Cuyahoga County Will Offer Universal College Savings Accounts to All Kindergarteners
By Kori Hattemer on 11/30/2012 @ 10:00 AM
In Ohio, Cuyahoga County today announced a new initiative to open a college savings account for every incoming kindergartener in the county, which includes Cleveland. Championed by County Executive Ed FitzGerald, the program is the largest effort to offer child savings program in the U.S. and will serve about 15,000 students in public, private, charter and parochial schools.
Cuyahoga County will start by enrolling 25% of kindergarteners in the program in fall 2013 and plans to enroll 100 percent of incoming kindergarteners by fall 2015. The county will seed each account with a $100 initial deposit that can be used for any postsecondary education, including vocational training as well as two- and four-year colleges. The program will also include a financial education component and is part of an accelerating trend to begin teaching saving and money management skills to both children and their parents.
The Cuyahoga County initiative is part of a growing national movement at the state and local level to help low-income children and families learn how to save for college and manage their finances. It follows a similar effort launched in San Francisco, now entering its third year, that provides a $50 deposit to public school kindergarteners, and a pilot program recently started in Mississippi. A number of other large-scale initiatives are also in development. The emergence of these programs reflects increasing recognition by local and state governments that even a small amount of savings can have a dramatic impact on long-term expectations, particularly for low-income children who may otherwise grow up believing college is out of reach.
Curbing Predatory Small Dollar Loans
By Jimmy Crowell on 10/04/2012 @ 11:00 AM
Payday loans don't solve a financial crisis, they create a new crisis every two weeks. That is the main message that Uriah King, with the Center for Responsible Lending, is trying to convey through his work with payday loan policy reform. The fact is that payday loans are not short-term loans, they end up sinking people further and further into debt. In the U.S., a payday loan will leave a person indebted for an average of 212 days over the course of a year. Payday loan advocates insist that these loans are a needed service for people experiencing an unexpected financial setback. The harsh reality is that most people turn to payday loans to pay for regular expenses like mortgage payments, utility bills and food. This only creates a a cycle of incurring more and more debt to pay for exorbitant interest rates. Unfortunately, due to this cycle, a payday loan borrower is more likely to pay overdraft fees, lose their bank account, default on their credit card and file for bankruptcy.
These stark realities have inspired community advocates across the country to lobby their legislatures to become part of a cohort of 17 states (and Washington D.C.) that have abolished 400% payday loans and capped interest rates at around 36%. The Montana Community Foundation successfully campaigned for payday loan policy reform with a meager budget of $500,000. Through their strong partnerships with organizations like AARP and Rural Dynamics, Montana Community Foundation were able to inform and mobilize Montanans to vote for payday loan reform. With an impressive 72% of voters supporting the policy reform, Montana Community Foundations estimate that Montanans are saving $32 million in payday loan interest fees every year. That is an amazing return on a $500,000 investment!
The Center for Economic Integrity also launched successful campaigns for payday loan policy reform in Ohio and Arizona. They too were able to mobilize strong coalitions with a modest budget to defeat highly paid lobbyists for payday lenders. The Center for Economic Integrity attributes a lot of their success to their concerted effort to raise awareness of the predatory nature of payday loans through local media outlets. Hopefully, more state leaders will step forward to champion payday loan reform. There is still a lot of work to do to protect Americans from predatory lenders but replicable campaigns can be launched to hold predatory lenders accountable and protect Americans from losing their hard earned income to draconian interest rates.
Assets & Opportunity Profile: New Orleans
By Sean Luechtefeld on 08/21/2012 @ 09:00 AM
Last week, members of CFED’s Research Team traveled to the Crescent City for the release of the Assets & Opportunity Profile for New Orleans. Commissioned by the Greater New Orleans Foundation, the Profile chronicles asset poverty in the Big Easy, showing that 37% of the city’s households lack the means to cover their expenses for three months should a job loss or other emergency leave them without income.
While the data paints a somewhat bleak picture for residents of Louisiana’s largest metropolitan area, it also points to some of the opportunities local lawmakers have in their efforts to promote financial security. The Profile outlines 19 strategies that should be undertaken to improve access to financial education, increase access to tax credits, connect residents with safe financial products, create savings opportunities and protect consumers in the financial marketplace.
The Profile is one of fifteen that CFED has developed, assessing the financial well-being of residents in cities from Seattle to Miami and everywhere in between. To read these data or to find out how CFED can create an Assets & Opportunity Profile for your community, visit CFED’s Local Policy Advocacy Center.
Click here to download the New Orleans Assets & Opportunity Profile.
