The Affordable Care Act & The Unbanked, Part I
By Lucy Mullany, Guest Contributor on 08/20/2013 @ 10:00 AM
EDITOR'S NOTE: This is the first in a two part blog series on the Unbanked and the Uninsured. Many thanks to Lucy Mullany of the Illinois Asset Building Group for permission to share this timely blog series.
When the Affordable Care Act (ACA) goes into effect this October, Illinois residents who don’t have a bank account could find themselves without access to new healthcare opportunities.
Under the Affordable Care Act, 957,440 Illinois residents are expected to qualify for tax subsidies that can be used to purchase insurance through new health care exchanges. However, an estimated 36% of uninsured households in our state have no checking or savings accounts and are effectively “unbanked”. The problem is that the vast majority of insurance companies require individuals to pay their monthly premiums via automatic withdrawal from a checking account. This means if you don’t have a checking account, you can’t get insurance.
As Illinois works to set up health exchanges, the question of how unbanked households will purchase insurance has largely been overlooked. In an effort to address this challenge, the Department of Health and Human Services released proposed rules that would require insurers to accept a menu of payment options, including:
- Paper Checks
- Cashier’s Checks
- Money Orders
- Prepaid debit cards
- Electronic funds transfer from a bank account
- Automatic deduction from a credit or debit card
IABG believes insurance companies should be required to accept alternative payment options in order to ensure that thousands of our residents are not denied health insurance as the ACA is implemented in Illinois. However, we also believe that we need to go further.
One in four Illinois households are either unbanked (with no checking or savings account) or underbanked (they may have a bank account, but still use alternative financial services like check cashers and payday loans). With individuals signing up for health insurance in communities across the state, this is a great opportunity to connect them with programs and services that help families become financially secure. These include community Volunteer Income Tax Assistance (VITA) programs, Bank On initiatives, and financial counseling services.
While existing programs are helping a percentage of households that need their services, with support from government leaders, they can leverage the implementation of the ACA to help even more residents safely connect to the financial mainstream.
IABG is working with other advocacy leaders engaged with CFED's Assets & Opportunity Network to develop recommendations on how the Department of Health & Human Services and other state and federal agencies can insure that a pathway to safe banking opportunities is a part of ACA implementation.
In part 2 of this blog series, we will share these recommendations and ask for your support in moving them forward. If you have feedback please contact Lucy Mullany.
Assets & Opportunity Network Reaches Several Milestones
By Jennifer Brooks on 08/19/2013 @ 03:00 PM
- We developed a Network federal policy agenda. We defended states’ right to eliminate asset tests in federal food assistance programs. We told the Consumer Financial Protection Bureau how to protect consumers and build financial capability.
- Through Network Lead Organizations, we engaged more than 10,000 asset-building advocates; reached millions of readers, viewers and listeners through more than 1,000 media hits; and directly educated hundreds of local, state and federal policymakers.
- We have kept Network Members “in the know” about state policy developments as they happen and about events and activities going on throughout Network. We’ve started a new monthly idea bank for Network Members to use to raise their visibility with the media, policymakers and allies.
- We created a home for the Network’s Learning Community, which features a resource library, events calendar, and opportunities to suggest and participate in learning groups. An impromptu learning group of Network Lead Organizations began in June to explore implications of the Affordable Care Act on the unbanked. Another learning group on coalition-building is underway. Have an idea for a learning group? Please share it!
What’s on deck for the Network in the next year?
The Network Steering Committee met in June to identify 10 goals for the next 18 months. Among them is hosting a 2013 Network Leadership Convening, December 3-4 in Washington, DC. The event will give Lead State and Lead Local Organizations the opportunity to shape Network priorities for the next year; learn from peers and experts about the most pressing issues and innovative asset building approaches; and educate federal policymakers about the impact that asset-building strategies can have on the lives of struggling Americans. Network Lead Organizations: save the date!
Are you from a state or local area that doesn’t yet have a Lead State or Lead Local Organization, consider stepping up to be the Network local convener in your geography. The Request for Letters of Interest is due September 6, 2013.
We’d love your feedback on how the Network is doing and ideas for how we can do even more to build an assets movement.
Asset-Building News Roundup - August 16, 2013
By Veronica Weis on 08/16/2013 @ 04:30 PM
Next week, PolicyLink is hosting a Promise Zones Informational Webinar on Thursday, August 22. The Promise Zones initiative is an exciting new strategy being implemented by the Obama Administration to address the challenges of concentrated poverty. Building upon the proven tools implemented by the President during his first term to combat poverty, this initiative will designate a number of high-poverty communities as Promise Zones, with which the federal government will partner and invest in to create jobs, leverage private investment, increase economic activity, expand educational opportunities and improve public safety. This webinar will introduce this interagency effort, explore its potential for tackling complex issues and discuss eligibility for application.
On August 28, the CFPB will host a conference for financial coaches and vendors who are interested in learning more about providing direct financial coaching to transitioning veterans and economically-vulnerable consumers. Click the link to learn more.
