A leaguer for life

By Sharon Parks, Former President and CEO of the League

My hubby and I recently moved from the home we had been living in for nearly 35 years. We downsized somewhat and now have a lovely house that fits our lifestyle. It’s a home that we will gradually make more personal over time. Our former home was where we raised our kids. We made many, many changes over the years—each one changing the house for the better.

That’s not unlike the organization where I spent 34 years of my work life—the Michigan League for Human Services, now the Michigan League for Public Policy. In retirement, I haven’t lost touch with the League. I have lunch often with staff who, over the years, have become good friends. I follow the League’s work and share it on social media. I am always proud when I see the League quoted in the media.

Much like our former house, the League has changed considerably over the years, and all for the better. When I started at the League our funding came mostly through local United Ways. Now, the League is funded primarily by local, state and national foundations. The League has also joined several national networks that help inform and shape public policy across the country.

In the ‘70s and ‘80s, the League carefully monitored the budget and that continues to be a key focus of League analysis. We also tracked specific pieces of legislation that impacted poor and vulnerable people in our state. Over the years however, the League’s work reflected a “bigger picture” approach to public policy, as the League’s analyses helped policymakers to connect the dots between numerous policy areas, particularly revenues and expenditures. The League also reached out to state-level organizations that didn’t necessarily fall into the “social welfare” category, always a province of the League’s, and the League now works collaboratively with many groups for the betterment of our state and its residents.

One thing has remained a constant during my time with the League and since retirement: the excellence of the League’s board leadership and the competence of the staff. The League’s leadership is impressive and affords the organization a wealth of experience in many areas. The staff at the League always has been, and continues to be, nothing short of phenomenal! I marvel at how such an intelligent and dedicated group of people can be congregated in one organization.

Michigan faces many challenges. Too many of our children live in poverty; too many of their parents lack the skills and education needed to compete in the workforce. Our educational systems do not measure up to national and international standards; our infrastructure has been badly neglected.

One thing I know for certain is that the Michigan League for Public Policy will continue to be a force in the public policy debate over these critical issues, just as it has been for 104 years.

We need to narrow Michigan’s income gap

It’s no secret—income inequality exists in Michigan. However, when nearly 1 in 4 kids still live in poverty in the state and when too many Michigan residents must cobble together multiple part-time jobs just to barely make ends meet, income inequality is a problem. And more must be done to lift our most vulnerable residents to help narrow the gap.

money 22x moreA new fact sheet released by the League begins to explore Michigan’s income gap, the issues it causes and what can be done to reduce the disparity. According to a recent report, Michigan is the 11th most unequal state in income in the nation, with its top 1% earning 22 times more than the rest of its workers. Over the past 30-plus years, income growth for top earners far outpaced growth of the bottom 99%. Since the end of the Great Recession in 2009, incomes for the top grew by over 26% while incomes for the rest of the state stagnated.

Income inequality is a much bigger and broader issue than simply the top compared to the rest of us. Income gaps exist regionally, between genders and along race and ethnicity lines. In Michigan, median incomes for full-time working women continue to trail those of men by nearly $13,000, and workers of color made $3 less per hour than white workers. These disparities exist regardless of educational attainment.

We need to fix income inequality. The income gap affects Michiganians’ abilities to pay for healthcare or save for retirement or a child’s college education. And while income disparities exist at the national level, Michigan can implement state policies to help narrow the gap including:

The League will continue to highlight this important issue in a series of fact sheets. Income inequality is a persistent and increasing problem in Michigan, hurting Michigan residents, communities and the economy, and state policymakers must do more to bridge the divide.

— Rachel Richards

Michigan, 20 years after “welfare reform”

It was 20 years ago, in 1996, that Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act that transformed cash assistance from a federal entitlement program (meaning that all who meet the eligibility requirements receive a direct federal benefit) to a block grant through which states fund their own programs. The Family Independence Program (FIP) is Michigan’s cash assistance program that is funded by the block grant—Temporary Assistance for Needy Families (TANF).

Unlike Aid to Families with Dependent Children (AFDC), TANF gave states wide latitude to set their own eligibility levels and work requirements. It allowed states to use federal funds for other things besides cash assistance as long as the expenditure fit within four general purposes of TANF.

