Ohio Supreme Court Will Decide the Future of Payday Lending in Ohio – Or Not

On December 10, Ohio legal aid advocates, represented by Julie Robie from the Legal Aid Society of Cleveland, participated in an oral argument before the Ohio Supreme Court in the case of Ohio Neighborhood Finance, dba Cashland v. Scott.  What is notable about our participation is that legal aid did not represent any party involved in this case. Cashland had its stable of expensive big firm lawyers to brief and argue the case.  Mr. Scott has long since gone on with his life, having made no appearances in any of the courts hearing his case.  Legal Aid and our allies appeared as amici, or friends of the court, to give the Ohio Supreme Court the consumer perspective on the issues involved in this important case.

 This case is important for consumers because it challenges the current business model of payday lending in Ohio.  As some of you may know, in 2008, Ohio adopted a statute reforming payday lending, repealing the old business model that allowed short term, single pay loans with 391% APR.  Ohio has never used the term “payday” loans in its statutes – when enabled in 1995, they were “loans by check cashing lender licensees.”  These old loans were eliminated, and replaced with “short term loans.”  The loan period for short term loans must be a minimum of 31 days, with a maximum APR of 28%.

 Despite legislative reform, payday lending continues as usual for Ohio borrowers.  No lenders are licensed under, or making loans under, the Short Term Loan Act.  Instead, lenders like Cashland made deliberate business decisions to continue making payday loans, shoehorning into other lending licenses and making convoluted legal arguments to justify evasion of Ohio law. The Elyria Municipal Court and the 9^th District Court of Appeals said Cashland cannot make payday loans under the lending license they currently hold.  Now it is up to the Ohio Supreme Court to say “yes” or “no.”

 But if the Ohio Supreme Court says no – no payday loans – what will this mean for Ohio borrowers?  No more payday loans, at least in this current form?   I wish.  Unfortunately, the consumer small loan industry will continue to flourish.  Even as we await the Cashland decision, cash-strapped Ohioans can get a short term consumer installment loan secured by a postdated check.  Or they can stop in their friendly neighborhood auto title loan shop and walk out with a loan secured by the title to their car.  And all of this and more can be done over the internet and without leaving the comfort and convenience of home. This market, “the financially underserved market”, generated $89 billion in fee and interest revenue in 2012.  This industry is limited only by the ingenuity of its management teams, clever legal staff, and the greed of its funders and investors.

 Under the veneer of industry best practices and superior customer service, the short term loan industry is making money selling credit to struggling families as a means to bridge the income gap.  None of these financial products help struggling families address the underlying problems of chronic income shortfalls, or help families build wealth so they can move up the socio-economic ladder. Despite very credible studies showing that the economic activity generated by this industry results in a net loss to the economy, this industry will thrive until policymakers step up to the plate.

 Stepping up to the plate doesn’t just mean better regulation of the industry and more consumer protections.  Enforcement of existing consumer protection laws and the political will to stop predatory lending will always lag behind this constantly moving target.  Stepping up to the plate means policy makers must address the much tougher issues involved in closing the income gap between low wages and what it really takes to make ends meet.

 The political struggle to expand Medicaid, the Governor’s refusal to apply for a federal waiver to waive work requirements for food stamp recipients, the shrinking Ohio Works First program, continued high unemployment rates and Congress’s refusal to extend Emergency Unemployment Compensation all indicate that Ohioans will not soon see any real shift toward policies that support working families in the struggle to not just to make ends meet, but to make a better life for themselves and their children.

 In the meantime, 46 Credit Services Organizations, 234 Ohio Mortgage Loan Registrants  with 1202 Mortgage Loan registrant branch offices, 32 Small Loan Licensees with 171 Small Loan licensee branch offices, 150 licensed pawnbrokers with 178 branch store fronts (as of December 19) will be in our neighborhoods or at our fingertips to help us get the money we need. As long as we can afford their exorbitant fees and interest.

 

Ohio At A Cross Roads: Medicaid Expansion

Ohio At A Cross Roads: Medicaid Expansion

The Ohio General Assembly and Governor Kasich are at odds over Medicaid expansion as anticipated by the Affordable Care Act.

