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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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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One area where Oklahoma needs to do better is our 529 college savings plan. Section 529 of the federal tax code allows families to set aside savings in a special account overseen by the state government. Interest earnings on the account are not subject to the federal or state income tax. CFED points out that:

Post-secondary education is one of the best investments an individual can make in his or her economic future…Yet escalating costs discourage many from pursuing post-secondary education. For many low-income families, the net out-of-pocket cost of a four-year public university education (even after grant aid) is estimated to be as high as 39% of total income.

Scholarships, grants and loans rarely cover the full cost of attending college; even students that qualify for federal and state aid need family income to pay the many expenses not covered by student aid. In addition to helping with college expenses, the practice of saving for college for your child or yourself can alter expectations about college attendance and help develop habits and skills that can provide far-reaching benefits.

CFED suggests making 529s more widely available and meaningful across the income scale by opening accounts for all children at birth; providing incentives for families to save by matching their contributions; and minimizing barriers to savings such as minimum contribution requirements. CFED gives Oklahoma low marks; we are one of 39 states with “No policy in place” for college savings incentives. This confirms what we already knew: Oklahoma must work harder to make post-secondary education  a realistic goal for all our students and to increase enrollment and educational attainment so we can compete more effectively in a rapidly-changing world economy.

Where to start? We asked Soddee Knight, our intern from Oklahoma State University, to compile a comparison of all the 529 plans in the nation. Here’s what we learned about how Oklahoma’s plan compares:

• Oklahoma’s minimum contribution to start an account, $100, is higher than 63 of the 101 savings plans (many states have more than one plan). This is a significant financial barrier that closes off 529s as a viable option for many low- and middle-income families. We should work toward a zero or very low initial deposit. Eventually, we should open account for all children with no initial deposit required.
• Additional contribution requirements are also high in Oklahoma. Our $25 contribution is higher than 37 other plans, many of which have no minimum at all. CFED says any minimum “…can be a barrier for very low-income families who may only have a few dollars at a time to deposit.”
• Oklahoma’s is one of 61 plans where families can deduct contributions to their 529 plan from their state income taxes. Our deduction–up to $20,000 for a family–is among the most generous. A deduction, however, is of little or no value to a low-income taxpayer. The most recent available data showed that fewer than 700 families earning under $50,000 took advantage of this benefit in Oklahoma in 2005. We could convert this deduction into a refundable tax credit, so that each dollar invested in education saves a dollar in taxes up to a maximum amount, even for those not owing state income taxes. Three states currently offer a credit for contributions..
• Unlike many states, Oklahoma considers the balance of 529 accounts in calculating state financial aid, so our students could receive less aid because their families saved money for college. That’s the wrong incentive; we want to encourage savings as part of the way to make college affordable. We should make savings, grants, and loans work effectively together.

We will be proposing a specific legislative agenda to make Oklahoma’s current 529 plan a more effective tool in building opportunity for all Oklahoma families, encouraging saving, and expanding our educational attainment and economy. We hope you’ll join us in our efforts.

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What is less frequently noted is that the racial wealth gap in America is even greater than the income gap. The 2009-10 Assets and Opportunity Scorecard that was recently released by CFED reports that for the nation as a whole,  the median White household possesses net worth (the sum of all assets less liabilities) six times greater than the median minority household: $122,505 compared to $20,132. In Oklahoma, the racial wealth gap was found to be even larger: the median white household enjoys net worth of $66,468 compared to just $6,620 for the median minority household, a gap of  10:1. Additionally, the report found that 37.2 percent of minority households nationally and 43.7 percent in Oklahoma live in “asset poverty”, meaning that they lacked sufficient net worth to subsist at the poverty level for three months in the absence of income. (By comparison, 16.4 percent of White households nationally and 15.9  in Oklahoma were determined to be “asset poor”).

At the CFED conference that launched a national policy campaign around the Scorecard, I heard a powerful presentation on the racial wealth gap from Meizhu Lui,  the director of the Closing the Wealth Gap Initiative at the Insight Center for Community Economic Development and co-author of The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide. Building on the pioneering research of social scientists such as Melvin Howard and Tom Shapiro, Lui’s main argument is that the vast racial wealth gap in American is far from a natural outcome or matter of chance. As much as public policies over the course of American history have actively sought to promote ownership, wealth, and economic mobility for American families – think the Homestead Act, the Federal Housing Administration, the home mortgage deduction, 529 College Savings Program – minorities must still contend with the legacy of policies, practices, and institutions from which they were excluded or which were actively designed to strip away their wealth.

Historically, of course, the appropriation of Native lands and the practice of slavery systematically concentrated property and wealth in White hands. But even in more recent times, policies and practices have continued to perpetuate or accentuate the wealth gap. Just in the area of housing – which for most Americans is the single largest source of household wealth – minorities over the past century have had to contend with segregation, housing covenants, redlining, and predatory mortgage lending. It is no surprise, then, that nationally, there is a 23 percentage point gap in home ownership rates – 71.5 percent for White households compared to 48.2 percent for minorities. In every other important area of asset development, whether it is business capital, educational opportunities, health care, or financial services, discriminatory treatment has limited minorities’ access to the building blocks of financial security.

The lessons I took away from the data and Meizhu Lui’s presentation are two-fold. First, communities and governments must acknowledge the ongoing impact of the policies that offered greatly disparate opportunities based on race and gender.  Second, public policy can and must play an important role in clearing the pathway to prosperity and in closing the wealth gap, just as  public policies played a role in creating wealth inequality. As Lui and her co-authors stress in The Color of Wealth, “the very success of programs to move white men into the middle class shows that it can be done for everyone.” Developing those inclusive policies that expand the promise of the American Dream–for everybody–needs to be our priority.

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