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Policy

The February 29, 2016 Peer Learning Session: Policy Academy

The session included a presentation on the Legislative Process put together by Roger Senserrich and Jim Horan from CAHS.  You can find it here.  Other presentations are linked to on the subpages of this Policy page.

 

Policy Academy:  Roger Senserrich, CAHS

Financial Education: Chris Lee, CT Jump$tart;

Removing Asset Limits:  Nancy Boone, CT Association for Basic Human Needs (CABHN) 

Retirement Savings:  John Erlingheuser, AARP

 

Seven CT Financial Institutions Earn Federal Designation to Assist Low Income Communities

myRA - My Retirement Account -

see announcement below or go to myra.gov for more information

 

THE WHITE HOUSE
 
 
Friends—
The U.S. Treasury yesterday officially launched its myRA program, a new simple, safe, no-fee retirement savings option for the millions of Americans without access to a retirement savings plan at work.
  
myRA makes saving simple, safe, and affordable for individuals to start saving, and is a good option for employers who do not offer a retirement savings plan to any portion of their staff, such as part-time, seasonal, or other employees.  With myRA, there are no costs to open an account, no fees, and no complicated investment options. Plus, people can choose how much to contribute – any amount that fits their budget – and they can access the money they put into their account if they need it. Also, at tax time, individuals can direct all or part of their federal tax refund to their myRA account.

To learn more or sign up for an account, visit myRA.gov.

 

Article on Asset Limits in Maine from the Washington Post

Wonkblog – From the Washington Post

Maine has found a stunning way to keep the poor in poverty

 

By Roberto A. Ferdman October 1 at 10:57 AM


(Robert F. Bukaty/AP Photo)

A savings account can be a powerful thing, especially for someone struggling to make ends meet. A little extra money on the side—even the tiniest of sums—can be a life-preserving cushion in the case of an unexpected injury, illness, or sudden unemployment. Building a financial base can also be a ticket out of poverty for families long relegated to economic hardship.

In Maine, though, the governor has fired up a debate about whether an individual can have a bit of money in the bank and still need governmental assistance. Starting as early as Nov. 1, Maine  is going to limit the financial assets of welfare recipients, effectively discouraging them from saving money.

The state will place a $5,000 cap on the savings and other assets of residents enrolled in the Supplement Nutrition Assistance Program (SNAP). Those whose bank accounts, secondary vehicles and homes, and other assets considered non-essential by the government, exceed the limit will no longer be eligible to participate in the food stamp program. An individual's primary home and vehicle won't count toward the limit.

The thinking, according to the Gov. Paul LePage's office, is simple: People shouldn't be allowed to take money from the government if they don't need to. "Most Mainers would agree that before someone receives taxpayer-funded welfare benefits, they should sell non-essential assets and use their savings,” LePage said in a written statement.

"What people see, what they're concerned about these days, is the abuse of the welfare system," added David Sorensen, who is the director of media relations and policy research for Maine's Department of Health and Human Services. "Well, it's an abuse to enroll in the system when you've got $5,000 in the bank."

But the unintended consequences of asset tests, like the one soon to be implemented in Maine, can be crippling, according to a growing pool of people who oppose such requirements. They argue that impoverished Americans, hoping to break from the cycle of poverty, are instead further bound by it. Many in Maine, struggling to make ends meet, will no longer put money aside, since doing so could jeopardize their ability to eat.

"There's a reason most states have moved away from asset tests," said Ezra Levin, who is the associate director of the Corporation for Enterprise Development, a nonprofit organization that fights poverty. Levin specializes in tax and asset-building policies, and is highly critical of LePage's plan. "The tests are counterproductive. They don't help people become self-sufficient. They actually do just the opposite."

Up until 1996, federal assistance programs were more preoccupied with providing indefinite income support than lifting families out of poverty. That year, President Clinton signed the 'Personal Responsibility and Work Opportunity Reconciliation Act,' which effectively flipped the goal around. But many quirks about the programs, including their reliance on asset tests, weren't reconsidered along with their central purpose.

