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How Have Asset Policies for Cash Welfare and Food Stamps Changed since the 1990s? |
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Cash welfare and food stamps are means tested: assets and income must fall below set limits for families to qualify. While this ensures that benefits go to the neediest families, asset limits may also discourage asset building. This Opportunity and Ownership fact sheet examines allowance changes for restricted and unrestricted accounts at the federal and state level. States can exempt all assets (unrestricted assets), or they can exempt assets held for a specific purpose, such as education, a home, or a business (restricted assets); a car; or an individual development account (IDA). Since 1992, states have increasingly supported IDAs and have allowed specific classes of assets (figure 1). Similarly, states exempting restricted assets in their welfare programs went from none in 1992 to 30 in 2003. Prior to 2002, the Food Stamp Program provided no exemptions for restricted accounts. But the 2002 Farm Bill provides states the option of exempting restricted assets, if doing so aligns their food stamp policy with their welfare or Medicaid policies. In 1992, federal policy for cash welfare allowed families to exempt $1,500 in vehicle value from the asset limit. The growth in allowances for restricted assets contrasts with the erosion in limits on assets not set aside for a particular purpose. Average TANF unrestricted asset limits rose in real terms from $1,138 in 1993 to $2,779 in 1998 but have since been eroded by inflation, falling to $2,592 in 2003.
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