A Discussion With Senator Katherine Klausmeier and Delegate Johnny Olszewski, Jr.
Q: Over the last several years, Maryland has seen hundreds of millions of dollars in budget cuts and is looking at reduced revenue projections in coming fiscal years. Has this changed your attitude toward governing?
Del. Olszewski: Maybe not changed my perspective so much as informed my career from the outset. It hasn’t been the most enjoyable thing to be forced to find new revenues or trim services and worthy causes. That said, you have to walk in and ask, how do we best meet the needs of the people we represent despite limited resources, how do we get the best bang for our buck? So we look at changes in the law that don’t cost anything but encourage positive behavior. That’s why we like prize-linked savings, for instance, and lifting asset limits. I’m sort of thankful I’ve grown up in this environment because at the end of the day, I think it promotes good governance.
Sen. Klausmeier: Knowing that people are not making that much money and wages are going down, we want to help these people. There are more people asking for help now than ever before. And because we’ve been cutting back, we have a problem. We’re acutely aware of this, and it’s become a real focus.
Q: State legislators have an opportunity to get involved in any number of issues, but you’ve definitely made an effort to focus on the livelihood of average families, why are these issues important to you?
Sen. Klausmeier: Wages are going down, people are losing their jobs. When people are trying their best and working hard, we need to help them to retain their dignity and respect if we can. It’s extraordinarily difficult out there. If I had to go get a job at my age in this economy—I don’t know if I’d be able to find one! People want to work but can’t. The jobs aren’t there. We need to help if we can.
Del. Olszewski: I represent an industrial, blue-collar district. Growing up I watched the decline of manufacturing, and it’s tough. We have a steel plant that’s gone from 30,000 workers to less than 3,000. We’ve seen the GM plant and others close. So we’re looking to support people who put in an honest days work for honest pay.
Q: People tend to assume that when you talk about lower-income families and government support, it means spending money on human services programs. What advice would you give to legislators who want to increase opportunities for working families without increasing spending?
Del. Olszewski: I think the best advice I can give is to frame the conversation around opening up opportunities to make it easier for people to be successful. That can mean savings and asset building or improving access to existing services, but also making those services more efficient. Waste, fraud and abuse are big issues. We have a chance here to make state government better and less expensive. We worked with the Department of Human Resources (DHR) to eliminate the asset test from our TANF program. Part of the reason the department liked the idea was because they took a look at Oklahoma, which realized $1 million in administrative savings after they got rid of their asset caps.
Sen. Klausmeier: Education and employment boards are good places to start. We need to find ways to help people get their GEDs and go back to community colleges. I’ve been a big proponent of manufacturing, and we need to help people prepare for the jobs that are out there in those industries.
Q: In 2010, the Department of Human Resources eliminated asset limits from the state’s Temporary Cash Assistance (TCA) program. You originally attempted to address asset limits in the legislature. Why is this issue important to you? And what type of opposition did you encounter?
Del. Olszewski: This is an opportunity to help families move into the middle class. But we ran into perception problems; people lacked the proper information. There was a sense that if we raised the limit we’d be giving benefits to people with assets. But then when we looked at what was really needed for cost-of-living expenses—and any kind of a cushion for emergencies—we realized we’re actually holding people back from self-sufficiency. First, DHR raised the limits and excluded college and retirement savings. New cases didn’t start popping up and program administration got much smoother. One lesson for me in that process is that it’s okay not to have a law passed with your name on. If your goal is to help families, then you do it any way you can. There’s more than one way to get it done.
Q: Maryland also passed prize-linked savings legislation in 2010. Why do you support these products?
Del. Olszewski: It’s a great tool to reach out to the unbanked and under-banked. It promotes the excitement of big prizes the way lotteries do, which appeals to just about everybody. Plus it’s an asset-building tool because people are saving money. It’s a win-win, pure and simple.
Q: The bill included a contingency that prevents credit unions from opening prize- linked savings accounts until federal legislation is changed to allow banks to offer similar programs. Was there ever a chance that this bill would pass without that kind of amendment? What were the banking industries concerns? In addition to urging Congress to act, do you have any advice to other states looking to allow PLS programs?
Sen. Klausmeier: It’s so frustrating because we were very excited about this bill. But when the banking industry heard about it they were strongly opposed because they were unable to participate due to those federal regulations. If the feds can change their policies we’ll have better luck, which is why we’ve been talking to senators and congressmen. It’s going to be very hard to get this passed over the objections of the banking industry. It’s such a great idea to encourage people to save money. I’m also going to introduce another bill on financial literacy and the comptroller is behind me. We need more financial education for students, and we need to make it mandatory.
Del. Olszewski: Bankers think this is good policy, but they don’t think it’s fair that they can’t offer this type of program. When we were discussing this issue it looked like the federal government might take action. So we took an opportunity to say together that this is good policy. But in the end the feds didn’t make the necessary changes. Kathy and I want to go ahead with an open authorization that lets credit unions move forward and allows banks to do the same thing if the federal law changes.
Update: Since this interview, Maryland passed a bill in 2012 that allows both credit unions and banks to offer prize-linked savings accounts. Click here to learn more.