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House Research Department Updated: August 2010 Minnesota Family Investment Program Grants: Calculation and Exit Points Page 3

Families without earnings receive a grant equal to the transitional standard—$1,005 in the case of a single parent with two children. Families with earnings get to disregard a flat percentage of their earnings in determining their grant, and their grant is calculated by subtracting earnings (with the disregard applied) from a “family wage level” that is 110 percent above the transitional standard that applies to families without earnings.

Table 2 shows the MFIP grant calculation for a single parent of two children who works full- time and earns $7.25 per hour. The disregard and the family wage level combine to provide an incentive for MFIP recipients to participate in the workforce, since families get to keep some of their MFIP grant as they begin working.

When calculating a family’s net income, a percentage of a family’s gross income is disregarded. Currently, the earned income disregard is 37 percent.

Table 2 MFIP Grant Calculation Single Parent with Two Children Earning $7.25 Per Hour, Full-Time, 2010 (1) Calculate earnings after disregard

Monthly earnings*

$1,257

minus earned income disregard (37% of earnings)

465

equals earnings after disregard

$792 (2) Calculate family wage level

Transitional standard

$1,005

Family wage level (110% of transitional standard)

$1,106 (3) Calculate grant

Family wage level

$1,106

minus earnings after disregard

792

equals MFIP grant

$314 * Monthly earnings are calculated as one-twelfth of $7.25 hourly rate times 40 hours worked per week times 52 weeks worked per year. House Research Department

MFIP Exit Points Although MFIP does not directly specify a program “exit point,” three- or four-member families lose eligibility for benefits at income levels about 115 percent of the federal poverty guidelines. Exit points for larger families are lower as a percentage of the poverty guidelines.