Los Angeles County is the nation’s most populous county, according to the 2022 United States Census, ringing in at 9,721,138 persons. This is nearly double the runner-up — Cook County, Illinois — which has approximately 5.1 million residents in comparison. Based on population, if Los Angeles County were its own state, it would be the 11th largest state in the United States, just behind Michigan, which has a little more than 10 million residents statewide.

So how does the world’s largest municipal government organization ensure equitable banking access and education to all the residents of the most populous county in the nation? By working smarter and partnering with other public sector, nonprofit, and private sector banks and financial institutions to create or leverage programs that benefit this population, especially the unbanked and underbanked populations of the county.

What Does the County Do and Who Does It?

Because of the size, scope, and diversity of the population within the borders of the county of Los Angeles, the county needs to work creatively and collaboratively to be able to reach the most constituents with the resources available. This is where partnerships become the key force multiplier for county agencies, not only with partners outside of the county agency, but also with partner departments within the LA County governmental structure. Two of these critical agencies are the LA County Department of Consumer and Business Affairs (DCBA) and the LA County Treasurer and Tax Collector (TTC). You might say to yourself, DCBA makes sense, they work directly with the constituents, but what does TTC have to do with financial empowerment and literacy within the county?

Let’s break this down. The mission of DCBA is to promote a fair and vibrant marketplace, serving consumers, businesses, and communities through education, advocacy, and complaint resolution. In line with this mission, the Center for Financial Empowerment (CFE), a division of DCBA, convenes, advocates, and builds capacity to strengthen the financial health of county residents, with a focus on those who are Black, Indigenous, and People of Color (BIPOC), to build economic resiliency. Therefore, DCBA is the voice and platform for constituents of the county who need assistance and direction in accessing resources and leveraging opportunities to improve their social position. Especially with the county’s focus upon anti-racism, diversity, and inclusion (ARDI) efforts, DCBA has been a critical county agency to reach the marginalized communities and advocate for their access to resources and community development, including those that are most vulnerable to financial disparities.

Quite different from DCBA, the mission of the TTC is to bill, collect, invest, borrow, safeguard, and disburse monies and properties. The TTC does this on behalf of the county, other government agencies and entities, and private individuals as specified by law. The department also provides enforcement, consulting, estate administration, and public information services. One specific function of the TTC is its treasury management services, where it is responsible for the nation’s largest municipal treasury pool. This Treasury Management Operation is divided into three unique areas of responsibility: banking operations/cash management, public finance, and internal controls (audit and accounting for public funds). These three areas of responsibility work together to safeguard public funds, ensure all credits and debits to the county are accounted for, forecast the county’s cash position, and invest any excess funds on a daily basis in accordance with the approved county investment policy.

So how does TTC tie back into the financial empowerment and literacy conversation? The Cash Management Division oversees the county banking contracts with partner banking institutions, and can leverage these partnerships for programming and problem solving when addressing the challenges that unbanked and underbanked constituents may face on a daily basis. In addition, most county banking partners invest with community development financial institutions (CDFIs) within the county, which creates opportunities for county constituents to access capital and resources typically not available to them under their current circumstances. This is where it gets really interesting.

Center for Financial Empowerment Programs

Expanding on the importance of financial empowerment, it’s crucial to highlight its ripple effects within communities. Whether through our financial counseling and workshops, or through strategic partnerships with local organizations, the DCBA’s CFE is committed to ensuring that individuals have access to safe, affordable financial products and services, tools to encourage savings and investments, consumer protection to safeguard those assets, and opportunities for intergenerational wealth transfer.

BankOn LA County

The high costs incurred by unbanked and underbanked households at alternative financial services and other check-cashing establishments go beyond mere financial strain. These costs can perpetuate cycles of poverty, hindering long-term financial well-being and threatening housing, food security, and ability to pay for healthcare. Addressing this issue is critical considering the disproportionate impact on marginalized communities. By spearheading initiatives like LA County’s BankOn, the CFE is actively combating this disparity, ensuring equitable access to safe and affordable financial services for all residents. A BankOn-certified institution is a nationally managed certification that distinguishes institutions committed to making financial services affordable and accessible. The CFE tirelessly works to connect unbanked and underbanked households to these financial products.

Financial Coaching

The CFE’s Financial Coaching Partnership builds the capacity of financial empowerment CBOs and establishes a network of certified financial coaches. These coaches in turn provide financial coaching and debt avoidance services to county residents, specifically those that are unbanked and underbanked.

Volunteer Income Tax Assistance

The CFE’s Volunteer Income Tax Assistance (VITA) program, which low-income county residents can use to obtain free tax preparation services, injects much-needed funds back into the pockets of our lowest-income earners, many of which are unbanked or underbanked. During the last 2022 tax season, the VITA program helped obtain almost $6.9 million in federal and state tax refunds. We found that the average annual household income of our VITA clients was $23,000, while the average return was about $2,000 (10% of their annual income). This can make a world of difference, alleviating immediate financial burdens. VITA is a perfect touchpoint that can connect clients to safe, affordable bank products.

