Michigan, You’re Bringing Back Asset Limits? Really!?!

In a clear case of adding insult to injury, beginning October 1st, SNAP (or, food stamp) participants in Michigan will have to provide even more evidence of how poor they are in order to receive assistance. Currently, households need only demonstrate incomes below 130% of the federal poverty line (in reality, most households have incomes below half of that), without consideration of any savings they might have. This is a process that we support because it allows families either to maintain or build up a financial cushion while benefiting from the immediate assistance they need until they’re back on their feet. In states experiencing high rates of unemployment (like, say, Michigan), this is particularly important so that families who have experiences a job loss and need temporary help don’t have to spend down their savings to get it. A family’s future isn’t improved by having nothing but air between them and an a financial emergency.

So, what prompted Michigan to buck the trend of the majority of states and impose an asset limit on SNAP? Did they discover rampant, widespread abuse by SNAP recipients supplementing their benefits with distributions from their trust fund? No, that’s not it. Nationally, fraud makes up only about .1% SNAP cases. Since this standard will have to be applied to all of the near 1 million households that receive benefits, and generate the expense for the state that it will incur by administering that verification process, it would stand to reason that the impetus for this decision is based on some sort of systemic violation of the spirit of policy. What? This is all because this guy won the lottery and stayed on the program? Really!?! Okay, so the asset limit is intended to weed out the lottery winners. It seems like if that is the intent, then maybe it would be easier just to cross-reference lottery winners with SNAP recipients, but, baring that approach, we can assume that the limit is set at a point where you’re just filtering the lottery winners from the folk who have managed to pull together a rainy day fund? What? It’s set at $5,000? Really!?!

What makes this move so perplexing isn’t just the absence of evidence to justify the policy change, it’s absence of consideration for the very real financial and human cost that will occur. There are early estimates that 15,000 families will lose benefits when this goes into effect, with more to follow. In a state with the third highest unemployment rate in the country and where nearly a quarter of all children live in poverty, these families need more support, not less and taking away the resources they use to put food on the table is loss they likely won’t be able to fill. It also sets the precedent that families have to spend down whatever modest sum they have set aside for their own financial security to be eligible for assistance, and that doesn’t serve anyone.

Looking at this through a purely pragmatic lens, it seems as though calculators were a line-item that was cut from the state budget, because it doesn’t like anyone did the math on this one. SNAP is all federal money. The only part of the tab that states pick up is part of the administrative cost. This change will kick people off of the program, meaning they will no longer be getting money from the federal government and spending it in the state, but WILL add a significant administrative burden that the state will have to cover. If we assume that just those 15,000 families lose benefits and consider that the average household benefit for a Michigan family is $270.43 per month, then we would expect the state to lose over $4 million per month. That $4 million in federal dollars that would be expected to generate $6.92 million in local economic activity, It’s less clear how much it will cost the state to verify the assets of all current and future participants, but other states that have eliminated asset tests for other programs have seen savings that would make any state happy in a fiscally constrained environment with a negligible if any uptick in participation. If 15,000 families are made ineligible, that will total around 1.5% of all participants, so the state will have paid to verify the other 98.5% with no benefit.  

It is with these considerations that I ask, Really, Michigan!?! Come on!