1. STATE OPTION TO SET THE ASSET AND GROSS INCOME TESTS Stacy Dean December 2008

2. USING CATEGORICAL ELIGIBILITY Since 1999, states have been able to set their own asset and gross income policy via categorical eligibility. Since 1999, states have been able to set their own asset and gross income policy via categorical eligibility. Asset option – 20 states Asset option – 20 states Gross income option – 9 states Gross income option – 9 states

3. SAVING POLICY FOR ALL Asset policy has focused on building wealth through the tax system – doesn’t help people with low incomes. Asset policy has focused on building wealth through the tax system – doesn’t help people with low incomes. Policies for low income actually create savings disincentives through asset tests -- get by but not ahead. Policies for low income actually create savings disincentives through asset tests -- get by but not ahead. Growing bi-partisan support to develop asset building policy that includes all Americans. Growing bi-partisan support to develop asset building policy that includes all Americans.

4. All States Have Expanded Asset Limits for Child Health Coverage

5. 31 States Have Expanded Asset Limits for Parent Health Coverage

6. 20 States Have Expanded Food Stamp Asset Limit

7. REQUIRED ASSETS CHANGES in ‘08 Farm Bill excluded: Farm Bill excluded: All retirement and educational savings accounts from the asset test, All retirement and educational savings accounts from the asset test, Indexed the $2,000 and $3,000 limits Indexed the $2,000 and $3,000 limits Required new policy, new forms, staff training. Required new policy, new forms, staff training. These mandatory changes are a good opportunity to consider state options on assets. These mandatory changes are a good opportunity to consider state options on assets.

8. STATES CAN SET THEIR OWN ASSET LIMIT WITH CAT EL States can make households that receive a TANF funded benefit categorically eligible for Food Stamps. 7 CFR 273.2(j)(2) States can make households that receive a TANF funded benefit categorically eligible for Food Stamps. 7 CFR 273.2(j)(2) Under cat el, the asset test of any TANF-funded benefit that a food stamp household receives or is authorized to receive is valid for food stamps. Under cat el, the asset test of any TANF-funded benefit that a food stamp household receives or is authorized to receive is valid for food stamps.

9. HOW DOES IT WORK? A household applying for food stamps is first screened for eligibility for a TANF-funded benefit. A household applying for food stamps is first screened for eligibility for a TANF-funded benefit. If eligible for the TANF-funded program, the asset and gross income test for food stamps is satisfied. If eligible for the TANF-funded program, the asset and gross income test for food stamps is satisfied.

10. LIMITS ON THE OPTION The household must be recertified for the TANF- funded benefit at least every 12 months (consistent with food stamp rules). The household must be recertified for the TANF- funded benefit at least every 12 months (consistent with food stamp rules). The TANF-funded benefit must have a gross-income limit. The TANF-funded benefit must have a gross-income limit. The TANF funded benefit must meet purposes 3 or 4 of TANF in order to serve all food stamp households. The TANF funded benefit must meet purposes 3 or 4 of TANF in order to serve all food stamp households. FNS must approve the option if states use benefits funded with less than 50% TANF/MOE. FNS must approve the option if states use benefits funded with less than 50% TANF/MOE.

11. WHAT TANF FUNDED BENEFITS ARE STATES USING? Want to find a TANF-funded benefit that will reach the entire caseload or your target group. Want to find a TANF-funded benefit that will reach the entire caseload or your target group. Examples: Examples: ND – TANF Information and Referral Services (Brochure) ND – TANF Information and Referral Services (Brochure) DE – Pregnancy prevention information. DE – Pregnancy prevention information. MI – Domestic Violence Brochure MI – Domestic Violence Brochure MD – Family Preservation Services Brochure. MD – Family Preservation Services Brochure.

12. CHOICES WITHIN THE OPTION What TANF-funded benefit will confer categorical eligibility? What TANF-funded benefit will confer categorical eligibility? What asset limit should you use? What asset limit should you use? Will the new resource limit apply to the entire caseload? Will the new resource limit apply to the entire caseload? How will you promote the change? How will you promote the change?

