Upward Mobility Act: 5 States Could Block Grant SNAP, Housing, and Childcare Funds to Fight the 'Benefit Cliff'

The “Upward Mobility Act of 2026” is setting up a major experiment in how we handle federal aid, rolling out a five-year pilot program where up to five states can merge funding from a huge list of anti-poverty programs into one big “Upward Mobility Grant.” Think of it like this: instead of dealing with five different federal agencies for food stamps (SNAP), cash assistance (TANF), child care subsidies (CCDBG), heating help (LIHEAP), and even some housing funds (Section 8 and CDBG), a state gets a single pot of money. The goal? To redesign how benefits work so that people aren't penalized for getting a raise—that dreaded “benefit cliff” where a small increase in pay means losing thousands in assistance.

The Great Consolidation: What’s on the Table?

This isn't a small tweak; it’s a fundamental structural change. The bill (Sec. 2) explicitly lists the major programs states can consolidate. This means a state could take the money currently earmarked for your SNAP benefits, your child care voucher, and your Section 8 housing assistance and blend them into a new, single-state benefit package. The core idea is to lower the Marginal Effective Tax Rate—the amount of benefits you lose when your income goes up—to no more than 50% for participants. For a parent working a minimum wage job, this could be huge. Right now, it’s common to face a 70% or even 90% effective tax rate, meaning for every extra dollar you earn, you only keep 10 to 30 cents after benefit reductions. The pilot aims to make sure every raise actually matters.

The Catch: Waivers and Rules

To pull this off, the Secretary of Health and Human Services (HHS) must grant states waivers from federal rules (Sec. 2). This flexibility is necessary for states to invent new benefit formulas and eligibility rules. However, the bill draws a few hard lines that can't be crossed. Waivers are prohibited for civil rights, non-discrimination, health, safety, labor, or environmental standards. So, states can’t use this pilot to roll back worker protections or discriminate against groups. Crucially, the bill also mandates that funds dedicated to housing (like CDBG and Section 8) must continue to be provided to the same local housing agencies that currently receive them, even if the state is managing the overall grant. This means local housing authorities still have a seat at the table, which adds a layer of administrative complexity but also protects the existing housing infrastructure.

High Risk, High Reward for Participants

Here’s where the rubber meets the road for everyday people. If you are a participant in one of these state pilot projects, you are generally ineligible for additional benefits from the original federal programs (Sec. 2). This is the high-stakes part of the experiment. If a state designs a great system, participants could see better, more stable support that genuinely encourages work. But if a state’s new design is flawed, or if the consolidated benefits are less comprehensive than the sum of the original parts, participants are locked out of the safety net they once had. The bill does offer an exception, allowing states to access emergency funds from SNAP, TANF, and LIHEAP during major crises like economic downturns or natural disasters, which provides a necessary safety valve.

Behind the Scenes: The Administrative Shuffle

This act also triggers a massive federal reorganization (Sec. 3). For the five participating states, administrative oversight for these consolidated funds will be centralized under the Administration for Children and Families (ACF) within HHS. This means functions, personnel, assets, and administrative funding from agencies like the Department of Agriculture (which runs SNAP) and the Department of Housing and Urban Development (HUD, which runs Section 8) will be partially transferred to the ACF. This is a significant move to consolidate bureaucratic power and streamline the management of these pilots, but it will require a complex, multi-agency transition that the Office of Management and Budget (OMB) is tasked with sorting out.