The Governor, a conservative Republican, included a Medicaid expansion in the state budget for all Ohioans with incomes up to 138% of the federal poverty level. This is the right thing to do for Ohioans who are now uninsured and cannot obtain the care they need to become, or remain, healthy. It is also the right thing to do to help Ohioans become more employable so they can be self-sufficient and stable. It is also the right thing to do for the state’s economy and budget.

Expanding access to health care to address the needs of the uninsured and to help Ohioans become self-sufficient and stable is important, but the last point about the state’s economy and budget is why every member of the Ohio General Assembly should support the Medicaid expansion.

The Medicaid expansion draws federal dollars into Ohio. The Governor projects that $13 billion dollars of federal funding would come to Ohio by 2020. Other projections are as high as $20 billion. In any case, a huge amount of money would circulate and generate additional economic growth in Ohio’s towns, cities and counties.

The Medicaid expansion fills a $400 million hole in the state budget because it off sets costs for mental health, corrections, drug and alcohol treatment and other services.

Read more about the impact of a Medicaid expansion in Ohio, on the Office of Health Transformation’s website, http://www.healthtransformation.ohio.gov/LinkClick.aspx?fileticket=vDu4XgXYGm0%3d&tabid=136

The expansion has the overwhelming support of the public, stakeholders and others. Click here to see what stakeholders and editorial boards have said about the expansion.
What they are saying about extending Medicaid coverage: Stakeholders and Editorials

The House removed the expansion from the budget it passed and has said that it will consider an expansion in the fall of 2013. The Senate President has announced that he would support a separate bill to explore whether to expand Medicaid, but it is unclear when such a bill might be introduced, how quickly it would move, and whether the Senate would make it a priority.

In the meantime, the clock ticks on and Ohioans may not get the care they need and deserve, and the state will lose billions of dollars of federal funding, just when the state needs to increase its economic activity and growth. Standing in the way of expanding Medicaid is bad for the state and bad for Ohioans.

The Governor is right. Ohio needs to expand Medicaid now to provide care for its residents and to strengthen our economy. As concerned Ohioans, we should all first, contact the Governor to thank him for fighting for Medicaid, second, contact our legislators to ask them to do what is right for Ohio and Ohioans, expand our Medicaid program now and, third, tell our friends and neighbors to do the same.

Medicaid Expansion is Right for Ohio (letter to editor, Columbus Dispatch, 4.4.13)

The Medicaid expansion currently being debated in the state budget would improve the health, safety and stability of Ohioans and Ohio families.

People who have access to health care are healthier. They get more appropriate preventive care and avoid emergency-room visits and heath crises. Many low-wage workers do not have access to employment-based health insurance, and they cannot afford to buy private insurance.

Families and individuals with access to health care are safer. They can get the health care they need, including immunizations and prescription medications, to avoid health risks and address chronic conditions.

Families and individuals with access to health care are more stable. Medical debt was a factor in 62 percent of the 38,000 bankruptcy filings in Ohio in 2012. Medical debts also play a significant role in home foreclosures. Access to health care would significantly reduce the number of bankruptcies and home foreclosures so that more Ohioans could remain economically stable and independent.

Debt also is a factor in domestic violence. Reducing medical debt would lessen family stress and domestic violence, keeping more families intact and stable.

Access to health care also will make Ohioans more employable, increasing their financial and social stability.

The Medicaid expansion would provide a helping hand to Ohio, Ohioans and Ohio families. It would keep Ohioans healthy, safe and stable. It is the right decision for Ohio and all of our residents.

– EUGENE R. KING

Director

Ohio Poverty Law Center

Columbus

http://www.dispatch.com/content/stories/editorials/2013/04/04/1-medicaid-expansion-is-right-for-ohio.html

 

School Discipline Is a Community Issue: Why People Whose Kids Are Grown or Who Don’t Have Kids Should Care About What’s Happening in Our Schools

Where did we ever get the crazy idea that in order to make children do better, first we have to make them feel worse? Think of the last time you felt humiliated or treated unfairly. Did you feel like cooperating or doing better?” 
Jane Nelson

Children “should be fully prepared to live an individual life in society, and brought up in the spirit of the ideals proclaimed in the Charter of the United Nations, and in particular the spirit of peace, dignity, tolerance, freedom, equality and solidarity.”      Convention on the Rights of the Child, Preamble

Public schools rely too heavily on exclusion – suspension and expulsion – as their primary discipline practice.  When a child or young person misbehaves or breaks a rule, “discipline” in most schools means removal of the child from school, sometimes for one day, sometimes for a year or more.  In almost every situation in which a child is removed from school, this is an illogical, counterproductive tactic.  In some situations, it is dangerous.

