No-Fee Bank Accounts on NPR

Austin Jenkins, a NPR reporter, has done numerous stories on the JP Morgan Chase and DSHS contract on the administration of the EBT card. This morning, he interviewed me on NPR to discuss the idea of requiring the contracting financial institution to provide no-fee bank accounts to welfare recipients to allow them an opportunity to build personal safety nets, and avoid a costly $.85 per-transaction fee. I wrote a report that makes the case for no-fee bank accounts that you can read here: Innovations in Welfare Policy: Building a Personal Safety Net with a Bank Account

For the NPR Story, you can listen to it here: ATM Fee For Wash. Welfare Recipients Could Be A Thing Of The Past

Living Cities

A little background on an exciting project called Living Cities that Burst for Prosperity is a partner – the following write-up is from our Associate Director, Diana Dollar, who was in Washington DC last week to learn more about the vision and purpose of this national program.

The City of Seattle has invited Burst for Prosperity to participate in a national Living Cities pilot project that focuses on incorporating financial empowerment strategies into the city’s Homeless Prevention Program (HPP). Seattle is one of two cities selected (the other is Louisville, Kentucky) by Living Cities to explore innovative approaches to expanding savings opportunities in low-income communities. Living Cities is an innovative collaborative of 22 of the world’s largest foundations and financial institutions that are helping shape federal funding programs, redirecting public and private resources, and helping communities to build homes, stores, schools, community facilities and more.

Burst recently attended a Living Cities meeting in Washington DC to learn the vision and purpose of this national program. Living Cities revealed their dedication to promote asset building nationally, and to transform service delivery systems. During this convening, they set in place methods for the cities of Seattle and Louisville to address greater systems change in both programs and services to achieve a measure of scale in transforming the entire city, region, state, or neighborhoods.

To advance this work, the City of Seattle Human Services Department will conduct a $15+ million Request for Investment process for a broad array of Homeless Intervention and Housing Stability strategies to be implemented in 2013, including shelters, day programs, transitional housing, and rapid re-housing. These services will target homeless families including children, youth and young adults, single men, and the chronically homeless. Strategies found to be effective in implementing financial empowerment services in HPP will be adapted and incorporated into the broader service delivery system for homeless people.

As a member of the City of Seattle’s Living Cities steering committee, Burst will provide all HPP case managers with the Financial Coaching for Prosperity training, and, shall complete an evaluation of the financial coaching so that the team can explore further the impact of financial coaching as a means of transforming service delivery to families at-risk of homelessness and to see the successful development of innovative approaches to transforming municipal systems that serve low-income communities.
Pretty exciting, right? If you want to learn more, you can contact Diana at dianad@chsw-wa.org.

hmmm…”welfare reform worked”

‘Welfare Reform Worked.’ It is a very rare sighting to see “welfare reform” and “worked” together in an headline but there it was, in the LA Times, an op-ed written by Ron Haskins of the Brookings Institution and Peter H. Schuck from the Yale Law School.

The op-ed claims, with the backing of “sucessful” data of never-married mothers, “the best way to reduce poverty and inequality: by encouraging individuals to work more and by supplementing their earnings with tax credits, child-care subsidies and other benefits for low-income working parents.” While work rates amongst never-married mothers is up, the poverty rate is relatively unchanged — before welfare reform, it hovered 60% and now, it is about 50%. Furthermore, an accurate poverty level of living in today’s world, would greatly increase this already high poverty level amongst this population.

It is true, the reform to incentivize work has been positive in many aspects for the most vulnerable but the jobs most are entering do not allow the opportunity to escape poverty. This has resulted in a consistent sized caseload, and a high returning population to the safety net. Furthermore, the overall poverty rate has been consistent since even before welfare reform.

The Op-Ed also claims that “both Congress and the states resisted the temptation to cut and run once the recipients’ situations improved; the governments largely maintained their efforts over time, mindful of how fragile these gains could be.” But the numbers do not back this claim — the welfare cash grant in Washington State is worth less than almost 40% than the 1996 grant level, and most work supports have dramatically decreased eligibility levels.

There needs to be new welfare reform instead of the current yearly reauthorization of the current law — the 1996 reform focused on helping families attain any job, hopefully the next reform focuses on the placement, retention, and advancement of careers towards escaping poverty permanently.

For now, as the numbers show, we should probably avoid putting “worked” and “welfare reform” together.

RISE Act

As Congress has continued to avoid the discussion of re-authorizing TANF and improving the failed program in the last few years, one Congresswoman has finally proposed a reform idea. Congresswoman Gwen Moore (a former welfare recipient) has introduced legislation to reform the system in an attempt to create a program that actually helps participants leave poverty permanantly. The proposal needs works but it is a good starting point. It is called the Rewriting to Improve and Secure an Exit Out of Poverty Act (RISE). The following is a bulleted list of key provisions, and some comparisons to the current TANF program.

