Introduction to the Family Self-Sufficiency (FSS) ProgramNational FSS Conference 2019

Today’s Presenters

Ann LentellChief Program Officer

Stephanie NguyenProgram Manager

Today’s AgendaSession Goal: Understand the program basics of the Family Self-Sufficiency (FSS) Program

Program Area Topics

1. An Introduction to FSS and Compass • What is FSS?• About Compass Working Capital

2. Enrollment • Who is Eligible for FSS?• Contract of Participation• Individual Training & Services Plan

3. FSS Escrow Account • FSS Account Basics• An Example Escrow Calculation• The FSS Account & Area Median Income• Interim Disbursements

4. Program Completion • Terminations • Graduations

5. Question and Answer

An Introduction to FSS and Compass

FSS Escrow Account One-on-One Coaching

The Family Self-Sufficiency (FSS) Program is a voluntary federal housing program that helps families increase their earnings, build assets, and achieve greater financial stability.

Through FSS, enrolled participants have the opportunity to save their rent increases in an escrow account as they earn more money at work. The program has two core components:

What is FSS?

How Does the Savings Account Work?In subsidized housing, when your income goes up, so does your rent.

This can create a disincentive to increase your income.

FSS removes this disincentive by allowing participants to save that rent increase, creating a powerful vehicle for families with low incomes to build savings and assets.

About Compass Working Capital

Compass FSS Approach: Wealth Building Model

Aspiration-focused marketing in "surround sound"

Client-driven financial coaching, counseling, and education

Strategic use of FSS savings account to achieve goals and promote economic mobility

Public-private model -- Philanthropic investment leverages additional public funds

Rigorous evaluation and analysis to drive stronger outcomes

Compass provides financial coaching and savings programs that support families with low incomes to build assets, achieve their financial goals, and become financially secure.

At Compass, we believe our families are the experts in their own lives and goals. Therefore, our model includes “coaching,” which is participant-led and driven.

Our financial coaches aim to demonstrate humility by approaching the relationship with participants as a partnership, asking questions, avoiding assumptions, and rejecting stereotypes.

About Compass Working Capital

The Impact of Compass FSSIn September 2017, Abt Associates, an independent research firm, released the results of a rigorous, multi-year, and quasi-experimental study of Compass' FSS programs.

The study found that Compass FSS participants performed substantially better than the applicable comparison groups across the financial security indicators measured, including:

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Compass’ FSS ResultsIn December 2017, HUD released its first-ever proposed FSS composite score methodology, which assesses and ranks FSS programs at public housing authorities around the country. The draft methodology includes three primary components: changes in earnings, participation rates, and graduation rates.

Compass' FSS program was one of only six programs out of over 700 nationwide to receive a perfect score.

“It’s hard to believe how with a few changes and

fixing my finances, everything has changed. I tell my financial coach at Compass, ‘you’re not just changing one life – you’re

changing five.’”-Mariluz, Compass FSS Program Participant

Compass FSS LinkCompass serves hundreds of families each year in our local FSS programs in the Northeast. In 2016, we launched an effort to expand our asset-building model by supporting public housing authorities and multifamily housing owners in the implementation of core aspects of our FSS program into their communities. In 2019, we launched Compass FSS Link, our new online community for FSS practitioners.

Enrollment

Who is Eligible for FSS?

Residents must receive either Project-Based Section 8, Mobile Section 8 (HCV), or public housing assistance to be eligible for FSS.

Understanding which residents have the eligible subsidies is important to FSS marketing & outreach since you want to market the program only to residents who are eligible to enroll.

In order to enroll in FSS, residents may have to meet additional eligibility criteria outlined in an FSS Action Plan, such as being a tenant in good standing.

Enrollment FormsHUD requires participants complete two documents to officially enroll in the FSS program: (1) the Contract of Participation (COP and (2) the Individual Training & Services Plan (ITSP).