On July 29, Illinois Governor Quinn signed HB2262, which eliminates asset limits in Temporary Assistance for Needy Families (TANF), making Illinois the eighth state to remove this disincentive to save. The law is effective immediately.
This fall, nearly 15,000 kindergarteners in Cuyahoga County, Ohio, will receive college savings accounts with $100 in them. Cuyahoga County Executive, Ed FitzGerald, announced that KeyBank will administer the College Savings Account Program. Plans are also underway to open bank accounts for children in rural Nevada this fall.
The Oregon legislature passed a bill that establishes the Oregon Retirement Savings Task Force. The Task Force will make recommendations for ways to increase retirement savings.
From the Assets & Opportunity Network
A fourth Request for Letters of Interest for organizations interested in becoming Assets & Opportunity Network Lead Organizations is now in the field. If your organization convenes a statewide or local coalition, and wants to engage your members in national Network opportunities and help lead and shape the direction of the Network, submit a Letter of Interest to firstname.lastname@example.org by September 6.
Next Step System Series: Life-Cycle Pricing
By Susan Bond and Stacey Epperson, Guest Contributor on 08/15/2013 @ 04:30 PM
EDITOR'S NOTE: This was originally posted on the Next Step blog and can be read here. Many thanks to Next Step for sharing this wonderful piece!
Simply put, life-cycle pricing adds up the value we build into every Next Step home – from a superior foundation to ENERGY STAR savings – and makes every cost transparent to our Network Members and their homebuyers. We analyze the cost to maintain a home over the life of ownership, and come up with a strategic solution to leverage the price and to help maintain the home’s value over time.
Our previous post on Permanent Foundations explained how a permanent foundation helps homeowners qualify for a better mortgage. In addition to permanent financing, we require that our homes be built to meet ENERGY STAR certification to maximize energy savings for homeowners. We also promote Universal Design features so that when elderly homeowners retire and begin living on a fixed income, there’s no need for expensive renovations – the features of the home are easily adaptable for wheelchair use, barrier free showers and other special needs.
We made the decision to focus on quality because we know that by making upgrades like ENERGY STAR construction, permanent foundations, and Universal Design, the likelihood of appreciation increases, thus building wealth in addition to saving a substantial amount in energy costs. The homeowner is also eligible for preferred real estate mortgages and can save money over the life of the loan; and when the homebuyer decides to sell their home, the next buyer qualifies for the same government-backed financing. This might create some upfront costs, but the long-term payoff is in the energy cost savings, curbing carbon emissions, the ability to age in place, and for the home to appreciate if the homeowner wants to resale.
Woven into life-cycle pricing is transparency. One way Next Step can offset these investment costs is by practicing transparent pricing, meaning Network Members and homebuyers always see invoices. This allows the Network Member and homebuyer to shop around and compare costs, saving money and providing the best product for each homebuyer. At Next Step, homeowners will know what it takes to turnkey a home. Life-cycle pricing includes expenses like transporting the home, setting the home, inspecting the home, installing electricity, building stairs and other costs that create an inhabitable, comfortable home. Next Step prices the total homeownership experience versus a homeowner trying to finish the home over the years when it’s affordable. By including quality systems up front, the homeowner also saves on ongoing maintenance, and by curbing both energy and maintenance costs up front with an ENERGY STAR investment, the life-cycle cost is built into the home by hedging repair costs.
Life-cycle pricing helps Network Members gauge long-term affordability, including savings for utilities. It also provides transparency to the nonprofit and to the homebuyer, while educating the homeowner on how to build and maintain their home as an asset. At Next Step, we believe this ultimately empowers the homeowner, who can not only achieve the American dream of homeownership, but also the ability to maintain it: creating wealth, skills for asset building, and independence from the cycle of poverty.
Energy Savings is Asset Building: Ideas into Practice in Indiana
By Megan Miller on 08/15/2013 @ 09:00 AM
On July 30, CFED, with the support of NeighborWorks America, presented a highly-attended webinar on the theme, Energy Savings is Asset Building. Moderator Michelle Winters of NeighborWorks America set the context, while Dave Betler of Next Step Network and Ludy Biddle of NeighborWorks of Western Vermont described programs that enable households to save hundreds of dollars in utility costs through home replacement and improvement.
Among the almost 200 webinar participants, Megan Miller, today’s Guest blogger, wants to share information about a program, Energizing Indiana, that benefits all households throughout Indiana and that may spark ideas from other parts of the country. Read Megan’s Post (below) for details of her Indiana experience, and check the webinar resource page for a directory of state programs and other resources.
I am Megan Miller, director of a not-for-profit corporation, Providence Housing Corporation, in W. Terre Haute, Indiana, that manages a development of rental housing for low-income seniors. We signed up to participate in Energizing Indiana’s Community Outreach and Enrichment Program to ensure that we were providing energy efficient homes for our residents. Through the Energizing Indiana program our organization receives a $25 donation for each energy assessment we sign up and that gets completed.
This program is available throughout the State of Indiana.
During the assessment, an energy advisor will guide the homeowner/tenant step by step through the process to produce long-term, cost-effective energy savings by analyzing the household’s use. Then they will recommend appropriate efficiency measures and install several low-cost energy saving measures. They will access heating, ventilation and air-conditioning systems to determine if they are operating efficiently. They may also inspect the home's air duct sealing and insulation levels.
