TANF Asset Limits and State Level Demographic, Economic and Political Factors

Background and Purpose:

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 devolved determination of maximum participant assets to states in the newly created Temporary Assistance for Needy Families (TANF) program. Today, many asset limits remain at 1980’s levels while others have been significantly increased or eliminated altogether. Liberalized limits are associated with increased savings and vehicle ownership among low income families and decreased administrative costs. According to many advocates, this change provides low income families with an important opportunity to gain financial independence. However, no previous research has examined the factors affecting state level decision making regarding asset limits. The eight states to eliminate limits altogether (AL, CO, HI, IL, LA, MD, OH and VA) appear at first glance to represent a diversity of political and economic conditions. The study described here therefore tests the relationship between TANF asset limits and various state level demographic, economic and political factors.

Methods:

A repeated cross sectional panel was created for 50 states and DC over the fiscal years 2009-2015. Asset limits and maximum monthly TANF benefit were collected via the Urban Institute’s Welfare Rules Database, unemployment rates via the Bureau of Labor Statistics, poverty rates via the US Census, State House and Senate makeup via the University of Kentucky Center for Poverty Welfare Dataset, and participant demographic data via the Administration for Children and Families. State asset limits were converted to a categorical variable to account for states without a limit. All other variables were continuous. A Spearman’s Rho was selected over a Pearson’s Correlation as the variables do not have a linear relationship.

Results:

TANF asset limits had significant positive relationships with the percentage of a State’s Senate that is Democratic (r_s = .114, p = .036) and the percentage of the TANF caseload that is Native Hawaiian/Pacific Islander (r_s = .169, p = .001) or multiracial (r_s = .221, p = .000). TANF asset limits had significant negative relationships with state unemployment rate (r_s = -.149, p = .005), poverty rate (r_s = -.188, p = .000), and the percentage of the TANF caseload that is Hispanic (r_s = -.138, p = .009) or has less than 12 years of education (r_s = -.143, p = .007).

Conclusions/Implications:

It is impossible to determine the direction of these relationships. However, negative relationships between asset limits and a state's unemployment rate, poverty rate and the percentage of state TANF caseload that is Hispanic or has less than 12 years of education implies that citizens who could most benefit from relatively generous TANF eligibility criteria are the least likely to have such access. While one might assume that generous asset limits would be associated with relatively generous benefit levels, that was not the case in the current analysis. Relationships with the native Hawaiian population are most likely explained by an eliminated limit in Hawaii. In order to expand access to asset development among low income families, greater research is needed establishing the state and individual benefits to liberalized asset limits.