State invests surplus welfare funds into new programs

But even with the new programs and extra spending, Michigan still has unspent welfare money sitting in Washington each year.

Under the 1996 federal welfare-reform law, the state must spend $468 million in Michigan taxpayers' money on welfare-related programs.

Each year, it also gets a $775 million block grant from the federal government.

The amounts are based on the number of welfare families in each state in 1994. At that time, Michigan had more than 210,000 families on welfare.

In July, there were fewer than 84,000 on welfare. But that hasn't affected the amount of money the state receives. So in February, when Gov. John Engler introduced his budget for the fiscal year starting Oct. 1, the welfare fund balance from 1998 was about $161 million.

Other states have similar pots of cash in Washington. Douglas Howard, director of the state Family Independence Agency, said there is growing concern that Congress will take the money back, interfering with states' abilities to change their welfare programs.

''On the one hand, we're being told to spend it so that it's not sitting around,'' Howard told the Detroit Free Press for a story yesterday.

''But we want to be fiscally responsible. And at the same time they're saying to spend it, they're saying they may take it way.''

Gretchen Odegard, policy analyst for the National Governors' Association, said the latest federal report showed that about 12 percent of the states' welfare money remained unused as of December, the most recent figure available.

''Leadership on (Capitol) Hill right now is pretty desperate to find funding. They're in a real tight situation.

They keep coming back to the states,'' she said.

Meanwhile, Michigan is finding new uses for the surplus, including an increase in benefits. Some welfare recipients can get up to $1,200 to buy a car, or $900 to fix one. Day care spending was expanded from about $119 million in fiscal year 1994 to about $581 million for 2000 to include many low-income families not on welfare.

Next year, the state will spend about $11 million of its federal money on Project Zero, Engler's welfare experiment to remove barriers that keep welfare recipients from working.

09-21-99