Michigan House and Senate Reach Agreement on the FY 2014 Human Services Budget

 Full report in PDF

On Tuesday, May 28, the joint House/Senate Conference Committee for the Department of Human Services approved its Fiscal Year 2014 budget for the DHS. The DHS conference report was subsequently approved by the full House of Representatives as part of HB 4328, an omnibus bill that includes the budgets for all state departments and services except higher education, community colleges and K-12 School Aid. A vote by the full Senate is expected in the coming week. Agreements reached by the joint House/Senate conference committees can be either approved or rejected by the full House and Senate, but cannot be amended on the floor.

After years of declining investments in human services, the final DHS budget agreement cuts spending by 10.2%, or $685.7 million. The deep cuts in DHS public assistance programs have largely been the result of recent policy decisions that limit eligibility, including a new asset test for food assistance, and more stringent enforcement of lifetime limits on income assistance—both adopted in 2011.

What is most unacceptable about the cuts in public assistance is that they come at a time when poverty is increasing, and unemployment—while dropping from peak levels—remains high. Further, many of the jobs that are being found are low wage, making it increasingly difficult for workers to support their families.

Exacerbating the problem have been recent tax policy changes that have increased taxes for low-income working families, further whittling away their wages. In 2011, Michigan lawmakers approved a major overhaul of Michigan’s tax system that cut business taxes by $1.8 billion, financed through tax increases on moderate- and low-income workers, as well as pensioners.

As part of that tax shift, lawmakers reduced the state’s Earned Income Tax Credit by 70%—from 20% of the federal credit to just 6%. The EITC is a proven tool for keeping children and families out of poverty and has been shown to increase employment and reduce the need for public assistance. It is estimated that a 20% credit kept 14,000 children out of poverty in Michigan. At 6%, an estimated 5,000 children will be kept out of poverty, leaving another 9,000 children behind.


The DHS budget is the third largest in Michigan, accounting for 13.5% of total spending from federal and state sources this year. The DHS administers a range of public assistance, child welfare and adult services at a cost of approximately $6.7 billion in the current fiscal year. Included in the DHS budget are funds for the Family Independence Program; the Food Assistance Program; State Disability Assistance; State Emergency Relief; and child protective, foster care, adoption and juvenile justice services.


Governor: The governor’s proposed DHS budget included a 9.8% cut in total spending, for a reduction of over $658.3 million. State General Funds dropped by $15.7 million or 1.5% in the Governor’s budget.

Conference: The Conference Committee reduced the DHS budget by 10.2%, from $6.7 billion in the current fiscal year to $6.02 billion—a reduction of $685.7 million.


FAP (formerly called the Food Stamp program) is completely federally funded, with an average monthly benefit for a two-person household of $267. Over 70% of FAP recipients receive no other state cash assistance. With increasing unemployment and need between fiscal years 2004 and 2011, caseloads grew by 135%. Since that time, in part due to state policy changes limiting eligibility, caseloads have begun to drop.

Key among those changes was the adoption in 2011 of a limit on FAP assets. Families must now have less than $5,000 in total assets, including the value of vehicles after certain exclusions, in order to receive food assistance. This asset limit resulted in less access to assistance for low-income families and individuals, and caused the state to turn away federal funds available to assist low-income families.

Governor: The governor’s budget reduced funding for FAP by $683.7 million in recognition of the loss of federal funds from the American Reinvestment and Recovery Act as well as caseload reductions. The governor’s budget assumed that FAP caseloads would fall from 1.1 million cases appropriated this year, to 876,650 in Fiscal Year 2014—a 19.4% reduction. The actual average monthly FAP caseload through April of this year is much lower than appropriated at 912,339.

Conference: The Conference Committee adopted the governor’s caseload projections.


FIP provides cash assistance to low-income households with dependent children. To be eligible for FIP, an average family of three must have an annual income of less than $9,800, and financial assets of less than $3,000. The maximum benefit for a family of three is $492 per month. Approximately seven of every 10 FIP recipients are children, and 60% of those children are under the age of 9. FIP caseloads have been declining dramatically in recent years, in large part the result of policy decisions, including the adoption in 2011 of changes in lifetime limits for assistance. Total FIP spending is estimated to be $255.3 million in the current fiscal year.