13. WHY ADOPT CAT EL? It is good policy. It is good policy. Encourages savings and supports working families and seniors who save. Encourages savings and supports working families and seniors who save. This option simplifies the program and is easy to implement. Asset tests are complicated! This option simplifies the program and is easy to implement. Asset tests are complicated! This option reduces errors. Not many asset QC errors, but they are large when they occur. This option reduces errors. Not many asset QC errors, but they are large when they occur. Food stamps benefits are 100% federal funds! Food stamps benefits are 100% federal funds! State administrators who have done it, love it – talk to them. State administrators who have done it, love it – talk to them.

14. ISSUES TO CONSIDER USDA has proposed eliminating this option. Congress hasn’t shown much interest. USDA has proposed eliminating this option. Congress hasn’t shown much interest. States fear it might results in big caseload increases without the needed administrative resources to manage. States fear it might results in big caseload increases without the needed administrative resources to manage. Some policy makers do not support liberalizing the asset test. Some policy makers do not support liberalizing the asset test.

15. MAKING MORE WORKING FAMILIES ELIGIBLE FOR FOOD STAMPS States also have flexibility to set the gross income test via categorical eligibility. States also have flexibility to set the gross income test via categorical eligibility. Under cat el, the gross income test (up to 200% of poverty) of any TANF -funded benefit that a food stamp household receives or is authorized to receive is valid for food stamps. Under cat el, the gross income test (up to 200% of poverty) of any TANF -funded benefit that a food stamp household receives or is authorized to receive is valid for food stamps. Extends more generous treatment of gross income to non-elderly/disabled households. Extends more generous treatment of gross income to non-elderly/disabled households.

16. GROSS INCOME TESTS

17. WHY RAISE THE GROSS INCOME TEST? Allows the state to provide more financial support to low-wage working families and individuals. Allows the state to provide more financial support to low-wage working families and individuals. States that have taken the option have increased their non-elderly, non-disabled caseload by an average of 6%, (ranging from 5 to 13%). States that have taken the option have increased their non-elderly, non-disabled caseload by an average of 6%, (ranging from 5 to 13%). Can improve QC with respect to income reporting rule. Can improve QC with respect to income reporting rule. Note: this does not increase benefit levels. Note: this does not increase benefit levels.

18. Mostly Helps Households Under 165% of Poverty

19. 90% of Benefits Go to Those Between 130% and 165% of Poverty

20. Many Households Get $10, but Majority Qualify for More

21. WHO ARE THESE HOUSEHOLDS? 96% are households with earnings. 96% are households with earnings. 84% are households with children. 84% are households with children. They have higher earned income and dependent care deductions than those below 130%: They have higher earned income and dependent care deductions than those below 130%: Earned income Earned income 96% receive it at $359 vs. 47% at $177 96% receive it at $359 vs. 47% at $177 Dependent care Dependent care 31% receive it at $214 v. 8% at $175 31% receive it at $214 v. 8% at $175

22. KEY CHOICES WITHIN THE OPTION What gross income limit should you use? What gross income limit should you use? Most benefits go to those < 165% of the poverty line. Most benefits go to those < 165% of the poverty line. Most of those who benefit are < 165% of the poverty line. Most of those who benefit are < 165% of the poverty line. Alignment with another program? Alignment with another program? Treatment of $0 benefit cases? Treatment of $0 benefit cases? What does $0 benefit cases get you? What does $0 benefit cases get you? There is a state option to make these cases ineligible. There is a state option to make these cases ineligible.

23. KEY CHOICES (cont) Will you keep the net income test? Will you keep the net income test? CBPP strongly recommends retaining the test. CBPP strongly recommends retaining the test. Makes more households eligible — many for $10, but also is vulnerable to attack. Makes more households eligible — many for $10, but also is vulnerable to attack. Can reduce administrative burden and cost of managing more $10 cases. Can reduce administrative burden and cost of managing more $10 cases. These details raise important trade-offs — Helping more families vs. administrative costs and political concerns. These details raise important trade-offs — Helping more families vs. administrative costs and political concerns.