Demagoguery About 48 Month Cut Off for Income Assistance is Off Base

Much publicity has been heard about how awful the Republicans in Lansing have been to institute a hard cap on the number of months a recipient can receive income assistance under the Family Independence Program (FIP) administered by the Department of Human Services (DHS). It is easy to over-simplify a new policy in an attack ad or press release, while it is more difficult to explain the reasons for a complex policy change.

The truth is that of the total of 13,789 cases closed on October 1, 2011, some of which were closed due to factors other than the time limits, 12,868 cases were closed because of the 60 month federal Temporary Assistance to Needy Families (TANF) limit and only 1,194 cases due to the more stringent state 48 month limit. The Family Independence Program (FIP): 48-Month and 60-Month Time Limits, Senate Fiscal Agency, Fall, 2011.

(Note, however, that Judi Lincoln, Policy Analyst with the Center for Civil Justice has said, “They are being cut because of DHS policy (in BEM 234) that creates a 60 month lifetime limit with no clockstoppers or exemptions that counts months from 1996 instead of 2007.  We do not believe that state or federal law supports the DHS policy.” Stay tuned on this contention, as I am not sure this issue was addressed when the judge ordered the DHS to supply new notices to those affected before the benefits could be terminated.) Personal e-mail message, October 14, 2011.

“Background on the Family Independence Program

· The Department of Human Services describes FIP as temporary cash assistance for low-income families with minor children. As of August 2011, the average monthly caseload was 80,024 households, or 216,946 individuals.

· Funding for FIP primarily comes from the Federal TANF block grant and the State General Fund/General Purpose (GF/GP) budget, depending on the type of case. As of August 2011, the average monthly costs for both TANF- and GF/GP-funded cases were $33,404,089. The average cost per case per month was $417.

· Pursuant to Federal eligibility requirements, a household must comply with work requirements (or qualify for work exemptions) in order to receive cash assistance.

· A majority of the cases – 83.0% in FY 2010-11 – are funded with Federal rather than State dollars. This means that up to 13,300 of the 66,500 federally funded cases could have fallen under the hardship exemption. . . .

Policy Change: TANF Hardship Exemption

Federal regulations impose a 60-month time limit on the receipt of TANF-funded cash assistance. The Federal government, however, allows states to exempt up to 20.0% of TANF-funded cases from this time limit due to hardship. The Department of Human Services recently decided to eliminate this hardship category, which will result in the closure of more cases in FY 2011-12. These hardship cases have received assistance anywhere from five to 15 years.

. . .

Cases that previously fell under the hardship exemption could have included individuals who might have qualified for a work exemption.

. . .

Federal TANF Work Participation Requirement

The Department of Human Services has indicated that the primary driving force behind the decision to eliminate the 20.0% hardship category is the State's difficulty in meeting the TANF work participation rate.

The State did not achieve its actual target work participation rate in three years: 2007, 2008, and 2010. For example, Michigan's revised target rate in 2007 was 44.3% (and the State actually achieved a rate of just 28.0% that year). As a result, the DHS has already received notification that the State could possibly face both a $24.0 million and a $22.0 million fine for noncompliance in 2007 and 2008. The 2010 penalty could be as high as $25.0 million. By eliminating the hardship work exemption under TANF, the DHS expects to achieve greater success in meeting the target work participation rate in upcoming years.” The Family Independence Program (FIP): 48-Month and 60-Month Time Limits, Senate Fiscal Agency, Fall, 2011.

Thus, it is clear that not only was the state not responsible for the majority of the cases closed, but also the policy change was necessary to avoid huge fines that would have affected the state’s General Fund/General Purpose budget. If being fiscally prudent is a crime, I suspect Governor Snyder will gladly join me in pleading guilty.

Of course, it is easier to attack a policy with one-liners and pithy phrases than provide good policy arguments against the changes.

It is interesting to note that after the DHS notices were sent to the about 11,000 people whose monthly assistance checks would be affected, only about 1,200 requested assistance to participate in “specified job preparation activity” which would meet the “seeking work” exemption. Pundits have concluded that the remainder of the recipients being cut off are only interested in assistance if they don’t have to do anything to get it. DHS is making extensive outreach efforts to assist people to meet the exemption, but only time will tell whether people are really interested in a “hand up”, rather than a “handout”.