Why did state’s cash aid drop 85%?

A version of this column originally appeared in the Alpena News.

In Fiscal Year 2011, the year Governor Rick Snyder took office, there was an average of 79,660 Michigan families per month receiving cash assistance through the Family Independence Program (FIP). Eleven years later, in 2022, only 11,947 families received it.

What happened?

First, let us not think for a second that this had to do with family well-being or the economy. There is no reason to believe that just 11,947 families are living in poverty in Michigan. Not when the 2020 American Community Survey census numbers show a 14% poverty rate for families with children. And that number jumps to 37% in a single parent (female) family.

No, the low number of families receiving FIP cash assistance is because, due to various state policies, very few families in poverty can actually receive assistance through the program. A new report from the League discusses how misguided policymaking has made cash assistance unavailable to families in poverty even when those families are working and trying to become economically independent.

First among these policies is an eligibility standard so low that a family has to not only be in poverty, but in deep poverty. In order to begin receiving cash assistance, a family’s total household income must be no higher than $814 per month, which equates to only 42% of the federal poverty line for 2022. If the family begins to increase its earnings, the FIP monthly benefit will decrease until the family household income reaches $1,183, equivalent to 62% of the federal poverty line.

Another significant state policy preventing Northeast Michigan families from accessing temporary cash assistance when experiencing financial hardship is the 48-month lifetime time limit set by the state in 2011. The months a family has already received cash assistance are counted against the time limit even if they received very low monthly benefit payments. In fact, for several years, all families who started earning too much to be eligible for FIP automatically received $10 per month for an extra six months in order to continue eligibility for Medicaid coverage—and those six months count against the 48-month lifetime limit.

Along with the very limited access struggling families have to cash assistance, there is also the issue of  the very low monthly benefit. The maximum amount that a family can receive is $492 per month, and that is only if the family has no other income. As the family brings in earnings, that benefit amount decreases (although the benefit decreases more slowly than the earnings increase to encourage work).

That $492 maximum FIP grant will only cover 55% of rent for a modest two-bedroom dwelling in Michigan, and Section 8 housing subsidies are largely unavailable to most families who otherwise qualify due to limited funds and long waiting lists. For a family with no other income, the FIP grant must cover not only housing costs, but clothing, school expenses, transportation, personal care, and many other monthly expenses. Food is subsidized by the Supplemental Nutrition Assistance Program, which all families receiving FIP are categorically eligible for, although it may not offer enough to cover a family’s entire monthly grocery needs.

Does it really make practical or moral sense to require a family with children to be in near-destitution before allowing the family to receive temporary cash assistance that could help them pay the bills, buy clothing for their children and keep their car running? And then to pay such a low monthly benefit that they still have trouble meeting their basic needs?

There are approximately 480,000 families in Michigan living in poverty. It is time to bring Michigan’s cash assistance program up to date so they can receive temporary relief.