The energy advisors will replace up to nine traditional incandescent bulbs with CFLs (compact fluorescent lights); install up to three low-flow faucet aerators; install up to two low-flow shower heads; and place water heater insulation wrap on electric water heaters.
Weatherization services are available for income-qualified homeowners/tenants. All types of homes qualify as long as the homeowner/tenant:
- has the electric bill in their name,
- the home was built prior to 2010,
- and has not had an assessment within the last three years.
For further information and questions, I can be contacted at 812-533-6807 or email@example.com.
Asset-Building News Roundup - August 9, 2013
By Veronica Weis on 08/09/2013 @ 03:00 PM
The Midas Collaborative is hosting an Assets & Opportunity Breakfast on September 6 in Boston, Massachusetts. Click here to register.
On August 1, Congressman José E. Serrano introduced the “Financial Security Credit Act of 2013,” a bill that would help begin to address the staggering asset-building inequity in the tax code. While the tax code has long supported saving for the highest-income workers, the Financial Security Tax Credit will bring support to both middle-income families and those struggling to secure a foothold in the middle class.
From the Assets & Opportunity Network
Looking for the latest statistics on the American retirement savings crisis? The Illinois Asset Building Group shared a blog post from the Sargent Shriver National Center on Poverty Law which takes a look at results from the latest retirement confidence survey.
Starting on October 1st, Florida residents will be able to enroll in the Health Insurance Marketplace run by the federal government and can begin enjoying the benefits from their new health insurance as early as January 1, 2014. Catalyst Miami, as part of our Prosperity Campaign, will launch a Marketplace Navigator, where clients can get in person help accessing and enrolling via the website. For help with enrolling, see the Catalyst Miami post here.
Infographic: Why the Economy Needs Fairer Student Loan Rates
Posted on 08/07/2013 @ 10:00 AM
This inforgraphic from Upworthy is definitely worth a share. It makes a pretty good case for the impact of the overall economy of the doubling of student loan rates.
An Intern's Perspective on the Importance of the IDA Survey
By Alicia Atkinson on 08/05/2013 @ 04:00 PM
In the fall of 2011 I was sitting in my “Assets and Social Policy” class learning for the first time about the power of savings and the transformative effect assets—both human and capital—can have on a person’s life. One of our first assignments was to read Michael Sherraden’s “Assets and the Poor,” which was published in the early 1990s and was one of the first works to chronicle inequalities in asset-building opportunities between low-income individuals and middle- to upper-income Americans. He argued that in order to move out of poverty, low-income families needed to have similar opportunities to build assets.
Sherraden proposed government-sponsored Individual Development Accounts (IDAs) to create a ladder out of poverty for individuals by providing the opportunity to save and purchase assets. This made sense! IDAs are a way to increase assets and allow for more individuals to have a stake in our economy, whether it is through homeownership, microenterprise or education. IDAs are a social innovation and have been proven to expand economic opportunity for low-income households.
I am excited to have the opportunity to put my knowledge of IDAs into practice as an intern with CFED, which was an early leader in the development and testing of IDAs and in promoting the first generation and subsequent federal and state policy strategies to expand the reach of IDAs. In particular, I am glad for the chance to be involved in CFED’s Annual IDA Program Survey. In the past, the IDA Program Survey has given CFED access to key information that has informed the way the organization provides services and support to IDA programs around the country and how we approach policy. (Click here to see significant findings of the 2010-2011 IDA Program Survey.) Though CFED and other organizations have already done much work on IDAs, we need to ensure that we are constantly learning and improving the field. That is where you—the IDA practitioners—come in!
If you work on an IDA program, please follow this link to complete the survey. You can also help us spread the word by sending the link to other IDA programs. Since the data collected from the survey are of critical importance, we are offering participants who complete the survey the chance to win a $100 Amazon gift card. Thank you for allowing us the opportunity to learn from IDA programs across the nation. I’m excited about seeing and analyzing the results, as well as sharing them with the IDA field. Please let us know if you have any questions or comments!
Take a Walk in Someone Else’s Shoes – The BETA Project
At what point can we say that we understand another person’s behavior? "Before you abuse, criticize and accuse," singer Joe South told us, "Walk a mile in my shoes." If we walked a mile in the shoes of every client that our three BETA test sites serve, we would need to cover approximately 3,797 miles.
Luckily, in order to diagnose a behavioral problem, we don’t need to exhaustively understand the mindset and behavior of every single client at our partner sites. Human behavior is shaped by a complex blend of contextual features and internal neuro-cognitive processes into which we have limited access, and different people demonstrate different behaviors. We simply aim to better understand the contextual features that become “behavioral bottlenecks” preventing many clients from reaching their goals.
In previous blog posts, we shared behavioral diagnosis tactics that include proving ourselves wrong and looking for unexpected details. Another useful technique that may unearth important contextual details is taking the perspective of the end-user, to the extent possible. We may not be able to walk a full mile in each client’s shoes—but we should at least take a quick stroll.
