Unpacking Minnesota Family Investment Program

by John Briel

The Minnesota Family Investment Program (MFIP)began as a field trial in 1994 after Minnesota received a federal waiver to redesign and pilot a revised welfare program. The new program focused on encouraging work and reducing dependence on government assistance while combating poverty. Minnesota initiated the pilot program in three urban counties (Anoka, Hennepin and Dakota) and four rural counties (Mille Lacs, Morrison, Sherburne and Todd). It lasted from 1994 – 1998 and was a precursor to changes brought about by major welfare reform in 1996. In 1998, MFIP expanded to become a statewide program. Beyond MFIP, Minnesota also has other welfare expenditures associated with welfare, like Diversionary Work Program (DWP), Work Benefit Program (WBP) and MN state food assistance.

Today, MFIP is “the state’s primary program for helping low-income families with children move out of poverty through work,” according to the MN Department of Human Services (MFIP, DWP and WBP). MFIP is funded by federal TANF Block Grants and Minnesota state Maintenance of Effort (MOE). The total payments reached $340.7 million in 2011. Of this, the state share was approximately 30 percent or $101 million. The federal share was $239.7 million or roughly 70 percent. Interestingly, for the same year the state reported $233 million in MOE spending.  

This disparity in the reported MOE spending and the amount of state share for MFIP, DWP and WBP ($233M v. $101M) could be due to several reasons. Varying data sets is one and another is that other programs, besides the three aforementioned, count toward state MOE totals, like food assistance programs. This difference in reported spending brings to mind a growing concern by federal accountability officials, the counting of third parties for MOE spending.

According to a report by the U.S. Government’sAccountability Office (GAO) prepared by Director of Education, Workforce and Income Security Issues, Kay Brown, found that 13 states reported third party nongovernmental (such as nonprofits) expenditures toward their state MOE in 2011. This is only counting states that actually reported. The structure of TANF Block Grants provides for little federal government oversight, so this should come as little surprise. In fact, Utah reported that 49.4 percent of total MOE came from third party expenditures (Brown, 2012). To my point earlier, Minnesota was not one of the 13 states in FY 2011.    

States undertaking this tactic cite that they would not otherwise make the TANF’s MOE requirements and that public-private partnerships are a growing source of expenditures. Additionally, third party providers helped states meet other requirements, such as their work participation rates. If states spend in excess of their required MOE, they increase their caseload reduction credits and thus lower worker participation rate measurements.

In a comparison of state TANF expenditures, Minnesota’s total expenditures in 2005 were $392M for both the federal and state. California had the highest rate at $5.8 billion and South Dakota had the lowest with $40 million in expenditures. This wide variation is dependent on population and government spending ethos by state. For example, Colorado has a comparable population to Minnesota but it only expended $214 million on TANF compared to Minnesota’s $392M in 2005. These numbers are according to the U.S. Census Bureau. 

In order to ensure the country's neediest families are being adequately served, it behooves the federal government to increase oversight of the TANF Block Grant program and establish higher accountability standards for state MOE funds.

Interesting Data Source: The Center on Budget and Policy Priorities is great resource for investigating how states spend state and federal funds under TANF Block Grant,  http://www.cbpp.org/cms/?fa=view&id=3808.