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Strengthening the Case for Removing Asset Limits on SNAP & TANF: Results of DHS Asset Limits Study

Posted by tedwards on 12/15/2014

In support of Southern’s mission to create economic opportunity and promote financial security, our policy team worked to pass legislation (Act 535 of 2013) during Arkansas’s 89th General Assembly that required the Department of Human Services (DHS) to conduct a study on current asset limits for the SNAP and TANF programs. While ample national research showed the negative effects of asset limits, there was insufficient data specific to Arkansas. In summer 2014, DHS released the study to determine the effectiveness, consistency, and efficiency of program administration and to understand the potential implications of changing the current asset limits.

The study’s results confirmed our 2013 research findings, presented in our paper “Making the Case for Eliminating Asset Limits: Why Asset Limits Undermine Financial Security for Arkansans”: less than 1 percent of Arkansas SNAP and TANF applications are denied because of excessive assets. The reason for such a low number of denied applicants is because the great majority of Arkansans receiving and needing income supports are in fact poor. The average Arkansas household receiving SNAP has only $57 remaining at the end of the month after paying for necessary expenses. Hence, SNAP recipients do not have the funds saved, or to save, to reach the asset limit, making the asset limit irrelevant for them. Further, in addition to asset tests, income tests are also in place to ensure a household has an income below 130 percent of the Federal Poverty Level.

While the intention of asset testing is to ensure accurate allocation of benefits to those most in need, the eligibility criteria can have negative impacts on the effectiveness of the program as a conduit to self-sufficiency. Asset limits were enacted to prevent wealthy people with considerable savings from receiving funds from anti-poverty programs, yet this scenario is extremely rare, largely due to income tests. Rather, asset limits often have an adverse effect, deterring people from transitioning from government dependence to self-sufficiency and keeping them on public benefit programs. Asset limits discourage savings, disincentivize maintaining a bank account, and theoretically increase the duration of time a family is financially unstable and stays on public benefits.

In addition to negatively impacting a household’s economic stability, asset limits also create problems within public benefit administration. Due to the great complexity of rules and exceptions attached to asset limits, the application evaluation process of asset confirmation can be extremely taxing and time-consuming for both the caseworker and the applicant. Regarding the convolutions of eligibility requirements, over two-thirds of payment errors in SNAP are made by the caseworker rather than the applicant. A 2012 study found that doing away with asset tests for SNAP in both Illinois and Ohio simplified the work, reduced the amount of verifications for applicants, and allowed workers more time to process other information regarding the assistance program.

The results of the DHS study show asset limits are futile, yet discourage economic independence. If Arkansas wants to reduce the number of people on SNAP and TANF, the state cannot perpetuate a cycle where those services become the norm – families need to be able to save to become financially independent. Further, removing asset limits in Arkansas would result in less government spending, and more administrative efficiency.

To learn more about our efforts to improve household economic stability for people in rural communities, please contact Meredith Covington, Policy & Communications Manager, at meredith.covington@southernpartners.org.

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Mississippi Has Highest Rates of Unbanked and Underbanked – 2013 FDIC Survey

Posted by esivak on 12/08/2014

People who have an account with a bank or credit union are better positioned to participate in the economy and contribute to the nation’s recovery. However, a large number of American households do not have access to basic financial tools like checking and savings accounts. According to the 2013 FDIC National Survey of Unbanked and Underbanked Households, more than one in four households (27.7%) are either unbanked or underbanked. Unfortunately, Mississippi leads the nation in the number of unbanked and underbanked households. A relationship with a financial institution enables individuals to more securely plan for future investments as they work their way toward financial stability. Banks and credit unions allow people to save their income to purchase a home, start a business, or further their education.

The Unbanked – have no checking or savings account.

In the United States, one in thirteen households is unbanked. Mississippi has the highest percentage of unbanked households in the country, followed by Louisiana and Arizona. Approximately 14.5% of households in Mississippi are unbanked.

