Minnesota Family Investment Program

Minnesota Family Investment Program: Minnesota Family Investment Program (MFIP) combined employment mandates with financial work incentives. MFIP was characterized by four key features: a requirement that long-term recipients work or participate in employment-focused services; financial work incentives for recipients who worked; payment of working recipients’ child care costs directly to providers (rather than reimbursement of recipients later); and simpler public assistance rules and procedures that combined different programs into one and provided food stamps as part of the cash welfare grant. The hope was that combining welfare-to-work strategies with financial incentives designed to “make work pay” would make both aspects more effective and reduce hardship

1994-04-01

1998-06-30

Employment, earnings, welfare receipt, income, marriage, divorce, fertility, children's education (third-grade and fifth-grade reading and math scores)

Families who were newly applying for welfare benefits or who were ongoing recipients and recertifying their eligibility were assigned, in a lottery-like process, to either the MFIP (program) group, which was eligible for the benefits and subject to the requirements of MFIP, or to the AFDC (control) group, which was eligible for the Aid to Families with Dependent Children program that was in effect in Minnesota in 1994.
A fraction of single-parent families in urban counties were also assigned to an MFIP-Incentives only group, designed to test the effects of offering MFIP's work incentives without the mandate to participate in employment and training services.
Single-parent families and two-parent families were analyzed separately. In the MFIP, “two-parent families” are those who were either married or cohabiting at study entry (and who provided the Social Security number of the partner or spouse to the welfare office).Among two-parent families who had been receiving welfare for six months or longer, MFIP required that at least one parent work or participate in employment services. For this reason, two-parent recipient families –– or those who had received welfare for at least six months –– were examined separately from two-parent applicant families, who were new to welfare.

MDRC algorithm

family

No

n/a

11,473 families (14,639 families randomly assigned; 3,166 excluded because of welfare status or missing baseline information)

single parent families: 3554 full MFIP, 1815 MFIP incentives only, and 3848 control
two parent families: 1109 full MFIP, 1147 control

The Minnesota Family Investment Program (MFIP) represents a new vision of welfare as a system that can simultaneously encourage work, reduce dependence on public assistance, and reduce poverty. It attempts to break loose from the historical tradeoffs among these goals by implementing two complementary policies: financial incentives to reward work and reduce poverty and, for long-term welfare recipients, mandatory participation in employment-focused services to encourage and require work and reduce dependence.

MFIP was initially implemented as a pilot program in the three urban counties of Hennepin (Minneapolis), Anoka, and Dakota, and the four rural counties of Mille Lacs, Morrison, Sherburne, and Todd. The pilot program operated from April 1994 to June 1998 and was evaluated by MDRC under contract to the Minnesota Department of Human Services. The evaluation was also supported by the agencies and foundations listed at the front of this summary. A modified version of MFIP is now Minnesota’s statewide welfare program.

This document summarizes the results presented in the evaluation’s final report. Volume 1 of that report examines MFIP’s effects on employment, earnings, welfare receipt, income, marriage, and other outcomes for adults in single- and two-parent families for up to three years after they entered the study. Volume 2 presents the results of a special study of MFIP’s effects on children and other aspects of family well-being for single mothers who had at least one child aged 2 to 9 when they entered the study.

MFIP’s results are particularly important because more than 40 states have incorporated a “make work pay” approach in conjunction with work requirements as part of their new, time-limited welfare reforms, which followed enactment of the 1996 federal Personal Responsibility and Work Opportunities Reconciliation Act (PRWORA). Most commonly — as in MFIP — states have aimed to make work pay by increasing their “earned income disregard”: More of a family’s earnings are disregarded (not counted) when their welfare grant is calculated. This policy allows more people to combine work and welfare. As discussed later, MFIP also included other financial incentives to work. The MFIP pilot program did not include time limits on welfare receipt, but the newer, statewide version does.

