Policy Focus in 2006-2008
APIC will continue to build the conversation on asset-building across the state, sharing best practices, highlighting local success stories, and bringing new voices to the table. To maximize our impact over the next two years, the APIC Steering Committee decided to focus on the following asset-building strategies.
APIC will play a lead role in moving a homeownership agenda for California:
Homeownership
California ranks 48th out of 51 states (including the District of Columbia) in homeownership rates. And for those lucky enough to own, a recent study says that California homeowners are the nation's most financially stressed. When ranked by the share of income spent on a monthly mortgage, our state captured the top 11 spots (and 28 of the top 50). Too many of our state's residents are missing out on the benefits of homeownership, which asset appreciation, increased social and civic engagement, higher rates of college attendance in children, and increased marital stability.
APIC will focus on identifying promising policies and strategies to promote homeownership in California with the goal of driving legislative and adminstrative changes in Sacramento. We will investigate a full spectrum of homeownership options available to low- and moderate-income families, with a focus on non-traditional strategies such as community land trusts, limited equity coops, manufactured homes, and Self-Help housing. Additionally, given the widespread use of Adjustable Rate Mortgage products and 0%-down loan, coupled with the recent rise in interest rates, APIC will also work closely with emerging “homeownership preservation” efforts.
APIC will play a supporting role in the following asset policy efforts underway in California:
With welfare reform in 1996, states were responsible for establishing their own asset limit to access public assistance. California set its CalWORKs asset limit at $2,000, which means that applicants must have no more than $2,000 in countable assets to be eligible for benefits. Across California, but especially in high-cost counties, this is an egregiously low savings ceiling.
Currently, Virginia and Ohio have eliminated their asset limits and several other states are working towards eliminating theirs. A precedent also exists among states for increasing, if not eliminating, asset limits to a more livable level. Importantly, recent findings suggest that increasing or eliminating asset limits has had a minimal impact on welfare caseload size. In some cases, such policies may even save public dollars by decreasing the administrative burden of having to verify a client’s asset declaration.
Californians are leaving nearly $1 billion in D.C. by not claiming their refunds. In 2003, approximately $39.2 billion in EITC benefits were paid out to more than 22 million claimants —an average benefit of $1,772 per claimant. These returns are not only windfalls for low-income families, but because the refund is likely to be spent locally they are also a boost to local economies.
APIC will support efforts that advance EITC at the state and local levels:
State-funded Matched Savings Accounts
Individual Development Account (IDA) products across the nation are proving that low-wage workers can and will save with the right incentives and access to financial services and training. Almost half of all state legislatures understand this and have passed and funded legislation for IDA programs.
The federal government is funding the Assets For Independence Act (AFI), which provides $25 million a year in matching grants. Currently, over 325 AFI programs are underway and more than 30,000 families are saving their earned income. In addition, the asset-building field is promoting two important savings tools at the national level:
APIC will play a lead role in moving a homeownership agenda for California:
Homeownership
California ranks 48th out of 51 states (including the District of Columbia) in homeownership rates. And for those lucky enough to own, a recent study says that California homeowners are the nation's most financially stressed. When ranked by the share of income spent on a monthly mortgage, our state captured the top 11 spots (and 28 of the top 50). Too many of our state's residents are missing out on the benefits of homeownership, which asset appreciation, increased social and civic engagement, higher rates of college attendance in children, and increased marital stability.
APIC will focus on identifying promising policies and strategies to promote homeownership in California with the goal of driving legislative and adminstrative changes in Sacramento. We will investigate a full spectrum of homeownership options available to low- and moderate-income families, with a focus on non-traditional strategies such as community land trusts, limited equity coops, manufactured homes, and Self-Help housing. Additionally, given the widespread use of Adjustable Rate Mortgage products and 0%-down loan, coupled with the recent rise in interest rates, APIC will also work closely with emerging “homeownership preservation” efforts.
APIC will play a supporting role in the following asset policy efforts underway in California:
Asset Limits
With welfare reform in 1996, states were responsible for establishing their own asset limit to access public assistance. California set its CalWORKs asset limit at $2,000, which means that applicants must have no more than $2,000 in countable assets to be eligible for benefits. Across California, but especially in high-cost counties, this is an egregiously low savings ceiling.
Currently, Virginia and Ohio have eliminated their asset limits and several other states are working towards eliminating theirs. A precedent also exists among states for increasing, if not eliminating, asset limits to a more livable level. Importantly, recent findings suggest that increasing or eliminating asset limits has had a minimal impact on welfare caseload size. In some cases, such policies may even save public dollars by decreasing the administrative burden of having to verify a client’s asset declaration.
Earned Income Tax Credit
Californians are leaving nearly $1 billion in D.C. by not claiming their refunds. In 2003, approximately $39.2 billion in EITC benefits were paid out to more than 22 million claimants —an average benefit of $1,772 per claimant. These returns are not only windfalls for low-income families, but because the refund is likely to be spent locally they are also a boost to local economies.
APIC will support efforts that advance EITC at the state and local levels:
1. State policy. As of August 2005, nineteen states had adopted an EITC, which is tied to the federal EITC. California is not one of them.
2. Statewide awareness campaign. A simple, low-cost marketing campaign for the EITC would have a huge return on its investment. The state of Washington invested just over $300,000 in a multi-level outreach campaign, which has seen a doubling of the EITC take-up rate and resulted in millions more dollars put in pockets of Washington residents. California does not have a coordinated EITC campaign.
3. Local policy. San Francisco’s Working Families Credit is setting a precedent for innovative asset-bulding policies at the city/county level. Local EITCs across California could be an example of city policies driving policy change at the state level.
2. Statewide awareness campaign. A simple, low-cost marketing campaign for the EITC would have a huge return on its investment. The state of Washington invested just over $300,000 in a multi-level outreach campaign, which has seen a doubling of the EITC take-up rate and resulted in millions more dollars put in pockets of Washington residents. California does not have a coordinated EITC campaign.
3. Local policy. San Francisco’s Working Families Credit is setting a precedent for innovative asset-bulding policies at the city/county level. Local EITCs across California could be an example of city policies driving policy change at the state level.
State-funded Matched Savings Accounts
Individual Development Account (IDA) products across the nation are proving that low-wage workers can and will save with the right incentives and access to financial services and training. Almost half of all state legislatures understand this and have passed and funded legislation for IDA programs.
The federal government is funding the Assets For Independence Act (AFI), which provides $25 million a year in matching grants. Currently, over 325 AFI programs are underway and more than 30,000 families are saving their earned income. In addition, the asset-building field is promoting two important savings tools at the national level:
1. Individual Development Accounts (IDAs). The Savings for Working Families Act would make IDAs available to over 900,000 low-income Americans, who could begin saving for high-return assets such as college education, homeownership and small business development.
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2. Children's Savings Accounts (CSAs). The ASPIRE Act would create an account for every child born starting in 2007. Each child would receive an initial deposit of $500 from the government to be used at age 18 for post-secondary education, homeownership or retirement. Children from low-income households would be eligible for match contributions up to $500.
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2. Children's Savings Accounts (CSAs). The ASPIRE Act would create an account for every child born starting in 2007. Each child would receive an initial deposit of $500 from the government to be used at age 18 for post-secondary education, homeownership or retirement. Children from low-income households would be eligible for match contributions up to $500.
Read more...
