On April 9, the House Public Education committee heard Representative Marsha Farney’s bill (HB 2662) to create a semester-long personal financial literacy course required for high school graduation and I provided testimony in support of this bill. A stand-alone PFL course in high school would better equip Texas students with real-world skills that are so important to becoming financially secure.

How do we currently teach PFL to our students?

In 2011, the 82^nd Legislature enacted a new requirement for K -8 math classes to include instruction on personal financial literacy (PFL), effective for the 2014-15 school year.  Students also receive PFL instruction in their 12^th grade economics course.  While it’s great our state has these requirements, our weak spot is clearly in high school. The proposed semester-long course, currently proposed as a social studies course, is important because it would expand PFL instruction in high school, which is taught too little and too late in 12^th grade economics, and build upon and reinforce PFL concepts taught in K-8 math classes.

The Great Recession has demonstrated the importance of strong financial management skills. However, too many young adults lack a sufficient grasp of financial concepts. One survey found that only 48% of high school seniors know that paying the minimum balance on a credit card results in higher finance charges than paying the balance off in full.¹ Texas also fares poorly on the financial health of our residents. The CFED Scorecard ranks Texas in the bottom ten states on a variety of financial health measures including the following:

• 65% of Texas residents have subprime credit scores;

• 37% of Texas residents do not have a savings account;

• Less than 40% of Texas workers participate in a retirement plan at work; and,

• 16% of Texas borrowers entering repayment on their student loans defaulted during the first three years of repayment.²

While there’s some uncertainty about where and when this course would best fit into the high school curriculum (whether as a social studies, math or career course), in part because the legislature is currently considering changes to Texas’ high school graduation requirements, Representative Farney seems open to working with her colleagues to find the best spot in the curriculum for this course once there’s more certainty about the high school graduation requirements.  Regardless of where this semester course best fits into the high school curriculum, a stand-alone PFL course in high school is an important addition to the high school curriculum and could go a long way in helping our students build brighter financial futures.

Update to above post: Since the time of writing this article, a committee substitute replaced the original bill and was passed out of the House Public Education committee. The committee substitute requires that Texas high schools offer an elective PFL course in high school instead of requiring a PFL course for high school graduation.

This originally appeared in the Austin-American Statesman on April 7, 2013.

Tax season is here. For many Texas families, the substantial tax refund they will get back is vital to their overall budget.

The Earned Income Tax Credit the most successful income supplement for working families, lifting millions of Americans, including about 765,000 Texans, out of poverty. Low-income children in families that receive the tax credit go farther in school and, as a result, work more and earn more as adults. Last tax season, 2.6 million Texans received the credit, claiming $6.9 billion, or approximately $2,600 per filer. Because tax refunds represent the largest single payment many low-income families receive all year, tax time creates an important opportunity for families to save for a more secure future.

Many families who are not necessarily living in poverty may still find themselves with few assets. Being liquid-asset poor, as defined by the Corporation for Economic Development Scorecard, means that a family doesn’t have adequate savings to cover basic expenses for just three months if they lose an income. Half of Texas residents are liquid-asset poor. While low-income residents comprise the majority of asset-poor Texans, nearly 3 in 10 households earning between $55,045 and $86,448 are also asset poor, with less than $5,762 in savings for a family of four. These families have nothing to fall back on if they experience an income-depleting emergency, making them more vulnerable to high-cost financial services such as payday loans.

In addition to providing short-term stability, studies have also shown long-term benefits for adults and children living in households with savings. Savings and other personal assets, along with educational attainment and family structure, have all been found to be important factors in moving families into the middle class.

And Texans know this — we want to become better savers. In a survey of custodial parents in the Texas child support system, 94.3 percent of parents ranked “saving for children’s future educational expenses” as important for their family’s future even while over two-thirds of these parents had household incomes less than $30,000. These families ranked savings above all other goals. In response to this interest, the Texas Office of the Attorney General’s Child Support Division is piloting a program to help custodial parents build college savings.

