Are Public Housing Authorities the Next Frontier in Financial Capability Integration?
Another tax season has now come to a close, and we’re making progress on integrating financial capability services into the arena of community tax preparation. More than 3 million low-income taxpayers utilize Volunteer Income Tax Assistance (VITA) sites to prepare their taxes each year, and many experienced VITA programs are starting or expanding the financial capability programming they offer. Also, the recently introduced bipartisan Refund to Rainy Day Savings bill would establish a pilot to support building emergency savings at tax time, another step toward moving tax-time financial capability integration forward.
So how can we build on the promise of the community tax prep model by scaling up financial capability integration in other social services? There’s a special opportunity to scale up integration at one particular type of service provider: public housing authorities. The federal Family Self-Sufficiency Program (FSS) offers a platform for connecting potentially millions of households to financial capability services.
Why Public Housing Authorities?
Over 5 million low-income households receive some kind of federal rental assistance, the majority through public housing or the Housing Choice Voucher program. Participants in these programs typically pay 30% of their income toward rent, which protects their household budgets from being devoured by housing costs. But just as a job is not enough to ensure financial security, neither is an affordable rent. For most families receiving federal rental assistance, rents typically go up as their income goes up, discouraging some workers from increasing their incomes.
That’s where the FSS program comes in. FSS gives households the ability to save over the course of five years as their income increases, keeping rents stable and stashing the additional income into an escrow account. That makes it easier for families to work toward building their assets and motivates workers to increase their earnings since they’ll be able to hold onto more of that extra cash. By providing a vehicle for participants to build their assets over an extended period of time, the program can help residents to move out of subsidized housing to market-rate rentals or homes purchased with their savings. This could help make room for the millions of other people on the waiting lists, since only one out of four eligible households currently receives rental assistance.
The FSS program already provides a great platform for financial capability services integration. Participants must sign a contract that incorporates an individual training and services plan (ITSP), which outlines the services and resources that participants need to access to achieve their goals through the program. In fact, the FSS program already recognizes a number of financial capability services—such as financial literacy and homeownership counseling—as eligible resources for the ITSP. Strengthening the financial capability component of the FSS program could help participants hone their ability to manage their financial lives well alongside building savings. And of course, it’s also an opportunity to nurture the aspirations of residents who see the financial achievements and possibilities for their families in the long run.
Ideas for Strengthening Financial Capability Integration
Just as in the community tax field, several organizations are already working to expand financial capability services integration into the FSS program. One great example of this work is Compass Working Capital, a group that partners with local public housing authorities to provide financial education and counseling for FSS participants, matching every dollar they save with three additional dollars from private contributors. Organizations such as Stewards for Affordable Housing for the Future, Preservation of Affordable Housing and Heartland Alliance are also taking steps to pair FSS programs with financial capability services. In addition, CFED is working with Credit Builders Alliance (CBA) to expand on the successful Power of Rent Reporting pilot into Home Forward’s FSS program, providing participants the opportunity to establish or build their credit by including rental payment history on their credit reports.
What else could the asset-building field do to build on the potential of the FSS program? One idea is a partnership between FSS and the Assets for Independence (AFI) program, creating a way for participants to leverage AFI matching dollars to accelerate program toward their ITSP goals. There is also the opportunity to reform FSS program requirements to include more and better financial capability services as part of participants’ ITSP, and to strengthen the connections between local public housing authorities and financial capability service providers in the community. But in order to make the most of the FSS program and ensure that any additional financial capability services reach more residents, we need a stronger partnership and more open dialogue between financial capability practitioners and HUD to identify paths forward.