Asset-building strategies give families a leg up

We all grow up in different circumstances. Some families own a home or business. Some parents are able to set aside money for their children's college education, a truly valuable economic security blanket.

Unfortunately, for many low-wage working families, there is little opportunity to build assets for their children's futures. Instead, these working adults pick up their paychecks, pay for basic necessities — housing, utilities, food and transportation — and are left with little or nothing to save. These struggling families are a layoff or medical emergency away from falling even deeper into poverty. Currently, almost 25 percent of Washington households are "asset poor" (without enough money on hand to live above the federal poverty line for three months). The 2006 federal poverty threshold is $20,444 for a family of four; our state ranks 39th nationally for assets. Sixteen percent of our state's households have zero net worth, putting us 37th in the nation, according to the Corporation for Enterprise Development (CFED). Even worse, our state ranks 45th nationally, with a 63 percent homeownership rate.

Indeed, each of us has a personal responsibility to save and build our assets. However, there are systems and policies that make this difficult, if not impossible, for families that depend on low-wage jobs. The cost of living continues to spiral upward, especially for necessities. Median home prices have risen significantly in South King County, and the continual rise in oil prices have pushed up costs for utilities, food and transportation.

The situation is urgent. Fortunately, there are innovative solutions and policies that can help families build assets and brighter opportunities for their children.

Although most federal asset-building programs are skewed to help those who already have assets, the Earned Income Tax Credit (EITC) is specifically for those with low and moderate incomes. Though a strategy available to many, it has been tapped by few simply because they did not know it existed.

In South King County, EITC outreach is putting money into people's hands. BuRSST for Prosperity, a community-based initiative, with other local partners supported EITC sites in Burien, Renton and SeaTac that helped return more than $1.4 million in federal refunds to working families during 2006. In 2007, more than $1.8 million in refunds were obtained.

The Legislature is also taking action. According to CFED's Asset Development Report Card, Washington ranks sixth in the nation in asset policy. Lawmakers appropriated $2.8 million in asset-building programs such as Individual Development Accounts (IDAs), in the last legislative session. IDAs help low-income families create matching savings accounts that can be used to purchase a home, start a business, or obtain an education for themselves and their children. Account holders are also trained in finances, home buying and business.

More can be done.

For example, earlier this year, California legislators introduced a bill to create the California KIDS account, which creates a savings account for every newborn, with a one-time, $500 deposit. The account can be tapped only after the child reaches 18 to pay for college, purchase a home or roll savings into a retirement account. The hope is for parents to build on these assets for financial empowerment.

Our state leaders have proven their commitment to children by providing them with health-care coverage and advances in early-childhood education. A newborn account program would help our state's most vulnerable children.

Nearly half of the children in our country grow up in households with zero or negative savings. Without assets, it is difficult for families to provide our future generations the opportunity of upward mobility and economic independence. Asset-building strategies strengthen the community and its foundation, making it essential for the community to help create and support innovative strategies to help families attain economic security.

More importantly, children need to know they have a stake in our future. Assets give them the capacity to dream.

Karan Gill is the government and public-relations manager at BuRSST for Prosperity (www.BuRSST.org), based in the Old Renton City Hall. He can be contacted at karang@chs-wa.org