In 1994, the state of Minnesota began a major welfare reform initiative aimed at encouraging work, reducing dependence on public assistance, and reducing poverty. The Minnesota Family Investment Program (MFIP) differed from the Aid to Families with Dependent Children (AFDC) system in three key ways: (1) Financial incentives to work. In MFIP, more earnings were disregarded when calculating grant levels, and child care payments were paid directly to providers; (2) Participation requirements for long-term recipients. If not working full time, long-term welfare recipients had to participate in services designed to move them quickly into the workforce., and; (3) Simplification of rules and procedures. MFIP combined AFDC, Food Stamps, and the state-run Family General Assistance (FGA) program into a single program with one set of rules and procedures and one monthly payment.
A central concern surrounding the recent wave of welfare reforms is how children will fare if their parents are subject to such policies as work mandates, time limits, and enhanced earnings disregards. Although research in child development suggests that children are affected by changes in their parents’ employment, income, and other aspects of the family environment, the net effects of these types of programs are not well understood. The findings in this report present one of the first looks at the effects of an innovative welfare reform policy on children. It also provides an unusual opportunity to more broadly assess how changes in income and employment can affect children’s outcomes. MFIP began operating in April 1994 in three urban and four rural Minnesota counties, and the Manpower Demonstration Research Corporation (MDRC), under contract with the Minnesota Department of Human Services (DHS), has been tracking its implementation and effects. Between April 1994 and March 1996, over 14,000 families were assigned at random, using a lottery-type process, to either the MFIP or the AFDC system. This study, which focuses on family and child well-being, follows a sample of families in the urban counties of the MFIP evaluation who had a child age 2 to 9 at the time of random assignment. MFIP’s effects on families and children are assessed by comparing the outcomes for the experimental group (MFIP) and the control group (AFDC) three years after they entered the evaluation. Reforming Welfare and Rewarding Work: Final Report on the Minnesota Family Investment Program, Effects on Adults, Volume 1 of the final report on MFIP, discusses adults in the study and focuses on MFIP’s effects on such economic outcomes as employment, earnings, welfare receipt, and income for the full evaluation sample. (author abstract)