Diagnosis Tactic #3: We experience the end-user’s perspective.
State the problem. At Accion Texas, we set out to solve the following problem:
Borrowers have difficulties making consistent, on-time repayments using the Automatic Clearing House (ACH) electronic withdrawal system.
Generate ideas. Our first step in tackling this problem was to map out the loan application, disbursement and repayment process at Accion Texas. Discussions with staff members enabled us to render a detailed process map of the entire process from start to finish. Based on this representation of the borrowing process, the behavioral bottleneck appeared to be at the actual moment of repayment, when many borrowers seemingly intended to pay, but mysteriously failed to follow through at the last minute.
Look for clues. As we conducted site visit interviews with additional employees, a fuller picture came into focus. Numerous staff members at Accion, including the Collections and Accounting teams, reported that changing the payment date was one of the most common loan adjustments that borrowers perform. We also heard from the Collections team that many of these borrowers do not make the change until they have encountered an issue with payment, even if they already know that the previous payment date doesn’t work for them. For instance, the payment may be scheduled soon after their rent is due and money is tight. Finally, we found that the timing of the monthly statements sent to borrowers can be inconsistent, meaning that these statements may not be serving as effective reminders to make a payment.
Change your perspective. Piecing together each of these perspectives allows us to better understand the process, but we also need to make sure we are viewing them through the right lens. We ultimately did a full remapping of the user experience (from the end-user’s perspective rather than the organization’s perspective), conducted client interviews to fully understand process details and viewed actual materials (like the monthly statement) in precisely the form that clients would see them. Through this process, we saw, through a borrower’s eyes, how small details in the application process (such as assigning an arbitrary repayment date to borrowers) and repayment process (such as sending out statements with inconsistent timing) can contribute to late repayment.
Next BETA Project Post: Design
At our partner sites, we used multiple tactics to gain insight into what contextual features of each program might be contributing to these behavioral problems. Although diagnosis is an important phase of our methodology, we must remember that the entire sequence is iterative and continuously changing as our understanding grows. We will revisit all of our assumptions in later stages, and we need to continue to ask whether we are asking the right questions.
This post and other helpful insights from the BETA Project are available on the Behavioral Economics blog and the BETA Project website. Our next post will look at how behavioral diagnosis sets the stage for our next phase: design. We will discuss how we use our behavioral diagnosis to design innovative solutions for our partner sites.
Asset-Building News Roundup - August 2, 2013
By Veronica Weis on 08/02/2013 @ 03:00 PM
Save the Date: On September 17, the Oklahoma Native Assets Coalition will host a roundtable, sponsored by the U.S. Department of Heath and Human Services, Administration for Children and Families-Region VI and the Oklahoma Association of Community Action Agencies, in Tulsa, Oklahoma which will provide information on asset building as well as other topics such as the Affordable Care Act, human trafficking, fatherhood, and marriage.
Just yesterday, Representative José E. Serrano (D-NY) introduced the Financial Security Credit Act of 2013 to promote a higher household savings rate nationwide by incentivizing savings by low- and moderate-income earners at tax time.
From the Assets & Opportunity Network
Don't miss part two of the Illinois Asset Building Group's blog series on the Affordable Care Act and underbanked Americans here.
Connecticut Voices for Children just released an issue brief that discusses the importance of providing health insurance to youth who age out of the foster care system, explains the coverage Connecticut currently offers, clarifies how the ACA expansion works and who is covered by it and makes recommendations for implementing the expansion of Medicaid to youth formerly in foster care.
DOMA and Same-Sex Household Financial Well-Being
By Alicia Atkinson on 08/01/2013 @ 04:30 PM
On June 26, 2013, the Supreme Court struck down the federal Defense of Marriage Act (DOMA) that defined “marriage” and “spouse” only for heterosexual couples. The ruling has been hailed as a huge victory for gay and lesbian civil rights. However, there are larger implications of this Supreme Court decision that could also lead to greater financial and economic security for same-sex families, especially those of low and moderate income.
Last year, the Movement Advancement Project, the Family Equality Council and Center for American Progress released a report titled “Strengthening Economic Security for Children Living in LGBT Families,” which chronicles the diverse landscape of present-day American families. The report found that between 2 and 2.8 million children are being raised by lesbian, gay, bisexual and transgender (LGBT) parents—and that these children are twice as likely to live in poverty as those being raised by married heterosexual parents. Additionally, in 2009 the Williams Institute found that poverty rates for LGB adults were higher than rates for heterosexual adults (age 18 to 44). Specifically, they found that 24% of lesbians and bisexual women are poor, compared with only 19% of heterosexual women. Considering these statistics, same-sex families’ and individuals’ financial security is a concern.
