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Idea of the Day: Reforming TANF Asset Tests Will Help States Save Money

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President Barack Obama’s fiscal year 2011 budget proposal provides an opportunity to innovate and reform asset tests for means-tested programs including TANF. President Obama’s budget recommends a provision that would help low-income people avoid being penalized for holding minimal assets by allowing them to keep at least $10,000 in assets before losing their eligibility for means-tested programs. The president’s budget proposal signals the kind of federal leadership necessary to make innovative changes to improve TANF access for families in need. This provision provides an incentive for states to innovate by lowering their asset limits or eliminating them altogether. One example is Ohio, which received $28.1 million in federal TANF high-performance bonuses in 2004 and $14.7 million in 2005 for labor force attachment programs, which help people maintain their connection to the labor force.  Such incentives will allow states to support work and self-sufficiency for low-income families.

Reforming TANF asset tests, whether it be in the upcoming reauthorization of TANF or through the enactment of President Obama’s budget proposal, would be a huge step toward helping states save money and low-income individuals move closer to self-sufficiency. And the fact that this change has already occurred in three states makes a stronger case for other states to follow in their footsteps and provides momentum for President Obama’s budget proposal to significantly reform asset limits.

These types of reforms can help families avoid having to spend down all their assets before qualifying for TANF benefits in dire economic climates. American families need a safety net that will help them bridge the gap between getting back on their feet and building assets that will make them financially secure.

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To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund)
202.741.6285 or kpeters@americanprogress.org

Print: Anne Shoup (foreign policy and national security, energy, LGBT issues, health care, gun-violence prevention)
202.481.7146 or ashoup@americanprogress.org

Print: Crystal Patterson (immigration)
202.478.6350 or cpatterson@americanprogress.org

Print: Madeline Meth (women's issues, Legal Progress, higher education)
202.741.6277 or mmeth@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Lindsay Hamilton
202.483.2675 or lhamilton@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org

 

This is part of a regular column: Idea of the Day

For more from the same column, click here