The Seeds of Success: Children’s Savings Accounts and College Enrollment

I’m often inspired by the innovative ideas being developed to help low-income families meet both present and future needs.  One example I recently shared highlighted community gardens that provide fresh food to low-income neighborhoods in Tulsa.  Today, I’m drawing inspiration from the economic seeds being planted through San Francisco’s Kindergarten to College (K2C) program.

Launched in 2011 by the City and County of San Francisco, K2C is the first publicly funded, universal children’s savings account program in the country.  Operated through the city’s Office of Financial Empowerment (OFE), the program ensures every kindergarten student in the San Francisco Unified School District is automatically enrolled in a College Savings Account.  Accounts are seeded with $50 provided by the city-county government, with students enrolled in the National School Lunch Program receiving an additional $50.

Accounts are designed to make contributing as easy as possible by allowing relatives and extended family to deposit money by mail, online, or in person.  There is no minimum deposit amount required, so families can give what they can afford, when they can afford it.  Partnerships with local foundations, organizations and businesses also provide matching funds for promotions that encourage families to save regularly and speed the growth of account balances.

The program is still relatively new but the results so far are encouraging.  As of 2012, over

Read Full Post »

America Saves Week: Time to Make a Plan

America Saves Week kicks off February 25.  This annual event offers people a chance to assess the status of their own saving and take financial action.  America Saves Week is coordinated by America Saves and the American Savings Education Council, and also includes hundreds of partners who promote the event across the country.  The theme this year encapsulates three essential steps: “Set a Goal. Make a Plan. Save Automatically.”  It is hoped that with practice individuals can turn these three actions into healthy financial habits.

Last summer, a survey by Bankrate.com reported that 22% of Americans have insufficient savings and 24% have no savings at all.  The situation in Oklahoma, as discussed in a previous post, is not any better with nearly 44% of residents living without sufficient savings to cover a job loss or other crisis. However, storing up assets for a rainy day is only one reason to save.  Putting money aside for vacations, education, retirement and large purchases are also examples of wise financial planning.  By saving money for large purchases, families can avoid paying high finance rates.  Saving money to invest in education can lessen the burden of future student debt.  And saving for vacations and retirement will lead to a higher quality of life.

While the positive aspects of savings are easy to understand, as the statistics point out, a significant number of the Americans still fail to take steps to build savings into their budget. 

Read Full Post »

The 2013 Assets and Opportunity Scorecard for Oklahoma

CFED recently released their 2013 Assets and Opportunity Scorecard, subtitled Living on the Edge: Financial Security and Policies to Rebuild American Prosperity. It details how millions of Americans are still just getting by in the wake of the recession, and for Oklahoma the data highlights two or three real problem areas. However, before we take the plunge into a sea of disconcerting data, there are two bright spots. Oklahoma earned the second highest rank among the states in Early Childhood Education participation, an especially relevant figure since CAP Tulsa is an early childhood program provider. The state can also boast of a low unemployment rate, the fifth best in the country. However, the high marks do not carry over to other areas of the Scorecard.

The Assets and Opportunity Scorecard examines the financial security of Americans by assessing states based on 69 different outcome measures. The measures are grouped into five broader categories: 1) Financial Assets and Income, 2) Business and Jobs; 3) Housing and Homeownership; 4) Health Care; and 5) Education. Oklahoma’s general report card, shown below, reflects a mixture of good news and bad news:

• D – Financial Assets & Income
• B – Business & Jobs
• B – Housing & Homeownership
• D – Health Care
• C – Education

For more detail on all of Oklahoma’s results, you can click here. For now, to better understand what these grades mean, we will take a quick look at just two of Oklahoma’s problem areas: 1) Financial Assets and Income; and 2) Health Care.

Read Full Post »

Oklahomans and Payday Loans

Last month, the Pew Charitable Trusts released Who Borrows, Where they Borrow and Why, the first in their Payday Lending in America series.  Their research gives us insight into behaviors and policies behind the use of payday loans, which we know are a costly alternative to traditional banking. Among five groups identified as highly likely to take out  payday loans are individuals earning less than $40,000 annually.

