Economic Perspectives with Hopeton Hay on KAZI 88.7 FM in Austin, TX

Texas Received “D” for Financial Stability of Families

Posted by Hopeton on April 7, 2010

When it comes to achieving financial stability, Texans face serious barriers, according to a report released by the Corporation for Enterprise Development (CFED), a national economic nonprofit. The state earned a “D” on the 2009‐2010 Assets & Opportunity Scorecard, with Texas trailing behind the rest of the country in health care, education and asset‐building policies and outcomes, though it does show potential for improvement in many areas.

CFED’s Assets & Opportunity Scorecard—online at scorecard.cfed.org—measures the financial security of families in the United States by looking beyond just income to the whole picture of building ownership and protecting against financial setbacks. The Scorecard ranks the 50 states and the District of Columbia on 58 performance measures in the areas of Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.

While Texas performed well in some housing indicators and ranked in the top 10 in important measures including net worth by race, income by race and asset poverty by race, it ranks 48th in overall net worth and 41st in unbanked households. The state must also address its “D” grades in Health Care and Education. As the nation takes on comprehensive health care reform, Texas ranks 51st in both total uninsured rate and percentage of uninsured low‐income parents, as well as 50th in percentage of uninsured low‐income children. And the state performs far behind the rest of the nation in key education measures, ranking 51st in high school degree attainment and 49th in Head Start coverage.

“The Scorecard provides a broad picture of how families stand, and what it tells us is that many American households were already very vulnerable economically going into this recession,” said CFED President Andrea Levere. “It also shows state by state what is being done to address these vulnerabilities, and while many states are taking some action, in most cases they haven’t been putting a very strong commitment into their efforts.”

The Scorecard also assesses states on the strength of its policies to help families build financial security. The Scorecard includes a detailed look of state‐by‐state information on 12 policy priorities, as well as information on 23 additional policies. Together, these policies provide a comprehensive picture of what states can do to help residents build and protect assets.

The Scorecard notes that Texas’ policymakers have significant opportunities to support the financial well­being of their constituents. Texas’ asset poverty is particularly striking; to address its low net worth and high asset poverty rate, Texas should promote financial security through investments including matched Children’s Savings Accounts, Individual Development Accounts and Community Tax Centers. To address its high rate of uninsured residents, Texas should expand eligibility standards for working poor parent Texans in public insurance, and increase enrollment of currently eligible Texans in public health insurance by reducing barriers to enrollment and renewal. To address financial abuses, the state should also provide regulatory oversight for credit service organizations offering payday and automobile title loans and enforce sound underwriting standards for all credit and mortgage products. Of the 12 policy priorities, Texas currently has taken action on six of them, with only one state policy rated strong or very strong by the Scorecard.

“If Texas were a nation, its economy would rank 12th by GDP. Texas must be bold in advancing asset‐building policies to enable more residents to achieve financial stability and prosperity,” says Alfreda Norman, Federal Reserve Bank of Dallas.

Nationally, the Scorecard notes that even before the current recession, economic vulnerability was growing, especially among low‐and middle‐income families. Among the findings:

  • While U.S. households overall registered a 27% increase in net worth between 2004 and 2006, median net worth fell over that period for the 40% of U.S. households earning less than $37,000 a year.
  • The number of individuals with employer‐provided health insurance fell sharply, to 60.9% from 63.2%, leaving more families vulnerable and financially unprepared for health emergencies.
  • The median amount of revolving debt, including credit card debt, rose 64% between 2006 and 2008 from $1,805 to $2,960.
  • Slightly more than 12% of households live below the federal income poverty line, but nearly double that amount (22.5%) are asset poor, meaning they have insufficient assets to keep them out of poverty for three months in the event of job loss. Over 14% of American households live in extreme asset poverty, meaning they have zero or negative net worth.

Top performers on the 2009‐2010 Scorecard—those states that earned an overall “A” in performance measures—include Hawaii, Iowa, Kansas, Maine, Massachusetts, Minnesota, New Hampshire, Vermont, Washington and Wyoming.

For more information and to access the Assets & Opportunity Scorecard, visit scorecard.cfed.org.

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