Back 

Working Families Featured State Iowa

FEATURED STATE: Iowa

Alternative Text

 

 







Overview


At the beginning of the new millennium, a team of Iowa legislators and staff began addressing the needs of families where families begin: with children. While working to improve the state’s child-care system, these same legislators took a more comprehensive look at families. They focused their efforts by asking a fundamental question: What is the cost of family failure?

The cost, they determined, is onerous. When families don’t succeed, parents and children suffer; and the trickle-down costs for communities and the state can be tremendous. Each year, billions are spent on remedial services – education, health care, foster care, substance abuse programs, unemployment, prisons.

With this in mind, a growing group of Iowa representatives sought ways to support families – to make it a little easier for them to stabilize their financial lives and lift the perpetual worry that comes from living one missed paycheck away from true hardship.  The Iowa team looked at initiatives designed to open routes to financial security, concentrating in particular on incentive-based strategies like the Earned Income Tax Credit (EITC), Individual Development Accounts (IDAs) and Microenterprise supports.

Taking a measured approach, Iowa legislators made small investments in promising, creative solutions and expanded the ones that worked. For example, Iowa first spent $100,000 on EITC outreach in 2004. Returns increased significantly, and two years later the legislature more than doubled its initial appropriation.

In addition to common sense and fiscal prudence, another hallmark of the Iowans work is bipartisanship. Over the years, leaders on both sides of the aisle pursued initiatives that incorporated ideas from across the political spectrum.

This approach to governing took real shape with the formation of the Successful Family Caucus. At its largest, the coalition had 63 legislators. According to members, the Caucus became a forum for honest dialogue and has been a key element in the creation and support of legislation aimed at reducing family failure.

Highlights

  • Successful Families Caucus – Cooperation among Committees, between Chambers and across the Aisle
    In 2007, four Iowa legislators—two Republicans and two Democrats—tried to break down some of the traditional barriers and jurisdictional walls that often hinder creative legislative action. Their focus was on low-income families and the devastating toll that financial failure can have on children, parents, communities and the state. Within months, the group had persuaded a full fifth of the Assembly to join their cause, and the Successful Families Caucus was born. With members from both chambers, both parties, a host of committees, and financial support from the Northwest Area Foundation, the new caucus began pursuing its goals. Its mission was challenging but straightforward: to sustain a constructive environment in the General Assembly that would allow legislators to explore innovative, comprehensive solutions for Iowa’s struggling communities and families. By creating a forum for unconventional thinking and civil discussion, the caucus has led the way on several issues important to low-income families: the state earned income tax credit, entrepreneurship programs for rural communities, and Individual Development Accounts for flood victims.  Read Caucus Brochure

  • Earned Income Tax Credit Outreach Pays Off
    Several years ago, the Iowa legislature appropriated $100,000 for an outreach campaign to encourage more eligible families to file for the federal Earned Income Tax Credit (EITC). After the campaign, EITC filings jumped 30 percent compared to the previous tax year. This increase in refunds meant an additional $2.6 million refunds for the state’s working families. The EITC initiative was run by Iowans for Social and Economic Development (ISED), an asset-building organization with a successful history of managing free tax preparation sites throughout the state. A routine check for EITC eligibility at these sites became a natural part of ISED’s multifaceted outreach strategy. Tax preparers also helped low-income filers take advantage of other savings opportunities, such as refund splitting or setting up a bank account—often on the spot, thanks to the participation of local banks. Building on these results, Iowa legislators have since more than doubled their annual appropriation for EITC outreach. They also have made their state EITC refundable and increased it from 6.5 percent to 7 percent of the federal credit.