Children who want to avoid schoolwork, a particular teacher, a classmate, or school in general learn quickly what to do to achieve being removed from the setting they seek to avoid.  Children who have been repeatedly removed from school fall further behind the more they are removed from their classrooms.  Children who are behind have more and more trouble catching up the more frequently they are gone.  Children who are behind and not engaged in the classroom do not learn.  Children who are not learning get bored and act up.  And so on.

Children who live in high-poverty, high-crime areas are susceptible to becoming both victims and perpetrators of crime when left outside of adult supervision all day while they are not in school. Many, many parents in low-income families work multiple jobs to try to get by, lack access to child care, and cannot stay home and supervise their children when they are suspended from school.

It is not surprising, therefore, that a history of prior suspensions causes young people to drop out of school.  And that far too many young people who are pushed out of school end up in our juvenile and criminal justice systems.

This affects all of us.  Crime committed by and against young people affects our communities, both on a large and small scale.  The young people who tag my garage and break into my neighbors’ homes in my central city neighborhood have almost certainly been failed by the public school system.  And it doesn’t just affect those of us who live in urban areas, where concentrated poverty and crime, and failing schools, are endemic.  Kids are pushed out of school in suburban and rural schools, too.  Data shows that kids who are repeatedly suspended from suburban and rural schools are at higher risk of dropping out, too.  And people who live in suburban and rural communities pay the price when kids from their own small communities, as well as the urban communities in their state, are not in school.

Because they’ve been failed by their schools, young people who are not in school are more likely to become unemployed adults.  They are more likely to become recipients of public benefits like food stamps and TANF.  Young people who are not in school do not disappear.  They simply lose access to almost every legitimate means of earning a living and supporting themselves and their families.  In short,  schools’ failure to provide students a high quality education and treat them with dignity fails not just them:  it fails every person who lives and works in their community, their state, their nation.

Every person who lives in any community, therefore, has a personal interest in ensuring that every young person in that community is in school.  Removing children from school to discipline them for wrongdoing treats them as disposable, as a nuisance that we have neither the patience nor the fortitude to address.  Instead, all community members must take responsibility for ensuring that their schools teach children appropriate behavior, use discipline wisely, and exclude children from school rarely.

Understanding Prepaid Debit Cards – Starting Up The Learning Curve

On July 25 the Ohio Poverty Law Center sponsored “Law and Economics of Poverty”, a training for legal aid attorneys in Ohio, at which many of us were introduced to prepaid debit cards as an alternative to conventional banking.  Also referred to as general purpose reloadable prepaid cards (GPR prepaid cards), these cards are relatively new financial products that can offer some attractive features to a number of different consumer groups.  Low income families or individuals using Ohio Direction cards for Supplemental Nutrition Assistance Program benefits, Eppicards for Ohio Works First benefits, and ReliaCards for unemployment compensation are already using reloadable prepaid cards, although these cards are not general purpose cards.  As all who work regularly in public benefits know, the US Treasury is phasing out paper check payments and requiring all recipients of federal benefits to get their money electronically.  The Treasury’s website, www.GoDirect.org, has a giant clock counting off the seconds until March 1, 2013.  If recipients have not chosen a form of electronic payment by that date, they will receive their payments via the Direct Express Card – a prepaid debit card.  As our client population moves into the age of electronic benefits and payments systems, we as advocates need to understand the benefits and pitfalls of these money-managing tools.

As is the case with many new financial products, GPR prepaid cards have been on the market for a number of years, but only recently have been the focus of potential regulatory attention. On March 14, 2012, David Rothstein, one of two presenters on prepaid cards at the July 25 training, testified before the Senate Committee on Banking, Housing, Urban Affairs Subcommittee on Financial Institutions and Consumer Protection regarding issues in the prepaid card market. On May 24, 2012, the Consumer Financial Protection Bureau (CFPB) issued an advance notice of proposed rulemaking, seeking input on GPR cards.   The National Consumer Law Center (NCLC), joining with the Center for Responsible Lending and the Consumer Federation of America, submitted extensive comments and recommendations to the CFPB.

