Center for Workers with Disabilities Conference

Linking Asset Development Strategies for People with Disabilities

Michael MorrisAssociate Director, Law, Health Policy, and

Disability Center (LHPDC)University of Iowa

Director, National Disability InstituteNCB – Development Corporation

Mmorris@ncbdc.org (202) 521-2930November 2004

Law, Health Policy, and Disability Center Established 10 years ago to improve

understanding and impact of employment and related public policy.

Particular focus on the relationship of federal and state policy to advance individual self-determination, personal , and economic freedom.

Study of the impact of the ADA on business practices and culture.

National Disability Institute Established in November 2001 as part

of National Cooperative Bank and NCB Development Corporation.

NCB has directed more than $1.5 billion in loans or investments to low-income communities nationwide.

Particular focus on affordable housing, small business development, access to health care and educational choice through charter schools.

National Disability Institute -- Vision

To provide leadership nationwide for innovative capital development and other capacity building strategies that expand social and economic options for low-income Americans with Disabilities.

The Challenges1. One out of every three adults with disabilities live

in very low income households as opposed to one of every eight non-disabled adults (NCD 1996 Report)

2. Lack of money is a serious problem among people with disabilities:

68% say it is a problem 39% say that the lack of financial resources is

the most serious problem they face. (NOD/Harris Survey 2000)

3. Only 37% of adults with significant disabilities are participating in the nation’s workforce. (National Health Interview Survey, 2000)

The Challenges, continued4. Even when people with disabilities are employed,

they earn substantially less than their non-disabled peers, roughly 72% to the dollar (NCD 1996 Report)

5. Public assistance represents 59% of the total income of people with significant disabilities and only 8% of the total income of people who have no disability. (Harris Survey 2002)

6. On a National level, 1.8 million SSI recipients with disabilities between the ages of 18 and 64 have no banking relationship; 50.7% of SSI recipients do not currently direct deposit their monthly checks. (SSA 2002)

The Challenges, continued

7. Less than 10% of people with disabilities own their own homes compared with 70% of Americans with no disabilities.

8. One-third of students with disabilities do not finish high school.

9. People with disabilities enroll in post secondary education at half the rate of the general population.

Asset Poverty Varies Significantly by Race and Gender 33% of all American households

have zero or negative net assets. 54% of Hispanic households have a

similar status. 60% of African American

households have no net assets. For persons with disabilities,

estimates are as high as 80%.

Current PicturePeople with Disabilities

1. Less Educated2. More likely to be dependent on fixed

income and government benefits3. More likely to live below poverty

levels4. Less likely to have assets5. Less likely to be employed full time

Introduction to Asset Development Strategies

Definition of Assets Capacities and resources that

enable individuals to identify, choose, and implement activities that enhance the quality of life experience.

Capacities and resources can be further explained by defining individual assets.

Definition of Individual Assets – Three Parts Individual financial assets (money,

stocks, real and personal property) Income Assets (job) Human capital assets (skills,

knowledge, and experience gained from education and training)

Strategies that Promote Asset Development Individual Development Accounts

(IDAs) Financial Literacy Affordable Financial Services Tax Policies Self-Directed Accounts

Private and Public Initiatives Assets for Independence Act of 1998,

Federally funded initiative; American Dream Demonstration

(“ADD”) of 1997, Corporation for Enterprise Development Foundation Site Demonstration

Multiple State and local initiatives; Over 25,000 Americans are saving

money in IDAs and there are an estimated 500 IDA projects nationwide.

Assets for Independence ActCongressional Findings Economic well being does not come solely

from income, spending, and consumption. It also requires savings, investment and accumulation of assets.

Assets can improve economic stability and independence, connect individuals with a viable and hopeful future and stimulate development of human and other capital.

Individual Development Accounts Matched Savings Accounts – match

earned income; Two Thousand Dollars Per Individual

– Federal IDA; Required Financial Literacy Training; Targeted Goals for Savings; Managed through CBOs, Banks,

Faith Based Organizations.

