Southern Good Faith Fund’s Public Policy program is supporting several initiatives to increase asset building opportunities for working Arkansans. A key priority is increasing funding for the state’s Individual Development Account (IDA) program. The current annual appropriation level of $550,000 for IDAs does not allow access to them statewide or in every county. Currently, four organizations offer Temporary Assistance for Needy Families funded IDA accounts in 36 of the state’s 75 counties.
Based on a proposal to expand IDAs statewide prepared by the Arkansas Assets Coalition, of which SGFF is a member, the Transitional Employment Assistance Board voted to more than triple the state’s IDA appropriation to $1.7 million annually; following this vote, the Department of Workforce Services pending appropriation bill for the next two fiscal years doubles this amount over the next biennium to a total appropriation of $3.4 million through June 30, 2009.
Another key asset-building initiative is the Aspiring Scholars Matching Grant Program, which adds a matched savings component for low-income accountholders to Arkansas’s 529 College Savings Plan and would be administered by the Arkansas Department of Higher Education. Named for the section of the Internal Revenue Service Code under which these plans are authorized, 529 college savings plans have become increasingly popular for middle and upper-income households. Incentive grants in the form of savings matches enable lower-income households to benefit from these plans by providing those who qualify with a match, within limits, to their own contribution.
Savings match grants are a highly efficient way for states to invest in need-based financial aid. Savings match grants, particularly if deposited early in a beneficiary’s life, can leverage the investment earnings potential of the financial markets to grow exponentially in value. No other state financial aid program offers such leverage. Senate Bill 822, which would direct the state’s Section 529 Plan Review Committee to develop and implement the Aspiring Scholars Matching Grant Program, has passed the Arkansas State Senate and the House of Representatives Education committees, and as of March 22 was pending in the full Arkansas State House.