Asset Building: Policy Development in

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Asset Building Policy Development in Local,
State, National Levels A Summit Pathways to
Positive Wealth Creation Programming Gena S.
Gunn Center for Social Development Washington
University, St. Louis, MO http//gwbweb.wustl.edu/
csd/policy/index.htm ggunn_at_wustl.edu
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A Working Definition of Asset-Building
Policies Policies created at the local, state
and federal levels, intended to afford
opportunities for individuals and families to
build wealth, improving personal, local, state,
and national economies. These policies,
typically supported through the tax code,
encourage wealth-building by allowing the
purchase or funding, over time, of such high
return assets as homes, businesses, and higher
education. Many of these policies reflect a
general paradigm shift toward individual account
systems.
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• Selected Asset-Building Policies for the
  Non-Poor (lt300 billion per year)
• Tax advantages on 401(K), 403(B), and like
  retirement accounts
• IRAs, Super IRAs, and Roth IRAs
• Tax deductions for interest paid on home
  mortgages and equity accounts
• Tax deductions for charitable contributions
• Child Tax Credits
• Tax credits (historic preservation,
  contributions, etc.)
• State College Savings Plan (529) Investment
  Accounts
• Various other tax advantaged investments
• Medical Savings Accounts

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• Selected Asset-Building Policies for
  the Poor (gt5 Billion per year)
• Earned Income Tax Credit (EITC) (better, but
  still highly underutilized)
• Job Corps Living Adjustment accounts
• Full Employment Programs (TANF/Jobs Programs)
  with Savings (fewer than 5, nationally)
• Housing and Urban Development FSS Section 8
  Escrow Accounts (highly underutilized)
• Federal Home Loan Bank Affordable Housing
  Programs and Accounts
• Temporary Assistance for Needy Families IDAs
• Office of Refugee Resettlement IDAs
• Assets for Independence Act IDAs (highly
  underutilized)

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What are IDAs and why are they directed at the
poor?

• Matched savings accounts

• Intended uses include purchases of homes,
  businesses, education

• Match moneys come from public and private
  sources

• Concept created by Michael Sherraden, in 1991,
  in Assets and the Poor A New American Welfare
  Policy, intended to be part of a universal system

• Originally suggested as universal policy,
  established at birth (UK model)

• First programs established in 1991, state
  policy 1993, Federal policy 1998

• In demonstration mode focus switched to
  low-income adults short term

• State and Federal IDA policies to date also
  established for short term program framework only
  may be problematic to change

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Selected State- and Sovereignty-Related Sources
of Support for IDAs

• State Housing Trust Funds

• Small Cities Community Development Block Grant
  Funds

• City Mandated Funds and City/County
  Discretionary Funds

• Community Services Block Grant Funds

• State Tax Credits

• State General Revenue Funds

• State Earned Income Tax Credits (EITC)

• Tribal TANF Funds

• Tribal NAHASDA (Housing) Funds

• Tribal General Funds

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State IDA Policy Picture in 1993

• 1 state had legislated IDAs (Iowa)

• No states had included IDAs in welfare plans

• Only 2 states (besides Iowa) proposed IDA
  legislation

• Only 3 known (unrelated) community-based IDA
  programs existed located in Indiana, Montana,
  and Mississippi

• No federal legislation had passed (1 bill was
  written, but not yet proposed)

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State IDA Policy Picture in 2004

• 35 states have legislated IDAs (plus D.C. and
  Puerto Rico)

• Most bills were bipartisan and passed between
  1997 2000

• 6 states support IDA programs through
  administrative rulemaking

• IDAs included in federal welfare reform law of
  1996

• 30 states include IDAs in welfare (TANF) plans

• 6 states are positioned to propose or pass IDA
  legislation legislation becoming more
  inclusive growing interest from tribes()

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State IDA Policy Picture in 2004

• 500 community-based IDA programs in all 50
  states including 13 IDA programs in Native
  American communities

• 1 state has legislation for Childrens Saving
  Accounts
• 24 state supported IDA programs (plus Puerto
  Rico)
• 11 state level collaborative IDA programs without
  state support
• 7 states are legislated for IDAs and without an
  IDA program
• 1 state has legislation creating an
  asset-building task force
• 1 state Governor commissioned an asset-building
  task force

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Proposed Federal Asset Policy Legislation

• SWFA proposed federal legislation for IDA tax
  credits (2001)
• New Homestead Act - proposed federal
  legislation (2002)
• ASPIRE proposed federal legislation for IDA
  accounts at birth (2004)

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International IDA and Other Savings Initiatives

• Canada Individual Development Accounts 1997
• Taiwan Family Matched Savings Account - 2000
  
• Singapore Children Savings Program 2001
• United Kingdom Savings Gateway 2001 (England
  only)
• Childrens Trust Fund Accounts 2003
• Australia, Africa, China, France, Mexico,
  Ireland, Scotland, South Africa

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Overview of Asset-Building State Coalitions and
Task Forces
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IDA and Asset-Building Coalitions

• 29 State Coalitions
• Formed or forming
• Formal and informal
• Specific focus on IDAs and asset-building

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• Focus of Coalitions
• IDA program driven
• Developed through community-based organizations
• micro-enterprise, housing, state trade
  associations, workforce development or
  non-profits groups