A form issued by HUD that sets forth the terms and conditions governing a resident’s participation in the FSS program.

• Start Date – The start date will always be the first of the month following the contract’s signing.

• Duration – This is a five-year contract that will always end on the last day of the month.

• Extensions – Contracts can be extended for up to two years for “good cause” such as serious illness or sudden job loss.

Contract of Participation (COP)

Enrollment Forms

A written goals plan developed at enrollment with the FSS participant that becomes part of the COP.

• Modifiable – Goals can be added, removed, or updated throughout the course of the program.

• Two Required Goals – These are also both graduation requirements: (1) The head of household will be employed at the time of graduation, and (2) All family members will be free from cash welfare assistance for 12 consecutive months prior to graduation.

This document is typically created with the coach and participant during an initial appointment.

Individual Training & Services Plan (ITSP)

Question 1

Angie wants to join FSS because she recently obtained a job and knows that her rent will go up on December 1. You schedule an appointment in October to enroll her in the FSS program, but

she misses it and instead comes in November.

What will Angie’s contract start date be?

Hint: Contract start dates are always the first of the month in the month following the signing of the contract.

Question 1

Angie wants to join FSS because she recently obtained a job and knows that her rent will go up on December 1. You schedule an appointment in October to enroll her in the FSS program, but

she misses it and instead comes in November.

What will Angie’s contract start date be?

December 1

FSS Escrow Account

FSS Escrow Account

• Increases in income from work from any adult member of the household that trigger an increase in the Total Tenant Payment (TTP) can contribute to FSS savings.

• Changes in other income (e.g. child support) do not contribute to escrow, even if they cause overall TTP to increase.

• The monthly deposit is typically the same as the difference between the participant’s TTP at enrollment and the current TTP.

Eligible Contributions

• Interest-bearing escrow accounts are set up and administered by the housing provider.

• Escrow is calculated using HUD’s escrow calculation worksheet upon completion of an annual or interim rent recertification

• The participant’s earnings and TTP on the contract will be their “baseline” for the entire five years of the program. A participant will begin escrowing once their monthly rent increases over the baseline amount listed on the COP.

Account Administration

Case Study: Basic Escrow Calculation

Current TTP – Starting TTP = Monthly FSS Account Savings$300 - $180 = $120

*This is a simplified example designed to demonstrate the basic concept behind the escrow savings mechanism.

When Janet enrolls in the FSS program in March, her monthly income from work totals $600. As a result, her monthly TTP is $180.

Six months later, after taking on extra hours at her job and securing a raise, Janet’s monthly income from work is now $1,000 and her rent is $300. The money deposited into her family’s FSS account each month will roughly equal the increase in her TTP:

Monthly Earnings Monthly TTP Monthly FSS Savings

March 1, 2018 $600 $180 $0

September 1, 2018 $1,000 $300 $120

FSS Escrow & Area Median Income

Currently in FSS, families are unable to build escrow on any income above 50% of the Area Median Income (AMI). This has two primary implications:

• Families who join FSS with an adjusted annual income above 50% AMI cannot escrow.

• Families who cross the 50% AMI threshold while in FSS will face a cap to their monthly escrow.

In May 2018, Congress passed legislation that changes this limit to 80% AMI. HUD has 360 days to begin implementing this change. Until then, however, you can view median income for your area here:

https://www.huduser.gov/portal/datasets/il.html

Interim Disbursements

• Participants are allowed to take an interim disbursement from the escrow account in order to make progress toward an ITSP goal.

• Interim disbursements can accelerate a participant’s progress (e.g. improving credit) or prevent a participant from sliding backwards on their progress (e.g. a vehicle-related expense).

Question 2

Angie wants to join FSS because she recently obtained a job and knows that her rent will go up on December 1. You schedule an appointment in October to enroll her in the FSS program, but

she misses it and instead comes in November. Her contract start date is December 1.

Can Angie escrow her increased rent right away?

