House budget slashes funding for program that helps the working poor

By Tim Grimes

Radio report

Lawmakers are considering a major cut in a program that helps poor Hoosiers invest in housing, school or a small business.

Tim Grimes of has the story.


INDIANAPOLIS – Lawmakers are considering a major cut in a program that helps poor Hoosiers invest in housing, education or a small business – even as another bill seeks to expand how individuals can use the money.

Individual Development Accounts allow Hoosiers that earn less than 175 percent of the federal poverty level to put at least $400 into an account that the state matches on a 3-to-1 basis. Participants must be working, have an income and participate in a financial literacy program.

In previous years, the state has allotted $1 million annually for the program. However, the two-year state budget passed by the House last week cuts that funding in half.

House Ways and Means Chairman Tim Brown, R-Crawfordsville, said that there have been “no complaints” about the poverty program and that the cuts were part of recommendations from Gov. Mike Pence’s budget proposal.

“We have not had a full discussion about what the amount should be,” Brown said.

The program had a high of 1,198 participants in Fiscal Year 2007. That’s steadily declined to roughly 1,000 people last year. Senate Appropriations Chairman Luke Kenley, the sponsor of the original individual development account law, said he wants to study the program’s usage and reasons for it before making any decisions about its budget.

“There’s been a fall-off in the amount of usage that has been made of those funds,” Kenley said. “If the demand isn’t there, there’s no reason not to cut it.”

But the Indiana Institute for Working Families said the development program is a good one because it allows poorer families to weather economic crises’ better.

“This is a reliable and successful tool,” said Andrew Bradley, a senior policy analyst at the institute.

Also, the reduction in the state’s budget for the program might mean Indiana could lose federal funding for it. The Health and Human Services Administration offers a dollar-for-dollar match for state funding of the development accounts, which might be in jeopardy if the state cuts funding for the program in half.

The Indiana Housing and Community Development Authority, which oversees the development program, “has committed to provide gap funding in order to maximize our ask of $1 million (over two years), which is equivalent to last year’s funding level request,” said Emily Duncan, public information officer for agency.

Another change to the program could result in more uses for the accounts.

Senate Bill 185 would allow users to spend up to $10,000 from an individual development account to buy a car. Hoosiers can already use the accounts to buy or rehab homes, pay for training or education or start or expand small businesses.

That bill passed the Senate unanimously and is now in the House Ways and Means Committee.

Tim Grimes is a reporter for, a news website powered by Franklin College journalism students. 

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