The use of prepaid cards is not evenly distributed across the population, and the largest numbers of prepaid card users are members of the vulnerable   populations we serve:  lower income, unbanked or those with less access to traditional banking facilities, recent immigrants, consumers in fragile economic situations, and younger, less educated and less experienced consumers.    Rothstein’s testimony and NCLC’s comments focus on two main points:  1) make disclosures clear and meaningful; and 2) prohibit overdraft fees and credit features.

The issue of overdraft fees played out here in Ohio, with US Bank charging unemployment compensation recipients who opted in to overdraft protection a $17 overdraft charge for ATM or store-based transactions that exceeded balances on its ReliaCard Visas.  As of Wednesday, July 18, 2012 US Bank withdrew that option, due to pressure from advocates and because of changes in federal regulations.

Public benefits advocates have kept a close and watchful eye on the costs and features of the benefits prepaid cards.  But the universe of cards used by our client population is much bigger, and we all need to keep a watchful eye on these financial products as they continue to spread out into the marketplace.

Déjà vu All Over Again

Will OWF face the same fate as DMA?

 Is Ohio setting up OWF for cuts in the next budget?

In 2003, enrollment in the state Disability Medical Assistance Program (DMA) was about 32,000 people.  DMA was a state funded program that provided basic medical care for Ohioans who were disabled or dependent on prescription medications and had very low incomes, no more than $115 per month.  This was also a crucial program for Ohioans because in addition to basic health care, it provided a means to obtain medical tests and documentation to support disabilities in the Aged Blind and Disabled (ABD) Medicaid application process.  Through a series of funding cuts and enrollment freezes, the Ohio Department of Job and Family Services shrunk the DMA program to a few thousand people in 2008 and finally eliminated it altogether in 2009 because the enrolled population could not justify the cost of administration.

In 2012, Ohio is again shrinking a crucial benefits program. Ohio Works First (OWF), Ohio’s version of the federal Temporary Assistance for Needy Families program has lost 24% of its regular adult enrollees in the 12 months between June 2011 (217,203 adults) and May 2012 (164,221). This loss of adult enrollment can be attributed to a number of factors, including: time limits; sanctions; more aggressive enforcement of work requirements; aging out of dependent children; transportation; and a wide range of perceived and real barriers at the state and county agencies.   Whatever the reasons, OWF is shrinking dramatically during an economic downturn in which record numbers of people are unemployed and child poverty is growing.   OWF is shrinking dramatically in the midst of a now four year recession that should be triggering record expansions in the program. (Look to the Medicaid program in Ohio that serves much the same population. In the same time period, it has grown significantly.)  OWF is now, or will soon be, a program primarily for children, despite the continuing needs of their parents. The impact on families of smaller assistance groups and reduced monthly benefits will be catastrophic.

Counties have experienced cuts to their administrative funds in the last two state budgets.  These funding cuts make it harder for counties to meet the state and federal requirements that they provide services to help OWF recipients become self-sufficient.  Lower OWF enrollment could be used to justify further cuts to the counties which will make it ever harder to serve their low-income residents?  Lower OWF enrollments could also justify cuts in other programs such as food assistance and child care?  Other low-income programs could also be targeted for cuts based on lower OWF numbers.  Lower OWF numbers can define away the problem of poverty in Ohio.

Unlike DMA, Ohio will not eliminate the OWF program, but it is clear that it wants to shrink it, despite the growing levels of poverty and the desperate need for assistance.  A smaller OWF program will be less helpful to low-income Ohioans and not help them to get out of poverty and become self-sufficient.  The state is intentionally shrinking the safety net. Every month more Ohioans are losing that protection.

Human Services issues in HB 487, Midterm Budget Review

Governor Kasich signed the Midterm Budget Review (MBR) on June 11.  A number of human services issues got a lot of attention during the process, some good and some bad.

1.      Post Sanction Reenrollment into OWF got more difficult

RC Section 5107.05 was amended to add stricter requirements to the reenrollment requirements for Ohio Works First (OWF) recipients who have been subject to sanctions.  The changes include:

• the situations in which a sanctioned recipient must enter into a new self-sufficiency contract to resume participation in OWF;
• the completion of all components of the self-sufficiency contract rather than the willingness to come into full compliance; and,
• in many cases the assistance group must also reapply for OWF in order to resume participation in OWF.

