Senator Eldridge Champions Matched-Savings Program for Low-Income Families in FY22 Senate Budget
Senator Eldridge Secures $250,000 earmark for MIDAS non-profit that helps build assets for Massachusetts working families.
Boston, MA – State Senator Jamie Eldridge (D-Acton) secured a $250,000 earmark for MIDAS (Massachusetts Individual Development Account Solutions), a Boston-based non-profit whose mission is to increase assets for working families across Massachusetts. The state funding will restore a Matched-Savings Program for low-income families, where money saved by these families will be matched to help with college expenses, buying a house, starting a business, or providing emergency funds related to expenses that accrued during the COVID-19 pandemic. Senator Eldridge led the effort to re-establish this program back in 2006, which at its peak provided $645,000 of matched savings until the state funding was eliminated as a result of the 2008 Great Recession.
“I am extremely proud to continue to collaborate with MIDAS, and matched-savings programs across Massachusetts, to restore this key anti-poverty program to state government,” said Senator Eldridge. “Over the past year, the twin crises of the pandemic and racial injustice have made crystal clear how deeply embedded income and wealth inequality is in Massachusetts. Matched savings programs, often run as Individual Development Accounts (IDAs), can play a critical role in providing direct financial assistance to struggling families seeking financial independence while providing them with the financial skills to further build their assets. I am deeply grateful to Senate President Karen Spilka, Senate Ways and Means Committee Chairman Michael Rodrigues, and all my colleagues for their support for matched-savings programs in the FY22 Senate budget.”
Senator Eldridge’s familiarity and passion for IDA programs harkens back to his work as a law student at the Community Enterprise Project at the Harvard Legal Services Clinic in Jamaica Plain, and afterwards as a Community Economic Development (CED) lawyer at Merrimack Valley Legal Services in Lowell.
When Senator Eldridge served in the House of Representatives, he passed legislation creating the Asset Development Commission and he served as Co-chair of the Asset Development Commission, both as a State Representative and a State Senator.
In 2009, the Asset Development Commission produced a report that stated: “Families need both income and assets to be economically secure. While income is what families use to cover daily living expenses, assets are what families use to move ahead directly and develop knowledge, skills, social networks and community.” Furthermore, the report described the various benefits of assets: “Asset holding increases household stability by providing a cushion in times of need … helping individuals avoid eviction, hunger, loss of utilities, loss of social networks through moves, or increasing debt.”
The Asset Development Commission had many critical recommendations, including requiring financial literacy in the public schools, eliminating asset limits for public benefits, expanding the Earned Income Tax Credit (EITC), and establishing matched-savings programs for residents in Massachusetts.
Many of the Asset Development Recommendations have become law. Most notably, Senator Eldridge successfully championed financial literacy as a requirement in our schools, and helped expand the state EITC from 23% to 30% in the 2019 fiscal year. As for matched savings, the Commonwealth briefly funded matched-savings programs from 2006 to 2008, but they were removed from the state budget over a decade ago during the Great Recession.
Publication of a groundbreaking report by the Federal Bank of Boston entitled The Color of Wealth in 2015 was a turning point in the struggle for matched savings. On the racial wealth gap, the report found that the median Black family in Boston had a net worth of just $8, while the median white family had a net worth of $247,000. This report connected matched-savings accounts to the issue of racial injustice. Despite a growing consensus among policy experts that matched savings is the best solution to close the wealth gap, political progress on matched savings had stalled.
As a result of Senator Eldridge’s successful amendment, MIDAS could receive $250,000 in state funds to enhance its matched-savings programs and develop its internal capacity to partner with additional non-profit organizations in order to establish matched savings programs, through the FY22 state budget..
The MIDAS team commented on this successful budget amendment by Senator Eldridge:
MIDAS Chair of the Board, Deb Tobin, explained “This funding will help to boost MIDAS’ capacity to serve a greater number of people who participate in the matched savings programs, which provide low to middle income people in Massachusetts the opportunity to save for a home, go to college or start a business.”
MIDAS Interim Executive Director Molly Goodman stated, “MIDAS and its member organizations are so thankful to Senate President Spilka and Budget Chair Rodrigues. Most importantly, we are grateful to Senator Eldridge for continuing to fight to secure funding for matched-savings accounts.”
“We could not have accomplished this all-important first step in providing matched-savings to the hardworking households of Massachusetts without the support of our elected officials,” said MIDAS Advisory Board member Kimberly Zimmerman Rand, who spearheaded the effective advocacy campaign for state funding for matched savings. “ I'd like to thank not only Senator Eldridge, but also Senators Barrett, Comerford, Hinds, and O'Connor for their leadership around asset building.”
Asset Limit Elimination
The issue of asset limits in cash assistance programs is interconnected with matched savings programs. Asset limits present obstacles to the implementation of matched savings programs. Low-income families risk losing critical benefits if they save money, creating a perverse incentive against developing an emergency fund. This phenomenon is also known as the “cliff effect.”
In another breakthrough advocated for by Senator Eldridge, the Senate Ways and Means budget eliminated asset limits for two cash assistance programs, Transitional Aid to Families with Dependent Children (TAFDC) and Emergency Aid to the Elderly, Disabled and Children (EAEDC). Under current law, the EAEDC asset limit is only $250. This program in particular makes it difficult for recipients to save even modest amounts for emergency funds. The more barriers we can eliminate for working families, the more stable they will be.
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