Community Overview

September, 2004

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

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

EMPLOYMENT:

LOCAL

• The unemployment rate for TravisCounty rose between May and June, and then fell slightly in July to 4.9%. The unemployment rate was 6.4% one year ago ( Texas Workforce Commission).

• The Central Texas Region saw its highest job growth in three years in July. The area added 4,800 new jobs in spite of the nation’s sluggish growth. The top gaining employment categories were trade, transportation, utilities, financial services, hotels, and restaurants. Technology and professional service sectors continued to lose jobs (Austin American-Statesman).

• Recent data from the Texas Workforce Commission suggests wage growth is on the rebound in Central Texas. By the end of 2003 the area’s average weekly wage was $819 – up 3.7% from the previous quarter of 2003 (Austin American-Statesman).

• Home Depot plans to bring 850 new jobs to the region. The retailer will open a call center in New Braunfels and a data center in North Austin . Average pay at the Austin technology center will be between $50.000 and $60,000 per year (Austin American-Statesman).

WorkSource reported that after several months of decreasing layoffs, the number of layoffs reported for August rose to 294. However, this is still less than one-third of the 904 layoffs reported in August of 2003. So far this year, Austin has had 1,682 lay-offs, of which 53% (898) were from call centers. There were 5,222 lay-offs in 2003 (WorkSource). In July, Schlotzsky’s Inc. cut 19 executive workers from its Austin headquarters – laying-off about 20% of its corporate staff (Austin American-Statesman). Due to poorer than expected sales, Cirrus Logic Inc. cut 55 jobs in late August, 25 of which were in Austin (Austin American-Statesman).

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STATE

• The Texas unemployment rate fell to 5.7% in June – a 0.2% decrease from May. The state unemployment rate was 7.7% one year ago (Austin American-Statesman).

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NATIONAL

• The nation’s employers now pay an average of $3,000 per year for health insurance per individual employee. Government data, industry surveys, and employer surveys support the notion that employers are reluctant to hire new workers because of increasing health benefit costs (Austin American-Statesman).
• U.S. Employers cut 64,000 jobs in June. The nation only added 32,000 new jobs in July, as opposed to the predicted 220,000. In August, 144,000 jobs were added. This number is barely enough to keep pace with the increase in the adult worker population (Austin American-Statesman).

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ECONOMY:

LOCAL

• The city collected $11 million in sales tax revenue for August , representing an increase of almost 11% from August of 2003. Year-to-date Austin has received $75.9 million in sales tax revenue, a 7.8% increase from the same period in 2003. Other area cities are also collecting more sales tax to date as compared to last year: Bastrop is up 4.7%, Cedar park is up 7.6%, Georgetown is up 22.5%, Pflugerville is up 10.7%, Round Rock is up 7.1%, and San Marcos is up 9.1% (Austin Business Journal, Austin American-Statesman) .
  
• The June survey of the Austin Chapter of the National Association of Purchasing Management showed signs of slow economic recovery since April. The purchasing managers index and manufacturing production were down from April, but both remain higher than survey figures from last year (Austin American-Statesman).
  
• Many local businesses show strong signs of recovery:
  
  • American Campus Communities Inc. raised more than $211.8 million in Austin ’s second biggest IPO ever (Austin American Statesman).
  • Dell reported a 29% profit gain and 20% sales growth in the recent quarter.
  • Freescale sales were up to $1.46 billion in the recent quarter, a 30% increase over last year’s sales (Austin American Statesman).
  • Citizens Inc. showed net earnings of $884,948 in the second 2004 quarter, up from $34,320 in the second quarter of 2003 ( Austin Business Journal) .
  • Encore Medical Corp. showed net earnings of $1.7 million in the second 2004 quarter, up from $171,000 in the second quarter of 2003 ( Austin Business Journal) .
  • Brigham Explorations showed net earnings of $5 million in the second 2004 quarter, up from $2.4 million in the second quarter of 2003 ( Austin Business Journal) .
    