Hint: Contract starting rent is the rent effective on the contract start date.

Question 2

Angie wants to join FSS because she recently obtained a job and knows that her rent will go up on December 1. You schedule an appointment in October to enroll her in the FSS program, but

she misses it and instead comes in November. Her contract start date is December 1.

Can Angie escrow her increased rent right away?

No, her contract rent will be her new, higher rent.

Question 3

Johanny has an escrow account balance of $4,000. She is working full time but has an ITSP goal of starting a small business. She needs $500 to file a registration with the state that would

establish an LLC so that she can start her own cleaning business. She asks you if she can use some of her escrow money to pay for the registration fees.

Can Johanny use her escrow to pay for the registration?

Hint: Clients can take an interim withdrawal as long as funds are used towards a client’s ITSP goal.

Question 3

Johanny has an escrow account balance of $4,000. She is working full time but has an ITSP goal of starting a small business. She needs $500 to file a registration with the state that would

establish an LLC so that she can start her own cleaning business. She asks you if she can use some of her escrow money to pay for the registration fees.

Can Johanny use her escrow to pay for the registration?

Yes!

Program Completion

While there are no specific HUD regulations about how often to connect with participants, regular communication is key to developing strong, trusting relationships. Generally, FSS Coaches and participants work together through appointments and other correspondence to:• Discuss goals outlined in the ITSP and

modify them as needed• Connect to community resources• Share account balances and process

interim disbursements as needed

Throughout the course of the program, FSS coaches or program coordinators meet with participants and provide ongoing coaching.

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One-on-One Coaching

Graduation Requirements

ITSP Goals Complete. As a reminder, these goals can change throughout the program.

Free of Cash Welfare. No household member can receive cash welfare assistance for at least 12 consecutive months prior to graduation.

Suitably Employed. The participant must be working to graduate. “Suitable employment” will depend on the participant. For example, it may mean 20 hours/week if a participant is also in school.

Participants are eligible for graduation when they can demonstrate the following:

FSS participants can request an early graduation at any time if they meet these program requirements. Upon graduation, a participant can use his/her escrow savings for any purpose.

Terminations

• An FSS participant may be terminated if he/she fails to meet program requirements outlined in the COP.

Involuntary Termination

• An FSS participant can terminate his/her Contract of Participation at any time if he/she no longer wishes to participate in the program.

Voluntary Termination

There are two primary reasons to initiate a program termination:

In either case a participant’s escrow is forfeited. In May 2018, Congress passed new legislation about this rule. Under this new legislation, forfeited escrow will remain with the housing authority or housing owner and be invested back in the FSS program to the benefit of all participants.

Question 4

It’s five years later and Tameka and her daughter are still living together on the same lease. They have $10,000 in escrow. Tameka is still the Head of Household and is still unemployed. However,

she has been working with her financial coach and no one in the household receives cash welfare.

Will Tameka be able to graduate and access her escrow?

Hint: The Head of Household must be employed at the time of the contract ending in order to graduate.

Question 4

It’s five years later and Tameka and her daughter are still living together on the same lease. They have $10,000 in escrow. Tameka is still the Head of Household and is still unemployed. However,

she has been working with her financial coach and no one in the household receives cash welfare.

Will Tameka be able to graduate and access her escrow?

No.

Question 5

Paul is an FSS participant who is three years into the program. He has worked towards his ITSP goals, is free of cash welfare, and working full-time. He would like to graduate early to use his

$9,500 in escrow to help his grandmother in the Dominican Republic who is ill.

Is Paul eligible to graduate early?

Hint: Clients can request early graduation if they have met their goals and are free of cash welfare.

Question 5

Paul is an FSS participant who is three years into the program. He has worked towards his ITSP goals, is free of cash welfare, and working full-time. He would like to graduate early to use his

$9,500 in escrow to help his grandmother in the Dominican Republic who is ill.

Is Paul eligible to graduate early?

Yes!

QUESTIONS?