State Asset-Based Policy: Findings from the State Asset Development Report Card Carl Rist Corporation for Enterprise Development State IDA Policy Conference November 6-8, 2002 St. Louis, MO

Purpose of the SADRC Assess asset poverty on a state-by-state basis. Measure the performance of states in helping families (especially low-income) to build assets. Propose a comprehensive, state asset-building policy agenda. Provide advocates with a powerful tool in support of state asset-building policies. Spur broader dialogue about wealth building as an effective anti-poverty strategy. Increase momentum toward effective, large-scale, asset- based public policies for all Americans.

Guiding Assumptions 1. Assets matter for poor families, both for economic and non- economic reasons. 2. Assets are distributed unequally, so asset poor families are not starting out even. 3. Ability of low-income savers to accumulate assets depends on: education and information, access, income, and incentives. 4. Current public policies reinforce asset inequality. 5. Effective anti-poverty policies must consider assets as well as income. 6. Comprehensive state asset-building policy must focus on:  asset development and  asset protection.

Key Definitions Assets = That which is saleable or has current market value (“fungible wealth”). Unit of measurement = individuals, families, households. Focus = outcomes or policies that have strong relationship to low-income families.

Structure Uses 68 socioeconomic and policy measures to compare and grade states on how assets are accumulated, distributed, and protected among their citizens. Two main indices:  Assets Outcomes, Assets Policy  Plus un-graded Tax Policy Accountability Index

Asset Outcomes Index How wealthy are residents and how well is wealth distributed? Do residents have opportunities and incentives to save? How well are assets protected?  Asset Outcomes Measures: financial assets (*first-ever state-level wealth data), homeownership, human, and business capital, bank access, and asset protection.

Assets Policy Index How well do state policies incent asset accumulation, protect assets of low-income families, facilitate access to financial mainstream? Has state policy removed barriers to asset accumulation?  Assets Policy Measures: financial asset building, affordable homeownership, human capital development, small business development, and bank access  Asset Protection Measures: wage protection, health insurance, and property protection

Tax Policy Accountability Index How transparent are the state’s tax-based subsidies? Who benefits from these subsidies?

Key Findings 1. In all but one state, asset poverty is greater than income poverty “Asset poor” = households or persons that lack access to wealth-type resources to meet basic needs for a limited period of time. In Report Card, defined as: “Percentage of families that lack sufficient net worth to survive for three months at the poverty line.”

Asset Poverty Ranks State% asset-poor households Iowa14.2% Minnesota15.7% New Mexico17.4% Ohio17.6% Pennsylvania18.0% States with Lowest Asset Poverty: State% asset-poor households: New York32.1% Arkansas31.0% Arizona28.8% California28.5% Wyoming26.9% States with Highest Asset Poverty:

Key Findings StateMean net worth (white to non- white) Tennessee2.03 California2.30 Missouri2.37 Colorado2.38 Florida2.57 States with Lowest Race Gap StateMean net worth (white to non-white) Virginia5.02 Pennsylvania4.90 South Carolina4.85 Washington4.61 Massachusetts4.54 States with Highest Race Gap 2. Asset poverty and inequality varies significantly by race…

Key Findings StateMean net worth (male-headed to female-headed) Washington1.20 Minnesota1.26 California1.26 Ohio1.26 Utah1.27 States with Lowest Gender Gap StateMean net worth (male-headed to female-headed) Louisiana2.21 Michigan1.97 Missouri1.97 Alabama1.84 Tennessee1.82 States with Highest Gender Gap 2. by gender…

Key Findings StateMean net worth Hawaii$164,318 Rhode Island$157,476 N. Hampshire$145,550 New Jersey$145,243 Iowa$142,327 States with Highest Net Worth StateMean net worth Oklahoma$74,431 ND, SD, WY$79,353 West Virginia$79,415 Mississippi$79,552 Arkansas$81,270 States with Lowest Net Worth 2. and by geography.

States with Highest and Lowest Net Worth

Key Findings 3. No state can yet claim the right set of policies at sufficient scope and scale to eliminate asset poverty. Of top 10 states in Assets Policy:  6 require state chartered banks to provide low-cost transaction accounts to help families in access the mainstream financial system  8 enacted a state Earned Income Tax Credit to help families keep more of their income and save  9 enacted some form of Individual Development Accounts program to help low-income families save, learn, and accumulate assets  7 provide funding to help low-income entrepreneurs start microenterprises  7 support Community Development Financial Institutions in making loans and providing services in low-income communities  8 prepare, and make public, tax expenditure reports on the use of tax subsidies

Assets Outcomes — Grades

Assets Policy — Grades

Honor Roll States

Regional Findings

Regional findings:  Midwest highest grades in Asset Outcomes; half of states with A or B for Asset Policy.  Northeast highest grades in Asset Policy.  Pacific Coast strong in both Asset Outcomes and Asset Policy.  South worst grades on Asset Outcomes; 60% with a D or F in Asset Policy.  Mountain West worst grades in Asset Policy.

Recommendations Government at all levels should pay attention to assets—not just incomes—of poor people Policymakers need to act now to improve public policies on asset accumulation and protection for poor people:  Large-scale IDA initiatives >20,000 now, 65 million could benefit  Asset Protection measures — health coverage, unemployment insurance, anti-predatory lending States must improve transparency of budgets to enable more complete analysis of asset- development policy

More Information State Assets Development Report Card funded by the Ford, Annie E. Casey, Charles Stewart Mott, and Rockefeller Foundations, and the Center for Study of Social Policy Online at Carl Rist Corporation for Enterprise Development 123 W. Main St., 3 rd Floor, Durham, NC Phone: Wesbite: