Savings promotion bill amended, advanced

Lawmakers gave first-round approval March 14 to a bill that would allow credit unions to conduct a savings promotion raffle.

Under LB524, introduced by Lincoln Sen. Amanda McGill, savings promotion raffles would be added to the definition of a gift enterprise. Currently, credit unions are authorized to conduct a gift enterprise – a business promotion contest or game of chance – under Nebraska law.

According to McGill, a savings promotion raffle is a contest where depositing a specific amount of money into a savings account or program earns an individual a chance at winning a designated prize. Each entry must have an equal chance of winning.

McGill said a pilot program in Michigan helped participants save over $28 million dollars last year. Participants earned a chance at winning a prize each time they made a deposit to a savings account, she explained, with the prize money supplied by credit unions.

“[LB524] is an innovative and fun idea to encourage people to save more money,” McGill said. “Fifty-six percent of the people who opened these savings products had never saved before.”

A General Affairs Committee amendment, adopted 35-0, prohibits credit union employees from participating in a savings promotion raffle, requires disclosure of raffle terms and conditions to participants and allows credit unions to limit the number of chances to win a prize but not the number of deposits.

Omaha Sen. Jeremy Nordquist supported the bill, saying the Michigan pilot project demonstrated that such programs encourage people to save who normally do not. The bill would incentivize low-income Nebraskans to accumulate assets and save for future needs, he said.

“When people have assets they think about the long term,” Nordquist said.

Sen. Bob Krist of Omaha also supported the measure, saying it would help establish trust in financial institutions, which could encourage savings further.

“We have a financial literacy problem all over this country,” he said.

LB524 advanced to select file on a 38-0 vote.