Strengthening Michigan’s Family Independence Program would help reach more families in poverty

When a family experiences poverty, they are met with day-to-day struggles and unimaginable stressors that can take a huge toll on their mental and physical health.

For the young children growing up in poverty, the impacts can be lifelong — from developmental delays to educational setbacks and considerable harm to their emotional well-being and future success. In fact, studies have shown that the longer a child lives in poverty, the less likely they are to complete high school or college or to be regularly employed in their 20s.  

We know families experiencing poverty live in every county in Michigan, and we also know that poverty is a policy choice and our state has the tools to do something about it.

As Fiscal Year 2025 state budget talks push forward at the Capitol, the first meaningful improvements to Michigan’s Family Independence Program (FIP) since 2008 could be on the horizon. 

Michigan House passes $80.9B budget, as the Senate is expected to take up its version Thursday

While there are some key differences in the current proposals from the governor, House and Senate that will need to be ironed out before the final budget is passed, all three have included FIP enhancements that would go a long way in helping more Michigan families with low incomes make ends meet. 

This comes at a critical time as Michigan now has the 13th highest state poverty rate in the country — at 13%.  The percentages are even higher for families with children, children under the age of 18 and single-parent (female) families at 15%, 18% and 36%, respectively.  

We at the Michigan League for Public Policy have been longtime advocates for strengthening FIP — our state’s basic cash assistance program — by reorganizing Michigan’s Temporary Assistance for Needy Families (TANF) spending. 

Currently, our state’s federal TANF allotment is used for 75% of the funding for Michigan college financial aid programs that primarily benefit middle-class and even affluent students. If this scholarship funding were to come from the general fund instead — as it should — more of the TANF allotment could be freed up and used for what it was intended: to help lift as many Michigan families as possible out of poverty.

Unfortunately, because of past bad policy choices, the number of families receiving FIP benefits today has dropped dramatically. There were 79,660 Michigan households receiving FIP benefits in 2011, while just over 12,000 households received them in 2023 — a staggering 85% decrease in just 12 years. 

This drop is not because poverty has significantly declined in our state, but rather because of Michigan’s stringent four-year time limit for FIP benefits and a woefully outdated payment standard, which determines FIP eligibility and the maximum payment amount.

FIP’s outdated payment standard means that many Michigan families are unable to receive assistance despite living below the poverty line. A family of three in Michigan has to have an extremely low income ($814 per month) to be eligible for FIP today. 

But in 1993, that same family would have been eligible for assistance even if they earned double that amount, adjusted for inflation. Put another way, families today need to be living at below 39% of the poverty threshold to qualify for cash assistance, while in 1993, eligibility started at 80% of the poverty line. 

Families in Michigan cannot make ends meet on $814 per month.

Meanwhile, the current payment standard for FIP has been frozen at $492 since 2008 and has failed to keep up with inflation. The maximum FIP benefit for a family of three was $459 in 1993 and the value of the maximum FIP benefit today is just $242 when adjusted for inflation. This is not enough for a family to afford to put a roof over their heads, much less pay for other basic necessities.

In fact, the maximum FIP benefit has covered less and less of fair market rent, covering 88% of a $522 two-bedroom home in Detroit in 1993 and just 38% of a $1,291 two-bedroom home in Detroit today. 

The failure of FIP has certainly contributed to Michigan’s housing and homelessness crisis. Tens of thousands of people — including families with young children — don’t have a reliable place to call home. Well over a third — 40% — of cost-burdened Michigan renters were paying more than 35% of their income to rent alone in 2022.

Reorganizing TANF spending in order to strengthen FIP would make a meaningful difference in the lives of Michigan families and children and also give a boost to communities, where these benefits would most likely be spent. And with changes to federal regulations regarding TANF spending potentially coming down the pike, improving state practices now will better prepare Michigan for the future. 

We are engaged in the budget talks around this important issue, and we also recently published our latest Census fact sheets, which provide easy-to-access data for policymakers on how residents are faring statewide, as well as in counties, legislative and congressional districts and select cities.