poverty reduction programs

Vocational Rehabilitation & Asset

Building

Abby [email protected]

Kennedy Douglas Consulting 1

Overview of Poverty Concepts What is Asset Development Disability and Poverty Attitudes about Money Tension Systems Credit Score and Rehabilitation Behavioral Economics Integrating Asset Development into the

Rehabilitation Process Helpful Tools Asset Building approaches ABLE & ACA Next steps


And what does it have to do with Vocational

Rehabilitation?

What is Poverty?


How the Federal Government Defines it:

Federal Poverty Guidelines: Typically, in January or February of each year the federal government releases an official income level for poverty called the Federal Poverty Income Guidelines, often informally referred to as the "Federal Poverty Level." The benefit levels of many low-income assistance programs are based on these poverty guidelines.

Poverty Threshold : poverty thresholds is based on the "thrifty food plan," which was the cheapest of four food plans developed by the Department of Agriculture. It assumes that 1/3rd of your after taxes income is based on food. This calculation has not changed since 1965.


1 $11,170

2 15,130

3 19,090

4 23,050

5 27,010

6 30,970

7 34,930

8 38,890

Federal Poverty Rate 2012


Problems in how poverty is viewed.

Types of income - By failing to include income that many low-income people receive in the form of public assistance, some critics maintain that the extent of poverty is over-stated.

Calculation is Flawed - assuming that families spend one-third of their income on food. Food now accounts for something closer to one-sixth of the family budget. Housing, transportation and utilities are much larger components of family spending.

Crucial Expenses -are simply excluded from consideration in the poverty calculation.

Most attempts to establish a new measure of poverty would result in higher numbers of people being counted as poor.


Living Wage

In recent years there have been more fundamental challenges to the poverty measure.

Concerned that the poverty rate is far too low, community-based organizations around the country have advocated for "living wages."

Policy and research institutes around the country have developed living wage budgets that take into account the full range of costs required for families of different sizes to maintain a decent standard of living.

http://www.thecalculator.org/http://www.dcmassc.org/http://www.dol.gov/whd/minwage/america.htm#Kentucky


http://www.thecalculator.org/

http://www.dcmassc.org/

http://www.dol.gov/whd/minwage/america.htm

http://www.dol.gov/whd/minwage/america.htm

Europe looks at social exclusion

Irish :What is poverty?

People are living in poverty if their income and resources (material, cultural and social) are so inadequate as to preclude them from having a standard of living which is regarded as acceptable by Irish society generally. As a result of inadequate income and resources people may be excluded and marginalized from participating in activities which are considered the norm for other people in society.


Causes of Poverty

All vantage points have validity. But each will frame how we deal with poverty and clients differently.Kennedy Douglas Consulting

9

But what is Asset Building?

ASSETS A resource of economic value that an individual, owns or controls with the expectation that it will provide future benefit. Such as stock of capital, including savings, financial securities, owning a business or property. Other less tangible forms of assets include educational achievement, job skills, training and access to credit.


The wealthiest Americans (those earning over $1 million annually) receive more than $95,000 in tax benefits.

Middle income families receive a few hundred dollars Poor families relying on public benefits actually face penalties for saving.

Eight out of 10 of the wealthiest families saved approximately one-third of their household income in 2009.

A full one-third of low-income households earned too little to make ends meet, much less save for the future. About 80% of the value for mortgage and property tax deductions accrued to the top 20% of taxpayers. In fact, many homeowners don’t take the mortgage deduction because they do not earn enough income or incur enough of a tax liability to warrant itemizing their deductions

Kennedy Douglas Consulting

11

Tax codes created the middle class

GI bill Land Grant System, Creation of the Federal Housing

Administration, The Home Mortgage Deductions, College aid.


Many people with disability are unemployed and don’t pay taxes. Those who do work frequently do not take advantage of options like the Earned Income Tax credit .

Welfare policy for the poor and disabled has tended to focus nearly exclusively on income support.