In the broader population, many Americans are barely holding onto their financial footing. CFED’s Assets & Opportunity Scorecard finds that nearly half (43%) of American households—equivalent to 132.1 million people—have little or no financial “cushion” to prepare for emergencies or future needs. For same-sex families, the picture can be even bleaker, as historically these families have often missed out on key financial security opportunities, such as:
- Access to workplace benefits. Workplace benefits such as health care, paid sick days, paid maternity leave, tax-deferred retirement accounts and life insurance all offer workers not only a greater measure of financial security, but also a sense of mental ease and a key opportunity to access asset-building tools and services. However, these benefits are often exclusively offered to an employee’s spouse and children, which to date have largely excluded same-sex households. For example, a 2007 study by the Williams Institute found that under DOMA, same-sex couples paid $1,069 more per year in taxes on health care than opposite-sex couples.
- Access to public benefits. Many low- and moderate-income LGBT families (like their heterosexual counterparts) rely on government programs such as Medicaid or Temporary Assistance to Needy Families (TANF) to provide much-needed assistance during times of financial difficulty. However, government programs tend to define “family” narrowly—which can potentially alienate or make children of LGBT families’ non-eligible for assistance they both need and qualify for. For example, the Williams Institute found that many children living in LGBT families cannot access Survivors and Disability Insurance Benefits if a parent becomes disabled or dies.
Same-sex couples may also find themselves spending down their assets in order to meet needs that opposite-sex couples may not face, such as:
- Affording welcoming schools. Same-sex parents often have concerns about their children’s school environments. A 2008 survey of LGBT parents found that 40% of students with LGBT parents reported being verbally harassed because of their families. LGBT families might choose to re-locate to an area that is more welcoming to their children or pay for private school. This could result in the spending of assets.
- High legal fees associated with adoption. The legal arrangements associated with adoption can be expensive and burdensome for a same-sex family. This has implications not only for parents who might not be able to pass guardianship to a same-sex partner, but also for children who may not be written into a will in order to receive an inheritance or be unfairly taxed on an inheritance.
- Vulnerable to extra tax burdens. The federal tax code uses a narrow definition of “family,” which does not allow same-sex couples to file jointly. Additionally, they cannot access deductions related to having children if their adoptions are not legally recognized. This means that many same-sex families have been missing out on significant tax benefits, and the opportunity to increase their overall financial security.
LGBT families face financial barriers and potential wealth depletion across many different domains, including the tax system, legal system and in the workplace. DOMA being overturned takes a vital step in the right direction, as it will begin to allow same-sex families—particularly those of lower income—to access key asset-building opportunities and help them both build and preserve wealth.
A Real$ense Volunteer's Journey to Financial Education
By Real$ense Prosperity Campaign on 07/31/2013 @ 11:00 AM
Katherine Marin has a Real$ense success story to which almost anyone can relate. Her journey with Real$ense has not only given her a new life, she is now working as a volunteer helping others find hope that they can have a better financial outlook.
Through introspection, education and a lot of hard work, Katherine has literally changed her life and the lives of her family with the help of Real$ense. Before the recession, Marin and her family were “living the dream” which to them meant they were living beyond their means, not making good financial decisions and getting deeper into debt. They purchased a large home but their debt payments became so overwhelming they couldn’t afford their house payment any longer. Depressed and unsure what to do, Marin sought help.
The family had previously had their taxes prepared with the Real$ense program, but then learned about the other financial education classes and services the program provides. Katherine’s first step was to enroll in the Money Smart program. “In Money Smart, I learned about making better choices, understanding the difference between needs and wants and living with what we could afford,” said Marin.
Katherine’s journey didn’t stop there. She took more classes and then became certified as a Real$ense Volunteer. She spends most of her volunteer hours helping people at the Ready4Work program at Operation New Hope in Jacksonville. Volunteering with Real$ense has also become a family affair when she recruited her daughter Britney, who is 17, to volunteer helping in the financial education programs for our youth. “One person at a time can make a difference. You can teach your kids. You have to work hard and we have to be patient,” said Marin.
Katherine’s family, although still learning and improving, has made tremendous progress towards controlling their own financial destiny. They’ve downsized their home to something they could afford without a mortgage. They don’t miss their large home, large yard and large responsibility of paying for it all and taking care of it all. They are rehabilitating a smaller home themselves. They are almost entirely debt-free. They have a monthly budget they adhere to and that helps them be less stressed.
“We are where we are, we’re doing what we can afford to do. We’re all very happy and our attitudes have changed for the better,” said Marin. “People can do this, they can change. They can look at their situation realistically and figure out what they can do,” she said. “It’s like planting a tree – you have to wait and water it and take care of it. And one day, you’ll have a wonderful, strong and tall tree.”
Money Smart workshops help you stop living paycheck to paycheck. Paying attention to where your money goes can help you hold on to more of it! Attend a FREE Financial Workshop and learn how to develop a successful spending and savings plan, fix or improve your credit score, open (or re-open) a checking or savings account not matter what your prior account history is, plan for your future and more. Money Smart workshops are held in partnership with Duval County Extension, Jacksonville Urban League, Jacksonville Housing Authority, Jacksonville Public Library and War On Poverty, Inc. For more information, call 904.390.3207 or visit www.realsensejax.org.
