Our friends at Prosperity Works have created an excellent video on the ins-and-outs of IDAs.  What is an IDA?  It is not, as some Facebook users suggested, internet dating advice or the International Department of Awesome.  IDA stands for individual development account.  It’s a matched savings account for low and moderate income earners to save for important assets like a college education, a home, or a business.  Watch this animated short video to find out more or click here to find an IDA near you.

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

Elderly parole

Long term unemployment, 1967-2011

Packed Oklahoma prisons, rising costs

Creativity & Learning

Access to credit has become a necessity for modern American living, touching virtually every aspect of our lives. Many consumers need credit to buy a house or a car, get an education, pay for medical expenses, or start a business.  ‘Credit’ is a generic term for an array of financial products and services that involve the borrowing of money and ‘affordable’ means terms of credit proportionate to a borrower’s ability to repay.  This post explores the critical role of credit in helping Oklahomans maintain financial security and build assets for a prosperous future, based on a newly released paper from Oklahoma Assets.  Oklahoma Assets advocates for policies and programs that can help create a more inclusive economy – one in which financial security and economic opportunity is available, not just to some, but to all Oklahomans.  Their new release, ‘Affordable Credit in Oklahoma: Asset-building and Financial Security‘ is available on their website along with their first brief on the importance of savings.

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. Read the rest of this entry »

What’s up this week at Oklahoma Policy Institute? The Weekly Wonk is dedicated to this week’s events, publications, and blog posts.

This week at OK Policy, we interviewed Steven Dow about recent controversy at the Oklahoma Commission for Human Services.  We pointed out that state leaders can’t rely on growth revenue to fund infrastructure repair and other priorities if they continue to cut (or even eliminate) the income tax.

Former State Treasurer Scott Meacham explains on the OK Policy blog that Oklahoma’s Rural and Small Business Tax Credit initiatives end up costing the state hundreds of millions in tax revenues.  The blog also featured a post on asset-building as an anti-poverty strategy.  Our director David Blatt was a guest this week on Studio Tulsa, discussing the importance of the income tax in adequately funding state government and essential services for Oklahomans.  Oklahoma Policy Institute’s director was also quoted in two articles this week on federal income tax liability for low-income households and the role of unemployment benefits during a recession.

In the Know, Policy Notes

• Tthe Economix blog examines whether it is more cost-effective to direct resources to college students or to preschoolers and kindergarteners in order to increase college completions over the longer term.
• Researchers at the University of Colorado at Boulder discover that immigration is correlated with falling crime rates.
• Bloomberg reports on how municipalities and state agencies, including the Oklahoma Turnpike Authority, are taking advantage of historically low interest rates to refinance bond issues and save money.
• The National Employment Law Project warns that if Congress doesn’t renew extended unemployment insurance by the end of this year, we risk plunging millions into deeper financial crisis and putting yet another obstacle in the path of economic growth.
• The National Academy of State Health Policy released a paper detailing efforts by state agencies to identify and act on racial and ethnic health disparities.

Numbers of the Week

• 16.43 inches – Amount statewide average precipitation was below normal this water year (October 1-September 30), the 2nd driest year on record for Oklahoma.
• 1,865 – Number of foreclosures in Oklahoma in August, down 5.8 percent from the same month in 2010
• $31,600 – Minimum amount in salary and fringe benefits earned by a first-year Oklahoma public school teacher with a bachelor’s degree, 2011-2012
• 80.3 – Number of primary care physicians per 100,000 people in Oklahoma, compared to 120.5 nationally.  Oklahoma ranked 49th in availability of primary care physicians, 2010
• 29 percent – Percentage of Oklahoma’s K-12 children who are on their own after school, 2009

Everyone manages money almost every day.  Often we wonder how to better manage our money when it seems there is never enough.  CareerBuilder surveyed 3,900 American workers and found that more than six-in-ten workers – 61 percent – live paycheck to paycheck.  Many families have no way to cover day-to-day expenses if their income drops or disappears.  Unemployment, medical crisis, or car repairs can put a family into debt – or deeper into debt if they already owe large sums.  Such families are “asset poor.”  Michael Sherraden, director of the Center for Social Development at Washington University and author of Assets and the Poor: A New American Welfare Policy, points out that assets affect us financially, socially and psychologically in a way that income alone does not.

