I am testifying today in support of S.1839 and H.1858, “An Act promoting financial stability and asset development.”

In June of 2009 the Asset Development Commission released a report to examine what it meant to be low-to-moderate income in the Commonwealth of Massachusetts, what help the state provides in moving families up the economic ladder, and what barriers are standing in their way.  I was proud to serve as Co-Chair of that commission.

What we found will be no surprise to many of you.

We found that financial stability — being able to consistently afford a place to live, food to eat, healthcare when sick, and other simple necessities – is a dream that’s currently out of reach for hundreds of thousands of Massachusetts families. Many more are on the edge, just one lost job or serious health problem away from poverty or even homelessness. Hundreds of thousands of Massachusetts families are struggling with these very problems right now – in every corner, and legislative district, of the Commonwealth.

We also found that often, we end up pulling the rug out from underneath low-income families just as they are starting to stand on their feet – stripping benefits as soon as families start to make more money, sometimes leaving them worse off than before they got a job or raise.

Most importantly, we found that encouraging families to develop assets – savings, a car, education – is one of the most effective ways of helping them get, and stay, out of poverty. And yet so many of our state programs make it harder for families to do this, actually discouraging people from savings or trying to get ahead.

I believe that we can do better here in the Commonwealth. We can do more to encourage and support families in their efforts to become economically self-sufficient.

And we can make common sense reforms to our current programs, reforms that will reduce these harmful cliff effects and encourage families to build assets.

And the best part, is that it makes good economic sense. As families become more financially stable, they become less reliant on government assistance. No matter what our political leanings, we can all share the goal of wanting to reduce the number of families who need help, saving the Commonwealth money in the process.

The Massachusetts Legislature, and the Patrick Administration, have spent a great deal of time and resources on stimulating economic development in the Commonwealth. We’ve  made great strides in extending health care benefits and promoting job creation. But simply having a job and health care does not mean that all of an individual’s needs are met – and many of these programs have been focused on helping the middle class. We need to make sure we are helping all families, including low and moderate income families, gain financial stability and move up the economic ladder

The bill I am speaking on today come from the two years of research done by the Commission. You will hear detail from the panels to follow, but briefly this bill would:

• Encourage Modest Savings: The bill would encourage families to develop modest savings by removing the asset limit for the TAFDC[1] and EAEDC[2].  These modest savings are a key to breaking the cycle of poverty, but also result in significant administrative cost savings for the state.

• A number of States have eliminated asset limits for some or all of their programs: Ohio and Virginia have eliminated Asset limits for their TANF programs and about 20 States have waived asset tests for families on Medicaid.  These states have seen significant administrative savings due to the elimination of eligibility determinations and verifications tests.

• Support the Transition to Employment: For many workers, access to a reliable car and the ability to pay for work-related costs – transportation, clothing, and payroll deductions – is critical to gaining and maintaining employment.  This bill would support families as they transition to employment by increasing the TAFDC work expense deduction from $90 to $250 and removing the asset limit to allow families to own a car.  This has not been raised in over 20 years.

• Promote education and training by not counting state education grants as income for TAFDC and EAEDC purposes, and allowing TAFDC recipients to use vocational education to meet their work requirements.

[2] Emergency Aid to Elders, Disabled and Children