Last week, I was pleased to host sixteen legislators, including senators and representatives from both political parties, in a conference on state policies to improve the financial situation of low-income working families. The conference was sponsored by the National Conference of State Legislatures and the Annie E. Casey Foundation.

For a number of years, I have been a member of the National Advisory Committee for Family & Children’s Services of the Annie E. Casey Foundation. Twelve states have representation on the advisory committee; six Democrats and six Republicans who work together on state legislative policy strategies to help low-income, working families get ahead, rather than just get by. It was in my capacity as a member of the Casey Foundation Advisory committee that I brought together the legislators and other concerned members of the community last week.

We all know that we have hard working families who play by the rules and go to work every day yet are simply getting by. We also know that if those families can get ahead, rather than just get by, our communities will be safer, our families will be stronger, and our economy will improve.

We were given data showing that low-income families in Iowa receive about $80 million in Temporary Aid to Needy Families (TANF) per year. But then we were told that there is a hole in that economic bucket! It is estimated that working and retired Iowa families lose over $90 million per year from three predatory lending practices. And this does not include the fast growing car title loan business. Growth in all three of these lending practices has occurred in both urban and rural areas, and it is all concentrated on low-income working families.

In some cases, certain mortgage lenders aggressively market misleading or overly-complicated mortgage refinancing arrangements aimed at low-income working populations. In other cases, cash-strapped households are enticed by advance loans on paychecks or instant tax refunds, both with very high fees or interest rates. In 1995, there were only seven payday loans licenses in Iowa; by 2004, that number had grown to 204.

The Center for the Study of Social Policy notes that Iowa is one of 22 states with no laws against predatory mortgage lending, and one of the 29 states with little, if any, restrictions against predatory payday loans.

The Casey Foundation works throughout Iowa with the Institute for Social and Economic Development (ISED). Our Mt. Vernon friend, Mel Essex, has been a staff person with ISED, and he has helped area families achieve economic success. ISED has been involved in start-up efforts to establish about a dozen sites across Iowa that recruit volunteers to help low-income families complete their tax returns, and make sure they file for the federal earned income tax credit (EITC), if eligible. The Casey Foundation estimates that Iowans leave tens of millions of federal dollars unclaimed each year, by failing to file for the federal credit.

Part of the Casey/ISED project involves educating clients, when they come in to get help on their tax return, on how to avoid predatory lenders. Last session, in an effort to help working families and capture federal EITC funds for the Iowa economy, I successfully advocated appropriating $100,000 to help ISED expand these programs during the current fiscal year.

Those of us working on this issue in the Iowa Legislature are requesting help from our local banks and credit unions to provide financial literacy education for low-income working families in Iowa. Recently, Iowa went to an electronic benefit transfer system. That required recipients of electronic transfers, such as child support payments, to open an account with a bank or credit union. Because of this change in policy, 55,000 families in Iowa opened new accounts and they now have access to helpful financial education.

We know that children do well when their families do well, and families do better when they live in supportive communities. What does it take to increase family economic success? We need to find ways to help families increase their earnings and income, stabilize their financial lives, and acquire assets and build wealth in thriving communities. In other words, we want families to earn it, keep it and grow it. That makes for stronger families and stronger families make for a better Iowa.

Let me know what you think. Many of you have sent back the survey and I appreciate hearing from you regarding the work of the Iowa Legislature. You can write me at the State Capitol, Des Moines, IA 50319; call me at 515/281-7328 or e-mail me at ro.foege@legis.state.ia.us.

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