EITC Gains and Losses: 2012 Legislative Update
By Elvis Guzman on 06/07/2012 @ 12:15 PM
The Earned Income Tax Credit (EITC) is one of the strongest public benefit programs that help to reduce poverty and is mainly intended to increase the incomes of low-wage families with children. Over 27 million families claimed the federal EITC in 2009. The amount of the credit depends on the recipient’s income, marital status, and number of dependent children. In 2010, the federal EITC lifted 6.6 million people (including 3.3 million children) out of poverty. Twenty-five states, plus the District of Columbia, supplement the federal credit with their own state-level versions of the EITC. States typically calculate the credit as a percentage of the federal EITC and most programs are refundable.
For years this program has been praised by both major political parties; in fact, the federal EITC was first proposed by the Nixon administration and was later expanded by administrations from both parties. State EITCs, however, continue to face political challenges. Following is a brief overview of changes or proposals to state-level EITC programs in the past year.
In the wake of the recent economic recession, state EITCs have been part of several public programs targeted for possible austerity. Recent fiercely contested battles in Kansas and Oklahoma demonstrate the strong opinions surrounding the credit. Kansas Governor Brownback proposed to eliminate the EITC and Child and Dependent Care Tax Credit (CDCTC), along with the state’s income tax. Ultimately, legislative negotiations resulted in a “compromise” where the EITC was left intact, while the CDCTC and other provisions were eliminated. Similarly, Oklahoma Governor Fallin proposed to eliminate the state’s EITC, CDCTC and Child Tax Credit (CTC), to help fund the elimination of the state’s income tax. After similar bills passed the House and Senate, groups advocated critically against these cuts. Ultimately, both chambers could not come to an agreement and no tax reform was passed in the recent legislative session.
EITC programs in other states faced similar legislative challenges. In 2011, Michigan legislators voted to decrease the state’s EITC rate from 20 to 6 percent of the federal credit. Earlier this year, House Bill 5407 was introduced to amend these changes but has made little progress. North Carolina’s EITC is set to expire at the end of this year. After the legislature proposed eliminating the credit in 2011, this year a bill was introduced and is under consideration in the House and Senate to extend the EITC, CTC and CDCTC. In Iowa, the Senate passed Senate File 2161 to increase the EITC from the current 7 percent to 20 percent of the federal credit by 2014. Governor Branstad, gave his support for an increase in the EITC if commercial and industrial property taxes were cut in a reform package. The state legislature ended its session in May with no agreement on a bill.
Wins and Opportunities
While the economic recession has posed threats to existing state-level EITC programs, some states have proposed or enacted legislation to improve this credit. After a long push by local advocates dating to 2003, in late 2011 Illinois passed a bill that doubled its credit to 10 percent of the federal EITC over the next three years. The measure also increased the personal exemption and indexed it to inflation. In New Jersey, Governor Christie pledge to slowly increase the state’s EITC back to 25 percent, after he reduced the rate to 20 percent in 2010.
Legislatures in Maryland and Utah proposed measures to improve or create EITC programs, however both sessions ended with unsuccessful results. The Maryland state Senate proposed to increase the state EITC to 30 percent of the federal credit, along with an increase in the income tax, however the house failed to pass this package. The Utah state Senate passed a bill to create a state EITC at 5 percent of the federal credit, but the session ended with no resolution. While these pushes were not successful, they demonstrate that there is clear support for state EITCs and have opened the window for local advocacy groups and policymakers to take future action.
There are a few upcoming political battles that may affect the federal EITC during the lame-duck session, including the extension of the Bush tax-cuts, the cuts in the Budget Control Act and the looming debate over raising the federal debt ceiling. Advocates are closely watching these highly-contested issues since they may result in cuts to the federal credit.
Benefits of the EITC
States often see cutting tax credits for low- and moderate- income families as an easy way to reduce spending. However, legislators frequently fail to see the benefits tax credits provide to working parents and their children. Enacting state-level EITCs is linked to better health related outcomes for children, including higher rates of private insurance and less reliance on public health programs, such as Medicaid and the Children’s Health Insurance Program (CHIP), (Baughman, 2012). This research also indicates that parents receiving the EITC are more likely to move into better paying jobs with more benefits, particularly health care. Other studies indicate the EITC increases employment, shifting dependence away from cash and food assistance programs; between 1993 to1996, economists estimate over a half million families moved from AFDC and the food stamps program to employment (Greenstein, 2005). Millions of hard-working families and children thrive with EITC assistance and it’s counterintuitive to cut these essential programs.
To help protect the federal and state EITCs, keep yourself updated on legislative changes. Lend your voice to local advocacy groups and contact your state’s elected officials. We must continue to act in unison to ensure low- and moderate-income families are not left behind.
