White: Don't limit asset-building for poor families
By: Kate Birnbryer White 12:08 a.m. EDT April 2, 2015 Asset limits were adopted in Michigan and other states as a way to safeguard tax dollars spent on public assistance. Essentially, they place a cap on the money and value of property a person can have and still be eligible for public assistance. Although asset limits may sound like a reasonable way to assure that tax-supported assistance only goes to people who need it, in reality the limits stymie the efforts of low-income families to become financially self-sufficient. And the costs to administer the multiple and differing limits are out of proportion to the amount of funding they attempt to protect. Ultimately, we want low-income families to achieve economic stability so they no longer need to rely on public assistance. Asset limits interfere with that goal, making it all the more difficult for families to become financially independent. Four of 5 Americans will experience at least one year of economic insecurity, ranging from poverty to unemployment to the need for public assistance, according to recent research. Such families are perhaps the most likely to eventually become self-sufficient when effective resources are applied quickly and comprehensively, as opposed to allowing them to fall deeper into debt as issues multiply and become harder to overcome. The help families need to get over the short-term economic hurdles and avoid more serious financial struggles are often restricted by asset limits. We agree with the need for accountability and robust stewardship of tax-supported public assistance, but asset limits can actually be counter-productive to the desired end goals. As low-income families struggle to gain secure economic footing, such obstacles actually defeat the goal of financial independence. Asset tests prevent families from having a little bit of money in reserve to absorb the cost of a car repair, fluctuating gasoline prices, a new prescription drug or a higher-than-expected utility bill. Removing asset tests can help adults maintain employment and empower children to stay in school. In Ohio, the first state to eliminate asset limits for Temporary Assistance to Needy Families (TANF), the number of families receiving aid did not increase. When Michigan reinstated asset limits for its Supplemental Nutritional Assistance Program (aka Food Assistance Program) less than 1 percent of the cases were deemed ineligible because household assets exceeded limits. Those advocating for smaller state government budgets should consider the high cost of enforcing and administering asset limits. In states where asset limits were eliminated, significant administrative cost-savings have occurred. Oklahoma and South Carolina, for instance, saved nearly $1 million by eliminating Medicaid asset limits. State employees that determine eligibility can be more productive and fewer may be needed if Michigan drops its current asset tests and resists the urge to expand asset testing further. Kate White is executive director of Michigan Community Action, a statewide association of 29 member agencies addressing poverty.