NAMHPAC Pre Conference WorkshopNAMHPAC Pre Conference WorkshopJoint National Conference – 2007Joint National Conference – 2007Washington DCWashington DC

State Level IDA Programs -

Achieving Wellness and Recovery Through Financial Stability, Security and

Independence

Peter Stahl

Community Enterprises Corporation

How does poverty affect wellness How does poverty affect wellness and recovery?and recovery?

Economic PovertyEconomic Poverty

“Poverty is one of the most pervasive, significant, and debilitating barriers that individuals diagnosed with a mental illness face that prevents them from participating fully in the community” (Swarbrick, 2007)

Characteristics of the Population We Characteristics of the Population We ServeServe

• Have been hospitalized for mental illness• Live in fear of coming out or going back in the hospital• Have been financially devastated• Have little or no earned income• Regulated to living on federal and state assistance• Classified by federal government standards as poor,

living in poverty• Have little or no access to money, banking, financial

services or to common hopes and dreams

What Do People with Mental Illness What Do People with Mental Illness Want?Want?

• They want what everyone else wants

• They want access to things people need

• They want opportunity to participate in society

BarriersBarriers

• Subsistent benefits and wages

• Limited access to community supports

• Limited access to housing

• Limited access to money, banking services and financial products

• Predatory practices by mainstream financial institutions

WHAT IS WELLNESS ?WHAT IS WELLNESS ?

• Wellness is:– a conscious, deliberate process that requires

that a person become aware of and make choices for a more satisfying lifestyle (Swarbrick, 1997).

WHAT IS RECOVERY?WHAT IS RECOVERY?

• Recovery is:– “a deeply personal, unique process of

changing one’s attitudes, values, feelings, and goals, skills, or roles. It is a way of living a satisfying, hopeful, and contributing life even with the limitations caused by mental illness. Recovery involves the development of new meaning and purpose in one’s life as one grows beyond the catastrophic effects of mental illness.” (Anthony, 1993).

Financial StabilityFinancial Stability

What are the characteristics?

• Steady income• Managed expenses• Balanced Budget

Financial SecurityFinancial Security

What are the characteristics?

• Savings for emergencies• Savings for a “rainy day”• Savings for big ticket items • Savings for investment

Financial IndependenceFinancial Independence

What are the characteristics?

• Investment in car• Investment in a business• Investment in education • Investment in a home• Investment in your future

Why Should People Living in Poverty Why Should People Living in Poverty Save?Save?

• Helps reduce stress in case of emergencies• Provides security, a sense of well-being and

worth• Increases hope, dares to dream• Gives control to one’s situation and future

Hopes and DreamsHopes and Dreams

• Job• Higher Education• More Money

• 401k / Retirement

• Spouse• Spirituality

• Car • Better Job • Home of your own• Friends• A Valued Role in

Society• A Better Tomorrow

Community Enterprises Corporation (CEC)Community Enterprises Corporation (CEC)

Created by Collaborative Support Programs of NJ, CEC was incorporated in 1992 to:

• Provide safe, decent, affordable and permanent supportive housing and economic opportunities to people of low income who are reentering the community living with a mental health disability.

How Do We Provide SupportHow Do We Provide Support

• Respond to clients needs

• Look at the clients experience

• Innovate and change, responding to additional needs

• Look at the clients experience again

• Innovate and change again

Community Enterprises Corporation Community Enterprises Corporation Financial ServicesFinancial Services

Provider of no fee access to a supported money and banking product and service environment:

• Financial Money Management/Bill Pay Accounts

• Small Saver and Consumer Savings Club Accounts

• Individual Development Accounts (IDA)

• Links tax preparation and tax credits such as Earned Income Tax Credits to savings products and services

• Assist with credit repair

Community Enterprises Corporation Community Enterprises Corporation

Financial EducationFinancial Education • Financial Literacy Training on money, banking,

budgeting, savings and credit

• Training and technical assistance in purchasing a home, starting a business, and seeking higher education

