Asset Initiatives in Illinois: An Overview

Asset building is a powerful and unifying framework to address the persistence of poverty. Illinois has enjoyed an encouraging environment for innovative asset-building and asset-protection policies for many years.

Asset building is a powerful and unifying framework to address the persistence of poverty. Illinois has enjoyed an encouraging environment for innovative asset-building and asset-protection policies for many years. This brief overview is intended to cover some of the progress we have made on asset policies in Illinois but is not a comprehensive list.

The Early Years (1990s–2003)

Long before the formation of the Illinois Asset Building Group and common use of the term “asset building,” Illinois policymakers, community and nonprofit leaders, and the private sector began to embrace asset-building policies and programs as a complement to traditional community development and income-support policies. Examples include:

CRA Agreements

Community leaders negotiated Community Reinvestment Act (CRA) agreements with banks in the mid- to late 1990s to expand access to mainstream financial services and credit in low- and moderate-income populations and communities.

TANF Asset Limits Increased

As the focus of welfare policy shifted from providing a safety net to promoting self-sufficiency through work, what became apparent was that working families would need increased work supports to ease the transition from welfare to work, maintain employment, and escape poverty. Under welfare reform and Temporary Assistance for Needy Families (TANF) block grants (post-1996), states have flexibility to set asset limits and are not required to have any asset limits at all. Illinois increased asset limits in the TANF program (a family of three may have up to $3,000 of countable assets). Permitting TANF recipients to have savings and emergency funds is consistent with the Illinois Department of Human Services (IDHS) mission to promote work and self-sufficiency.

Direct Deposit of Cash Benefits Encouraged

IDHS formed the Illinois Link Committee with food retailers and advocates to address concerns regarding the new electronic benefit transfer system (1996–97) for cash and food stamp benefits. The committee published a brochure to inform cash benefit recipients of the option to have benefits directly deposited into a bank account instead of the Illinois Link card.

Illinois IDA Law Passed

Illinois enacted a 1998 law allowing state TANF funds to be used for Individual Development Account (IDA) programs to help low-income working adults gain financial management skills and go to college, buy a home, or start a business. IDHS (with the Illinois Community Action Association and the Women’s Self-Employment Project) supported one of the first IDA programs in Illinois and exempted funds in those accounts from counting as income or assets for means-tested programs. Since then, dozens of nonprofit entities throughout Illinois have implemented IDA programs.

FLLIP Financial Education and IDA Programs and Evaluation Conducted

IDHS partnered with the Financial Links for Low-Income People (FLLIP) coalition to conduct a statewide Financial Education Program, IDA program, and evaluation focused on low-income adults (2001–2003). As part of this initiative, Illinois became the first state to recognize participation in the FLLIP financial education classes as a TANF “work activity.” The 126 IDA graduates made 153 asset purchases, including homes, home repair, cars, car repairs, small business capitalization, and postsecondary education. Financial education graduates increased knowledge, improved financial management, and increased savings and assets.

IDA and Asset Rules Improved

As part of the FLLIP partnership, IDHS revised administrative rules to allow state-supported IDA participants to use funds for additional asset-building goals, including home repair and vehicle purchase or repair, and exempted all funds held in IDHS-approved IDA programs from consideration as income or assets. These administrative changes became effective in 2001.

Governor’s Task Force on Financial Literacy Established

The Illinois governor’s office and former Office of Banks and Real Estate (OBRE) created a statewide task force focused primarily on financial education for children. OBRE held conferences in 2002 and 2003. The Board of Education clarified how financial education can be incorporated into the curriculum as part of state K-12 learning standards and consumer education requirements.

Children’s Savings Accounts Initiative Launched

CFED, a nonprofit organization that expands economic opportunity, launched in 2003 its national Savings for Education, Entrepreneurship, and Downpayment (SEED) Initiative, including a Chicago site administered by the Shriver Center. The SEED initiative seeks to set the stage for universal, progressive children’s savings accounts. The Americans Savings for Personal Investment, Retirement, and Education (ASPIRE) Act, which would establish universal kids accounts, was introduced in Congress in 2004 and 2005.

Statewide Asset Policy Conferences Held

The first two statewide asset policy conferences in Illinois were held in 2002 and 2003. CFED presented its first State Asset Development Report Card at the 2002 conference. The 2003 conference presentation topics included the first FLLIP evaluation report and SEED Initiative.