Today, asset tests have become unpopular. Increasingly, they have been viewed as inhibitors to self-sufficiency—people need to build a safety net, in the form of savings or assets, before they can transition away from government aid.

Only a handful of states, including Michigan, Wyoming, and Virginia, still require that food stamp recipients pass such exams. The rest—36 in all—have chosen to drop them in recent years. Most recently, Pennsylvania shed the practice.

Levin is not alone in his disapproval of the Maine governor's plan. Amy Fried, who teaches political science at the University of Maine, penned an opinion piece for local newspaper Bangor Daily News on Tuesday, detailing how the policy will hurt low income students hoping to save for college. Rachel Black, who is a senior policy analyst for New America, a Washington, D.C.-based think tank, told the Portland Press Herald last month that the legislation is "antithetical to the idea of promoting self-sufficiency."

Perhaps the most poignant criticism comes from an investigation published in 2013 by the Deseret News. The piece chronicles the struggles of Melissa and Jimmy, a couple living on food stamps. They saved money to ween themselves off of the program, but were forced off too soon, thanks to asset limits. They had no choice but to spend some of their savings so they could afford to eat.

"It felt like a no-win situation," Melissa told the Deseret News. "We were being forced to choose between what is good for our family in the long term and what our kids need right now."

Sorensen acknowledges that the forthcoming legislation has met ample disapproval. He says the governor's office expects the criticism to grow louder as the mechanics are implemented. But he believes the governor's plan is more careful than many realize. 

"We're not penalizing anyone for having an IRA account or a 401K," he said. "We don't include personal items either, as some have people have suggested. The truth is that we're not actually being very strict about this."

Sorensen points to the fact that the USDA's default limit for bank accounts is $2,250, less than half the cap that will be implemented in Maine, as evidence of the program's leniency (though the default limit is neither binding nor adhered to by many states anymore). He also notes that it only applies to people without dependents (i.e. children).

But that's less generous than it sounds, says Levin. "Just because someone doesn't have officially registered dependents doesn't mean there aren't people who depend on them," he said.

Currently, a household of one can earn no more than $1,276 of gross income per month in order to receive food stamps. That same household can qualify for up to $194 dollars a month, or fewer than $7 dollars day, as part of SNAP, according to the Department of Agriculture. It doesn't take much math to figure out that neither that kind of income nor the daily food allowance affords any kind of lavish lifestyle.

"If someone manages to save money while earning next to nothing, why would we punish them for it?" Levin said. "Why would we discourage sound financial practices?"

The number of welfare recipients has shot up in Maine in recent years, largely thanks to the recession, but there is little evidence to suggest there is rampant abuse of the system. Studies have, in fact, suggested that the opposite is true. Only a tiny fraction of welfare recipients have enough in their bank accounts to fail the sort of asset test soon to be implemented in Maine.

Gov. LePage's policy is part of what Levin calls a long history of complicating the plight of the poor in America. The problem, he says, is that there's so much focus on people who don't deserve support that the people who do are made to suffer.

"Normally it's Republicans who support programs that create incentives for poor people to save," Levin says. "The crux of conservative thinking around welfare is that people shouldn't grow dependent, but this policy does exactly that."

LePage says asset tests are necessary if his state is going to rein in a system he believes has grown too large for its own good. "What the governor is doing is breaking the cycle of generational dependency," Sorensen said. "Our goal here in Maine is to change the culture, and change the expectations of the system."

Janet Smith, a grassroots activist in Maine who helps impoverished communities with financial capability and asset building, sees only irony in that statement. "One of the few ways to break out of generational poverty is to build assets, to save money," she says. "The governor is effectively closing that window."

Poverty involves a complex web of sacrifices that policymakers aren't always privy to, she says. To demonstrate that disconnect, Smith tells the story of a man she once worked with, who couldn't afford to live on a street that was regularly plowed during the winters—which are long in Maine. Each day, he was forced to use a beat-up snowmobile to get from his home to his car, an unconventional but necessary step. From there he drove to work. And at day's end, the process repeated itself, in opposite order.

"I'm not saying SNAP recipients need snowmobiles," Smith says. "What I'm saying is that we're focusing on the wrong things."