‘Bring it Back to Texas’ Allows Families to Save, Build Assets
For the past two years, the Office of the Texas Attorney General Child Support Division (CSD) has been working through a federal demonstration grant to embed asset-building services into the core functions of the state’s child support system. In 2012, CSD launched Bring it Back to Texas (BBT), an innovative pilot to promote financial management and arrears-reduction for noncustodial parents (NCPs). During this pilot, which was supported by a grant from the U.S. Department of Health and Human Services, Texas CSD participated in CFED’s Integrated Service Delivery Intensive Learning Cluster (sponsored by Bank of America Charitable Foundation).
The federal tax refund offset program requires that the tax refund of any NCPs who have custodial parent-owed child support arrears of $500 or more will be intercepted by the government and applied to arrears. Texas CSD found substantial anecdotal evidence that indicates many NCPs do not file their taxes for three reasons:
- They do not want to pay for tax preparation services only to have their refund intercepted through the federal offset process.
- They believe they have not made enough money to file taxes.
- They are unaware of the tax credits to which they are entitled.
Given these barriers, CSD saw an opportunity to reduce NCPs’ debt, increase their financial stability, and increase the financial stability of custodial parents and children by helping eligible NCPs file their taxes at free tax preparation sites. The BBT pilot was launched in two Texas cities – Fort Worth and Lubbock – with the intent of leveraging existing services within child support and the local community to provide positive benefits to everyone:
- NCPs receive tax refunds and credits they are due with the subsequent reduction in arrears balances through the federal offset process.
- Custodial parents and children see increased payments on past-due support.
- Texas CSD increases collections on arrears.
- Local community tax preparation programs help more people file their faxes.
BBT targeted 8,710 employed NCPs in Lubbock and Fort Worth who met the income eligibility criteria for free tax preparation services and who had child support arrears. CSD mailed postcards to these NCPs to notify them of free tax preparation and financial management services available at tax preparation sites during the 2013 tax filing season.
Due to the free tax preparation services and efforts to help participants understand the long-term consequences of child support debt (such as the possibility of having wages garnished), NCPs were more likely to file their taxes and more willing to apply tax credits to arrears. CSD’s evaluation of the project revealed that NCPs who received the postcard were as much as 10 percent more likely to have a federal offset (which indicates that the NCP filed their taxes and their refund was intercepted and put toward child support arrears) than NCPs not mailed a postcard. The BBT pilot collectively reduced the amount of child support debt by almost $135,000. The pilot test effects, if applied to the entire Texas CSD caseload, have the potential for increasing federal offsets by an estimated $12 million annually. The pilot was also relatively inexpensive. For every $1 spent on providing free tax preparation services and financial education classes at child support agencies, the State received $10 in arrears collections.
The pilot program was a big win for all parties involved. The participating NCPs are one step closer to paying down their child support arrears and achieving financial capability. Custodial parents with large amounts of child support back-payments owed to them saw benefits as those arrears were paid. Due to the federal performance measures that can dictate matching funds available at the state level, increased arrears payments also brought the Texas child support agency more funding.
For more information about this innovative pilot, please see the full version of the final report here.
Look for the Unexpected – The BETA Project
Part of diagnosing a behavioral problem is realizing that you don’t always know where to look for the “symptoms.” In medical diagnosis, symptoms are at least limited to the physical human body. Human behavior, on the other hand, is shaped by a complex blend of contextual details and internal neuro-cognitive processes into which we have limited access.
Nevertheless, there are a few tactics we can use to pinpoint the “behavioral bottlenecks” that may be preventing someone from reaching their desired outcome. One method we use in the BETA Project is to generate hypotheses and try to find evidence to prove ourselves wrong. Below, we share another tactic to diagnose the underlying behaviors and psychologies at play for a given problem.
Diagnosis Tactic #2: We look for overlooked details.
State the problem. At partner site Neighborhood Trust, we set out to tackle the following issue:
Low-income individuals sign up for accounts with affiliated credit unions during Neighborhood Trust’s financial education course, but do not fully utilize them.
Generate ideas. During our preliminary diagnosis process, we wondered how frequently Neighborhood Trust clients used their accounts after they were first opened. Perhaps, we thought, clients didn’t use their accounts often and long enough for it to become a habit before they graduated from the financial education course.
Look for clues. In fact, client interviews conducted during our site visit suggested that some clients may never visit the credit union or use their account, even once, after account opening. One client reported that she intended to enroll in direct deposit with her employer, but never quite got around to it before she lost that job. She continues to use money orders to pay her bills rather than her account, which remained dormant.
Look beneath the surface. In our initial hypothesis, we thought that some clients may not have used their accounts enough. During site visits, we found that some clients may not have used their accounts at all. This finding prompted us to dig a bit deeper into the earlier stages of the account opening process and course content, with an eye out for counterintuitive, unexpected details.
Through observation, interviews and analysis, we discovered that Neighborhood Trust is incredibly successful at making it easy for clients to open credit union accounts. Account applications are included in the course curriculum, there are recurring and predictable opportunities for clients to gather documents and open an account, and course instructors can provide direct assistance.
Account usage, on the other hand, remained largely outside the purview of the course. Actions related to account usage like finding the nearest ATM or credit union branch, learning how to use online banking and activating a debit card for the first time were riddled with small inconveniences.
