State funding to help low-wage workers gain fiscal stability

by Anna Weggel

This summer, 144 Minnesotans plan to buy homes, 101 to complete higher education plans and 119 to start small businesses, according to an article in Wednesday’s St. Paul Pioneer Press. All of this is because of a group of University professors, graduate students and activists, family social science professor Jan Hogan said.

In 1998, this group attended a conference in St. Louis during which its members heard about programs to help low-income workers. The group presented a similar idea to the Minnesota Legislature later that year, Hogan said.

State funding was granted and a bill passed to begin a trial run of the state Family Assets for Independence in Minnesota project, according to a press release from Bremer Bank, the primary banking partner for the program’s accounts.

The program assists low-wage Minnesota workers in achieving financial stability and gaining assets. After four years of demonstrated success, the program is now entering its second phase.

Participants in the program are required to put $30 per month into a savings account at Bremer Bank.

All deposited savings are matched 3-to-1 – half of the money coming from the state and half from federal funds. Once their savings are matched, participants can save up to $1,440 per year. The money becomes available when participants need it for their specific plan.

For example, a participant who wants to go to college will receive funds immediately for tuition. A participant who wants to buy a house will not receive funding until payments are due, Hogan said.

Participants can use their saved money to purchase a home, take part in higher education or start a small business, according to the press release.

Hogan, aided by other professors and graduate students, is nearing the end of a three-year research evaluation of the program. The team interviewed and tracked 25 randomly chosen families participating in the program and was overwhelmed with the enthusiasm and determination of each, Hogan said.

“The families that are still in the program have never missed a payment,” Hogan said, “And they do whatever it takes to make them.”

Some enrolled families had to discontinue their participation in the program because they lost their jobs and were not able to make payments, Hogan said.

“They really had their hopes so high,” said Busi Nkosi, a College of Human Ecology graduate student who participated in the research evaluation. “Having to leave the program was a big disappointment to them.”

To be in the program, participants must complete 28 hours of financial management classes and 10 to 14 hours of specific asset track classes run through the program, according to the press release.