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Focus of Coalitions

• IDA program driven (continued)
• IDA specific
• Collaboration of services
• Program development, implementation, and
  technical assistance
• Funding sources
• IDA policy
• State IDA legislation
• Connecting state and federal programs and
  policies
• Sub-committees to carry out specific tasks

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Focus of Coalitions

• IDA and asset-building policy driven
• Developed by IDA and asset policy advocates
• Directed to state and federal lawmakers
• Governor or treasurer task force

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Focus of Coalitions

• IDA and asset-building policy driven (cont)
• Comprehensive statewide asset-building strategy
• Critical issues identified
• Connection of state and federal policies
• Accumulation of assets
• Leverage of assets
• Protection of assets

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State IDA and Asset Policy Coalitions

• Delaware Governor appointed Financial
  Independence task force
• Missouri and Kansas MOKANSave bi-state asset
  policy coalition
• California Asset Policy Initiative of
  California
• Illinois Planning statewide asset-building
  initiative and have convened statewide meetings
  specific to financial education and asset-building

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State IDA and Asset Policy Coalitions

• Florida FlorIDA and Asset Building Coalition
• Hawaii Statewide asset-building conference and
  report
• Massachusetts Proposed legislation for the
  creation of a task force to address
  asset-building policy
• New Mexico Legislation passed creating an
  asset-building task force
• Pennsylvania Governors Task Force for Working
  Families
• Other states forming Utah, Idaho, Connecticut,
  and Alaska

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• WISCONSIN IDA Program
• The Governor of Wisconsin's budget, for
  1999-2001, contained a passage stating that the
  Department of Workforce Development was
  authorized to establish a Program of IDAs.
• The Wisconsin Community Action Association
  (WISCAP), United Migrant Services (UMO), and the
  Office of Refugee Resettlement (ORR) supports the
  IDA Program with 12 member agencies are funded
  from a variety of sources, including CSBG
  discretionary funds, TANF funds (obtained
  locally), Assets for Independence Act grant
  funds, and Office of Refugee Resettlement grant
  funds.
• Wisconsin does not have IDA legislation.
  WISCAP has taken the lead on developing and
  supporting proposed IDA legislation in the past.
  
• The state IDA program is not supported
  monetarily by the state.

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A More Universal Approach to Asset-Building
Policies

• Has the state set goals for developing
  asset-building policies? (Is there an inclusive
  state plan for asset-building policy
  development?)
• Could current state asset-building policies
  connect to federal asset-building policies? How
  could this be done?
• Are current asset-building designed to be
  short-term or long-term? Why?
• Have potential state and federal funding
  streams for asset-building policies been
  identified? Are state agencies and departments
  communicating?
• Do projected benefits of implementing
  asset-building policies justify projected costs?
  How could this be determined?

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Selected State IDA Policy Resources

• Center for Social Developments web page
  http//gwbweb.wustl.edu/csd - go to State Assets
  Policy from the main menu.

• Edwards, Karen and Rist, Carl (2001). State IDA
  Policy Guide Published jointly by the
  Corporation for Enterprise Development and the
  Center for Social Development.

• Gunn, Jacobs, Lewis (2003). Tax Credits and IDA
  Programs, Report, CSD.

• Grinstein-Weiss, Schreiner, Clancy, Sherraden,
  (2001). Family Assets for Independence in
  Minnesota Research Report, CSD.

• Edwards, Mason, (2003). State Policy Trends
  for Individual Development Accounts in the United
  States, 1993-2003, Report, CSD.

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Selected State IDA Policy Resources

• King, Edwards, Hicks, Larson (2003). American
  Indians Tribal Communities and Individual
  Development Account (IDA) Policy, Report, CSD.

• First Nations Development Institute
  http//www.firstnations.org. Two reports on the
  FNDI Tribal IDA Project and a Tribal/IDA Handbook.

• Stein, Friedman (2003). Childrens Development
  Accounts The Oregon Story, Report, CSD.

• Zdenek, Stein (2003). Recommendations From the
  Field Individual Development Accounts as Part
  of a Universal Asset-Building System, Report, CSD.

• Beverly, Dailey (2003). Using Tax Refunds to
  Promote Asset-Building in Low-Income Households
  Program and Policy Options, Report, CSD.
• Shreiner, Clancy, Sherraden, (2002). Savings
  Performance in the American Dream Demonstration,
  Final Report, CSD.

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Selected State IDA Policy Resources Coming Soon

• TANF and IDAs A Multi-State Study, 2005,
  Report, CSD.

• Workforce Investment Act ITAs and IDAs, 2005,
  Report, CSD, CLASP

• FHLB Affordable Housing Program and IDAs A
  Study, 2004, Report, CSD

• Rural Asset-Building Policies Opportunities
  and Challenges, 2004, Report, CSD.

• The Case for Assets Policies for People With
  Disabilities, 2004-2005, Journal Article.

• Policy Brief Series Selected CSD reports

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State and Other Asset Building Resource Websites
WISCAP http//www.wiscap.org/ida.htm
New America Foundation http//www.assetbuilding.or
g/AssetBuilding/
Corporation for Enterprise Development http//www.
idanetwork.org
Task Force for Working Families Commonwealth of
Pennsylvania--Department of Banking http//www.ban
king.state.pa.us/banking/cwp/view.asp?a1344Q546
115bankingNav