KEY PROVISIONS (AND TANF COMPARISONS)
• Index the block grant for both inflation and child population growth in the state since 1996, versus a set block grant that has not fulfilled the needs of states.

• Replace the current contingency fund with one based on the Emergency Contingency Fund enacted in the Recovery Act which helped to create over 260,000 jobs — see stimulus post from a few weeks ago.

• FY2012 appropriation of $2.5 billion, versus the FY2012 appropriation for TANF of $612 million. This increased appropriation will definitely impact the viability of its passage.

• Lift all time limits on work participation requirements and remove the cap on educational activities versus stacked activities and a current 30% state cap on education. This is good for education and soft skills training but not having a time limit on job search activities may further inflate referrals to job search and participants stagnating in an activity that usually leads partipants to lower-wage jobs.

• Guarantee child care for TANF work-eligible recipients, up to 25O% FPL, and within 24 months of leaving the system – this will greatly impact the post-TANF population to remain on a steady career pathway.

• Pass through all child support collected directly to the family versus paying back TANF obligations in the past.

• Eliminate full family sanctions and lifetime sanctions and establish a Pre and Post-Sanction Review Process requiring states to continuously work with families that are subject to sanction or have already been sanctioned, versus the hard-limited 60 month sanction (currently, there is a proposal to reduce the time limit to 48 months in the Washington State Legislature).

• Stop the clock during a recession against sanctioned times versus counting towards limit during times with high unemployment (greater than 6.5%)

• Stipulate that the number one goal of TANF is child poverty reduction through outcomes versus the number one goal of attaining only a job.

• Fund research and evaluation grants at $15 million per year to improve the program.

• Require states to calculate and place in their state plans a dollar amount representing a family budget sufficient to meet basic needs. States that fail to provide assistance needed to meet basic needs would have their block grant reduced by 5% versus states being allowed to continually reduce the grant.

• Provide financial or other rewards to the states for high rates of employment and high rates of employment at good wages for those who participated in the program versus the current reward only if the state is getting more participants to work or in a work activity.

Hey Stimulus, You Did? Well, Thank You!

The overly maligned stimulus by President Obama in 2009 has been criticized for swelling the already large deficit in the US budget. But in terms of saving more from falling into poverty, it should be lauded. The effects of the stimulus are beginning to be shown, and let us thank the Center on Budget and Policy Priorities (CBPP) for the data. The Earned Income Tax Credit (EITC), the most succesful asset-building policy solution to date, was expanded in the Reovery Act and saved the poverty rate from increasing an additional 3 percent (14.9 to 17.8) — more specifically, 10 million less people are in poverty thanks to the EITC expansion. Just in 2010. 6 million were saved from poverty (thank you EITC!) — and the food stamp expansion saved an additional 4 million Americans falling into poverty.

Even more astounding, without the whole safety net, the poverty rate in 2010 would have been almost 29 percent versus the 15 percent in 2010. Obviously, 15 percent is nothing to pat ourselves on the back about, but 29 percent! Imagine, if the safety net did not have all the holes it currently has in it?

Unfortunately, more holes are being proposed for an already damaged safety net. Food stamps are phasing down, tax credits for the working poor are expiring, and states are at almost little choice but to cut childcare, unemployment, and cash assistance to bare levels.

Even with it much maligned, we could use another stimulus as its results continue to prove its success. For now, we’ll just say, “thank you.”

Legislative Session…it’s back!

As many of you know, the legislative session began three weeks ago and it’s off to a fast start. While the budget deficit is the central focus of the legislature, other things are still getting done. Our organization, Burst for Prosperity is focusing on a few things as priorities:

LIFELONG LEARNING ACCOUNTS
Lifelong Learning Accounts, or LiLAs, are employer-matched, portable, employee-owned accounts used to finance education and training. In partnership with the Workforce Training and Education Coordinating Board, Senator Kilmer is drafting a bill to address the challenge of providing low-skilled workers with postsecondary education and training through a lifelong learning program that will develop partnerships and mechanisms with workers, employers, education and training institutions, state and local government, and financial institutions.

EITC OUTREACH AND LOCAL ASSET BUILDING COALITIONS
Washington State has invested in the creation of an innovative asset building infrastructure through the support of local asset building coalitions. This infrastructure is unique in the nation and, like all good investments, has generated high returns to the State. - Between the 2006 and 2007 tax years, local asset building coalition campaigns resulted in an 18% increase in tax refunds at free tax preparation sites, bringing an additional $5 million in federal dollars into the State. An estimated $80 million of Earned Income Tax Credit (EITC), a refundable federal income tax credit for low to moderate-income people, goes unclaimed each year in Washington State.

