Opportunity Digest

Understanding the Texas Approach to College Savings Accounts at Large Scale

Written by Don Baylor

November 29, 2011 - 04:41 PM

In November, CFED released an update to the Assets & Opportunity Policy Scorecard, reflecting the policy changes enacted over the past year or so. CFED evaluates all 50 states on 12 different policies, so states can receive 48 points at the maximum. OpportunityTexas is either supporting or coordinating efforts in four of the twelve policies, including: College Savings Incentives, Protection from Predatory Short-Term Loans, Lifting Asset Limits in Public Benefit Programs, and Financial Education in Schools. The scoring ranges from a “very strong” policy (meets all 4 criteria) to “weak” policy (meets no criteria).

In sum, Texas only scored 11 of 48 possible policy points, so obviously we have room for improvement. Notwithstanding the accomplishments of the 82^nd Legislature on payday lending, asset limits, college savings, and financial education, Texas scored a “goose egg” on six of the twelve Scorecard policies.

On “College Savings Incentives”, the CFED policy criteria underscore how little has been accomplished at the state level, with only twelve states meeting any of the four college savings policy criteria. All told, the number of college savers earning state-run incentives remains extremely low—only a few thousand students nationwide. All states failed on another key criteria: automatic 529 plan enrollment at birth. Given the current political and budgetary climate, especially given the entitlement and immigration debates, automatic or universal 529 enrollment seems unattainable. Instead of universal enrollment, we are focusing on enrolling economically disadvantaged students and incenting these College Savings Accounts (CSAs) through existing large-scale platforms.

Because OpportunityTexas is working to expand access to college savings and connect better with our K-12 education system, we wanted to provide a timely update on how our Texas college savings platforms are gearing up for large-scale enrollment with savings incentives. In particular, we want to highlight new and emerging opportunities to use our Texas college savings infrastructure to enroll and match economically disadvantaged students at a larger scale:

· Texas Save & Match: Texas is one of a dozen states that explicitly authorizes incentives for state residents, with a focus on lower-income families and economically disadvantaged students.

· Elimination of College Savings Penalty: With the passage of HB 3708, Texas is also one of a handful of states to disregard state 529 assets for key public benefits and state financial aid programs (e.g. TANF, CHIP, Medicaid, TEXAS Grants).

· Texas Match the Promise Foundation: Texas is also poised for college savings success because of our capability to raise private dollars for the Save and Match program through the Texas Match the Promise Foundation, a 501c3 organization developed by the Texas Comptroller. With funds accumulating, education and asset building stakeholders have the opportunity to go large-scale through this centralized platform that could match students’ savings across the state. This statewide platform is well suited to foster contributions from private individuals and foundations geared for students in certain geographic areas.

· Regional College Savings Hubs: With the growing interest in college savings through the RAISE Texas network, including the recent College Savings Forum, several local organizations, including those in Austin, Bryan, San Antonio, Midland, and Dallas, are stepping up to enroll children into college savings accounts to complement their financial coaching and education roles. One emerging pilot program, Child Support For College (CS4C), which is a partnership between RAISE Texas and the Child Support Division of the Texas Attorney General’s Office, seeks to enroll and incent at least 300 students, utilizing three local groups serving as enrollment facilitators and financial counselors with custodial parents receiving lump sum child support payments.

· Smarter Texas: Through recent policy changes and our partnership with the Texas Council on Economic Education on Smarter Texas, an emerging K-12 infrastructure can complement local and statewide college savings efforts. With mandatory K-8 financial education, Texas teachers and students can fuse in-classroom financial education with large-scale college savings facilitation and enrollment. In 2012 through our Innovation and Investment Fund, OpportunityTexas hopes to support a pilot in one school district that connects the Smarter Texas program with college savings account enrollment.

With this plumbing in place and a steady stream of funding for the Save & Match through unclaimed property and the Statewide Employee Charitable Campaign, we need to develop three spigots to take Texas CSA enrollment and incentives to large-scale implementation:

· Private Fundraising: A major obstacle to large-scale CSA implementation continues to be product development, enrollment facilitation, and case management. With a secure statewide fundraising platform, local and regional philanthropy should examine investments in child savings accounts that would benefit students in their respective areas of funding.

· Texas Legislative Appropriations: The Legislature should consider appropriating eligible funds to create a statewide challenge grant that would boost interest and leverage donations from the private sector. One possible funding source could be the newly authorized Texas Financial Education Endowment, to be administered by the Texas Finance Commission.