But Texas families need more than desire to be able to save. They need opportunities and incentives. Some middle- and upper-income families are encouraged to save for retirement through an employer contribution match; however, 64 percent of Texas workers are not provided a retirement plan at work.

Because the state is currently playing a minimal role in promoting savings, the nonprofit and private sectors have stepped up. For example, in 15 Texas communities including Austin, financial institutions, community tax centers and nonprofits are providing incentives and opportunities for working Texans to save a portion of their tax refunds.

In another example, this spring in Amarillo, the school district and Happy State Bank are connecting Texas’ new K-8 financial education requirement with hands-on experience in money management by launching in-school banking programs in half of the district’s elementary schools.

While these community efforts are important, to promote savings for all Texans, the state must expand and build upon them. In 2011, the Legislature adopted several policies to promote savings: requiring K-8 math-based financial education; establishing Texas Save & Match, which helps families save for college by matching their contributions to pre-paid tuition accounts; and creating the Texas Financial Education Endowment, which is managed by the Finance Commission and funded by a small fee assessed on payday and auto title lenders.

The state can leverage these recent policy initiatives by growing the Texas Financial Education Endowment. To expand grantmaking to nonprofits to support household financial education and savings, more state-regulated financial services businesses should contribute funds to the endowment through a small fee assessed by their state regulator.

The Legislature could also reform our state’s policy on eligibility for various state programs such as the Supplemental Nutrition Assistance Program by passing bills being considered by the Legislature that would eliminate or exempt certain savings products from asset limits for program eligibility. Right now the state disqualifies a person from participation if they have even minimal savings.

Imagine the impact on our state’s high asset poverty rate if more Texas children and families had opportunities to save during tax season or, like the students in Amarillo, to save at school. Texas needs to focus on policies that promote savings.

With two innovations by the U.S. Treasury, people now can save directly on their tax return, either by splitting their refund between a checking and savings account or by purchasing “Series I” U.S. Savings Bonds, making saving easier and more automatic.   These savings bonds are a good “starter” savings product for families because they can be purchased without a savings account and pay a decent annual interest rate (currently 1.76 percent) compared to basic savings accounts (.01 percent).

During tax season, more than 114,000 Texans get their taxes prepared at Volunteer Income Tax Assistance (VITA) sites. VITA sites typically serve households earning less than $50,000, although the average client earns slightly above $20,000.  These IRS-certified VITA sites, operated by local entities, provide free tax return preparation to low-income families and have emerged as a primary platform to encourage working families to save.

While saving at VITA sites is gaining momentum, relatively few VITA filers (less than 2 percent) purchased Savings Bonds or split their refund for the 2012 tax season. Despite the relatively low uptake, we have witnessed considerable growth in the number of savers at Texas VITA sites.  In 2012, the number of VITA savers doubled from the 2011 tax season to 1,728 because of the growth in projects encouraging filers to save their refund.  This tax season, we have identified 15 local projects that are incentivizing VITA clients to save a portion of their tax refund. Below we highlight this tax season’s largest tax-time savings projects in Texas including the OpportunityTexas Tax-Time Savings Project, as well as tax time savings projects taking place in Houston and San Antonio.

The OpportunityTexas Tax-Time Savings Project

OpportunityTexas, a joint initiative of CPPP and RAISE Texas, has been growing tax-time savings through our Tax-Time Savings Project (TSP).  TSP,  in its third year, includes two different projects: the Savings Bond Incentive Project and the Opportunity Savings Project.

TSP's Savings Bond Incentive Project provides modest incentives to VITA clients to encourage them to save a portion of their tax refunds by distributing a $25 grocery or discount store gift card to filers that purchase at least $100 in U.S. Savings Bonds with their tax refund at participating VITA sites. Our 2013 partners include Foundation Communities in Austin and the United Ways of Texas. Local United Ways are carrying out the project at 37 VITA sites in the following nine communities and regions: Brownsville, Corpus Christi, Dallas, Fort Worth, Longview, Lubbock, Temple, Victoria and Wichita Falls.