The 2011 State budget was cut 41 percent to $260,000 in FY 2011 and $259,000 in FY 2012 in support of local asset building coalitions’ work, including EITC outreach campaigns. This session, we hope the Legislature will preserve funding for local asset building coalitions to continue conducting EITC outreach campaigns and other asset building activities.

TANF BANK ACCOUNTS
As mentioned in an earlier blog post, we continue to work on this issue. Our position remains the same — we believe the current EBT contracting financial institution (JP Morgan Chase) should provide a no-fee bank account at their institution for each parent at the time of enrollment into the WorkFirst program for the duration of his or her stay in the program. The bank account will be inaccessible until the participant completes the activity of financial education, as approved by DSHS. This recommendation will potentially need the drafting of legislation to require the establishment of a no-fee checking account as a requirement for the next request for proposals (RFP) that will be sent by the state agency (DSHS) to financial institutions to administer the EBT program in 2014. We will be releasing a white paper that provides further detail on this issue in the next few weeks.

WorkFirst Piggy Banks

The government safety net for American families continues to see a hole get larger. This recession has beat down the safety net, and more continues to be proposed. It is past due time that the safety net begins to help families build their personal safety net before there is nothing left of the programs to assist the most vulnerable. Our white paper on WorkFirst introduced an idea to help participants in WorkFirst to build personal safety nets through a bank account. We have begun to do more research on this issue, and will release a white paper detailing more background information and policy options in February. But this blog post will introduce our policy hopes and direction.

The most important support of the TANF WorkFirst program is the cash assistance distributed to families per month. The assistance, as of January 2012, is $478 per month for a family of three (not including a 2% reduction proposed in the latest budget proposals). If a parent is eligible to receive cash assistance, he or she will have the option to be issued an Electronic Benefits Transfer (EBT) card that may be used as a debit card, or the option of having the benefits deposited by Electronic Funds Transfer (EFT) into a checking or savings account.

The EBT card is administered in partnership with DSHS and JP Morgan Chase. This year alone, the state has paid Chase almost $10 million to administer the program. In addition, JP Morgan Chase has collected more than $100,000 a month from an 85-cent per transaction ATM fee from WorkFirst parents in the state. The 85-cent transaction fee is currently the highest in the nation, while multiple states have no transaction fees. In addition to the Chase transaction fees, according to a news report, surcharges at non-Chase cash machines totaled more than $890,000 in the first four months of 2011. The only way for participants to avoid the transaction fee is to have cash benefits deposited directly into a new or current personal bank account. Unfortunately, only about 12 percent of participants take advantage of direct deposit, further indicating the need to improve access to mainstream banking. Research has shown the main barrier and primary reason for lower-income families being unbanked is not having the required amount of money that banks require to open and maintain an account.

Our policy hope is that the current contracting financial institution shall be required to provide a no-fee bank account at their institution for each parent at the time of enrollment into the WorkFirst program for the duration of his or her stay in the program. The bank account will be inaccessible until the participant completes the activity of financial education, as approved by DSHS. This recommendation will potentially need the drafting of legislation to require the establishment of a no-fee checking account as a requirement for the next request for proposals (RFP) that will be sent by the state agency (DSHS) to financial institutions to administer the EBT program in 2014.

WorkFirst participants deserve the opportunity to have a no-fee piggy bank to build personal safety nets to fall back on, versus a government safety net that has many families falling right through.

Presenting Asset Building to a few Huskies

From what appears to be my speaking tour of negativity — Julie Watts, an instructor at the School of Social Work and recently added staff member for Burst for Prosperity, convened over 150 University of Washington students and faculty to hear from a panel about the impacts of the recession on low and moderate-income families. I was a part of this panel speaking on how asset building public policy should be a part of our economic recovery. In addition to myself, Kim Justice from the WA Budget and Policy Center spoke on the budget and its impact on the most vulnerable and Tony Lee spoke on the impacts on TANF and other public assistance systems.

I tried to be more upbeat than in my last speaking engagement but the data did not allow me to do so — damn you data…and facts! Fortunately, I came away really impressed by the feedback and knowlege of the students at the UW. I know as a student, I definitely wasn’t there…maybe that says more about me. But I thought that I should add some of the talking points and data since it is, what I believe to be, very useful information.

The Asset Building Effect:

Generates Upward Economic Mobility
– 71% of children of low-income parents who saved their liquid assets at high rates moved up into higher income brackets, as they aged.