The evaluation results speak directly to three goals that have emerged as high priorities under PRWORA: ensuring that long-term welfare recipients make substantial strides toward self-sufficiency before reaching their time limits on welfare receipt, supporting the efforts of low-income workers to advance in their jobs and provide adequately for their families, and assuring that social policies do not discourage marriage.

To assess MFIP’s success in achieving its ambitious goals, the evaluation used a rigorous, random assignment research design. Between April 1994 and March 1996, more than 14,000 families in seven Minnesota counties were assigned, using a lottery-like process, to either the MFIP program (the “MFIP group”) or the traditional Aid to Families with Dependent Children (AFDC) program (the “AFDC group”). MFIP’s effects were estimated by following the two groups over time and comparing their employment, welfare receipt, and other outcomes. The difference in outcomes between the two groups is the effect, or impact, of the MFIP program.

Knox, Virginia, Cynthia Miller, and Lisa Gennetian. 2000. Reforming Welfare and Rewarding Work: A Summary of the Final MFIP Report. New York: MDRC.

http://www.mdrc.org/publication/reforming-welfare-and-rewarding-work-summary-final-mfip-report

The Minnesota Family Investment Program (MFIP) originated, in 1994, as a new vision of a welfare system that would encourage work, reduce reliance on public assistance, and reduce poverty. The program differed from the existing Aid to Families with Dependent Children (AFDC) system in two key ways: It included financial incentives to “make work pay” by allowing families to keep more of their welfare benefit when they worked, and it required longer-term welfare recipients to work or participate in employment services.

This report updates the MFIP story in two ways. First, it examines whether the program’s effects held up in the longer term, through six years after study entry (earlier studies reported on effects after three years). A primary question of interest is whether MFIP, after it effectively ended in its original form in 1998, provided families with a permanent advantage, increasing their employment or self-sufficiency in the long term, or whether its effects faded after the program ended. Second, the report presents new findings on MFIP’s effects on outcomes that were not available or that could not be reliably measured at the three-year point, such as school records data to measure children’s school achievement. Results are presented separately for single-parent families and for two-parent families.

Key Findings
-- For the full sample of single-parent families, MFIP increased employment, earnings, welfare receipt, and income up through Year 4 of the follow-up period, after which MFIP’s effects on economic outcomes dissipated. In two-parent families, through Year 4 of the follow-up period, MFIP reduced employment among second earners, usually women; however, the reduction in family earnings was offset by higher welfare benefits, resulting in no effects on family income.
-- MFIP’s economic effects persisted up until Year 6 for several of the most disadvantaged groups of single parents, including those with little employment history, long-term welfare receipt, and no high school diploma or General Educational Development (GED) certificate and those with a combination of these characteristics.
-- Among the full sample of single-parent families, MFIP had no overall effect on the elementary school achievement of very young children, but, in line with results for parents, positive effects did occur for several subgroups of young children for whom data are available — notably children of long-term recipients and of the most disadvantaged families. The program had no effect on elementary school achievement of young children in two-parent families.
-- By Year 6, marriage rates were similar for MFIP and AFDC single-parent families overall, but the small positive effect MFIP had at the three-year point did persist for some subgroups of single-parent families. For two-parent families, MFIP’s effects on divorce varied by the prior welfare history of the two-parent family, with small reductions occurring among recipient families and an opposite pattern occurring among newer applicants, leading to no overall effect.

By using welfare payments to supplement the low earnings of welfare recipients who took jobs, Minnesota was able to increase employment, income, and children’s school performance in the three-year period during which the MFIP program operated. Encouragingly, these efforts may persist even after the program ended for the most disadvantaged, who would have been less likely to work in the absence of MFIP. However, to achieve these gains, Minnesota spent somewhat more than it would have under the AFDC welfare system.

Gennetian, Lisa, Cynthia Miller, and Jared Smith. 2005. Turning Welfare into a Work Support: Six-Year Impacts on Parents and Children from the Minnesota Family Investment Program. New York: MDRC.

http://www.mdrc.org/publication/turning-welfare-work-support