Advocates were concerned at the time that transferring cash assistance to the state level would lead to a “race to the bottom” in which states would spend as little money as possible on needy families and push them into low-wage jobs that would not help them leave poverty. Some even within the Clinton administration warned that it would actually increase poverty.

As preparations begin for the reauthorization of TANF, the national Center on Budget and Policy Priorities takes a look at the past 20 years and finds that “welfare reform” did not in fact help poor families in the way that it could have. Fewer families below the federal poverty line are receiving cash assistance and the benefits have eroded with inflation over time. Moreover, states in general have been spending only half of their TANF block grants on basic assistance, child care or work activities, with the other half going to other uses that fit within the four purposes of TANF (including supplanting state funding for popular programs with TANF funds).

blog 29_July_2016Immediately before the passage of the welfare reform legislation in 1996, 184,000 Michigan families received cash assistance and 88 families received benefits for every 100 families with children in poverty. In 2014, only 39,000 families in our state received cash assistance and the cash assistance-to-poverty ratio was only 14 to 100. By May 2016, the number of families receiving cash assistance fell even further, to 22,573 families.

Between 2001 and 2011, Michigan’s unemployment and poverty rates soared and Michigan had what was sometimes referred to as a one-state recession (Michigan led the nation in unemployment for four straight years). During that time, FIP caseloads remained flat overall and even decreased at some points, showing a serious inability to respond to very real need. Currently, a family must be at HALF the federal poverty line in order to begin receiving cash assistance through FIP.

Michigan’s monthly FIP benefit is also very low: only $492 per month for a family of three without any other income. A family of three can combine earnings with cash assistance only up to $1,183 a month, with benefits decreasing as the parent earns more money, but that still only brings the family to 74% of the poverty level.

Michigan also does not spend any of its TANF block grant on child care for families who are leaving cash assistance, making it difficult for such families to become economically self-sufficient. As a result, the child care subsidy is far lower than market rates, making it difficult for struggling families to find quality child care and putting their jobs (and perhaps their children) at risk.

Michigan can do much better with the $775 million it receives each year in federal TANF funds. While conversations go on at the national level about how to make TANF more effective in responding to need, Michigan has to have that conversation as well. A few good steps would be:

  • Increasing the cash assistance monthly benefit to a level that will bring families up to at least the federal poverty line if they are working full time.
  • Modify eligibility rules to enable more working families living in poverty to qualify for assistance.
  • Strengthen the child care subsidy to help working parents meet their children’s needs without risking losing their jobs.

— Peter Ruark

Flint crisis is Michigan’s crisis

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Whether you’re Governor Rick Snyder or Hillary Clinton, Rachel Maddow or Jimmy Fallon, Madonna or Ziggy Ansah, it’s all about Flint right now. The same is true for us here at the League. This man-made disaster has drawn the national spotlight to Michigan for all the wrong reasons. Every day another story or scandal arises. But for me, the main question is: What do we do now?

Fixing the poisoning of Flint’s water will require action in every single area of public policy. It is a public health issue. It is an environmental issue. It is an infrastructure issue. It is an education issue. It is an economic issue. It is a racial issue. And down the road, it will likely become a corrections issue. State government largely caused this problem, and at every turn, it must be there to help. This is a battle that must be fought on all fronts, with offensive and defensive strategies, and the League is committed to that.

(more…)

A banner year for better policy

It is 2016. A new year with new hopes, and a new set of challenges.

But before we look ahead, I want to take a moment to reflect on 2015 and what you have helped us accomplish. (From here on out, when I say “we” or “our,” know that I am including you, because the League’s work is all thanks to you.) When fighting the good fight, the victories can sometimes be few and far between, so it’s important to celebrate the ones we get, big or small. (more…)

From Safety Net to Springboard: Using the Family Independence Program to Help More Parents Build Their Skills

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Approximately 25,500 families in Michigan receive cash assistance through the Family Independence Program (FIP), including approximately 15,500 adult parents.1 Most parents receiving cash assistance are required to work in order to receive benefits. Due to the low household income limit for FIP eligibility, many families leave the program because parents earn too much to remain eligible. These parents often then find themselves stuck in low-paying, unskilled jobs that do not provide a secure economic future for their families and which cannot adequately cover costs such as child care.

