Building AssetsBuilding AssetsNovember 9, 2006

JoAnne Malloy,Institute on Disability, University of New

Hampshire

Tobey Davies, MSSouthern New Hampshire University

2006 NCHSD Fall TA Conference

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IntroductionIntroduction

• Asset Building Rationale

•Conceptual Model

•Strategies, particularly IDAs

•Systems and Process Model

•Examples

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The ProblemThe Problem

Criteria for important health and income assistance programs for people with disabilities create systemic barriers to entering competitive employment and moving out of poverty – creating asset wealth:

– Individuals must show that they cannot work enough to “earn a living” {SGA}, so “disability” = “inability to work”

This is in obvious contradiction to what people with disabilities say they want and exactly what grants like the MIGs are designed to address

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Asset Building Programs & Asset Building Programs & People with DisabilitiesPeople with Disabilities

Utilization: Very low utilization of asset building programs by people with disabilities -- especially within Medicaid buy-in’s. Programs are largely marketed to other low-income populations (TANF).

Integration with work incentives: Existing asset building tools can work in conjunction with each other AND with other work incentives programs.

Program implementation: People with disabilities often have trouble accessing information on how to enroll and participate in asset building programs.

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Conceptual ModelConceptual Model

Principles:Self-determination/ Self DirectionAsset-BuildingFull Accessibility to Services and

SupportsPeer Solidarity

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OutcomesOutcomes

Value of Assets is IncreasedDecreased Consumer DebtIndividuals Make Progress Toward

Their Financial GoalsFinancial Literacy is IncreasedEmployment Increased Economic Empowerment

and Control

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StrategiesStrategies

Work Incentives and Benefits Counseling Employment Development and Supports Micro-Enterprise Development Earned Income Tax Credit Extended Medical Eligibility (Buy Ins) Individual Development Accounts Financial Literacy Specialized Financial Services Debt Restructuring Trusts

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Referral/Entry pointsReferral/Entry points

Community development Corporations

Banks and Credit unionsHousing organizationsBusiness developmentVITA & AARP sitesBenefits Planners/VR/case managersAsset Building Coalitions

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What are Financial Assets?What are Financial Assets?Definition of Assets

Capacities and resources that enable individuals to identify, choose, and implement activities that enhance the quality of life experience.

Capacities and resources can be further explained by defining individual assets.

Definition of Individual Assets

Individual financial assets (money, stocks, real and personal property)

Income Assets (job) Human capital

assets (skills, knowledge, and experience gained from education and training)

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““Making Work Pay”Making Work Pay”(Center on Budget and Policy Priorities, 2003)(Center on Budget and Policy Priorities, 2003)

Earned Income Tax Credit Work incentive for workers and

self employed Available to child & childless

singles. Must file for taxes

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EITC, cont.EITC, cont.Even workers whose earnings are too small to have

paid taxes, can still get EITC.- employer-paid disability benefits qualify as earned income- Adult children may qualify as “qualifying child” & also meet Child tax credit.

Refunds from EITC is often the most money filers have at any one time and can equal up to 40% of some filers annual income.

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Medicaid Buy In ProgramsMedicaid Buy In Programs

Work incentive: Maintaining healthcare coverage for workers

Sliding fee scale for premiumsHigher Income and asset standards

for Medicaid eligibilityIndividuals are allowed to save

more

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Social Security Work Social Security Work IncentivesIncentives

SSI 2 for 1 disregard Impairment related work expenses Self-employment exclusions and

deductions Student Earned Income Deduction Plans for Achieving Self Support Property Essential for Self-Support Un-incurred Business Expenses

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Other mechanisms for asset Other mechanisms for asset buildingbuilding

Independence Building AccountsSpecial Needs Trusts*

*Not owned by beneficiaries

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Social Security Protection Act Social Security Protection Act 20032003

For a period of 9 months….Disregard retroactive checks from

SSA for SSI eligibilityEITC refundsChild Tax Credit refunds

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SSPA 2003, cont.SSPA 2003, cont.

Effective June 2004, disregard:All education related income, scholarships, fellowships, and gifts income.

Excluded as an SSI resource for 9 months

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Assets for Independence ActAssets for Independence Act

Passed with bipartisan support in 1998 Designed to provide funds to states for

Individual Development Accounts 1:1 match Eligible: EITC eligible; 200% of poverty;

eligible for TANF; or SSI eligible. Must work or have an eligible working

member of the same household.

