Assets for Independence Act Evaluation:
Phase I Implementation Final Report
October 5, 2001
I. |
Background |
||
| A. | Overview of the Assets for Independence Act | ||
| B. | Overview of the Evaluation | ||
This chapter provides an overview of the Assets for Independence Act (AFIA) and the congressionally-mandated national AFIA evaluation.
A. Overview of the Assets for Independence Act
The Assets for Independence Act (AFIA, Public Law 105-285, enacted on October 27, 1998) provides federal funding for a series of state and local individual development account (IDA) programs. IDAs are personal savings accounts that enable low-income persons to combine their own savings with matching public or private funds to purchase homes, start or expand businesses, advance their education, or purchase other assets that will promote economic self-sufficiency. The Act provides for grants to qualified non-profit organizations (including low-income credit unions and certified community development financial institutions) to conduct five-year demonstration projects under which non-federal sources contribute at least one-half of the project funds. (Indiana and Pennsylvania, having previously enacted large state-funded IDA initiatives, also qualify as grantees.) The Act is administered federally by the Office of Community Services (OCS) of the U.S. Department of Health and Human Services (HHS).
To receive AFIA funding, an IDA program must comply with the following guidelines:
-
Participants either must have incomes at or below 200 percent of the poverty level, must be income-eligible for the earned income tax credit (EITC), or must be receiving benefits or services under a state's Temporary Assistance for Needy Families (TANF) program. Participants must also have assets of less than $10,000 (excluding the value of one's primary dwelling and one motor vehicle).
-
To receive matching funds on their savings, a participant must use the account for home purchase, post-secondary education, or business capitalization. The participant's deposits must be from earned income.
-
Matching rates can range from $0.50 to $4 per dollar saved, with non-federal funds providing one-half or more of the matching contributions.
-
Up to 15 percent of the grant funds are earmarked for non-match program costs: evaluation, economic literacy training, and administrative costs.[1]
-
Of the 15 percent set aside, at least 2 percent must be devoted to program evaluation, up to 5.5 percent may be used for case management, budgeting, economic literacy, and credit counseling, and the remainder (typically, 7.5 percent) may be used for administrative functions (program management, reporting requirements, recruitment and enrollment of participants, and monitoring).
The Act authorized $25 million for each of five fiscal years (FY 1999 through 2003). The annual appropriation approved by the Congress was $10 million for FY 1999, $10 million for FY 2000, and $25 million for FY 2001. In September 1999, OCS awarded 40 grants (totaling $9.4 million) from FY 1999 funds; these first grantees included 38 local non-profit organizations, plus the states of Indiana and Pennsylvania. In September 2000, OCS then awarded grants to 25 additional organizations (totaling $4.6 million), plus supplemental grants (totaling $2.1 million) to 14 of the 25 recipients in the first funding cohort.
A specified portion of the annual appropriation is earmarked
for evaluation. For the first two years (FY 1999 and FY 2000)
the evaluation set aside was 2 percent of the annual appropriation.
Beginning with FY 2001, the evaluation set aside was amended to
be "not more than $500,000" of the annually appropriated
amount.
B. Overview of the Evaluation
Section 414(a) of the Act called for a national evaluation of AFIA demonstration projects to be carried out by an independent research organization under contract to HHS. Abt Associates was selected by HHS to conduct the first-year design phase of the national evaluation, which was completed in August 2000.[2] The Final Report of the design phase described data collection and analysis activities that would meet the Congressional evaluation mandate. These activities were organized under the following research areas: program and participant tracking and monitoring, a process study, an experimental impact study, a non-experimental impact study, in-depth participant interviews, and a benefit-cost study.[3] With the evaluation funding provided by the Act, activities have now been implemented by Abt Associates in two of these areas: the process study and the non-experimental impact study. These activities are described below.
Process Study
The process study will provide a comprehensive picture of the development, planning, start-up, and on-going operations of selected AFIA programs. It will help HHS staff understand how the programs work and the factors influencing effective operations. In describing how clients interact with program staff and receive program services, the process study also will help interpret the findings of the non-experimental impact study (described later below).
At its core, the process study examines how AFIA policies are implemented. The primary intent is to understand how AFIA programs are organized and operated and what factors influence these aspects of the site.[4] The secondary intent is to shed light on the effects of IDA program structure, design, and operations on program results and outcomes. Whereas the impact study will try to assess empirically whether IDA participants are better off, the process study will describe the program services provided at different AFIA sites and will help explain the observed patterns of participant outcomes.
The process study has four basic objectives:
-
to describe the goals of the AFIA legislation and the program features it requires;
-
to document and assess the implementation of the AFIA by selected grantees;
-
to compare and contrast the experiences of the grantees in establishing their IDA rules and procedures and operating program sites; and
-
to help interpret the findings from the impact study.