This led us to believe that the course was very effective at helping clients take action to open an account. However, the course was lacking in the later stages of guiding clients from account opening to active account usage. Even though these steps appear to be simple, small barriers can have a surprisingly large effect. These "hassle factors” could prompt a client to procrastinate and put off a task that seems difficult in favor of more familiar options, like money orders.
Only by diving in to examine the gritty details of the client experience were we able to detect this “behavioral bottleneck.”
Next BETA Project Post: Take a Walk in Someone Else’s Shoes
As mentioned in “Don’t Suppose, Diagnose,” we use a range of tactics to elicit insights during the behavioral diagnosis process. Our next post on the BETA Project will discuss another strategy we use in the field: looking from the perspective of the end-user. This post and other helpful insights from the BETA Project are available on CFED’s Behavioral Economics blog and BETA Project website.
Asset-Building News Roundup - July 26, 2013
By Veronica Weis on 07/26/2013 @ 03:00 PM
Next month, the Colorado Community Action Association will host the 2013 Colorado Conference on Poverty which will engage policy makers, government employees, social service agencies, nonprofits and advocates around poverty issues and will share best practices for policies and programs that work. To register, click here.
On September 6, The Midas Collaborative will host an Assets & Opportunity Breakfast to honor Senator Elizabeth Warren for her work in consumer protection. Click here for more information.
The Equality of Opportunity Project is a newly launched initiative to measure and raise up the issue of upward economic mobility across our country. Their recent paper, The Economic Impacts of Tax Expenditures: Evidence From Spatial Variation Across the U.S., set out to study the impact of tax expenditures on intergenerational mobility and found substantial variation in the economic outcomes of children from low income families across areas of the United States.
The asset-building team at the New America Foundation released a paper last week with principles and policy proposals for reforming the tax code to address inequality toward low-income households. You can read the full report and recommendations here.
From the Assets & Opportunity Network
Thanks to Catalyst Miami for submitting this blog post which highlights business leaders who are now joining members of Congress in calls for the need to increase the federal minimum wage.
Meet the latest organization in the A&O Network: Ohio CASH, a statewide network led by Policy Matters Ohio that promotes financial and economic stability for working families.
Celebrate the Success of 2012 with Us!
By Roberto Arjona on 07/26/2013 @ 09:00 AM
‘Tis the season for organizations to release their Annual Reports, and you may have seen that we launched ours on Tuesday. If you’ve got a minute, you might want to download it to your iPad from the App Store. What makes this year’s Annual Report different from any that CFED has released in the past is that its interactive features means you can relive some of the greatest moments of 2012. Watch videos, listen to audio and flip through the photos that capture what the past year in the asset-building field has been all about.
If you don’t have an iPad, you can view CFED’s 2012 Annual Report online by clicking the arrows above, or you can download a PDF version, which is ideal for printing.
What were your organization’s big milestones for 2012? Use the comments below to share your thoughts!
What is Financial Counseling?
By Rebecca Wiggins, Guest Contributor on 07/25/2013 @ 02:30 PM
EDITOR'S NOTE: Special thanks to Rebecca for providing us with a helpful resource that practitioners can use to better help their clients build and protect their assets.
At a time when the personal debt level and economic inequality are at record levels in our nation's history, many people are unsure who to turn to and trust for guidance. With intimidating investing terms, hidden fees and product sales, how do consumers know where to turn for help or who to trust? With so many financial professionals out there, it can be very overwhelming to know where to start.
Think of financial counseling as the foundation to a solid home structure. Once individuals gain knowledge and resources through counseling and education, they can begin to build their home based on their individual dreams. Financial counselors and educators help move individuals and families along a spectrum of knowledge through behavioral adjustments, with the hope of eventually referring them to investment advisers and financial planners like a Certified Financial Planner® (CFP®) for wealth planning advice.
One trusted resource that interested professionals and public can turn to is the Association for Financial Counseling and Planning Education® (AFCPE®). Founded in 1983, AFCPE® is a nonprofit, international, professional membership organization dedicated to improving personal financial management education, training, and certification of financial counselors, educators, coaches and other related practitioners.
AFCPE® is uniquely built upon decades of extensive field research, out of which our nationally recognized certification programs were born: Accredited Financial Counselor® (AFC®) and Certified Housing Counselor® (CHC®). AFCPE®’s certification marks represent the highest standards of excellence in the field of financial counseling and education. Our programs train professionals to guide clients through a holistic counseling framework of life cycle financial education. This allows the professional to provide a high-level, tailored approach based on the needs of each individual and family to most effectively analyze and positively affect lasting financial behavior change among clients.
As a result, AFCPE® Certified Professionals are qualified to help clients through a variety of complex issues. They are equipped to navigate clients through financial crises such as credit and debt issues, bankruptcy, and foreclosure, as well as work with clients to develop and implement effective spending plans, eliminate debt, build savings and create meaningful solutions to maintain financial stability and reach the client’s financial goals.
AFCPE® continues to be a leader in the field in its responsibility to expand its role in its mission to provide professional development experiences for financial educators, practitioners and researchers with the goal of improving the economic wellbeing of individuals and families worldwide.