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. Read the rest of this entry »

Oklahoma Assets will host the third in a series of webinars on asset-building next Thursday, June 23rd from 1:00 to 2:00 pm CDT.  The 60-minute webinar, “Individual Development Accounts (IDAs): Programs and Policies that Work!” will show how IDAs offer individuals with low income and limited resources the opportunity to save money for education, a small business, or a home.  IDA participants enjoy matched savings, peer support, financial education and training specific to their savings goal.  Click here to register, free of charge. Read the rest of this entry »

A few weeks ago I had the opportunity to attend a conference hosted by the Ford Foundation and Howard University’s Center on Race and Wealth.  The three-day meeting was the first annual gathering of a diverse group of representatives supported by grants from the Ford Foundation’s Building Economic Security Over a Lifetime initiative.  The initiative promotes programs that help low-income families achieve and maintain economic stability throughout their lives.  The conference focused on a particular and troubling aspect of economic achievement in the United States:  the racial wealth gap.

Few ideas are more evocative of the American dream than wealth and economic security, yet opportunities to accumulate wealth and secure income have never been equally distributed.  In virtually every measure of wealth, non-white households are falling behind.  For example, homeownership, the primary vehicle for building wealth for most Americans, is more attainable for white households than their minority counterparts.  According to the U.S. Census, in 2008 only 47.5% of African-Americans and 48.9% of Hispanics owned their own homes, compared with 74.9% of whites.   White households continue to accumulate more savings, more assets (vehicles, houses, businesses), and more wealth, consistently maintaining larger net worths than minority households.  While some of this gap is attributable to higher incomes and educational attainment, it takes a longer view of history to understand and explain its persistence.  Historically, some of the largest expansions of American wealth were achieved through sacrifices disproportionately shouldered by the poor, the disenfranchised, and communities of color. Read the rest of this entry »

Oklahoma Assets will host a 60-minute webinar on promoting savings in Oklahoma on Thursday, March 24 from 2:00 to 3:00pm CDT.  The presentation, ‘Taking it to the Bank: Promoting Savings in Oklahoma,’ features expert speakers via conference call and on-line content exploring policies and programs that promote savings for low-income individuals and families.  Register for the webinar here.

This event is the first in a series of webinars produced by Oklahoma Assets, a coalition that aims to identify and strengthen programs and policies that help Oklahoma residents achieve economic security.  For more information about this event and the continuing series click here or email info@oklahomaassets.org Read the rest of this entry »

Last week, the Census Bureau released new data showing that one in seven Americans, including one out of every five children, are now living in poverty. This week, some one thousand advocates, program directors, community organizers, business owners, policy analysts and researchers are gathering in Washington for CFED’s biannual Assets Learning Conference to discuss emerging ideas for helping children and families achieve economic security and stability.

As part of the conference kick-off, several organizations that are leaders in the asset building field came together yesterday to release a new report, Lessons from SEED, a National Demonstration of Child Development Accounts. The SEED project is a comprehensive initiative, combining policy, practice, and research, designed to explore a national system of savings and asset-building accounts for children and youth. Child Development Accounts, or CDAs, are intended to give children in low-income families a “financial head start” towards economic opportunity by beginning savings from as early as birth. CDAs are generally “seeded” with an initial deposit from public or private funds, after which children and parents are encouraged to contribute to the account, often with the incentive of matching contributions. The accounts provide savings that can later be used as productive investments that provide the pathways to opportunity and security, by paying for college, buying a home, starting a business, or for retirement. Read the rest of this entry »

An front-page USA Today article last week reported that government anti-poverty programs – including Medicaid health insurance coverage, food stamps, unemployment benefits and welfare cash assistance – are now assisting one in six Americans and are continuing to expand.  Anyone who has been following the monthly releases of our Numbers You Need bulletin is unlikely to be surprised by the trends reported by USA Today.  Oklahoma continues to see ongoing growth and record caseloads for Medicaid (just under 695,000 recipients) and food stamps (over 585,000), with fewer individuals receiving cash payments for unemployment benefits (weekly average of 36,000 initial and continuing claims) and TANF (21,640).

