Growing numbers of Americans have almost no savings or other assets to fall back on if they lose their jobs or face a medical crisis.  Without those savings, few will be able to invest in a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.

The 2012 Assets & Opportunity Scorecard offers a comprehensive look at Oklahomans’ ability to build wealth, fend off poverty, and create a more prosperous future. The Scorecard compares states along 52 different measures of how residents fare in five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.

Oklahoma ranks 33rd overall and earns a “D” in Financial Assets & Income, with above-average income poverty and an over-reliance on predatory lenders and subprime credit. In Health Care, the state ranks 46th in the overall uninsured rate and 47th in uninsured low-income parents. We rank 43rd in residents with two- or four-year college degrees. The one bright spot among the five issue areas for Oklahoma is in housing and homeownership. The state earned a “B” on the Scorecard and ranks 14th in overall homeownership and housing affordability.

The Scorecard also highlights a dozen policy solutions that can help Oklahoma increase opportunity and promote financial stability.  To address asset and income poverty, Oklahoma should fund a state Individual Development Account program to help its low-income population build wealth. To improve its below-average secondary and post-secondary educational outcomes, Oklahoma should increase funding to schools, especially in high-poverty districts, and match savings for college in 529 accounts. In addition, to protect assets and avoid the pitfalls of predatory high-cost loans, Oklahoma should increase access to safe financial products and limit high interest rates and other harmful practices of payday lenders.

Oklahoma Policy Institute is co-releasing the Assets & Opportunity Scorecard as part of an ongoing commitment to advance anti-poverty policies in Oklahoma that prioritize wealth creation and asset-building for low- and middle-income households.  Oklahoma Policy Institute Director, David Blatt, interprets the scorecard results to mean that, “Too few Oklahomans have a college degree and too many are living in asset poverty, without the savings to weather a financial setback or invest in their future. We need better policies that ensure that all Oklahomans are on a path to prosperity and we must protect existing policies, like tax credits for working families, that help hundreds of thousands of households make ends meet.”

The Scorecard paints a picture of a country where middle class families continue to fall further behind more than two years after the official end of the recession.  For ‘asset poor’ families, making ends meet from day to day is a constant struggle and investing in the future is all but impossible.  Locally, a new organization is committed to promoting those policies that improve the outlook for poor, near poor, and middle class Oklahomans.  The mission of Oklahoma Assets is to advocate policies and programs, like the ones just outlined, that create a more inclusive economy – one in which financial success, economic stability, and opportunity are available for all.

To download a summary of Oklahoma’s Scorecard click here.

To view all Oklahoma data from the 2012 Assets & Opportunity Scorecard click here.

To access the complete Scorecard, including data from all 50 states click here.

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View other clips from OKPolicy’s “Watch This’ video series:

Elderly parole

Long term unemployment, 1967-2011

Packed Oklahoma prisons, rising costs

Creativity & Learning

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According to the Fair Isaac Corporation, 58 percent of Americans have credit scores above 700, which is considered a really good score. If you are among the other 42 percent, it may feel like you will always be stuck with a lower score. Fortunately, credit scores are just a snapshot of your credit at one point in time and can change frequently. In just a few short months, you could notice a big increase in your credit score if you work to improve it. Bad credit is not a life sentence.

Poor credit and the resulting low credit score may mean that you can’t borrow money from traditional lenders like banks and credit unions. If you are able to borrow money at all, you may have to pay increased interest rates and higher overall prices.  Because of this, studies have shown that people with poor credit can pay $250,000 more over their lifetime more than people with good credit.

A credit history that reflects late payments, collection accounts, judgments, and liens may feel like it will haunt you forever. The good news is that there are things you can do to begin improving your credit and reducing your debt right now. With a better credit score, you will have more options if you need to borrow money for a car or home loan in the future. You will also be able to qualify for lower interest rates. Here are some ways to begin today improving your credit:

• Get a free copy of your credit report: the only truly free report is at www.annualcreditreport.com. Review it to know exactly what it says. Dispute any incorrect information.
• Pay bills on-time: Your payment history makes up the largest portion of your credit history. If you are behind on loans or credit cards, do your best to bring them current.
• Pay off collection accounts and old debt: Start with the smallest ones. Make payments on the others.
• Stay out of debt: If you have credit cards, charge small amount to boost your score. Pay them off each month.
• Attend Bootcamp: Consumer Credit Counseling Service of Central Oklahoma and Tinker Federal Credit Union team up to offer Fiscally Fit Bootcamp three times per year. This six-week course will teach you everything you need to know about whipping your wallet into shape www.fiscallyfitbootcamp.net for more info.