In the report and interactive features, Oklahoma clearly stands out with the highest usage rate in the nation for payday loans, at 13%.  Part of the problem for Oklahoma, as pointed out in the Pew report and numerous news articles, are the permissive laws regulating payday lenders.  The so-called “hybrid states,” which restrict storefront payday loan operators to lower limits on fees, all have usage rates significantly lower than Oklahoma. However, the best results are from states with the most restrictive laws, and therefore no storefront payday loan operators, some of which come in as low as 1%. 

Read Full Post »

Household Net Worth: How Low-Income Families Weathered the Recession

Earlier this week the Federal Reserve (Fed) released the key findings of their most recent Survey of Consumer Finance.  The report, which occurs every three years, is a comprehensive survey of family finances, focusing on income, net worth, assets and liability.

When NPR’s Morning Edition, and other news sources, discussed the survey’s finding they focused on the hit to the middle class, however a deeper look at the report makes it clear the impact fell heavily on many low-income families. The survey reports the median net worth for the lowest quartile fell from $1,300 to zero during the period from 2007 to 2010.  The mean net worth for this same group also declined; falling “from negative $2,300 to negative $12,800.”

Still, the Fed’s report does show some lower income families managed to accumulate additional wealth during this period. 

Read Full Post »

Guest Post: SaveUSA: Giving Tulsans an incentive to save all year long

Karissa Coltman, SaveUSA Research Coordinator and Tax Program Operations Specialist, is our May guest blogger.

In a tough economy where so many hard working families are barely making ends meet, it might seem strange to ask “What are you saving for?”.  Yet this is exactly the question asked of and answered by 702 families this year in Tulsa who enrolled in SaveUSA.  They have been given the opportunity to have 50 cents of each dollar they saved matched in a special savings incentive research study.  This savings incentive opportunity was offered at tax time to income eligible families in four cities across the country, including Tulsa, Oklahoma.

The program which is also offered in New York City, Newark, NJ, and San Antonio, TX, just completed its second tax time enrollment period where tax payers with dependants making $50,000 or less and tax payers with no dependents making $25,000 or less were given an opportunity to set aside a portion of their refund (a minimum of $200) into a special savings account with an opportunity to receive a 50 cent deposit matching each dollar they saved at tax time, up to $500, on February 1,2013.

Community Action Project of Tulsa County is one of the research sites tracking two randomly assigned sets of participants, a program group that had the opportunity to open the matched savings account, and a regular filers group that did not.  Researchers hope to determine over a 3 to 5 year period whether there is any significant difference between the program group with an incentive to save part of their refund and the regular filers group. The study is in its second of three programmatic years, and will follow participants for a total of five years to determine long term impact of an incentive to save.

Read Full Post »

Guest Blog: The 2012 Assets and Opportunities Scorecard: Oklahoma Ranks 33rd for Financial Stability of Residents

As part of a new project at CAP, each month we will be featuring a guest blogger from across the agency.  Amy Amatucci, Senior Fund Development Specialist, is our sixth blogger.

Last month the Corporation for Enterprise Development (CFED) and OK Policy co-released the 2012 Assets and Opportunity Scorecard, which shows that more than one in four Oklahoma households are “asset poor.”  The report measures how residents in each of the 50 states and the District of Columbia rank in their ability to achieve financial security across 52 measures in five areas, including Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care, and Education.

Asset poverty is an estimate of financial security that takes into account all of a family’s assets (e.g., house, car, checking and/or savings account) which would be used in the case of lost income. However, this is a conservative way to measure assets, since a home or car would be difficult to liquidate in an emergency. A more accurate measure of a family’s financial resources is “liquid asset poverty” which excludes those assets which are not easily converted into cash. So while 15.6% of Oklahoman residents are income poor, 27% are asset poor and, even more disturbing, 48% of Oklahomans are liquid asset poor.

Read Full Post »

President Calls for Tax Savings Pioneered by CAP

I was pleased to see recent news that President Obama used his weekly address to announce new initiatives to promote savings. (White House, New York Times, New America Foundation). Among other ideas, he charged the IRS with implementing a checkbox on tax returns that would allow you to save a portion of your refund in savings bonds. Behavioral economics teaches us that making saving simpler and available at an opportune time will lead to more people saving. CAP worked with D2D Fund in a pilot to offer savings bonds through our free tax preparation program.