As part of federal sequestration, the Administration chose to eliminate the annual clothing allowance for approximately 30,000 children receiving FIP in cases that do not include an eligible adult—the only direct client grant reduction. Since 1999, Michigan has provided at least some children receiving FIP an annual clothing allowance—in recognition of the reality that the failure to raise public assistance grants has reduced their value to less than one-third of the federal poverty threshold. At its peak, more than 150,000 children were provided a back-to-school clothing allowance. In 2011, the program was restricted to children in FIP cases that do not include an adult, leaving behind more than 120,000 children.

Governor: The governor’s budget reduced funding for FIP by $15.8 million to a total of $239.4 million to reflect continued reductions in caseloads. The governor projects FIP caseloads will fall from 53,298 in the current year to 49,226 in Fiscal Year 2014—a reduction of 7.6%.

Conference: The Conference Committee:

  • Reduced expected cases and funding for FIP based on May caseload estimates. The Conference Committee projects that there will be a total of 45,710 FIP cases in FY 2014.4 The DHS reports that the average monthly caseload for the FIP program fell from 83,507 in Fiscal Year 2011 to 55,971 in April of this year.5
  • Provided $2.9 million to restore the clothing allowance in the 2013-2014 school year, retaining the restriction that only children in FIP cases without an eligible adult can receive the assistance.
  • Did not fund a new substance abuse screening and testing pilot for FIP applicants and recipients in at least three counties, as proposed in HB 4118.


The SDA, which is a state-funded program, provides cash assistance to disabled adults who have annual incomes below $5,400. The payment level for a single adult is $269 monthly. With the adoption of the Conference Committee report, funding for SDA will be down 39% since 2010.

Governor: The governor recommended a decrease of $546,600 (all State General Funds) to reflect an anticipated drop in the number of SDA cases from 8,777 this year to 8,600 if 2014—a reduction of 2%.

Conference: The Conference Committee further reduced expected SDA cases to 7,777 based on the May Revenue Estimating Conference consensus caseloads—a reduction of 11% below the current fiscal year, and 9.6% below the governor’s recommended caseload.


DHS assists low-income individuals and families facing emergencies that threaten health and safety. Through a combination of direct financial assistance and contracts with a network of nonprofit organizations such as the Salvation Army and local Community Action organizations, low-income households can receive assistance with emergency housing, utility shut-offs, home repairs, relocation assistance and burials.

For energy services, families must have incomes below 150% of the federal poverty level; for non-energy services, a family of three must have an income of $625 per month or less. Families with cash assets over $50 must pay toward the emergency, and the value of non-cash assets cannot exceed $3,000 for a family of two or more.

Governor: The governor included a total of $235 million in federal and state restricted funds, including $175 million in federal Low-Income Home Energy Assistance Program funds, and $60 million in new state restricted funds for a Low-income Energy Assistance Fund—in response to a new state law (P.A. 615 of 2012) requiring DHS to establish a new consolidated energy assistance program with a single, simplified application. Revenues for the Low-income Energy Assistance Fund would be collected through the Department of Licensing and Regulatory Affairs and administered by DHS.

Conference: The Conference Committee agreed with the governor and provided $60 million in restricted funds for energy assistance.


A range of child and family services programs are funded through the DHS, including protective services to investigate charges of child maltreatment; foster care services to supervise and place children who cannot remain safely in their homes because of child abuse and neglect; adoption subsidies, including financial and medical subsidies to families who adopt children with special needs; and family preservation and prevention services. In addition, DHS works in partnership with counties to fund services for delinquent and maltreated children and youths through the Child Care Fund.

While funding for some child welfare services has increased in recent years as a result of litigation against the state for its failures in meeting the needs of abused and neglected children, funding for services to prevent maltreatment, and to strengthen and reunify families, continues to be woefully inadequate.


Governor: The governor’s budget included $190.8 million for foster care payments, a cut of $15 million (7.3%). The current year budget includes $205.8 million for foster care payments, with a caseload of 7,200. The governor projected that the Fiscal Year 2014 caseload would be 6,650.

