Association for Public Policy Analysis & Management

Background: The social service sector shows emerging interests in using financial capability services to increase access to financial products, asset-building opportunities, and financial education and training for vulnerable families (ACF, 2015; M. S. Sherraden, et al., 2016). Social service organizations often integrate financial capability services with other service such as child care, parenting training, family counseling, and health care. However, few studies have examined the effects of integrating financial capability and social services. The study used Child Development Accounts (CDAs) as one example of financial capability services, and examined the CDA impacts on low-income participants in Temporary Assistance for Needy Families (TANF) or the Head Start program. We hypothesize that CDAs have positive impacts for TANF and Head Start families, which will indicate the potential of integrating financial capability and social services.

Methods: We selected 426 family recipients of TANF and Head Start (T= 201, C= 225) from a statewide randomized CDA experiment in Oklahoma (SEED OK). The experiment automatically opened a state-owned 529 college savings account for each treatment child and provided financial incentives to encourage families to accumulate assets for children. The study assessed the CDA’s impacts on multiple financial and social-development outcomes, including 529 account ownership, amount of accumulated assets, parental educational expectations, parenting practices, maternal depressive symptoms, and children’s social-emotional development. The independent variable was the treatment status. We applied simultaneous equation modeling to include all outcome variables in one analysis. We also compared the estimated treatment effects in the analytic sample (N = 426) with those for other SEED OK participants (n = 1,819).

Results: Compared to control children, treatment children were 98 percentage points and 9 percentage points more likely to be the beneficiaries of any OK 529 account (p < .001) and participant-opened individual OK 529 accounts (p < .001), respectively. The average total assets held by treatment families exceeded the average total assets held for control beneficiaries by nearly $1,500. Treatment mothers had higher levels of educational expectations (b = .13; p < .10) and positive parenting scores than control mothers (b = 6.23; p < .10). Punitive parenting practices were less frequent among treatment mothers (b = -.85; p < .05), and maternal depressive symptoms were also lower (b = -.48; p < .05). Finally, the mean social-emotional development score among treatment children was 3.41 points better than that among children in the control group (p < .10).

Implications: Findings provide empirical support for a new model for integrating the accounts with other social services for economically vulnerable populations. The centralized account platform as 529 college account used in SEED OK seems essential to providing CDAs on a large scale and promoting opportunities for integration with federal- and state-funded social service programs.