The value of the process study goes beyond what it tells us about the dynamics of change at any one site. It can also illustrate the variety of program models that evolve under AFIA. Existing research into IDA programs—for example, from Abt Associates' study of asset accumulation initiatives (sponsored by the U.S. Department of Agriculture) and the ongoing evaluation of the American Dream Demonstration—indicates that current IDA programs are quite diverse. For example, programs may vary significantly in the strictness with which staff monitor and enforce the requirements of program participation (e.g., minimum deposit amounts, frequency of deposits, attendance at counseling and training sessions). To the extent that programs vary on these and other important features, it is important to ask whether these differences appear to influence participant outcomes. Of course, without an experimental design in each site, we cannot definitively attribute caUSlity to the program. What we observe in the process study, however, can serve to narrow and sharpen our focus on those aspects of the program that appear to offer the most plausible explanation of effects.
A process study that traces the development of selected IDA programs over time can also provide valuable lessons for other IDA programs. It may identify issues that were found to be problematic across all sites or only under certain conditions. For example, establishing relationships with financial institutions, or devising procedures for efficient verification of account use, may prove to be more difficult (and/or may take longer) than sites anticipated. The lessons learned about how sites overcame these challenges (or the implications of not overcoming them) would be extremely useful to both current and future sites and may have policy implications, to the extent some policy elements appear to promote or impede success.
Non-experimental Impact Study
The non-experimental impact study will address three of the "factors to evaluate" identified in Section 414(b) of the Assets for Independence Act. Specifically, this portion of the evaluation will assess:
-
the savings rates of individuals in the demonstration project[s] based on demographic characteristics including gender, age, family size, race or ethnic background, and income;
-
the effects of incentives and organizational or institutional support on savings behavior; and
-
the effects of individual development accounts on savings rates, home ownership, level of post-secondary education attained, and self-employment, and how such effects vary among different populations or communities.
The first of these factors calls for an analysis of savings patterns among AFIA participants, in relation to their own demographic and economic characteristics. The second and third factors call for a comparison of the patterns of savings and asset purchases among AFIA participants with the patterns among nonparticipants.
For this evaluation component, the planned data collection activities will provide three years of longitudinal data on a national sample of program participants that is comparable with panel data on program-eligible nonparticipants within the general population, as collected by the Census Bureau through the Survey of Income and Program Participation (SIPP). To estimate the effects of IDA participation on savings and asset purchases, multivariate statistical techniques will be employed to account for observable differences between participants and nonparticipants on individual background characteristics and other contextual factors.
The primary program effects that this analysis will assess are as follows:
-
increase in savings - the increase in the amount of interest-bearing assets held at financial institutions (including IDA balances) as a percentage of household income;[5]
-
increase in homeownership - the increase in the percentage of individuals who own their primary residence;
-
increase in postsecondary education - the percentage of individuals who have advanced their postsecondary education;
-
increase in self-employment - the increase in the percentage of individuals who are self-employed.
A series of secondary effects will also be examined, as follows:
-
increase in home equity - increase in amount of equity in one's own home less the amount of mortgages on one's own home;
-
increase in earned income - increase in the amount of monthly household income derived from employment, including self-employment; and
-
reduction in consumer debt - decrease in the amount of unsecured liabilities and vehicle loans.
The process study and the non-experimental impact study are complementary.
The impact analysis will provide estimates of the effects of IDA
incentives. Although the impact study can indicate whether IDAs
affect participant savings and asset accumulation, the impact
estimates themselves will not explain why and how those effects
occur. The process study will indicate the dynamics of program-client
interactions and suggest the underlying basis of the observed
participant outcomes.
Notes
[1] This represents an increase from the previous 9.5 percent as a result of recent technical amendments to the Act. [Return to Text]
[2] The Center for Social Development of Washington University in St. Louis was a subcontractor to Abt Associates during the design phase. [Return to Text]
[3] See Gregory Mills, Michael Sherraden, et al., "Assets for Independence Act Evaluation: Design Phase Final Report," Abt Associates Inc., Cambridge, Mass., and Center for Social Development, Washington University in St. Louis, August 9, 2000. [Return to Text]
[4] "Grantees" are organizations that applied for and received AFIA funds. "Sub-grantees" are established or funded by grantees to oversee or operate specific IDA programs. Grantees or sub-grantees may deliver IDA services through single or multiple "sites." A "site" is thus the most disaggregated level at which a single IDA program is administered—that is, the lowest level at which the same IDA policies are implemented (i.e., the same program, eligibility, and participation rules). As such, a site will be defined as a sub-grantee in most cases. [Return to Text]
[5] Interest-earning assets held at financial institutions include the following: savings accounts, money market deposit accounts, certificates of deposit, and interest-earning checking accounts. [Return to Text]
