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Table of Contents

  1. What is the Family Self-Sufficiency (FSS) Program?

  2. Is FSS effective in helping low-income families build assets and achieve other key goals?

  3. How does one start or expand an FSS Program?

  4. How does the FSS Program differ from IDAs?

  5. Where can I get more information on the FSS Program?

 

For a PDF version of these FAQs, complete with references, click here.

What is the Family Self-Sufficiency (FSS) Program?

The FSS program was enacted by Congress in 1990 to help promote employment among and boost the assets of low-income families participating in certain federal housing programs. Currently serving more than 75,000 families nationwide, the FSS program is administered by State and local Public Housing Agencies (PHAs) and open to families participating in the Housing Choice Voucher (also known as the Section 8 Voucher) program or living in Public Housing. PHAs have discretion to determine how applicants will be selected for participation and how many participants will be in the local program.

The FSS program has two components:

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Escrow Accounts. This is the asset-building component of FSS. In general, it works as follows:

 
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As the incomes of families in the Public Housing and Housing Choice Voucher programs increase, their rents also increase. (This is because most families in these programs pay 30 percent of their adjusted income for rent and utilities.)

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FSS participants, however, have an opportunity to obtain a refund of some or all of these increased rent payments. As the rent of an FSS participant increases due to increased earnings, an amount equal to the rent increase is deposited into an escrow account.

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Individuals that successfully complete the FSS program receive their accrued FSS escrow funds plus interest. (The basic program length is five years, but many families graduate in fewer years.) While there is no formal restriction on use of the escrowed funds, many families use the funds for homeownership, advanced education or to start a new business. FSS participants may also apply for interim withdrawals to cover work-related expenses and other expenses that are consistent with the goals in their personal training and services plans.

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Case Management. FSS participants also receive case management services to help them develop a personal training and services plan specifying their individual goals over the five-year course of the program and obtain access to supportive services in the community. The nature of the services varies among programs and communities. Examples include: employment search, employment training, high school or post-secondary education, financial literacy education, child care, and transportation assistance.

 

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Is FSS effective in helping low-income families build assets and achieve other key goals?

According to the Center on Budget and Policy Priorities: "As of November 2000, about 48 percent of FSS participants who had been enrolled in FSS for 12 months or more had positive escrow balances. These families had an average escrow balance of about $2,400 and were adding to their accounts at the average rate of about $300 per month." Certain FSS programs report significantly greater asset accumulation. In Portland, Oregon, for example, escrow payouts at graduation have averaged $7,000. The FSS program in Montgomery County, MD, reports average escrow accumulation by graduates of $8,000 per family. The average escrow payout among 22 FSS programs in Oregon and Vancouver, WA is at least $3,297.

Importantly, the FSS program appears also to increase families' earnings. An evaluation of the Portland FSS program in mid-2000 found that the average annual earnings of its graduates increased from $4,000 at the beginning of the program to $17,500 at graduation - an increase of 338 percent. To similar effect, Montgomery Country, MD reports that average earned income of FSS graduates increased from $9,180 to $27,130 annually - an increase of nearly 200 percent.

Some 40 percent of FSS graduates in Portland, Oregon and 25 percent of FSS Graduates in Montgomery County, MD, became homeowners. The homeownership rate among graduates of the 24 programs in Oregon, Idaho, and SW Washington State is 36 percent.

For more data on FSS results, click here.

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How does one start or expand an FSS Program?

Under current law, a PHA that does not have an FSS program may start one by submitting an FSS Action Plan to HUD. A PHA with an existing FSS program may expand its program by submitting an amended FSS Action Plan. Provided they can support a program of the requested size, PHAs may request approval to run an FSS program of any size.

The law's flexibility provides an exciting opportunity for government and nonprofit agencies, community groups and others to partner with PHAs to expand participation in this promising program. 

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How does the FSS Program differ from IDAs?

While both FSS and IDAs help low-income families boost assets, they work differently.  Some of the key differences are outlined below:

 

IDAs

FSS Program

Growth of escrow account depends on:

The amount the participant saves, plus the amount of matching funds.

The amount by which the participant’s rent increases, due to increases in earnings.

 

Permissible uses of escrow funds:

Limited to specific uses, generally: homeownership, education or a new business.

Upon graduation, any purpose.  Many graduates use accounts for homeownership or education.  Interim withdrawals available where needed to help meet goals of FSS participant’s career development plan.

 

Services provided:

Strong emphasis on financial literacy education.

Up to the local program.  Referrals or services generally focus on helping boost participant’s employability.  Some programs also address financial literacy.

 

Funding needed for:

(a) matching funds for escrow account and (b) case management and supportive services.

 

Case management and supportive services only.  HUD covers cost of escrow accounts.

 

Bank participation required?

Yes (to administer the accounts)

No.  All funds are administered by the housing authority. 

 

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Where can I get more information on the FSS Program?

FSS Partnerships has prepared a number of working papers on FSS.  Click here to see a list.

The Center on Budget and Policy Priorities has published two papers on the FSS program: a seven-page fact sheet and a longer analysis. The fact sheet is available at: http://www.cbpp.org/5-5-99hous.htm. The longer analysis is cited in Endnote 3. A brief Q&A is also available on HUD's website at: http://www.hud.gov/offices/pih/programs/hcv/fss.cfm.

 

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Revised: 04/14/04.
 

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