When Foster Care Ends, IDA Provides Safety Net

The following are excerpts from an article appearing in the Spring 2008 issue of Bridges, a quarterly newsletter published by the Community Affairs Office of the Federal Reserve Bank of St. Louis.

Young adults who “age out” of the foster care system often have no support system to fall back on. They are suddenly on their own, looking for a place to live and a way to pay their bills. In St. Louis, the Youth IDA Pilot Program is one support system they can turn to.

The concept for the program grew from a feature story that KETC-Channel 9 (a PBS television station) aired on foster children. Realizing the extreme need of many of those who are too old for foster care but too young to know how to manage their lives, the staff at Channel 9 wanted to help. They approached United Way of Greater St. Louis (www.stl.unitedway.org) with an idea to rework an adult IDA program for youth.

IDAs are individual development accounts for low- to moderate-income working people who participate in a matched-savings program. The savings are used for specific purposes. Participants are required to complete financial education classes and meet a savings goal before they receive the matched portion.

“The issue was to create a program to help youth leaving foster care to make a successful transition to independent living,” says Cassandra Kaufman, a community investment director with United Way. “Youth in foster care have a much tougher time than other kids going out on their own. They’re often younger, many are parenting children, many need a place to live, need transportation, need education, they haven’t had the resources to learn how to live on their own, have low job skills, no money and they simply do not have the family support to fall back on, if or when anything goes wrong.”

Foster care studies show that four years after leaving foster care, 62 percent of the youngsters have not maintained employment for one year; 46 percent lack a high school diploma; 42 percent have become parents; and 38 percent have been diagnosed with an emotional problem.

Acting as a convener, the United Way collaborated with social service agencies, educators and bankers to develop the program. Covenant House Missouri, Epworth Children’s Home, Family Resource Center and Youth in Need joined in the partnership. Because they work with foster children, they understand the barriers that exist for them once they age-out. Other partners include the University of Missouri Extension, which does extensive work in financial education and tailored financial education curriculum for the project, and US Bank, which holds the savings accounts for the young adults.

Thirty-four youth started the program in October 2006, taking classes and opening savings accounts. Through January 2008, they saved a total of $14,700. Seven of them have reached their $1,000 savings goal, and four have completed the program and purchased their asset. Three bought cars and one used the savings toward the first and last month’s rent and a security deposit for an apartment.

“It’s been educational for all of us to see these kids go through the classes,” Kaufman says. “Things we take for granted, balancing a checkbook for example, is something they’ve never learned to do. We try to make the classes as interactive as possible. I look forward to this program expanding to serve more youth aging out of the foster care system in the future.”

exploring: searching or traveling for the purpose of discovery

innovation: to add value by applying a new idea or method to something established