IDAs in the States State Policy Trends for Individual Development Accounts (IDAs) 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 ``

IDAs in the States 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?

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

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

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

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

IDAs in the States  Legislation Strategy and Design  Funding Appropriations  Program Evaluation Four Significant State IDA Policy Trends  Program Administration

IDAs in the States 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.

IDAs in the States 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).

IDAs in the States 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.

IDAs in the States  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? 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?

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

IDAs in the States  Center for Social Development’s web page: - go to “State IDA Policy”  Corporation for Enterprise Development’s web site: - go to “State Pages” Selected State IDA Policy Resources  Edwards, Karen and Rist, Carl (2001). IDA State Policy Guide: Produced jointly by the Corporation for Enterprise Development and the Center for Social Development  Grinstein-Weiss, Schreiner, Clancy, Sherraden, (2001). Family Assets for Independence in Minnesota Research Report, Center for Social Development.  Shreiner, Clancy, Sherraden, (2002). Savings Performance in the American Dream Demonstration, Final Report, Center for Social Development.