Welfare reform: Minnesota style: reforming welfare is a work in progress. Even Minnesota's successful experiment that encourages work, but retains some benefits, is still being tweaked.

• Author: Hage, David

When Congress abolished the nation's old welfare system in 1996, imposed tough new work rules and limited cash welfare to five years, the late Senator Daniel Patrick Moynihan called it "the most dramatic experiment in domestic social policy since the New Deal."

To legislators and governors, however, a different feature of the law stood out: It granted states unprecedented flexibility to design their own welfare-to-work programs, according to their own ideas. To them, welfare reform is not one big national experiment, but 50 very different and diverse ones.

Some states, notably Wisconsin and Arizona, adopted aggressive "work first" systems that encouraged rapid employment and discouraged families from entering the welfare system in the first place. Other states, including Connecticut and Indiana, experimented with time limits as short as two years on the theory that tough deadlines would encourage welfare parents to seek work quickly.

Some states focused on increasing families' incomes, looking to lift them out of poverty and improve child well-being. Minnesota, Oregon and Illinois focused on this "make work pay" strategy. They emphasized building job skills and education and supplementing earned income, rather than moving families off welfare.

THE MINNESOTA MODEL

The Minnesota approach, which rewarded welfare families with wage supplements, child-care subsidies and other work supports as they moved into the job market, landed The North Star State a prominent place in the national research literature and won plaudits from President Bill Clinton. It also triggered a new conversation among economists about solving an old dilemma in welfare policy: How to wean families from public assistance and raise them out of poverty.

"Early findings [from these projects] provide encouraging evidence that making work pay, in conjunction with other services and conditions, can both increase work and reduce poverty among welfare recipients without reducing employment rates among the working poor," Gordon Berlin of the Manpower Demonstration Research Corporation concluded in a 2000 monograph, "Encouraging Work, Reducing Poverty."

Since 1996 and the devolution of welfare authority, many states have adopted some version of "make work pay." But few researched the tactic so rigorously. And few built such a durable political consensus around a new welfare strategy that would decrease dependency while also reducing poverty.

Ironically, the Minnesota experiment began in acrimony, not harmony. In 1986, Minnesota Republicans had gained control of the House after several years in the minority. In an effort to scale back on Minnesota's reputation for generous social benefits, they proposed a 30 percent cut in the state's monthly welfare grant. A bitter fight broke out with Senate Democrats. As a result, Democratic Governor Rudy Perpich suggested simply pulling welfare off the Legislature's agenda and turning it over to a bipartisan citizens' commission. Perpich's plan was widely regarded as a political convenience, a way to end the legislative session.

To the surprise of many observers, however, the commission's 10 members dug in for a long summer's work of research and reflection. They took testimony from the state demographer on whether Minnesota had become a "welfare magnet" for poor families from other states. They heard from county welfare workers about the red tape and perverse incentives of the old welfare system, Aid to Families with Dependent Children (AFDC). And they heard from welfare mothers themselves about their struggles to make ends meet while trying to leave public assistance. At the end of that year, the...