City Governments Play Critical Role in Promoting Asset-Building Strategies

This post was written by Karrie Peterson, MSW Graduate Student at Washington University in St. Louis, and Research Fellow with the Asset Building Program.

Given the current economic climate, it would be a surprise to find city governments across the country pioneering new policy strategies, but in fact many cities are playing a pivotal role in the promotion of savings and asset-building strategies as a way to encourage household economic security and alleviate poverty.

In an event held yesterday morning, CFED and Cities for Financial Empowerment (CFE) unveiled a new report, Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment, highlighting innovative policies and programs implemented in cities across the country that are enhancing financial security of low and moderate-income residents. Cities for Financial Empowerment include: Chicago, County of Hawai^٬i, Los Angeles, Miami, Newark, New York City, Providence, San Antonio, San Francisco, Savannah, and Seattle.   

The report findings are exciting as they show cities across the country the possibilities of asset-building policies that promote household economic stability and address poverty. The findings can further inform future state and federal policies. New America has been working alongside many of these city leaders as well as state and federal leaders to meet the challenges they face, and it is gratifying to see some of that work paying dividends for citizens in these communities.

The fundamental approach of each of the cities is to embed and centralize financial empowerment and asset-building strategies within the local administration. Like people, cities are trying to do more with less and to make every dollar stretch. One cost effective measure is to utilize already existing city government infrastructure and draw on established public and private partners.

There is a growing recognition that high levels of asset poverty (40% of households in CFE live in asset poverty) threaten the economic security and well-being of communities as a whole. Because programs have varying price tags, these cities have asked difficult questions about the costs of inaction and decided that there are smart investments to be made. For example, some programs, like San Francisco’s Kindergarten to College CSA program, come with a high initial price tag for the city but because of their long-term cost-savings are recognized as worthy of investment.

One of the coalition goals is to increase access to income-boosting supports and tax credits. Panelist Jonathan Mintz, commissioner of the New York City Department of Consumer Affairs noted their program, SaveNYC that provides a 50 percent match of up to $500 to eligible tax filers who succeed at saving a portion of their tax refunds for a full year. This allows low-income individuals to build short-term emergency savings as a pathway to long-term savings. The program is an active demonstration of the concept of the Saver’s Bonus, a proposal put forward by the Asset Building Program that would provide low-income families with an opportunity to receive a dollar for dollar match for each dollar that they contribute to a designated savings product, up to a maximum of $500 a year.

While these cities are doing a commendable job of embracing asset building in their communities, they can look forward to federal assistance in the future. The federal government is designating a pot of money to expand programs like San Francisco’s Bank On that will enable communities to provide financial access to the un- and underbanked. The Obama administration has announced a plan in its budget to raise asset limits. If adopted, the move will reduce many of the paperwork burdens faced by municipal and state service providers, easing service delivery to millions of Americans. This would be a win-win for low-income families and service providers.

It is exciting and inspiring to see this level of innovation and commitment occurring during such difficult budgetary times. Cities have looked to the asset building field for innovative solutions, to resources like the Assets Agenda 2011, and found opportunities worth pursuing. In addition to meeting the needs of their own residents, the Cities for Financial Empowerment are building a base of knowledge and serving as a positive example for their fellow municipalities, their state and federal governments.