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TANF Asset Limits Provide a Barrier to Financial Stability

Programs such as Supplemental Assistance Nutrition Program (SNAP) and Temporary Assistance to Needy Families (TANF) should provide support to families as they work toward financial independence. Structured properly, these programs can greatly benefit children and their families.

However, programs do not always function as effectively as they could. A recent study by the PEW Research Center finds that low asset limits on public programs such as TANF make it more difficult for families to gain financial security. This ultimately results in families remaining on the program longer which leads to higher program costs. Asset limits are based on the amount of savings and material assets an individual applying for or receiving benefits holds. Asset limits range from $1,000 to $10,000, with several states removing limits altogether. In Nebraska, the current asset limit in our TANF-funded Aid to Dependent Children (ADC) program is $4,000 or $6,000 depending on the size of the household. Of the 40 states whose programs use asset limits, only two have higher asset limits than Nebraska. Many policymakers are concerned that higher asset limits or elimination of such limits will increase the number of families using TANF and incur higher state costs. However, PEW finds that raising or eliminating asset limits does not increase the number of applicants and results in fewer families later returning to the program. The majority of the states that removed asset limits saw a decrease in their caseloads because the programs resulted in long-term financial security for more participants. While Nebraska has a high asset limit compared to other states, removing asset limits completely would make ADC more effective in helping families reach financial stability.

In states with low asset limits, a family might reach the limit and lose program eligibility before they have accrued enough savings to be financially stable. The family is likely to fall below the asset limit again, oftentimes within a month, and return to TANF. The frequent movement of families on and off programs caused in part by low asset limits results in increased administrative costs for the state as they are forced to repeatedly process applicants. States with higher limits are less likely to see families return to public programs because participants are more likely to reach long-term financial stability. Programs consequently have fewer cases to process, lowering administrative costs.

When states set higher asset limits asset limits, or remove them completely, in programs such as TANF, families are able to become financially stable and are less likely to require future assistance. Low asset limits, on the other hand, do not result in long-term financial stability as families repeatedly cycle in and out of the program. Nebraska should consider removing this obstacle for families trying to build greater economic security.

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