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The Ladder

A Blog from New America's Asset Building Program

Asset Limit Reforms Gain Momentum

Published:  March 11, 2013
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Last month, we wrote about a recent push in Hawaii to eliminate the state’s TANF asset test. A new report and proposed legislation suggest that similar changes are on the horizon in Arkansas. Let’s explore why it’s so important that these reform proposals are emerging right now.

Arkansas is currently one of only a handful of states that have maintained asset tests in both their SNAP and TANF programs. The state’s SNAP households can have no more than $2000 in savings, while TANF households are limited to $3000. These limits have remained unchanged since 1986 and 1997, respectively; to put that in context, $2000 in 1986 had the same buying power as around $4202 today.  Meanwhile, the current asset poverty limit for a family of three is $4773. Therefore, in exchange for what are designed to be short-term benefits, these low limits set families up for financial devastation should they experience an emergency or other unanticipated expense.

The new report, Making the Case for Eliminating Asset Limits: Why Asset Limits Undermine Financial Security for Arkansans, emphasizes the importance of asset limit reform for supporting low-income families’ financial mobility and permanent transition off of public benefits. The report is authored by Southern Bancorp Community Partners, a community development financial institution that promotes economic opportunity in Arkansas and the Mississippi Delta region. As the report notes, asset limits can discourage participation in the financial mainstream and instead push families to turn to high-cost loans and check cashing services. This issue is of particular importance in the South, which is home to nearly half of the nation’s unbanked households; in Arkansas alone, 10.2% of households don’t have bank accounts.

Following the issuance of the report, a bill was introduced just last week in the Arkansas state legislature that would require the Department of Human Services to conduct a study on the current asset limits in SNAP and TANF. Among other things, the evaluation would contain an assessment of the costs and staff time required to verify assets; data regarding the number of applicants denied due to excess resources; and the cost implications of adjusting or eliminating the asset tests.

The momentum in states like Hawaii and Arkansas (and even more recently, Illinois) to eliminate their asset tests is important for two reasons. First, while the Farm Bill debate was pushed off to later this year as part of the Fiscal Cliff deal, there have been proposals in both the House and the Senate that would effectively eliminate states’ authority to increase their SNAP asset limits behind the federal threshold of $2000 per household. Just last week, Sen. Pat Roberts (R-KS) introduced a bill that would abolish this state option. The Roberts bill would also reverse a reform in the 2008 Farm Bill that indexed the federal SNAP asset limits for inflation. When asset limits are not indexed, they can remain stagnant for decades – in SSI, for example, the resource limit has remained at $2000 for all recipients since 1989. In real terms, this means that the maximum value of SSI recipients’ personal safety net has been cut almost in half.

Eliminating states’ flexibility to set their own asset limits would have major practical consequences for both SNAP participants and state administrators. As we described in our policy paper last year, the process of verifying SNAP applicants’ resources is time-consuming and error prone. And since very few SNAP applicants have savings approaching the state or federal limits, documenting resources is an inefficient use of caseworkers’ time. As one state administrator put it, eliminating the SNAP asset test “allows workers more time to process other information regarding the assistance group and allows benefits to be approved in a more efficient manner.” By contrast, Sen. Roberts’ bill would require the forty-three states that have raised or eliminated their SNAP asset tests to retrain their staff, reprogram their systems, and revise their administrative codes—all in the name of “efficiency.”

Second, states are finding that the success of asset limit reform in SNAP is replicable in TANF, as Hawaii becomes the seventh state to eliminate its TANF asset test (and the fifth state since 2009). However, in nine states, TANF households are limited to only $1000 in savings. With one of the program’s stated goals to “end the dependence of needy parents on government benefits,” helping families accumulate personal savings—rather than punishing them for this behavior—only makes sense.

TANF’s most recent short-term extension expires at the end of this month, meaning that there is the potential for a full reauthorization. The time is now for thinking about how to make the program more effective and efficient. TANF is a complex program and the solutions may not be simple; however, crafting policies that would enable the program to work better as a pathway to economic opportunity—which should include a discussion of personal savings and asset limits—should be a priority.

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