future of what have been dubbed “equity grants.”
MinnPost photo by Peter Callaghan

Months after police fatally shot Jamar Clark and protests roiled Minneapolis, former Gov. Mark Dayton released a $100 million plan to shrink Minnesota’s stark divide in economic success between whites and people of color, a disparity that ranks among the worst in the country.

State Sen. Jeff Hayden, a DFLer from south Minneapolis who helped shepherd the idea through the Legislature, said they chose to accomplish this by offering direct payments to organizations helping minority communities facing a “persistent gap” from their white counterparts in categories like unemployment and home ownership.

Dayton didn’t get his full request — lawmakers approved $35 million in 2016 and another $24.3 million in the two-year budget of 2017 — but supporters considered it a victory.

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Now, Gov. Tim Walz and his fledgling administration are contemplating the future of what have been dubbed “equity grants.”  Though Walz offered to keep existing payments largely in place in a budget plan full of new spending, he has not chosen to significantly increase them as part of his strategy for reducing racial disparities.

Steve Grove, the new commissioner of the Department of Employment and Economic Development, which administers the grants, also promised improved oversight in how the money is spent. “We think we can do better in this space than we’ve done in the past,” said Grove. “I think when this program was first started, it had a few hiccups along the way.”

What have equity grants accomplished?

Since the summer of 2016, the equity grants have been distributed to dozens of nonprofits and government organizations focused on an array of different issues. Some of the groups that got money were chosen through a competitive process, but others were picked by the Legislature. Some programs got money to train workers, while others got money for administrative purposes, like building a curriculum.

The City of St. Paul’s Right Track program, for example, was awarded $602,970 as part of Youth-At-Work grants. Shaina Abraham, Right Track’s supervisor, said their DEED money is mostly spent on subsidizing wages for hundreds of teens placed in summer jobs. Some is also spent on full-time staff and temporary job coaches. Abraham said participants get experience critical for their résumés, and they also bring home cash.

“They’re helping their families,” Abraham said of teens in the program. “That’s a really big deal for us, that people understand the impact that making $2,000 over the course of the summer is. It doesn’t sound like a big deal to a lot of people, but to a 16-year-old, it’s a huge deal.”

Without the DEED money, “those jobs wouldn’t exist,” Abraham added.

The complex web of programs, however, has made broad conclusions about the overall success of the equity grants difficult to come by. DEED officials testified in a Senate committee last week that some metrics for people of color in Minnesota are improving. Unemployment for black Minnesotans, for example, has continued to drop from a high of 25 percent in 2011 to 5.4 percent late last year.

But Jeremy Hanson Willis, DEED’s deputy commissioner for workforce development, said any decrease in unemployment rates can’t necessarily be attributed to the grants. Unemployment has dropped nationally and stands at a rock-bottom 2.8 percent overall in the state. And the rate of unemployment for black and Hispanic residents is still well above that for whites in Minnesota.

Still, the lawmakers repeatedly pressed Hanson Willis to describe metrics used by DEED and to give his overall impressions. “In your opinion, how do we rate? How are we doing?” asked Sen. Rich Draheim, a Republican from Madison Lake.

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“I think we have to look at every program and grant themselves because there is no common outcome that is shared by all of them,” Hanson Willis said.

What might change going forward

DEED Commissioner Grove, however, said there are changes he hopes to make in order to “emphasize thoughtful management” and develop better metrics for existing programs. A recent state report on the grants says DEED struggled handling the large numbers of programs at times while some of those getting money needed more help than expected, leading to “slower-than-usual service delivery and program outcomes.”

photo of steve grove
Steve Grove
The Walz budget plan has an extra $500,000 for new spending aimed at fixing those issues.

In general, Grove said there was a move away from putting more money into grants he described as “siloed, carve-out programs,” but instead to “bring the philosophy of equity to all that we do.” He also called generally for more transparency in reporting information on grant spending to the public at DEED.

Walz’s budget plan technically has $24.8 million in new spending over the next two years on DEED’s programs for closing racial equity, although much of that would be continuing direct payments to organizations like the YWCA of Minneapolis that would otherwise lapse. Only the Youth-At-Work competitive grant program received additional new money in the plan — an extra $3 million.

Grove emphasized he believes the governor’s budget plan represents a step forward on shrinking racial disparities. He said efforts to improve racial equity are sprinkled throughout the governor’s budget with boosts to spending on education, affordable housing, transit, health care and other programs.

“Yes, it is important to target specific funding to specific groups, and that part of the budget does this,” he said. “But that is by no means our only strategy for closing the talent gap in this state as it relates to communities of color.”

Others call for more funding

Despite the call for changes to the equity grants, Walz’s budget has drawn some cautious support from at least some who backed Dayton’s original plans in 2016.

Tawanna Black, founder and CEO of the Center for Economic Inclusion, has been a strong proponent of targeted money aimed specifically at helping certain communities, neighborhoods or ethnic groups. She consulted with Dayton before he released his $100 million request, and said historically, the state has instead tried to serve broad categories, like “low-income people of color” or “people on the Iron Range” without a whole lot of success.

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Black said she was heartened to see Walz “endorse and get behind the theory behind the allocations and appropriations,” but said she’d like to see an acknowledgement that the cash spent so far isn’t enough to solve Minnesota’s disparities.

“I think we’re still very early on and we’re trying to right many decades of wrong in a couple of years,” she said. Black is also the executive director of the Northside Funders Group, which has received $2 million from the equity grants to help it operate the North @ Work program for African-American men in north Minneapolis.

Hayden, the Democratic senator, said he’d also prefer more targeted money be spent to address racial inequities, but said he appreciates that Walz’s budget continues the grant payments while investing in other areas to boost people of color — such as increased child care subsidies. “I applaud him for not abandoning it” since it wasn’t his idea, Hayden said.