In 2013, TSP added the Opportunity Savings Project, a partnership with the Texas Credit Union Foundation, which is offering a matched savings account to filers at VITA sites operated by Border Federal Credit Union in Del Rio and Coastal Community Credit Union in Galveston. Filers at their VITA sites are encouraged to open and deposit a portion of their refund into a savings account and build savings in the account over a one year period. For signing up, filers receive between a $25-50 gift card.  Next January, if the participant has a higher balance in their account than their initial deposit, they will receive a 1:1 match on their net savings up to $100.  The goal is to encourage savings throughout the year.  So far, we have seen strong demand for these accounts and the pilot is on track to meet its goal of opening at least 170 accounts.

San Antonio

San Antonio emerged as the only Texas community—and one of four nationally—to participate in a national demonstration project called Save USA, which aims to build the case for a federal tax credit that would incentivize low-income families to build first-time savings. Adapted from a pilot effort in New York City, Save USA offers a 50 percent match (up to $500) for filers that save a portion of their refund into a savings account and maintain their savings for approximately one year.

Houston

United Way of Greater Houston, in collaboration with Neighborhood Centers, is offering its United Way SAVE program to filers at Neighborhood Center’s 15 VITA sites.  Filers are encouraged to open and save up to $1,000 of their refund in a United Way SAVE account. Next January, clients will receive a 25 percent match on the lowest balance in their account over the project year. Their goal is to open at least 500 accounts this tax season, more than double the number of accounts opened last year.

Removing Barriers to Tax-time Savings

Despite these promising new programs, low income families have to overcome many institutional hurdles to save their tax refund for a more secure future.  For example, many state programs including SNAP, a nutrition program, and TANF, a cash welfare program, disqualify a person from participation if they have even minimal savings ($1,000 and $5,000 liquid asset limits for TANF and SNAP respectively) . This eligibility restriction is counterproductive to the very aim of these programs—to provide financial stability to families with the goal of reaching financial independence.

To address this issue, a provision of The American Tax Payer Relief Act of 2012 permanently exempts federal tax returns from asset tests for public assistance programs for one year beginning this tax season. While this policy change is a step in the right direction, this temporary exemption still discourages long-term savings.

Texas has also taken a few first steps to address this issue.  The state categorically exempts savings bonds for one year and certain college savings accounts from our asset tests for state programs.

To continue in this direction, the Legislature should pass HB 3845 and HB 3486 being considered this session that would eliminate or permanently exempt certain savings products such as United Way SAVE accounts, tax refunds and savings bonds, from asset limits for program eligibility.

One in two Texas families is asset poor, meaning they don’t have adequate savings to cover basic expenses for just three months if they lose an income.  Imagine the positive impact on our state's high asset poverty rate if more Texans had opportunities and incentives like filers at VITA sites with asset-building tax-time savings products.

This blog post originally appeared on the Center for Policy Priorities' blog here.

If the Legislature is serious about preparing the Texas workforce for future jobs, we need greater investment in higher education that empowers more low-income students to enter and complete college.

This Thursday, the Texas House has the opportunity to add more funding to the state’s financial aid programs—proven tools to increase college access and success— as they debate the proposed Texas budget for the 2014-15 biennium.

The House and Senate financial aid proposals restore some of the cuts from last session but still leave financial aid funding roughly at 2010-11 levels, inadequate for a rapidly growing state.

The House Appropriations Committee passed a more generous budget proposal for Texas’ financial aid programs compared to the Senate. It includes an additional $30 million above the Senate budget for TEXAS Grants—the state’s major need-based grant program. It has $5 million in additional funds for the Texas Education Opportunity Grant for community college students and the college work study program, respectively. And it provides an additional $15 million for the Texas Equalization Grant program for students attending private universities.

Even though current financial aid programs expand access for many low-income students to attend college, Texas has never made the commitment to fully fund TEXAS Grants to reach all students with financial need. At its highest level of investment in 2010-11, TEXAS Grants only reached an estimated 60 percent of all eligible students, leaving many students to borrow more and work more to cover their college costs. With increases to Texas’ financial aid programs, lawmakers can reduce student loan dependence and help students succeed.