Sometimes even discouraging assets -Supplemental Society Income (SSI)-prevents an individual having more than $2000 in resources.

Asset Development programs are trying to help individuals leave poverty. So how is Vocational Rehabilitation part of Asset Development?

Persons with disabilities were not part Persons with disabilities were not part of the Asset Building Communityof the Asset Building Community


For individuals without disabilities, 12.8% had income below the poverty level over the past 12 months

For individuals with disabilities, more than 2x that rate - 27.3% had income below the poverty level.

69% of people with disabilities do not have a checking account, and 50% did not have a savings account.

• 75% of persons with disabilities do not have any loans with financial institutions

• 10% of persons with disabilities own their own home

• 39% of persons with disabilities indicate that lack of financial resources is the most serious problem they face


Federal poverty level for an individual is $930 a month.

The average monthly payment for someone on SSI in July was $532.00, SSDI was $1,111.44.

People with significant disabilities are frequently the poorest of the poor


Kentucky

One of the 11 states that have over 30% of its population living in poverty areas.

Five of the 11 are in SE TACE region

Http://scorecard.assetsandopportunity.org/2012/state/kyhttps://www.census.gov/hhes/www/poverty/data/index.html


http://scorecard.assetsandopportunity.org/2012/state/ky

http://scorecard.assetsandopportunity.org/2012/state/ky

https://www.census.gov/hhes/www/poverty/data/index.html



Protect Consumers in the Financial Marketplace: To address high unbanked and underbanked rates, increase credit scores and lower bankruptcy rates, Kentucky should help ensure residents have access to fair and appropriate financial products by capping payday loans at 36% APR.

Increase Incomes and Encourage Savings:

Kentucky should enact a state Earned Income Tax Credit to maximize income for low-wage workers,

remove the disincentive to save for very low-income families by lifting asset limits in two public benefit programs: TANF and family Medicaid,

create a state Individual Development Account program.

17Kennedy Douglas Consulting

This needs to be an underlying

assumption of our services


Where someone is in his or her life will directly impact what information they need or want.

Need to assess what the person is able to hear and understand and what information should wait until a later time.

Helping someone think about

what they need to establish the desired lifestyle is not just about obtaining employment and budgeting.

It is also about understanding the emotional connection to money, i.e. self-image. The emotional connections to money are far difficult to think and talk about honestly

Money is EmotionalMoney is

Emotional


Past financial behavior can inhibit certain vocational dreams

Myths and misunderstandings may inhibit a participant’s vocational aspirations

Attitudes = subconscious thoughts and feelings

Habits = unconscious patterns of behavior that are acquired through frequent repetition over time

Attitudes and habits determine your behavior and actions

How Does money play a

role in successful closures?

How Does money play a

role in successful closures?


Attitudes about Money


A penny saved is a penny earned …Waste not, want not …You deserve the best …If I could just win the lottery everything would be okay …Easy come, easy go …Do you think money grows on trees …?She is living beyond her means


Customers should work at SGA if _____________?

Working under the table is _______ ?

Receiving full benefits when you can work full time is ______?

Expecting the system to pay when you can is ____________?

Debt is ________________?


Pick a partner & Tell them

Your earliest memory about money

Who earned the money in your household

Who handled the money in your household

Did you have money

What did you hear about people who didn’t have money


Tension Systems



Kurt Lewin’s theory on tension systemEnvironments are complex and layered•There are behaviors that pull us away and towards certain behaviors.

These are “tension systems”Small changes can make a desired behavior easier to obtain

Dieting:Smaller platesRemove the temptationPush back from the table

Ladders are the small changes that make the desired behavior easier to act on.

Ladders are the small changes that make the desired behavior easier to act on.

Chutes are forces

propelling us away from

those behaviors.

Can be very subtle

CommentsMissing a bus

Self-doubt

Chutes are forces

propelling us away from

those behaviors.

Can be very subtle

CommentsMissing a bus

Self-doubt


Mapping Tension Systems

What are the chutes your customers face?

What are the ladders we need to create?

