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Part II: Program Description and Performance Analysis
STRATEGIC GOAL I (con't)
2. INCREASE INDEPENDENT LIVING
Approach for Strategic Objective: Promote asset accumulation among lower income working families, increasing their personal assets for education, home-ownership and small business capitalization.
2.1 ASSETS FOR INDEPENDENCE (INDIVIDUAL DEVELOPMENT ACCOUNTS)
| Request, Full Costs, & Annual Measures ($ in millions) |
FY 2003 | FY 2004 | FY 2005 |
| Budget Request (Program Level) | $24.8 | $24.7 | $24.9 |
| Estimated Full Cost | $25.8 | $25.6 | $25.9 |
| Program Goal: Asset Acquisition Incorporates measure: FY 2003: 2.1a-b; FY 2004-2005: 2.1c
|
$25.8 | $25.6 | $25.9 |
*The distribution of full costs to performance measures may not equal the full cost of the performance program area.
ALLOCATION METHODOLOGY EXPLANATION: performance measures represent 100% of full cost of program.
PROGRAM DESCRIPTION AND CONTEXT
The purpose of the Assets for Independence Demonstration Program is to promote asset accumulation among lower income working families as a tool to help them achieve self-sufficiency and enter the economic mainstream. The program provides incentives through matching contributions to investments of limited income working families in Individual Development Accounts (IDAs), which can be used for purchase of a first home, post-secondary education, or business capitalization. It was established by the Assets for Independence Act (AFI Act), under title IV of the Community Opportunities, Accountability and Training and Educational Services Human Services Reauthorization Act of 1998, Pub. L. 105-285.
The major goals of the program are to design demonstration projects that will determine (1) the social, civic, psychological, and economic effects of providing to individuals and families with limited means an incentive to accumulate assets by saving a portion of their earned income; (2) the extent to which an asset-based policy that promotes saving for post-secondary education, homeownership and small business capitalization may be used to enable individuals and families with limited means to increase their economic self-sufficiency; and (3) the extent to which an asset-based policy stabilizes and improves families and the community in which they live.
The Assets for Independence Demonstration Program is a matched savings/investment program for lower-income individuals and families. Participants enter into a Savings Plan Agreement with the project grantee which establishes a schedule and goal of savings from earned income to be matched at an agreed rate which can be from one to eight dollars for each dollar saved. Matching contributions are made by the grantee at least quarterly from equal parts of Federal grant funds and non-Federal share contributions to the project. Matched savings may be expended for either (1) the purchase of a principal residence by a first-time homebuyer, (2) the capitalization of a business, or (3) the expenses of post-secondary education.
Competitive grants are made to eligible applicants, which include private, not-for-profit 501(c)(3) organizations; state and local governmental agencies or Tribal governments applying jointly with eligible not-for-profit organizations; Credit Unions that have been designated as Low Income Credit Unions by the National Credit Union Administration; and/or Community Development Financial Institutions (CDFI), so designated by the Treasury Department or the CDFI Fund.
It should be noted, however, that focus on the program will remain for several years following the sunset period, regardless of reauthorization. Section 414(b)(5) of the Act calls for evaluation of "the potential financial returns to the Federal Government and to other public sector and private sector investors in individual development accounts over a 5-year and 10-year period of time."
Program Partnerships
ACF works in partnership with selected states and local grantees toward achieving the goals of this program. ACF has found that a key to successful project implementation is the development of effective, mutually supportive relationships between grantees and their partnering Financial Institutions, and OCS technical assistance efforts are focusing on strengthening these relationships. Other external variables that will continue to influence the achievement of program goals include the health of the local economy and job availability; systemic barriers to low-income employment such as availability of transportation and affordable day care; support of the banking, business, and foundation communities in providing non-Federal matching contributions; collaboration with other social service programs such as Weatherization Assistance and the Residential Energy Assistance Challenge Option Program (REACh), that can help to assure the soundness and energy efficiency of dwellings purchased by IDA account holders; and the availability of support structures that enhance job retention and advancement of IDA program participants.
PROGRAM PERFORMANCE ANALYSIS
| Performance Measures | Targets | Actual Performance | Reference (Relevant strategic goal in the HHS Strategic Plan) |
| 2.1a. The number of participants that have opened IDA accounts. | FY 03: Replaced FY 02: 5,389 |
FY
03: 13,835* FY 02: 4/04 FY 01: 4,037 (Baseline) |
|
| 2.1b. The number of participants receiving financial literacy education and asset-related training/services. | FY 03: Replaced FY 02: 5,945 |
FY
03: 8,990* FY 02: 4/04 FY 01: 4,453 (Baseline) |
|
2.1c. Increase small business
capitalization, homeownership and post- secondary education acquisition
by low-income working families. % of Full Cost |
FY 05:TBD | FY05: TBD |
HHS 9.2 EFFICIENCY MEASURE |
| Total Funding (dollars in millions) See detailed Budget Linkage Table in Appendix A-12 for line items included in funding totals. |
FY 05: $24.9 FY 04: $24.7 FY 03: $24.8 FY 02: $24.9 FY 01: $24.9 FY 00: $10.0 FY 99: $10.0 |
||
| * FY 2003 actuals are preliminary data on active accounts. ( two instances:back to first instance,back to second instance) | |||
Summary of Program Performance
A first round of 40 demonstration grants was funded in August and September 1999 for 5-year demonstration projects. In FY 2000, OCS received another $10 million appropriation with which it made 25 new competitive grants to new applicants and 17 supplementary grants to FY 1999 grantees. These supplementary grants were made to grantees that demonstrated their ability to raise additional non-federal share dollars documented successful operation of their project to-date, and identified unmet need that could only be met with supplemental funding. In FY 2001 OCS received an appropriation of $25 million with which it made 78 competitive 5-year grants: 58 to new applicants and 20 to existing grantees. In FY 2002 and 2003, OCS continued to receive an appropriation of $25 million with which it made 67 competitive 5-year grants in FY 2002 and an additional 47 competitive grants in FY 2003. In CY 2004, the first year of grants will reach their completion.