The opinions stated above are not necessarily those of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.

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The next lecture in the Practice and Policy Lecture Series, sponsored in part by the Oklahoma Department of Human Services (OKDHS), will focus on these issues and on the power of asset-building as an anti-poverty strategy.  The lectures, “Benchmarking Asset Development in Fighting Poverty,” will be held Thursday, January 12th from Noon to 1 p.m. in the Chesapeake Room of the Oklahoma History Center, 800 Nazih Zuhdi Drive in Oklahoma City.  Attendees will hear from Dr. David Blatt, Director of Oklahoma Policy Institute and Steven Shepelwich, Senior Community Development Advisor at the Federal Reserve Bank of Kansas City.

Dr. Blatt helped found OK Policy and became the Director in 2010.  He was recognized as one of the state’s leading experts on fiscal policy and is one of the Tulsa World’s five “Oklahomans to Watch” in 2011.  Steven Shepelwich leads Branch efforts to promote economic development and fair and impartial access to financial services in Oklahoma’s low- to moderate-income communities. Both Steven and David were in involved in founding Oklahoma Assets, an organization that advocates for policies and programs that can help create a more inclusive economy.

Click here for more information about the event and featured speakers.

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Oklahoma Assets is interested in applicants with the following requisite experience:

• At least four years cumulative experience working in a leadership or management capacity with community-based organizations
• Their own office space and equipment
• Proficiency using Microsoft Office software suite
• Experience with web-based communications and community building
• Willingness and ability to attend and/or facilitate project-related conference calls, in-person meetings, trainings and conferences in a variety of locations throughout Oklahoma (mileage and other travel compensation will be provided by Oklahoma Assets)

Click here for a full detailed description of the position.  The deadline for applications is December 6th, 2011.  The Project Manager position is to be filled immediately and on a contract basis.  The position is being supported by Oklahoma Assets in partnership with First Nations Development Institute.  If you are interested, please direct questions and application materials to:

Kristi Bias

OK Assets
20 E. Georgia
Shawnee, OK 74804

bias.kristi@gmail.com

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This blog post was excerpted from remarks by Angela Glover Blackwell, founder and CEO of PolicyLink, during the opening session of PolicyLink’s 2011 Equity Summit in Detroit, Michigan.  The speech presented a new framework for creating an equitable economy.  Click here for a new report from PolicyLink looking at how demographic changes and deepening inequality demand an urgent re-imagining of our economy.

This is a critical moment.  The economy is in crisis.  The middle class is shrinking.  Inequality has come front and center in our conversation in America and we have rapidly changing demographics in which the racial and ethnic composition of the country is changing fast.  This economic crisis really represents a failed growth model, one that was based on a housing bubble; one that was allowed to present itself as opportunity when it was really only credit-fueled consumption that was improving the lifestyles of people [..]

We have a moment in time in which everyone is looking up and deciding that it’s okay to talk about inequality.  That we have to talk about inequality.  That as we struggle and work together as a nation to find our footing again in the global economy, as we try to reverse this crisis that we’re in, we need to make it clear that we cannot be nostalgic for a time that never was, while avoiding a future that is inevitable.  We cannot go back to what we had [..]

We are changing more rapidly than anybody expected that we would.  Already, 46.5 percent of all children under 18 in this country are children of color.  By the end of this decade, the majority of all children in this country will be children of color.  By 2030, the majority of young workers under 25 will be young workers of color and by 2040, the majority of people in this nation will be people of color.  This represents an incredible gift to America – an incredible gift [..]  But the sad, the troubling thing, is so many of those people that represent that gift are being left behind.

