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.”
• $ave USA Initiative. For many low-income families, the Earned Income Tax Credit (EITC), which can be worth over $5,000 to a two-child household,  provides an annual lump-sum payment that can not only be used to spend on ongoing and one-time expenditures, but that can also be saved and invested.  In New York City, the Office of Financial Empowerment launched the $ave NYC Account Program to provide  opportunities for  families to invest part of their EITC  refund in savings. $ave NYC is a matched savings program operated at tax time that provides low-income households 50 cents of public match for every $1 of savings up to $1,000. An evaluation of the program found that 61 percent of program participants deposited over $500 to their $ave NYC account, despite having average households earnings of roughly $15,000.  These findings confirm the growing body of evidence showing that with the right incentives and program design, low-income families can and do save. In July, the federal government announced its financial support for the program in New York and three other cities, including Tulsa.
• Small Dollar Loan Program: Many low- and moderate-income families regularly depend on payday loans, which have APRs that can exceed 450 percent and tend to be extremely short-term, to try to make ends meet. Payday loans often lead to patterns of frequent, high-cost borrowing which perpetuate a cycle of debt and economic insecurity. In 2008, the FDIC launched the Small-Dollar Loan Pilot Program in partnership with 31 banks. All the banks committed to offering borrowers closed-end installment loans up to $2,500 with payment periods that extended beyond a single paycheck and APRs below 36 percent. Some banks coupled their loan product with financial education classes and resources.  According to a study of the program,  “most pilot bankers in the pilot indicated that small dollar loans were a useful business strategy for developing or retaining long-term relationships with consumers.” The FDIC intends to use the lessons from the pilot to work with the public, private, and non-profit sectors on strategies to expand  the supply of lower-cost  small-dollar loans.
• The Saver’s Credit. At the national policy level, the Obama Administration is promoting a broad set of tax policy changes that encourage and facilitate savings.  One proposal that is strongly backed by CFED and a coalition of corporate and non-profit supporters would expand the Saver’s Credit, which currently is claimed by less than 6 million individuals. Under the Administration’s proposal, the Saver’s Credit would provide a flat 50 percent match on deposits into qualified retirement accounts up to $1,000 per year for joint filers, automatically deposit this match directly into a designated account, and extend this benefit to households earning less than $65,000. If enacted, up to 50 million Americans would be able to use the Saver’s Credit to build up a nest egg for retirement and other eligible uses.

These four examples are from an exhaustive list, but they are representative of a field in which a growing number of partnerships are bringing together government, non-profits, and the private sector to help build assets and strengthen financial security.  The Oklahoma Asset Building Coalition is eager to be an active part of this work here in Oklahoma; whether or not you’ve been a part of the regional meetings that the Coalition is hosting around the state, we hope you’ll join our effort and help us ensure that Oklahoma contributes to bringing the assets movement to scale.

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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.

The theme of the 2010 Asset Learning Conference is “Creating the Save and Invest Economy”, inspired in part by a speech delivered by President Obama in 2009 on rebuilding the American economy:

We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity — a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.

Michael Barr, the assistant secretary for financial institutions at the U.S. Department of the Treasury, spoke to the opening plenary of some of the initiatives the Administration is pursuing to spur this vision of an economy based on saving and investment. Their three-fold focus is on expanding financial education; broadening financial access, especially for the large segment of the population that is unbanked or that relies on high-cost fringe financial services; and strengthening consumer protection in the home mortgage and financial services sectors, particularly through the new Consumer Financial Protection Bureau enacted as part of this year’s financial reform law. Barr also identified a number of key policies specifically aimed at encouraging more families, especially those of moderate means, to save. These include automatic contributions to retirement accounts, lifting asset limits in public benefit programs, and making it easy for people to invest part or all of their tax returns in U.S. savings bonds. The Administration has also pushed for a major expansion of the Savers Credit, which is part of a policy agenda that hundreds of the delegates promoted during visits with their Congressional representatives on Capitol Hill.