As a system In counseling and

guidance


Some ladders to think about


RISK. A risk is something one can gauge or has a sense of the possible outcomes based on past experience and knowledge. When a risk is taken the risk taker has a reasonable idea of the expected outcome.

RISK. A risk is something one can gauge or has a sense of the possible outcomes based on past experience and knowledge. When a risk is taken the risk taker has a reasonable idea of the expected outcome.

Uncertainty however, means

one is unclear what will happen

and has no way to project

possible outcomes.



How they are calculated

Impact

Plan

Credit Scores

Bad credit score can impact:

Getting a job What a person pays in

insurance Getting a loan or credit

card If approved pay higher

interest rates Renting an apartment Utility companies may

request a higher deposit Self-image


Thinking about how to combine credit scores with benefits planning and vocational counseling?

How do you currently use or talk about credit scores?

Do you help customers get their credit scores?

Is improving credit scores part of any planning?


Credit repayment history

Balances on credit

Rate at which they are using credit versus the amount of credit they have available

Depth of credit history

Length of credit history


There is a million ways to wreck your credit and only one way to improve you credit.

Bring active past due accounts current and keep them current

Keep credit card debt below 30% of credit limit

Request correction in writing for any errors

Do not close existing accounts

Limit applications for new revolving debt – credit cards

At what point do we talk about this? And

how?

Assist participant in obtaining credit

report ?

(www.annualcreditreport.com)


•57% higher for renters than for homeowners

•62% higher for people earning less than $40,000 than for those earning more

• 82% higher for people without a college degree than for those

with a four-year degree or higher

Loan Usage 12% Disabled Individuals have used pay day storefronts 12% African American 13% separated or divorced

New Research on Pay Day Loanhttp://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_Payday_Lending_Report.pdf


How Do We Talk about Money in Counseling and

Guidance?



We are under the illusion that we make rational decision.

We take short cuts in our thinking without even knowing it.

Yellow Red Green Purple

Orange Black Pink White

Gray Rose Brown

Behavioral EconomicsProbability Judgment- is central to everyone’s economic life.

Frequent questions: Will I get a raise? Can I afford to buy that car? Will I loss my job?

The likelihood of an event occurring- is usually not based on careful cognitive thought, or logic.


Availability – How our memories sequence information distorts probability judgment people tend overestimate the likelihood of easy to recall events and underestimate the likelihood and impact of less familiar by more likely events.

Anchoring- People estimate of the size or value of something based on what they start out comparing it to or what has been paid in the past. “Sticker Shock” or thinking you are getting a deal.


Status quo bias- People tend to do what they have always done. Change is hard, need to think about how we create options that have the desired behavior as the default

Loss aversion- Adam Smith- people are far more concern about what they will loss then what they will gain.


People will respond differently to the same information in either a positive or negative way depending on how it is framed.

We have financial literacy classes every Monday night.

Every Monday night we have classes that present proven strategies to increase your income.


People impose patterns where they do not exist based on a stereotypes drawn form experience with a few member of a group, or a hypothesis. It is a shortcut in thinking.

Example: When software engineers refused to believe people were having problems with their software. Microsoft installed a test room with one-way mirror so the engineers could see people struggling. (Hearth, Larrick & Klayman 1998)


People may change subsequent behavior when asked what they intend to do.

Too many or too much information of any product or services impedes a person’s ability to sort through choices rationally.

Fairness- people want their actions to appear fair.

Dan Ariely- Behavioral Economics

http://www.youtube.com/watch?v=9X68dm92HVI

http://www.youtube.com/watch?v=JH1GBX4ohMw

Priming & Complexity

Priming & Complexity





All this is interesting but

what does it have to do with

my job?

Current System



Living wages

What we want

We need to provide information not solutions

We need to assist not direct

Acceptance of what the individual cannot say about their situation

Help the person separate themselves from the issue

Identify options related to available resources

If we can do this- creates relationships and trust

Money in Vocational Counseling

Is Tricky

Money in Vocational Counseling

Is Tricky


What information about earnings, asset development or financial stability can be added to you webpage?