Rebecca Wiggins is the Executive Director of AFCPE and holds a Masters of Family Financial Planning from Kansas State University. She is deeply committed to AFCPE’s mission to build, support and ensure the integrity of the Personal Finance profession and improve the economic well being of individuals and families worldwide.
To find out more about how to get certified or become a member, attend our 30th Annual Symposium or browse through research publications and newsletters, visit us on the web: www.afcpe.org.
Read: Highlights from CFED's Policy Forum on the CFPB
By Kristin Lawton on 07/24/2013 @ 05:00 PM
Last Wednesday, over 100 people joined CFED & Democracy: A Journal of Ideas on Capitol Hill for a forum on the impact of the Consumer Financial Protection Bureau (CFPB) after two years. Taking place just one day after the Senate voted to confirm Richard Cordray as the Director of the CFPB, this timely forum welcomed Senator Elizabeth Warren (D-MA), who shared remarks about the importance of protecting and empowering consumers in the financial marketplace. We’re pleased to share her remarks with those of you who were unable to join us in Washington last week here.
Michael Tomasky introduced Senator Warren and talked about the critical role that her article published in Democracy Journal, when she was a professor at Harvard University, had in the creation of the CFPB. After Senator Warren’s speech, the moderator Robert Kaiser provide an insider prospective on the creation of the CFPB, through the Dodd-Frank regulatory reform bill, which he had exclusive access to the key lawmakers responsible for the bill while covering its creation for the Washington Post. Julie Chon, Senior Fellow at the Atlantic Council, kicked off the panel by telling a story about early conversations she had with then Professor Warren about the idea of a consumer protection agency. Jeremie Greer, Director of Government Affairs for CFED, followed by dispelling the simple good guy/bad guy dynamic that often drives conversations about consumer protection. He emphasized the need of strong consumer protection regulation and enforcement, but stated that these actions should not stifle the innovation and partnerships with the financial services sector necessary to bring safe and affordable products to scale. Bill Bynum followed by provided his observation of the CFPB’s efforts as Vice Chair of the CFPB Consumer Advisory Board, and also described the unique challenges consumers face in rural communities such as the Mississippi Delta. Finally, Mae Watson Grote described challenges that clients of the Financial Clinic face and how the CFPB has had tangible impact clients that they have served.
We extend our thanks those who made the event possible, including Senator Warren and her staff, as well as our esteemed panelists.
We’d also like to extend a special thank you to our co-hosts at Democracy Journal. As Senator Warren noted, Democracy planted the seed that led to the growth of the CFPB, and we were pleased to work by their side to make this event happen.
Do you have feedback on the event? Email CFED.
Policy Alert: Tell Congress to Keep State Flexibility to Lift Asset Limits
By Emanuel Nieves and Jeremie Greer on 07/24/2013 @ 02:00 PM
After failing to pass a Farm Bill in early July, House Republicans last week managed to pass a pared-down Farm Bill without the Supplemental Nutrition Assistance Program (SNAP), previously known as food stamps. The 216-208 vote was mainly along on party lines with all Democrats and 12 Republicans voting against the measure. Last week’s vote is also noteworthy as it’s the first time in 40 years that SNAP has not been a part of a Farm Bill, a strategy that House leadership adopted in order to persuade more conservative members to vote for the measure.
The House Agriculture Committee chairman, Rep. Frank Lucas (R-OK), and House leadership have indicated plans to work on a SNAP-only bill, although the precise timeline and extent of SNAP cuts in that bill remain unclear.
Last month’s failed Farm Bill included a $20.5 billion cut to the SNAP program, with 60% of these cuts coming from elimination of “broad-based categorical eligibility,” which since 1996 has given 36 states the flexibility to eliminate asset limits in SNAP. Had this policy been enacted it would have reversed 17 years of state-level progress and would have caused up to two million Americans to lose benefits altogether. One of the biggest reasons for the failure of last month’s farm bill was that a large number of Republicans (64) voted against that measure because they felt that SNAP cuts were not deep enough. This does not bode well for a future SNAP-only bill.
The Senate passed its Farm Bill with strong bipartisan support, which includes modest cuts to the SNAP program but does not separate it from the overall bill. Importantly, the approved Senate cuts would not affect states’ flexibility to remove asset limits in the SNAP program.
It remains unclear at this point what will happen next, legislatively speaking. There is a strong possibility that both chambers will go to conference and begin working to resolve disagreements between the two versions, which will almost entirely revolve around SNAP. Democrats are holding to their position that SNAP should remain in the Farm Bill with only modest cuts. In addition to Democratic opposition, nutrition and asset-building advocates, as well as the farm lobby, do not support the split and are advocating for the farm and SNAP titles to remain part of a single bill.
While we wait until the path forward is clearer, you can still make your voices heard back home as Members of Congress will soon begin their August recess. Schedule a meeting with your Member’s district office to express your concerns over the Farm Bill and what this will mean for your asset-building work. Members will also hold numerous town halls and other local events while they are back home and you should try to attend at least one event so that you can express your concerns over this debate directly to your Member of Congress.
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