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Individual Development Individual Development AccountsAccounts

Time-limited Matched Savings Accounts – match earned income;

Two Thousand Dollars Per Individual – Federal IDA ***( there is a growing number of “non-federal” IDAs);

Required Financial Literacy Training; Targeted Goals for Savings; Managed through CBOs, Banks, Faith

Based Organizations.

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How IDAs WorkHow IDAs Work

$1 of savings could = $.50 to $8 in dollars matched by private and public institutions.

IDAs managed by community organizations, and the accounts are held at local financial institutions.

Participation includes economic literacy training to improve credit, creation of a budget and savings schedule and the development of long-term management skills.

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ActivitiesActivities

Individuals create personal savings plans;

IDA accounts established; Money management courses

completed; Establish and save at or above

monthly targets; and Meet asset goals.

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Early Research FindingsEarly Research Findings

Low income individuals can and will save and accumulate assets;

Participants in ADD save an average of $25 per month;

IDAs have been successful in promoting economic stability and educational attainment;

Data collection has not focused on identification of IDA participants with disabilities.

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Federal Exclusion Federal Exclusion from Means Tested Eligibilityfrom Means Tested Eligibility

Social Security policies allow for:– Exclusion of $$$ the individual puts into

the IDA from monthly SSI calculation– Exclusion of resources saved in the IDA

account– Exclusion of interest $$$S earned on

deposits for TANF and AFIA IDAs

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Asset Based TrainingAsset Based Training

Home Ownership

Postsecondary education

Self employment

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Financial LiteracyFinancial Literacy

An essential element of successful asset building strategies.

Even when incentives to save and invest are strong, most individuals of low and moderate income lack the basic knowledge to manage their income, avoid excessive debt, and build assets.

**** A trained work incentives counselor must be on the team for individuals with disabilities

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Money Smart and the FDICMoney Smart and the FDIC In July 2001, the FDIC began offering Money

Smart, a comprehensive financial education program.

The target audience is adults outside the financial mainstream to develop improved financial skills and positive banking relationships.

The curriculum is available for free from the FDIC website and Train-the-Trainer programs are available through many banks and credit unions nationwide.

It is available online and in multiple languages.

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Access to “Micro-enterprise” Access to “Micro-enterprise” SupportsSupports

Financial counseling for individuals who are starting their own businesses

Includes peer support: lending clubs, etc. Individuals with disabilities have

additional resources and challenges:– SSA Work incentives for self-employed

individuals– Must be careful to know about SSA work

incentives and communicate with SSA

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Collaboration Across SystemsCollaboration Across Systems

Multiple points of entry to start an account.

Benefits specialists are available who are knowledgeable about multiple public benefits and successful approaches to bundling in a self-directed account.

Fiscal intermediaries are available to offer efficient financial management.

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Peer SupportPeer Support

• Savings clubs and buying coops

• Managing illness and financial wellness

• Organization skills

• Navigating marketplace

• Working toward goals

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Certified Credit CounselingCertified Credit Counseling

• Credit history & recommendations

• Spending & Savings Plans

• Credit Use and management

• Survival skills in the marketplace

• Preparing for asset goal

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IDA ResourcesIDA Resources

The New America Foundation’s Asset Building – www.assetbuilding.org

CFED’s IDA Network – www.idanetwork.org Center for Social Development:

www.gwbweb.wustl.edu/csd Center on Budget & Policy Priorities:

www.cbpp.org The Abilities Fund – www.abilitiesfund.org Association for Community Action Now –

www.acorn.org

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Work Incentives Planning and Work Incentives Planning and Assistance (WIPA)Assistance (WIPA)

Individuals with disabilities have to plan carefully around asset development strategies-

Assessment of current benefits/financial situation

Income projections and work incentive options

Information and referral Follow up as needed

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So What?So What?Can we Achieve Financial Independence Can we Achieve Financial Independence For Persons With DisabilitiesFor Persons With Disabilities??

  1. EXPAND KNOWLEDGEEmpower individuals with disabilities to manage personal resources and improve informed decision-making about credit, savings, tax credits/provisions, banking services and asset development.