Based on legal aid experience across the state, most sanctions are triggered by a failure to meet the work requirements or other work readiness issues.  This is often due to an absence of meaningful work, and/or transportation, child care, and scheduling issues that are a fact of life for low-income people.  This appears to be another block in the wall of barriers that the state is creating to reduce its rolls in order to meet the federal work participation requirements.  OWF enrollment has dropped 24% in the twelve month period ending in May 2012.

2.     Medicaid Given Authority for Waivers      

The MBR granted authority to the Medicaid Director at ODJFS to apply for any needed additional waivers and amendments to the state Medicaid plan to implement the proposed 1115 Medicaid waiver aimed at streamlining the Medicaid eligibility process.  We support these proposals and believe that they will help more Ohioans to qualify for Medicaid more quickly.  See the announcement from the Office of Health Transformations on the 1115 waiver. 

3.     Drug testing was out, then in, then back out, but it will be back

The bill did not include any provisions requiring drug testing of applicants or recipients for public benefits programs.  An amendment was offered late in the Senate process, but that amendment was withdrawn within 24 hours in response to testimony by advocates that the Chair said raised questions that would require further consideration.

4.     Nursing Homes lost a windfall

The MBR included a provision that would have rolled over $30 million in Medicaid funds from 2012 – 2013 for increased payments to nursing facilities.  The Governor vetoed this provision, stating that, “No new data has been presented to justify those changes, demonstrate a need, or explain the rationale for this specific amount. . . The Nursing Facility Reimbursement Subcommittee of the Unified Long Term Services and Supports Advisory Work Group established in HB 153 is the appropriate venue for considering modifications to the nursing facility reimbursement formula.”

The Governor also vetoed $1.5 million for the Aging in Place Pilot Project aimed at funding home improvements to allow individuals to stay in their homes instead of moving to a nursing facility.  The veto message stated that this program “. . . duplicates existing programs, however as nearly $18 million is currently spent annually on such efforts. . . “

Commentary: How Poverty Puts Our Democracy at Stake

By:  Sarah Biehl, Staff Attorney

The concentrations of power and wealth that we are seeing at the top and the sense of political exclusion and impossibility that we are seeing at the bottom threaten a new order that would hard to characterize as the animating ideal of our country. At the end of the day, our democracy is at stake.

–   Peter Edelman

Today I read one of the best, most poignant blog posts I’ve ever read about poverty in the United States.  In it, Peter Edelman, a law professor at Georgetown University, both promotes his new book, So Rich, So Poor: Why It’s So Hard to End Poverty in the United States, and summarizes some of his book’s main points.  I am definitely going to go out and get this book.  But, even if you don’t want to read the book, read the blog post.  In it, Professor Edelman explains very succinctly why the drive to further limit public benefits (welfare, food stamps, Medicaid, etc.) available to poor families is bad policy and harms our country.

Read it here:  How Poverty Puts Our Democracy at Stake | ACS.  And, once you’ve read, please feel free to post comments and thoughts below.  We’d love to hear what you think.

Drug Testing Public Benefits Recipients is an Assault on the Poor

The Ohio General Assembly recently proposed and later withdrew an amendment to the Midbiennium Budget Review, House Bill 487, requiring that all new applicants for Ohio Works First (OWF) for whom there is “reasonable cause to suspect . . . chemical dependence”, be tested, at their own expense, for illegal drug use.  If such drug use was found, or if the individual did not cooperate, their OWF benefits could be cut or they could be required to have their benefits paid to a non-relative “protective payee” who would manage the OWF benefits for the entire assistance group.  If the test did not find illegal drugs, the agency would reimburse the applicant for the cost of the test.

There is also an even stricter bill still pending in the Ohio Senate.  Senate Bill 69 requires all applicants eighteen years of age or older for all need-based benefits (cash, food, medical, housing, or energy), but not Unemployment Compensation, to undergo a drug test, also at their own expense, to determine whether the applicant has a controlled substance abuse problem. Refusal to undergo a drug test will make the individual ineligible for benefits and preclude them from applying for the program again for at least 30 days.

