States rethink asset tests for food benefit recipients

October 23, 2013

Michigan Gov. Rick Snyder (R) signed new asset caps for food stamp recipients in 2011 (Carlos Osorio/AP)

When Leroy Fick won $2 million in a lottery game in 2011, he opted for a lump sum of about $850,000. That decision meant Fick got a big check right away — and the right to continue using his Michigan Bridge Card, the electronic alternative to food stamps.

The loophole Fick found — lump sum lottery payments weren’t counted as income under state rules — sparked outrage in Michigan. State legislators passed three measures to close the loophole, and to define the amount of assets someone receiving public nutrition assistance could maintain while still qualifying for the programs.

But now, even as states continue to provide assistance for low-income families and individuals who participate in government food programs, several states are revisiting those so-called asset tests. Low-income advocates are pushing state officials to lift the caps, arguing that higher asset levels allow families to save enough to lift themselves out of poverty.

Forty-two states and the District of Columbia place limits on assets of recipients of Temporary Assistance for Needy Family program grants. The amounts range from a $1,000 cap in Georgia, Indiana, Missouri, New Hampshire, Oklahoma, Pennsylvania, Rhode Island, Texas and Washington state to a $10,000 cap in Delaware.

Asset limits for applicants to TANF programs by state:

(Darker states have lower limits; white states have no asset limits)

(Source: Corporation for Enterprise Development)

Fifteen states cap assets of qualifying recipients of Supplemental Nutritional Assistance Programs, according to data compiled by the Corporation for Enterprise Development, a think tank that focuses on financial security issues.

Most states exclude some assets from the total calculation, such as vehicles or retirement savings accounts. And some states set different limits for first-time applicants and regular recipients, meaning families can save money while continuing to receive government aid. In Oregon, a first-time applicant must have less than $2,500 in assets; they can grow their savings to $10,000 once they begin receiving aid.

But the limits, according to low-income advocates, place a burden on families trying to grow their way out of poverty. If they save enough money for the future to price themselves out of TANF or SNAP programs, those savings will be bled out by the cost of food.

“The fact of the matter is, if you want someone to get off those services, you don’t want to create a cycle that perpetuates, where those services become the norm,” said Kate Marshall, the Nevada state Treasurer and an opponent of asset caps. “You have to allow them to transition. Sometimes these restrictions have the opposite effect. They keep people on. The marginal benefit of that extra dollar that then dumps you from the service isn’t worth it.”

“I don’t want them to stay on [the programs]. I want to teach them how to fish,” Marshall said.

Several states are moving in that direction. This year, both Illinois and Hawaii have eliminated asset caps for TANF participants. In Nevada, Marshall’s office pushed the state to exempt 529 plans, which allow families to save for college, from TANF caps.

California Gov. Jerry Brown (D) signed legislation earlier this year more than tripling the limit on vehicle assets. And Arkansas, where families receiving TANF benefits are limited to $3,000 in assets, has created a commission to study those limits.

In Pennsylvania, which like Michigan placed new asset tests on TANF and SNAP recipients last year, new Department of Public Welfare Secretary Beverly Mackereth told the Philadelphia Inquirer’s editorial board on Tuesday that she was rethinking those new caps.

“My focus is not waste, fraud, and abuse. My primary focus is getting services to people who are entitled to them,” Mackereth told the paper. Her predecessor, Gary Alexander, had pushed for the caps as a way to eliminate waste, fraud and abuse.

The new rules in Pennsylvania kicked 4,000 households off public benefit programs, according to the Department of Public Welfare. More than 100,000 households were denied benefits because they didn’t produce documents required to show their asset levels.

A call to the Department of Public Welfare on Wednesday wasn’t immediately returned.

Some asset tests are superceded by federal rules. The Affordable Care Act requires all states to eliminate Medicaid asset tests by 2014.

Ethan Geiling, of the Corporation for Enterprise Development, said his group expects legislators in at least eight states — Washington, California, Nebraska, Nevada, Minnesota, Arkansas, Florida and Rhode Island — to introduce legislation to eliminate TANF asset tests.

“We want people to move off social services,” Nevada’s Marshall said. “In order to do that, they need to be able to do what one needs to do to become independent.”

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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Reid Wilson · October 23, 2013