States Rethink Asset Tests for People on Food Stamps

In the last few years, most states have stopped taking assets like retirement and education savings into account when deciding whether people qualify for aid.
by | May 12, 2015

Pennsylvania became the 36th state last month to do away with asset limits for households on food stamps. But it was only a few years ago that asset tests were actually the norm, not the exception. When Barack Obama was first running for president in 2008, all but 12 states required an asset test to receive food assistance. So what changed?

Jennifer Medina, a senior manager at the nonprofit Corporation for Enterprise Development (CFED), credits the 2008 farm bill. Policy changes in the law, according to Medina, signaled to states that Congress saw asset limits as contradictory to the spirit of the Supplemental Nutrition Assistance Program (SNAP). As a result, lawmakers started loosening asset rules either by indexing the asset limits to inflation or by excluding retirement and college savings accounts as assets that could be counted against SNAP eligibility.

At the same time, national groups such as the CFED and the New America Foundation started arguing against asset tests, saying they encourage SNAP households to spend down their resources in order to qualify for the benefit. That message, according to these groups, flies in the face of municipal initiatives like financial empowerment centers and Bank On programs that try to get low-income families to save for future expenses that could be critical in exiting poverty. "You want families to be saving and then they hit this limit and they can't get food stamps anymore," said Kathy Fisher, policy manager for the Greater Philadelphia Coalition Against Hunger. "It can be a real impediment to that family achieving sustainability down the road."

In Pennsylvania, almost 1.8 million low-income Pennsylvanians receive monthly SNAP benefits, according to federal data. Last year, the average monthly benefit for a person on SNAP in the state was slightly less than $120. When the test was still in place, households with people under age 60 were limited to $5,500 in assets to qualify for SNAP. For households with older residents, or those with people with disabilities, the limit was $9,000. The rules for determining what resources did and did not count against a household's eligibility were complex, but houses, retirement benefits and one car did not affect eligibility.

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Pennsylvania, under Democratic Gov. Ed Rendell, was one of the first states to get rid of the asset test in 2008. Rendell's successor, Republican Gov. Tom Corbett, however, reversed that decision after hearing about two people in Michigan that had won more than $1 million but were still qualified for SNAP. Both Corbett and Michigan Gov. Rick Snyder brought back the asset test on the premise that it would prevent people from accessing public benefits who did not need it while preserving the assistance for those who did.

Meanwhile, Rendell and others argued that the asset limit would add administrative costs and extra work for already overburdened caseworkers. They also pointed out that by the state's own estimates, it was a relatively small problem: Less than 1 percent of SNAP households received benefits despite exceeding the state's asset limit.

Pennsylvania Gov. Tom Wolf delivers his budget address. (AP/Matt Rourke)

Fisher, at the Coalition Against Hunger, said another problem was that applicants had difficulty locating documentation and that as a result 111,000 households were denied benefits because they could not provide proper financial documentation.

But with the election of the new governor, Democrat Tom Wolf, the asset test is gone again. "It was very difficult to implement," said Ted Dallas, the acting secretary of human services in Pennsylvania. His department estimates that the asset test cost about $3.5 million a year to administer and due to errors made by caseworkers, resulted in roughly $1.5 million not going to people who should have qualified for benefits.

Dallas said caseworkers have already begun waiving the test. All it takes is skipping a set of questions during the application process. "It was a lot easier to undo than it was to do," he said.

*CORRECTION: A previous version of this story incorrectly referred to the New America Foundation as the New American Foundation.