Without in-demand occupational skills signified by a postsecondary credential such as a degree, certificate or license, it is difficult for FIP recipients to become economically self-sufficient. The Partnership, Accountability, Training, Hope (PATH) program, established in January 2013, encourages training as a strategy for achieving economic security, but federal restrictions prohibit the state from making full use of training opportunities for some FIP recipients. Because of Michigan’s high level of work participation, however, the state can implement several changes despite these limitations that would increase participants’ likelihood of success in training programs.2

Children who grow up in poverty are more likely to be poor as adults than those not raised in poverty, and the educational level of parents is an indicator of how far their children will go in education and skill building.3 For this reason, increasing the skills of FIP recipients is a sound, long-term two-generation strategy: by helping parents in the present, Michigan will help their children to become skilled adults, reducing their likelihood of being in poverty and needing public assistance in the future.

Background: Brief History and Structure of TANF

In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act (informally called welfare reform) that changed the structure of federally-funded cash assistance in the United States. This act replaced the federal cash assistance program Aid to Families with Dependent Children (AFDC) with the Temporary Assistance to Needy Families (TANF) block grant to states, through which each state would set up its own program within broad guidelines. While federal AFDC money to states was based on the number of cases the state had, going up or down with respective caseload increases and decreases, TANF set each state’s annual block grant according to the state’s 1994 AFDC spending levels. Nineteen years later, Congress has still not raised the amount of the block grant to each state. Michigan continues to receive $775 million per year, the same amount it received in 1997.

The two central features of TANF that marked a major change from AFDC are the establishment of a 60-month lifetime limit and stricter federal work requirements. States may not use TANF funds for families that include an adult who has received federal cash assistance for 60 months (consecutive or nonconsecutive) since the implementation of TANF. States are free to use their own funds to continue benefits to such families and to set their own time limits for those benefits. States are allowed to set time limits on federal benefits that are shorter than the 60-month limit, and many do. Michigan’s lifetime limit for receiving FIP assistance, established in 2006 and made stricter in 2011, is 48 months, a full year less than the federal amount. The federal limit does provide some flexibility to states through the hardship exemption, which allows a state to exempt up to 20% of its cases from the 60-month limit for reasons of hardship as defined by the state.

The other major change with TANF is the federal work requirement. A single parent with at least one child under 6 years old must participate in approved work activities for 20 hours per week; if the single parent’s children are between the ages of 6 and 17, the parent must participate in 30 hours per week of work activities. For two-parent families, the combined work hours must total at least 35 hours per week (55 hours per week if a family receives a federally-funded child care subsidy).

The 1996 law set forth 12 categories of work activities that can count toward the work requirement (some of the categories were further defined when TANF was reauthorized in 2005). Nine of these 12 categories are core activities that can count toward any number of hours of participation, and many recipients fulfill their entire work requirement through one core activity, usually unsubsi-dized employment. Participation in the three secondary activities can count only if the individual also participates in core activities for at least 20 hours per week (single parents) or 30 hours per week (two-parent families).

The allowable core and secondary activities are shown in Figure 1.

The percent of a state’s cash assistance caseload that is meeting the work requirements is known as the work participation rate (WPR). Each state has a WPR target of 50%, but that target can be adjusted by applying a caseload reduction credit—subtracting a percentage point from the work participation target for each percentage point that the state reduced its caseload since the baseline year of 2005 (Figure 2). Prior to 2006, the baseline year was 1995, and due to the large reduction following welfare reform, many states had an adjusted target of 0%. TANF imposes penalties on states whose WPR falls short of their adjusted target.

TANF policy states that no more than 30% of the families that a state counts toward its federal work rates may do so through vocational educational training or, for parents under age 20, school attendance or education directly related to employment. Most years, only 1-3% of Michigan’s caseload meeting the requirements consists of parents under 20 finishing high school, so this is not a concern when trying to bring up the number and percentage of recipients participating in vocational educational training.

