IDAs and Welfare Programs Most common source of state IDA funding is Temporary Assistance for Needy Families (TANF)

Why TANF $ for IDAs makes sense l Asset building through IDAs with an “earned income” requirement promotes work and self-sufficiency, key goals of most TANF programs l Financial education can count as a TANF “work activity” l IDAs for homes, business, education, cars support work efforts

Authority for TANF $ for IDAs l State legislation/appropriation l State administrative rules l State budget process (In Illinois, TANF $ for the FLLIP IDA program came from “lapsed” TANF funds that would have reverted to general revenue if unused)

Types of TANF $ for IDAs l Matching funds l Administration l Evaluation l Some or all of the above

Advantages of state $ for IDAs State-funded programs have more flexibility in terms of allowable asset goals, match rate, program rules

Disadvantage of TANF $ for IDAs l Most states limit participation in TANF-funded IDA programs to persons that are TANF eligible or have income up to 200% of federal poverty guidelines l In areas with high cost of living, setting eligibility at 80% of area household median income may be a more realistic standard

Persuading states to use TANF $ for IDAs l Bring clout to the table l Emphasize public/private partnership l Be sensitive to political considerations in deciding where to conduct programs (e.g., not just in big cities)

Persuading states to use TANF $ for IDAs Illinois example: Governor’s Commission on the Status of Women Foundations Financial institutions Federal regulators Broad coalition of advocates Non-Chicago sites selected

Persuading states to use TANF $ for IDAs Illinois example: Persistence pays off -- Informal conversations, formal meetings with Department personnel, supporting research, and 6 months of phone calls, , and letters of support resulted in funding of $500,000

Persuading states to use TANF $ for IDAs Other potential allies/clout: State Treasurer Other state elected officials Mayors EITC/tax counseling programs Employers Job training contractors Universities and community colleges Community action agencies

Use of administrative rule to build on state law Illinois example: Department’s legal counsel drafted an amendment to the existing administrative rule to expand allowable assets for IDAs (so as to include cars and home repair) without amending state law that listed only homes, business, and postsecondary education or training

IDAs and Welfare Programs For more information on IDAs and state welfare programs, see CSD’s October 2002 report “IDA Policy in the States” and CFED’s State Asset Development Report Card

IDAs and postsecondary education Most IDA programs include postsecondary education or training as an allowable asset goal, but it is underutilized compared to homes and business capitalization

IDAs and postsecondary education l Some IDA programs focus primarily on postsecondary education as the asset goal l The LIFETIME program in the Bay Area focuses on getting women on welfare into postsecondary education

IDAs and postsecondary education: LIFETIME program l Eligible participants: EITC eligible current or recent CalWORKS recipients with work in 6 of last 8 mos. or completed semester Savings up to $1,000 per year matched 2:1 up to 2 years for college, professional certificate or license, or vocational/technical training l Funding: TANF, AFIA, United Way

IDAs and postsecondary education: LIFETIME program l Key components: Close cooperation with educational institutions re financial aid and work-study (exempt income) Fees waived at Community colleges (BOGG) Classes, work-study, study-time (some counties) count as a TANF “Work activity” Mandatory monthly “Investors meetings” / Peer support after completing financial education One-on-one counseling helps participants identify coursework geared to high quality jobs Self-advocacy training re benefits, disputes

IDAs and postsecondary education: LIFETIME program For more information about the LIFETIME IDA program, contact: Diana Spatz, Executive Director or Anita Rees, Program Director LIFETIME, 132 East 12th Street Oakland, CA Or

IDAs and other training programs l Consider: Adult Basic Education GED Family literacy English as a Second Language (ESL) Union apprenticeship Financial/consumer education in schools (mandated in some states)