Thank you, Patrice, for that very kind introduction. It is my pleasure to be with you all today to recognize your work on early childhood nutrition and development in Minnesota’s American Indian communities. I would especially like to thank the Shakopee Mdewakanton Sioux Community and the Better Way Foundation for the leadership and support they have provided to this Healthy Children, Healthy Nations initiative.
I plan to talk a bit about how the work of the initiative aligns with what we do at the Federal Reserve Bank of Minneapolis, starting with some of the origins of our work in Indian Country and on early childhood development. Before I do, I should note that my remarks reflect my own views and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
The Healthy Children, Healthy Nations initiative sits at an intersection of decades of work at the Minneapolis Fed on both Indian Country and on early childhood development. Our work in Indian Country, which today occurs under the umbrella of the Center for Indian Country Development, in fact dates back to at least the 1970s and has been a high-profile effort since the early 1990s. Our work in this area is driven by the fundamental regional structure of the Federal Reserve System as defined in the Federal Reserve Act, which created 12 Federal Reserve Districts across the country, each with its own independent Federal Reserve Bank responsible for understanding its District’s economy. In our Ninth Federal Reserve District, the 44 federally recognized American Indian reservations are prominent features of the regional economy. In addition, our Indian Country work is based on the Community Reinvestment Act of 1977, which directs us to monitor how banks are meeting the needs of low- and moderate-income communities; American Indian reservations figure prominently on our list of these areas.
Our work on early childhood development also dates back decades and is tied to our concerns about low- to moderate-income communities. You might be surprised to learn, however, that the initial source of this work lies in our regional economic policy analysis. More than 20 years ago, one of my predecessors as Director of Research at the Minneapolis Fed, Art Rolnick, and others took a hard look at regional development policies in which state governments directed subsidies to individual corporations and found that they produced meager returns for the local economy and were harmful from a national perspective.1 When asked to offer a better regional economic development alternative, Art teamed with Rob Grunewald, another economist at the Minneapolis Fed, to document the long-lasting benefits and social returns from investing in high-quality early childhood programs.
Given this history, we are delighted to support the Healthy Children, Healthy Nations initiative. The work that you do to provide high-quality early childhood experiences is especially important in light of evidence that many of Minnesota’s American Indian mothers and children remain at risk. The statistics are striking: only 47 percent of Minnesota’s American Indian mothers received adequate prenatal care in 2015.2 The Minnesota Department of Human Services recently reported that about 1 in 10 pregnancies on reservations is affected by prenatal opiate use.3 These factors partly explain why American Indian infant mortality is twice as high as white infant mortality in Minnesota.4 In 2016, 23 percent of American Indian children ages two to five participating in the Minnesota Special Supplemental Nutrition Program for Women, Infants, and Children were considered obese, compared with 16 percent of white non-Hispanic children in the program.5 The percentage of American Indian children involved with Minnesota’s child protection system is 5 times higher than the percentage for white children,6 and placement in foster care is almost 20 times higher.7 Outcome gaps like these have persisted for decades, as shown by the fact that Minnesota’s Native American adults are significantly more likely than adults of other races to have experienced at least one of nine categories of adverse childhood experiences; 23 percent have had five or more adverse childhood experiences, compared with 7 percent among white adults.8
The disadvantages experienced by too many of Minnesota’s American Indian children transfer into gaps in educational outcomes. American Indian test scores are much lower than those of white children; for example, only 30 percent of Native American elementary and middle school students meet or exceed standards in math, compared with 68 percent of white students.9 Only about 52 percent of American Indian youth complete high school within four years in Minnesota, far below the 87 percent graduation rate for white teenagers.10
The gaps in outcomes that prevail in Minnesota’s American Indian communities point to gaps in the opportunities available within these communities. Understanding and removing these opportunity gaps is the aim of the Minneapolis Fed’s new Opportunity and Inclusive Growth Institute.11 The design of the Institute reflects the limits on what the Fed can and cannot do. The Fed is not Congress; we cannot pass laws. Nor does the Fed have the power to appropriate funds in order to write checks to support specific programs. As the Fed is an independent nonpartisan organization, we cannot advocate in favor of specific pieces of legislation. However, there is still much that the Fed can do: The Fed can listen to and learn from the people in our communities. We can use our analytical capacity to isolate the causes of opportunity gaps and to identify promising policies to close them. And, we can partner with groups on the ground, bringing interested parties together to help forge coalitions to tackle these problems directly.