Websites Could have the living wage

calculator for Kentucky http://livingwage.mit.edu/

http://ndi-inc.org/Financial-Education/Financial-Wellness-Webinar-Series.aspx

Financial literacy http://www.mymoney.gov/ http://

www.360financialliteracy.org/

Real Question is:

How Do We Want to

Frame Vocational

Rehabilitation

Real Question is:

How Do We Want to

Frame Vocational

Rehabilitation


http://livingwage.mit.edu/

http://www.mymoney.gov/

Lay the foundation that a job alone is not enough. VR wants you to be financially stable. Which means we will:

Assist you in thinking about a career that both meets your unique strengths and abilities and puts you on the pathway to financial stability

Ask you to think about how much money you will need now and in the future to be financial stable. And what are you willing to do to achieve that.

Information on how to use your public benefits as a tool to support that goal

Provide resource information on financial literacy training and community resources

Information that could be

added to Orientation

Information that could be

added to Orientation


Add questions – Related to desired salary Supports wanted in

understanding benefits Do they have a bank

account If unbanked – for how long Credit issues, Level of debt

ApplicationApplication


Allow participant to set the pace

Allow participants to discuss financial fears and worries

Be available

Inform participants of their options,

Help them to use their own knowledge and experience to make decisions regarding their financial situation

Setting the stage

Setting the stage


What does financial security look like for the individual person?

What does financial independence look like?

When does the person engage in risky and/or impulsive financial behavior?

What does status mean and how does it play out in financial behavior?

What financial goals does the person have?

Are these goals addressed in the vocational plan?

Adapted from Thomas Jensen Vaerdi Financial, LLC, power point Talking about money

What a VRC needs to know

What a VRC needs to know


You will be providing information on one of the most personal topics – money

A topic that holds a lot of risk and uncertainty for many individuals

Need to understand how great the risk is

What questions need to be answered

If the risk can be controlled ? How? Is it reversible?

To be effective you need to establish a relationship

Use language that people understand Check out assumptions and don’t sell

people short Try to talk less than the person

Counseling &

Guidance

Counseling &

Guidance


If you had a little bit more money:

What would change in your life What would you buy Would you be willing or want to save for that What has been your relationship with banks

or credit unions How would more money help you or harm

you Who would you help if you had more money What are your concerns

Is there anything you like to know about

Credit or credit scores Budgeting getting Getting out of debt

Make it Real.

Make it Real.


Financial security: What does being secure

mean to you?

When would you know you had enough money?

What would you do if you desperately needed money


Spontaneous behavior:

When do you find it the most difficult to say “no”?How did you spend money the last year that added value to your life?


Goals: What does a targeted goal

mean to you? Where did your goals

come from? Have they changed?

Have you put off doing things that are important to you until you reach specific goals?


Ask the participant to make a list of top three financial concerns

Ask the participant to

articulate how the vocational plan can address these concerns

Create a personal action plan for what to do immediately,

within 30 days,

within 2-3 months,

within 6 months, etc.

Have the person mail the plan to him/er self


Counselor and Client need to consider how these factors will impact:

Successful employment

Financial stability

And what strategies need to be in place.

Living arrangement, Fear of losing benefits

Expectations, Lack of transportation,

Low credit score,Money as a trigger

Criminal recordLevel of debt

Past overpayments

Living arrangement, Fear of losing benefits

Expectations, Lack of transportation,

Low credit score,Money as a trigger

Criminal recordLevel of debt

Past overpayments


Financial education Getting banked Banking tools that work for

them Credit repair Managing credit and debt Tax Credits and Tax Filing

Assistance Savings Accounts IDAs Ability to use benefits as an

asset building tool Credit building loans Emergency loans (not

payday)

Need new partnerships &

resources

Need new partnerships &

resources


How a person defines financial stability and how to achieve that should be part of his or her planning

Financial support could be incorporated into the Individual Plan for Employment

PLANPLAN


CRPS Need To Be On The Same Page

Need to have conversations that help job seekers and their supporters thinks about:

What type of wage is needed? What would that wage change in the person’s life? What is the person willing to give up or do to obtain that

earning? Are there supports or assistance need to help manage

earned income?