The Underbanked – have an account but continue to depend on costly alternative financial services for basic transactions and credit needs, like check cashers, payday loan providers, pawn shops, auto title lenders and rent-to-own stores. These businesses charge high fees for their services – services that deplete rather than preserve income and wealth. In the U.S., one in five households is underbanked. Mississippi also has the highest percentage of underbanked households in the country – 32.8% of households in Mississippi are underbanked (a nearly 10 percentage point increase from 2011). Compared to the rest of the nation, Texas and Georgia have the second and third highest rate of underbanked residents in the country (approximately 26% and 27%, respectively).

Unbanked and underbanked households typically operate in a cash-based system, and, as a result, do not have the same financial security and opportunities as those who bank with traditional financial institutions. The unbanked and underbanked are more likely to spend a percentage of their net income on unnecessary fees. They are also more likely to be victims of crime, because they often carry their cash or keep cash in their homes.

The new data continue to underscore the importance of implementing policies that promote financial inclusion. When households are attached to the financial mainstream, they have the tools available to save and build wealth, as well as the opportunity to pass good financial habits onto children.

Interestingly, the states with the highest rates of unbanked populations are those states with large immigrant and African American populations. For example, one out of three African American households in Mississippi is unbanked – approximately 10 percentage points higher than the national average for African Americans. Given the shifting demographics of the country, pursuing policies that support successful models of connecting households of color to the financial mainstream remains essential to maximizing opportunity in America. Examples of such policies include expanding support for Community Development Financial Institutions and Community Development Credit Unions to continue the work of meeting the needs of historically underserved populations.

Source: FDIC, 2013 FDIC National Survey of Unbanked and Underbanked Households, 2014.

-Jessica Shappley
Policy Analyst

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ILLINOIS LEGISLATURE PASSES THE SECURE CHOICE SAVINGS PROGRAM

Posted by lmullany on 12/04/2014

Chicago, IL — On a vote of 30-25-2 in the Senate and 67-45 in the House, the Illinois Secure Choice Savings Program (SB2758) was approved by the Illinois General Assembly today. The bill will give millions of private sector workers in our state the opportunity to save their own money for retirement by expanding access to employment-based retirement savings accounts.

SB2758, sponsored by Senator Daniel Biss and Representative Barbara Flynn Currie, will automatically enroll workers without access to an employment-based retirement plan into the Secure Choice program. While workers can opt-out of the program, those that do participate will be able to build savings in an Individual Retirement Account (IRA) through a payroll deduction. All accounts are pooled together and professionally managed; ensuring that fees are low and investment performance is competitive.

“Illinois has taken a huge step forward in addressing a growing retirement crisis by giving Illinois residents the tools to save,” said Senator Biss. “The Secure Choice program will have a minimal impact on the state and participating businesses, but the effect for workers will be the difference between retiring with dignity and a retiring into poverty.”

More than 2.5 million workers do not have access to a retirement savings account through their employer, according to a report from the Woodstock Institute. The report found lack of access is most serious for low-wage workers, of whom 60 percent lack access, but even for workers making $40,000 or more, 49 percent do not have access to an employment-based retirement savings plan. In every Senate district in Illinois, over half of private-sector workers do not have access to this type of plan.

“The Secure Choice Savings Program will make it easy for Illinois workers to save without burdening employers or the state,” Representative Currie said. “This program can make a secure retirement a reality for hard working Illinoisans.”

The Illinois Asset Building Group (IABG), a project of Heartland Alliance, has been advocating with its partners for the passage of the Illinois Secure Choice Program. “Secure Choice is an innovative, simple program that makes saving for retirement easy for Illinois workers,” said Lucy Mullany, Coordinator of IABG and a Senior Project Manager with Heartland Alliance. “We thank the General Assembly for taking a big step towards stronger retirement security for Illinois workers and look forward to working with leaders to implement this new program.”

