Asset Accumulation is Key for Family Economic Security
LITTLE ROCK, Arkansas (Jan. 31, 2013) — Over half of Arkansas residents currently risk financial disaster due to the absence of sufficient savings to fall back on in the event of a job loss, health crisis or other income-depleting emergency, according to a report released Jan. 30 by the Corporation for Enterprise Development (CFED).
The 2013 Assets & Opportunity Scorecard defines these residents as “liquid asset poor,” which means they lack adequate savings to cover basic expenses at the federal poverty level for just three months if they suffer a loss of stable income. Included in this group are a majority of Arkansas residents who live below the official income poverty line of $23,050 for a family of four, as well as many who would consider themselves middle class. Forty percent of households earning between $41,341 and $67,008 per year have less than three months of savings ($5,762 for a family of four).
These families have limited hope of building a more prosperous future for themselves or their children through saving for college, buying a home or setting aside money for retirement.
Arkansas receives an F in Financial Assets & Income, due in part to Arkansans’ lack of access to the financial mainstream. The state ranks 49th in unbanked households and in under-banked households that have a checking or savings account but still continue to rely on alternative financial services. Arkansas also has the lowest number of households with a savings account in the nation, at fewer than 50 percent. The state also receives an F in Education, ranking 50th in adults with at least a two-year college degree and 49th in four-year college degrees.
The state ranks ninth on homeowner cost burden and 12th on affordability of homes. While Arkansas has the 13th lowest foreclosure rate in the US, it ranks 42nd on delinquent mortgage loans, indicating that a significant number of homeowners are at risk of losing their homes. Also, with 45 percent of children enrolled in some form of pre-K, Arkansas ranks fifth on early childhood education enrollment.
Published annually, the Assets & Opportunity Scorecard offers the most comprehensive look available at Americans’ ability to save and build wealth, fend off poverty and create a more prosperous future. It explores how well residents are faring in the 50 states and the District of Columbia and assesses policies that are helping residents build and protect assets across five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.
“We understand asset accumulation leads to greater economic mobility by increasing current and future levels of income,” says Tamika Edwards, director of public policy for Southern Bancorp Community Partners (SBCP). “Savings are needed to have household financial stability, and we believe building and securing assets is crucial for the economic security of Arkansas families.”
Southern Bancorp Community Partners serves as the Lead State Organization for the CFED Assets and Opportunity Network.
“SBCP’s direct service work carries out our beliefs,” Edwards says. “We recently celebrated the milestone of reaching our 1,000th asset purchase through our Individual Development Account (IDA) Program.”
Organizations throughout the state comprise the Arkansas Assets Coalition (AAC), a group of asset-building practitioners and policy advocates that promote the importance of savings and sound financial decisions.
“We understand how important it is for individuals to learn to manage their income properly to ensure they are financially secure in case of emergencies, as well as having the money needed to pursue higher education, buy a home or start a business,” says Sonya Lane, executive director of Change, Inc. “We are looking forward to working with the Arkansas Assets Coalition to help create effective strategies that will allow Arkansans to become financially independent.”
“The mission of the Central Arkansas Development Council (CADC) is to improve the quality of life and build strong communities in Arkansas,” says Linda Spaul of CADC. “Our Individual Development Account and Money Management programs are designed to help eligible low-income families become more financially self-sufficient and reach their goal of educational attainment or home or business ownership.”
The Scorecard includes a dozen policy solutions that can help Arkansas increase opportunity and promote financial well-being for all residents. Among them:
• To address high rates of income and asset poverty, Arkansas should promote awareness of the federal Earned Income Tax Credit to maximize income for low-wage workers and remove the disincentives for very low-income families to save by lifting asset limits in its public benefit programs.
• To help maintain homeownership as a route to the middle class, Arkansas should provide assistance to first-time homebuyers and funding for its state Housing Trust Fund.
• To improve job quality, Arkansas should increase the state minimum wage and expand federal leave laws to cover more Arkansas workers.
• Finally, to boost two- and four-year college degree attainment rates, Arkansas should expand its college savings incentives through the state 529 plan.
“Moving the needle from poverty to prosperity for Arkansas begins with individuals and families,” says Dr. Sherece West-Scantlebury, chief executive officer of the Winthrop Rockefeller Foundation. “By investing in asset development strategies such as Volunteer Income Assistance sites, Individual Development Accounts, Centers for Working Families, and financial literacy, we can ensure that Arkansans achieve financial security and our communities and state thrive.”
To access the complete Scorecard visit http://assetsandopportunity.org/scorecard.
Southern Bancorp is one of America’s largest and most profitable community development banks. Together with its nonprofit affiliate Southern Bancorp Community Partners, it seeks to reduce poverty by improving education and economic opportunities for individuals and families. For more information visit www.banksouthern.com and www.southernpartners.org.