March 11, 2016

Lawmakers pass bill to expand Individual Development Accounts

A view of the Indiana Statehouse in Indianapolis. (File photo by Natalie Hoefer)

A view of the Indiana Statehouse in Indianapolis. (File photo by Natalie Hoefer)

By Brigid Curtis Ayer

Indiana lawmakers passed legislation to assist low-income families by expanding a savings plan program called Individual Development Accounts or IDAs. The Indiana Catholic Conference (ICC) supports the legislation.

Senate Bill 325, the IDA enhancement bill, passed unanimously on third reading in the Indiana House of Representatives on Feb. 23, and is headed to Gov. Mike Pence’s desk for approval.

The measure, authored by State Sen. Mark Messmer, R-Jasper, aims to improve the state’s IDA program by ensuring more individuals can take advantage of this resource by increasing the maximum income eligibility from 175 percent to 200 percent of the federal income poverty level guidelines. For a family of four, the income eligibility for IDAs would increase to $48,600 annually.

“IDAs help low-income Hoosiers build assets, attain self-sufficiency, learn personal finances skills, and improve their quality of life,” Messmer said.

According to Messmer, Indiana has been a national leader of IDAs since 1997 when it was one of two states in the U.S. to pass legislation which created a statewide IDA program before the federal legislation took shape. The ICC was instrumental in working with lawmakers to get the initial IDA plan passed.

In this program, non-profit organizations assist low-income individuals open a matching savings account at a ratio of three to one, helping individuals to save toward the purchase of lifelong assets, such as a home.

“Every dollar saved, the IDA participants get a three dollar match on their deposit, up to $900 per year,” Messmer said. “Participants can only use the matching funds if they follow through on financial education and a goal setting plan offered by the IDA administrating organization.”

Currently under the program, IDA participants can receive financial management support, including financial literacy courses and assistance in planning for a business, attaining higher education or buying a home. The IDA bill allows participants to use IDA funds to purchase a vehicle when used as transportation to adult or secondary educational opportunities. “This would give low-income Hoosiers more options to utilize this program in order to help them enter the financial mainstream,” Messmer said.

The 1997 IDA legislation was authored by two Indianapolis lawmakers who are now retired, State Rep. John Day, a Democrat, and State Rep. Mike Murphy, a Republican, who are both Catholic. The bill gained bipartisan support, and was passed as part of the state budget.

Messmer said that while the changes to the IDA program may seem modest, the impact on those in the community is substantial. He said that by raising the income threshold to 200 percent of federal poverty guidelines, more low-income residents will be eligible to receive asset goal education, credit repair education, and monthly check-ins with dedicated nonprofit organizations’ staff.

He said the bill takes an important step forward in removing an impediment—transportation— for low-income individuals to maintain employment. Messmer added that in Indiana, the vast majority of hard-working people require a vehicle to obtain and maintain steady employment.

Testimony earlier during the session revealed that employers’ site transportation difficulties were one of the main reasons they lose entry-level workers. Many urban and rural areas of the state are underserved with regard to public transportation. In those areas where there is adequate public transportation, the schedules or bus line routes are not always reliable for workers to sustain their employment with their proximity to affordable housing. This makes it difficult for workers supporting themselves or their families to keep a steady job. Messmer said that Senate Bill 325 responds to this impediment by expanding the savings option to allow a vehicle purchase.

Andrew Bradley, senior policy analyst for the Indiana Institute for Working Families, spoke in support of the legislation. He said that purchasing and maintaining a vehicle can require upward of 25 percent of the IDA participant’s income. Ninety percent of the current IDA participants in Indiana do not own a vehicle.

Glenn Tebbe, executive director of the ICC, who serves as the legislative and public policy spokesperson for the Church in Indiana, said, “The ICC has had a long history of supporting programs that assist low-income, working individuals provide for their families and work toward self-sufficiency. The inclusion of vehicle and an increase in the income threshold is a positive step which will allow more individuals to gain access and make a better life for themselves. Over the years, the ICC has been supportive of the IDA program, and we are pleased that lawmakers have moved to expand the program this year.”

Tebbe said that the Indiana General Assembly must adjourn by March 14, but he says lawmakers have targeted an earlier date, March 10, to complete all legislative work.

(Brigid Curtis Ayer is a correspondent for The Criterion. For more information about the Indiana Catholic Conference, its Indiana Catholic Action Network and the bills it is following in the Indiana General Assembly this year, log on to

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