It so happened that USA Today published its report the day before the Oklahoma Asset Building Coalition held the first of five regional meetings around the state. These gathering are bringing together a diverse group of stakeholders to talk about  challenges facing low- and moderate-income Oklahomans and strategies for achieving economic security. The meeting began with a presentation on the Oklahoma Self-Sufficiency Standard, a tool for calculating the amount of income that families of different sizes and compositions need to meet their basic household expenses – housing, food, child care, transportation, health care, taxes and miscellaneous – without public or private support or subsidies. For a single working adult with one infant and one preschool child, the hourly self-sufficiency wage is $16.43 an hour in Cherokee County and over $21.63 an hour in Tulsa County. For a two-parent family with kids that age, each working adult would need to make $10.28 an hour in Cherokee County and $12.39 an hour in Tulsa to meet its basic needs. It’s worth mentioning that this is a basic family budget with an austere set of assumptions – it includes no meals out or entertainment, no one-time purchases, no loan payments or money put aside for savings. Read the rest of this entry »

The Oklahoma Asset Building Coalition is hosting a series of regional meetings on asset building strategies for increasing the financial security of families and communities throughout Oklahoma. Anyone working in the private sector, public sector or a non-profit with an interest in how building assets can expand and strengthen economic security is invited to attend these meetings that will be held from 10:00 AM to 2:00 pm, with lunch provided, on the following days:

• Broken Arrow, August 31st;
• Durant, Sept. 14th;
• Oklahoma City, Sept. 28th;
• Lawton, Sept. 29th;
• Woodward, Sept. 30th Read the rest of this entry »

For many of us, the economic events of the past two years have eroded our savings and heightened our sense of economic fragility. Yet for many low- and moderate-income households, savings have long been out of reach. The 2009-10 Assets and Opportunity Scorecard, which OK Policy released in partnership with CFED, revealed that in 2006, more than one in five Oklahoma households was in “asset poverty”, meaning that it had insufficient net worth to subsist at the federal poverty level for three months if income were interrupted, such as due to a job loss. Without savings, any minor setback can turn into a full-fledged crisis. More importantly, perhaps, without access to savings to attend college, buy a home, start a business, or retire, the pathway out of poverty and towards economic security is blocked.

It is for this reason that an important and growing movement of anti-poverty advocates have focused in recent years on ways to support savings among low and moderate-income families. As we discussed in our issue brief, “More than Just Getting By, ” public policies in this country have long encouraged savings, ownership and wealth creation through such mechanisms as the home mortgage deduction and preferential tax treatment of capital gains and college 529 plan contributions. The problem is that most low-income households are not in a position to benefit from the asset building policies embedded in the tax code. As a result, one study found that 45 percent of the benefits from federal asset development policies went to the richest 1 percent of households, while less than 3 percent of the benefits went to the bottom 60 percent of households. Read the rest of this entry »

OK Policy focuses not just on budget and tax issues, but on finding ways for government and households to work together to make Oklahoma and Oklahomans more prosperous. One great example of this kind of partnership is 529 college savings plans. These state-managed savings plans are open to everybody who can come up with the $100 initial deposit. Savers can deduct their contributions to the account (up to $10,000 per year) from their Oklahoma state income taxes. If the account is used for qualified education purposes, all the money it earns over the years is exempt from both state and federal income taxes. So the federal and state government have established a system to encourage saving for college and to make it easier by managing the plans. Families just have to take advantage of this structure.

That’s easier said than done. In 2002, the last year for which we have data, only 4,420 Oklahoma tax returns–about 1/3 of one percent of all returns filed–reported contributions to a 529 plan.Most of those who did contribute were from higher income brackets; over half of all contributions were from families making $70,000 or more.

One of Oklahoma’s biggest needs is higher educational attainment. As the economy changes, college and technical education are more and more essential to family security and a growing economy. OK Policy is committed to making education more attainable and more effective. 529 plans are one path toward that goal. We can broaden participation by improving policy, but we also need to broaden awareness. Here’s a video  on starting a college savings plan by Tammy Trenta, whose credentials are led by being a contestant on The Apprentice. Still, it’s a good example of financial planning made simple, which will be one thing we have to do in order to open 529 participation up to all Oklahomans regardless of income and assets.