Promising Federal and State Asset-Building Policies

A number of initiatives at both the federal and state levels have gained broad, bipartisan support. Here is a summary of some notable policy efforts.

The Assets for Independence Act was the first dedicated national program for IDAs. It provides support, on a competitive basis, to nonprofit community-based IDA programs in diverse settings throughout the United States. This valuable federal investment has enabled nine thousand low-income people to buy homes, pursue postsecondary education, or start a business. CFED is working to reauthorize the program by expanding its funding and making a series of technical improvements to ease its implementation.

If enacted, the Savings for Working Families Act (SWFA) would result in an eighteenfold increase in match funding for IDAs. SWFA would provide a tax credit to financial institutions that match the savings of 900,000 low-income Americans. Other promising strategies include (Boshara, Cramer, and O'Brien 2007, 1)

• Creating universal children's accounts at birth.

• Raising or removing asset limits in public assistance programs.

• Resurrecting savings bonds.

• Requiring employers to use payroll deduction to fund employees' IRAs.

• Expanding state-based 529 college savings plans.

• Improving financial education.

• Reforming laws to protect assets and reduce consumer debt.

States, and some localities, have become increasingly engaged in asset-building initiatives: funding, providing financial education, earmarking public funds for savings matches, outlawing predatory lending, and eliminating policy disincentives to acquiring assets. Some state programs and policies furnish essential financing for a home purchase, business start-up, or postsecondary education required to secure a better job and financial security.

Recently, states have begun to take a more comprehensive approach to ensuring financial security and opportunity for all citizens. Some of these statewide asset policy initiatives are led by government (e.g., Delaware and Pennsylvania); others are led by community-based advocates (e.g., California, Illinois, and Michigan). These initiatives have two things in common: commitment to a broad, state-level policy agenda that expands economic opportunity, asset building, and financial security; and diverse stakeholders, including government agencies, elected officials, community-based organizations, and business.

A recent report by the Fannie Mae Foundation looked at six statewide assets policy initiatives (McCulloch 2005):

• Delaware: Governor's Task Force for Financial Independence (2001)

• California: Asset Policy Initiative of California (2003)

• Illinois: Illinois Asset Building Group (2003)

• Pennsylvania: Governor's Task Force for Working Families (2004)

• Hawai'i: Ho'owaiwai Asset PoUcy Initiative of Hawai'i (2004)

• Michigan: Michigan IDA Partnership (2004).

These initiatives have produced legislative and administrative policy changes; brought new players, strategies, and resources to the table; added "assets" to the policy dialogue; and built public support for a broad range of economic-opportunity ideas. The following states are also engaged in statewide asset policy initiatives: Arkansas, Connecticut, Florida, Massachusetts, New Mexico, North Carolina, Oregon, and Texas.

In fall 2007, CFED partnered with ten organizations to improve state-level assetbuilding and protection policies as a means of expanding economic opportunity. The campaign will be linked to the release of the 2007-2008 Assets and Opportunity Scorecard. The Scorecard uses forty-six outcome measures to report how well the residents of each state and the District of Columbia are able to build and retain wealth. CFED has prioritized twelve core state policies of the twenty-six covered in the Scorecard. The collaborative campaign will focus on:

• Asset limits in public benefits programs

• Housing trust funds

• Incentives for college savings

• IDA programs support

• Microenterprise support

• Curbing of predatory lending

• Expanded coverage of Medicaid and SCHIP

• School spending fairness

• Support for community development lenders

• State-earned income tax credit

• State-supported preschool

• Tax expenditure reports

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