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 OK Policy and the Corporation for Enterprise Development (CFED) co-released the 2012 Assets and Opportunity Scorecard, which showed that more than one in four Oklahoma households are “asset poor,” meaning they have little or no financial cushion to rely on in an emergency.  The Tulsa World and the Oklahoman covered Oklahoma’s Scorecard results in depth.

We pointed out that if legislators make the choice to prioritize tax cuts, they cannot pretend to be blameless when funds aren’t available for crucial services.  We hosted a debate about whether or not to require a prescription for pseudoephedrine, featuring Jessica Hawkins, the Director of Prevention Services for the Oklahoma Department of Mental Health and Substance Abuse Services, and former state Senator Ed Long.

Finally this week, the Associated Press quoted us in an article on a regional trend of GOP action to axe state income taxes. The Tulsa World presented a summary of our issue brief defending the income tax. The Journal Record cited our work on worsening poverty in Oklahoma and legislative proposals that would make it even harder to be poor. The OK Policy Blog featured a short video about ‘community schools,’ a comprehensive approach to education that makes the school the hub of the community.

Numbers of the Day

• $136 – Average tax increase on elderly Oklahoma couples with $35,000 in income under a legislative proposal to eliminate a slate of broad-based tax credits and exemptions.
• 8,100 – Number of manufacturing jobs added in Oklahoma from January to December of 2011, up 8.4 percent for the year.
• 178, 020 – Number of Oklahoma children under age 6 who need daily child care during the week because their primary caregiver/s participate in the labor force, 2009
• 6,592 – Number of Oklahomans who tested for their GED in 2009; 70.1 percent received their GED, just above the average national pass rate of 69.4 percent.
• 11^th – Oklahoma’s rank among the states in percentage of households with no computer in their home, 2010

In The Know, Policy Notes

• The Foundation for Child Development finds that states with higher taxes and greater investment in public programs score highest for Child Well-Being.
• The Economic Policy Institute points out that the massive tax cuts propose by GOP presidential candidates don’t square with professed concerns about public debt.
• Demos shows that the pay premium gained by joining the federal workforce is reserved largely for less-skilled workers, and rather than disparaging public sector pay levels, we should embrace them as standards from which the private sector has shamefully deviated over the last three decades.
• The Shriver Center examines the trend of states issuing public benefits through bankcards and the implications of card fees for low-income people.
• Bloomberg Businessweek reports on falling premiums for Medicare Advantage, a private health insurance option for Medicare beneficiaries.

In Oklahoma, more than one in four households are “asset poor,” meaning they have little or no financial cushion to rely on if unemployment or another emergency leads to a loss of income, according to a report released today by the Corporation for Enterprise Development (CFED).  Asset poverty is distinct from and broader than income poverty, which measures the amount of money a household receives during the year.  According to the U.S. Census, about one in six Oklahomans were income poor in 2010.  Andrea Levere, president of CFED, highlights asset poverty as a significant barrier to long-term financial stability:

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. Read the rest of this entry »

Assets mean economic security.  Yet impoverished families frequently lack the means to build assets.  Some are even sanctioned by public assistance programs from accumulating the wealth they need to escape poverty.  Oklahoma earned a “C” grade from the Corporation for Enterprise Development in a national report ranking states on opportunities for wealth creation and protection, particularly for low-income residents.  That same report says 23 percent of Oklahoma households are asset poor, lacking sufficient net worth to subsist at the poverty level for three months if their income was disrupted. Read the rest of this entry »

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. Read the rest of this entry »

This post is adapted from an upcoming issue brief on savings from Oklahoma Assets, a statewide coalition committed to promoting financial security. Click here for other OK Policy blog posts on assets and financial security.

Most Americans recognize the value of savings, yet over time, American savings have declined sharply. Even before the losses incurred during the Great Recession, a large segment of the population in Oklahoma and across the nation had little or no savings with which to weather a setback or move ahead by investing in the future.  According to the 2009-10 Assets and Opportunity Scorecard, nearly one out of every four Oklahoma households (22.7 percent) lacked sufficient financial assets to subsist at the poverty level for three months. Minority households are also disproportionately prone to possess little savings – the asset poverty rate for minority households in Oklahoma exceeds 40 percent and is 2.75 times greater than for White households. Read the rest of this entry »

It is widely accepted that ownership of assets – a home, savings accounts, stocks and investments, a business – is a cornerstone of family financial security. Assets provide a cushion against temporary setbacks and allow for an investment in greater opportunities and economic success in the future. Government policies have long promoted asset building through a combination of direct expenditure programs and, especially, through preferential tax treatment in the federal tax code of home mortgages, savings account contributions, capital gains income, and other items.  States, too, promote asset building, in large part by “piggybacking” on federal itemized deductions for such items as the home mortgage deduction and property taxes on state income taxes.