Empower-u Fund

Launched in 2023, the Empower-u Fund provides critical financial assistance in the form of a $2,500 grant, as well as support services to eligible domestic violence survivors. This program was meticulously designed with the unique challenges faced by the vulnerable population in mind:

• It features a minimal barrier application process.
• It leverages domestic violence survivor CBOs as trusted messengers for intake and wraparound support services.
• It ensures safe communication to prevent inadvertently placing the survivor at risk of harm by the abuser.
• The disbursement of funds come in the form of a digital or physical prepaid card.

Currently, the Empower-u program is active and has disbursed over 1,000 grants to domestic violence survivors, aiding them in securing housing, food, utilities, and other necessities. Not only did this program offer crucial financial aid, but it also played a role in stabilizing grant recipients.

Community Development Financial Institutions, Banking Partnerships, and Innovative Funds Distribution

The county of Los Angeles partners with several of the largest financial institutions in the United States because of the demands for liquidity and collateralization of large amounts of cash daily. The relationships also expand to allow the county to share its vision and mission for financial literacy and empowerment for its constituents with these partner banking institutions. There are several ways that the county collaborates with its banking partners to deliver services and invest in communities, especially historically marginalized or under-represented populations. Here are some examples:

Community Development Financial Institutions

Community development financial institutions (CDFIs) serve the needs of low- and middle-income individuals in both urban and rural communities, with a specific focus on those who have been underserved or ignored by traditional banks and lending institutions. CDFIs are set up to create financial self-sufficiency within these underserved communities in order to trigger overall economic growth and community redevelopment. All the banking partners that the county works with contribute to CDFIs in LA County and ensure the reinvestment in these communities of need.

Prepaid Cards for Foster Youths

One area of note that the county identified were unbanked foster youths. These youths were issued checks each month, often with no place to cash them because of their unbanked status, driving them to payday loan and check-cashing centers (who often imposing predatory rates for the transaction in excess of 20% of the check cashed). The county partnered with financial institutions to solve this problem through the issuance of reloadable prepaid cards to the youths that they can swipe or load to their digital wallets for ease of use and safeguarding of their funds. This program has been hugely successful within this target population and the county is seeking to expand this business model to other target populations.

Bank Accounts for Minors (ages 14+)

In most jurisdictions, this population experiences difficulty opening bank accounts without co-signers. Minors receiving county services are no different. There are existing laws that allow minors to open bank accounts with certain court documentation, but not all youths receiving services have this documentation. The county is actively working with banking partners to determine what alternatives can be enacted to afford this priority population receiving services from the county to become banked individuals through alternative certifications besides court-stipulated documents. We are optimistic that the county and its partners will find a solution to meet the needs of these youths, and allow them to exercise their financial independence, while gaining financial literacy along the way.

What the Future Holds for Los Angeles County

As stewards of financial empowerment, we must break down barriers that continue to impact the financial well-being of residents through strategic partnerships, targeted outreach efforts, and innovative solutions that promote financial inclusion and equity. As such, the county is exploring additional alternatives and opportunities for partnerships to both expand upon current programming and establish new opportunities for residents. The following are three current initiatives:

Expanding the use of prepaid cards, in lieu of the issuance of paper checks, to individuals that qualify for county services and funds distribution.

This may include constituents experiencing homelessness, domestic violence survivors, constituents under conservatorship (public guardian), or individuals that face additional challenges that limit their banking options and are considered underbanked or unbanked.

Increasing financial education awareness, through partnerships targeting predatory lending practices, such as payday loans.

The county is currently exploring a partnership with a Los Angeles–based minority-owned bank that offers a banking product and partners in financial education directly related to predatory lending. The Center for Financial Empowerment is excited about this potential partnership and how it could add to their resident offerings in their financial empowerment portfolio.

Banking access for People Experiencing Homelessness (PEH).

The county is currently developing a plan to increase banking access for PEH, which will include partnership opportunities with banks and CBOs, an outreach campaign specifically tailored for PEH, and assessing the feasibility of removing fees when cashing checks.

Conclusion

Achieving widespread financial empowerment requires a multifaceted approach that acknowledges and addresses systemic barriers. While socioeconomic disparities, limited access to banking services, and disparities in educational opportunities all contribute to financial exclusion, there are tangible ways where the government can make a difference and can benefit from. No matter what size jurisdiction you operate within, financial education and financial empowerment impacts your residents.

The county of Los Angeles has found ways to partner with the banking community to fill gaps and provide services to its unbanked and underbanked population. These partnerships expand upon program offerings that the local government can offer independently and often have access to much greater resources than within tight government budgets. By exploring these partnerships and expanding financial empowerment programs and resources to your communities, you can foster economic growth, reduce poverty, promote social stability, and enhance financial inclusion, all of which benefit both your residents and government alike.

Consider exploring these banking partnerships within your jurisdiction to provide a wealth of financial education and financial empowerment resources to your communities!

 

BENJAMIN M. EFFINGER is operations chief of the cash management division of the Los Angeles County Treasurer and Tax Collector. He serves on the communications team of the ICMA Veterans Advisory Committee and is president of the University of La Verne’s College of Law and Public Service Student Public Administration Association, where he is currently pursuing his doctorate in public administration.

 

CHRISTIAN OLMOS serves as the deputy director of the Consumer and Community Services Bureau within the County of Los Angeles Department of Consumer and Business Affairs. In this role, he leads the development of public policy and legislative advocacy priorities of DCBA. His bureau also provides essential services to LA County residents, including financial empowerment, consumer counseling, and foreclosure prevention.