The Importance of Postsecondary Credentials for FIP Recipients

Nearly all FIP recipients have no education beyond high school. About 25% do not have a high school diploma compared with 10% of Michigan’s general population, while about 75% have only a high school diploma (no postsecondary education) compared to less than 30% of Michigan’s general population. A very small percentage (1-3% most years) has some level of education beyond high school, though likely many or most of those did not finish a postsecondary program or attain a credential (Figure 3).

In past decades, helping a parent go from welfare to family-supporting work with only a high school diploma would not be a problem. As recently as the 1980s, a Michigan individual could find gainful employment (often in the manufacturing sector) immediately after high school graduation and begin a lifelong career. Since then, many jobs have been moved out of the country or automated, and many of the remaining entry-level jobs that lead to a career track require a higher skill level than before. As a result, workers with only a high school diploma are likely to remain stuck in low-paying work with little chance of promotion; real wages for Michigan workers with only a high school diploma have fallen from $36,234 in 1979 to $28,288 in 2014 (Figure 4).4

Of Michigan’s 969,565 working families, 12% have incomes below the poverty threshold (considered poor) and 32% have incomes below two times the poverty threshold (considered low income).5 Of the working families that are below the poverty threshold, 44% do not have a parent with any education beyond high school, and it is safe to assume that there are also many working poor families in which a parent enrolled in at least one postsecondary class but did not finish the program or receive a credential.6 Even some working families above the “low income” level experience difficulty meeting basic needs.7

For most people, becoming employed in jobs with a career track and livable wages requires some level of postsecondary training leading to a credential—a two- or four-year college degree, a certificate or a license. Such training pays off; from 2005 to 2012, Michigan workers with an associate degree earned an average of $8,139 per year more than those with only a high school diploma.8

Many cash assistance recipients are in a very economically precarious position. The FIP monthly grant will bring a family with no other income to less than one-third of the federal poverty threshold, though the grant is supplemented by Food Assistance Program benefits, which bring the percentage a little bit higher. When a parent begins to earn enough to bring his or her family to 75% of the poverty level, their family is no longer eligible for cash assistance and is likely to remain poor despite the parent working full time. If a recipient can become skilled and earn a credential before losing assistance, the chances of needing public assistance in the future will be greatly reduced and the family’s economic well-being more likely to improve.

As Figure 5 shows, each year through Fiscal Year 2012, Michigan has consistently had far below 30% of its FIP recipients who fulfill the federal work requirements do so through vocational education. If this pattern has continued since the launch of PATH in January 2013 (data is not yet available for fiscal years after 2012), then Michigan is not making full use of its ability to use FIP as a springboard to economic security.

In addition to underutilizing its ability to have up to 30% of its FIP population in education and training, Michigan also currently does not track the academic and work success of those who leave cash assistance. It is developing a P-20 educational data system, however, that tracks the educational progress of all students in all public (and some private) K-12 schools and postsecondary institutions, in adult education and in the workforce development organizations.9 If this data system would aggregate welfare recipients and those who have left assistance and track their progress through these systems, Michigan would be able to compile data to show what strategies work to help those on public assistance become more economically self-sufficient.

Recommendations

Because Michigan’s work participation rate (WPR) is so far above its target, the state can afford to have more of its recipients not meeting the federal work requirements and not counted toward the rate. There are a number of ways that Michigan can take advantage of this flexibility in order to help recipients attain postsecondary credentials and move into employment that pays a livable wage.10

Actively promote the vocational educational training option to recipients who are likely to succeed. Many FIP recipients are not ready for vocational educational training due to complicated family situations, learning disabilities or other barriers, or a lack of desire. However, for the many who would benefit and are considered likely to persist and complete a program, local Michigan Department of Health and Human Services (DHHS) offices should actively promote this option and facilitate its participants’ success. If in a future year higher percentages of FIP recipients successfully participate in vocational training, Michigan can make use of the flexibility provided by its high WPR to lift the 30% cap on counting this activity rather than turn away recipients who wish to participate.