 

Roberto A. Ferdman is a reporter for Wonkblog covering food, economics, immigration and other things. He was previously a staff writer at Quartz.

 

 

Upcoming Member Organization Events

2016 IForums

to learn more contact the Partnership for Strong Communities

 

For more information - IForums flyer

 

 

Policy and Program News

 

The ALICE Report

Thirty-five percent of households in Connecticut are on a financial tightrope, including many hard-working families who are struggling to earn enough pay to make ends meet.

United Way of Connecticut's in-depth ALICE Report documents that 474,445  households across the state struggle to pay for life’s basic necessities. That number includes those living in poverty and an often-overlooked population -- ALICE, a United Way acronym for Asset Limited, Income Constrained, and Employed.

ALICE represents the men and women of all ages who get up each day to go to work, but who aren’t sure if they’ll be able to put dinner on the table each night. They are our childcare workers, our mechanics, our home health aides, security workers, store clerks and office assistants – all workers we cannot live without.

The United Way ALICE Report provides detailed analysis and data that explains why so many are struggling:

  • ALICE households have income above the Federal Poverty Level but below a basic cost-of-living threshold, described in the ALICE Report as the Household Survival Budget.
  • The annual household survival budget for a family of four in Connecticut is $64,689. For a single adult it is $21,944.
  • 474,445 or 35 percent of Connecticut households are in poverty (141,628) or fit the ALICE definition (332,817). 
  • 51 percent of jobs in Connecticut pay less than $20 per hour, which is $40,000 per year if full time.
  • In Greater New Haven, those living below the ALICE threshold, including those living below the federal poverty level, total 96,279 -- or about 39% of the total households.
  • Find out how one working mom in Branford gets by while living below the ALICE threshold.

ALICE’s financial hardships affect the overall social and economic viability of our communities too.  On the other hand, when ALICE households thrive, our communities and our economy are stronger.

Connecticut’s United Ways invite you to be a part of the expanding dialogue around the growing illusiveness of the American dream for many working families and the ways we can come together to address the challenge.  

 

 

From CTMirror.org  February 8, 2016 

Note: for the graphics use link below:

Commentary: CT must invest in children to overcome wide economic disparities

TrendCT The story in numbers

Derek Thomas    Fiscal Policy Fellow, CT Voices for Children

In Connecticut, not all boats are rising with the recovery’s tide. Though the state’s longstanding investments in high-quality public services, such as health care and education, contribute to overall levels of prosperity that compare well to the rest of the nation (the 10.8 percent poverty rate is third lowest and the child poverty rate of 14.4 percent is sixth lowest), the story is vastly different for many residents.

Connecticut is experiencing economic segregation that inhibits economic mobility – a detriment not only to the pursuit of equal opportunity for children in these communities, but to the state’s future workforce and economic success as well. In Connecticut, two children who live just a few miles away from one another often have widely divergent levels of opportunity. Educational resources and public services vary significantly. For many who struggle to make ends meet, economic segregation, high housing costs and a regressive property tax system are barriers. Strategic investments are needed in the health and education of children so that they are provided a fair shot, regardless of race or where they live.

We are fortunate that incomes in Connecticut are among the highest in the country, we have regained all the private sector jobs lost during the Great Recession, and the state’s labor force participation has rebounded faster than the nation. But poverty rates for black residents (20.8 percent) and Hispanic residents (26.5 percent) are three to four times that of white residents (6.1 percent), according to the most recent U.S. Census data. Among children, the disparity is even wider: 5.6 percent of white children live in poverty, and alarmingly, 30.5 percent of black children and 33.5 percent of Hispanic children live in poverty.

Our State of Working Connecticut report found that, despite a declining unemployment rate, the recovery is leaving many behind. Only one in two black residents over the age of 16 is employed, the lowest rate of employment on record. It also found that black and Hispanic workers make a median hourly wage that is, on average, $7.25 to $8 less than white workers (a gap that has widened since before the Great Recession).