• Other local businesses show mixed signs of recovery:
  
  • Sigma Tel reported record high revenue in the second quarter of 2004, but the company’s earnings fell short of unofficial expectations, and stock prices dropped by 32.9% the day after the second quarter report (Austin American Statesman).
  • National Instruments reported record sales in the second 2004-quarter, but company earnings fell short of forecasts because of increased marketing and development costs (Austin American Statesman).
  • In late July Whole Foods reported a net income grew 15% to $32.9 million from last quarter, but stock share prices fell 5% in after hours trading when net income failed to meet analysts’ predictions (Austin American Statesman).
  • Silicon Laboratories Inc. saw stock share prices drop by 41% in the last week of July after reporting record high results for the second quarter (Austin American Statesman).
    
• Schlotzsky’s Inc. continues to struggle. In mid July, after cutting 19% of its corporate staff the company announced the closure of 6 stores. Then in early August the company filed for Chapter 11 bankruptcy (Austin American-Statesman, Austin Business Journal) .

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STATE

State sales tax collection totaled $1,272 million in July of 2004, representing an increase of 9.6% compared with the $1,160 million collected in July 2003 ( Texas Comptroller of Public Accounts). The Texas State Comptroller reported a 5.3% increase in the state’s economic index for March, bringing the index to the highest rate in 10 years ( Austin Business Journal). The March report also showed that the Texas consumer confidence index rose by 52.5%, and the most recent consumer confidence index, from July, shows a 35.4% increase ( Austin Business Journal).

• According to the recent census, Texas was among six other states to experience an increase in child poverty in 2003 (Austin American-Statesman).

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NATIONAL

• The Commerce Department reported slower than expected second quarter growth in the gross domestic product. The GDP showed a 2.8% expansion, down from the 4.5% growth of the first quarter of 2004 (Austin American-Statesman).
  
• In early August the Institute for Supply Management reported that the manufacturing index had increased from 61.1 to 62, marking the 14 th consecutive monthly increase. An index reading of over 50 indicates an expansion in manufacturing (Austin American-Statesman).
  
• Retailers report slower than expected sales in both June and July. Automobile sales dropped 4.3% in June, bringing the overall retail sale decline to 1.1% (Austin American-Statesman).
  
• A composite index of several of leading economic indicators used to forecast the nation’s economic health over the next six month period showed signs of slowing recovery as it dropped for the second consecutive month. The index dropped 0.1% in June and 0.3% in July (Austin American-Statesman).
  
• According to the Labor Department the Consumer Price Index fell 0.1% in July, marking the first decrease since November of 2003 (Austin American-Statesman).
  
• After sharp increases in May and June fuel prices decreased 4.2% inJuly (Austin American-Statesman).
  
• Recent census numbers released for 2003 show that the number of people loving in poverty has increased by 1.3 million in the last year. Children make up more than half of the increase – about 800,000 – bringing the child poverty rate to 17.6%. (Austin American-Statesman).
  
• The U.S. Trade Deficit reached a record $55.82 billion in June. Analysts attribute the surge to increased foreign oil prices, and predict that the trade imbalance will remain high for July and August (Austin American-Statesman).
  
• 30-year mortgage interest rates declined through late July to 5.85% in early August – the lowest rate since April of this year. Analysts attribute the recent rate drop to reports showing July job growth landing far below expectations (Austin American-Statesman).

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DEMAND INDICATORS:

Housing:

• Apartment occupancy levels are on the rise in Austin. Rents are increasing, and almost 30% fewer apartment landlords are offering move-in incentives (Austin American-Statesman).
  
• The national homeowner rate is 68%, as opposed to 38% in the City of Austin (Tekoa Partners Ltd / U.S. Census Bureau).
  
• More than 14 million Americans spend more than 50% of their income on housing (Tekoa Partners Ltd.).
  