The Illinois Secure Choice Savings Program was supported by IABG, Heartland Alliance, Woodstock Institute, the Sargent Shriver National Center on Poverty Law, SEIU Healthcare, AARP Illinois, and over 60 organizations and businesses across the state.

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The Illinois Asset Building Group (IABG) is a statewide coalition committed to increasing access to the tools people need to build financially secure futures for themselves and their children. IABG's work across issue areas includes examining barriers and solutions to the persistent racial wealth gap. IABG a project of Heartland Alliance. For more information, visit http://www.illinoisassetbuilding.org.

Heartland Alliance - the leading anti-poverty organization in the Midwest - believes that all of us deserve the opportunity to improve our lives. Each year, we help ensure this opportunity for nearly one million people around the world who are homeless, living in poverty, or seeking safety. For more information, visit: http://www.heartlandalliance.org.

Woodstock Institute is a leading nonprofit research and policy organization in the areas of fair lending, wealth creation, and financial systems reform. Woodstock Institute works locally and nationally to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity. For more information, visit: http://woodstockinst.org/.

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SE Michigan: VITA Volunteers Needed!

Posted by mlulion on 12/02/2014

Tags: VITA, asset building, Volunteer, Michigan, Detroit, Wayne County, income tax, Wayne Metro

Hello from everyone in Wayne Metropolitan Community Action Agency's Asset Building Department!

The holiday season is already upon, which means tax season is just around the corner! Wayne Metro is currently seeking volunteers for its Volunteer Income Tax Assessment (VITA) Program for the 2015 tax season.

The VITA Program at Wayne Metro provides free income tax return preparation for low-to-moderate income taxpayers. We are looking for volunteers to assist the Tax Program in preparing quality income tax returns and to uphold the highest ethical standards in doing so.

In 2011 and 2012, Wayne Metro helped file more than 4,000 income tax returns and we have continued to grow each year, but we still need your help! The more volunteers we have, the closer we come to providing free income tax assessment to every eligible taxpayer in Wayne County.

VITA Programs are incredibly effective asset building tools, especially when paired with savings. Taxpayers who use VITA services can not only increase their wealth with a tax return, but also by avoiding the fees charged by a for-profit tax preparer.

Each Income Tax Assistance Volunteer is asked to make a commitment of at least 5 hours per week, and since this is an ongoing volunteer position we encourage a long-term commitment to the Tax Program!

If you, or anyone you know, is interested in joining our Tax Program team as a VITA Volunteer click here to find out more about the position and fill out a volunteer application!

Tax Day

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Governor Proposes Tax Credit for Mississippi Working Families

Posted by esivak on 12/02/2014

Earlier this week, Governor Bryant released his budget recommendation for the next budget yearThe twelve months of the Fiscal Year plus the lapse period.. His plan includes recommended funding levels for schools, law enforcement, healthcare and other state services. Also included, was a plan supporting working families through the Mississippi Working Families Tax Credit.

The tax credit, modeled after the federal Earned Income Tax Credit (EITC) would reduce or eliminate low and moderate income working families’ income tax liability .

Bryant’s plan would be a great start toward supporting Mississippi’s working families who are struggling to make ends meet. It would be a boost to family economic security as well as local economies. The tax credit could support families even more if it were improved in a couple of key ways:

  • Currently in Mississippi, a family of four with two parents and two children generally does not owe state income taxes if they earn under $19,600 annually and claim standard exemptions and deductions. Under Bryant’s plan these families would not get the full amount of the tax credit because their income tax liability is less than their credit amount. Although the families may not owe state income taxes in a given year, they are taxpayers. These families pay sales tax, fuel taxes, and others. As a result, most of the states (22 of 26 states) with a with a similar credit refund their state EITC to offset the other taxes for lower income families pay in addition to the income taxes.
  • Bryant’s proposed credit would only be available in years with 3% revenue growth over the previous year and when the state’s rainy day fund is full. This sounds fiscally responsible, but would mean that state taxes on low and moderate income Mississippians would go up in lean times, like a recession; when they can least afford it.

