Asset-building program for poor tries to win back state support

Ten years ago, Rena Moran and her seven children were homeless for several months. At 43, she was unemployed.

Today, Moran owns a three-bedroom home in St Paul's Rondo neighborhood and is a Democratic representative in the state legislature.

"I'm truly one to believe that no one does it by themselves, unless they're really privileged," she said. "And then again, they haven't done it by themselves, neither."

Moran rose from difficult circumstances with help from a program called Family Assets for Independence in Minnesota, known as FAIM. The program operates on the principle that people need to build assets to move out of poverty.

The small program has unusually high success rates for moving people out of poverty, but two years ago legislators cut its state funding and the program was drastically scaled back. With a push from Moran, the program may soon be back on firm ground after Gov. Mark Dayton and legislators restore the state's half of its $500,000 budget.

Family Assets for Independence in Minnesota is made up of several organizations, including local Community Action Agencies, Bremer Bank, City County Federal Credit Union, Greater Twin Cities United Way, Leech Lake Tribal Government, and Emerge Community Development.

FAIM participants receive one-on-one help from a financial counselor aimed at helping them build savings. They get a three-to-one savings match: so every month, they have to set aside $40 and put it in a savings account. If they do that, the program adds $120 added to the savings account.

"I'm truly one to believe that no one does it by themselves, unless they're really privileged... And then again, they haven't done it by themselves, neither."

For her contribution, Moran took $40 a month from her family's food and clothing budget -- without telling her children.

"You wanna say 'how can I put away $40? I just can't do it,'" she said. "But I don't know. I did it."

Moran is originally from Chicago. Four of her seven children are boys, and as they grew older Moran worried more that staying in Chicago would lead one of them astray. She came to the Twin Cities in 2003, lured by good schools and close, small town-like communities.

"One day I got up, I woke up and said 'no, this is not where I want to raise my kids,' " she recalled. "And didn't think it through that much. Called a nephew who lived here in the Twin Cities and said 'I want to come to Minnesota.'"

Until Moran found a job, she and her family lived in a shelter. FAIM opened a door to a better life.

Like other participants in the program, Moran could only use the money to pay for college courses, start a business or buy a home. Two years after entering the program, Moran had enough savings to buy and maintain a house.

"To know that I had money in the bank, money there that I had saved to allow this moment to happen is awesome," she said.

Participants who have tried to withdraw the savings for immediate needs were removed from the program. But the majority of participants are successful, among them Moran, said Kate Ouverson, FAIM's statewide coordinator.

"In that very short period of time, she was able to purchase a home and she's moved on to be a policy maker at the state legislature," Ouverson said. "Now, did FAIM do that all for her? Absolutely not. But were we a part of it? Yes."

In 12 years, FAIM has helped low-income Minnesotans save a total of $2.5 million. A survey last year of participants from the past 10 years found that, of 81 graduates who worked toward a new home, 97 percent still owned their home. Of 115 who pursued an education, 96 percent had earned a degree or were completing one. Of 130 participants who started businesses, 89 percent were still in business after two years.

Studies done by the University of Minnesota and Gustavus Adolphus College found similar results.

FAIM carefully selects who can participate. To qualify, each applicant must pass a stringent screening process. They must have a job and a household income of less than $47,000 for a family of four.

Ouverson said the results show made a good return on its investment. Every year for 10 years, the state kicked in $250,000. The federal government matched that.

"So for $500,000, we are able to show that people are vital participants in their communities," she said.

But two years ago, FAIM lost its state funding. It found enough money to keep going but couldn't serve as many people.

This year, the program did not make it into Gov. Mark Dayton's first proposed budget.

"When any governor is looking at putting together a budget where the projected deficit is great, you know not everything that people would like to see in is able to get in, " said Erin Sullivan Sutton, an assistant human services commissioner in the Dayton administration.

That's when Moran and two Republican colleagues stepped in. Along with state Rep. Jim Abeler, R-Anoka, and state Sen. Michelle Benson, R-Ham Lake, Moran she pushed legislation to restore funding for FAIM. When those bills were heard in House and Senate committees recently, state Sen. Mary Kiffmeyer, R-Big Lake was one of many legislators who praised the program.

"I mean, wow. You actually get to see the tangibles here," Kiffmeyer said. "There aren't many that come to us that have this kind of documentation and track record."

The House bill added $250,000 in annual funding to a budget bill. Dayton has also restored funding in his supplemental budget.

Sutton, the assistant human services commissioner, said the governor decided to fund FAIM after a February budget forecast showed he had more money to work with than earlier estimated.

"One of the strengths of this program is that it helps people move up and out of poverty and to be more in the financial mainstream," Sutton said. "And I think that's one of the things that makes this particularly attractive."

Moran said she's glad her colleagues at the Capitol understand that it's important to invest in people.

"We need to know and believe that poor people are smart people," she said. "When you give them an opportunity, when you invest in them, they make good choices."

Gallery

Fullscreen SlideshowPrevious Slide

1 of 1

Next Slide