2. CHANGE POLICYRemove disincentives to work, home ownership, long-term services and supports, and business ownership for building assets that are part of state and federal public policy for working people with disabilities.

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Financial Independence For Persons Financial Independence For Persons

With DisabilitiesWith Disabilities 3. PROVIDE INCENTIVESCreate incentives to savings with IDAs and match to earned income set aside for continuing education, microenterprise start up, and home ownership objectives.4. NATIONAL OUTREACH AND TRAININGImprove utilization of financial and tax services by individuals with disabilities through outreach to local disability organizations, providers of services and non-profit and private sector organizations.

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Pursue employment and work incentives planning and assistance.

Pursue employment and work incentives planning and assistance.

Get jobGet job

Is individual interested in saving toward a goal such as post-secondary education, first home purchase, or business start-up?

Is individual interested in saving toward a goal such as post-secondary education, first home purchase, or business start-up?

Does individual qualify for an IDA or PASS?Does individual qualify for an IDA or PASS?

Are you interested in Financial Literacy training

Are you interested in Financial Literacy training

Write PASS or IDAWrite PASS or IDA

Get Financial Literacy in conjunction w/Benefits Counseling & incorporate PASS & IDA

Get Financial Literacy in conjunction w/Benefits Counseling & incorporate PASS & IDA

Assist with tax preparation and filing for the EITC.

Assist with tax preparation and filing for the EITC.

Charting Path to Asset Wealth

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Asset Building Programs Work Asset Building Programs Work TogetherTogether

All of these programs are not exclusive– Programs can work together to

compound the same amount of earnings– Polar opposite of public programmatic

policyPublic Return To Work Policy

Same amount of earned income =

Deductions in SSA cash benefits

Deductions in HUD voucher

Deductions in food stamps

Deductions in childcare assistance

Asset Building Policy

Same amount of earned income =

Can be matched by SSA in PASS

Can be matched again in IDA

Can be added to EITC refund

Can be filed for free at local VITA

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Referral/Entry pointsReferral/Entry points

Community Development Corporations

Banks and Credit unionsHousing organizationsBusiness developmentVITA & AARP sitesBenefits Planners/VR/case managersAsset Building Coalitions

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NHCLF-IDA Impact in NHNHCLF-IDA Impact in NH

778 Total Enrolled 345 Active

– 274 Homeownership

– 35 Education– 33 Small Business– 3 Other

275 Withdrawn/Term

158 Graduated– 132

Homeownership– 8 Education– 9 Small Business– 9 Other

Those 778 participants received 13,844 hours of training.

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NHCLF- IDA ImpactNHCLF- IDA Impact

IDA Funds have leveraged $20,184,162.99 in asset purchases!

80% of clients are below 50% of HUD’s Area Median Income (AMI)

17% of participants were unbanked when they enrolled in the Program

Over 55% had previously received TANF

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Role for MIG in Role for MIG in Asset Building ProgramsAsset Building Programs

Assess (map) existing asset building programs and resources.

Develop mechanisms and capacities for agencies and programs to work together

Develop outreach materials and strategies to reach more individuals with disabilities

State-level systems change and policy development.

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MIGs and MIGs and Asset Building ProgramsAsset Building Programs

Intertwined goals of Asset Building Programs, WIPAs & MIGs:– Both programs support and

encourage employment– Both create an environment that

works toward financial empowerment – Financial literacy prepares individuals

future for competitive employment

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ImplicationsImplications

Entry points vary Interaction of long term supports to

obtain and maintain asset (s) Long time to save Incremental process Must interact with career development Knowledge transfer across counseling

methods (VR, BP, CM, etc.) Benefits counseling

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Asset Building: Creating Opportunities to Asset Building: Creating Opportunities to become part of the “Ownership Society”become part of the “Ownership Society”

Connecting asset development with employment builds a concrete out of poverty.

– The challenge of benefits counseling in the future is to recognize and support asset development strategies as the most powerful incentive to work.

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State Based ResourcesState Based Resources

Tobey Davies - t.partch-davies@snhu.edu Abby Cooper - cooplind1@comcast.netJoAnne Malloy - Jmmalloy@aol.com Megan O’Neil - megan@wid.org David Foster - david.foster@hcs.state.or.usJoe Entwisle- jentwisle@hdadvocates.org