Setting the Baseline: A Report on State Welfare Waivers. Section 5: Assets


AFDC Requirement: Under the AFDC rules, AFDC families could have no more than $1,000 in countable assets. Certain assets were not counted towards this limit, including ownership interest in a vehicle of up to $1,500, burial plots, etc.

Waivers: These resource limits were widely considered to be barriers to self-sufficiency since they made it impossible for a family to save for education or home-ownership, or even to pay the deposit on an apartment in a better neighborhood. The limit on the value of a car often forced families to depend upon highly unreliable vehicles, making it difficult to get to training programs or work. Because of these concerns, a large number of states loosened the asset restrictions. As shown on Table V, 25 states received waivers allowing them to increase the asset limit and 32 states received waivers allowing them to increase the value of a car that could be excluded from the asset limit. Some states established higher limits for recipients who are employed or otherwise participating in self-sufficiency activities. In order not to expand the eligible population, some states restricted the increase to recipients, while applying lower limits to new applicants for assistance.

Also shown on Table V, a total of 18 states received waivers authorizing them to disregard assets held in a restricted account, often called an "Individual Development Account." Each state had different rules regarding the uses to which these accounts may be spent, but they were typically restricted to such purposes as education or training, starting a business, or purchasing a home. Some states allowed funds to be withdrawn for emergencies. A few states required that employers of recipients participating in subsidized work programs pay their workers an additional amount that was deposited in a restricted account.

TANF Provision: Under the TANF program, there are no federal provisions regarding asset limits, including vehicle exclusions. States have full authority to set these limits higher or lower than they had been under the AFDC program. The only requirement is that states have objective criteria for determining who is eligible.

The TANF law explicitly addresses Individual Development Accounts (IDAs). States may use TANF funds to support the establishment of IDAs. Funds deposited into an IDA must be derived from earned income, and can only be withdrawn for postsecondary educational expenses, first-time homeownership, or business capitalization.