How IDAs Work $1 of savings could = $2 to $4 in matched

by private and public institutions. IDAs managed by community

organizations, and the accounts are held at local financial institutions

Participation includes economic literacy training to improve credit, to create a budget and savings schedule and to develop long-term management skills

Individual Development Accounts: Eligibility and Uses 200% of poverty level – $18,000 for a

family of three; EITC, TANF eligible. Uses for home ownership, post-

secondary education and small business start-up.

Some other uses – home repair, vehicle ownership [state IDAs].

Working people with disabilities eligible for SSI and SSDI are participating in IDAs in small numbers.

Activities Individuals create personal savings

plans; IDA accounts established; Money management courses

completed; Establish and save at or above

monthly targets; and Meet asset goals.

Early Research Findings Low income individuals can and will save and

accumulate assets; Participants in ADD save an average of $25 per

month; IDAs have been successful in promoting

economic stability and educational attainment; Data collection has not focused on

identification of IDA participants with disabilities;

Not a target population for current IDA demonstrations.

Financial Literacy: Five Principles for Successful Financial Education Programs

Seek behavioral change not just improved knowledge;

Focus on practical information; Address values as well as knowledge; Provide opportunities to learn by

doing; Coordinate and collaborate to meet

those with the most pressing needs.

What is the Earned Income Tax Credit

Federal tax benefit designed to assist low and moderate income workers in increasing their financial stability

Reduces taxes for workers Supplements wages Makes work more attractive

EITC Facts and Figures Provides a maximum credit of up

to $4,300 for working families with less than $34,458 in earned income

Over 21 Million working families and individuals received over $37 billion in EITC in 2002 (average refund of $1,770)

Refundable Credit – EITC

Credit offsets any tax liability Excess received as refund

Why is EITC Education & Outreach Needed?

25% of families fail to claim the credit.

Limited education, language & financial abilities;

IRS efforts in the past have failed to reach all eligible families;

Affirmative Action is required to access EITC and other tax credits.

Why Free Tax Preparation Services are Needed Inability of families to prepare own

return. Nationally, 61% of EITC recipients

used paid preparer. Potential link to asset building

opportunities.

Link to Assets “Unbanked” Financial Literacy Other Family Support Programs Investment Opportunities

Linking the Pieces Outreach – Reach eligible families

not currently claiming the credit. Free Tax Preparation – Preserve

the value of the credit. Asset Building – Introduce

financial literacy and link to other supports at tax preparation sites.

Community Based Partnerships

Awareness and Education

Tax Preparation

AssetBuilding

Community- Based

Coalitions

Next Generation Opportunities Historical Context Realign Social Policies and

Practices Next Generation Self-Directed

Accounts

Historical Context1990 Passage of the Americans with

Disabilities ActEnd isolation and segregationPromote full community participation

1999 Olmstead Supreme Court DecisionTitle II of the ADA requires States to expand support for community options

2001 New Freedom InitiativeTear down barriers to equality Build systems capacity

Historical Context, Continued

2001-2004 CMS Real Choice Systems Change Grants

Improve Community Based Service Systems Transition from institution to community Expand personal assistance services Respond to direct service worker shortages Promote consumer direction Improve agency collaboration Focus on quality improvement

Three Goals for Systems Change For Children and Adults of Any Age Who Have a Disability Live in the most integrated community

setting appropriate to their individual support requirements;

Exercise meaningful choices about their living environment, the providers of services they receive, the types of supports they use, and the manner by which services are provided; and

Obtain quality services in a manner as consistent as possible with their community living preferences and priorities.

Principles of Self-Determination Person centered plans; Individual budgets; Individual choice of supports and

providers; Financial management services.

New Strategies Individual Budgets – CMS Individual Development Accounts – HHS Work Incentives – SSA Cash-Out Benefits – VR, MH, Education Individual Training Accounts – Labor Housing Choice Vouchers – HUD Use of Earned Income Tax Credits – IRS

Blended Self-Directed Account

Bundling public benefits across the domains of:

Housing; Personal assistance; Social security; Employment; Skills development; and Asset building.

