The 1994 waivers were designed to make work appealing and to eliminate barriers or disincentives to work. In concert with the 1992 waivers, they form a solid, positive reward system for public assistance recipients who are moving toward self-sufficiency by working.

Building on this base, our proposals under the new block grant opportunities will round out the incentives to make work pay.

Our proposals to increase incentives by cashing out Food Stamps and advancing the Earned Income Credit for working families are basic to rewarding motivation. Simplifying conflicting policy between financial assistance programs will streamline the bureaucratic requirements that create long-term dependency on the system by acknowledging the need for families to maintain some assets to support their work involvement. The results of planned research on families without income (Project Zero) will go a long way to determine the course for future resource and service redirection to increase self-sufficiency.

Transportation

Every Block Grant advisory group identified transportation as a major statewide barrier preventing welfare recipients from becoming self-sufficient and accessing essential services. The goals of welfare reform cannot be completely achieved until the transportation issue is resolved. The Michigan Department of Transportation, working with the Family Independence Agency, will develop a plan to resolve transportation barriers preventing low income citizens from becoming self-sufficient.

Earned Income Credit

In 1994, Michigan proposed advancing the federal Earned Income Credit to working AFDC families. Health and Human Services (HHS) was unable to grant a waiver in this area at the time. Employers currently have this option but many choose not to pursue this benefit for their employees. Increased income is a real incentive to work, and we are reproposing that the state advance the credit on a monthly basis to eligible families and have asked for a change in federal law that will allow this option.

All Family Independence and Food Stamp families who work and raise children would receive the monthly advance from the Family Independence Agency. This increases the families' monthly income throughout the year, not just at income tax time. Clients would cost settle with the IRS at the end of the year. The credit is not counted in determining eligibility for Family Independence...it is a reward for working.

Food Stamp Cash-Out

All Food Stamp clients currently receive coupons to purchase their food. Working families have demonstrated responsibility and should not have the stigma of using stamps in the checkout lane. They should be rewarded for their work motivation.

Working Family Independence clients will receive cash instead of Food Stamps when they have earnings of at least $350 per month for three consecutive months. Clients whose earnings drop below $350 for three consecutive months would revert to food coupons. Michigan has already received a waiver from the U.S. Food and Consumer Services for this approach. A side benefit will be reduction in Food Stamp black market sales.

Simplified Application Form

The current assistance application form is lengthy and difficult for many clients to complete. Much of the length can be attributed to various federal requirements. The current application form has been identified as a barrier by clients and advocates. We will significantly reduce the length of the application through policy simplification (e.g., treatment of income and assets) and program changes. The shorter application form will be easier to understand and complete and will significantly reduce the about of time caseworkers spend determining eligibility.

Treatment of Income

Currently, public assistance recipients must answer extensive questions regarding the sources of income they receive. The vast majority of these income types we ask about are required by a variety of federal policies and are rarely sources of income for most clients. As an example, income from the Black Lung Fund is one of many income types about which all applicants for financial assistance are asked.

We will revise our income data capture documents to inquire about only the most common types of income while asking for information about other sources, such as Black Lung Fund, through a broader interpretation of "other." This will greatly simplify administration of the program and will save case worker and client time by not requiring a detailed review of types of income the vast majority of applicants do not have.

Prospective Budgeting

The current retrospective budgeting process is labor-intensive and does not allow for quick response to changes in the client's circumstances and income. We will adopt an approach of prospective budgeting which estimates the amount of expected income, simplifies case maintenance, and requires fewer client income reports. This is especially important when income does not change or changes minimally.

We will adopt a $100 tolerance level and not require clients who have income changes of less than $100 to report them to the Family Independence Agency. This will result in fewer client and agency errors, simplify case maintenance and require fewer income reports. It will also increase available staff time to focus on Family Independence Contract activities.

Treatment of Assets

Current determination of eligibility for assistance requires a time-consuming examination of all potential assets despite the fact that less than one percent of all applications are denied assistance due to assets. Forcing families to become destitute impairs their ability to enter or re-enter the job market.

We propose to count only cash assets such as cash, savings accounts, currency, uncashed checks, etc. in determining eligibility for financial assistance. This would allow workers to spend their time assisting clients to find work, keep clients closer to their last episode in the job market, and increase the likelihood that financial assistance will be temporary. The asset limit will be set to exclude most items that would keep the family from total impoverishment and increasing the likelihood of quick re-entry into the work force.

Work First as a Condition of Eligibility

Clients will be required to participate in Work First as a condition of eligibility. Failure to cooperate would result in grant closure. The current timing between Work First and DSS financial assistance is complicated and clients don't always get immediate assistance in job search or get penalized in a timely fashion if they fail to cooperate.

New applicants for financial assistance will be expected to participate in a joint orientation conducted by the Family Independence Agency (FIA) and the Michigan Jobs Commission (MJC) as a condition of receiving assistance. FIA and MJC will guarantee that the joint orientation will be available within a week of application for assistance. If the applicant does not attend the joint orientation, the case will not be opened.

During or immediately following orientation, the client and case worker will complete the Family Independence Contract. Clients will be referred to the MJC where they will be enrolled in an employment related activity or, if job-ready, be directed to a prospective employer. If the client does not cooperate with the MJC activities and requirements within 60 days, the case will close. Clients who fail to comply after the initial 60 days may be subject to a reduction in Family Independence Program and Food Stamp benefits. If the client remains in non-compliance for four months, the case will close. This process will quickly bring those in need of help into full compliance or result in case closure.

Clients who first meet on of the following criteria will not be expected to continue their connection with Work First:

• Employed 20 or more hours per week
• Severely disabled or caretakers of a severely disabled child
• Pregnant women up to six weeks post partum
• Minor mothers
• Ineligible grantees.

Group Composition

Currently, stepparents are not mandatory members of an AFDC unit. Under the Family Independence Program, the stepparent's income and resources will be considered in determining eligibility for the family.

This change recognizes that all household members living together share expenses and income. It greatly simplifies public assistance policy and is consistent with policies adopted by other states and in Michigan for families receiving Food Stamps.

Food Stamp Standardization

The AFDC and Food Stamp programs have operated under separate federal guidelines. Whenever feasible, differences in policy will be eliminated.

Food Stamp policy will be changed to compliment the rules for Family Independence cases in the following areas: definition of income, definition of assets, prospective budgeting, and case management by the Family Independence Specialists.

Work Participation and Project Zero