Conference: The Conference Committee included $181.1 million for foster care payments, a reduction of 12% over the current year, and 5% below the governor’s recommendation for Fiscal Year 2014. The Conference Committee projects that foster care caseloads will fall to 6,250. The Committee also increased foster care administrative rates for private child placing agencies by $3 to a total of $40 per child per day.


Governor: The governor projected that adoption subsidy caseloads would increase slightly from 26,850 to 27,100 monthly, an increase of approximately 1%.

Conference: The Conference Committee assumes an adoption subsidy caseload of 27,150 in Fiscal Year 2014. The Committee also included $28 million for a $3 per child per day rate increase for all adoption subsidy cases. The current year budget had included funding for a $3 per day increase only for current foster care parents and new adoption subsidy cases. As a result of a legal opinion that DHS could not exclude current adoption subsidy cases from the increase, the higher rate was implemented in October of 2012 for all adoption subsidy cases, resulting in a budget shortfall of approximately $28 million. The Conference Committee rejected $2 million previously added by the Senate to allow adoptive parents to claim an additional subsidy if they discover that their adopted child has additional special needs after the adoption is finalized.


Governor: The governor’s budget included funding to continue to expand the number of child welfare workers in order to comply with a settlement agreement resulting from a lawsuit by Children’s Rights, Inc., a national advocacy organization. The lawsuit claimed that DHS was unable to move children quickly into safe, stable and permanent homes, provide children with adequate services, provide safe and stable foster homes, or prepare children who “age out” of the child welfare system. To address the settlement, in May of 2012, the governor requested a total of 577 new workers for the current fiscal year (FY 2013). The governor’s Fiscal Year 2014 budget revises the total number of child welfare enhancement staff needed to 496 (a cut of 81 FTEs), the majority of which are protective services workers. Overall, the governor’s budget includes funding for a total of 3,940 child welfare workers statewide.

Conference: The Conference Committee cut the number of new child welfare workers by an additional 80 positions, for a total cut of 161. This was substantially less than the cuts previously passed by the House, which cut an additional 151 positions above the governor’s recommendation, and the Senate, which reduced child welfare staffing by an additional 223 positions.


Governor: Based on current spending trends, the governor’s budget provided $177.5 million for the county Child Care Fund, a reduction of $11.1 million or 6% from current year expenditures of $188.7 million. The Child Care Fund provides for the care and treatment of delinquent or maltreated children who are court wards and not eligible for federal payments through Title IV-E. The primary sources of funding for the Child Care Fund are state General Funds and federal TANF.

Conference: Based on the May 15th consensus agreement, the Conference Committee provided $171 million for the Child Care Fund. Included in the Conference Committee budget is $5.1 million for an increase of $3 per child per day for private child placing agencies, as well as a cut of $11 million as a result of DHS audits of Child Care Fund claims made by counties to identify improper claims. The Senate also added $1.5 million for counties to expand their in-home, community-based juvenile justice programs.


Governor: The governor provided largely continuation funding for Families First ($18.0 million), Strong Families/Safe Children ($12.4 million), Child Protection and Permanency ($16.8 million), and the Family Reunification Program ($4 million). The governor also allocated $2.5 million in one-time funding to expand the Families Together Building Solutions program to Macomb and Muskegon counties, and to expand the Supportive Visitation/Home-Based Parent Education program to additional counties.

Conference: The Conference Committee:

  • Rejected the governor’s $2.5 million expansion in one-time family preservation funding.
  • Further reduced funding for family preservation programs by $4.2 million, including cuts in Families First, Child Protection and Permanency, and family reunification.
  • Cut funding contracts for runaway youth services by 10% in order to partially offset costs related to the adoption subsidy shortfall.
  • Provided $2.5 million in federal funds for pilot programs in Kalamazoo, Macomb and Muskegon counties to prevent children from birth through age 5 from entering foster care.


1. The Child Development and Care program is now funded through the Michigan Department of Education budget.
2. The Medicaid program is funded through the Department of Community Health budget.
3. The total unduplicated count takes into account individuals that receive more than one public benefit (e.g., are eligible both for the Family Independence program and Medicaid).
4. Summary of FY 2013, 2014, 2015 Consensus Agreement – May 10, 2013, Department of Human Services – Major Spending and Caseload Programs, Fiscal Year 2014, State Budget Office (total FIP caseloads includes Extended FIP benefits and Short Term Family Support).
5. Total Cases, Recipients and Payments for FIP, FAP, SDA, CDC and SER Benefits Trend Information, Fiscal Years 2011, 2012 and 2013, Green Book Report of Key Program Statistics, Michigan Department of Human Services. Fiscal Year 2013 is an average monthly year-to-date through April of 2013.

