Slide 1: Asset Ownership in Illinois
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Slide 2: Illinois Asset Building Group
A diverse coalition working to build the strength and stability of families and communities. IABG began in 2004 to promote asset building as an innovative approach to eliminating poverty and creating opportunities for Illinois residents. IABG Goals: Build Assets, Increase Savings Opportunities, Protect Existing Assets, and Promote Financial Literacy
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Slide 3: What Are Assets?
Assets help individuals and families live securely, plan for the future, and pass wealth on to the next generation Savings, Education, Homeownership, Small Business • Assets strengthen communities by creating financial stability • When individuals and communities are stable, the entire state benefits – job growth, tax revenue
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Slide 4: What is Assets Poverty?
Households experiencing asset poverty do not have enough cash reserves (savings, stocks, retirement accounts, equity in a home or business) to get by at the federal poverty level for three months when their primary source of income is eliminated through job loss or other disruption. How is asset poverty different from income poverty? Measuring net worth by considering assets and liabilities, as opposed to income alone, provides a more long-term and encompassing view of economic security and mobility. In Illinois 26.9% of households are asset poor vs. 10.9% that are defined under income poverty.
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Slide 5: Illinois Asset Poverty Index
The Illinois Asset Poverty Index (IAPI) provides data on asset poverty for counties and county groupings across Illinois. Developed with help from our partner organization in California, the IAPI enables Illinois residents to ascertain asset poverty rates for the communities in which they live.
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Slide 6: IAPI County Clusters
Asset Poverty in Cook County
Category Total Housing Tenure Homeowners Renters Race White Black Latino Asian Native 63.6% 15.9% 14.8% 5.6% 0.2% 5.3% 20.5% 15.8% 9.3% 15.4% 19.4% 48.9% 49.5% 27.6% 39.7% 58.0% 42.0% 3.5% 18.0% 3.6% 64.4% Demographics 1,160,152 Income Poverty 9.6% Asset Poverty 29.2%
To view IAPI data for all of Illinois go to: http://www.illinoisassetbuilding.org/data/assetpoverty/
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Slide 7: IAPI County Clusters
Asset Poverty in Cook County
Category Age Under 35 35-44 45-54 Over 55 Family Composition Married, no children at home Married, children at home Single, no children at home Single, children at home 15.1% 34.6% 35.8% 14.5% 2.9% 5.0% 12.0% 21.5% 15.7% 18.2% 36.6% 50.9% Demographic s 30.0% 28.4% 25.0% 16.7% Income Poverty 12.8% 9.0% 7.2% 8.4% Asset Poverty 44.8% 27.7% 20.8% 16.2%
To view IAPI data for all of Illinois go to: http://www.illinoisassetbuilding.org/data/assetpoverty/
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Slide 8: IL Household Net Worth
15.4% of all Illinois households have zero or negative net worth, meaning they may owe more than they own. Median Net Worth of Illinois Households by Race in 2004 White – $128,444 Minority – $12,100
Illinois asset poverty has increased 6.4% since 2004
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Slide 9: Education as an Asset
As an asset, education has a cumulative life-long impact in the form of higher annual incomes and more money to put away into savings or investments such as a home.
Illinois Educational Attainment, 2006
Highest Educational Level Attained Less than a high school diploma High school diploma Some college or associate’s degree Bachelor’s degree Graduate or professional degree Percent of Adults age 25 and Over 15.0% 28.9% 27.3% 18.1% 10.8% Illinois Median Annual Earnings $20,019 $27,048 $33,383 $47,484 $60,695
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Slide 10: Ways to Help Build Assets
Earned Income Tax Credit Payday Loan Reform Children’s Savings Accounts
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Slide 11: Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable income tax credit for low-income working individuals and families. • Because it is refundable the EITC is given as a tax refund payment when the credit exceeds the amount of taxes owed • EITC is available on both federal and Illinois state income taxes • In 2007 the maximum federal EITC for a individuals with two or more qualifying children was $4,716
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Slide 12: EITC in Illinois
• Last year nearly 777,000 lowincome, working families benefited from the Illinois EITC with an average credit of about $100 • Most state EITCs are based on a percentage of the federal EITC • Set at only 5% of the federal EITC, the Illinois EITC is among the smallest of all state EITCs • Legislation, SB12, has been proposed to double the Illinois EITC
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Slide 13: Payday Loan Reform
Payday loans are small loans with high interest rates that are most often provided by companies with no ties to banks and are not regulated by the FDIC. • Payday lending fees costs Americans approximately $3.2 billion annually • There are almost 3 times as many payday licenses in Illinois than there are McDonald’s restaurants How Payday lenders profit: • Astronomical APR rates • Loan roll over • Balloon payments • Prepayment penalties • Multiple loans to the same borrower 13
Slide 14: Payday Loan Reform
In the past payday loans normally had terms of approximately two weeks. After an Illinois law was initiated to regulate payday loans most lenders extended terms past 120 days as a loop hole to avoid this law. By doing so lenders can continue to provide loans with no consumer protections. How to Reform Payday Loans: • In order to eliminate loop holes, and reform payday lending once and for all, amendments must be made to the Consumer Installment Loan Act • Amendments should include limits on charges & fees, cap interest rates, restrict prepayment penalty and amortize all loans • Legislation is being discussed in this session and will continue until the problem has been solved
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Slide 15: What Are Children’s Savings Accounts?
• Opened at birth for all children • Seeded with an initial deposit • Children & families can contribute over the years • Used for designated purchases – educational expenses, homeownership, entrepreneurship– when the child reaches least 18 years old
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Slide 16: Why Build Assets for Children?
Children’s savings accounts promote lifelong financial literacy and savings behaviors. Holding assets raises aspirations of children and parents for a better future. Saving for the future helps bring back the idea that education (and money) create new opportunities
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Slide 17: .. and When the Children Become Adults
• Creates opportunities for career advancement, skills development through increased education • Provides family, individual stability through homeownership, small business ownership • Increases lending eligibilities, helps steer clear of predatory lending, such as payday loans
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Slide 18: IABG Principles for a CSA Plan:
• Inclusive so that all children can participate • Seeded with an initial deposit so it creates a concrete asset at the onset • Progressive in structure, providing higher initial deposits and/or matching funds for savings deposited by lower-income families • Simple so that investment decisions are limited and easily understood • Linked to age-appropriate financial education to build savings and investment skills • Nondiscriminatory to families receiving public benefits • Protected from use until the child is at least 18
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Slide 19: …But Will This Really Fly?
Asset policy is a new approach to eliminating poverty and creating economic security for all. Several factors make children’s savings accounts marketable: • Corporate, business leaders supportive of investment and savings • Financial institutions see opportunities for new customers • Children are particularly compelling beneficiaries for social programs
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Slide 20: How will CSAs become a reality in Illinois?
In 2007 legislation was passed that created the Children’s Savings Account Task Force • The goal of the Task Force is to form a strategic implementation plan to create a savings account at birth for every child born in Illinois to Illinois residents. • The Task Force’s plan will be the basis of advocacy led by IABG & Task Force members in the future to create an Illinois CSA program
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Slide 21: What Can You Do to Help?
• Add your organization to the CSA list of supporters at www.illinoisassetbuilding.org/csa • Talk with your community about asset building and CSAs • Contact elected officials and let them know you support CSAs
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Slide 22: For more information: Chris Giangreco 773.336.6073 support@illinoisassetbuilding.org
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