Program Development HistoryProgram Development History

1992

• The Need - people reentering the community needed housing

• The Issue - many struggled with inadequate incomes, lacked critical independent-living skills and never gained or lost their housing due to none payment of rent

Program Development History (cont’d)Program Development History (cont’d)

1996• The Need - development of money management

program and representative payee program

• The Issue - money management program and representative payee program did not promote independent financial management skills generally linking disbursement of funds to treatment compliance contributing to power struggles, loss of freedom and control of ones finances

Program Development History (cont’d)Program Development History (cont’d)

1996• The Need -program is voluntary and free of

charge, awareness emphasized and help is given in making budgeting decisions

• The Issue - Clients were not able to save money, poverty conditions and lack of incentives to save increased requests for emergency aid

Program Development History (cont’d)Program Development History (cont’d)

2002

• The Need -Developed budgeting and savings education program adding a 1:1 matched savings program incentive which reduced emergency requests by over 60%

• The Issue -Clients were developing financial skills and were ready to acquire additional assets however the adverse impact of poverty and benefit regulations required additional asset building techniques

Program Development History (cont’d)Program Development History (cont’d)

2002• The Need -Individual Development Accounts

(IDA) matched savings for a home, a business and further education at a rate of 2:1 without jeopardizing individual benefits

• The Issue – Savers still had emergency needs and wanted to cash in savings accounts forfeiting match money

Program Development History (cont’d)Program Development History (cont’d)

2002• The Need - Emergency collateralized loan

program with flexible payment terms and 0% interest protected asset accounts keeping clients on the path to asset investments and accumulation

• The Issue - ongoing need for financial education and asset building strategies to help with personal, business, and tax issues

Program Development History (cont’d)Program Development History (cont’d)

2007

• The Need - Financial Fitness Center and Volunteer Income Tax Assistance (VITA) site created in 2007

The New Jersey ExperienceThe New Jersey Experience

Because CEC’s parent organization providessupport services, supported housing andadministers self help centers across the state:

• Clients could be selected from the agency • A pilot group was funded by the agency• Program was based on the recognized needs

of the clients• Relationships were already in place with the

State Division of Mental Health Services (DMHS) and Department of Community Affairs (DCA) who supported development

The New Jersey ExperienceThe New Jersey Experience

Regulatory Requirements:• Federally matched IDA savings are exempt from

Social Security assets limits• Clients need to be under the 200% of the federal

income guidelines• Net worth not including home and car cannot

exceed $10,000• Saving has to come from earned income• Client must save for at least 6 months

The New Jersey ExperienceThe New Jersey Experience

Community Collaboration:• Banks will provide financial literacy training and

funding for training to meet Community Reinvestment Act (CRA) requirements

• Not all banks will provide grant funding• Banks will provide agency level banking services

but will not necessarily provide individual bank accounts

The New Jersey ExperienceThe New Jersey Experience

Administration of the program:• Segregated bank accounts and monthly

reconciliation of client savings and match money funding

• Segregated client accounting• Monthly statements to the clients• Quarterly reports to funders• Regular meetings with clients

The New Jersey ExperienceThe New Jersey Experience

Lessons Learned:• Start clients with small saver accounts for things

they wanted to save toward• Limit goals to assets and improvement of quality

of life, not debt repayment• Limit match amounts and total amounts• Capacity of the organization needs to be self-

sufficient, limited funding for administration• Incorporate financial security and independence

through savings into wellness and recovery curriculum

Community Enterprises Corporation Community Enterprises Corporation SupportersSupporters

• State of New Jersey, Department of Human Services, Division of Mental Health Services (DMHS)

• State of New Jersey, Department of Community Affairs (DCA)

• US Department of Health and Human Services, Administration for Children and Families, Office of Community Services-Asset Building, Assets for Independence Program Grants (AFI) http://www.acf.hhs.gov/assetbuilding/