A legislative leg-up

Lucy Mullany, a senior policy associate at the Heartland Alliance and coordinator for the Illinois Asset Building Group, in her Ravenswood office. Photo by Tyler Stabile.

Lucy Mullany, a senior policy associate at the Heartland Alliance and coordinator for the Illinois Asset Building Group, in her Ravenswood office. Photo by Tyler Stabile.

It’s rare to see anything positive coming out of Springfield on social welfare. But a recent amendment to the Illinois Public Aid Code removes the asset eligibility requirements for the Temporary Assistance for Needy Families program, which provides cash assistance to families living at or below 50 percent of the federal poverty level. The measure passed both houses of the Illinois General Assembly in June and was signed into law in July.

Under the old requirement, if a family had more than $3,000 in assets, such as a savings account or a car, it would have been ineligible to receive the monthly financial assistance—$432 on average for a family of three—according to the Illinois Asset Building Group, a statewide anti-poverty group. 

That discouraged people from saving—a key part of ending poverty, argues Lucy Mullany, a senior policy associate at Heartland Alliance, a Chicago-based advocacy organization for low-income populations.

She is also a coordinator for the asset building group, a coalition advocating for policies that help create wealth for low-income people. 

Along with other organizations, including the Sargent Shriver National Center on Poverty Law and the Woodstock Institute, it led the push to eliminate the asset test. 

The test “really prevents families from building the financial security and the financial independence they are going to need,” said Mullany. A family with less than $3,000 in savings is ill-prepared for emergencies as small as a last-minute car repair, she argued.

Low-income families are no longer forced to spend down their savings, Mullany said. “We were certainly really thrilled to see this barrier to savings eliminated for the most vulnerable population in the state.”

State Rep. Robyn Gabel, a Democrat based in Evanston, sponsored the amendment. For Gabel, the legislation comes with an extra bonus; it not only helps low-income communities but helps the state save money, she said.

Asset tests cost Illinois taxpayers nearly $1 million a year, Mullany said. Of the 192,000 asset tests the Illinois Department of Human Services performed in 2012, it found only eight cases where assets of a family exceeded the $3,000 limit.

Temporary Assistance for Needy Families funds are federally funded block grants that allow states to choose whether to administer the tests. Illinois is the eighth state to drop the asset test, according to the Illinois Asset Building Group.

Like many social welfare initiatives, the assistance program has come under fire for providing woefully little support in an already patchy social safety net. More than 21,000 families in Illinois received the benefits in fiscal year 2013, according to the U.S. Department of Health and Human Services.

In her role with the asset building group, Mullany works to find ways to help low-income families build assets like retirement and savings plans, which can help them gain financial stability. Removing the asset test is only one part of the struggle, she said.

The asset building group is working on a host of structural changes that make it easier for low-income people to obtain bank accounts. The group is also looking for ways to fund retirement plans that are not employer-based.

“Income is certainly a part of” asset building, said Mullany, but it’s not the whole story. 

“When you look at the same income of two different people, you can see that, depending on what community they are in, their race, ethnicity and education, one may have less wealth creation over time,” she said.

The removal of the asset test is “part of a much larger movement across the country,” she added.

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