• In late April, 400 TravisCounty houses were set for foreclosure on September 7 – a 22% increase from September of 2003 (Austin American-Statesman).
  
• The number of housing units in the Austin area has outpaced population growth for the last three years. The number of housing units grew 11.2% for July of 2000 to July of 2003 while the population grew by only 8.9% ( Austin Business Journal).
  
• Nationally, new home starts were down 8.5% in July, while Austin-area builders saw a 14.8% increase in the recent quarter (Austin American-Statesman).

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Physical and Mental Health:

• Medicaid enrollment in TravisCounty rose to 69,995 in July of this year. This is the highest level in over a year, and a 13.5% increase over the 61,694 enrolled at the same time in 2003 ( Texas Health and Human Services Commission).
• A recent report showed that 12% of American children lack health insurance. Texas leads the nation in uninsured children with 21.8%, or 1.3 million uninsured children (Austin American-Statesman).

CHIP enrollment increased slightly to 8,426 in July in TravisCounty. This came after a steady decline - from 12,130 children in October of 2003 to 8,190 in May of 2004 ( Texas Health and Human Services Commission, Insure-a-kid). There was a national downturn in insured children in 2003. In Texas, 149,000 children lost health insurance coverage through CHIP last year, half of the national figure (Daily Texan).

• AustinTravisCountyMHMRCenter reported the following population data for their 2003/2004 fiscal year:
  
  • Number of unduplicated clients served include: 8,084 adult mental health services; 2,419 children’s mental health services; 1,476 mental retardation services; and 2,947 substance abuse and specialized services
  • 13,236 hotline calls, and 27,804 psychiatric emergency services
  • Number of clients served through outreach and presentation services: 3,766 served in HIV and substance abuse outreach and presentations; and 2,905 served in substance abuse outreach, screening and referrals (Austin Travis County MHMR).
    
• A recent survey by the National Institute on Alcohol Abuse and Alcoholism revealed that around 9% of Americans abuse alcohol. It showed that more than 9% of Americans have mood disorders such as major depression, and more than 11% have anxiety disorders. The survey found that 4.2%, or 2 million Americans meet the criteria for a drug use disorder. 20% of people with a substance abuse disorder also have a mood or anxiety disorder (CNN News).
  
• One recent study found that Hispanic women are at greater risk for developing eating disorders than white women. The study found that 63% of Hispanic women, 56% of white women, and 48% of African American women are affected by eating disorders (Austin American-Statesman).
  
• According to the Journal of the American Heart Association said that about 1 in 3, or 65 million American suffer from high blood pressure – 30% more than the previous decade. Experts believe that the increase is a result of the growing aging and obese populations (Austin American-Statesman).
  
• On the first day of the school year about 6,000 of Austin’s 78,000 students (7.7%) were not immunized in accordance with new Texas Department of Health rules announced last spring. School officials did not allow the un-immunized students to attend school until they could show proof of a Health Department Waiver or scheduled doctor’s appointment (Austin American-Statesman).
  
• Statewide, 75% of Texas toddlers were immunized in 2003. Although more toddlers are being immunized in comparison to 2002, Texas fell from 44 th to 46 th in state ranking for childhood immunization (Austin American-Statesman).
  
• A national study by the Center for Studying Health System Change (HSC) revealed that about 20 million American Families had trouble paying medical bills in 2003 (HSC).
  
• The Indigent Care Collaboration has screened their 100,000th patient for medical assistance program eligibility using the Medicaider tool. Approximately 11% of total uninsured people screened were eligible for third-party funding, although this percentage is down 4% in the past year, since the state cut back Medicaid and the State’s Children’s Health Insurance Program eligibility (Indigent Care Collaboration).

