state policies to promote economic self-sufficiency through asset development
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State Policies to Promote Economic Self-Sufficiency through Asset Development. NGA Center for Best Practices - Annual Human Services Policy Retreat Miami, FL □ June 18, 2005 Carl Rist, Director, SEED Initiative CFED. Why Asset Development? 1. Assets matter. - PowerPoint PPT PresentationTRANSCRIPT
State Policies to Promote Economic Self-Sufficiency through Asset Development
NGA Center for Best Practices -Annual Human Services Policy
RetreatMiami, FL □ June 18, 2005
Carl Rist, Director, SEED InitiativeCFED
www.cfed.org
Why Asset Development?1. Assets matter
Welfare policy too focused on consumption
Assets change thinking and behavior: Greater household stability Long-term thinking and planning Enhance well-being and life chances of kids
“Income may feed people’s stomachs, but assets change their heads.” (Michael Sherraden, Wash Univ. in St. Louis)
www.cfed.org
Why Asset Development?2. Unequal asset distribution
THE INCOME GAP
Mean Household Income by Quintile
$105,945
$50,395
$32,385
$19,224
$7,762
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Highest Fourth Third Second Lowest
Mea
n H
ouse
hold
Inco
me
Income Received by QuintilesSource: The Census Bureau, 1994
THE ASSET GAP
Share of Net Financial Assets by Quintile
86.9
-2.92.2
0.1
13.7
-10
0
10
20
30
40
50
60
70
80
90
100
Highest Fourth Third Second Lowest
Net Financial Assets by Quintiles
Per
cent H
eld b
y Eac
h Q
uin
tile
Source: Black Wealth/White Wealth, 1988
www.cfed.org
Why Asset Development?3. It works
ADD evaluation (large-scale IDA demonstration with over 2,000 participants). On average, ADD participants:
Had family income at 116% of the family-size-adjusted poverty line,
Saved $19.07 per month in average net deposits (1.6% of monthly income),
Made a deposit in about 6 of every 12 months, With an average match rate of 2:1,
accumulated $700 per year in IDAs. 300 IDA programs; at least 15,000 savers.
www.cfed.org
2005 Assets and Opportunity Scorecard: Financial security across the states
Most comprehensive tool yet to measure ownership and financial security at the state level
Assessment of states’ efforts to encourage and protect wealth among their residents
www.cfed.org
2005 Assets and Opportunity Scorecard
Emphasize assets as a unifying theme for promoting economic opportunity. Data are organized into five indexes: Financial security Business development Homeownership Health care Education
These issue areas show that asset building is essential to these elements of economic opportunity as well as make the data more accessible to advocates.
www.cfed.org
2005 Assets and Opportunity Scorecard Data
Cover performance and policies in the five areas.
Include both quantitative and qualitative measures.
Describe how well each state and the District of Columbia helps its residents to build and protect wealth.
www.cfed.org
Assets across America: the national picture
Nearly one in five households owes more than it owns
One in four families does not own enough to subsist at the poverty level for three months
One in four female-headed households has zero or negative net worth
One in three minority-headed households has zero or negative net worth
www.cfed.org
Assets across America: Financial SecurityFindings on Net Worth
For every one dollar in net worth of a household headed by a male, a female-headed household has less than 40 cents.
For every one dollar in net worth of a household headed by a white adult, a minority-headed household has about 6 cents.
The median Massachusetts household has four times the net worth of the median Texas household.
www.cfed.org
State Grades
www.cfed.org
State Policy Ratings
www.cfed.org
A look at Michigan
Overall grade on asset performance: COverall policy rating: Substandard
Index Grade Rating
Financial security C Substandard
Business Development
D Substandard
Homeownership B Standard
Health care B Substandard
Education C Favorable
Tax policy and accountability
Favorable
www.cfed.org
Noteworthy numbers for Michigan
#5 in homeownership rate #7 in homeownership by income #8 in Head Start coverage, college
degrees by race #44 in foreclosure rate, college
degrees by income #46 in microenterprise ownership #48 in small business ownership
www.cfed.org
Notable policies in Michigan
Favorable to asset building and protection: Match for low-income families saving in MI
529 plan High asset limits on means-tested programs Property tax relief for all homeowners First-time homebuyers’ assistance High per pupil spending Tax expenditure report
www.cfed.org
Asset-building policy opportunities in Michigan
Raise the income tax threshold Raise the state minimum wage above
the federal level Expand SBIC financing Provide CDBG funds for microenterprises Use bond sales for affordable housing Raise income limits for public health care
coverage Publish a multitax incidence report
www.cfed.org
www.cfed.org/go/scorecard
All data available for download State summary of data List of advocacy organizations by
location and issue area expertise CFED’s center for policy advocacy Media samples Guide to create state scorecard
www.cfed.org
A New Idea: Children’s Savings
What difference would it make if every child started with an account at birth?
Vision: $1,000 at birth for every child, Accounts used for asset building, Universal system Progressive matches Appropriate financial education delivered at
scale
www.cfed.org
Children’s Savings Policy
International precedent: Child Trust Fund
Federal proposal: ASPIRE Act
State precedents: Oregon’s Children’s Development
Accounts 529 College Savings Plans
www.cfed.org
Children’s Savings: SEED Initiative Multi-year, multi-site experiment with SEED
(children’s savings) accounts 1,250 accounts with children in 12 sites,
including 500 in MI. State policy partners:
Illinois Michigan Kentucky Oklahoma Alaska
One state “Universal Model” experiment to be chosen
www.cfed.org
Contact:
Carl RistCFED123 W. Main St., Suite 210Durham, NC 27701919.688.6444919.688.6580 (fax)[email protected]/go/scorecard