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Before welfare reform in 1996, states were mostly required to give cash assistance to anyone who was eligible — without work requirements or time limits. The amount of money from the federal government varied year to year based on need. After welfare reform, the government capped the program at $16.5 billion dollars. Now, states receive a block grant, and they can choose to spend their federal money as long as it fits within four categories:
Michigan is one of eight states that spends less than 25 percent of its total welfare funds on the issues that were at the center of the welfare reform debate: cash assistance, work support and child care, all to help welfare recipients get jobs. The largest share of its spending, 33 percent — nearly $500 million in 2014 — went to out-of-wedlock pregnancy prevention, according to the state’s reports to the U.S. Department of Health and Human Services. Looking more closely at state plans, some of those funds go to preventing teen pregnancy among high-risk populations. Nearly $100 million of welfare funds were spent on college scholarships that benefit both low- and middle-income students.
Spending on basic assistance in Michigan dropped significantly after welfare reform: from $737 million in 1997 to $167 million in 2014.