Costs of the tests have been estimated to be between $15 and $60. Even the lower cost estimate would present a barrier for many Ohioans applying for assistance.

The Columbus Dispatch reported on May 18 that “Gov. John Kasich affirmed his support yesterday for a pilot program to drug-test some Ohio welfare recipients before they receive benefits, countering objections from critics that such a move would be discriminatory and punitive.”

Similar bills have been introduced in other states across the country.  In Florida, early results from the state’s law requiring public benefits applicants to take a drug test have shown NO savings.  And the Southern Center for Human Rights is already threatening to file a lawsuit to stop the program, which, of course, costs money to defend.

Studies in other states have also found that the percentage of public benefits recipients who abuse drugs is about the same as in the general population. Use of illegal drugs is a problem, but it is not a problem limited to, or concentrated in, the low-income community, so we should not be targeting low-income public benefits applicants for greater scrutiny.

It would be much better for Ohio to recognize substance abuse as a health issue and expand the availability of confidential drug treatment programs so that every Ohioan who needs assistance, regardless of where they live, could get that assistance without risk to their public benefits or other services.

OPLC is concerned about these proposals because they create a de facto application fee for OWF in Ohio that will act as a barrier to obtaining benefits, violate individual privacy rights, disproportionately affect people with disabilities, utilize unqualified County Department of Job and Family Services staff to conduct assessments, jeopardize family stability, and perpetuate the stereotype that all or most welfare recipients are drug users.

Because we expects this issue to surface again in future legislation, OPLC attorneys and summer interns will be researching legal challenges and social implications of drug testing bills.  We are especially interested in the legal, constitutional, and privacy issues and the significance of creating an application fee for OWF in Ohio.  We will share our research and findings over the summer.

Commentary: Combating Negative Portrayals of “Welfare” Recipients in the Media

By: Sarah Biehl, Staff Attorney, Ohio Poverty Law Center

“Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.”

                        – Franklin Delano Roosevelt, 32nd President of the United States

Most of us here at OPLC have been frustrated at many points over the past few years by the renewal of what I call “the war on poor people.”  As poverty law advocates, this is something we fight against constantly – from opposing counsel who view our clients as insignificant, scummy, or otherwise useless human beings they can simply stomp all over, to policymakers and ideologues in the media who seek to demonize people simply because they happen to be poor.  But it seems like it has gotten worse over the past few years, since the start of the economic recession and its aftermath.

Examples of the demonization of the poor, and the programs that help Americans make ends meet, are here, here,  and here.  Sigh.

There are probably lots of reasons that Americans are attracted to the idea that poor people have made bad choices, or done something wrong or evil.  We need to believe that people in bad situations did something bad to put themselves there; otherwise, it could happen to any one of us, right?  And our collective focus on and respect for hard work, individual responsibility, and family autonomy is strong.  What seems to have been lost, however, is an acknowledgment of our collective vulnerability to bad luck, a struggling economy, and/or the inequity of access to education, resources, and jobs.  We’re all really only one medical emergency away from bankruptcy.  Poverty.  Economic hardship.  It really doesn’t matter what you call it.

This is why OPLC has been working to help found, design, and promote OhioSPEAKS, a project of Advocates for Ohio’s Future.  Advocates for Ohio’s Future is a statewide coalition of poverty groups and advocates who work together to advance the causes of Ohio’s marginalized, poor, and struggling families.  OPLC is a member of Advocates for Ohio’s Future, of course.  The idea behind OhioSPEAKS is that we need a place to collect stories that tell the REAL story of what’s happening in Ohio – of how Ohio families are using public benefits like food stamps to stabilize their families, provide nutrition and resources to help their children grow up healthy, and create the best possible future for themselves.  It sounds idealistic, and it is:  we are actively trying to combat negative commentary about poor people with real stories, told by real people, not pundits, of what “welfare” actually does.

Fight negative perceptions, myths, falsities, and opinions with truth.  Don’t just advocate for and speak out on behalf of people in poverty in Ohio – provide a platform so that they can speak for themselves.  Share their stories and promote the good deeds that our “welfare” programs do every day.  This is the power of OhioSPEAKS and of the people who live, work, and struggle every day in Ohio.

I hope you’ll join our fight against the war on poor people and check out OhioSPEAKS today.