Assets & Opportunity Profile Release: Dallas
By Sean Luechtefeld on 02/17/2012 @ 10:45 AM
Yesterday, CFED’s Vice President for Policy & Research, Ida Rademacher, joined Communities Foundation of Texas (CFT) in Dallas for the release of the city’s Assets & Opportunity profile, published by CFED and commissioned by CFT and the Thomson Family Foundation.
The report, which you can read about here, reveals that two out of every five households (39%) in Dallas live in asset poverty, or roughly twice the number of families (19%) who live in income poverty. To find out how Dallas compares with the rest of Texas and with the nation, visit the 2012 Assets & Opportunity Scorecard.
Yesterday’s release event featured a press conference and legislative briefing which were attended by a full slate of city officials and nearly 300 nonprofit leaders from the Dallas region, including Assets & Opportunity Network lead local organization YWCA of Metropolitan Dallas and lead state organization RAISE Texas. Here at CFED, we’re especially excited about how the data has been received; the Assets & Opportunity profile and its release have been covered in, among other venues, the Dallas Morning News and the Dallas Observer. This high-profile coverage illustrates the potential asset poverty has to become part of a robust dialogue, not only in Dallas, but nationally as well.
We hope you’ll take the time to view the report for Dallas and join us in thanking CFT for coordinating this important event.
Thank You for Making Asset Poverty Part of the National Dialogue
By Lauren Stebbins on 02/08/2012 @ 04:30 PM
Thanks to a tremendous collaborative effort between CFED and leaders in the Assets & Opportunity Network, last Tuesday’s launch of the 2012 Assets & Opportunity Scorecard has raised up the concept of asset poverty in the national conversation about the financial security of American families.
More than 200 articles cited the data on the 127.5 million families who are living one crisis away from poverty. This coverage has raised awareness and is helping us make the case for why local, state and federal policies must take steps to combat asset poverty and rebuild prosperity in the United States
Coverage can be seen in:
- National media outlets like the Huffington Post, the New York Times and Marketplace
- Local media outlets in 47 states, including television network news affiliates and local newspapers
- Online, among bloggers and journalists committed to promoting financial security
Through our collective efforts, policymakers, opinion leaders and the general public better understand the concerns of the 43% of families who are liquid asset poor. We look forward to working with you to build on this momentum to further spread awareness about the financial security and opportunities for American families.
For the latest coverage on the Scorecard visit the newsroom.
New Report on Municipal Financial Empowerment
By Mitchell Kent, Guest Contributor on 12/13/2011 @ 10:00 AM
EDITOR’S NOTE: Mitchell Kent is Director of Legislative Policy and Special Counsel for the New York City Department of Consumer Affairs (DCA). DCA’s Office of Financial Empowerment was profiled in CFED’s 2011 report, Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment, and was a key collaborator on the report, along with other members of the Cities for Financial Empowerment coalition.
New York City’s Department of Consumer Affairs just released a report about its work embedding financial empowerment initiatives within core City social service programs. The new Report, Municipal Financial Empowerment: A Supervitamin for Public Programs, is exciting because it offers cities and states a way of enhancing existing programming during difficult economic times. The Report, the first in a series on the role of financial empowerment in public programs, focuses on professional, one-on-one financial counseling. It shows how New York built its network of privately-funded Financial Empowerment Centers and how financial counseling may make traditional social service programs achieve better and longer-lasting outcomes.
The City’s Department of Consumer Affairs has been working closely with nonprofit organizations across New York City to run this initiative. A Wall Street Journal article about the approach, City Now Offering Financial Counsel, ran on December 7th. The article featured a Financial Empowerment Center client, Margarita Mora, who was “too embarrassed by the foreclosure proceedings against her to seek help.” Because of the integration of financial counseling in the City’s foreclosure prevention efforts, a judge led Ms. Mora to a financial counselor at a Financial Empowerment Center run by Credit Where Credit is Due.
The Bloomberg administration is set to expand this initiative next month, putting $2.4 million behind the Centers, which previously were paid for by private funds donated to the nonprofit Mayor's Fund. The four-year trial included 16 financial counselors, reached more than 13,000 New Yorkers and helped pay down $6.3 million in personal debt.
Click here to see the Department of Consumer Affairs report.
CFED Research Release Highlights Twin Cities' Financial Insecurity
By Sean Luechtefeld on 10/18/2011 @ 11:30 AM
New data released today by CFED's Research Team reveals enormous disparities along racial lines in how people are faring in the Twin Cities during the economic downturn, particularly in the areas of homeownership, savings and overall income.
