CFED Assets & Opportunity Scorecard
Over a quarter of Americans are “asset poor,” meaning they do not have sufficient net worth to subsist at the poverty level for three months in the absence of income. Through tax and spending decisions, the government can create incentives for people to save and build assets. One policy that helps low- and moderate-income people build assets is a state-supported Individual Development Account (IDA) program. IDAs are special savings accounts that match the deposits of low- and moderate-income savers, provided that they participate in financial education and use the savings for targeted purposes – most commonly postsecondary education, homeownership or capitalizing a small business. Research demonstrates that these accounts make families more financially secure and communities more stable. States should provide funds and support for local IDA programs.
Funding for local IDA programs comes from a combination of federal and state governments, foundations and the private sector. State funding, in addition to directly helping low- and moderate-income savers, can also leverage federal Assets for Independence Act funds, which require that every federal dollar be matched by a non-federal source.
Generally, state-supported IDA programs involve a partnership between a state agency, a nonprofit service provider and a financial institution. Once a state authorizes a state IDA program through a legislative or regulatory process, it designates a state agency or non-governmental entity to serve as the program administrator and steward.
The program administrator may set up accounts with the financial institution partner; provide fiscal management, administration and overall marketing services; and report results to a state auditor or evaluator. The administrator also partners with nonprofit service providers to interface with accountholders. Service providers manage outreach and recruitment, data collection and administration of individual accounts, and also provide financial education training, budget and credit counseling and asset-specific classes.
Strength of State Policies: Individual Development Accounts
|Does state provide funding for IDAs? 1|
|State||Authorized state funding?||Authorized 2015 Funding||Stable funding over|
last 3 years? 2
|District of Columbia||$200,000||Yes|
|New Mexico 13||$100,000||Yes|
|North Dakota 14||$62,500||Yes|
Notes on the Data
1. CFED collected data on state IDA policies from June-August 2015 through an online and phone survey of state agencies and/or state program administrators. States receive credit for state support for Individual Development Accounts (IDAs) if they provide funding for IDAs through appropriations, tax credits, TANF, a Housing Trust Fund or other discretionary state government sources. Note: "-" indicates that the data is not applicable because the state does not currently appropriate IDA funding.
2. States are considered to have stable funding if they have steadily maintained or increased funding over FY 2013, 2014 and 2015; or, in cases where there has been a reduction in funding, states are considered to have stable funding if their funding average for FY 2012, 2013, and 2014 is within 10% of peak funding within this same time period.
3. Alabama passed legislation in 2011 that created a state IDA program which will be administered by the Alabama Department of Human Resources. The program has not yet received funding. Advocates are actively working with the state legislature to secure funding for the program.
4. In June 2013, the Connecticut governor signed a bill to eliminate the $1,000 per calendar year cap on matching funds for each IDA program participant.
5. Although Indiana did fund IDAs in Fiscal Year 2015, data on the amount is unavailable.
6. Iowa appropriated $400,000 for IDAs in FYs 2008 and 2009, most of which was set aside for victims of 2008 flooding and other disasters. Unspent funds carry over into additional years. Because of difficulty drawing down the funding earmarked for disaster victims, the state lifted this requirement in 2012. Iowa continues to use funds carried over from FY 2009 (currently $80,000), but because there was no new appropriation in 2015, the state is not considered to have stable funding.
7. In Fiscal Year 2014, Kansas had funding for IDAs. We were unable to confirm that Kansas still has funding in 2015.
8. Because Congress allowed TANF Supplemental Grant funding to expire in June 2011, Louisiana eliminated all funding for IDAs beginning in FY 2012.
9. Maine offers state support for IDAs through a tax credit program.
10. IDAs were rewarded $375,000 from the Michigan State Housing Development Authority, which began in July 2014 and ended on June 30, 2015. There is no state funding after this date.
11. The Minnesota legislature appropriated $250,000 per year for FY 2014 and FY 2015, for a total of $500,000 over the two years. (Minnesota operates on a biennial budget cycle.)
12. While Montana does not currently offer state support specifically for IDAs, the state has appropriated funding for its Family Economic Security Program (FESP) which allows providers to include an IDA project in their program offerings.
13. New Mexico's IDA funding appropriation is for 1 year, to be used by June 30, 2016.
14. The North Dakota legislature appropriated $62,500 per year for FY 2014 and FY 2015, for a total of $125,000 over the two years.
15. Ohio's funding for IDAs comes through discretionary state funding.
16. Oregon is authorized to expend $7.5 million in state dollars and accept $10 million in donations at a 75% tax credit until October 6, 2015. After October 6, the state will shift to 70% tax credit with authorization to expend $7.5 million in state dollars and accept up to $10.7 million in donations.
How States Are Assessed
States receive credit for state support for Individual Development Accounts (IDAs) if they provide funding for IDAs through appropriations, tax credits, TANF, a Housing Trust Fund or other discretionary state government sources.
What States Have Done
To date, 40 states, the District of Columbia and Puerto Rico have enacted or administratively created state IDA programs, though not all are currently active or have current state appropriations. States that have had a state IDA program at one time or another are: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawai‘i, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia and Washington. At least fourteen states and the District of Columbia provided funding for IDAs in 2015.
Organizations and Experts:
- CFED's IDA Resource Library and IDA Research pages
- Administration for Children and Families’ Assets for Independence Program
- Assets for Independence IDA Resource Center
Guides, Briefs and Papers: