Recent years have seen an increased realization that low-income people need to build assets through savings. Low-income Americans need savings, in the short term, to weather unexpected emergencies or pay for college and, in the long term, to ensure a decent standard of living in retirement. There is also growing recognition that many people’s savings are woefully inadequate. As a result, we now put a higher priority on policies that encourage savings than we did before. Here I describe last spring’s successful campaign to encourage low-income families to save, and to protect their savings, by eliminating the Temporary Assistance for Needy Families (TANF) asset limit in Illinois.
Means-tested public benefits programs typically set a limit on the countable assets one may have as a condition of eligibility for the program. Typically, the value of certain assets is exempt from being counted. Examples of assets that may be exempt are a house, a car (sometimes limited to a certain value), and specified types of retirement accounts. States are allowed to set their own asset limits for the Supplemental Nutrition Assistance Program (SNAP) and TANF. The asset limit may be set as low as $2,000 for the SNAP or $1,000 for TANF.
Asset limits are problematic for many reasons. They force people who are otherwise eligible for and in need of a benefit program to deplete their life savings before they can receive assistance. They prevent program participants from building savings needed to weather emergencies such as an unforeseen car repair. And they send low-income people the message that they should spend, not save.
The Affordable Care Act required states to eliminate the Medicaid asset limit on January 1, 2014. Thirty-six states have eliminated asset limits in SNAP, and seven states have eliminated them in their TANF programs (Alabama, Colorado, Hawaii, Illinois, Louisiana, Maryland, and Ohio).
Temporary Assistance for Needy Families
TANF is the cash assistance program for needy children and their families. This assistance is intended to cover all of a family’s non-food expenses, such as rent, utilities, clothing, gas, and other household items. The monthly TANF grant for a family of three in Chicago is $432, enough to support a family at 27 percent of the 2013 federal poverty level. TANF has a five-year lifetime limit, and its recipients must spend 30 hours per week in defined work activities (20 hours if caring for a child under six). TANF is the program that is popularly considered “welfare.”
TANF and its predecessor program, Aid to Families with Dependent Children, have had an asset limit since 1940, five years after the program was created. Prior to its elimination last spring, the TANF asset limit in Illinois was $3000 for a family of two and $50 more for each additional family member. Assets exempt from being counted in Illinois included a house, a car, and certain retirement accounts.
The Campaign to Eliminate the TANF Asset Limit
Eliminating asset limits in public benefit programs has been a major, long-term goal of asset-building advocates around the country. Illinois eliminated the asset limit from family Medicaid in the early 1990s and from SNAP in 2010. An administrative rule promulgated in 2009 by the Illinois Department of Human Services, which administers the TANF program, would have eliminated the TANF asset limit, but the rule was invalidated by the Joint (Legislative) Committee on Administrative Rules. Thus, eliminating the TANF asset limit in Illinois required legislative action.
The Illinois legislative campaign to eliminate the TANF asset limit was undertaken by a coalition of the Illinois Asset Building Group, a program of Heartland Alliance for Human Needs and Human Rights, the Woodstock Institute, and the Sargent Shriver National Center on Poverty Law. The campaign staff included experts in asset policy and experts on the TANF program. Being able to draw on this combined expertise was a major factor in the legislative campaign’s success.
Framing the Arguments and Responding to Concerns
The main obstacles to passing legislation to eliminate the TANF asset limit were the unpopularity of welfare and legislators’ fear of appearing to be “soft” on welfare and opening the door to program fraud.
Given the conservative attitude with which most legislators approach TANF and welfare issues, we had to frame our arguments in conservative terms. It was not difficult to do so because eliminating TANF asset limits serves the traditional values of encouraging and preserving savings and building financial security. Another argument with conservative appeal emerged later in the process, when the state agency estimated that eliminating the TANF asset limit would produce nearly $1,000,000 in administrative savings while having only a nominal impact on the size of the caseload.
Legislators who opposed or were undecided on the legislation voiced the following concerns in our meetings:
Isn’t the asset limit needed to ensure that only the truly needy are on the program?
No. While at one time the asset limit was needed to ensure that the TANF program served only the truly needy, it is no longer needed due to the stringent work requirements included in the 1996 welfare reforms. TANF recipients must work or participate in work activities for 30 hours per week (20 hours if caring for a child under six) to “earn” $432, a monthly grant for a family of three. This “wage” works out to $3.32 per hour. No one with significant assets would choose to receive TANF under these conditions. This response was a powerful argument that legislators across the spectrum found persuasive.
Why should we facilitate saving by TANF recipients when working people are unable to save?
We responded to this attempt to drive a wedge between the poor and the working class by acknowledging that saving money is hard for everyone, and we shouldn’t add barriers to saving for anyone.
Why not just raise the asset limit or carve out additional exemptions?
Our strongest response was that in order to obtain the $1,000,000 in administrative savings, the TANF asset limit had to be eliminated altogether. In addition, having any asset limit sends the wrong message about saving versus spending.
The state is not really going to realize $1,000,000 in administrative cost savings, is it?
Yes and no. Caseworkers will not be laid off, but instead of $1,000,000 in wasted administrative expenses, overburdened caseworkers will be able to meet legal case-processing deadlines and offer additional help needed by families.
Legislative Strategy: Initial Decisions
We decided to start the legislation in each house of the Illinois legislature. That way if the legislation was stymied in one house, we could proceed in the other one and meet the deadline for passage by the first house.
Our sponsors, chosen carefully, were the chairwomen of the Human Services Committees in each house. We were confident they would be strong advocates who would fight hard for the bill, and they were.