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Education and Workforce Development

WorkSourceCareerCenter has had 147,654 visits so far in 2004 – a 13% increase from the same time period last year (WorkSource). The Texas class of 2004 did not improve last year’s SAT scores. State leaders note that the flat score may be a result of increased test participation (Austin American-Statesman). There are currently 517 children on the waiting list for subsidized child care services from Texas Migrant Council. Last month, 3,991 children received subsidized childcare ( Texas Migrant Council).

• According to a report issued by the State Higher Education Coordinating Board, Hispanic college enrollment is lagging in Texas while African American enrollment is exceeding recommended goals . (Austin American-Statesman).
  
• AustinCommunity College Trustees approved a $69 per student tuition increase for full time students this fall (Austin American-Statesman).
  
• The University of Texas is reducing its enrollment by admitting fewer freshmen. The University cut its enrollment to about 50,000 for the fall semester – a decrease of about 2,260 since the fall of 2002 (Daily Texan).

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Public Safety:

• Williamson County Jail is experiencing inmate overcrowding. In July inspectors found more than 63 inmates in a pod designed to house 48 (Austin American-Statesman).
• Recent inspections show that 84% of Texas nursing homes have been cited for fire safety deficiencies (Austin American-Statesman).
• Austin ’s traffic fatalities are up so far in 2004. As of June this year Austin has had 38 traffic deaths. There were a total of 52 traffic deaths in 2003 (Austin American-Statesman).

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Demographic Changes:

• The teen birth rate declined by 40% between 1991 and 2002 nation-wide. Twenty three girls per 1000 ages 15 to 17 gave birth in 2002 – the lowest level since the government started tracing this demographic in 1940 (Austin American-Statesman).
  
• The latest Census Bureau survey shows that Caucasians no longer make up the majority in Texas residents as of 2003 (Yahoo! News).

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RESOURCES:

• The Texas Parks and Wildlife Commission has awarded Travis and surrounding counties $3 million in grants for park improvements (Austin American-Statesman).
  
• Several local victim service organizations received money from a $1.2 million federal Victims of Crime Act grant in late August. The recipients included: Austin Children’s Shelter, City of Austin, Deaf Abused Women and Children Advocacy Services, SafePlace (Travis County Domestic Violence and Sexual Assault Survival Center), Travis County Sherriff’s Office Victim Services Unit, Travis County Children’s Advocacy Center. (Austin American-Statesman).
  
• Also through the federal Victims of Crime Act, the Governor’s Criminal Justice Division awarded Texas Mothers Against Drunk Driving $1.5 million to provide crisis support and other support services to victims of drunk driving (Yahoo! News).
  
• The Community Partnership for the Homeless won the 2004 MetLife Foundation Award for Excellence. The organization will be awarded a cash prize between $10,000 and $25,000 for its achievement (Community Partnership for the Homeless).
  
• The U.S. Department of Housing and Urban Development ranked the Housing Authority of the City of Austin the best housing authority in the state (Housing Authority of the City of Austin ).
  
• The Meadows Foundation awarded the Austin Child Guidance Center a $135,000 grant to help increase mental health services to children and reduce the Center;s waiting list (Austin American-Statesman).
  
• This spring, nonprofit group Mobile Loaves and Fishes won the Governor’s Volunteer Award. The group delivers free food and supplies to Austin’s homeless daily. It employs the participation of 4,500 volunteers and has delivered 265,000 meals since 1998 (Austin American-Statesman).
  
• In July the Housing Authority of the City of Austin gave $50,000 in scholarships to 26 students living in lo-income housing.
  
• WaterlooCounselingCenter Received a $15,000 matching grant from the Meadows Foundation. The money will support the expansion of services to gay, lesbian, bisexual and transgendered (GLBT) individuals ( Waterloo Counseling Center ).
  
• In August Broadwing Communications donated $15,000 to Helping Hand Home, the residential treatment center for abused and neglected children. Broadwing employees gave individual Helping Hand resident’s gifts (Austin American-Statesman).
  
• Applied Matierials awarded the Center for Child Protection $20,000 to support the organization’s Spanish Parenting Program and Community Education Project (Austin American-Statesman).

