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TO: Mayor Richard C. Irvin
FROM: Martha Paschke, Director Innovation & Strategy
DATE: November 27, 2024
SUBJECT:
A Resolution authorizing the Director of Purchasing to enter into an agreement with Operation Hope to become a service partner as managing agent for the Aurora's Promise Children's Savings Account (CSA) program for a twenty (20) year term in an amount not to exceed $1,983,600.85.
PURPOSE:
The Aurora's Promise Children's Savings Account (CSA) program is being established in an effort to equitably prepare Aurora's children for the challenges and opportunities ahead while narrowing wealth gaps and providing knowledge and skills necessary to access higher-paying job opportunities.
Operation Hope, founded in 1992, is a 501(3) organization that has received a 4-star rating from Charity Navigator for 10 consecutive years. Operation Hope operates a number of initiatives with a mission to expand economic opportunity, making free enterprise work for everyone. Operation Hope operates its financial literacy and economic empowerment initiatives through over 275 locations around the country.
Operation Hope has managed the City of Atlanta's Child Savings Account (CSA) program since it was established in 2021, currently managing over 7,500 accounts for that program.
Operation Hope's proposal leverages their knowledge and experience in managing a municipal CSA program to effectively and efficiently launch and operate Aurora's Promise CSA program through ownership and management of accounts and facilitation of outreach and engagement activities.
BACKGROUND:
On December 5, 2023, City Council approved the FY24 Budget which included funds to establish a Children's Savings Account (CSA) program.
CSA programs are long-term savings or investment accounts designed to help young children save for postsecondary education. With over 128 CSA programs operating across the country and nearly 5,000,000 children benefiting, CSAs are growing in popularity due to the supporting evidence.
Evidence shows that low- and moderate-income children who have savings as low as $1-$499 set aside for education are three times more likely to attend college and four times more likely to graduate. Recent findings from the country's oldest CSA program in San Francisco demonstrated a 30% closure in the college enrollment gap for underrepresented children, a 7% higher on-time graduation rate, and a 12% increase in college enrollment.
In addition to the strong evidence for the positive impact on students' aspirations and achievement, CSA programs have been shown to reduce disparities in account holdings and savings. Because CSA's are accessible to all students and can be operated on an opt-out basis, they serve as an introduction to banking for families who may be un- or underbanked.
Operation Hope seeks to partner with the City to establish a strong and successful CSA program with goals to: Expand Financial Literacy, Promote Savings Behavior, Support Educational Goals, and Foster Community Engagement.
DISCUSSION:
A request for proposals for the holding and administration of the CSA accounts was published by the City on August 19th, 2024.
Operation Hope, the sole bidder, has met with City staff to review the proposed scope of work and staff have determined that the proposal meets qualifications.
As the contracted manger and facilitator of the Aurora's Promise CSA program, Operation Hope will serve as custodian of the accounts and manage the program platform.
Operation Hope proposes utilizing the VistaShare digital program platform and holding the funds with US Bank. VistaShare is a platform that is used nationally by CSA programs, and US Bank is the fifth-largest bank in the United States.
Aurora's Promise CSA program would be initiated as a pilot program, starting with CUSD 129 and CUSD 131 as the two districts serving the most low- to moderate-income students. Students in kindergarten in these schools who are Aurora residents will be eligible to opt-in to the program during the pilot phase. Students who opt-in will have an account created and an initial seed deposit of $50 will be made by the City.
Accounts will receive an additional $10 upon activation. In addition, students who qualify for free and reduced lunch will receive an extra $20.
The City will develop additional incentives in collaboration with community partners as the program grows.
After the pilot phase, additional public school districts serving Aurora resident students will be added to the program and those students whose pilot cohort grade level was eligible for participation will be eligible at that time.
In addition to holding and managing the accounts, Operation Hope proposes to achieve program goals through:
Program Setup and Initial Consultation:
Facilitating strategic planning meetings with the City and key stakeholders, including public school representatives, to establish a clear understanding of the program's objectives, scope, and resources.
