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Sweeping welfare changes on tap

State report seeks to offer new incentives

By David Abel
Globe Staff / June 25, 2009
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Those who collect welfare have long faced a financial Catch-22: Too often it doesn’t pay to take a job or accumulate assets that can help them stay off public assistance, state officials say.

Those who find work often lose their benefits and can end up earning less than if they did not have a salary. Those able to afford a vehicle or put money in the bank often find that such investments make them ineligible for aid. As a result, welfare recipients who work find themselves in a more tenuous position and too often end up back on the dole.

To end the cycle and increase incentives for welfare recipients to take jobs and save their money, state officials plan to release a report today that recommends sweeping changes in who qualifies for public assistance.

“The overall goal is to help the 43 percent of the state’s population that are asset poor and facing financial and state barriers to achieve economic self sufficiency,’’ said Senator James B. Eldridge, cochairman of the Massachusetts Asset Development Commission, which produced the report. “The commission has put out some common-sense reforms that would eliminate barriers to families moving up the economic ladder.’’

The recommendations, which have been endorsed by key members of the Patrick administration, could cost the state millions of dollars. But Eldridge and others said the more expensive changes will not be introduced until after the state emerges from the recession.

“We all agreed that these recommendations are being made with a long view in mind,’’ said Tina Brooks, undersecretary of the Department of Housing and Community Development. “We see these as small, human responses that could go a long way to saving government money and preserving the dignity of people.’’

The commission makes its recommendations as the state experiences a rise in the number of residents collecting food stamps and other forms of public assistance. Last month, nearly 50,000 families in the state received cash assistance, about an 8 percent increase from 2007, according to the Department of Transitional Assistance.

The recommendations include doubling the asset limit allowed for cash assistance to $5,000. Now, a family that has $2,500 in a bank account or other assets of that amount is ineligible for cash assistance. For an elderly or disabled individual seeking emergency cash assistance, assets now cannot exceed $250.

Why not abolish all limits on assets, as Ohio and Virginia have done? “We thought it would be inappropriate,’’ Eldridge said. “We thought raising the limits would be a good place to begin discussion.’’

The commission has also recommended allowing licensed drivers in a family to own a car, without the vehicles counting against their income limits. Commission members argue that vehicles are vital to enabling welfare recipients to work and that existing limits make too many needy families ineligible for benefits.

Welfare recipients now lose assistance if they own cars with an equity value of more than $5,000. The elderly and disabled who receive emergency assistance lose their benefits if the equity value of their vehicles exceeds $1,500.

The state welfare agency estimated that nearly 90 percent of applicants for public assistance were denied in part because their cars exceeded the income limits. They said it would cost the state about $1.5 million to provide benefits to hundreds of additional families and individuals who would qualify if the recommendations take effect.

But they insisted that the state would ultimately benefit by saving on administrative costs and other expenses.

“I’m not saying we would definitely end up saving more than we spent [as Virginia seems to have], but it’s likely there would be some savings to offset the benefit increases,’’ said Melissa Threadgill, a spokesman for Eldridge. “It’s also important to note that these figures don’t include the number of people who, over time, move off of assistance because they are more financially stable due to the increased savings and car ownership.’’

The commission also recommends allowing welfare recipients to put as much money as they can in so-called 529 college savings plans, without such savings or other educational grants counting against their income limits. Massachusetts is one of only 16 states that count what welfare recipients save for college against their eligibility for aid.

The recommendations would also allow welfare recipients to report monthly income every six months, instead of every month, making it less likely they would lose benefits as a result of short-term jobs.

“The idea of many of the recommendations is to allow low-income and moderate-income residents to get ahead,’’ said Elisabeth Babcock, president of the Crittenton Women’s Union in Boston, who served on the commission. “These recommendations would eliminate obstacles for many families and allow them to maintain that economic security once they’ve obtained it.’’

For Diane Sullivan, 35, a mother of six from Medford, the system needs change. As a former recipient of cash assistance who still receives food stamps and housing assistance, Sullivan said she has seen how the existing system dissuades many people from working.

She speaks from the experience of having her health benefits, child care, and rental assistance ended after she found her first job. “I was tossed off a cliff,’’ she said. “What I realized was that I was worse off than if I didn’t work. What kind of incentive is that?’’

David Abel can be reached at dabel@globe.com.