The Governor’s budget recommendation as well as the Joint Legislative Budget Committee (to be released in December) will be debated by the legislature when crafting a state budget for the FY 2016 year. Stay tuned for more details on the Governor’s budget, including recommended funding levels for schools, higher education, healthcare and other key services.

-Sara Miller
Senior Policy Analyst

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New Poverty Measure Paints Different Picture of Poverty Rates in Arkansas and Mississippi

Posted by tedwards on 12/01/2014

In October, the Census Bureau released the poverty rate based on the Supplemental Poverty Measure (SPM). This snapshot of poverty in America, which varies somewhat from the standard official measure released in September, accounts for regional differences in the prices of housing and other local living costs by using more updated formulas associated with consumption patterns and family structures to calculate the rate. It also deducts essential costs—food, clothing, housing, and utilities—and accounts for government assistance programs. This new measure is significant as the official poverty measure (OPM) has been widely assailed because of assumptions such as the income needed to live in San Francisco being the same as what is needed in the Mississippi Delta. Just to clarify and underscore the absurdity of this, the median value of owner-occupied housing units in Clarksdale, Mississippi is $60,000; while in San Francisco, it’s $750,900.[i] Further, the OPM does not incorporate many income supports that effectively lift families out of poverty. Thus, many conclude that the SPM is a more accurate measure of poverty than the OPM.

The SPM shines a new light on the effectiveness of anti-poverty and government assistance programs in tackling poverty. For example, a single mom in Arkansas with two kids can receive an Earned Income Tax Credit (ETIC) of $5,370 if she makes about $13,500 annually, which increases her household income by nearly 40 percent. Including this kind of information in poverty analysis measures paints a more accurate picture of what poverty looks like in the U.S.

The OPM calculates Arkansas’s poverty rate as 18.7 percent, and Mississippi’s rate as 20.7 percent. Under the SPM, Arkansas’s poverty rate decreases to 16.1 percent, and Mississippi’s declines to 15.3 percent. In summary, the poverty rates in both Arkansas and Mississippi are lower when using the more comprehensive SPM. Further, on the national level, the overall poverty rate over the last five decades remains around 15 percent according the OPM. The SPM, on the other hand, declines markedly over the past fifty years (19 to 16 percent).

OPM (2011-2013) SPM (2011-2013) Difference


Arkansas 18.7% 16.1% -2.65
Mississippi 20.7% 15.3% -5.4%
U.S. 14.9% 15.9% 0.9%
Source: Census Bureau, 2014.

Having an accurate measurement is critical to Southern’s work as we seek to create opportunities for economic stability and mobility in Arkansas and Mississippi. While the SPM does not tell us everything about the communities we serve, it does provide insight into the resources people have access to and the costs they incur by looking at the population in a comprehensive way. To learn more about our efforts to improve economic opportunities for people in rural communities, please contact Meredith Covington, Policy & Communications Manager, at meredith.covington@southernpartners.org.

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CFPB We're helping build savings at tax time

Posted by klawton on 11/25/2014

Our friends at the CFPB asked that we share the below message with the A&O Network about their efforts to help build savings at tax time.

Good afternoon,

Every tax season since the CFPB was formed, we’ve worked to help taxpayers build savings from their tax refunds. Having a savings cushion provides more financial stability and security, especially for consumers who have limited income or are economically vulnerable.

Last year we helped train volunteers at Volunteer Income Tax Assistance (VITA) sites, and we distributed materials for consumers to help them focus on savings when they filed their taxes. About a dozen VITA sites around the country participated to help test the effectiveness of this approach.

One key lesson we learned: It’s important to have dedicated staff or volunteers in the tax site talking to taxpayers about savings. If you work with a VITA site or see an opportunity to lend a hand, consider making this part of your tax time initiatives.

This year, we’re making our training and consumer information available to VITA sites around the country. If you work with a VITA office, or if you have other opportunities to help people save part of their tax refunds, we look forward to sharing the materials with you.