Making Michigan truly a ‘comeback state’

As the annual Mackinac Policy Conference continues, we’re sure to hear a lot about Michigan as the “comeback state.” (Just check out #MPC13 on Twitter and Gov. Rick Snyder, who tweets under @onetoughnerd.)

Sponsored by the Detroit Chamber of Commerce, the conference brings together business people and politicians on Mackinac Island for an annual confab on policy. (more…)

Who are we waiting for?

Budget Director John Nixon is pledging that the administration will continue “relentless positive action” to achieve approval of the Medicaid eligibility expansion by Oct. 1.

That follows some bad news from legislative leaders last week that they are pushing ahead with a Fiscal Year 2014 budget without including the savings from or the federal funds for Medicaid expansion. Nixon told Gongwer News Service that the Snyder administration is committed to meeting the Oct. 1 deadline to start enrollment for new healthcare coverage that starts Jan. 1, 2014. (more…)

Oakland Press — Gilbert: State should invest more in effective anti-poverty effort

There has long been partisan agreement on the effectiveness of the Earned Income Tax Credit as a tool to fight poverty.  At the federal level it started in the 1970s during President Ford’s Administration. Presidents Reagan and George H.W. Bush continued to support it in the ’80s. May 24, 2013 — Oakland Press

Conference Committee Approves FY 14 School Aid

 Full report in PDF

On Thursday, May 23, the joint House/Senate Conference Committee for K-12 School Aid voted to approve a budget for Fiscal Year 2014, and is expected to reconvene on Tuesday, May 28, to sign the final conference report. The Conference Committee budget included $140 million in additional funding based on more favorable revenue estimates adopted by legislators  following the May 15 Revenue Estimating Conference.

The new revenue consensus by state fiscal experts is that Michigan will have an additional $702 million in combined revenues above earlier estimates for fiscal years 2013 and 2014—including a total of $579 million in state General Funds and $123 million in the School Aid Fund. While encouraging, these increases follow years of steep revenue declines and related budget cuts, including cuts in per-pupil allocations for public schools, and reductions in assistance for low-income children and families.

Earlier this week, Gov. Snyder and Republican leaders in the Legislature agreed to split those unexpected funds between transportation and road improvements ($350 million), K-12 education ($140 million), and the Budget Stabilization or “Rainy Day” Fund ($75 million).

Included in the School Aid Conference Committee agreement is $65 million for an expansion of the Great Start Readiness preschool program, an increase in the per-pupil allowance received by public schools and academies, a one-time equity payment for districts with foundation allowances below $7,076, and additional funding for school districts that can meet certain performance requirements in reading and math.

*FY 2014 budget includes $156 million for the MPSERS retirement reserve fund. Sources: School Aid Background Briefing, House Fiscal Agency, January 2013 and School Aid Section-by-Section Highlights, Fiscal Years 2012-14.



Per-pupil foundation allowance:

  • Governor: The governor’s budget did not increase the per-pupil foundation allowance over 2012-2013 levels. The basic foundation allowance is currently $8,019, while the minimum foundation allowance is $6,966.
  • Conference Committee: The Conference Committee increased the maximum (basic) foundation allowance by $30 to $8,049, and the minimum foundation by $60 to $7,026. The committee also appropriated $6 million to districts to ensure that all districts receive a minimum increase of $5 per pupil.

Equity payments:

  • Governor: The governor recommended a total of $24 million for equity payments to further close the foundation funding gap between districts by raising the per-pupil payment for the lowest-funded districts receiving the minimum grant from $6,966 to $7,000 per-pupil—an increase of $34 per pupil. Because the governor did not recommend an across-the-board increase in per-pupil allocations, districts that were not eligible for equity grants were facing possible cuts in their per-pupil allocations because of the governor’s proposed changes in payments contingent on best practices (see below).
  • Conference Committee: The Conference Committee approved $36 million for equity payments to districts with foundation allowances of less than $7,076. The payment would be the lesser of $50 per pupil or the difference between the districts Fiscal Year 2014 foundation allowance and $7,076.

