Expanding the Savings Agenda RAISE Texas Summit Federal Reserve Bank of Dallas—Houston Branch October 30, 2012 Laura Rosen OpportunityTexas

Tax-Time Saver Story Bobby, a VITA client from Longview, decided to purchase a $500 Bond because he received a much larger return than he had anticipated. He plans to put this money aside for retirement and said this savings will be the beginning of his retirement savings.

Texas Tax-Time Efforts Increase Savings Filers that Saved on Tax Return ,728 Tax Returns Prepared93,206104,116114,019 Annual Percentage change12%10% Percent of VITA Filers that Saved on Tax Return 0.08%0.80%1.52% Percent of VITA Sites Where Clients Saved on Tax Return 15%31%36% Annual Percentage change107%16%

Three Largest Tax-Time Savings Projects in Texas OpportunityTexas Tax-Time Savings Project (2011 & 2012 tax seasons) San Antonio’s SaveUSA (2011 & 2012) United Way of Greater Houston’s Tax-Time Matched Savings Program (2012)

This Year, Texas Tax-Time Efforts Doubled # of Savers from total savers

OpportunityTexas Tax-Time Savings Project,  Incentives: $25 grocery store card (used in 2012) more popular than $50 Savings Bond (2011)  Immediate incentive can have effect 2-3 times greater on motivating savings initiation. 1  Return-on investment,” i.e. savings-to-incentives, increased from 3:1 to 10:1 from 2011 to Jones, Damon and Aprajit Mahajan, “Time-Inconsistency and Savings:Experimental Evidence from Low-Income Tax Filers,” CFS Research Brief, October 2011.

OpportunityTexas Tax-Time Savings Project, Outcome Number of Project VITA Filers who Saved Total Value of TSP incentives $9,695$14,240 Total TSP savings$29,950$143,300 Texas communities participating in the project 912 Texas VITA sites participating in the project 2451

Future of Tax-Time Savings – 2013 Tax Season and Beyond  Tax-Time Savings Project Partnership with Texas Credit Union Foundation  SaveUSA-like program with a few modifications $25-50 upfront incentive for initial deposit of between $ :1 match up to $100 on additional deposits  2014 – Sites have a menu of savings product options  Savings bonds  Savings accounts  Prepaid cards Exploring prepaid card as emergency and college savings product for VITA sites to promote in 2014 tax season Median % of filers direct depositing refund – 67%, range % Is prepaid something network is interested in?

College and Children’s Savings in Texas  Smarter Texans Saves, Amarillo ISD  Child Support for College (CS4C)  Save & Match/Texas Match the Promise Foundation - Platform to accept private (and public) $ to be used for 529 college savings matching grants

Match the Promise Scholarships Up to $500 match on tuition unit purchases Approximately150 awards Matching Scholarship $2,000 tuition grant 5 awards Promise Scholarship

Scholarship Application Timeline Sept. 1- December 31, 2012 Scholarship Application Period March 31, 2013 Scholarship Award Notification August 31, 2013 Scholarship recipients have until this date to meet contribution requirement

Scholarship Eligibility  Grades - Students in grades 6-9  Account Ownership – Must have a Texas Tuition Promise Fund account or enroll by 12/31/12  Tx Residency – Must be a Texas resident and a dependent for tax purposes of a Texas resident  Family Income - $75,000 or less  Savings Contribution - Minimum $100 contribution to Promise Fund account during the current sales period – September 1, 2012 – August 31, 2013  Career Essay – Submit word essay about the career in which the student is interested  Report Card or Transcript – Submit report card/transcript  Initial Pool – 797 account holders potentially eligible

College Savings Challenges & Next Steps 529 Plan Barriers  No retail presence  Only broker-dealers and certified investment advisors can provide enrollment assistance and advice Explore Alternatives & Policy Changes  Pursue additional policy change to enable 529 enrollment assistance  Other product alternatives, including prepaid card

Resources  November 5, 2-3pm  Registration link on OpportunityTexas website Registration link Dollar for Dollar Publication Webinar: Promoting Savings at Tax- Time

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