State Asset-Based Policy: Findings from the State Asset Development Report Card

Carl RistCorporation for Enterprise Development

State IDA Policy Conference November 6-8, 2002St. 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

Iowa 14.2%

Minnesota 15.7%

New Mexico 17.4%

Ohio 17.6%

Pennsylvania 18.0%

States with Lowest Asset Poverty:

State % asset-poor households:

New York 32.1%

Arkansas 31.0%

Arizona 28.8%

California 28.5%

Wyoming 26.9%

States with Highest Asset Poverty:

Key Findings

State Mean net worth (white to non-white)

Tennessee 2.03

California 2.30

Missouri 2.37

Colorado 2.38

Florida 2.57

States with Lowest Race Gap

State Mean net worth (white to non-white)

Virginia 5.02

Pennsylvania 4.90

South Carolina 4.85

Washington 4.61

Massachusetts 4.54

States with Highest Race Gap

2. Asset poverty and inequality varies significantly by race…

Key Findings

State Mean net worth (male-headed to female-headed)

Washington 1.20

Minnesota 1.26

California 1.26

Ohio 1.26

Utah 1.27

States with Lowest Gender Gap

State Mean net worth (male-headed to female-headed)

Louisiana 2.21

Michigan 1.97

Missouri 1.97

Alabama 1.84

Tennessee 1.82

States with Highest Gender Gap

2. by gender…

Key Findings

State Mean 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

State Mean 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 Findings3. 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 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 http://sadrc.cfed.org

Carl RistCorporation for Enterprise Development

123 W. Main St., 3rd Floor, Durham, NC 27701

Phone: 919.688.6444E-mail: rist@cfed.org Wesbite: www.cfed.org