A new report from CFED and the Annie E. Cassey Foundation (AECF) calculates annual federal expenditures on asset-building policies to be $384 billion. Of this total budget, ninety per cent of benefits, or $348 billion, is delivered through the tax code, while just 10 percent, or $37 billion, takes the form of direct government expenditures. Most of the latter is in the area of scholarships and grants for post-secondary education. Conversely, the vast majority of the total federal budget in the areas of homeownership, savings and investment, retirement accounts and business developments takes the form of tax credits, deductions, and lower tax rates.

Here’s the thing. These policies to promote savings, investment and ownership primarily subsidize the wealthy, and offer few, if any benefits to low- and moderate-income households. Take, for example, homeownership. According to the report: Read the rest of this entry »

Last week, I had the pleasure of attending the 2010 Assets Learning Conference that brought together over 1,000 participants for three days of plenaries, workshops and sessions exploring approaches to building an economy in which all Americans, including those of limited means, are provided opportunities to achieve household financial security through savings, investment, and entrepreneurship.

As I noted in my blog post reporting on the opening plenary, a major theme of the conference was the notion of “scale” – the need and opportunity to take policies, programs, and products that have been introduced and tested in modest ways up to now and expand them to serve a much greater number and range of individuals and families. In session after session, I learned about innovative practices that are already working at the local level or in pilot programs and that community organizations, government agencies, and financial institutions are gearing up to expand.  Here are just four of the policies, programs and products from the asset building field that seem poised for a larger impact:

• The Bank On Initiative: According to a 2008 FDIC survey,  one in four U.S. households is unbanked or underbanked, which means they do not have a checking or savings account, or rely on high-cost alternative financial services. In 2006, the city of San Francisco, in partnership with banks, credit unions and non-profit organizations,  launched the Bank on San Francisco project to make it easier for the unbanked to get into mainstream banking by providing consumers with  starter accounts and financial education. Building on the success of the San Francisco program and with the active involvement of the National League of Cities, the program has spread to over a dozen cities. The Administration has now proposed $50 million for a national Bank on USA initiative “to promote access to affordable and appropriate financial services and basic consumer credit products for households lacking such access.” Read the rest of this entry »

This week I am participating, along with over 1,000 other delegates from around the U.S. and a dozen foreign countries, in the biannual Assets Learning Conference hosted by CFED in Washington, DC (Click here to follow our Twitter feed from the conference). The conference brings together a genuinely broad range of participants – including community practitioners, policymakers, researchers, public officials, entrepeneurs, and businesspeople –  united by a shared interest in the ways that assets can help create prosperity and expand economic opportunity for all Americans.

In her opening State of the Field address, CFED President Andrea Levere laid out the case for why the assets movement  has reached a defining moment. She argued that an array of programs, policies, products, and financial strategies that the asset-building field has pioneered over the past 30 year are ready to be scaled and to lay the foundation for a more just and inclusive economy. 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 »

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 »

As the economic downturn continues to take its toll in Oklahoma and across the nation, how financially prepared are families to deal with extended periods of unemployment and underemployment. Newly-released data (PDF) from CFED that focuses on “asset poverty” confirms that many Oklahomans have little or no financial cushion on which to fall back.

Asset poverty is a measure that establishes a minimum threshold of wealth needed for household security:

A household is asset poor if it has insufficient net worth to support itself at the federal poverty for three months in the absence of income. Asset poor households would not have enough savings or wealth to provide for basic needs during a sudden job loss or a medical emergency. Read the rest of this entry »

We’ve recently joined with CFED, a national organization dedicated to expanding economic opportunity, and the Oklahoma Asset Building Coalition, in releasing the 2009-2010 Assets and Opportunity Scorecard. Our earlier post summarized the Oklahoma results, as did several media reports.

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: Read the rest of this entry »