For VITA sites + Training manual for staff and volunteers + Webinars to help staff and volunteers promote savings + Web banners for posting on your organization’s site + Posters encouraging taxpayers to consider saving + Savings video for tax sites to show in their waiting areas

For consumers + Checklist, to help taxpayers prepare for their tax appointment + Worksheet, to help taxpayers decide how much to save

The materials will be available for download or order in December. You’ll receive an e-mail letting you know when they’re ready and how to access them. At the same time, you’ll receive the schedule of webinars for staff and volunteers and instructions on how to sign up.

Stay tuned for more news from the CFPB about saving at tax time.

Sincerely, The Consumer Financial Protection Bureau

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Support the Employer-Based Payday Loan Alternative in Texas

Posted by lgates on 11/20/2014

The Community Loan Center of Texas is a nonprofit 501(c)3 program that provides a sustainable and scalable, low cost, market-based alternative to high cost payday and auto title loans. This innovative employer-based program is expanding statewide after impressive results during a pilot project over the last three years in the Rio Grande Valley. The program allows employees the opportunity to borrow up to $1,000 at 18% interest and a small fee of $20. Borrowers will have up to a year to pay back their loan. Your support will help us launch and scale the Community Loan Centers across Texas.

A network of nonprofit organizations are working together to jumpstart the program and raise loan capital from several sources including a CrowdFunding campaign on Indiegogo. Through grassroots efforts we hope to raise $20K through crowdfunding for our initial loan pool. These funds will help more than 150 employees borrow money at reasonable rates and save them over $500,000 in fees compared to the costs of payday or auto-title loans. We’ve now raised over $2,000 toward this goal from 40 individuals who think the Community Loan Center is an idea worth investing in.

There are now 17 days left in the Indiegogo campaign. If you’d like to support Texas communities, here are some ways to help:

  • We’re asking for your donation – $5, $10, anything helps!
  • Would you be willing to feature a story in your newsletter or a blog about our efforts?
  • Would you help us promote this fundraising effort through social media?

For more information on the Community Loan Center of Texas, visit the website or the crowdfunding campaign website.

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Reflections on the First-Ever National Head Start Stakeholder Convening

Posted by klawton on 11/20/2014

Yolanda Gonzales

Thirty years ago, I was a Head Start parent. Now, I am the Director of a $28 million Head Start program, covering 8,000 square miles in Kern County, California. If someone had told me thirty years ago that this is where I would be, I would have thought they were insane.

I’m a living testament that Head Start and financial capability programs work. Building the financial security of Head Start parents is an issue that touches home for me because I had the opportunity and determination to break the cycle of poverty. I know how difficult it is for parents. I understand the fear of not knowing if you can make it to the next month. I had to make a difference in my life, and going back to school, even if it was a struggle, helped me make a difference for my children. All my children have master’s degrees, and soon I’ll have a master’s degree of my own.

As the Director of the Head Start program at Community Action Partnership of Kern (CAPK), I am an advocate for integrating a financial-capability approach into Head Start programs. Fortunately, CAPK was selected in January 2014 from a pool of over 70 Head Start applicants to receive technical assistance from CFED as part of the ASSET Initiative Partnership to help us implement an integrated approach.

CAPK began our integration project with the goal of working directly with Head Start families to improve their financial future. However, it quickly became apparent that there was work to be done with program staff─ not only with their comfort level in discussing finances with clients, but also their own financial security. According to an Employees Financial Empowerment survey we conducted, 43% of respondents indicated that they were either neutral or uncomfortable discussing financial topics with clients, and faced financial challenges similar to their clients. We learned it was imperative to empower staff with tools to improve their own finances, and help them convey these resources to clients.

A successful first step towards increasing staff capacity was to train them on the Consumer Financial Protection Bureau’s “Your Money, Your Goals” toolkit. More than 20 CAPK employees, from administration and the centers, attended the full-day training and came away with a better understanding of the importance of financial security for client families and for themselves. Additional staff and a select group of Head Start parents will receive the “Your Money, Your Goals” training in January and October of 2015.