Momentum for Asset Building (2003–2005)

A Receptive New Administration

As Gov. Rod Blagojevich prepared to take office in 2003, constituents participated in transition team meetings and recommended ways to encourage asset building in Illinois. In June 2004 advocates recommended, among other policies, support of financial education, IDAs, and consumer protection and the elimination of asset barriers to improve access to IDHS services.

Illinois Asset Building Group Formed

A statewide asset policy coalition, the Illinois Asset Building Group (IABG) established seven priorities: lifelong education and training; health care; financial security and investment; housing, homeownership, and utilities; small business development; transportation; and tax policy. Based on extensive statewide grassroots outreach and member input, IABG decided last December to make children’s savings accounts a primary policy initiative. (The Woods Fund of Chicago spearheaded the formation of IABG in 2003.)

Payday Loan Reform Implemented

The Egan Campaign for Payday Loan Reform waged a six-year battle (1999–2005), ultimately winning passage of the Payday Loan Reform Act with strong support from the Illinois governor’s office, industry, and consumer advocates. The law took effect last December.

Successful Other Legislative Proposals

Other Illinois legislative and appropriations issues that enjoyed broad support and success include FamilyCare, a state rental housing subsidy, and increased low-income utilities funding.

IDA Expansion Approved

IDHS last November requested a grant from the U.S. Department of Health and Human Services to expand IDAs in Illinois. HHS approved the grant in February 2006.

All Kids Passed

The Illinois governor announced last October a new initiative, All Kids, to expand health care to all uninsured Illinois children. The Illinois General Assembly approved the proposal during the veto session in November. The program begins on July 1, 2006.

Asset Exemptions Expanded

IDHS removed another barrier to asset building when it exempted retirement accounts as countable assets under the TANF, General Assistance, and Food Stamp programs in April 2005. Proposed IDHS rules that would have eliminated asset limits in TANF and GA and exempted all vehicles in the Food Stamp Program were put on hold last October.

Assets & Opportunity Scorecard Indicates Need for Improvement

Illinois received a “favorable” ranking on its asset policies but received an overall “D” score on asset outcomes for Illinois residents in CFED’s 2005 Assets & Opportunity Scorecard (see www.cfed.org/go/scorecard.) The Scorecard data help document the need to improve asset policies in Illinois and serve as a measure for comparison with other states. IABG cosponsored policy briefings in Springfield and Chicago in May 2005 to release Illinois Scorecard results and discuss asset-building policy.

DCEO Grants for Financial Services Careers and Access to Banking

The Illinois Department of Commerce and Economic Opportunity approved a High Technology School to Work grant in 2005 to Park Federal Savings Bank and the Shriver Center for the creation of a student-run bank branch at Curie High School in Chicago. The Curie Branch opened in April 2005.

The Future of Asset Building in Illinois (2006–)

Universal and Progressive Asset Policies

Current policies and pending proposals that are universal and progressive can lay the groundwork for future inclusive asset initiatives. The All Kids program will expand health care coverage to all uninsured children. The proposed Preschool for All initiative would expand universal prekindergarten to all 3- and 4-year-olds in Illinois. IABG plans to launch a universal children’s savings account initiative in 2007. (To get involved with IABG, contact Dory Rand or Gina Guillemette at gguillemette@heartlandalliance.org or 773.336.6083.) Policies targeted to population groups, such as immigrants, facing additional barriers to asset building will be needed to level the playing field and ensure opportunity for all.

Addressing Asset Limits

Further improvements in asset-limit policies are needed to insure inclusive participation in asset-building opportunities and avoid penalizing savings and assets.

Housing, retirement security, and many other asset policies are expected to continue to attract growing support as diverse stakeholders come to understand the potential of asset building for individuals, families, and communities.

This track record and growing support among Illinois policymakers and community leaders offer hope for creating and implementing future initiatives to strengthen Illinois families and communities through building, owning, and protecting personal and financial assets.

Dory Rand is supervising attorney of the Community Investment Unit at the Sargent Shriver National Center on Poverty Law and co-coordinator of the Illinois Asset Building Group. For more information or to give feedback on this article, contact Dory at 312.368.2007.