Removing asset test for Temporary Assistance for Needy Families program a step forward for the poor

Removing asset test for Temporary Assistance for Needy Families program a step forward for the poor
Lucy Mullany, a senior policy associate at the Heartland Alliance and coordinator for the Illinois Asset Building Group, in her Ravenswood office. Photo by Tyler Stabile

It’s rare to see anything positive coming out of Springfield on social welfare, but a bill that recently passed both houses of the General Assembly may be a turn in the right direction. HB2262 would entirely remove the asset eligibility requirements for the Temporary Assistance for Needy Families program, the cash assistance program for families living at or below 50 percent of the federal poverty level.

If a family had more than $3,000 in assets such as bank account savings or a car, the TANF asset test would have determined that they were ineligible to receive the $432 in monthly financial assistance, according to the Illinois Asset Building Group. By setting the bar for asset eligibility so low, the law disincentives people from saving – a key part of ending poverty, argues Lucy Mullany, a senior policy associate at Heartland Alliance, a Chicago-based advocacy organization for low-income populations. She is also a coordinator for the Illinois Asset Building Group, a statewide coalition advocating for policies that help build asset wealth for low-income people. The group is part of a statewide coalition that led the push to eliminate the TANF asset test, along with other organizations, including the Sargent Shriver National Center on Poverty Law and the Woodstock Institute.

“The asset test on TANF really prevents families from building the financial security and the financial independence they are going to need,” said Mullany, arguing that with less than $3,000 in savings, a family is ill-prepared for an emergency as small as a last-minute car repair.

Under the bill, the asset test would be eliminated, no longer forcing families to spend down their savings, Mullany said. “We were certainly really thrilled to see this barrier to savings eliminated for the most vulnerable population in the state.”

The bill was introduced by Rep. Robyn Gabel and sent to Gov. Pat Quinn on June 19. Quinn’s office said he will sign it law. For Gabel, a Democrat whose district office is based in Evanston, the legislation comes with the extra bonus that it not only helps low-income communities but also allows the state to save money from its ailing budget.

According to Mullany, asset tests cost the state nearly $1 million a year. Of the 192,000 asset tests the Illinois Department of Human Services performed in 2012, it found only eight cases where assets of a family exceeded the $3,000 limit.

TANF funds are administered as block grants by the federal government and allow states to choose whether or not they administer the tests. Illinois will be the eighth state to remove the asset testing for TANF assistance, according to the Illinois Asset Building Group. The state no longer requires an asset test for the Supplemental Nutrition Assistance Program.

Like many social welfare programs, the TANF program has come under fire for providing woefully little as part of an already patchy social safety net. In fiscal year 2013, more than 21,000 families in Illinois received TANF benefits, according to the U.S. Department of Health and Human Services.

But the bill also is important for low-income families beyond its change to TANF requirements. As part of the Illinois Asset Building Group, Mullany works to find multiple ways to help low-income families build assets like retirement and savings plans that she hopes can eventually help them gain financial stability. Removing the asset test for the TANF program was a step toward removing asset barriers for social welfare programs, she said, but its only part of the struggle to help the low-income gain assets.

The Illinois Asset Building Group is working on a host of structural changes that could help by making it easier for low-income people to have access to bank accounts; helping young children growing up in poverty know that there is a savings account with their name on it, and looking for ways to fund a retirement plan that isn’t employer-based.

“Income is certainly a part of [asset building],” said Mullany, but it’s not the whole story. “When you look at the same income of two different people, you can see that depending on what community they are in, their race, ethnicity, and education–one may have less wealth creation over time.”

Mullany said the removal of the asset limit for TANF eligibility is “part of a much larger movement across the country.”

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