Q&A: Nebraska Senator Amanda McGill
In this interview, Senator Amanda McGill shares her insight into legislating prize-linked savings as a way to encourage people to save.
NCSL: As a state legislator, there are so many issues out there that you could focus on. Why is it important to you to encourage people to save?
McGill: It’s a huge mistake that people are getting into as much debt as they are today. It makes them more dependent upon fishy loans. I tried for several sessions to put better regulations into payday lending so that people wouldn’t be as susceptible to getting caught in the cycle of owing lenders. But I wasn't finding any luck in Nebraska making those changes.
So, I asked, what do people need to do to avoid dependence on payday lenders? They need to have savings, in case they do fall into a need. I've seen the value in my own life of having that financial cushion. It allows me to have better options. I want everybody to have that cushion.
When you see how much people are spending on lottery tickets in comparison to their necessities, you know this [prize-linked savings strategy] is a good opportunity. At least out here in Nebraska, we value personal responsibility and this allows people to take responsibility while still having some of that fun they have by participating in a lottery.
NCSL: What were the benefits of bringing the credit unions and banks in early in the process of drafting the bill?
McGill: My staff and I worked very heavily with them right away to get our ducks in a row for a [legislative] hearing. I was afraid that some of my colleagues might not be able to wrap their minds around the idea. Is this gambling in any way? How is this going to hurt people or hurt banks? I made sure to work closely with Doorways to Dreams and had them come out and give a presentation for staff and Senators at a breakfast. And that really helped their understanding and allowed them to ask questions before the hearing.
I have a good relationship with the Nebraska Bankers Association. When they learned about the bill they came in from a productive stand point. The [Association] did their homework and reached out to other states where this bill was being discussed. I held my bill back while they were working through their networks to see if there was a way to include banks. At the time, they weren't able to figure that out.
But otherwise they [the banks] didn't do anything to hold up the bill. I told them if there was ever a way to include them I would do that. I am looking at it for 2014 since some states have been able to include banks. Hopefully we will be able to as well.
NCSL: What were the concerns expressed during the informal breakfast?
McGill: The biggest concern, I think, was from one of the rural Senators who asked “How is this going to impact the interest rate for people saving? Where were the winnings going to come from?” We were able to tell them that prizes were coming out of their [credit union] marketing budgets and costs are not passed along to that saver.
It really helped having Nebraska legislators from across the political spectrum attend the NCSL Working Families conference. Colleagues from the other side of the aisle were able to stand up and say, "Look, this [program] has had great results." One Senator who is very opposed to expanding gambling, talked about how this isn't really a form of dangerous gaming.
Two or three very respected members of the other party were there [at the conference] with me and some signed on to the bill even before I introduced it. Since I am a member of the minority party, that immediately gave it more legitimacy and wasn’t just some random idea that Senator McGill got. It was something that others had learned about too and thought was worth of investing in.
NCSL: States continue to be cash strapped and are making hard choices about where to allocate general funds. It’s my understanding that the Save to Win program has not cost the state a dime.
McGill: The fact that this bill is revenue neutral played a huge part in getting people to give it a chance. Since we weren't asking the state to put any money into it, the credit unions were going to self fund any promotion and prizes, there was an attitude of, “Well, it can't hurt to give this a shot.”
I passed this during a time when the economy was really bad and people needed savings more than ever and needed that encouragement. Let credit unions and banks do what they can to get people to save and not let government regulation get in the way.
NCSL: Other states have faced some opposition to prize-linked savings, mostly due to the federal regulation that prohibits banks from participating. How did you address is challenge and was there any other unexpected opposition?
McGill: I didn't hear any actual concerns from Senators about banks. I was willing to work with the banks and hold back the bill until we felt that we exhausted our options. At the time the Maryland legislature introduced a prize-linked savings bill and was challenged by the banks. So, I was mindful of the banks and did what I could to help them.
NCSL: The Save to Win program was implemented in nine credit unions immediately after the PLS bill was passed. Can you talk more about how it was able to do so, so quickly and what your involvement was in the program’s launch?
McGill: The bravo goes to the credit union league. If it weren't for them being so gung-ho, this may not have passed through as easily, and it certainly wouldn’t have started so soon. I was there to help them publicize it and congratulate them along the way. It would be my hope that even more credit unions in Nebraska begin to participant in the program too.
NCSL: The program is showing great results in encouraging people of all economic backgrounds, including those who are low-income, to save. What are you most excited about looking out into the future of the Save to Win program?
McGill: Since we do have such great numbers, I would love to expand the law to include banks and look at what states did to navigate around the federal laws and regulations. We have over $2 million in savings now, just from credit unions alone. I can only imagine if banks were offering this product, how many more people would be saving.
This can change the culture of the state and lead to more stability for families. There are few things that I am more proud of than this. And I'd love to be able to end my last year in the legislature with broadening the program.
NCSL: What do you think legislators should consider when looking into introducing legislation on prize-linked savings?
McGill: The biggest question is “Why not”? There are proven programs now, including Nebraska’s. Take a look at our numbers. So far I have not seen a downside.
In terms of implementation, I think it was useful to have Doorways to Dreams make a formal presentation outside of a hearing because the idea is so new. Even if you're not getting the Senators attending, getting staff who can report back is a big deal.
The numbers speak for themselves in terms of the benefits. If you are considering this strategy, I know myself, and I am sure the other folks who passed legislation in other states, are here to help.
This interview took place November 18, 2013