CFED’s Asset & Opportunity profiles for the Twin Cities were released at a St. Paul forum featuring state and local elected officials and national experts, including Mayor Chris Coleman, State Rep. Morrie Lanning, St. Paul City Council Member Melvin Carter, Minneapolis City Council Member John Quincy and Commerce Commissioner Michael Rothman. Our very own Jennifer Brooks, Director of State & Local Policy, was on-hand to speak at the event as well.
“We hope these profiles and the forum today fuel an ongoing conversation about income and asset poverty in the Twin Cities and statewide, “ said Brooks. “It is clear that many families are suffering. But we have found ample evidence that local leaders, working in partnership with non‐profits, have the power to create highly effective programs that help families build wealth and save for the future.”
CFED's Asset & Opportunity profiles provide a comprehensive look at the financial stability and economic resiliency of families in general, and those released today take a close look at Minneapolis and Hennepin County and at St. Paul and Ramsey County. They offer the most comprehensive data available on the economic challenges facing households in the metro area in comparison with state and national figures. Among the key findings in Minneapolis & St. Paul:
- While more than 63 percent of whites own homes in the Twin Cities, just 23 percent of blacks in Minneapolis and 26.4 percent in St. Paul are home owners. This is attributed, in part, to high home costs. The average national home cost is 3.7 times greater than median income, but is 5 times greater in Minneapolis and 4.5 times greater in St. Paul.
- Low incomes and lack of assets are having a profound effect on the ability of Twin City residents to save for the future and build financial security. Fully 63 percent of black Twin City residents, compared with approximately 25 percent of whites, are living in “asset poverty,” meaning they do not have enough assets to live at the poverty level ($22,314 for a family of four) for three months if they lose their main source of income. The overall rate for people of color living in asset poverty was also quite high (57 percent in Minneapolis and 52 percent in St. Paul).
- While median income for whites was nearly identical to the national rate of $52,175, the medium income for black households was just $21,747 in Minneapolis and $26,031 in St. Paul.
“These data paint a troubling portrait of the recession’s impact on the Twin City’s most vulnerable families. Our region’s economy cannot prosper with so many residents lacking the income and assets to achieve financial security,” said Ron Elwood, supervising attorney for the Legal Services Advocacy Project, which hosted the forum along with CFED and Greater Twin Cities United Way.
At the forum, policy makers presented their reactions to the data and discussed current programs and future plans aimed at expanding financial security and opportunity. A panel of local experts also provided information about efforts currently underway that are helping struggling Twin City residents build wealth by connecting them to safe and affordable financial products and services, and increasing their access to income‐boosting benefits and tax credits.
“These innovative programs are making a significant difference for families in our area. But they need to reach more people. Local, state and national leaders working with those of us in the non‐profit sector have an opportunity to identify and support strategies that can help people achieve greater financial security,” said Andrea Ferstan, director of income strategies for Greater Twin Cities United Way.
CFED has been working with cities across the country to expand access to mainstream banking, financial education and income and asset‐building opportunities, as well as help families protect the assets they have so they can become more financially stable. The organization is assisting Twin City officials to help bring about similar changes in the metropolitan area and throughout the state. To read the Minneapolis Asset & Opportunity Profile click here; to read the St. Paul Asset & Opportunity Profile, click here.
The Asset & Opportunity Profiles were made possible with support from Northwest Area Foundation.
CFEDers to Headline Pathways to Prosperity Conference
By Sean Luechtefeld on 10/10/2011 @ 10:30 AM
The 2011 Pathways to Prosperity Conference will take place next week, October 17-18, at the Sheraton Imperial Hotel in Durham, NC. The event, which aims share innovations in research and policy and identify improved strategies for wealth creation and poverty alleviation, will feature several presentations from members of the CFED team. Among those presentations,
- Stephanie Halligan will present as part of “Asset Building for Children: Strategies for Developing a Successful Children’s Savings Account or IDA Program for Youth” on Monday, October 17 from 1:20 – 2:50 pm.
- Ida Rademacher will present as part of “Upside Down: How Federal and State Budgets Invest in Asset Building” on Monday, October 17 from 3:00 – 4:30 pm.
- Lisa Buckley and Carl Rist will present as part of “New Municipal Strategies in Asset-Building and Financial Empowerment” on Tuesday, October 18 from 8:45 – 10:15 am.
- Rick Haughey will present as part of “Bringing it All Home: Building the Future of Affordable Housing with Manufactured Housing” on Tuesday, October 18 from 10:30 am – 12:00 noon.
- Carol Wayman will present as part of “112th Congress and Asset Building: What to Expect, Hope for and Fear” on Tuesday, October 18 from 1:45 – 3:15 pm.
- Carl Rist will present as part of “Assets & Opportunity in NC: A Look at Household Wealth in NC and the Strength of NC Policies Focused on Family Financial Security” on Tuesday, October 18 from 3:30 to 5:00 pm.
