Equity & Opportunity – Page 13

New Policy Recommendations to Address Racial Disparities

In August of 2020, Maryland Senate President Bill Ferguson launched a work group aimed at generating policies to increase racial equity and inclusion. On Monday, the work group unveiled its 47 proposals. Among them are extending Medicaid coverage for new mothers, providing prenatal care to undocumented immigrants, and changes to state contract programs for minority-owned businesses. Ferguson hopes to include many of the proposals in legislation during Maryland’s legislative session, which began this week. Read the report here.

College Savings Program

Problem

In our modern economy, a college degree is still the primary way that children can become self-sufficient and contributing adults. Unfortunately for many students — especially in low-income areas — lack of sufficient savings for college has been a barrier to higher educational attainment, limiting opportunities for future economic success.

Solution

Treasurer Jones is proposing to provide each child entering Kindergarten in a public school in St. Louis a seed account with $50, which they would have the chance to build upon via financial incentives for good grades, perfect attendance, and family participation in a financial wellness program. Studies show that kids with savings accounts are more likely to enroll in and graduate from college, and therefore become meaningful contributors to the economy. Children’s Savings Accounts (CSAs) also have the capacity to change an entire family’s mental, emotional, and economic health with spillover effects changing the family’s spending and saving patterns.

Crowdfunding for Communities

Problem

Currently, many small businesses and historically underutilized businesses struggle to gain access to capital and small business loans. While Texas, like many other states, has recently legalized intrastate online crowdfunding to let businesses raise capital in exchange for equity or debt, experience in other states indicates that established small businesses—especially those in underdeveloped areas—struggle to attract investors and gain the financial and technical expertise necessary to fully utilize crowdfunding to raise capital.

Solution

Representative Eric Johnson has authored legislation to establish more flexible crowdfunding regulation requirements for a specific class of small business development entities that serve historically underfunded businesses. By allowing these businesses to leverage crowdfunding through less intrusive requirements, they can maximize their impact on small businesses and boost the economic impact around Texas.

How to steal this idea:

Learn more about Representative Johnson’s efforts in this article on his crowdfunding bill: https://www.bizjournals.com/dallas/print-edition/2015/02/27/bill-would-tweak-crowdfunding-rules-for-nonprofits.html

Read the legislation he sponsored in Texas: House Bill 1629

In the face of federal inaction, many states are already taking steps to facilitate equity crowdfunding within state lines by exempting from securities laws corporations that use crowdfunding to raise capital. To date, twenty-two states and the District of Columbia have enacted rules to allow intrastate crowdfunding.

In Wisconsin, these intrastate crowdfunding rules made it possible for a small business to establish a crowdfunding portal to raise $67,000 in growth capital from just over 50 individuals.

Texas can expect to see similar opportunities because we have similar regulations already in place. However, our solution is to go one step further to increase access to capital from crowdfunding by removing barriers to this tool for the small businesses that would otherwise not be able to take advantage of it, especially those in under-developed areas.

For more information on how other states are starting crowdfunding legislation, visit https://www.nasaa.org/industry-resources/corporation-finance/instrastate-crowdfunding-resource-center/

Visit and share the gallery of NewDEAL Challenge winners at governing.com/newdeal.

Evidence Based Policy – College Financial Aid Access

Problem

Access to college aid programs is a major impediment to low-income students applying to and enrolling in college. Numerous studies show that many college applicants, especially those who are low-income, have very little understanding of college tuition levels, financial aid opportunities, and how to navigate the admissions process. Because of the complexity of the financial aid system and the lack of information about the availability of college aid, it is estimated that hundreds of thousands of students who are eligible for financial aid do not complete the necessary forms to receive said aid each year.

Solution

Delegate Andrew Platt is proposing legislation in Maryland to use tax assistance preparation services for low-income families to help them complete and submit a Free Application for Federal Student Aid (FAFSA) application for their child. This approach has already been proven effective by the Coalition for Evidence-based Policy. Platt’s legislation will create a grant program to cover the cost of the tax preparation provider to provide this service, which is $90 per family. He plans on using the open-source software used in the field experiment, have the Maryland Department of Education and the Maryland Higher Education Commission fine tune it, and then work to create partnerships with online tax preparation companies, like Turbo Tax, to offer the service alongside online tax preparation and submission, using the free, open sourced software.

How to steal this idea:

The Coalition for Evidence Based Policy sponsored this experiment. Publications related to the evidence can be found at the following links:

https://toptierevidence.org/programs-reviewed/hr-block-college-financial-aid-application-assistance

https://isites.harvard.edu/fs/docs/icb.topic1232998.files/Bettinger%20Long%20Oreopoulos%20-%20The%20FAFSA%20Projects%20-%20description%207-25-13.pdf

Visit and share the gallery of NewDEAL Challenge winners at governing.com/newdeal.

Working Families Opportunity Act

Problem

The Arkansas tax system places a far greater burden on low- and middle-income Arkansans than the top 20 percent of earners in the state. High-income Arkansans pay about six percent of their total income in state and local taxes while households at the state average and below pay nearly twice that amount.

Solution

Representative Warwick Sabin sponsored “The Working Families Opportunity Act,” a state version of the federal Earned Income Tax Credit, which is the nation’s most effective tool for reducing poverty among working families and children. The WFOA provides a break to working Arkansans who currently shoulder a disproportionately high tax burden. WFOA credits help people make ends meet while working at low wages so that they can stay employed and take advantage of opportunities to make a better life for themselves and their families.

How to steal this idea:

Read about Representative Sabin’s efforts on the Working Families Opportunity Act in this op-ed he wrote: Rep. Warwick Sabin: In Support Of The Working Families Opportunities Act

See the legislation he sponsored in Arkansas here.

Learn about how other states are adopting and adapting the federal Earned Income Tax Credit at https://www.brookings.edu/blogs/the-avenue/posts/2015/07/29-states-eitc-local-need-holmes-berube

Visit and share the gallery of NewDEAL Challenge winners at governing.com/newdeal.

ACCESS (Affordable College & Career Education Starts with Saving)

Problem

In many cities across the country, the zip code you’re born in is the most predictive factor in the health, wealth, and life outcomes you can expect. This uneven playing field can manifests in your ability to attend college and lifetime earnings. Lack of access to post-secondary training decreases the likelihood of attaining a good-paying job and supporting a family. Even after receive advanced training, the debt incurred may keep prosperity out of reach. Young people from lower-income families have an especially difficult time saving for college, because the financial status of the family may not lend itself to supporting their education. The price of admission reinforces the barriers that young people face in exiting poverty.

Solution

Columbus is piloting ACCESS, a program to address financial barriers that keep lower-income youth from achieving a post-secondary education. Through the Recreation and Parks Department’s Applications for Purpose, Pride, and Success (APPS) program, youth ages 14-24 receive a job along with leadership and professional development, financial education, and mentoring. Through the pilot eligible youth will also have access to an Individual Development Account (IDA) where up to $500 in savings will be matched 8:1 with a combination of City, private, and federal dollars, for a total of $4,500. Participants can use the funds for any eligible educational expense, including earning a certificate, to seek a four-year degree, or learn a trade.

New Policy Recommendations to Address Racial Disparities

College Savings Program

Problem

Solution

Crowdfunding for Communities

Problem

Solution

Evidence Based Policy – College Financial Aid Access

Problem

Solution

Working Families Opportunity Act

Problem

Solution

ACCESS (Affordable College & Career Education Starts with Saving)

Problem

Solution

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