In support of Southern’s mission to create economic opportunity and promote financial security, our policy team worked to pass legislation (Act 535 of 2013) during Arkansas’s 89th General Assembly that required the Department of Human Services (DHS) to conduct a study on current asset limits for the SNAP and TANF programs. While ample national research showed the negative effects of asset limits, there was insufficient data specific to Arkansas. In summer 2014, DHS released the study to determine the effectiveness, consistency, and efficiency of program administration and to understand the potential implications of changing the current asset limits.
The study’s results confirmed our 2013 research findings, presented in our paper “Making the Case for Eliminating Asset Limits: Why Asset Limits Undermine Financial Security for Arkansans”: less than 1 percent of Arkansas SNAP and TANF applications are denied because of excessive assets. The reason for such a low number of denied applicants is because the great majority of Arkansans receiving and needing income supports are in fact poor. The average Arkansas household receiving SNAP has only $57 remaining at the end of the month after paying for necessary expenses. Hence, SNAP recipients do not have the funds saved, or to save, to reach the asset limit, making the asset limit irrelevant for them. Further, in addition to asset tests, income tests are also in place to ensure a household has an income below 130 percent of the Federal Poverty Level.
While the intention of asset testing is to ensure accurate allocation of benefits to those most in need, the eligibility criteria can have negative impacts on the effectiveness of the program as a conduit to self-sufficiency. Asset limits were enacted to prevent wealthy people with considerable savings from receiving funds from anti-poverty programs, yet this scenario is extremely rare, largely due to income tests. Rather, asset limits often have an adverse effect, deterring people from transitioning from government dependence to self-sufficiency and keeping them on public benefit programs. Asset limits discourage savings, disincentivize maintaining a bank account, and theoretically increase the duration of time a family is financially unstable and stays on public benefits.
In addition to negatively impacting a household’s economic stability, asset limits also create problems within public benefit administration. Due to the great complexity of rules and exceptions attached to asset limits, the application evaluation process of asset confirmation can be extremely taxing and time-consuming for both the caseworker and the applicant. Regarding the convolutions of eligibility requirements, over two-thirds of payment errors in SNAP are made by the caseworker rather than the applicant. A 2012 study found that doing away with asset tests for SNAP in both Illinois and Ohio simplified the work, reduced the amount of verifications for applicants, and allowed workers more time to process other information regarding the assistance program.
The results of the DHS study show asset limits are futile, yet discourage economic independence. If Arkansas wants to reduce the number of people on SNAP and TANF, the state cannot perpetuate a cycle where those services become the norm – families need to be able to save to become financially independent. Further, removing asset limits in Arkansas would result in less government spending, and more administrative efficiency.
To learn more about our efforts to improve household economic stability for people in rural communities, please contact Meredith Covington, Policy & Communications Manager, at email@example.com.