  • Microenterprise Support—A Leader Returns to its Roots
    In the 1980s, Iowa was considered a leader in microenterprise support, but by the turn of the century, much of the state’s support for microenterprise had lapsed or been cut. In 2007, Iowa ranked 45th among states in microenterprise ownership and 37th in private loans to small businesses – a sign that it might be too difficult for would-be entrepreneurs to find capital. Troubled by these numbers and aware that small businesses create the most new jobs nationwide, the legislature directed the Department of Economic Development to commission a report assessing how the state might best support microenterprise. Based in part on the report’s recommendations, the legislature in 2008 established the Iowa Community Microenterprise Development Organization. The organization’s initial job was to distribute $450,000 in competitive grants to nonprofit organizations that offer training and technical assistance to entrepreneurs, especially in lower-income and rural communities. As of 2010, the state was set to issue its first round of grants after delays and funding problems due mainly to the catastrophic floods of 2008.  Read Microenterprise Report

  • Matched Savings Accounts: Building Assets—Rebuilding lives
    In 1993, Iowa became the first state to legally establish Individual Development Accounts (IDAs). Banks, credit unions and nonprofits across the state provide the administration and match money for these accounts, and, over the years, the state has periodically appropriated funds for both (federal grants also can be a significant source of IDA funding). In Iowa, IDAs are limited to people who earn less than two times the federal poverty guidelines ($22,050 for a family of four in 2009) and are saving for a significant investment, such as buying a home, going back to school, or starting a business. After the disastrous floods of 2008, however, legislators recognized that, in addition to helping people build assets—a primary source of financial stability—IDAs also could be an effective tool to help residents rebuild what they had lost. For flood victims, the state raised the IDA eligibility ceiling to 300 percent of the poverty guidelines, expanded the list of approved investments and dedicated $250,000 for IDA match funds. Following the success of this and other IDA programs, legislators in 2010 commissioned a report to assess how the state might implement other savings and asset building strategies for low-income families.  Read IDA Legislation (HB 64)  

    Read Iowa's State Profile for more notable legislation,state action plans and participants by year.

Hear It From Them

Q and A: Iowa Representative Dave Heaton and Senator Joe Bolkom


Hear from lawmakers and others who have been intimately involved with their state’s efforts to create opportunities for low-income working families. Legislators explain why they feel these issues are important. They also discuss the factors that helped them be successful – both in the statehouse and at home in their district.
 

 

 

 

 


 

Rep. Heaton                           Sen. Bolkom

Q: What does family failure mean to you?
Sen. Bolkcom : Clearly, state and local governments spend public resources when families fail when they can’t make ends meet when they can’t find good jobs and when kids have problems in school. We want to focus on turning that around. We want to help families be successful.

Rep. Heaton: I’m a conservative guy. But stable income, food on the table, health care for the kids and parents─that’s what you strive for, and that’s what you want to see as a legislator. When the basics break down, it sets up a whole list of failures.

Q: State legislators can choose to be involved in an array of issues. What drew you to this concept helping families succeed?
Sen. Bolkcom: I’m interested in making sure that people have an opportunity to get ahead if they’re willing. When people lack these kinds of opportunities, it drags down the entire community. One of our jobs as a legislature is to ensure that people actually have an opportunity to achieve the American dream. Being able to support yourself and your family is the bedrock of the dream. We have an obligation to make sure that this kind of equity of opportunity is real─that people who are working full-time can support their families.

Rep. Heaton: There are a lot of good policies here to work with. For example, we created our own EITC. We conducted outreach for the federal Credit. As I looked for ways to make life better for lower-income working people, I realized there’s no easier way to put money back in their pocket than the EITC. But here’s the deal: sometimes people’s incomes are low because they made poor choices or came from families that made poor choices, so sometimes these same people will take their EITC money and spend it on frivolous things. We also need to teach people how to manage their money, how to budget, how to save and plan for the future. When we give them the financial skills, then we’re doing some good.

Read Full Q and A

State Programs Links

About the Opportunities for Working Families Meeting

Since 2003, the NCSL/AECF Partnership on Family Economic Success has held a yearly meeting to give lawmakers a chance to convene with their colleagues and discuss solutions to the challenges faced by low-income working families. Legislative leadership from 10 states send small teams of legislators to the forum. Participants hear from leading experts and practitioners and develop an action plan that is relevant to their state.

Share this: 
We are the nation's most respected bipartisan organization providing states support, ideas, connections and a strong voice on Capitol Hill.

NCSL Member Toolbox

Denver

7700 East First Place
Denver, CO 80230
Tel: 303-364-7700 | Fax: 303-364-7800

Washington

444 North Capitol Street, N.W., Suite 515
Washington, D.C. 20001
Tel: 202-624-5400 | Fax: 202-737-1069

Copyright 2014 by National Conference of State Legislatures