Financial literacy education and asset-specific training related to the savings goal are required elements of all AFIA funded demonstration projects. They are critical to most participants’ success in attaining an asset and having it contribute to wealth accumulation over the long term. In addition to financial literacy education and asset specific training, over 95 percent of AFIA projects provide ancillary services, directly or through referrals to other agencies. These services include employment support, childcare, transportation, credit repair, and crisis intervention services such as revolving loan funds that can help participants weather unexpected life events. Additional resources offered by many AFIA projects that help make the asset attainable include additional financial support such as down payment assistance, special financing arrangements, and discounts or free services related to the purchase. Together these services increase participants' ability to achieve their savings goals and to eventually acquire an appreciable asset.
Each grantee produces yearly progress reports within 60 days of completion of each year within their 5-year project. The Secretary submits interim annual progress reports to Congress, using the information provided in these progress reports.
Strong evidence for the positive influence of asset ownership, particularly a home, a business, or a post-secondary education, is summarized in Dalton Conley’s book, Being Black, Living in the Red (University of California Press: 1999). Based on data collected by the University of Michigan’s Panel on Income Dynamics (PIDS), which includes data on over 68,000 households, Professor Conley's analysis concludes that asset ownership increases quality of life, intergenerational economic and educational performance, increases family stability, and reduces the likelihood of the family suffering adverse events, including involvement with the criminal justice system. Asset ownership has a more powerful effect on life chances than racial or ethnic identity and social class is one of the important findings of the analysis.
ACF will assess the effectiveness of the IDAs based on evaluation research being conducted by Abt Associates. (Section 414(a) of the AFIA requires the Secretary to enter into a contract with an independent research organization for the purpose of a project evaluation.) The evaluation assesses the economic, civic, psychological, and social effects of asset accumulation among lower income populations and communities and explores the effects of project design, incentives, and institutional support on savings behavior; the savings rates based on demographic characteristics of participants; the effects of IDAs on participant achievement of asset goals.
Achieving substantive impacts through the IDAs requires a considerable effort from program staff. The program must be fully explained, and extensive program marketing, participant recruitment and program adaptation are required. Agencies administering IDA initiatives typically must revise outreach and intake strategies several times to find the right “marketing message” for their particular target population. This often entails conducting numerous focus groups and surveys with potential clients to assess the best way to explain the IDA account structure, program requirements, and recruitment expectations.
Data Sources: The Assets for Independence Act allocates up to $500,000 per year of the appropriated funds to evaluate the overall demonstration program, in addition to the funds required for data collection. The agency requires the grantee to provide a well thought-out plan for collecting, validating and reporting the necessary data in a timely fashion. Grantees are encouraged to identify the categories of data it believes would facilitate the management information, reporting, and evaluation purposes. Grantee must agree to cooperative with the evaluation of the national program and are urged to carry out an ongoing assessment of the data and information collected as an effective management/feedback tool in implementing their project.
Measure-by-Measure Presentation of Performance
PROGRAM GOAL – Stability and Self-sufficiency: To increase family stability and self-sufficiency through the accumulation of assets using a matched savings/investment program.
| FY 2002 Plan | |
| 2.2a. |
The number of participants that have opened IDA accounts.
|
As of September 2003, grantees for FY 1999-2002 reported 13,835 active IDA accounts and a total of $3,820,623 in savings deposits. These are preliminary figures based on initial data collection; updated information will be provided in the Annual Progress Report to Congress. Given the fact that the income of most account holders was below 150 percent of poverty, these savings figures represent a substantive achievement by the grantees. In FY 2003, the projects will have progressed sufficiently to provide significant numbers of participants completing IDA accounts. This measure was replaced by an outcome measure (measure 2.2c) focused on participants acquiring assets.
| FY 2002 Plan | |
| 2.2b. |
Increase the number of low-income families receiving
financial literacy and asset-related services. |
Financial and asset-related training was offered to 8,999 participants as of September 2003, with 6,057 participants completing their entire training program. This measure was replaced in FY 2004 to focus on asset acquisition.
| FY 2004-2005 Plan | |
| 2.2c. |
Increase homeownership, post-secondary education and
small business capitalization acquisition by low-income working
families (New). |
With the completion of IDA accounts, clients will have developed a rigorous investment plan, deposited significant amounts of savings and will be primed to progress toward acquisition of an asset, the next step in the process of economic self-sufficiency. Account holders will have acquired an appreciable asset – a first home, a new business, or enrollment in post-secondary education. Account holders will have completed both financial literacy education and asset-specific training, enabling them to deal more successfully with the complexities of banking and financial planning and the challenges of home ownership, business management and career planning. As previously noted, these assets have increased quality of life, intergenerational economic and educational performance, and family stability, and have reduced the likelihood of the family suffering adverse events.
ACF is collecting information on clients' progress toward these goals in their transition out of poverty, e.g., the number of clients completing their IDA accounts and the number acquiring an appreciable asset. These measures track account holders’ achievement toward goals of economic self-sufficiency and entry into the economic mainstream.
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