This blog post originally appeared on the Center for Public Policy Priorities' website here.

To build a strong economy, Texas can do better to strengthen the adult basic education (ABE) and literacy system to prepare more Texans for higher-skilled and higher-wage jobs. To make system-wide changes to the way adult basic education is delivered and improve outcomes for adult learners in Texas, state policymakers and ABE providers should adopt a goal of integrating career pathways and bridge programs to streamline and shorten the process for adult learners to obtain the training and education they need to attain a certificate or degree, a higher-wage job, and financial independence.

Our latest policy page provides an overview of the adult basic education and literacy system in Texas and makes recommendations for strengthening the ABE and literacy framework to reach more students and improve outcomes for adult learners.

This post originally appeared on the Center for Public Policy Priorities' blog, here.

At CPPP, we believe in the people of Texas. And we believe that all Texans deserve a chance to live a safe and healthy life–seeing a doctor when they need one, having healthy food on the table, and getting the education they need to secure their economic future.

But what does it take for families to be able to make ends meet and reach these basic tenets of the American Dream? Our new Better Texas Family Budgets provide a conservative measure of what it costs for families to make ends meet without sacrificing safety, health or security. Our budgets also reflect that families’ expenses differ dramatically depending on where they live, their savings goals, and who is in their family (e.g., kids or spouse).

And we’re taking this information on the road!!!!

Since it’s release in January, we’ve taken our Family Budgets tool throughout Texas, sharing the findings with city and county leaders, service providers, business leaders, and the general public.

The response has been overwhelming. Through our tool, we can show what it takes for families to get by in a specific metro area in Texas, what percentage of jobs in that area pay enough for families to get by, and the profound impact of job-based health insurance on a family’s financial security.

The data, combined with our documentary A Fighting Chance, is a powerful catalyst for community discussion, leading to basic community planning questions like:

• What tough choices must families make when they can’t meet these basic budgets?
• What are the most common jobs in our community?
• What kinds of education are required for jobs that do pay enough to get by?
• What does it take for families to be able to save for emergencies, college, or retirement?
• And what can we do as a community to create opportunities for and eliminate barriers to financial security for our friends and neighbors?

To date, we’ve taken our Roadshow to five cities reaching over 600 people. Our goal is to reach every metro area in Texas at least once (if not multiple times!) by the end of 2013. The culmination of the Roadshow will be a Family Economic Security Summit in Austin in the Spring of 2014 where communities from across the state can come together to create a shared state-level agenda to increase family economic security.

But we can’t do this without your help! If you would like to help bring the Roadshow to your city, fill out our speaker request form. We would love to work with you to plan either a standalone event or integrate our work into an existing agenda. The critical first step is to get the conversation going. Because it’s only by working together that we can build a  road to a better Texas for everyone.

This post originally appeared on the Center for Public Policy Priorities' blog, here.

“Texans believe in hard work that leads to a secure retirement. We provide our public servants a secure retirement through a decent pension. At the Center for Public Policy Priorities, we recently released a major report on our state’s two largest pension plans, the Teacher Retirement System and the Employee Retirement System. Every pension plan must be evaluated individually, but unlike some plans, generations of conservative stewardship have made these two Texas plans national models.”

Read the full piece by our executive director F. Scott McCown & policy analyst Chandra Villanueva here.

Financial education has the potential to put students on the right path to building the skills that are so important for building financial security.   Smarter Texans Save, a new initiative which launched in January coordinated by OpportunityTexas in partnership with the University of Wisconsin-Madison Center for Financial Security, Texas Council on Economic Education and CFED, with support from the U.S. Department of Treasury, will give elementary school students in the Amarillo Independent School District a unique opportunity to participate in important research that could break new ground in financial capability for other Texas school districts and schools across the nation.