Community Engagement and Outreach:
Advise on the development of a community engagement strategy, including partnerships with local businesses, civic organizations, and parent-teacher associations. Facilitate training sessions for community leaders and school administrators on promoting the CSA program.
Implementation and Monitoring:
Act as the primary advisors during the program's rollout, offering guidance on best practices for account setup, student and parent engagement, and data collection. Monitor progress and provide regular feedback to the City of Aurora to ensure that the program is on track.
Ongoing Support and Continuous Improvement:
Continue to provide advisory services, focusing on scaling the program and enhancing its impact. Facilitate periodic reviews of the program's outcomes and offer recommendations for improvements
If approved by Council, the term of this Agreement will commence as of December 10, 2024 and shall continue through December, 9, 2043 (the “Original Term”), unless terminated sooner as provided in Section 6 herein.
Contractor agrees to perform the services (“the Services”) in accordance with the Scope of Services detailed in the Proposal for the duration of the term set forth herein and for any Renewal Term.
For budget year 2024 $30,000 has been budgeted to support the initial cost. Additional funding is requested for budget year 2025.
Operation Hope's proposal includes costs for years 1-3, after which time the budget will be renegotiated and any change outside of the assumed 3% escalation will require an amendment to the agreement.
If approved, the estimated cost of the proposed agreement term shall not exceed $1,983,600.85 for December 10, 2024 through December 9, 2043.
Funding for this program will be paid from 215-1305-419.32-20 for the contract management and 215-1305-419.50-88 for the child accounts.
IMPACT STATEMENT:
A partnership with Operation Hope as our service provider will provide for an efficient and effective establishment and operation of the Aurora's Promise CSA program. Together, we will prepare Aurora's children for brighter futures and generate equitable economic mobility for years to come.
RECOMMENDATIONS:
I request approval of a contractual agreement for Operation Hope to become a service partner for the Aurora's Promise Children's Savings Account (CSA) program through December 9, 2043 and to allocate $110,000 of budgeted funds for Operation Hope for budget year 2025, $79,412.47 for budget year 2026, with an annual increase of 3% every year after for a term of twenty (20) years through December 9, 2043 for a total amount not to exceed $1,983,600.85.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution authorizing the Director of Purchasing to enter into an agreement with Operation Hope to become a service partner as managing agent for the Aurora's Promise Children's Savings Account (CSA) program for a twenty (20) year term in an amount not to exceed $1,983,600.85.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora seeks to establish the Aurora's Promise Children's Savings Account (CSA) program in an effort to equitably prepare Aurora's children for the challenges and opportunities ahead while narrowing wealth gaps and providing knowledge and skills necessary to access higher-paying job opportunities; and
WHEREAS, the City of Aurora conducted a request for proposals in search of a partner to best fit the City's needs; and
WHEREAS, Operation Hope was the sole proposer; and
WHEREAS, Operation Hope's mission, experience, and expertise align with the City's goals for the Aurora's Promise Children's Savings Account program; and
WHEREAS, if approved, the proposed contract will secure a servicing partner, Operation Hope, through the twenty (20) year term to provide consistent management and facilitation of the Aurora's Promise Children's Savings Account (CSA) program for the City and all eligible children and their families;
WHEREAS, 2024 funding will be paid from accounts 215-1305-419.32-20 for the contract management and 215-1305-419.50-88 for the accounts.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that a proposed contractual agreement with Operation Hope to provide services for the Aurora's Promise Children's Savings Account (CSA) program as described in this Resolution shall be and hereby is approved; and further
BE IT RESOLVED, that $110,000 of funds be allocated for budget year 2025, $79,412.47 for budget year 2026, and an annual increase of 3% every year after for a term of twenty (20) years through December 9, 2043 for a total amount not to exceed $1,983,600.85 for Operation Hope to fulfill the service agreement, shall be and hereby are authorized for disbursement, subject to budget approval each year, consistent with the purposes of this Resolution. The Chief Financial Officer and City Treasurer is authorized to execute the agreement on behalf of the City as well as any other agreements to establish the program.