As CAPK expands its financial-capability approach for Head Start parents, we are eager to share our lessons learned and contribute to the national dialogue. In October, I had the opportunity to participate in a one-day Head Start Stakeholder Convening where I shared my personal story and why strengthening the financial capability of Head Start parents is so important to me. The Convening was a “first-of-its-kind” event hosted by Office of Community Services’ in partnership with the Office of Head Start. I was greatly impressed and inspired by the financial capability work others have done within their Head Start programs. Including financial capability as a policy priority will ensure that all Head Start programs have the institutional and financial support needed to carry out this important work. Through my own personal and professional experiences, I believe that financial literacy and inclusion can change the lives of low-income children and families.

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New Unbanked and Underbanked Rates Underscore Need for Affordable and Accessible Financial Services in Arkansas and Mississippi

Posted by tedwards on 11/20/2014

As a Community Development Financial Institution (CDFI) seeking to provide affordable and accessible financial services to Arkansans and Mississippians, a recently released FDIC survey on unbanked and underbanked households in America caught our attention. The study breaks down the rates of unbanked and underbanked households by state as well as providing information on rates of savings account ownership and usage of prepaid debit cards and mobile financial services.

For background, the FDIC defines “unbanked” households as not having a checking or savings account, and “underbanked” households as those having a checking and/or a savings account but using alternative financial services, such as non-bank money orders, non-bank check cashing services, payday loans, rent-to-own services, pawn shops or others in the past 12 months.

While still higher than the national average of 7.7 percent, Arkansas’s unbanked rate was stable over the last two years at 12.3 percent. Further, the underbanked rate decreased from 28.1 percent to 25.7 percent, which is exceptionally noteworthy because of its significant increase from 22.3 percent in 2009 to 28.1 percent in 2011. In Mississippi, the unbanked rate decreased 0.6 percent from 15.1 percent in 2011 to 14.5 percent. However, Mississippi’s underbanked rate took a turn for the worse: the percentage of underbanked households jumped from 23.8 percent in 2011 to 32.8 percent.

Unbanked, 2011 Unbanked, 2013 Underbanked, 2011 Underbanked, 2013
Arkansas 12.3% 12.3% 28.1% 25.7%
Mississippi 15.1% 14.5% 23.6% 32.8%
U.S. 8.2% 7.7% 20.1% 20.0%
Source: FDIC, 2014.

In addition to the unbanked and underbanked rates, the FDIC’s findings on the increased usage of prepaid debit cards and mobile banking are also of interest. In Arkansas, 10.2 percent of households used prepaid debit cards in the last 12 months; in Mississippi, the rate of prepaid debit card usage is 14.9 percent. Unbanked households had the highest rate of usage of prepaid debit cards, whereas underbanked households are more likely to use mobile financial services than fully banked or unbanked households.

So what does this mean for Southern? Arkansas and Mississippi are both relatively poor states, so higher unbanked and underbanked rates are not surprising as the FDIC survey shows there is a strong negative relationship between lower-income households and ownership of a bank account. But as a CDFI, Southern works to extend the availability of credit and capital to everyone, and provide responsible, fair financial services to its customers. As demonstrated at the national level in the FDIC survey, 35.6 percent of unbanked households reported the main reason for not having an account was insufficient money to meet minimum balance requirements, and 34.1 percent of households that recently became unbanked experienced either a significant income or job loss they said contributed to becoming unbanked. To help alleviate financial stress amongst our customers, Southern currently offers several different kinds of accounts with no service fees and no or low minimum balance requirements.

To learn more about Southern’s efforts to reach unbanked and underbanked households and create economic opportunity in Arkansas and Mississippi, please contact Meredith Covington, Policy & Communications Manager, at meredith.covington@southernpartners.org.

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