Collaboration Across Systems Multiple points of entry to start an

account. Benefits specialists are available

who are knowledgeable about multiple public benefits and successful approaches to bundling in a self-directed account.

Fiscal intermediaries are available to offer efficient financial management.

Collaboration Across Systems, continued Opportunities are created to

encourage private match to earned and unearned savings with direct tax benefits to the donor and account holder.

Individual self-directed budget is personal and portable.

Agreement on Account ObjectivesRespond to multiple personal, individualized goals including:

Self-employment; Employment related supports; Affordable housing and homeownership; Education and skills development; Health care and emergency needs; and Savings for specific short and long-term

needs: (a) Transportation, (b) Technology, and (c) Retirement.

Recommendations

Recommendations1. Establish an Interdepartmental Work

Group with consumer and family participation to design a policy friendly environment and infrastructure to support pilot testing of IDAs and blended self-directed accounts.

2. Reach agreement on the scope and boundaries of each program/benefit that may be bundled in a self-directed account.

Recommendations, Continued

3. Simplify and coordinate procedures for application, determination of eligibility, development of people centered budgets, and multiple points of entry.

4. Identify potential pilot sites at a community level and public-private partner work groups to realign roles, relationships, and responsibilities.

Recommendations, Continued

5. Focus on: Capacity building; Education and training; Policy alignment; Private sector participation; Interdepartmental collaboration; and Needed coordination and technical

assistance.

Recommendations, Continued

6. Build on existing relationships State IDA Network; Microenterprise Loan Providers; Financial Education Providers; BPAO Benefit Specialists; Disability Program Navigators; and Other Service Coordinators.

EvaluationQuantitative and qualitative research needs to answer several questions.

1. When current resource tests are altered or waived, what improvements result in social and economic status for individuals with disabilities?

2. What outcomes result from self-directed accounts related to savings, asset building, employment status, community participation, housing choices, and other quality of life issues?

3. What permanent policy and infrastructure changes are needed to support self-directed accounts?

Evaluation, continued4. What oversight and quality control mechanisms

are needed to minimize risk, protect public resources, and improve consumer satisfaction?

5. What incentives can be offered to improve multiple public system coordination and private sector investment in self-directed accounts?

6. Do self-directed accounts reduce dependence on government benefits, encourage income generation, and asset building?

7. Does financial education and benefits counseling support informed decision making and improved management of resources?

Unprecedented Opportunities Make a commitment to self-direction and

asset building objectives; Reduce disincentives to work; Increase individual choice and control; Align policy and infrastructure to support

informed decision making and efficient financial management; and

Advance social and economic independence.

Further Information

Private Sector Groups The New America Foundation’s

AssetBuilding.org – www.assetbuilding.org

The Corporation for Economic Development – www.cfed.org

CFED’s IDA Network – www.idanetwork.org

Further Information, Continued

Private Sector Groups, cont. The Center on Budget and Policy

Priorities – www.cbpp.org National Community Tax Coalition

– www.tax-coalition.org National Cooperative Bank –

Development Corporation – www.ncbdc.org

Further Information, Continued

Private Sector Groups, cont. National Disability Institute –

www.nationaldisabilityinstitute.org Law, Health Policy, and Disability

Center – disability.law.uiowa.edu Master My Money –

www.mastermymoney.org

Further Information, Continued

Research Centers & Email Newsletters Law, Health Policy, and Disability Center of

the University of Iowa – Disability.law.uiowa.edu

One-Stop Toolkit – www.onestoptoolkit.org Resources of the Week e-newsletter–

www.onestoptoolkit.org/resourceoftheweek.cfm The World Institute on Disability –

www.wid.org Equity e-Newsletter --

www.wid.org/publications/?page=equity

Further Information, Continued

Federal Government Sites The Internal Revenue Service – www.irs.

gov Earned Income Tax Credit information --

www.irs.gov/individuals/article/0,,id=96466,00.html

The Federal Deposit Insurance Corporation – www.fdic.gov The Money Smart Program –www.fdic.gov

/consumers/consumer/moneysmart/index.html