From the beginning, just after the bills were introduced, we worked closely with the legislative staff assigned to the bill. We supplied them with the information needed to understand the topic and to put it into context. The bill analysis written by staff is typically the only information about a bill that the legislators will read, and hence staff must be as well-informed as possible. In addition, staff will often share valuable information about how the bill is proceeding behind the scenes.
We worked closely, throughout the legislative process, with the Illinois Department of Human Services, the state agency that administers the TANF program. Its initial position on the bill was neutral, but its bill analysis was very favorable. We lobbied the Department hard and persuaded it to switch its position to support.
One group with which we did not seek to work was the media. In every campaign advocates must carefully consider how working with the media will affect the ultimate chances of success. In this case we decided that working directly with the legislators would be more effective than working through the media.
The Illinois House has 118 members. Bills need 60 yes votes to pass, regardless of how many members vote, so undecided and not present have the same effect as a no vote. The House contains 71 Democrats and 47 Republicans, but “controversial” legislation must have bipartisan support in the House because the Speaker of the House will not permit any “targets” to vote for it. Targets are mostly new members in swing districts who could be politically vulnerable if they cast a vote in favor of welfare recipients. The House contained 12 targets, meaning we started out with 59 Democratic votes at most.
Our bill received a favorable, or at least neutral, write-up from the Republican staff (members are not permitted to show us the staff analysis, and we did not see it), so Republican members were free to support the bill, i.e., their caucus did not take a position in opposition to the bill. A major breakthrough occurred when the ranking Republican on the House Human Services Committee agreed to be a chief co-sponsor of the bill. Another Republican committee member cosponsored the bill, as did a third Republican. (Our Republican cosponsors were all women, who generally expressed more empathy for the single mothers involved.) We met individually with each member of the Human Services Committee before the bill was called and gained the support of another Republican on the committee who had a very conservative voting record. No one spoke against the bill in committee.
Bill sponsors become more invested in the bills they are sponsoring when they see that the bill has “legs.” This is important since members can do important things that advocates cannot do themselves, or not as well, and also because leadership requires members to set legislative priorities. Putting three Republican cosponsors on the bill was a powerful demonstration that it had legs and motivated our sponsor to become more invested in securing the bill’s passage.
Besides lobbying her fellow members, our sponsor asked the Governor’s office to prepare a cost estimate. We achieved another major breakthrough when the state agency estimated that it costs $960,000 per year to administer the asset limit, based on the assumption that it spends ten minutes on it for each of the 192,000 applications and redeterminations processed over a year. This research gave us a whole new argument with strong appeal to legislators.
The first time the bill was considered on the House floor, it received only 55 votes. Our sponsor moved to postpone consideration of the bill, which allowed her to bring it up again later. Since the votes had been up on the board before she moved to postpone consideration, we knew how each member had voted on the bill. We then focused our efforts on members we thought we could win over, dividing up assignments between our sponsor, our chief Republican cosponsor, and us.
In addition to meeting with persuadable members, we made a point of meeting with members who had spoken out against the bill on the floor. We gently corrected whatever misstatements they had made and gave them a chance to vent. This is a good, but not foolproof, way to blunt opposition.
We met with a member of the Republican leadership who had spoken out against the bill. Once he got a better understanding of the bill, he told us he still couldn’t vote for it but said he would talk to the firebrands and ask them not to speak against the bill again and to let it be called for a vote without further debate. (We saw him doing this on the floor.) Sure enough, there was no further debate on the bill and thus nothing to derail the bill before the vote.
We knew going in that we had the votes to win. As always, there was still drama. Two or three members broke their commitments to vote for the bill, and another one was in the bathroom and missed voting. But in a bit of serendipity, we bumped into a member of the Democratic leadership team just before the vote, and she arm-twisted a couple of nontarget Democrats into switching their votes from no to yes. The bill passed with 62 votes.
The Illinois Senate has 59 members, and bills need 30 yes votes to pass. The Senate contains 40 Democrats and 19 Republicans.
We met with the ranking Republican on the Senate Human Services Committee, and he was strongly opposed to the bill. Being experienced on human services issues and respected in his caucus, we knew that his strong opposition would prevent us from getting any Republican votes.
We met individually with all 40 Senate Democrats except the Senate President, many of them multiple times. Democratic Senators in suburban and downstate districts, traditionally more conservative than city districts, were wary of voting for the bill.
We knew the vote would be close. We kept asking the sponsor to postpone calling the bill for a vote until enough of our supporters were there, but we were running out of time as it was the last week of the legislative session. When she called the bill for a vote, one of our supporters was not there, and just before the vote two more left. Fortunately three senators whom we had put in the undecided, leaning against column, voted for the bill, giving us the needed margin. The bill passed the Senate with two votes to spare, just as it did in the House, and was later signed into law by the Governor. Sometimes luck can be a strong ally.
Policies that encourage savings have broad appeal across the political spectrum. We always framed our message in those terms. As with any proposed welfare reform, the proponents have the burden of showing that it will not open up the program to ineligible people who will take scarce resources away from the truly needy. Therefore, explaining how TANF’s stringent work requirements discourage all but the truly needy from getting on the program was our key argument. The significant administrative savings realized by eliminating the TANF asset limit was a strong secondary argument.
I’ve detailed here how we maneuvered the bill through the Illinois General Assembly. While some of the information here applies to other states, every state legislature operates differently. It behooves advocates to learn as much as they can about their legislature’s political dynamics and its formal and informal procedures and to build relationships with key members and staff.
Another very important ingredient for achieving success was having experts on both asset policy and the TANF program involved. We were able to speak with authority to both parts of the issue and to handle the hard questions.