Smarter Texans Save is designed to pilot Texas’ new requirements for personal financial literacy instruction in K-8 math classes.  The initiative will also examine the effects of financial education coupled with an in-school banking program on student learning, financial attitudes and behaviors. Through Smarter Texans Save, all Amarillo ISD 4th grade students will receive financial education, with the goal of helping students develop important financial skills, including saving money and spending wisely. The research component of Smarter Texans Save is particularly innovative as virtually no rigorous research exists on the effects of financial education coupled with hands-on banking application. The results of this program may inspire more schools across the nation to explore similar strategies for helping their students gain personal financial skills and build savings at an early age.

During the Spring 2013 semester, students will receive six financial literacy lessons tied to the Texas K-8 financial literacy curriculum standards that will go into effect statewide in the 2014-15 academic year. Happy State Bank is also implementing its in-school banking program in roughly half of Amarillo ISD’s 36 elementary schools, doubling Happy State Bank’s current in-school banking program, Kids’ Bank, in the Panhandle. Half of the students in these schools will randomly be offered a $25 seed deposit to encourage them to open an account and test the effects of the seed deposit on student enrollment in the account.

Smarter Texans Save received media coverage from major Amarillo news outlets including a story in the Amarillo Globe-News and a story on KFDA NewsChannel 10.  Also, you can check out a photo album of press conference here. For more information about Smarter Texans Save, check out the official press release, visit http://smartertexanssave.wordpress.com/ or contact Laura Rosen, OpportunityTexas Coordinator at rosen@cppp.org.

This post was originally posted on the Center for Public Policy Priorities' blog here.

Half of Texas residents are living on the edge of a financial hardship with almost no savings to fall back on as a result of a job loss, health crisis or other income-depleting emergency, according to a report released today by the Corporation for Enterprise Development (CFED).

The 2013 Assets & Opportunity Scorecard defines these Texas residents as “liquid asset poor,” which means they lack adequate savings to cover basic expenses for just three months if they suffer a loss of stable income. Included in this group are a majority of Texas residents living below the federal poverty line of $23,050 for a family of four plus many Texans who would consider themselves middle class. Nearly three in ten households earning between $55,045 and $86,448 per year have less than three months of savings ($5,762 for a family of four).

Without savings, these families have limited hope of building a more prosperous future for themselves or their children, including saving for college, buying a home or setting aside money for retirement.

Texas ranks 39^th in the country overall in the ability of residents to achieve financial security. You can view the entire Texas profile here.

The Scorecard evaluates states across 53 measures within the five different issue areas. Texas received:

• “F” in Health Care,
• “D’s” in Financial Assets & Income/Education, and
• “C” in Businesses & Jobs.
• Overall, our best area was Housing & Homeownership, where we scored a “B”.

Texas also ranks in the bottom ten on 18 of the ranked 53 outcome measures, including these notable ones:

• Unbanked Households; Underbanked Households
• Homeownership Rate
• Share of Consumers with Subprime Credit
• Households with Savings Accounts
• Retirement Plan Participation
• Uninsured Rate; Employer-Provided Insurance Coverage
• Share of Adults with High School Degree
• Student Loan Default Rate

To improve financial stability, reduce asset-stripping and enhance borrower success, Texas should enact “ability to repay on-time” legislation to limit fees, decrease rollovers and reduce auto repossessions.

To increase access to mainstream financial products, promote financial success and reduce asset poverty, Texas should remove state asset limits, particularly for SNAP and TANF, and promote household savings through strategic investments in proven financial education, credit building and college savings initiatives.

Finally, to address the highest uninsured rate in the country and to improve affordability and continuity of health coverage for low-income working families, Texas should opt to cover more than one million uninsured U.S. citizen adults in Medicaid beginning in 2014. In conjunction with Affordable Care Act implementation, Texas must continue to modernize and streamline Medicaid-CHIP enrollment and renewal procedures to ensure “no wrong door” enrollment for either public or private health coverage. To improve affordability and continuity of health coverage, Texas’ Department of Insurance must stop unreasonable rate increases and ensure that Texas’ health insurance exchange is user-friendly and family-centered.

To read an analysis of key findings from the 2013 Assets & Opportunity Scorecard, click here. To access the complete Scorecard, visit http://assetsandopportunity.org/scorecard.