We hope you’ll be able to join us for these and a bevy of other exciting sessions! For more information about Pathways to Prosperity or to register, visit the conference website today!
A New Direction for the Assets & Opportunity Initiative
By Jennifer Brooks on 07/20/2011 @ 04:00 PM
A New Direction for the Assets & Opportunity Initiative: Creating a National Network
Since 2002, CFED has helped foster the emergence of state and local asset coalitions and their policy advocacy efforts. Primarily anchored by the Assets & Opportunity Scorecard, CFED has partnered with an expanding group of—primarily state-level—asset policy advocates and coalitions to increase awareness of asset-building strategies and advance a broad range of asset-building and asset-protection policies.
Since we began this work nearly a decade ago, the field of advocates, coalitions and other stakeholders has increased in number and become more diverse. Collectively, we have also recognized the need for a way to leverage our knowledge and maximize our impact.
With input from a broad range of stakeholders through listening sessions, discussions and work groups—and with the ongoing advice of an Interim Network Steering Committee—we are ready to take the next leap.
We are pleased to announce the establishment of a new national Assets & Opportunity Network.
The Assets & Opportunity Network is a movement-oriented group of advocates, practitioners, policymakers, and others nationwide working to expand the reach and deepen the impact of asset-based strategies. Network members are on the frontlines of state and local policy advocacy, coalition-building and service delivery. The purpose of this Network is to serve as both a learning community and advocacy community—to both enhance member capacity to advocate and deliver asset services, and to foster growth of assets movement leading to opportunities at scale. The Network is a hub of action for local, state and federal policy advocacy as well as program implementation.
Network membership will have two tiers—General members and Lead State and Lead Local Organizations—and will be guided by a permanent Network Steering Committee. The first step toward building-out the Network is selection of Lead State and Local Organizations. (General Membership will be available starting January 2012.)
CFED is soliciting letters of interest from organizations interested in serving as Lead State and Lead Local Organizations. Interested organizations should submit letters of interest to email@example.com by August 5, 2011.
We look forward to building the Assets & Opportunity Network together!
By Sean Luechtefeld on 06/27/2011 @ 04:15 PM
Here at CFED, when we introduce our colleagues to one another and to members of the assets & opportunity field, we like to explain the role they play here at CFED. When new folks join the staff, they get introduced to Kim Pate simply as Kim.
Here’s the deal: we’re busy here. If we were to try to explain Kim’s role at CFED, we’d literally have to mortgage an hour of our day just to describing everything Kim does. Kim’s value to the organization is indescribable, but includes overseeing all aspects of Communications, Strategic Partnerships and SETI – the Self-Employment Tax Initiative. Along with these, Kim is event planner-extraordinaire, office safety czar, VP for Innovation, native and rural entrepreneurship expert, purveyor of all things public sector and so much more.
Last week, we celebrated a big milestone: Kim’s 10-year anniversary here at CFED. While it’s not entirely clear how the organization functioned pre-Pate, we’re certain CFED is a better place with her here. To commemorate this momentous occasion and capture just some of what Kim brings to the office everyday, Chris Campbell, Jennifer Brooks and Anne Li put together Captain Kimpossible: Defender of Economic Equality, a comic book chronicling a typical day here at the office (okay, maybe not – but it’s still really fun!). Then, Kristin Lawton, Ida Rademacher and Lauren Stebbins acted in a skit for Kim in front of the entire office. While we don't quite have the video from the skit ready, you can check out the comic book by clicking on the cover image to the left. We hope you’ll join us in congratulating Kim on her 10 years of service at CFED. Her contributions have been incredible, and we’re so thankful to work with her.
Oh, and by the way, Kim’s official title: Vice President for External Relations. I think.
P.S. The tags above don’t work – we couldn’t possibly maintain a tag for everything Kim does!
CFED Receives Living Cities Grant
By Sean Luechtefeld on 05/25/2011 @ 11:30 AM
Today we are excited to announce that Living Cities has awarded CFED a grant of $185,000 to support resource guides for advocates, practitioners, program administrators and decision-makers both inside and outside government. The funds from this grant will be used to develop resources that can help local public sector leaders and advocates integrate asset-building strategies, tools and products into the mainstream of human service delivery systems, and we’re especially glad to call Living Cities a partner in this work.
In the coming months, Living Cities’ support will be used to produce integration guides and briefs that will provide in-depth examinations of how specific systems, structures and social programs can integrate a range of asset-building approaches into their work, and in doing so, become important scaling platforms for reaching large numbers of low-income families. This support will also be used to create a “stroke-of-the-pen” Changes Guide for policymakers in the form of three briefs – one each for local, state and federal policymakers. These will feature "easy" policy changes that would facilitate local asset-building and financial empowerment.
Eventually, we’ll disseminate the Resource Guides and Briefs through:
- A new Assets & Opportunity web portal that provides easy access to the broad range of advocacy and implementation tools and resources CFED produces
- Asset building educational sessions sponsored by CFED
- Ongoing federal policymaker education and integration into our strategic communications with federal agencies
We will also share the guides and briefs with national allies, particularly those that reach state and local target audiences.
To say CFED is very grateful to Living Cities for its support is an understatement, and we hope that you will join us in thanking them for their dedicated partnership.
Confessions of a Volunteer Tax Preparer
By Ethan Geiling on 04/28/2011 @ 03:30 PM
“Umm…how old are you? Are you sure you know how to do taxes?” After taking one look at me, one of my first VITA clients was quite skeptical of my ability to prepare her taxes. I suppose her doubt wasn’t completely unfounded. I’m 22 and probably don’t look like someone who knows anything about taxes.
Over the past four months, I volunteered as a tax preparer for the DC EITC Campaign. Every Saturday afternoon I trekked over to Adams Morgan for my weekly four-and-a-half hour shift at the Jubilee Jobs tax site. Overall, I had a very positive experience and learned a great deal about both tax law and some of the hardships DC’s low-income residents face. Now that tax season is over, I want to share some stories, reflections, and takeaways from my experience. (For the record, my skeptical client ended up trusting my abilities, and even asked me to help her fill out her daughter’s financial aid forms after I finished her taxes). Finances are a very personal subject. They’re not something you generally discuss in depth with others. But they were something that I needed to discuss with all of my clients in order to accurately prepare their returns. Interestingly, when taking with someone about their finances, an invisible barrier is broken and they may start telling you all sorts of details about their lives -- details they normally wouldn’t tell a complete stranger. During my conversations with clients, which usually lasted between 30 to 90 minutes, I learned a great deal about their family structures, home lives, and financial welfare. Here are a few takeaways:
- Many people are struggling to find steady employment in this tough economy.
Many of my clients had been laid off in recent years and were trying to cobble together income from multiple jobs and sources. It was not uncommon for someone to come in with three or four W2s -- each with only a few thousand dollars or less -- from all of their employers over the year. Although many clients wished to be employed full time, their employers could only afford to hire them part time or for short periods. For example, I had one client who worked part time at a grocery store for half the year, had a short stint at a catering company, and occasionally worked the night shift as a security guard throughout. Sadly, stable employment was a rarity.
- People use a wide variety of financial products beyond checking accounts to meet their financial needs.
You often assume a checking account is the first and most basic account a person needs. I found that this often wasn’t the case. For example, a number of my clients used prepaid cards for their day-to-day banking instead of a checking account. They told me prepaid cards were easier to manage, let them pay bills simply, and provided almost all of the same features as a checking account, with very low fees. Surprisingly, a few of my clients had savings accounts but not checking accounts. They said savings accounts provided them with a structure to save, but they preferred to use check cashers and other methods for their day-to-day financial needs. In addition, one client told me that he purposefully doesn’t know the PIN for his checking account debt card, because he wants to make it difficult to access the money. He was essentially treating the checking account like a savings account in order to curtail impulse spending.
- People recognize the value of savings, even if it is only a small amount.
Even though almost all of my clients were struggling to make ends meat, many of them still understood the importance of savings. Many clients told me they planned to put aside at least a small portion of their refund for savings. One client even used Form 8888 to purchase a $100 savings bond with his refund (thanks D2D Fund for helping make this possible!). Few, if any, clients planned on saving their entire refund, which is understandable given their other pressing financial needs.
Doing taxes is kind of like a detective game where the goal is uncovering credits and deductions in order to maximize the refund. When preparing a client’s return, I would try to thoroughly understand the client’s financial situation so I could figure out every credit or deduction he or she might qualify for. And there are so many different credits out there! There are tax credits for children, education, retirement savings, housing, and more. Two credits in particular deserve a special mention:
- The Earned Income Credit: Since the DC EITC Campaign is named after this credit, it seems fair to give it a special mention. In addition to the federal EITC, the DC metro region has some of the country’s highest state EITCs, which are additional credits that build on the federal credit. The state EITC is 40% of the federal credit in DC (the highest rate in the country), 25% in Maryland, and 20% in Virginia (although the Virginia credit is not refundable). Montgomery County has an additional local credit that is 72.5% of the Maryland state EITC.