Oklahoma is well represented at the Assets Learning Conference with some dozen participants, most of whom are operating non-profit and tribal programs aimed at promoting savings and wealth and expanding economic security. These programs include home ownership assistance, tax refund sites, matched savings Individual Development Accounts, financial education and counseling, and others. It is something of a happy coincidence that the conference  is taking place right as the Oklahoma Asset Building Coalition is convening a series of five regional meetings across Oklahoma to discuss assets and economic security. What we are learning in DC about the innovative policies, programs and products being developed across the nation will help inform the Coalition’s remaining regional meetings and our work going forward. In time, we also hope it will help lay the groundwork for a policy agenda to build assets and strengthen economic security.

The challenges the assets movement faces certainly remain daunting. The Great Recession has left more families in financial distress and led to a great loss of wealth from declining home and stock values. The movement also continues to grapple with how to communicate and organize around a central concept – assets – that remains unfamiliar and ill-defined to most of the public and many potential participants and supporters. Yet the conference also reminds us that the field is bristling with innovative ideas, committed practitioners, and proven strategies. We look forward to going back home charged up and ready to get down to work.

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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.

It’s obvious that for many working Oklahomans, there is a substantial gap between the actual wages paid by available jobs and the self-sufficiency standard. As jobs have disappeared and wage growth has collapsed over the course of the recession, the gap has certainly widened and more families have fallen into it. However, well before the downturn started, and presumably long after it ends, adults may work full-time and make the best possible decisions about how to budget their money and yet still fall short of making end meet without some form of ongoing help.

There are at least two major implications that can be drawn from the Self-Sufficiency Standard.  The first is that for this population of working families whose income falls short of self-sufficiency, identified sometimes as the working poor, access to public programs like Medicaid, food stamps, child care subsidies and rental assistance provide the critical supports that maintain family health and well-being. Research by the Center on Budget and Policy Priorities has found that public safety net programs have cut the number of Americans living in poverty by nearly half, reduced the severity of poverty for those who remain poor, and helped protect Americans from the deepest extremes of poverty. As we discussed in this blog post, key parts of the safety net are seriously frayed, but for those who qualify, public benefit programs are frequently what allow low- and moderate-income working families to pay the bills and take care of basic needs from one month to the next.

Yet for families to get ahead, it will take more than public benefits and income supports. The second implication of the Self-Sufficiency Standard is the need for strategies focused on helping families achieve economic security.The Oklahoma Asset Building Coalition has chosen to focus on building and preserving assets as a key cornerstone and pathway. As OK Policy argued in a recent brief:

For individuals and families aiming to achieve economic success, the key to prosperity is the development and accumulation of assets. Assets are the basic foundations for financial security and the pathway to the American Dream.

Over the course of our remaining upcoming meetings, which will be held in Durant, Lawton, Oklahoma City and Woodward over the month of September, the Coalition will continue the work of identifying practices, programs and policies that can make a difference in building and protecting assets and expanding economic security. If you are interested in attending one of the meetings, click here for a schedule and registration information. Or click here to join the Oklahoma Assets Google group where you can share information, news, resources and questions related to asset building strategies and policies.

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• Broken Arrow, August 31st;
• Durant, Sept. 14th;
• Oklahoma City, Sept. 28th;
• Lawton, Sept. 29th;
• Woodward, Sept. 30th

The meetings will provide an opportunity to learn more about:

• tools such as the Self-Sufficiency Standard and the Assets and Opportunities Scorecard;
• asset building programs and policies, such as financial education, Individual Development Accounts, and the Earned Income Tax Credit; and
• the work of the Oklahoma Asset Building Coalition and how you can become involved.

We hope you will participate in one of these meetings around the state. For information on exact locations and how to register, click here [PDF].

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The Self-Sufficiency Standard for Oklahoma [3 MB PDF], released last week, provides new data that can help answer these questions and many others. The Standard was developed by Dr. Diana Pearce of the Center for Women’s Welfare at the University of Washington for the Oklahoma Asset Building Coalition. The new report updates the original Oklahoma Self-Sufficiency Standard released in 2002. Over the years, the Standard has been used for a wide range of purposes, including career counseling, workforce development, grant-writing, research, and advocacy.

According to a press statement by Dr. Pearce:

The Self-Sufficiency Standard is a measure of income adequacy that gives detailed information on what it costs to live in different parts of Oklahoma, for families with different compositions… The Standard is the economic equivalent of the minimum daily requirements we see on food packages – the Standard is the minimum needed to adequately meet a family’s most basic needs.