Allow FIP recipients who successfully complete one year of a two-year vocational educational training program to complete their second year without additional work requirements. Because of the importance of attaining a postsecondary credential to increase success in the labor market, FIP policies should be improved to ensure that recipients who have made significant progress in their training programs can continue to study and receive cash assistance seamlessly, without new work requirements added on. These recipients will not be able to be counted as fulfilling work requirements in Michigan’s WPR for those 12 months.

Apply months of vocational educational training against a recipient’s 12-month limit only when the recipient completes enough hours in that category to satisfy the entire month’s federal work requirements. There is a 12-month limit on a recipient fulfilling all monthly work requirement hours through vocational educational training. Participation in this activity that exceeds the 12-month limitation may not be counted in the state’s work participation rate. According to federal TANF policy, if a recipient participates in vocational educational training even just one day in a given month and the state counts that activity in its WPR for the month, that month must count against the recipient’s 12-month limit for vocational education.

Recipients in vocational training programs may have some months in which they do not have enough vocational training hours to fulfill federal work requirements. In these months, Michigan should not count those hours as vocational educational training. If the recipient has enough combined hours in vocational educational training AND other countable activities to fulfill the work requirement in a given month, then the vocational program should be counted as “job skills training,” which does not have a time limit. If the recipient does not have enough countable work hours in any activity to fulfill work requirements, then that recipient cannot be counted in the state’s WPR for that month anyway and the hours spent in vocational educational training should not be documented as such against the recipient’s 12-month time limit.

Allow FIP recipients over 20 years old who have not completed high school to do so by taking adult education classes without additional work requirements, provided they take a minimum number of classes concurrently and maintain satisfactory academic performance. Michigan would not be able to count these cases toward its WPR. However, adult education is a crucial link to postsecondary education for low-skilled parents, and the longer the time needed to complete adult education classes and pass the General Educational Development (GED) exam, the more likely such parents will drop out. Allowing the parent to “speed up” the process by taking more than one class at a time with no other requirements makes it more likely that the parent will continue education into the postsecondary level. This is especially important for parents who need to take Adult Basic Education (ABE) classes before GED classes, as the longer time required in adult education increases the likelihood that they will drop out before completion.11

Allow FIP recipients who are participating in adult education or vocational training programs and are close to exhausting their 48-month lifetime limit to receive an additional year of FIP. Although the state has imposed a 48-month/four-year lifetime limit on families receiving FIP, the federal lifetime limit for supporting families with cash assistance through TANF is five years. This enables Michigan to continue giving assistance to parents who have not yet finished their education and training. Adult education students who are meeting their work requirements could continue to count toward the WPR, as would vocational educational training participants who have not exceeded the 12-month limit. (Extending FIP for these families beyond 48 months can only be done if the Legislature modifies Public Act 131 of 2011.)

Allow English as a Second Language (ESL) to count as a core or secondary activity. Although TANF allows other forms of adult education (ABE and GED classes) to count toward work requirements, it does not allow states to count time that recipients spend in ESL. Such recipients must learn English in addition to participating in their required weekly work hours. As the flexibility provided by Michigan’s high WPR allows, the state should permit recipients who are making satisfactory progress in ESL classes to count class and study time toward their weekly work requirements.

Use the statewide P-20 education system to measure the workforce success of those who leave cash assistance, with and without training. It is very difficult to track and measure the economic well-being of those who leave cash assistance in Michigan. In the past, the responsible state agency would send out voluntary surveys to former recipients that would have a very low response rate. Today, however, the state has a P-20 data system in place that measures education and workforce success and the system is being expanded. While preserving recipient privacy, Michigan should link this system with the DHHS data system in order to track parents when they leave FIP, measuring the success of those who have participated in education and training while receiving FIP compared to those who have not. This will help the state know what kind of programs and policies have been successful at facilitating the transition from cash assistance to family-supporting wages and job security.12

Conclusion

Cash assistance is a necessary safety net for parents who have barriers to finding or maintaining a job that enables them to meet their family’s needs, and the PATH program provides a three-week screening process to pinpoint such barriers. For many recipients, the barriers include a low level of marketable occupational skills, and a subset of these recipients lack basic skills in at least one academic area that are needed to attain occupational skills through postsecondary training. Without such skills, parents often remain either unemployed or stuck in low-paying jobs that do not pull them out of poverty or help them meet their children’s needs.