We have over a third of black and Latino children who are overweight or obese.  One third of all black teenage girls are obese.  Serious problems in terms of what that represents.  We know that our educational system is leaving millions and millions of children that are Latino and African-American behind.  They’re behind when they begin school, they’re behind by 4^th grade, they’re dropping out before they finish high school.  They’re entering a work system that has no place for a worker that has at least a high school diploma.  While we look at this gift, we know that it will not be viewed as an asset if we don’t deal with these issues.

The United States has invested in equity before.  Right after World War II, California looked at its population and what it saw was a population that was very poor, with a quarter of the people there living below the official poverty level.  Only half of the adults had a high school diploma.  This state looked at its population – that was white – and viewed it as an asset.  Under Republican Governor, Earl Warren, and Democratic governor, Pat Brown, California rolled up its sleeves and it built the best educational system in the country.  It built the best healthcare system.  It built the best system of roads and parks and infrastructure. By 1960, California had a 25 percent advantage in terms of growth and salaries over the rest of the nation.

That is a story about what happens when government and the private sector look at the population that it has, views that population as an asset, and steps up.  We’ve got to step up as a nation [..]  For all of the years that I’ve been working on equity I have felt that it was the right thing to do.  The moral thing to do.  That there was something immoral about a nation that systematically leaves people behind [..] It continues to be the right and moral thing to do, but it has now become an economic imperative.

This nation has no future worth mentioning [..] if it doesn’t figure out how to be competitive in the global economy, how to unleash the creativity and the entrepreneurial spirit that is here [..] That agenda, that equity agenda, has become an imperative for the nation.  Equity no longer stands out there as the thing to do because it’s the right thing to do – begging and pleading for people to find a heart, find a conscience, do the right thing.  Equity is the only way forward.  Equity is the superior growth model for the nation.  [..]

This is not a poor country.  We have more wealthy people than anyone could ever think would be possible.  We have more infrastructure – crumbling as it is – than most places ever dream of [..]  We have the ability; we have the money to do what we need to do [..]  We have a crisis, but it’s not a crisis that comes of not having any resources to address it.  How should we use all that money that we do have?  We need to use it to invest in the nation’s infrastructure because it’s win, win, win [..]  We target the places that need it – rural communities without broadband, urban communities where people are isolated from opportunity because of the absence of transportation.  We invest in the places, we invest the projects, and ultimately we invest in the people.

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Affordable credit plays a pivotal role in a household’s capacity to maintain financial security and build assets. Lower income earners in particular need the flexibility that credit affords to handle emergencies, make ends meet, and avoid high cost credit products that could set them back even further.  When households without access to affordable credit face emergency situations that threaten their ability to work—like illness or car repairs—they either take the credit they are offered, often at prohibitive rates of interest, or face unemployment and insolvency.

American households have become increasingly reliant on credit cards to meet their monthly expenses and handle emergencies.  According to CFED, Oklahoma had the 41st lowest median credit card debt in the nation in 2008.  The Federal Reserve Bank puts the average revolving debt for an Oklahoma borrower in 2011 at $3,600, about half the national average of $7,700.  While Oklahomans have less debt than residents of most other states, they may be paying more to finance that debt because of poorer credit ratings. Oklahoma ranks 44th among the states for residents’ credit scores, with an average credit score 17 points below the national average of 683.

Many consumers are also turning to the alternative financial sector (AFS) to make ends meet.  AFS outlets typically offer check cashing, bill payment, short-term loans and rent-to-own contracts for popular consumer goods.  Oklahoma households use AFS credit services at a much higher rate (17.5 percent) than the average American household (11 percent). Oklahoma ranks 3rd – behind only Arizona and Kentucky – in overall use of AFS credit, and the rate is even higher among low-income households.  The drastically higher cost of credit through an AFS outlet – versus a traditional bank – can chip away at the discretionary income of lower-earning consumers with the least to spare.

Consumers in Oklahoma need access to affordable credit products – especially lower income earners who are more likely to struggle with meeting expenses. When low-income households come up short and lack access to affordable credit, they are faced with some grim realities: falling behind on bills and damaging their credit history or tapping a high-cost credit product whose debt service payments they can ill afford. Since maintaining financial security is a prerequisite for asset building, barriers to affordable credit can become life-long barriers to building the assets that provide families with a stable retirement and a prosperous future for their children.

