BEYOND THE NUMBERS
We’ve explained that SNAP (formerly food stamps) has design features that enable it to respond rapidly and effectively to disasters, such as the recent hurricanes. No such comparable features are part of Temporary Assistance for Needy Families (TANF), a program designed to help struggling families cover their basic needs. Under its block grant structure, states don’t get additional TANF funds to provide extra support to struggling families when disaster strikes. Although states could use their capped TANF funds to provide disaster relief, they’d have to shift dollars they have already allocated for other purposes, creating a budget hole somewhere else.
Funding for the TANF block grant has been frozen since 1996 and has lost one-third of its value due to inflation. Providing cash assistance to help families meet their basic needs is not a priority in many states, including states hit by the recent hurricanes. In Florida, for every 100 families with children in poverty, just 11 receive cash benefits from TANF; in Texas, it’s just 4 in every 100. For the few families that receive cash assistance, benefits are nowhere near sufficient to meet their ongoing basic needs, much less prepare for and recover from a disaster. In Florida, a family of three receives a maximum of just $303 in cash benefits, and it’s even less in Texas – just $285. Puerto Rico’s unemployment and economic challenges before Hurricane Maria put it in an even worse situation. And with average monthly TANF benefits of $207, Puerto Rico’s families have virtually no ability to prepare for or recover from a disaster like Maria.
Even a small financial cushion can better position a household to avert or bounce back from a crisis such as a hurricane or family emergency. Yet, in 2015, 42 states had counterproductive asset tests for TANF recipients, which punish households for setting aside modest savings for life emergencies. The threshold at which benefits are denied is $2,000 or less in assets in 20 states, including Texas and Florida; in five of those states, including Texas, the threshold is just $1,000. Also, 14 states, including Texas and Florida, subject part of the family vehicle value to the asset limit, punishing those who have a car to get to work while temporarily enrolled in TANF, whereas other states either exempt all vehicles or at least one vehicle. (In some states, asset thresholds vary depending on household composition, and certain exemptions apply.)
TANF families are not alone in lacking assets when disaster strikes. More than 1 in 3 households are “liquid asset poor”: they don’t have immediate access to savings or assets that they can easily convert to cash at levels needed to cover the basics and escape poverty for three months (about $6,000 for a family of four), research shows. African American and Latino households are twice as likely as non-Hispanic white households to be liquid asset poor, meaning they have significantly lower savings and wealth to draw upon when a disaster strikes. Communities of color have historically faced, and continue to face, structural barriers limiting their ability to build wealth and pass it on to the next generation — from slavery to government-sanctioned housing discrimination to ongoing predatory lending practices.
Policymakers can enact a range of policies to help struggling Americans make ends meet today and build savings to increase future economic stability. For example, they can eliminate asset tests in public benefits programs and restore the full value of TANF benefits that has been lost in recent years. Broader policy change will be needed, however, if lawmakers want to truly build pathways to financial security.