Moreover, Connecticut’s income gap is the second largest in the nation just behind New York's – the average income of the highest 1 percent of earners is 51 times greater than the average income of everyone else. Among the nation’s 100 largest metropolitan areas, the Brookings Institution found that Bridgeport-Stamford-Norwalk is first in the nation and New Haven-Milford is ninth in terms of income inequality.

To better gauge the economic disparities described above, our interactive Mapping Disparities by Race and Place maps allow users to compare the U.S. Census American Community Survey’s most recent five-year estimates on income, poverty, educational attainment, and housing characteristics of all 169 Connecticut towns. Along with the indicators, each table lists the margin of error (MOE).

The Disparity by Place maps below reflect the differences across town lines. In addition, when populations are large enough for accurate measures, differential poverty rates are shown by race and ethnicity, as in the chart above.

CHILD POVERTY:

In Hartford, more than a third of all individuals and nearly half of the city’s children live in poverty. That is three times the state child poverty rate of 14.8 percent and 25 times more than some of the state’s wealthiest towns.

MEDIAN HOUSEHOLD INCOME:

Illustrating the stark economic divide between two towns less than 30 miles apart, median household income in Darien is $199,144, nearly five times the income of Bridgeport. Connecticut’s median household income is $69,899.

EDUCATIONAL ATTAINMENT:

Not surprisingly, the towns with high levels of poverty and higher rates of unemployment are the same as those falling behind in educational attainment. In New Haven, home to Yale University, the share of adults over 25 years of age that do not have a high-school diploma (18.8 percent) is double the sate rate of 9.9 percent.

DISPARITY BY RACE:

The towns with the widest racial and ethnic differences in poverty rates are also among the state’s largest cities. The five towns with the greatest differences between black and white poverty rates are: West Hartford, Middletown, Stamford, Waterbury, and Meriden. Even adjusting for large margins of error in towns such as West Harford, for example, black poverty rates range from 18.4 to 37.8 percent and white poverty rates range from 4 to 5.6 percent - enormous disparities exist.

Trend CT welcomes data-inspired stories from contributors. Check our guidelines for more information.

Methodology Notes:
To obtain large enough samples to analyze small populations across the state, 5-year estimates are collected over 60 months, from January 1, 2010 through December 31, 2014. Data should be referred to as 2010-2014 data, not by release date, i.e., 2015 data. Statewide indicators rely on 1-year estimates. Maps will include margins of error (MOE) when applicable. Margins of error define the range of values in which the sample statistics differ from the actual population with a level of confidence of 90 percent (confidence interval). For example, we can say with 90 percent accuracy that a poverty rate of 10 percent with a margin of error of +/-2 falls between a confidence range of 8 and 12 percent. Confidence ranges are presented in the Disparity by Race maps.

 

Partnership to Increase Financial Well-Being of LMI Americans

New York, NY, December 10, 2015 (CDFI Connect)—This week, MetLife Foundation and Duke University announced the launch of the CommonCents Lab to identify new ways to help Americans improve saving and spending habits. The CommonCents team will identify behavior-related challenges and design solutions aimed at low- to middle-income (LMI) Americans.

Dennis White, president and CEO, MetLife Foundation, said, “Most people know that saving for emergencies, college and their retirement is a great –– and they want to save. But, knowing what is helpful and taking action to achieve it are two different things.” White added, “We’re excited to provide funding and partner with the CommonCents Lab to help them identify new solutions that will get people to act.”

The Latino Community Credit Union—an Opportunity Finance Network Member—and the Duke Credit Union, Durham, North Carolina, have already committed to serve as research partners for the Lab next year. The Lab is also seeking three additional research partners. Applications for potential research partners will be accepted until Jan. 15, 2016.

Excerpts from the announcement:

  • The Lab will be managed by Duke’s Center for Advanced Hindsight, which is headed by Dan Ariely, the James B. Duke Professor of Psychology and Behavioral Economics at the university. It will partner directly with banks, credit unions, community colleges, employers and other nonprofit organizations to design, build and test solutions intended to help people make smarter choices with their finances.
  • CommonCents will focus on developing steps to help people build emergency, retirement and college savings, and make informed big purchase decisions and end-of-life financial arrangements.
  • MetLife Foundation funding will go toward developing two locations for the Lab; one in Durham, North Carolina, and another in San Francisco, California. The San Francisco lab will be focused on taking behavioral insights into product development. It will partner with financial technology startups on building solutions to key financial challenges. Startup partners currently include Digit and RetiremapHQ in California and Qapital in New York.

