Minnesota's Welfare Program Shows Dramatic Results

 

Call it a battle of welfare reformers. Minnesota officials have long complained of what they call "Tommy-Thompson-Envy" -- the feeling that their more generous welfare program has been unfairly eclipsed by the Wisconsin governor's aggressive method of cutting the rolls.

But with a report released Wednesday by Gov. Jesse Ventura, Minnesota is now armed with evidence that its slower and more expensive approach should not be ignored.

According to the evaluation, Minnesota's plan of weaning long-term recipients off welfare -- with a combination of work requirements and financial incentives -- has led to one of the largest drops in poverty among single-parent families ever recorded.

Minnesota's program also increased the proportion of recipients that got or stayed married, "the first hard evidence" that a welfare program can promote two-parent families, the report says.

"We set out with a goal to increase work and decrease poverty... with what we thought was a pretty difficult agenda," said Chuck Johnson of the Minnesota Department of Human Services. "It demonstrates that we are on the right track."

To be sure, the Minnesota study will not end the debate. It shows that even a program designed to lift working families above the poverty line can have limited effects. But the results further highlight how states can achieve very different results depending on their goals and policies.

Long considered two of the nation's most progressive states, Minnesota and Wisconsin have taken divergent paths to welfare reform. In an era when individual states decide how best to aid their poorest families, perhaps no greater contrast exists anywhere else in the country.

Few states share Minnesota's goal of decreasing poverty, an objective that has left it far behind most of the nation in reducing its caseload. Minnesota allows families to continue to collect a welfare check even after they have started working. While welfare rolls have fallen 53 percent nationally since 1993, Minnesota's have dropped just 39 percent.

In contrast, welfare rolls in Wisconsin have fallen 90 percent in the past six years. Wisconsin set as a top goal the need to reduce dependence on government aid. It demands families begin work immediately, with few exceptions, and, unlike Minnesota and 39 other states, it does not subsidize working families.

Wisconsin has not done as rigorous a follow-up evaluation as Minnesota, so it is not known how effective its program is at reducing poverty and promoting marriage.

"What we know from Minnesota's program is, when you invest, you get positive results for families," said Michael Kharfen spokesman for the U.S. Department of Health and Human Services, which helped fund the Minnesota study. "What we encourage when we learn these results is, use them."

The evaluation, by the Manpower Demonstration Research Corp. (MDRC), looked at an early version of Minnesota's current statewide program, the Minnesota Family Investment Plan. Researchers conducted a rigorous test, comparing families subject to the experimental rules against a control group that continued under the old welfare system, Aid to Families with Dependent Children, or AFDC.

During the research, Minnesota benefited from one of the strongest economies in the nation, with unemployment in some counties at three percent. The use of a control group, however, allowed researchers to look beyond the economy's effect.

Researchers found that Minnesota's work requirements succeeded in moving more parents into jobs. In this respect, the results are similar to what many other states have reported. Quarterly employment among single-parents who were long-term recipients -- on welfare for two out of three years prior to the study -- increased by 35 percent. Income rose by 23 percent.

The most surprising findings, however, were the program's effects on poverty and family well-being. At the end of the evaluation, 42 percent of the long-term, single-parent families in the experiment were earning enough -- through the combination of a work and a welfare stipend -- to leave poverty. In the control group, only 30 percent earned above-poverty wages.

Children benefited from the new welfare rules and incentives as well. A smaller percentage of poor children in the experimental group struggled in school, seven percent versus 12 percent, and their parents' perception of their overall behavior also improved.

"Because the families had more income and weren't poor, you see positive effects for the entire family," said Johnson of the Minnesota human services department.

It all adds up to results the MDRC calls unprecedented.

Virginia Knox, the director of the evaluation for MDRC, attributes many of Minnesota's unique outcomes to the financial support it gave families even after they began working.

Families who worked full-time were entitled to keep some of their welfare benefits until their income rose to 40 percent above the poverty line. Under the state's current program, the stipends are smaller, but they still enable a parent working full-time at the minimum wage to take home a poverty-level income, about $17,050 for a family of four.

"We've actually rarely seen this kind of improvement in poverty," Knox said. "These financial incentives are giving states a new tool to make even further progress than they have in the past."

At the end of the three-year study, more single-parents in the new program had gotten married -- 11 percent vs. seven percent.

But the most dramatic improvement in marriage occurred among the state's two-parent families, who make up about 10 percent of Minnesota's caseload. Many more couples in the experiment stayed or got married than in the AFDC group, 67 percent versus 49 percent -- a 38 percent increase.

Domestic violence also fell. During the study, 60 percent of the parents who stayed in AFDC were victims of domestic violence. Those in the experimental program saw an 18 percent reduction.

The domestic violence statistics point to what has always been the flip side of efforts across the nation to conquer poverty. Violence is a common feature of the lives of the poor families who turn to the welfare system. While Minnesota's program appears to reduce it to some extent, it remains far from a cure.

And even though a surprising number of long-term, single parents moved out of poverty under Minnesota's program, the report also highlights the barriers these families still face. At the end of three years, almost 60 percent still lived below the poverty level. Forty percent were not working at all.

Minnesota's program also cost more than AFDC, between $1,900 and $3,800 more per family per year.

Although the report proves that supporting families as they make the transition from welfare to work can have very positive effects, researchers do not expect Minnesota's statewide program to register quite this level of improvement. For one thing, most families in Minnesota, as in the rest of the nation, are now subject to a five-year, federal lifetime limit on cash assistance.

"There really is going to be an issue (in Minnesota) with people who are not working at the end of five years," said Knox of MDRC. Time limits will also encourage families to "bank" their time and leave welfare sooner, before they have increased their hours and wages enough to escape poverty.

The combination of an incentive in the form of a welfare supplement and a time limit on that incentive "really are sending people mixed messages and I think states are struggling to reconcile those messages," Knox said.

In that respect, Wisconsin's clear signal that work is better than welfare may offer an advantage over Minnesota's anti-poverty efforts: Wisconsin is giving far fewer families the opportunity to use up their entire allotment of aid.

 
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