FIP encouraged recipients of Aid to Families with Dependent Children (AFDC) to change their behaviors to better achieve self-sufficiency by incentivizing work, mandating personal responsibility, and supporting family stability.
FIP was one of the demonstration projects made possible by Section 1115 waivers to the rules in effect at the time for the AFDC program. These Section 1115 waivers allowed states to test new approaches to advance the objectives of the AFDC program.
FIP had three main components. First, it aimed to make work pay by disregarding 60 cents of every additional dollar earned when calculating AFDC grants and by extending transitional child care. Second, to encourage responsibility, FIP required all able-bodied (nonexempt) AFDC recipients to take part in employment and training activities. Participants had to sign a Family Investment Agreement that specified the steps parents would take to achieve economic self-sufficiency. Participants’ cash assistance payments could be reduced for three months and then terminated for six months if they failed to sign or adhere to the Family Investment Agreement. They were also required to participate in the Promoting Independence and Self Sufficiency through Employment, Job Opportunities and Basic Skills program, which provided education, employment (job search assistance, unpaid work experience, and monitored employment, and training opportunities. Finally, FIP promoted family stability by eliminating the 100-hour rule (which stipulated that families were ineligible for cash assistance when the principal earner worked more than 100 hours per month) for families with two wage earners and granting the same deductions to earned income for step-parents that would be calculated for natural parents. FIP participants received services until they left AFDC. All recipients of AFDC who were able to work were required to participate. FIP was implemented throughout Iowa.