Best practices grants:

  • Governor: The governor reduced funding for “best practices” grants from $80 million in the current year to $25 million, a nearly 70% decrease, with the award amount falling from $52 per pupil to $16. Grants are available for school districts that meet seven of eight best practices defined by the Legislature, including participation in schools of choice, student academic growth, online learning opportunities, provision of dual enrollment and other opportunities for postsecondary coursework, employee healthcare benefit practices,  competitive bids for non-instructional services, the availability of a dashboard for parents to help evaluate performance, and the inclusion of physical and health education in the curriculum.
  • Conference Committee: The Conference Committee retained best practices grants at the current year funding level of $80 million, with districts eligible for $52 per pupil if they meet seven out of eight best practices.

District performance funding:

  • Governor: The governor included continuation funding of $30 million for districts meeting specified performance standards in reading and math. Districts can receive a total of $100 per pupil in additional funding, with $30 for student academic growth in math for grades 3-8, $30 for growth in reading in grades 3-8, and $40 for growth in all high school tested subjects.
  • Conference Committee: The Conference Committee increased district performance funding by $16.4 million, for total funding of $46.4 million, to reflect the actual costs of fully funding all eligible districts.

Competitive “student-centric” grants:

  • Governor: The governor included $8 million in new, one-time funding for competitive grants to districts that work to align instruction with individual student learning styles and paces, allow for school site-based autonomy, and advance students based on their mastery of the material. These funds are related to the new Education Achievement Authority, which is currently operating in 15 Detroit schools, and is being debated by the Legislature for expansion to the lowest performing 5% of all Michigan schools.
  • Conference Committee: The Conference Committee agreed with the governor’s recommendation.


  • Governor: The governor included continuation funding of $309 million for students at risk of academic failure. These dollars can be used flexibly by local school districts for a range of services, including tutoring, mentoring, reading programs, class size reductions, credit recovery programs, alternative and adult education, K-3 early interventions and early childhood programs, and medical and counseling services.

The governor also included continuation funding for Child and Adolescent Health Centers ($3.6 million), and hearing and vision screenings ($5.2 million).

  • Conference Committee: The Conference Committee adopted the governor’s budget recommendations and provided continuation funding for at-risk programs, as well as Child and Adolescent Health Centers and hearing and vision screenings.


Great Start Readiness Program:

  • Governor: The governor increased funding for the Great Start Readiness preschool program (GSRP) by $65 million, from $109.3 million in the current year to $174.3 million in Fiscal Year 2014. This increase would open up approximately 16,000 new half-day slots for four-year-olds living in families with incomes below 300% of poverty. In addition, the governor made the following changes to GSRP:
    • Increased the payment for a half-day preschool slot from $3,400 to $3,625.
    • Eliminated the current competitive GSRP program that provides funds to private sector providers, and instead required Intermediate School Districts (ISDs) to ensure that at least 20% of their slots are contracted to public or non-profit community-based organizations, as well as for-profit businesses.
    • Required ISDs to ensure that at least 90% of the children they serve are from families with incomes of 300% of poverty or less (up from 75%).
    • Requires GSRP providers to participate in the state’s quality improvement program—Great Start to Quality—with a quality rating of at least three out of five stars.
    • Requires GSRP providers to use a sliding fee tuition scale for children who do not meet the income eligibility requirements.
  • Conference Committee: The Conference Committee also expanded the GSRP by $65 million in Fiscal Year 2014, but reserved $25 million of the increase in a newly created GSRP Reserve fund that could only be tapped through legislative action if there is sufficient need for the preschool slots. The Conference Committee also:
    • Accepted the governor’s recommendation to raise the payment for a half-day slot to $3,625.
    • Agreed with the governor to eliminate the current competitive GSRP program that provides funds to private sector providers, and instead required ISDs to establish a local process to contract out at least 30% of their slots to public or non-profit community-based organizations, as well as for-profit businesses. The Conference Committee adopted House language ensuring that ISDs that can demonstrate that they are unable to contract out at least 30% of their slots to private sector providers are able to keep their full GSRP allocation.
    • Lowered the income eligibility cap for the GSRP program. ISDs would be required to ensure that at least 90% of children served are from families with incomes below 250% of poverty. In addition, Senate language is adopted that requires ISDs to rank children based on income from the lowest to the highest quintiles, and enroll all eligible children in the lowest quintile first before moving to the next quintile until slots are filled.
    • Agreed with the governor’s recommendation that all providers have quality ratings of at least three out of five stars through Great Start to Quality. The Conference Committee also adopted Senate language requiring that grantees that enroll children in blended programs of both GSRP and Head Start meet both GSRP and Head Start regulations and policies, with adherence to the highest standard in either program.
    • Agreed with the governor and requires GSRP providers to use a sliding fee tuition scale for children who do not meet the income eligibility requirements, lowering that income eligibility scale from 300% to 250% of poverty.