For a deeper discussion about why Oklahomans might have difficulty accessing credit on terms they can afford to repay, and what we can do to enable access to affordable credit, click here to access the paper from Oklahoma Assets.  If you are interested in building strong financial foundations for Oklahomans and their communities, take a moment to connect at OklahomaAssets.Org or through Facebook and Twitter.

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Asset-building is beginning to gain traction as an anti-poverty strategy.  Assets for Independence (AFI), a federal grant program that enables nonprofits and government agencies to incorporate assets-based principles into their programming, recently launched the ASSET Initiative.  The ASSET Initiative hopes to expand the reach of the asset-building message and encourage more collaboration across government agencies who do anti-poverty work.  Another such initiative that is picking up steam locally is Oklahoma Assets, an organization whose mission is to advocate policies and programs that can help create a more inclusive economy – one in which financial success, economic stability, and opportunity is available, not just for some, but for all.

The assets approach to overcoming poverty empowers families to take control of their finances and plan for long term stability.  Asset-building helps families avoid or get out of debt, prepare for emergencies, and plan for college or home ownership.  To advance an understanding of the asset-building approach, we’ve highlighted six strategies for family financial security and resources to promote them:

1. Financial Education:  Curricula for staff, parents and children is available on-line at no cost via www.mymoney.gov
2. Savings:  The path to financial security starts with savings.  The Federal Reserve Bank of Dallas has compiled a comprehensive multimedia toolkit called a ‘Beginners Guide to Securing Your Financial Future‘
3. Getting banked: This site connects parents and staff to banks and credit unions – www.joinbankon.org
4. Managing credit and debt:  Visit www.creditbuildersalliance.org for strategies to take control of debt and information about the importance of personal credit history.
5. Tax credits and filing assistance:  The IRS sponsors free tax preparation services that help working families and individuals apply for tax credits and keep more money in their pockets.
6. Accessing public benefits:  Public programs help families lessen crises due to job loss, illness, disability, or divorce.  They support working families with low earnings and reduce the severity of poverty by increasing disposable income.  Learn more about such programs at www.benefits.gov

To partner with the ASSET Initiative, educate yourself and others, or take on asset building strategies, visit www.idaresources.org or contact Wanda DeBruler at (405) 641-5090 or wanda.debruler@idaresources.org.  To learn more about Oklahoma Assets, visit OklahomaAssets.org or email info@oklahomaassets.org.

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In 2009, we blogged about a series of regional meetings hosted throughout the state by Oklahoma Assets (formerly OkABC) on asset-building strategies for increasing the financial security of Oklahomans.  Click here for a recap of the Oklahoma Assets day-long meeting in April 2009 on “Economic Security for Oklahomans: Asset Building Approaches for Assisting Families with Low Incomes,” where results of the regional meetings were shared and discussed.

To learn more about the importance of assets in building economic security, check out our issue brief on promoting savings in Oklahoma and our series of blog posts:

• What does it take? Oklahoma Self-Sufficiency Standard calculates what families need to get by, December 2009
• Assets can build the bridge from the safety net to self-sufficiency, September 2010
• Promoting financial security: Matched savings account programs, February 2011
• When a job is not enough: New measure looks at what’s needed for economic security, April 2011
• Wealth and Worth: What’s race got to do with it?, April 2011
• Quick Cash and Debt Traps: Predatory payday lending in Oklahoma, May 2011
  

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Access to credit has become a necessity for modern American living, touching virtually every aspect of our lives. You need credit to buy a house or a car, pay for medical expenses, even rent an apartment.  Obstacles to affordable credit can create obstacles to work.  Without a car and a place to live, a job is difficult to maintain.  Simply put, credit enables individuals and families to create the basic building blocks of a healthy and prosperous life.

