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Expanding the Savings Agenda RAISE Texas Summit
Federal Reserve Bank of Dallas—Houston Branch
October 30, 2012 Laura Rosen
OpportunityTexas
Tax-Time Saver Story
Bobby, a VITA client from Longview, decided to purchase a $500 Bond because he received a much larger return than he had anticipated. He plans to put this money aside for retirement and said this savings will be the beginning of his retirement savings.
Texas Tax-Time Efforts Increase Savings
2010 2011 2012
Filers that Saved on Tax Return
77 836 1,728
Tax Returns Prepared 93,206 104,116 114,019
Annual Percentage change
12% 10%
Percent of VITA Filers that Saved on Tax Return
0.08% 0.80% 1.52%
Percent of VITA Sites Where Clients Saved on Tax Return
15% 31% 36%
Annual Percentage change
107% 16%
Three Largest Tax-Time Savings Projects in Texas
OpportunityTexas Tax-Time
Savings Project (2011 & 2012
tax seasons)
San Antonio’s SaveUSA (2011
& 2012)
United Way of Greater
Houston’s Tax-Time Matched
Savings Program (2012)
This Year, Texas Tax-Time Efforts Doubled # of Savers from 2011
2010 2011 20120
200
400
600
800
1000
1200
1400
1600
1800
52%
33%
15%
3%
OtherTTSPSan AntonioHouston
Year
Num
ber
of
Save
rs
32%
55%
9%
2%
Other 75 %Houston 17%San Antonio 8%
77 total savers
(942)
(635)
(226)
(265)
(436)
1,728 total savers
836 total savers
OpportunityTexas Tax-Time Savings Project, 2011-12
Incentives: $25 grocery store card (used in 2012) more popular than $50 Savings Bond (2011)
Immediate incentive can have effect 2-3 times greater on motivating savings initiation.1
Return-on investment,” i.e. savings-to-incentives, increased from 3:1 to 10:1 from 2011 to 2012.
Jones, Damon and Aprajit Mahajan, “Time-Inconsistency and Savings:Experimental Evidence from Low-Income Tax Filers,” CFS Research Brief,
October 2011.
OpportunityTexas Tax-Time Savings Project, 2011-12
Outcome 2011 2012
Number of Project VITA Filers who Saved
265 942
Total Value of TSP incentives
$9,695 $14,240
Total TSP savings $29,950 $143,300
Texas communities participating in the project
9 12
Texas VITA sites participating in the project
24 51
Future of Tax-Time Savings – 2013 Tax Season and Beyond
Tax-Time Savings Project Partnership with Texas Credit Union Foundation SaveUSA-like program with a few modifications
$25-50 upfront incentive for initial deposit of between $250-500 1:1 match up to $100 on additional deposits
2014 – Sites have a menu of savings product options Savings bonds Savings accounts Prepaid cards
Exploring prepaid card as emergency and college savings product for VITA sites to promote in 2014 tax season
Median % of filers direct depositing refund – 67%, range 25-100%
Is prepaid something network is interested in?
College and Children’s Savings in Texas
Smarter Texans Saves, Amarillo ISD
Child Support for College (CS4C)
Save & Match/Texas Match the Promise Foundation - Platform to accept private (and public) $ to be used for 529 college savings matching grants
Match the Promise Scholarships
•Up to $500 match on
tuition unit purchases
•Approximately150 awards
Matching
Scholarship
•$2,000 tuition grant
•5 awards
Promise
Scholarship
www.matchthepromise
.org
Scholarship Application Timeline
Sept.
1-
Decem
ber
31,
2012
•Scholarship Application Period
March
31,
2013
•Scholarship Award Notification
Augus
t 31,
2013
•Scholarship recipients have until this date to meet
contribution requirement
Scholarship Eligibility
Grades - Students in grades 6-9 Account Ownership – Must have a Texas Tuition
Promise Fund account or enroll by 12/31/12 Tx Residency – Must be a Texas resident and a
dependent for tax purposes of a Texas resident Family Income - $75,000 or less Savings Contribution - Minimum $100 contribution to
Promise Fund account during the current sales period – September 1, 2012 – August 31, 2013
Career Essay – Submit 200-300 word essay about the career in which the student is interested
Report Card or Transcript – Submit 2011-12 report card/transcript
Initial Pool – 797 account holders potentially eligible
College Savings Challenges & Next Steps
529 Plan Barriers
No retail presence Only broker-dealers
and certified investment advisors can provide enrollment assistance and advice
Explore Alternatives & Policy Changes
Pursue additional policy change to enable 529 enrollment assistance
Other product alternatives, including prepaid card
Resources
November 5, 2-3pm
Registration link on OpportunityTexas website
Dollar for Dollar Publication Webinar: Promoting Savings at
Tax-Time
Use of This Presentation
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© CPPP
Center for Public Policy Priorities
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