CRPS need to be willing to negotiate wages and hours up not just down with employers.


Clients employed at wages that at least meet expenses,

Knows how to report earned income to SSA,

Knows how to apply for Earn Income Tax credit,

Has a bank account, Information on Individual

Savings Accounts (if appropriate)

Who in the community can assist with budgeting, financial literacy etc.

At ClosureAt Closure


Hazel Joyce Wiley Career & Financial Literacy Institute, IncP.O. Box 71Shelbyvile, KY 40066

The Center for Women and FamiliesP.O. Box 2048Louisville, KY 40201-2048(502) 581-7200

The Race For Education, Inc.1818 Versailles RoadLexington, KY 40504(859) 252-8648

United Way of the Bluegrass2480 Fortune DriveLexington, KY 40509(859) 281-1516

New Directions Housing Corporation1000 E. Liberty StreetLouisville, KY 40204(502) 589-2272

Jewish Family & Career Services of Louisville2821 Klempner WayLouisville, KY 40205(502) 452-3641

Kentucky Domestic Violence Association, Inc.111 Darby Shire CircleFrankfort, KY 40601(502) 209-5382


IDA’s in Kentucky

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000dpX40AAE



http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000Oxc0nAAB

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000Oxc0nAAB

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000Oxc0rAAB

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000Oxc0rAAB

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000dpX2wAAE

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000dpX2wAAE

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000OxbzfAAB

http://www.idaresources.org/apex/testgranteedetailsite?id=0017000000OxbzfAAB

What are IDAs? Matched savings accounts-

matches range form $1.00 to $9.00

The match comes from Asset for Independence (AFI) and private donations

Federal IDAs can save for education, homeownership, or starting own business.

Account holders receive financial literacy training and counseling.

Who Qualifies for an

Individual Development Account?

In Federal IDAs it must be Earned income

200% of poverty level Other requirements (vary by

program)


http://idaresources.org/afigrantees

Federally funded IDAs are exempt from asset calculations on ALL benefit programs- SSI, Medicaid, food stamps, etc…

Contributions deduct from countable income

Non-federally funded IDAs count as a resource unless included in a custodial account



IDAs

•Stronger, healthier families

•Long-term thinking and planning

•Enhanced self-esteem

•Sense of pride

•More community involvement

•Hope for the future

•Not for everyone

People on Social Security cannot work.

People with cognitive issues cannot save or manage their money.

To serve people with disabilities requires special

expertise.

Providing accommodations is expensive.


Misconceptions about IDAs

Bank On Louisville

“Bank On Louisville” initiative, described as: “a comprehensive network of community partners focused on serving the unbanked and underbanked by increasing access to mainstream financial services, products and tools and financial education resources in order to decrease their reliance on expensive, alternative services and increase financial stability.”

In 2011, “Bank On Louisville reported over 5,900 new accounts opened across the Louisville community—representing 24% of the estimated unbanked households.

Rose to 10,144 in their second year, with a steady increase being realized each quarter and the average quarterly balance on the accounts hovering at $818.”

How is the disability community involved with Bank On efforts?


Resources for Financial Literacy

CARE Program - http://care4yourfuture.org/CARE is a free financial literacy program which makes bankruptcy professionals available to educators, students and the public to illuminate the dangers of credit abuse. CARE has a presence in all 50 states and the District of Columbia.The Kentucky Council on Economic Education – http://www.econ.org/ Training around the areas of financial and economic literacy.Kentucky Jump$tart – http://jumpstart.org/states-kentucky.html

http://www.fdic.gov/consumers/consumer/moneysmart/adult.html – The National Council on Economic Education (NCEE) http://www.councilforeconed.org/


What work incentives can be an asset building tool?

What new partnership do we need?.


