Hawai’i Poised to Eliminate its TANF Asset Test

After years of political organizing, research and advocacy, Hawai’i is poised to become the seventh U.S. state to eliminate the asset test for applicants to its Temporary Assistance for Needy Families (TANF) program. If the experience of other states is any indication, this policy change should reduce unnecessary paperwork, bolster administrative efficiency, and establish a more supportive environment for strengthening low-income families’ financial security.

The path to this reform has been a long one, dating back to 2006 when the Hawai'i Alliance for Community-Based Economic Development (HACBED) developed a state Asset Policy Initiative identifying six key policy priorities. Among these was “Break Down Barriers to Asset Building,” in which the authors recommended eliminating the Hawai’i TANF asset test, citing the success of similar reforms in Virginia and Ohio. Two years later, the state legislature responded by establishing an  Asset Building and Financial Education Task Force to develop policy recommendations surrounding asset limits, children’s savings accounts and financial education. The Task Force collaborated with HACBED to produce a report for the legislature in 2010, which paved the way for the introduction of multiple bills to eliminate the TANF asset test in 2012.

A 2012 House Resolution requested that the Hawai’i State Department of Human Services (DHS) conduct a study regarding asset limits in the state’s public assistance programs and provide recommendations about proposed legislative reforms. DHS’s report, submitted last month, recommended eliminating the asset test for TANF. The report noted that, as in other states, very few of Hawai’i’s TANF applicants are denied due to excess assets – a mere 0.2%. Yet as documented in the report, the process of verifying families’ assets is time-consuming for program administrators and imposes significant paperwork requirements on applicants, which can discourage eligible families from accessing the assistance they need.

Last week, the Hawai’i House of Representatives passed the most recent bill that would remove the TANF asset limit. In the Senate, both the Committee on Human Services and the Committee on Ways and Means recommended that the companion bill be passed, and DHS submitted testimony indicating that it “strongly support[ed]” the bill. A wide range of government and community organizations, including the Office of Hawaiian Affairs, the Legal Aid Society of Hawai’i, and the Hawai‘i Appleseed Center for Law and Economic Justice, also submitted statements in support of the reform.

This is exciting news.

As we described in our policy paper last year, asset tests in programs like SNAP  (formerly food stamps) and TANF negatively affect low-income families in two key ways.  First, asset tests compel some families with modest savings to spend down all they have before accessing assistance, thus rendering them more financially vulnerable and increasing the likelihood that they’ll return to public benefits in the future. Second, they send the message to low-income families that saving is a behavior that warrants punishment. This message runs counter to the one wealthier American families get through the tax code and public discourse, which subsidizes and praises saving by higher-income households. Not only are these anti-saving messages contradictory and frustrating for lower-income families, they also pose a serious threat to these families’ economic mobility and contribute to our nation’s growing wealth inequality.

Hawai’i’s process to this reform, which relied on collaboration among advocates, state government and community groups, reflects the benefits of asset test elimination for a wide range of stakeholders. Eliminating the TANF asset test both removes a barrier to families’ financial security and reduces the burden of administering the program by streamlining the application process and eligibility evaluations, increasing both accessibility and efficiency in one fell swoop.

Kudos to Hawai’i for prioritizing families’ economic mobility and taxpayer savings! Here's hoping other states follow suit.