Lead Sponsors: Senator Jamie Eldridge and Representative Linda Dorcena Forry

Summary:  This bill would remove state-imposed barriers to asset development for low-to-moderate income residents of the Commonwealth who receive support through the Department of Transitional Assistance and will promote gainful employment and financial stability. 

Why This Matters: Low-to-moderate income families often face substantial barriers to gaining and keeping employment and to building the assets necessary to achieve financial stability. Having a car to drive to work, the education and vocational training necessary to gain sustainable employment, and the ability to build modest savings are key to breaking the cycle of poverty. However, many transitional assistance and education programs are restricted to those with few or no financial assets.  These restrictions can have the unintended effect of restricting employment options due to a lack of reliable transportation, education, and training, and can create disincentives for saving or working.

Eliminating asset tests would also have the added benefit of simplifying administration and reducing costs – both short term administrative costs and long-term caseload reductions. The two states that have eliminated asset tests for their TANF programs – Ohio and Virginia – have seen declines in caseloads with no reports of high-asset, low-income individuals abusing the system. Virginia saw an estimated initial assistance increase of $127,000 for 40 families and savings of $323,000 in administrative staff time.

What this Bill Would Do: This bill will help low-to-moderate income families transition successfully to gainful employment and financial stability by removing many of the state-imposed barriers currently in place:

•  Encourage Modest Savings: The bill would encourage families to develop modest savings – a key to breaking the cycle of poverty — by removing the asset limit for the TAFDC[1]  and EAEDC[2]. In addition, the bill would allow TAFDC and EAEDC recipients to save up to $10,000 received from personal injury settlements or other third party sources in an Individual Asset Account (IDA) to be used for debt reduction, job training, transportation, and/or housing.
•  Support the Transition to Employment: For many workers, access to a reliable car and the ability to pay for work-related costs – transportation, clothing, and payroll deductions – is critical to gaining and maintaining employment.  This bill would support families as they transition to employment by increasing the TAFDC work expense deduction from $90 to $250 and removing the asset limit to allow families to own a car.  This has not been raised in over 20 years.
•  Promote Education and Training: The bill would treat state educational grants and state or private work study the same as federal payments and not count them as income for EAEDC and TAFDC purposes. In addition, it would allow TAFDC recipients to use vocational education to meet their work requirements through their period of time-limited assistance and to obtain time limit extensions to complete such programs.

[2] Emergency Aid to Elders, Disabled and Children