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The Ladder

A Blog from New America's Asset Building Program

New Paper: State Asset Limit Reforms and Implications for Federal Policy

Published:  November 6, 2012
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Figure: Trends in State Asset Limit Policies

Last week, the Asset Building Program released a new paper about recent state-level reforms to asset limits in public assistance programs, in conjunction with our event with the Coalition on Access and Opportunity about removing red tape in the public benefits system. Asset limits have long been in tension with one of the core principles of asset building; that is, that families of all incomes should have the access and ability to save for the future. This new research reveals that many state administrators concur with this assessment—and have also found that eliminating asset tests eases their employees’ work while streamlining benefits access.

Even low levels of assets have been found to significantly increase financial security by providing families a cushion of savings they can access to respond to an emergency or complete a car or home repair. Many states, however, have asset tests that cap household savings at a level far below what’s necessary to respond to an unanticipated expense. The asset poverty line provides a good frame for this comparison: it’s the amount of savings a family would need to live at the poverty level for three months in the absence of income. For a family of three, the asset poverty line is currently $4632. However, ten states have asset limits below this level in the Supplemental Nutrition Assistance Program (SNAP/Food Stamps), while for Temporary Assistance for Needy Families (TANF), it’s a full 41 states. These low limits thus require families to choose between present and future wellbeing and remain in both income and asset poverty to receive the assistance that will help them get back on their feet.

Yet while these principles are well established in the asset building field, few prior assessments have gone beyond the theory to explore how asset limits are experienced and what impacts are observed by those administering the programs. This is where this research fills a void. Through surveys and interviews, we learned how asset limits and recent reforms have affected the administration of SNAP and TANF in a range of states with different policies in place. Drawing on their own experiences, program administrators explained that having asset limits in place not only adds needless complexity to the application process, but also traps families in a state of financial vulnerability, potentially increasing the amount of time they need to access public assistance in the long-term. Moreover, most administrators reported that eliminating asset tests allowed eligibility workers to devote more time to other case management duties and streamlined access to benefits and services in a time of overwhelming need.

In the past year, two states reinstated their SNAP asset tests, and the House has proposed requiring states to maintain an asset limit for SNAP (currently $2000) through the Farm Bill reauthorization. Accordingly, this is an important time for examining how recent reforms to asset tests have affected both applicants and eligibility workers. It’s our hope that the insights from administrators embodied in this report will help inform future state and federal policy decisions.

For more, check out the full report or the executive summary. You can also access copies of related documents from the Coalition on Access and Opportunity here.  


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