State Policy Trends for Individual Development Accounts (IDAs) 1993-2002 States and IDA Policy: Knowledge Building, Net

1. `` State Policy Trends for Individual Development Accounts (IDAs) 1993-2002 States and IDA Policy: Knowledge Building, Networking and Creating New Opportunities Conference November 2002 Karen Edwards Center for Social Development Washington University, St. Louis, MO http://gwbweb.wustl.edu/csd/statepolicy

2. Six Key Policy Development Questions for • Individual Development Accounts • What is the purpose of developing IDA policy? • Who will the new policy serve and why is it necessary? • Are asset-building policies already in place that could accommodate IDAs? • If IDA policy is instituted, how will it be implemented? • What is the projected cost of implementing IDA policy and do potential • funding sources exist? • Do projected benefits of implementing IDA policy justify projected costs?

3. State IDA Policy Picture in 1993 • 1 state had legislated IDAs (Iowa) • No other states had included IDAs in welfare reform plans • Only 2 states (besides Iowa) had proposed IDA legislation • Only 3 known (unrelated) community-based IDA programs existed: located in Indiana, Montana, and Mississippi • No federal IDA legislation had passed (1 bill was written, but not yet proposed – this bill eventually developed into AFIA)

4. State IDA Policy Picture in 2002 (only 9 years later) • 34 states have legislated IDAs (plus D.C. and Puerto Rico) Majority of legislation passed between 1997 and 2000 • 8 states have created IDA programs by administrative rule • IDAs included in federal welfare reform law of 1996: • 30+ states included IDAs in welfare (TANF) plans • 4 states are positioned to propose or pass IDA legislation • 500 + community-based IDA programs in 49 states • Federal IDA legislation passed with funding (AFIA – 1998) • SWFA proposed – federal tax credit legislation for IDAs (2002)

5. Typical State IDA Program Funding Streams • State general funds (12) • State tax credits (10) • Temporary Assistance for Needy Families (TANF) (17) • Community Development Block Grant (CDBG) (6+) • CSBG, FHLB and other public funds (10+) • Assets for Independence Act Funds (AFIA) (18+) • Office of Refugee Resettlement Grant Funds (ORR) (9+) • Private funds (Foundations, Corporations, FIs, Individuals)

6. Typical State IDA Policy and Related Program Issues • Policy intent and program design (limitations and restrictions) • Capturing and retaining funding sources • Creating an IDA program from policy (who does it and how?) • Leveraging state tax credits (turning straw into gold) • Program administration (who does it and how?) • Program delivery (fiduciaries, marketing, and costs) • Limited technical assistance and related reporting requirements • Support for networking, coalition-building and collaborations

7. Four Significant State IDA Policy Trends • Legislation Strategy and Design • Funding Appropriations • Program Administration • Program Evaluation

8. Common Elements of IDA Programs Established Through State Policy: • Designated as a “Demonstration” or “Pilot” program (at least to start). • A community-based program delivery structure – often includes specific • qualifications or requirements for delivery organizations. • Program delivery organizations are most often designated as non-profit • organizations: 501(c)3s – tribal governments are often not mentioned. • Targets specific geographical areas and/or populations to be served. • Stipulates qualifications for account holders such as household income • (most often a percentage of the federal poverty level) and net worth. • Accounts holders must be adults, with few exceptions.

9. Common Elements Continued: • Account structure is time-limited, savings capped, and has a capped • match rate (designed to be short-term). • The total number of possible participants is restricted – either by stated • numbers or by limited funding. • Pre-determined choices of asset goals are established: typically limited to • homeownership, small business capitalization, and college education. • Some financial education is required to be offered to IDA holders. • Program administration is most often shared between the state and a • non-profit organization in contract with the state (with program • implementation responsibilities falling mostly to the non-profit).

10. Common Elements Continued: • Program evaluation may or may not be required; but some form of • reporting to the state is required. • Funding is typically appropriated from TANF dollars, state general • funds, and/or state tax credits – in that order of occurrence. • Little or no funding is appropriated for program development, program • operations, dedicated program staff, program evaluation, or networking. • Allows, encourages, and sometimes requires that funding be raised • from non-state sources. • Program design must sometimes be in agreement with IDA requirements • of PWRORA and/or AFIA IDAs.

11. A State/Federal Policy Nexus • Federal policies relating to similar or identical initiatives vary in design and execution from state to state. What can we learn from this phenomenon? How could IDAs fit in? • States often play the role of “incubators,” for new and innovative policies. How do we best use the lessons learned about IDAs to inform federal policy makers? • State and federal policies relating to similar or identical initiatives may develop simultaneously, but are not necessarily complimentary. How can this policy disconnectedness be overcome?

12. Back to the Future • What asset-building policies currently exist (state and federal)? • What are these asset-building policies designed to do? • Who do existing asset-building policies target? • Who takes advantage of existing asset-building policies? • How are existing policies tested and implemented? Do IDAs fit in?

13. Selected State IDA Policy Resources • Center for Social Development’s web page: http://gwbweb.wustl.edu/users/csd - go to “State IDA Policy” • Corporation for Enterprise Development’s web site: http://www.idanetwork.org - go to “State Pages” • Edwards, Karen and Rist, Carl (2001). IDA State Policy Guide: Produced jointly by the Corporation for Enterprise Development and the Center for Social Development • Shreiner, Clancy, Sherraden, (2002). Savings Performance in the American Dream Demonstration, Final Report, Center for Social Development. • Grinstein-Weiss, Schreiner, Clancy, Sherraden, (2001). Family Assets for Independence in Minnesota Research Report, Center for Social Development.