Minnesota Family Investment Program

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Overview

A long-standing dilemma in welfare policy is that while cash benefits reduce poverty, they can also discourage low-income parents from supporting their families through work. Conversely, work requirements like those introduced in the 1996 federal welfare law encourage employment but — given that many welfare recipients command only low wages — can also leave families in poverty.

The Minnesota Family Investment Program (MFIP), piloted from 1994 through 1998, was an attempt to break loose from the historical tradeoff between encouraging self-sufficiency and reducing poverty by combining financial work incentives and employment mandates. MDRC’s evaluation of the initiative, conducted under contract to the State of Minnesota, was unusual for its extensive analysis of the program’s effects on families' and children's well-being as well as its economic impacts. Because more than 40 states have incorporated the “make work pay” approach — coupled with work requirements — into their welfare programs since 1996, the study’s findings have widespread implications for current welfare policy.

Agenda, Scope, and Goals

The MFIP evaluation addressed four major issues that remain on the minds of decision-makers:
 

  • What can states do to minimize the chances that long-term welfare recipients reach a welfare time limit without any way to support themselves?
     
  • How should policymakers help low-income workers stay in their jobs and provide for their families?
     
  • How can social policies avoid penalizing marriage?
     
  • How have the kinds of policy changes states have made since the 1996 federal welfare reforms affected families and children?

Integrating policies that would become the backbone of Minnesota’s current statewide welfare program, MFIP was distinguished from the traditional welfare program by these 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)
     
  • Simpler public assistance rules and procedures that combined different programs into one and provided food stamps as part of the cash welfare grant

MDRC’s evaluation of MFIP examined the program’s implementation, costs, and effects on economic, family, and child outcomes.

Design, Sites, and Data Sources

The MFIP evaluation included more than 14,000 welfare recipients and applicants, most of them single parents. Starting in 1994, each one was randomly assigned to MFIP, which made them eligible for the program’s services and benefits, or to Aid to Families with Dependent Children, the traditional welfare program. Because the two groups did not differ at the outset, any differences between them that later emerged can be attributed to MFIP.

MFIP was implemented in seven Minnesota counties, three of them urban (Anoka, Dakota, and Hennepin, which encompasses Minneapolis) and four of them rural (Mille Lacs, Morrison, Sherburne, and Todd).

The evaluation relied on data from myriad sources, including unemployment insurance records, public assistance benefit records, and client surveys.

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