Additionally, the president is seeking new rules that would encourage employers to automatically enroll their workers in retirement plans unless employees opt out. As I’ve mentioned before, “opt out” rules increase take-up of positive behaviors dramatically without limiting one’s freedom or constraining their choices.

—

Image used under Creative Commons license from Flickr user alancleaver_2000.

Read Full Post »

Budget Blogging

President Obama released his budget for the 2010 fiscal year. The document is a kind of roadmap for the President’s initiatives over the next several years, but he’s left lots of room to Congress to fill in details.

Anyway, I thought I’d put up some topics of potential interest to our readers:

• Early Childhood – The President will build on the investments made in the stimulus bill (e.g. doubling Early Head Start slots), as well as expand early childhood eduation by encouraging state and local investment, promote coordination among state, local, and federal partners, and improve information about program options and quality. Additionally, the budget proposes to create the Nurse Home Visitation program to “provide home visits by trained nurses to first-time low-income mothers” and expectant mothers. This program is based on the evidence-based Nurse Family Partnership model, of which Oklahoma’s Children First is a part. the Read more here.
• Quality Jobs – The Labor Department budget supports transitional jobs and career pathway programs that help low-income Americans attain quality jobs that pay a living wage and offer opportunities for advancement. New workforce programs will continue to focus on “green jobs” that prepare workers for jobs in renewable energy and energy efficiency.
• Savings and Economic Stability – Building on the work of behavioral economists that demonstrates automatic enrollment in 401(k) programs dramatically boosts participation, the President seeks to create a system in which every employer would automatically enroll every worker into a retirement or pension program. If the employer didn’t offer such a plan themselves, the money would be deposited into an IRA account instead. Such programs have been shown to boost participation rates to as high as 90%. See this article in Harvard Magazine for more on automatic enrollment and behavioral economics. The budget also boosts the Saver’s Credit by providing a 50% match on the first $1,000 of savings for families earning less than $65,000.
• Promise Neighborhoods – The President includes his campaign commitment to supporting “Promise Neighborhoods,” which would be modeled after Harlem Children’s Zone and seek to improve “life outcomes in high-poverty areas” through intensive services and innovative educational strategies.
• Social Innovation – Finally, in a move sure designed to forever win the hears of people like Diama, the President proposes a Social Innovation Fund, which would support new approaches to major challenges and leverage private and philanthropic funding. The Stanford Social Innovation Review recently published an article suggesting four federal policies to promote social innovation and entrepreneurship.

Did you see anything else of interest to you?

Obviously all these well-laid plans must still ultimately be funded by Congress, so keep watching.

—

Image used under a Creative Commons license from flickr user Ma1974.

Read Full Post »

Microloans and Milestones

Last week the Tulsa World was one of many papers to publish a press release from Sam Daley-Harris, director of the Microcredit Summit Campaign, celebrating more than 106 million microloans in 2007.  In 1997 when a goal was set to reach 100 million of the world’s poorest families with microloans by 2005, it had to be a pretty heady aspiration. When it wasn’t quite reached in 2005, rather than simply push the date back they raised the bar with new goals for 2015: 1) 175 million of the world’s poorest women receive credit for self-employment and other financial and business services and 2) 100 million families rise above the US$1 a day threshold between 1990 and 2015.

By 2007, the original goal had been broken with 106 million microloans at over $15 billion and the work continues towards reaching 175 million women and families by 2015. It’s really a pretty exciting milestone considering fewer than 8 million very poor clients had a microloan in 1997.

The second goal has taken on its own identity as the “Movement Above a $1 a Day” project. Although clear data exists for the number of microloans issued, as well as payback rates – rates that are much higher than other markets – especially these days… few efforts have been made to track how many families have surpassed the $1 a day threshold. Tackling this is quite a task considering the number of microloans… spread around the world.  

Are you tracking clients long-term? Are you in the planning stages like us?  It would be great to hear your thoughts on what you are doing and thinking about on-blog or off.  How about microloan, entrepreneurship, or business co-op programs here in the U.S., Oklahoma or Tulsa?  I know there are a number of ways to get involved in global microloan programs from Tulsa, but I don’t know about any efforts  reaching Tulsa families. Do you? 

__

Image used under a Creative Commons license from flickr user lecercle.

Read Full Post »