Asset Limits in Public Benefit Programs Cost More than They Are Worth

By Jami Schlafer

States consider income and assets, but not debts, in determining participant eligibility in public benefit programs to ensure that only those who truly need help get the assistance. The rationale is to guarantee that people use their assets as cash reserves in times of need rather than tap into public assistance programs.  When debts were factored, participants in these programs are more likely to have no net worth or a negative net worth, even though caseworkers are required to administer and validate asset amounts.

In Illinois, conducting this asset test costs the state more money in operating costs than the state would lose by allowing participants to exceed the asset limit. If an applicant has more than the allowable amount, caseworkers often encourage applicants to spend those assets, resulting in a decrease of their financial stability, to qualify for the programs—a message completely contradictory to the goals of these caseworkers’ agencies.

Instead of focusing on maintaining a process that guard against those who may cheat the system, public benefit programs should consider the message that they would like to communicate to public benefit recipients. “As Americans, we value self-sufficiency and policies that encourage savings,” says Dory Rand, supervising attorney of the Community Investment Unit of the Sargent Shriver National Center on Poverty Law. “Asset limits imposed on a population that discourages them to save are absurd.”

The Shriver Center supports legislation or administrative rule changes that eliminate asset limits for public benefit programs. The Shriver Center supports the Freedom to Save Act of 2007, to be introduced this month, that seeks to eliminate the asset test for the Temporary Assistance for Needy Families, the State Children’s Health Insurance Program, the Food Stamp Program, and the Social Security Income program for disabled individuals. Read Rand’s article, “Reforming State Rules on Asset Limits: How to Remove Barriers to Saving and Asset Accumulation in Public Benefit Programs,” in the March–April 2007 Clearinghouse Review: Journal of Poverty Law and Policy; the article covers states’ options for reforming asset limits. In Illinois the Shriver Center continues to work with state policymakers to eliminate asset barriers for public benefit recipients.

For more information and a copy of Rand’s article, visit us online or call Rand at 312.368.2007.