In keeping with its name, the Family Independence Program ought to use every available means to enable cash assistance recipients to acquire credentials leading to gainful employment and economic security. While not all recipients are able to do this, for the ones who are, FIP can be not only a temporary safety net but a springboard to skills, career and economic security—for the parents now and their children when they become adults.

skilling up michigan

 

Endnotes

  1. Michigan Department of Health and Human Services, Trend Report of Key Program Statistics, September 2015.
  2. The PATH program ended the prior program for work participation known as JET (Jobs, Education and Training). One of the main features of PATH is that it requires a 21-day application eligibility period in which recipients are screened for work readiness and barriers.
  3. Bassett, Meegan D., Considering Two Generation Strategies in the States, Working Poor Families Project, Summer 2014.
  4. Economic Policy Institute analysis of Current Population Survey data.
  5. Working Poor Families Project data generated by Population Reference Bureau from the American Community Survey, 2013.
  6. Working Poor Families Project, ibid.
  7. For more on the level of income that Michigan families must have in order to meet their basic needs without public or charitable assistance, see the Michigan League for Public Policy’s Making Ends Meet in Michigan: A Basic Needs Income Level for Family Well-Being, March 2014.
  8. Economic Policy Institute, ibid.
  9. P-20 is shorthand for an integrated educational system that extends from preschool to higher education and the workforce. For more on Michigan’s P-20 data collection system, go to: http://www.michigan.gov/cepi/0,4546,7-113-56472—,00.html.
  10. For further discussion on many of these recommendations, see Lower-Basch, Elizabeth, Amy Ellen Duke-Benfield and Lavanya Mohan, Ensuring Full Credit Under TANF’s Work Participation Rate, Center for Law and Social Policy, March 2014.
  11. Adult Basic Education (ABE) classes are those that bring the student to a ninth grade level in a given academic area, while General Educational Development (GED) classes bring students to a high school graduation level. For the very low-skilled, ABE classes are often a necessary prerequisite to GED classes and the necessity of completing them before GED classes prolongs their time in adult education, increasing the likelihood of dropping out.
  12. For more information on this subject, see Michigan League for Public Policy, The Key Ingredient: Data is Crucial to Building Michigan’s Workforce System, July 2011.

 

 

 

 

The time is now to protect federal working family credits

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I hope you all had a wonderful Thanksgiving, surrounded by family and friends and all the food and fixings you could hope for. But many Michigan families are still struggling and could soon be making due with close to $1,000 less in their family budgets if Congress doesn’t translate the rhetorical goodwill of the holiday season into actual action to help those in need.

I know I’ve been talking about this issue for several months, and I hope you are all already aware of why the federal Earned Income Tax Credit (EITC) and low-income portion of the Child Tax Credit (CTC) are so important and why the expiring provisions of these credits should be made permanent. But the need is extremely urgent now. (more…)

Join us October 26th for Public Policy Forum

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Just like assets or heirlooms, economic disadvantages are often passed down from generation to generation. And we need your help to change that.

A recent report on the state budget by the League shows that children born into poverty immediately start out behind and spend the rest of their lives playing catch-up. They have limited early education opportunities when the brain is at one of its highest stages of development. These kids have trouble ever overcoming that gap, with problems in fourth-grade reading proficiency. Not surprisingly, they are also less likely to finish high school or attend postsecondary school, and without a degree or training, they end up with lower-paying jobs themselves. (more…)

Racial disparities persist in child poverty

Census numbers released in September show that although poverty is decreasing in Michigan, racial inequities still exist, especially for children.

In 2014, there were 493,000 children (22.6%) living in poverty, compared to 2013 when there were 524,000 children (23.8%) in poverty. (more…)

Aging baby boomers face huge hurdle with food assistance asset test

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When most of us think of hunger and those in need, we think of children. As our recent Kids Count Data Book points out, too many Michigan children are currently facing poverty and hunger. But there’s another group of people who are also struggling with hunger, and it might come as a surprise: baby boomers. (more…)

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