XI.	FY1999 Grants to State IDA Programs
		Pennsylvania Family Savings Account Program
		State of Indiana AFI Demonstration Program

Pennsylvania Family Savings Account Program

In 1997, with the support of the governor, the Pennsylvania General Assembly approved legislation to create a statewide Individual Development Account (IDA) program. At the time, the program was both the largest and furthest reaching IDA program ever enacted by an individual state. The purpose of the proposed IDA program was to enact "a statewide community building initiative for the purpose of promoting economic self-sufficiency for lower income Pennsylvanians through a matched savings program." The Community Empowerment Office (CEO), a subdivision of the Pennsylvania Department of Community and Economic Development, was put in charge of the administrative portion of the IDA project, known as the Family Savings Account (FSA) Program of Pennsylvania. The agency’s responsibilities included the creation of administrative rules and a request for a proposal (RFP) to send to community groups interested in operating FSA projects.

The new program required a minimum savings of $10.00 per week, or an amount that averaged $10.00 per week for a period of no less than 12 months and no more than two years. The state would match 50 percent of the individual’s savings at a rate not to exceed $300 per year or $600 over a full two-year participation period. If optimum savings goals were met, the program would finance the following:

1. A $57,000 home through participation in a 203(k) housing program (a Pennsylvania program);
2. A full year's tuition without supplemental grants or loans at a community college in Pennsylvania; or
3. Provide the necessary equity in a business to obtain a small business or micro-business loan.

During the summer of 1999, the Pennsylvania Department of Community and Economic Development received a $930,000 federal grant under the AFIA Demonstration Program that was to be used to supplement the Family Savings Account (FSA) Program developed two years before.

As of the end of the first year reporting period ending September 30, 2000, the Pennsylvania Department of Community and Economic Development (DCED) had not opened any IDA accounts with the Federal money, and was still in the development stages of their IDA program.

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State of Indiana AFI Demonstration Program

The Indiana Department of Commerce (IDC) received a $930,000 dollar Federal Grant to enact an IDA program in Indiana for up to 800 account holders. The program proposed to match up to $900 of savings at a uniform 3:1 rate across all savings goals. One full-time employee and two part-time employees were assigned to the IDA project. The first stage of the project required the IDC to find Community Development Corporations (CDCs) in Indiana that wanted to participate in the program. Once CDCs were found to implement the program, the next step was for the CDCs to recruit low-income individuals to participate in the IDA program.

Under the direction of the Indiana Department of Commerce, 44 different CDCs recruited account holders the first year. At the end of the reporting period September 30, 2000, the savings of the 580 account holders totaled $133,284.12, or on average approximately $230 per individual. At a match rate of 3:1, the total match of the IDA program amounted to $399,852.36, or on average approximately $690 per individual account.

Account holders in the Indiana program are required to attend training courses in financial management. By the end of the reporting period (September 30, 2000), the CDCs for Indiana partnered with numerous organizations, such as Consumer Credit Counseling and Purdue University Cooperative Extension, to provide financial counseling for IDA account holders at little or no cost to the individuals. Along with developing partnerships with these organizations, the CDCs were also responsible for providing reports, both narrative and financial, to the Indiana Department of Commerce on the progress of the IDA project, and to ensure that match funds were being distributed to the participating individuals.

Along with the $930,000 federal grant, the State IDA statute also provides IDC with non-federal funds amounting to $720,000, $1,440,000, $2,160,000, and $2,160,000 for the fiscal years 1997-2001, respectively.

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