When the D.C. Council takes its second and final vote on the 2014 budget today, one item on the agenda will be changes to the rules on how the District provides shelter and services to homeless families. DCFPI strongly supports the goals of the changes proposed by the Gray Administration to the Homeless Services Reform Act — preventing families from becoming homeless, moving families out of shelter and into housing quickly, and providing shelter year-round to families in need. But we are concerned about one proposal that would require homeless families to set aside money in an escrow account as a condition of receiving shelter or supportive housing services
DCFPI believes that savings should be encouraged, but not at the expense of needed shelter. We support a voluntary escrow policy, which would provide savings assistance, financial education and debt counseling, if needed.
Even jurisdictions with some type of mandatory savings program exclude the lowest-income families. New York City only requires individuals with earned income, not those that receive only TANF or SSI payments, to contribute to escrow. Massachusetts requires a mandatory contribution of $150 per month from their TANF families who are in shelter, but their TANF benefits are much more generous than the District’s, $618 per month for a family of three compared to $428 per month. After paying escrow, Massachusetts families have more in remaining benefits than District families have to start with. With more than 70 percent of DC General Shelter families receiving public benefits as their only income, the majority of families will not be able to pay escrow and pay for necessities.
Current DC law requires homeless service providers to offer escrow but few providers do. A first step toward the goal of improving savings would be to enforce the requirement on providers to offer escrow. This would allow the District to evaluate the effectiveness of a voluntary escrow program and measure the associated costs for both providers and the District government.
If the intention is to encourage savings and good financial management, DCFPI suggests implementing a matched savings program along with financial literacy classes as programs in Toronto (Canada), San Mateo County (California), and New York City do. Programs like this that encourage savings without taking away from the very limited resources families have to meet their ongoing needs make the most sense.
To print a copy of today’s blog, click here.