· Financial Institution Partnership: In our role to promote savings and financial education, OpportunityTexas supports an effort to create a partnership between our state’s 529 plans and a financial institution. One of the barriers to 529 access is clearly the lack of any visible community or storefront presence, such as retail outlet to encourage enrollment and accept deposits. In Sallie Mae’s 2010 report, How America Saves for College, low-income parents are much more likely to use checking accounts when saving for college and also more likely to make manual deposits. Currently, families can only make deposits into our state’s 529 plans online or set up automatic bank drafts. How can parents more easily make deposits locally? How can we leverage the ubiquity of ATM machines to create a crosswalk with our 529 plans to boost participation and deposits?

With your help and some improvements as outlined above, we can begin to bring the Save & Match to a community, school and student near you.

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Key Takeaways and Resources from the Equity Summit

Written by Laura Rosen

November 21, 2011 - 09:09 AM

Two weeks ago, I attended PolicyLink’s Equity Summit in Detroit. The summit brought together 2,500 advocates, practitioners, policymakers, and philanthropic stakeholders to advance a more inclusive policy agenda that will put our country on a path towards social and economic equity. We thought it would be helpful to share important resources and key learnings in this blog post.

A first takeaway is that we have a unique opportunity to raise up equity and inequality using the “teachable moment” of the Occupy movement. The conference dedicated some time to discussions about the Occupy movement, including having one of the Occupy leaders speak at a plenary session. Before attending the conference, I was uncertain about whether and how to utilize the Occupy movement to advance my work. At the conference, it became clearer to me that regardless of whether or not organizations affiliate with the movement, the Occupy movement provides advocates and community builders with a unique opportunity to put issues of wealth and income inequality into public discourse and demand results from policymakers to implement policies and programs that can help reduce these inequities. One speaker suggested that an op-ed was as a great way to elevate issues of inequality and the work we are doing in our communities. Andrea Levere, president of CFED, mentioned that the Occupy movement also presents an opportunity to engage financial institutions to innovate and create products that better meet the needs of low-income families.

Recently, the Census released 2010 data on a few measures of income inequality. According to this data, the top five percent of Texas households earn nearly 22 percent of the state’s overall income. In San Antonio, the top 5 percent of households earn 20.8 percent of the aggregate income pie. Midland’s top 5 percenters rank highest among Texas cities, earning more than 28 percent of their local income pie. Income inequality data points will be one of several dozen local indicators that will be available as soon as Fall 2012 with the release of our Texas Regional Opportunity Index (TROI).

Another takeaway is that integrative place-based solutions are emerging as an important strategy to help transform low-income communities and are receiving increased financial support at both the federal and local levels. To help advance this strategy, I learned that the Obama administration created a new Office of Urban Affairs in 2009, which aims to foster collaboration, better integrate local services, and encourage public-private partnerships.

Two examples of these integrative place-based solutions include HUD’s new Choice Neighborhoods Initiative (CN) and the Department of Education’s Promise Neighborhoods Initiative. CN provides funds for low-income communities with public housing to support large-scale community change by linking public housing improvements to a variety of other services including transportation, education and employment services. San Antonio was one of 17 cities selected nationally for the first ever CN planning grant in 2010.

The Promise Neighborhoods Initiative, which aims to scale the Harlem Children’s Zone model, provides funding to low-resourced communities to provide comprehensive supportive services to students and their families from a child’s birth to college to increase college attainment. Houston and San Antonio were two of 21 cities selected nationally for Promise Neighborhood planning grants in 2010. At the summit I spoke with Henrietta Munoz of the United Way of San Antonio and Bexar County who has been involved with San Antonio’s Promise Neighborhoods and Choice Neighborhoods planning grants. She mentioned that through these platforms, San Antonio is bringing together many organizations and government officials who have previously never before worked together to advance large-scale community change.

A last key takeaway from the summit is that advancing a more inclusive, equitable policy agenda will become even more critical to our nation’s success as America becomes a “majority people-of-color nation,” which Policy Link projects to happen in 2042.

New Publications Mentioned at the Summit

The following are some interesting reports and publications I learned about at the conference:

Ten Lessons for Talking About Racial Equity in the Age of Obama by the Opportunity Agenda. This memo outlines how to best communicate racial justice problems and solutions.
America's Tomorrow: Equity is the Superior Growth Model, Policy Link released this report at the summit, which outines why racial and economic inclusion is critical to economic growth.
Creating Pathways to Opportunity, a recent report by the Obama administration, which outlines the ways in which the administration has advanced policies that promote opportunity.
Profit at the Bottom, a book by Jody Heymann, founding director of McGill Institute for Health and Social Policy, which outlines how companies can make more money by improving employee conditions.

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