More here.

 

Nearly Half of Renters Put Too Much Toward Rent

Washington, DC, December 10, 2015 (CDFI Connect)—According to a report released by Harvard University’s Join Center for Housing Studies, a growing number of renters are spending more than 30 percent of their incomes on rent. The report, America’s Rental Housing: Expanding Options for Diverse and Growing Demand, shows more than 21 million households are burdened by rent, which is up from fewer than 15 million in 2001.

Despite the recent boom in construction projects across the US, there is still a need for more units, especially in affordable housing. “As much as we’ve seen an increase in rental supply, the increase in rental demand has been astounding,” said Chris Herbert, managing director of the Joint Center for Housing Studies.

Excerpts from the report:

  • Inflation-adjusted rents rose 7% from 2001 to 2014, while renter household incomes fell 9%, creating affordability challenges for many renters.
  • In mid-2015, 43 million families and individuals lived in rental housing, up nearly 9 million from 2005—the largest gain in any 10-year period on record. In contrast, the number of rental units expanded by just 8.2 million, most of that from the conversion of single-family homes into rentals.
  • Much of the new supply is aimed at higher-income renters. The median asking rent for new market-rate apartments hit $1,372 last year, a 26% increase from 2012, according to the report.

More here.

Read the full report here.

 

New Data Reveals High Unbanked, Underbanked Rates in Localities across America

By Kasey Wiedrich on 12/03/2015 @ 12:00 PM

Tags: News, Data and Research

According to the latest estimates published in CFED’s Assets & Opportunity Local Data Center, one in every nine households (11%) in American cities with 200,000 or more residents are unbanked, meaning that they have neither a checking account nor a savings account. This figure is significantly higher than the national average of 7.7% for all households—roughly one in every 14 households. Without a bank account to store and accrue earnings, unbanked households lack even the most basic tools through which to build a safety net for emergencies, and are effectively shut out of the economic mainstream. Additionally, one in every five (20%) households in major cities is underbanked, meaning that while they have access to a bank account, these households still use alternative financial services, like money orders or high-cost short-term loans, to manage their finances. Family Assets Count, a partnership between CFED and Citi Community Development, is putting national data in the hands of local decision-makers to advance solutions to this issue.

Through the Family Assets Count project, CFED used the latest biennial Survey of Unbanked Households from the FDIC to develop new estimates of household financial access for cities and counties across the country, updating data previously released in 2014. These estimates provide a glimpse into the factors that influence a household’s banked status, and illustrate the pervasiveness of—and need for comprehensive solutions to—the nation’s financial access crisis.

Of major U.S. cities, Newark, NJ, has the highest unbanked rate, with 23.3% of its households identified as unbanked. Detroit has the second-highest rate with 19.9% unbanked. These positions are reversed for underbanked rates: at 28.5%, Detroit has the highest underbanked rate of all American cities with a population greater than 200,000 people, while Newark has the second-highest rate, at 26.9%. Newark and Detroit also had the highest unbanked and underbanked rates, respectively, among major cities in 2011.

These findings point to the need for solutions that address the financial vulnerabilities facing households across the country, especially households of color, those with low incomes and those without postsecondary degrees.

To find out about how families are faring on these measures in your city, visit the Assets & Opportunity Local Data Center. For more on how some groups are using this data, visit FamilyAssetsCount.org.

 

To post information about your organization's asset building event - send it to:  CTAssetBuilding@gmail.com.

 

What is Asset Building?

The Collaborative's members do work in the following areas:

Entrepreneurship and Business Development

Financial Access and Products

Financial Education/Coaching/ Credit Counseling

Housing Assistance and Homeownership

Jobs and Workforce Development

Savings for Adults and Children, IDAs

Tax Assistance and Credits (VITA)

 

CFED_household_framework.png

 

 

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