MFIP Incentives Only was one of the demonstration projects made possible by Section 1115 waivers to the rules in effect at the time for the AFDC program. These Section 1115 waivers allowed states to test new approaches to advance the objectives of the AFDC program. MFIP Incentives Only used financial incentives to encourage AFDC recipients to work and reduce their dependence on public assistance.
First, MFIP Incentives Only increased the basic AFDC grant by 20 percent if participants worked and reduced AFDC benefits by only 62 percent for every earned dollar (rather than dollar for dollar). MFIP Incentives Only also made it less burdensome for families to receive benefits by combining families’ AFDC, Food Stamps, and Family General Assistance (a state-funded cash assistance program) into one monthly cash payment. Finally, MFIP Incentives Only paid child care costs directly to providers rather than reimbursing parents for costs paid out of pocket. Clients could receive MFIP Incentives Only services as long as they remained enrolled in AFDC. All AFDC, Food Stamps, or Family General Assistance applicants and recipients were eligible to participate in MFIP Incentives Only. The MFIP Incentives Only program was implemented in three urban Minnesota counties (Hennepin, Anoka, and Dakota). The evaluation of MFIP Incentives Only, which focused on single-parent households that were either recent applicants to MFIP or long-term recipients, was part of a larger evaluation of MFIP. The larger evaluation also tested the effectiveness of MFIP, a version of the intervention that included a work requirement for long-term recipients, and compared the effectiveness of MFIP Incentives Only and MFIP.
MFIP Incentives Only used financial work incentives to increase employment and reduce poverty among recipients of Aid to Families with Dependent Children (AFDC).