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IMPACT OF LEGISLATIVE BUDGET CUTS ON LOCAL AGENCIES AND FAMILIES

• In July the Center for Public Policy Priorites released a report explaining some of the impacts that the 2003 legisative budget cuts have had on poor Texas families. According to the report:
  
• 126,000 fewer children and 28,000 fewer adults receive healthcare through CHIP (Children’s Health Insurance) and Medicaid. Between September 2003 and July 2004 CHIP enrollment fell by 145,000.
• Child abuse and neglect prevention funding was cut by more than 20%.
• The overall budget for public education increased, but law makers cut millions in funding for teachers’ health benefits (Austin American-Statesman, Yahoo! News).
  
• $561 million in reinstated cuts will serve to expand health care services to poor families. Just over $20 million will be used to restore Medicaid coverage to pregnant women earning up to 185% of the federal poverty guideline. Over $300,000 will go to reduce the state’s Medicaid and CHIP shortfalls. (Austin American-Statesman).
  
• Annalee House, an arm of Marywood, nearly closed its doors in mid-August. An anonymous donor stepped forward at the last minute and contributed enough money for the house to stay open through the end of the year. Annalee house serves as a foster home to teen mothers and their children (Austin American-Statesman, News 8 Austin ).
  
• After initially losing 100% of its funding, TCADA restored 85% of the funding forAustin Recovery’s Family House, which provides substance abuse treatment for women and their children, and states that it hopes to restore the remaining 15% during the course of the year (Austin Recovery)
  
• In the latest TCADA awards, Austin Recovery receives 8 additional residential treatment beds (Austin Recovery)
  
• Austin Recovery no longer receives state dollars for detox services. TCADA awarded detox money for facilities in Waco and College Station but did not fund detox services in Austin. Austin Recovery’s detox unit is still operating but admissions are now limited to self paying clients and Travis County residents who are homeless or women designated at high risk (Austin Recovery)
  
• The collaboration between Austin Recovery and the Salvation Army had it’s TCADA funding reduced from $207,000 in FY04 to $100,000 in FY05. In this program, Austin Recovery provides substance abuse treatment services for men living at the 118 bed Salvation Army facility on South Congress. (Austin Recovery)

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WHAT CAN YOU DO TO HELP?

• Choose a local social services agency to support financially.
  
• Copy and distribute this document in order to increase public awareness.
  
• Support the local economy by shopping at local businesses.
  
• Give to the United Way Capital Area’s Community Fund or the Austin Community Foundation’s Urgent Issues Fund.
  
• Contact the United Way Capital Area’s Volunteer Center at 512-323-1898 or search for volunteer opportunities on United Way Capital Area’s website at http://www.unitedwaycapitalarea.org.
  
• Also see the 2001 CAN Urgent Issues Action Plan at www.caction.org for additional information about community-wide approaches to addressing these issues in our community.

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ACKNOWLEDGEMENTS

The Community Overview was researched and written by the Research & Planning Division of Travis County Health and Human Services & Veterans Services, with assistance from numerous individuals in the community. We attempted to include all those who had a part in this undertaking, but if we have inadvertently omitted anyone, we apologize and ask that you inform us so that we may recognize you appropriately as the process continues.

TRAVIS COUNTY HHS & VS RESEARCH AND PLANNING DIVISION:

Blanca Leahy, Director

Brook Son, Lead Writer

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

CONTRIBUTORS:

Fred Butler, Sam Woollard, – Community Action Network

Gail Goodman – Waterloo Counseling Center

Mildred Vuris, Kristin Creel – Austin -Travis County MHMR

Leanne James – WorkSource

Dick Lavine – CPPP

Jason Sabo – United Ways of Texas

Allison Schmidt – Community Partnership for the Homeless

Paul Gionfriddo – Indigent Care Collaboration

COMMUNITY ACTION NETWORK PARTNERS:

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