- The Schedule H Credit: Another credit that was particularly beneficial for my clients was the DC Homeowner and Rental Property Tax Credit, or Schedule H. This refundable credit of up to $750 is available to DC renters and homeowners with incomes below $20,000. Although $750 might not sound like much in the grand scheme of things, this credit was invaluable to many of my clients, especially given DC’s exceedingly expensive housing.
Overall, being a volunteer tax preparer was an incredibly valuable experience both for me and for my clients. I even had one 84 year-old lady who really wanted to leave me a tip, and couldn’t understand why I didn’t have a tip jar!
Thanks to our friends over at Capital Area Asset Builders and Community Tax Aid for organizing over 500 volunteers and making it all possible. I’m looking forward to volunteering again next tax season.
State EITC Gains and Losses: 2011 Legislative Update
By Ethan Geiling on 04/26/2011 @ 06:00 PM
The Earned Income Tax Credit (EITC) is the largest federal anti-poverty program; it provided about $59 billion to 25 million families last year. The refundable credit is targeted at low-income working families with earned income, usually in the form of wages, salary or self-employment earnings. The specific amount of the credit a family can receive depends on both income and the number of qualifying children. The EITC was originally enacted in 1975, and has expanded with bipartisan support since then. Ronald Reagan once called the EITC “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”
Currently 24 states and DC have their own version of the EITC that builds on the federal credit. These state EITCs range from 3.5% of the federal credit in Louisiana to 40% of the federal credit in the District of Colombia.
Unfortunately, the EITC is under attack in a number of states. Legislation was introduced in Michigan to eliminate the state EITC, which is currently 20% of the federal credit. If enacted, this would reduce incomes for 800,000 working families and push 14,000 children into poverty. Similarly, legislation was introduced in North Carolina to eliminate the refundable portion of the state EITC. Advocates in both states have been actively fighting to preserve the credit.
However, there is still some positive news. Five states – Connecticut, Missouri, Montana, North Dakota and West Virginia – have introduced legislation to create a state EITC, while four states – Illinois, Iowa, New Jersey and Oregon – have introduced legislation to expand their state EITCs. The most promising efforts are in Connecticut, where Governor Malloy has publicly endorsed a state EITC. The Connecticut legislature is reviewing two bills to establish a state EITC: SB 41 calls for a phase-in of a credit starting at 10% of the federal EITC in 2012 and increasing to 20% by 2014; and HB 5701 calls for a state credit equal to 20% of the federal EITC.
New America Foundation Webinar on City Financial Empowerment Initiatives
By Kristin Lawton on 04/21/2011 @ 12:00 PM
Webinar: Local Innovation. National Impact.
What's Next for City Financial Empowerment Initiatives
Tuesday, April 26th, 2011
2:00 pm - 3:30 pm EST
11:00 am - 12:30 pm PST
Join CFED's Vice President of Policy and Research, Ida Rademacher, for a webinar on the latest innovations around city financial empowerment, hosted by the New America Foundation.
Across the country, cities are emerging as engines of change to educate, empower, and protect low-income residents to help them build savings and make the most of their money. Join experts for a conversation about the cutting edge of financial empowerment at the local level. We'll explore questions such as:
- What have we learned from Bank On initiatives over the past five years and what is the future of the Bank On strategy?
- What promising financial empowerment strategies are emerging at the local level?
- What national supports are coming on line to support city-level financial empowerment work?
We also want to hear your thoughts on your own local financial empowerment efforts. What do you see as the most promising opportunities to help low income families in your communities? What are ways to stretch limited budget dollars? Our presenters will kick off the conversation by presenting and reflecting on their own work, before we hear from you.
Leigh Phillips, San Francisco Office of Financial Empowerment
Leigh will reflect on growing Bank on San Francisco and her new paper, Building Better Bank Ons.
Cathie Mahon, New York City Office of Financial Empowerment
Cathie will discuss the expansion of the SaveNYC initiative and reflect on the past three years of growing the nation's first Office of Financial Empowerment.
Ida Rademacher, Corporation for Enterprise Development
Ida will talk about her scan of this emerging field and CFED's new report, Building Economic Security in America's Cities: New Municipal Strategies for Asset Building and Financial Empowerment.
Matt Pippin, U.S. Department of Treasury
Matt will talk about plans for the Treasury's upcoming Bank on USA initiative.
Anne Stuhldreher, New America Foundation
To RSVP for the webinar, go to the event page: http://newamerica.net/events/2011/webinar_local_innovation_national_impact
For questions, contact Maria Sotero at (916) 706-2772 or firstname.lastname@example.org.
A New Mayor and an Experienced Mayor Trade Thoughts
By Anne Li on 02/02/2011 @ 09:12 AM
Hello! My name is Anne Li and I am CFED’s program director for innovation. I will be blogging pretty regularly from now on, and also inviting you and others to be Guest Bloggers.