Unfortunately, a number of factors, including insufficient income, existing debt, and a tainted or non-existent credit history affect low- to moderate-income borrowers’ ability to access affordable credit through mainstream financial institutions.  Credit access is also exacerbated by a paucity of mainstream financial outlets in low-income neighbourhoods.  When households with limited access to affordable credit face emergency situations that threaten their ability to work—like illness or car repairs—they often have no choice but to take any credit that they are offered, often at prohibitive rates of interest.

Storefronts advertising ‘quick-cash fast’ line the streets in commercial areas of low-income neighborhoods and market high-cost products to working-poor households.  Some states enforce usury laws and interest-rate caps that adequately protect consumers from the worst of these practices but many, including Oklahoma, do not.  One common source of short-term, high-cost credit for households facing acute cash-flow problems are payday loans.  Payday lenders began operating in Oklahoma in 2003 after the state legislature passed the Deferred Deposit Lending Act setting minimum standards for their operation.

Predatory payday lending is the practice of making several small, consecutive, short-term loans at an average APR of around 400 percent.  Opponents of the practice maintain that these loans trap borrowers in a cycle of debt.  The Center for Responsible Lending (CRL) found that out of the total volume of payday loans in 2009 76 percent were ‘churned’ loans - consecutive pay period transactions.  As the CRL describes, “This rapid re-borrowing indicates that most payday borrowers are not able to clear a monthly billing cycle without borrowing again.” To lessen the risk of a debt trap, Oklahoma law technically prohibits renewal or rollover of a payday loan.  However, since it also permits borrowers to have more than one outstanding loan at a time, the rollover provision is functionally unenforceable.

There are 404 payday-lending storefronts in Oklahoma as of June 2010.  That’s more than the number of Walmarts and McDonalds in the state combined.  A standard payday loan is made for between $100-$500 for a two-week period with consumers promising to pay off the loan with their next paycheck.  Payday lenders are disproportionately concentrated in Tulsa and Oklahoma County, two metropolitan counties containing roughly a third of the state’s population, but half the payday lenders.

There are 15 states that prohibit payday lending outright or have effectively prohibited the practice by enacting a hard cap on interest rates of 36 percent APR.  In 2007, federal law barred consumer credit products with an APR of over 36 percent from being sold to military families.  Assuming the average transaction fee ($51.93) and transaction amount ($388.12) in 2010, an Oklahoma borrower is paying an APR of 349 percent on a standard 14-day loan.

Industry representatives and defenders of high-cost short-term lending insist that churned loans are not the norm and that their products serve an important need — providing emergency cash to consumers who would not otherwise have access to credit.  However, data collected through Oklahoma’s payday loan database show that only 5.4 percent of the total loan volume went to borrowers who took out between 1 and 3 loans over the course of a year.   The bulk of the loans, 61.3 percent, went to customers who took out between 12 and 40 loans in one year.

To investigate the claim that payday loans are a temporary and helpful form of short-term credit for low-income families, a researcher at the Kellogg School of Management at Northwestern University recently analyzed survey data from over 40,000 households over several years.  Brian Melzer found no evidence that payday loans helped alleviate economic hardship. Rather, payday loan access was correlated with increased difficulty paying mortgage, rent and utilities.  The analysis concluded that:

Contrary to the view that improving credit access facilitates important expenditures, the empirical results suggest that, for some low-income households, the debt service burden imposed by borrowing inhibits their ability to pay important bills.

While it’s true that access to credit is a problem for low-income Oklahomans, payday loans are no solution.  Low- to moderate-income Oklahomans need short-term and emergency loan products on fair and reasonable terms and some banks and credit unions have successfully experimented with such products.  You can read more about mainstream financial institution innovations in Oklahoma Assets upcoming issue brief on affordable lending and in an upcoming blog post.

In addition to substitute products to serve low-income communities, we also need regulatory action.  One solution would be to enact the same interest rate cap for civilian households that military leadership felt was necessary to protect active duty households – 36 percent.  Short of a hard cap, state regulators could also do more to prevent loan rollover by extending the term of a loan from 14 days to 30.  They could also limit borrowers to a single outstanding loan at a time and limit the numbers of transactions per borrower per year, ensuring that consumers don’t get trapped on a debt treadmill that will only pull them ever-further away from financial security.

Click here for other OK Policy blog posts on assets and financial security.

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