Unlike the federal poverty level, the Standard is calculated based on the actual costs of basic needs – food, housing, health care, transportation, etc. – and takes into consideration geographic variations  and differences in costs for children of different age. The result is a report that calculates the Standard for eight family types (based on the number of working age adults and number and ages of children) for all 77 Oklahoma counties, plus Oklahoma City and Tulsa.

For a single-parent family with a preschooler, the report finds the self-sufficiency wage varies from a low of $11.42 per hour ($24,111 annually) in Grady County to a high of $16.54 per hour ($34,933 annually) in Tulsa County. For a two-parent working family with a preschooler and school-age child, the self-sufficiency wage ranges from $8.41 per hour ($35,515 annually) to $11.10 per hour ($46,686 annually).  These amounts are all substantially above the federal poverty level, which in 2009 was set at $18,310 for a family of three and $22,050 for a family of four.

Dr. Pearce emphasizes that the Standard is an important tool for establishing a realistic assessment of what it really takes to get by:

The Self-Sufficiency Standard tells us that families have a hard time meeting basic expenses not because they lack responsibility, work ethic, or budgeting skills, but because they lack enough income. Reaching Self-Sufficiency involves many stakeholders – not just parents working or employers paying adequate wages and benefits, but also the state providing work supports to reduce costs and absent parents paying child support.

As Steven Shepelwich, chair of the Oklahoma Asset Building Coalition and senior community affair advisor for the Oklahoma City office of the Federal Reserve Bank of Kansas City, noted in the Oklahoman article discussing the Standard,  “the report can help policymakers set more realistic guidelines, and provide a more accurate economic picture for Oklahomans considering career and family choices”.

The Self-Sufficient Standard is a useful complement to another recent report, the Assets and Opportunity Scorecard, that OK Policy put out in September in conjunction with CFED and the Oklahoma Asset Building Coalition.  Taken in conjunction with the federal poverty level, each of these tools gives a snapshot of different points on the economic spectrum. The poverty level shows a point well below that which is necessary to get by. The Self Sufficiency Standard gives us an accurate indication of what a specific family make-up in a specific county needs to break even. The Assets and Opportunity Scorecard tells us what it takes for a family to get ahead and create a better life for themselves and their children.

I think we can all agree that getting ahead should be the goal. It is the American dream that hard work will lead to financial security and a better life for the next generation. As we point out in our recent issue brief, assets are the financial resources and capacities that create financial security and provide the pathway to the middle class. Only when families are able to combine income and assets will they have what it takes not only just to get by but to get ahead.

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While the Coalition has a particular focus on how assets – whether tangible, financial, or personal – can help move people towards economic security, the barriers identified as standing in people’s way to being economically secure were far-ranging. Educational attainment, unstable families, lack of jobs, and substance abuse were most frequently cited over the course of the listening sessions as creating obstacles to success. Looking at existing programs and policies, the most significant gaps were seen to be in the areas of housing, system coordination and communication, and asset accumulation policies. Education, employment, substance abuse, and prisoner re-entry were also identified by many participants as areas where current programs and policies fell short.

The meeting allowed participants, working in groups, to select one area where there are currently gaps in programs and policies, and to begin to sketch out a strategy to address the problem. Although the ideas and strategies were far-ranging, one common theme was the need for better coordination of service between the wide network of public and non-profit providers involved in helping families – better information about the resources out there, better communication between agencies, and a more holistic approach to serving the needs of individuals and families. Many of the strategies had a particular angle in rural communities and for Native tribes, but the challenges across the state were broadly similar.

OkABC, which is led by a steering committee of which I am a member, will continue its efforts to share, learn about, and expand strategies for promoting economic security and building assets. This fall, the Coalition, in conjunction with the University of Washington School of Social Work, will be releasing an updated version of the Self-Sufficiency Standard, a report that calculates the amount of income families in each county require to meet the cost of their basic needs. The last Oklahoma Self-Sufficiency Standard report was issued in 2002.

Anyone interested in being part of the work of the Coalition should contact Steven Shepelwich, Senior Community Development Advisor with the Oklahoma City branch of the Federal Reserve Bank of Kansas City, steven.shepelwich@kc.frb.org. If you have thoughts on these issues, feel free to post a comment here on the blog.

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