Project urges workers to save

State to match funds low-income earners put aside with grants

October 02, 2001|By Michael Dresser | Michael Dresser,SUN STAFF

Low-income Marylanders who regularly put aside money to improve their long-term economic prospects could get help under a new program that matches their savings with grants.

The Maryland Center for Community Development announced details yesterday of the Individual Development Account program, which was created in legislation passed by the General Assembly this year.

Deborah Povich, the center's director of public policy, said the program is designed to encourage people to save money to create a foundation for increased wealth in the future. The money may be used for buying a home, paying for post-secondary education or launching a small business.

Under the program, people earning up to 200 percent of the federal poverty level -- about $35,000 for a family of four -- agree to save a certain amount regularly toward a financial goal. As they save, the program matches each dollar with $2 in a separate account that can be tapped when the goal is reached.

The program got a boost recently when the U.S. Office of Community Services agreed to match $367,590 contributed by the state and private sources. The federal dollars bring the number of Marylanders who can take part in the program to 220.

"The fundamental idea is to help people pull themselves out of poverty by encouraging them to invest in themselves," said Sen. Christopher Van Hollen Jr., a Montgomery County Democrat who was a sponsor of the legislation.

Advocates welcomed the federal funding, saying it will get the initiative off to a good start. "It's a good first step, and it's a program that can make a significant difference in people's lives," Povich said.

State, private funding

The program's funding comes from $100,000 in state money and $267,590 contributed by nonprofit groups, corporations and local governments. The federal money brings the first-year total to $735,180.

The statewide initiative follows a small pilot program in Garrett County that created accounts for 32 local residents, including the Eichorn family of Swanton.

Dawn Eichorn, 30, said she and her husband, Scott, 35, put aside $1,000, which was matched by $1,850 from the federal government. Her husband, who had lost his job at a local factory, used the money to get an associate's degree in automotive technology at Allegany College.

`It helped a lot'

She said that since getting the degree, her husband has landed a better-paying job at a garage in Oakland. "It helped a lot," she said.

As a condition of receiving the grants, recipients must take courses on managing their finances. Yolanda Massey, whose husband went to taxidermy school and launched a business with the program's help, said she found the educational requirement useful in getting the business started.

"I wouldn't have known a lot of what you need to keep track of and what to take as deductions," she said.

The statewide program is the result of legislation sponsored by Van Hollen and Del. Howard P. Rawlings, a Baltimore Democrat.

Rawlings said the program has broad bipartisan support, and he expects it to expand to serve more people.

"What we need is the state to do more than the $100,000, and I believe the governor will do more in the upcoming budget," Rawlings said.

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