Early childhood block grant:

  • Governor: The governor recommends continuation funding of $10.9 million for the early childhood block grant to ISDs for parent education and support, allocating to each ISD 100% of its current allocation. Block grant funds are used in part to convene local Great Start Collaboratives and Parent Coalitions. Budget language requires the collaboratives and parent coalitions to convene work groups to serve as school readiness advisory committees to ensure local supports for children birth to age 8.
  • Conference Committee: The Conference Committee also provided continuation funding for the early childhood block grant, but included language requiring the Office of Great Start to determine a new distribution formula for the funds to ensure more equitable funding statewide.


  • Governor: The Governor included no new funding for bilingual education.
  • Conference Committee: The Conference Committee included $1.2 million for districts and ISDs for instructional programs for pupils with limited English-speaking ability. ISDs or school districts that allow students who do not legally resident in the U.S. to participate are not eligible for funding.


  • Governor: The governor maintained funding for adult education at $22 million. State funding for adult education fell from $80 million in 2001 to $22 million in the current fiscal year. At the same time, deep cuts were made in federal funding, making adult education less accessible for many.
  • Conference Committee: The Conference Committee agreed with the governor’s recommendation for continuation funding at $22 million, and added budget language requiring a study of the impact of allocating adult education funds on a competitive basis beginning in Fiscal Year 2015.

Welfare reality check

Twenty years ago, in April 1993, there were 232,795 Michigan households receiving cash assistance through the Aid to Families with Dependent Children program. Ten years later, in April 2003, there were 74,851 households receiving cash assistance through the Family Independence Program, which replaced AFDC in Michigan. This April, the FIP caseload dropped to 45,236—its lowest level ever.

With caseloads only one-fifth of what they were 20 years ago, why do myths persist that “welfare is out of control” and “welfare spending is making Michigan broke?” (more…)

An opportunity we can’t afford to waste

Last week’s Revenue Estimating Conference—the second meeting this year of the state’s best prognosticators on the ups and downs of Michigan’s economy and related tax revenues—brought some good news: Revenues are higher than expected.

Michigan, like other states around the country, has turned the corner following the national Great Recession, and revenues are inching up while unemployment slowly falls. The new revenue consensus by state fiscal experts is that Michigan will have an additional $702 million in combined revenues above earlier estimates for fiscal years 2013 and 2014—including a total of $579 million in state General Funds, and $123 million in the School Aid Fund.


The Detroit News: Michigan Republicans seek new limits on welfare aid

The Legislature’s Republican majority has redoubled its efforts to squeeze welfare spending by imposing new conditions on aid recipients.

Lawmakers want to field-test a drug screening program next year for welfare recipients, cut off cash aid to families whose children miss too much school and require recipients who won more than $600 in the Michigan Lottery during the past decade to reimburse the state up to half of their winnings. May 20, 2013 — The Detroit News

MLive: Jackson County sees fewer teen mothers, more unwed mothers and low-birthweight babies, report says

Jackson County has seen fewer teens become mothers and fewer preterm births, but has seen a jump in unwed mothers and low birth-weight babies, according to a new report.  May 9, 2013 — MLive

Oakland Press: Group pushes to restore Michigan Earned Income Tax Credit

With Michigan expecting a surplus of money heading into the final weeks of negotiating a new state budget, a coalition of groups say some of the money should go to restoring an income tax credit for the working poor.  May 15, 2013 — Oakland Press

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