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Individual Development Accounts in the Heartland

Individual Development Accounts in the Heartland. IDA Policy and Advocacy Needs in Kansas. IDAs in Kansas—A history. Started in KS with the American Dream Demonstration in 1997 (75 accounts) Expanded to NE Kansas City, KS in 1999 (250 additional accounts)

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Individual Development Accounts in the Heartland

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  1. Individual Development Accounts in the Heartland IDA Policy and Advocacy Needs in Kansas

  2. IDAs in Kansas—A history • Started in KS with the American Dream Demonstration in 1997 (75 accounts) • Expanded to NE Kansas City, KS in 1999 (250 additional accounts) • Expanded again in KCK and KCMO in 2001 (500 additional accounts with AFIA dollars)

  3. Savings Works in Kansas • 75 original participants saved $65,000 of their own money • 13 bought houses • 11 started small businesses • 14 went back to school • 18 repaired their homes • 24 saved for retirement

  4. Why do we need statewide IDA policy? • To take what is working on a small scale and apply it on a larger scale • To provide the administrative authority, funding, and state authorization necessary to support IDA programs around Kansas • To lend added legitimacy to IDAs, institutionalizing them in tax and regulatory codes • To generate additional funding sources for IDAs in Kansas, including state general funds, welfare monies, tax credits, or other discretionary dollars

  5. What kind of IDA policy do we need in Kansas? • To be successful, we need IDA policy that: • Is flexible, with as little “program” written in as possible • Allows adequate funding to administer accounts • and provide case management • Allows asset goals that meet participants’ needs • Includes economic education requirements and funding • Makes logical connections to other community and economic development policy and programming • Appeals to Democrats and Republicans, east and west, urban and rural

  6. State of the States in IDA Policy • According to the Center for Social Development, in 2002, 34 states have legislated IDAs, and an additional 8 state programs were developed through administrative rule. • 26 states have implemented state supported matched savings programs for low-income families. Programs are in development in 5 states and the District of Columbia. • Legislation is pending in 4 states to implement IDA programs. • Three states have statewide IDA initiatives that are not state-supported.

  7. State of the States, continued • Twenty-nine states are involved in coalition-building work to develop a statewide program or enhance an existing program. • There are over 500 community-based IDA programs serving over 20,000 participants in 49 states. • States also benefit from federal legislation including the Assets for Independence Act, Office of Refugee Resettlement fund allocations, and the proposed Savings for Working Families Act.

  8. Kansas’ IDA Policy History • Kansas is among the 7 states with “old” IDA legislation on the books but no program developed. • Legislation that included tax credits for IDAs was originally proposed in 2000. In 2001, it passed the Senate but failed to win passage of the full Legislature. In September 2002, the Interim Committee on Taxation held a hearing on this earlier bill (SB 231). • IDAs in Kansas have been supported by both urban and rural legislators, Democrat and Republican. Much of the difficulty encountered with the 2001 legislation was due to an inaccurate fiscal note, a state advocacy network in the early states of development, and a failure to build strong bipartisan support.

  9. IDAs in the 2003-2004 Legislature • Senator David Haley (D-Kansas City) introduced HB2409, through the House Taxation Committee, to develop an IDA program in Kansas. • This legislation included several important features: • Tax credits as a funding stream (up to $500,000 annually) • Nonprofit and tribal administering authority • Money for administration and match • Administration through the Kansas Development Finance Authority (now contains Housing functions)

  10. Status of HB2409 and Action Items • HB2409 was initially a House Taxation Committee bill, but it was reassigned to House Appropriations, where it failed to receive a hearing in 2003. • While the current budget crisis largely explains this lack of action, there are several things you can do to improve HB2409’s prospects in 2004: • Contact your state representative with your reasons for supporting IDAs, and ask for support of HB2409 • Contact the members of the House Taxation Committee and ask for a hearing in 2004 on HB2409 • Write letters about your experiences with anti-poverty policy/practice, your belief in IDAs, and your desire to see statewide IDA policy in Kansas

  11. Simultaneous Action to Advance IDA Policy • While legislative strategies are essential, advocates in Kansas can also: • Work with SRS to use savings-based approaches in income support, anti-poverty programs • Market Learning Quest and other asset-based programs to low-income clients • Focus on coalition-building, replication of privately-funded programs, and public education

  12. Where do we get the money? • Admittedly, HB2409’s fiscal note is one of the challenges we face in getting it passed. • We must “pitch” IDAs as an investment in the future, not a never-ending appropriation. • We need to be willing to compromise with a smaller program, less administrative money, more private matching, or other strategies to show legislators that we appreciate and understand fiscal constraints.

  13. Effective Advocacy for IDAs in Kansas • Communicating our Message • IDAs reward hard work and family sacrifice • IDAs give families a chance to help themselves • IDAs help people who can’t take advantage of asset subsidies (like mortgage interest deductions) through the tax code • Connecting to communities’ Needs • East and West, urban and rural, Kansas needs homeowners, small businesses, educated workers • IDAs can be a community and economic development tool • Visioning the Future • IDAs are not a panacea, but they can help to build a healthier Kansas • Other states are experiencing success with IDAs, and we can too!

  14. Next Steps for Policy Work in Kansas • Educate ourselves and our allies • Tax credits and how they work • What other states are doing with IDAs • What IDAs are not • How IDAs would help Kansas communities • Build a network around the state • Geographic & demographic diversity • Identify a bipartisan group of supportive legislators • Use the network of advocates to reach legislators • Frame policy alternatives and know what we want

  15. Contact Information • Melinda Lewis and Jennifer Gordon • El Centro, Inc. 650 Minnesota Avenue, Kansas City, KS 66101 • 913.677.0100 • Mlewis@elcentroinc.com; Jgordon@elcentroinc.com • Kansas Legislature • www.kslegislature.org

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