Reflecting these capabilities, the Institute’s aim is to conduct and promote basic research into the forces that limit opportunity and inclusion. We recognize that these forces are complex and that opportunity gaps have persisted for decades in spite of the devoted efforts of many talented people. But this is not a reason for moving slowly. We have already assembled a group of world-class experts drawn from economics, sociology, law, and political science as our Board of Advisors,12 and at an Institute conference at the end of May we listened to their ideas about where the Fed should focus its efforts.13 Informed by their advice, we established a visiting scholars program to facilitate the interaction of outstanding researchers while they are in residence in Minneapolis.14 We also established a new working paper series that has already released more than 20 titles highlighting work on opportunity gaps by researchers throughout the Fed system.15 Just as importantly, we are listening to and learning from people outside of academia, including community leaders and community development professionals.
The Healthy Children, Healthy Nations initiative is an excellent example of how cutting-edge research and a community participatory process can be combined to address key social and economic issues. Research by the Minneapolis Fed has found that the returns on investments in young children are enormous. After taking into account the effect on future school performance, increased earnings, decreased crime, and decreased welfare expenditures, this research has found that an extra $1 spent on the education of vulnerable children returns between $4 and $16.16 Research also shows large positive returns to investments in health and nutrition programs for families with pregnant women and young children. For example, the Michigan Maternal Infant Health Program finds $1 spent on prenatal health education aimed at reducing use of tobacco, alcohol, and drugs reduces preterm births by 3 percentage points, yielding returns of $1.38 in the first month of life alone.17
It is important to pause for a moment to reflect upon just how large these returns are. To put them in context, note that we live in a time when a 1 percent return annually on our savings accounts looks very attractive and where our federal government can borrow for 30 years at a rate under 3 percent. In such a world, investments that pay for themselves within a few years—and, in some cases, only a few months—and that can accumulate returns over an entire lifetime of more than 500 percent—and, in some cases, possibly more than 1,500 percent—are staggering. They are, quite simply, investments that make both dollars and sense.
As an economist, I’ve been trained to apply hard-headed analytical techniques to the evaluation of public policy programs. In return, I am sometimes called hard-hearted. But the application of hard-headed analytics to the policies advocated by well-meaning, compassionate people occasionally uncovers unintended adverse consequences, while at other times it reveals that, although a policy may work as intended, it returns far too little to justify the expense involved. While I sympathize with the motivations of these policy advocates—I self-identify as soft-hearted—it is important to recognize that every dollar spent on one policy program is a dollar that is unavailable for another. It is therefore important that we work to weed out ineffective policies (if I were being uncharitable, I might call them “soft-headed” policies) and direct expenditures toward those policies that do the most good. What makes the work of the Healthy Children, Health Nations initiative so exciting is that it champions soft-hearted policies that survive the test of hard-headed analysis.
Thank you.
Endnotes
1 See Economic Bidding Wars, Minneapolis Fed website.
2 Minnesota Pregnancy Risk Assessment Monitoring System, Minnesota Department of Health. Prenatal Care: What are the Barriers? Funding for MN PRAMS is made possible by grant number: 5U01DP006217-02 from the U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion.
3 Minnesota Department of Human Services. Minnesota State Targeted Response to the Opioid Crisis. Project Narrative. April 2017.
4 Minnesota Department of Health. 2012 Minnesota Infant Mortality Data Book. January 2014.
5 Minnesota Department of Health, WIC Program. Overweight and Obesity Status in Children Ages 2 to 5 Years of Age Participating in Minnesota WIC by Year and Race/Ethnicity. February 2017.
6 Minnesota Department of Human Services. Minnesota’s Child Maltreatment Report 2015. October 2016.
7 Minnesota Department of Human Services. Minnesota’s Out-of-Home Care and Permanency Report 2015. January 2017.
8 Minnesota Department of Health. Adverse Childhood Experiences in Minnesota. Findings & Recommendations Based on the 2011 Minnesota Behavioral Risk Factor Surveillance System. February 2013.
9 Minnesota Department of Education. 2017 Minnesota Assessment Results: Reading, Mathematics and Science. August 2017.
10 National Center for Education Statistics. Public high school 4-year adjusted cohort graduation rate (ACGR), by selected student characteristics and state: 2010-11 through 2014-15.
11 See Opportunity and Inclusive Growth Institute, Minneapolis Fed website.
12 See Institute’s Board of Advisors, Minneapolis Fed website.
13 See Inaugural Spring 2017 Institute Conference, Minneapolis Fed website.
14 See Visiting Scholar Program, Minneapolis Fed website.
15 See System Working Papers, Minneapolis Fed website.
16 Rob Grunewald. “Investments in Young Children Yield High Public Returns.” Cascade. Federal Reserve Bank of Philadelphia. No. 93, Fall 2016.
17 C. Peters, P. McKane, and C. Meghea. Michigan Department of Community Health. “Return on Investment: Cost Savings to Medicaid from Maternal Infant Health Program due to Reduction in Preterm Birth Rate.” ROI Fact Sheet Series Volume 1, Issue 1, 2015.