Increases Educational Access, thus Household Income
– <20% of children with a college education remained in the bottom income quartile compared to <50% of children without a college education.

Improves Future Outlooks for Children
– 75% of young adults who have savings designated for school are ‘on course’ to attend college, compared to 45 percent without school savings.

Policy Options for Asset Building
- WABC Funding: $438k funds 21 different local asset building coalitions that provide direct asset building services from financial education and coaching, EITC outreach, tax prep, getting more of the population banked, etc.

- Child Savings Accounts: Possible legislation calling for a taskforce explore options for designing a Washington State Child Savings Account Program.

- College Savings Incentives: Introduce legislation to eliminate or reduce fees enhance deposits, or provide matching funds and/or discounts for low income families applying for GET Accounts (90% of current GET participants are families with incomes over $50k. < 10% of participants make less than 50k.)

- TANF Bank Accounts: Propose legislation that would provide TANF recipients with automatic access to no-fee bank accounts and matching funds to promote personal savings while on welfare.

And…Go Dawgs!

Cheap Public Policy?!

Developing solutions to help families attain financial security is one of the core missions of our work at Burst for Prosperity. As we look for policy solutions to help attain that goal, most policy options are difficult to pass due to the budgetary contraints of state budgets.

For instance, the Prosperity Blueprint we developed to promote asset building policy has options ranging from no or low-cost to large fiscal impact policies. Last session, three of the no fiscal impact options passed with flying colors — elimininating private transfer fees, prize-linked savings and foreclosure protection; whereas, the fiscal impact options of removing asset limits or college savings incentives did not even get a committee hearing.

Fortunately, CFED (national asset building think tank) recently produced a report called “The Stroke of a Pen” which outlines more than 20 low-cost policy options that will help families increase financial security and opportunity in these difficult times. These options range from integrating financial education in schools and public assistance systems, allowing local government entities to deposit funds in local credit unions, and requiring homeownership counseling.

The ideas are there…now, only if lawmakers will listen…

70+ SKC Community Leaders Engaged in Dialogue = Good.

Last week, on November 16th, the South King County Human Services Council and the United Way coalesced over 70 community members that included electeds, fire chiefs, nonprofit agency executives, and other community leaders to begin a dialogue regarding human services, state budget cuts and its impact, and what can be done collectively for communities in need.

I spoke at the event on the impact of budget cuts on economic services for the most vulnerable. I concentrated on a theme that the WA State Budget and Policy Center has asked throughout their work of “is this the kind of state we want to live in?” The premise of that question is the impact of budgetary decisions on our communities, and how they are changing the quality of life in Washington State. I focused on that theme within the economic services provided by the state, and the numbers were difficult to digest for the audience.

Text from the speech:

Are we okay with an increasing child poverty rate? Right now, one in 12 children in our Head Start and other preschool programs is homeless. And our total child poverty rate is over 20%.

Are we okay with the majority of families on an economic fault line? 900,000 people in our state are in poverty, making less than $23k for a family of four – and unfortunately, 45% of those families are making less than $12k a year. Imagine if the poverty rate was not a figure created in 1963 primarily around food needs, and it was a true poverty threshold like the self-sufficiency standard that claims that a family of three needs $56k a year just to cover basic needs in King County. That number would be even scarier. Another unfortunate statistic shows that 21% of families in our state are in asset poverty and almost 20% remain unbanked. By asset poverty, I mean a family that has enough assets to stay afloat if they lose their income for three months.

Are we okay with inaccessible higher education opportunities with tuition rising at unprecented levels? Are we okay with reducing funding by 50% that helps equalize school funding across wealthier and poorer districts even when income inequality is at its largest gap ever?

Are we okay with rising food insecurities, and addressing it by eliminating the basic food state assistance plan for 13,000 individuals? Or eliminating health care for 35,000 more working people?

At a time of a 9% unemployment rate – even higher in communities of color, immigrant and refugee families, youth and our veterans – populations highly concentrated in our SKC community – we have allowed drastic cuts to work supports and employment services totaling $485 million in the last two biennium’s – and now more cuts have been proposed by our Governor to address the $2 billion shortfall.

That was some of the text from my speech (more scary text of that speech is available via email) — as you can tell, I basically required everyone to get a prescription for depression and anxiety after I was finished. But the meeting still ended up positive — there were great leaders in the room that were energized to make positive change, partner with non-traditional stakeholders, and continue the work already being done in the local community. This meeting was the first of two conversations focused on initiating cross-sector response for addressing Health & Human Services in South King County. Tentatively, the larger second event is planned for early 2012. As we hope you will on this blog, we also hope you will engage and take part in these future conversations and events.

You can find more about the South King County Human Services Council here: http://skchs.org