Money Match: Federal Aid Offers Workers a Helping Hand

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The Courier-Journal (Louisville, KY)
By:  Jere Downs
March 31, 2013

For every dollar Caitlin S. Willenbrink deposits in the bank toward college, a little-known program will match it with $3 in federal and local cash.

Willenbrink's poverty-level wages and clear goals helped her qualify for the assisted savings program.

Scraping by on a $10,000-per-year job as a VISTA volunteer with Metro government and $200 per month in federal food stamp aid, Willenbrink dreams of graduate school. With the "Individual Development Account," or IDA, her goal is in sight. She aims to save $500, to net a total of $2,000 by this time next year.

"I know I have to save or else I will forfeit the program," Willenbrink said.

The 23-year-old she expects to apply for student loans and scholarships for a master's degree in social work.

She said that "$2,000 is not a whole lot of money for graduate school, but it will pay for my books or a new laptop."

Willenbrink could also have signed up for savings to help toward a home purchase or a new small business through the program, which is administered through participating local government agencies, private companies and nonprofits. Matching cash comes only if participants complete financial education classes and discuss progress in regular meetings with guidance counselors.

Designed to build assets, the federal program is designed to "give low-income families a hand up out of poverty," according to the U.S. Department of Health & Human Services.

The savings accounts are for Louisville-area workers who earn an average of $11 per hour or less.

Willenbrink was getting her matching money through the nonprofit Center for Women and Families.

In the last three years, 120 local workers socked away $160,031 with the help of the center. Few were recent victims of domestic violence, services for which the Center is most known in Louisville. Instead, they were screened to make sure their credit was reasonable, they were employed, and they had sufficient stability to stick to a monthly budget.

Homeownership

Of the group of mostly single mothers with at least two children, 41 used their savings to buy a home, said Allison Brown, who manages the program for the agency in Old Louisville.

"We have had waitresses, child-care workers, social workers and students on work study programs," Brown said, adding about 70 percent of enrollees successfully complete the assisted savings program.

People buy modest homes for between $70,000 and $80,000, she said, adding local banks including Republic, Fifth Third, PNC and others help with aid, financial counseling and banking services.

Working people of modest means struggle to live check to check, with saving enough to buy a house or go to college out of reach. But assets, such as a home or business, are crucial to breaking generational cycles of poverty. That is the rationale behind the IDA, which runs between one and five years with an estimated 500 programs nationwide, with a total budget of $25 million, according to HHS. Partner governments or agencies must raise matching funds for each federal dollar spent.

'Changed behavior'

"When you combine financial education with a product like a matched savings account, you see changed behavior," said Amy Shir, a Louisville-based financial consultant who advises agencies nationwide on IDA plans and other anti-poverty programs. "You see hope. This helps working people enter the economic mainstream."

Who can benefit depends also on the local agency administering the program. Jewish Family & Career Services, for example, runs an IDA savings program to help refugees settle in new professions or homes in the U.S. Refugees receive $1 in aid for every $1 saved up to $2,000 total for an individual, and up to $4,000 per household. Up to 30 refugees from Iraq, Cuba, Myanmar, Somalia, Nepal and elsewhere are involved, said Katherine Becker, a special-projects coordinator at JFCS.

"A lot of our clients come from places where they live in complete turmoil," Becker said. "They may not even be here by choice. If they can enroll in a program and become economically self-sufficient, they will need other government subsidies less and less."

Pilot program

Match rates vary. A pilot program just begun by Metro Louisville government aims to help a dozen city residents recruited at Neighborhood Place community centers. City applicants must earn wages at about $24,000 per year or less, or roughly 130 percent of federal household poverty guidelines, administrator Cassandra Miller said.

"Most of our folks are either interested in homeownership or small business," she said, adding federal and city funds will match $4 for every $1 participants save. Accounts for the Metro Louisville program will be based at the Fifth Third bank at 15th Street and Broadway. Four case managers chose finalists from 50 participants, who attended orientation sessions, she added. Money is spent directly on purchases approved by program administrators, who also review clients' monthly budgets.

"Once you enter the program, you have a three-year time period to graduate," she said.

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