I’d like to share some observations from a standing-room only event on January 20th at the St. Regis Hotel. It featured a number of mayors and others who are leading cities into the forefront of asset innovation. CFED’s new report, Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment was the centerpiece of the event. Generous funders Living Cities and the Surdna Foundation were represented by Ben Hecht and Jasmine Thomas, respectively. The Cities for Financial Empowerment (CFE) Coalition, whose members inspired and provided much of the information in the report, were represented by (among others) Jonathan Mintz of New York City and Jose Cisneros of San Francisco.
Many in the audience, including myself, were struck by the observations of a new mayor and an experienced mayor. Mayor Angel Taveras of Providence RI had been in office only 17 days! Himself raised by a single mom and attending Head Start, Mayor Taveras went on to Harvard University and Georgetown Law School before being elected mayor last fall. He said, “A child is poor because the parents are poor. Lift the parent out of poverty, and you’ve lifted out the child, and broken the cycle of poverty.”
Mayor Chris Coleman of St. Paul, MN has more time in grade than Mayor Tavares. He had recently been re-elected to a second term. He said, “Cities are uniquely qualified to have an impact on citizens’ financial security. Cities can use their schools, their libraries, their parks, and so many other places and ways in which they touch people where they live.”
Mayor Coleman asked Mayor Taveras: “You’ve been in office 17 days. How many calls about snow removal have you already received?” He went on to use snow removal (a touchy subject for so many of us, this winter) as an example of the way cities have unique types of interactions with residents that affect their financial security. When a city declares a snow emergency, the Mayor said, it is very often lower-income residents who don’t move their cars from the snow emergency routes. Why? Sometimes because they’re not tuned in well enough to hear about the snow emergency declaration. Sometimes their car won’t start and they can’t afford to buy a new battery.
And then what happens? The Mayor asked and answered. Their car is ticketed and towed. And the $75 for a ticket plus the $350 for towing, while a nuisance for more affluent residents, may become a financial catastrophe for a low-income household. It may be enough to push that household into crisis.
With that very graphic and compelling story, Mayor Coleman sounded the theme echoed by the other speakers and by the report: cities can leverage municipal power and politics to advance a diverse financial empowerment agenda. The report describes a variety of innovative municipal approaches – not only New York and San Francisco, but also Seattle-King County, Newark and San Antonio among many others. It’s a user-friendly catalogue of innovative strategies and policies that localities across the country can adapt to the needs of their citizens to help them build and preserve financial security.
Interested in what else was discussed during the January 20th event? Watch the recorded briefing and panel discussion here.
Slideshow: Building Financial Security in America's Cities Release
By Chris Campbell on 02/01/2011 @ 08:43 PM
CFED and the Cities for Financial Empowerment (CFE) Coalition held a release event for CFED's new groundbreaking report, Building Economic Security in America's Cities: New Municipal Strategies for Asset Building and Financial Empowerment, on January 20 in Washington, DC. Enjoy our slideshow from the event.
Another Victory for the Paperless Payday
By Lauren Stebbins on 10/26/2010 @ 11:26 AM
In late September, the City Council for Austin, Texas unanimously passed a resolution to increase the percentage of city employees receiving their salary through electronic fund transfers or pre-paid debit cards to 98% by September 30, 2011. The resolution was introduced by Council Member Bill Spelman and cosponsored by Council Member Sheryl Cole. Over the next year, city managers will be working with city employees receiving their salary through paper checks to identify barriers preventing them from choosing electronic payment, develop procedures encouraging them to opt for electronic payment, and promote accessible bank accounts and other financial services. To carry out this project, the resolution directs the City to work with Bank On Central Texas, an initiative of United Way Capital Area and PeopleFund to provide un- and under-banked Texans access to mainstream financial products and services.
A paperless payday is a critical strategy for bringing people into the financial mainstream by connecting them with bank accounts and financial services that are not easily accessible for them. Access to these products and services helps them avoid the costly fees that come with money orders and check cashing institutions and build their assets.
Austin’s efforts are informed and inspired by the innovative work of the San Francisco Office of Financial Empowerment and their efforts to be the first city in the country to implement a plan to move all employees in the city of San Francisco – not only city employees but all workers employed in the private sector as well – to a paperless payday. More details about San Francisco’s efforts can be found on CFED’s Innovation Profile page highlighting the work of José Cisneros, Treasurer for the City and County of San Francisco; Leigh Phillips, Program Manager for San Francisco’s Office of Financial Empowerment; and Eugénie FitzGerald. Research from the design phase of San Francisco’s paperless payday initiative will be disseminated to leaders in other cities who are considering this type of strategy.