Trial Work Period (TWP)

The Trial Work Period applies to you only if you receive SSDI or SSDAC. Trial Work Period is a nine month period with three additional months called the cessation and grace period.

For a full year you can try working without losing your benefits. During the Trial work period you can earn as much money as you can and still receive your full Social Security check.

How is this an asset tool?


The majority of people we work with lack control over economic resources. Are working poor even after we close their case

A PASS plan can give people control over their economic resources – A way out of poverty. Can be paired with other asset building tools.

Limited counseling and guidance on fiscal issue:

The amount of money people need to make to be economically independent. Or how to use their benefits strategically to become economically independent.

PASS Plan will give an opportunity to have these conversations


It can enhance the plan

Can build ownership

It can reduce fear of losing Medicaid


Washington Access Fund provides the state’s assistive technology (AT) IDAs and is also a CDFI that provides low interest loans for AT and this can improve individuals credit score if they have a loan with WAF.

The program aims to combine IDAs and low interest loans to build economic self-sufficiency.

Received permission for Dept of Education to use telework funds to create IDAs for business equipment


Funded a study creating a private IDA for individuals with disabilities.

Purpose to increase economic security for persons with disabilitiesIncrease communication and collaboration between the disability and asset development communitiesHigher match rateExpanded what people could save forShorter saving time


CASA of Oregon, Innovative Change and Community Vision established financial portfolios for individuals with disabilities including:

IDAs federal and state Low interest loans IDAs and low interest loans


Individual Mandates Requires most people maintain a

minimum level of coverage and dependents each month beginning in 2014

What satisfies coverage- employer sponsored insurance, grandfathered health plan, Medicare or Medicaid, individual plan

Who is exempt – undocumented immigrants, religious objectors, people incarcerated

Health Insurance Exchangeshealth plansadvanced payment of premium tax creditsamount of tax credits varies based on income


A person with income between 100% and 133% is responsible for paying premiums of 2% of his/her income and is eligible for a tax credit

Tax credit is based on the second lowest cost exchange

Provide cost sharing to incomes between 100% and 250% of FPL ($23,050-$57,625 per year for a family of four)

Don’t satisfy mandate- financial penalty $95 or 1% of income in 2014 $325 or 2% of income in 2015 $695 or 2.5% of income in 2016 Penalty dollars are subject to an annual cost of

living adjustment


Exempt from penalty Premiums would exceed 8% of

their household adjusted gross income

Members of American Indian tribes

Financial hardship waivers Income below the tax filing

threshold Lacked insurance for less than

three months during a given year

Medicaid Expansion-Beginning 2014Nearly all people under age 65 with

household incomes at or below 133% of FPL ($14.856 individual, family of four $30,657)


To fund the expansion ACA provides that the federal government will cover:

100% of the states’ cost of the coverage expansion in 2014-16

Gradually decreasing to 90% in 2020 and thereafter

Newly eligible Medicaid population – essential health benefits

Medicaid expansion would cover an estimated 17 million uninsured, low-income individuals


Leaves the Medicaid Expansion intact

Restricts the Secretary’s

enforcement authority

Also leaves intact-increase in primary care provider payments, new option to expand home and community-based services

Gradual reduction in disproportionate share hospital payments

States maintain the eligibility standards until the Secretary certifies exchange readiness


Affordable Insurance Exchanges

http://www.healthcare.gov/law/features/choices/exchanges/index.htmlKentucky has received $66.5 million in grants for research, planning, information technology development, and implementation of Affordable Insurance Exchanges.

$1 million in Planning Grants: This grant provides Kentucky the resources needed to conduct the research and planning necessary to build a better health insurance marketplace and determine how its exchange will be operated and governed.

$65.5 million in Exchange Establishment Grants: These grants are helping States continue their work to implement key provisions of the Affordable Care Act.


[email protected]


poverty reduction programs

Documents

poverty calculation

poverty measure

poverty thresholds

extent of poverty

federal poverty guidelines

federal poverty level

new measure of poverty

taxes income