2016 Human Services Budget Continues Disinvestment in Families and Children

 

The final agreement on the 2016 budget for human services within the Department of Health and Human Services perpetuates the ongoing decline in investments in low-income children and families, the unemployed and adults with disabilities.

Children are living in deeper poverty in Michigan in part because of policy changes that reduced eligibility for income assistance programs, including stringent lifetime caps on assistance and the elimination of income support for an entire family due to the truancy of a single child. Fewer families can receive food assistance and food assistance benefits have been reduced—in part the result of a state asset test.

The 2016 budget approved by lawmakers fails to reverse those policies, and the number of families and children receiving state assistance is expected to continue to decline.

The final budget provides total funding for human services in 2016 of $5.5 billion, a reduction of $207 million (3.6%) over current-year spending, and $220 million below the governor’s recommended budget. Nearly 80% of all human services funds are from the federal government. Total state general funds available for 2016 are $942.2 million, down nearly $39 million or 4% from the current budget year.

The single largest program in the DHS budget is the federally-funded Food Assistance Program, which accounts for 45% of total departmental spending. Other major programs include children’s services (20%), administration and field operations (18%), and other public assistance programs (8%).

Income Assistance

The Family Independence Program (FIP) provides minimal income assistance to low-income households with dependent children. To be eligible for FIP, an average family of three must have income below $9,780 annually and financial assets of less than $3,000. The maximum benefit for a family of three is $492 per month.

Total FIP spending and eligible families: The governor recommended a 6% cut from current-year FIP spending (from $146.6 to $138 million), partly due to the continued and rapid decline in the number of families eligible, which the governor projects will be 31,400 next year. Policy changes made in 2011 resulted in dramatic decreases in FIP cases, despite continued high poverty rates, particularly among children. Between 2007 and the current budget year, spending on income assistance declined by 66%, and the number of families receiving income assistance is at its lowest levels since the Kennedy Administration.

    • The House and Senate agreed with the governor’s estimated caseloads and related FIP spending.
    • Final Budget: The Legislature reduced funding for the FIP program by $25.4 million based on new estimates on the number of families that will be eligible in budget year 2016 agreed to at the May Revenue Estimating Conference.

Out-stationed eligibility specialists: The governor recommended $20.6 million in private contributions and federal funding for additional workers that would be placed in health clinics, hospitals, community agencies and with private employers, rather than in DHS offices. The workers would determine eligibility for DHS services and help individuals find community services.

    • The House and Senate agreed with the governor’s recommendation.
    • Final Budget: The Legislature adopted the governor’s recommendation.

Elimination of Extended-FIP: The governor proposed to eliminate the Extended-FIP payment that gives households who are no longer eligible for income assistance due to increased earnings a nominal $10 per month in assistance for six months after they leave the program, ostensibly to help them access other state services as well as allowing the state to continue counting the households in its federally mandated work participation rate. This minimal assistance has, however, counted against the state’s more stringent lifetime limits, hurting children in the long run.

    • The House and Senate agreed with the governor.
    • Final Budget: The Legislature adopted the governor’s recommendation and eliminated the Extended-FIP program.

Children’s clothing allowance: The governor included continued funding of $2.88 million for the annual children’s school clothing allowance. The assistance is available only for children who are living with grandparents and others who are not eligible for assistance.

    • House: The House cut the FIP clothing allowance by $200,000 and retained current eligibility for the assistance.
    • Senate: The Senate agreed with the governor.
    • Final Budget: The Legislature adopted the Senate and governor’s recommendation for continued funding and eligibility for the FIP children’s clothing allowance.

Drug testing for FIP recipients: The Senate included $275,000 for a pilot program to implement a suspicion-based drug testing pilot program in three counties, reflecting legislation passed in 2014. (PA 394 and 395 of 2014). The governor and the House did not include funding for drug testing pilots.

    • Final Budget: The conference committee provided $300,000 for a drug testing program for FIP recipients, an increase of $25,000 over the House recommendation.

DHS office closures: The governor recommended closing 11 DHS offices throughout the state, including northern and southeastern Michigan, for a total savings of $5.3 million ($2.2 million in state General Fund). Funds would be saved in part by sharing office space with up to 28 public, private or nonprofit partners. The governor’s recommendation was based on a model in Florida where workers are housed with local partners or satellite offices, or telecommute.

    • House: The House agreed with the governor.
    • Senate: The Senate assumed total savings from the office closures and consolidations of $6.1 million ($2.5 million in state General Fund).
    • Final Budget: The Legislature reduced office closures and related savings for a total cut of $3.2 million ($1.3 million in state General Fund).

Enhanced employment and training services: The governor included $800,000 to expand an employment and training program for FIP recipients with significant barriers to employment. Services are provided through Michigan Works! Agencies, and the goal is to expand the program statewide after the pilots are evaluated.

    • The House and Senate rejected the expansion.
    • Final Budget: The Legislature adopted the governor’s proposed increase of $800,000 for specialized employment and training services programs.

Food Assistance

The Food Assistance Program (formerly the Food Stamp Program) is completely federally funded, with an average monthly benefit for a two-person household of $245. More than 70% of FAP recipients receive no other cash assistance from the state. The number receiving food assistance began to fall in Michigan in 2011, the same year that the state imposed a new asset limit. Between budget years 2011 and 2015, cases dropped by 13%.

Beginning Oct. 1, 2014, food assistance recipients no longer receive $1 in federal energy assistance (LIHEAP) that previously helped recipients claim the maximum utility deduction, which subsequently increased their food assistance. The 2014 federal Farm Bill increased the required amount of LIHEAP funding for eligibility purposes from $1 to $20 (often referred to as the “Heat and Eat” policy), which essentially left states with the option of increasing the minimum energy assistance benefit to $20, or accepting food assistance cuts, along with the associated loss of federal funds. Michigan chose the latter.

Total food assistance spending and eligible recipients: The governor recommended total funding of $2.5 billion for the federally-funded food assistance program, an increase of $13.8 million over current-year spending. The governor projects that 847,700 families and individuals will need help with food in 2016.

    • The House and Senate agreed with the governor.
    • Final Budget: The Legislature cut the Food Assistance Program by $193 million based on new, lower caseload projections.

“Heat and Eat” benefit reductions: The governor recommended no change in the policy that rejects additional federally funded food assistance because of a needed increase in the minimum energy assistance benefit.

    • The House and Senate agreed with the governor.
    • Final Budget: The Legislature continued the current policy that has resulted in cuts in food assistance benefits for many low-income Michigan residents.

Asset test for food assistance: The governor recommended no change in the asset test that was imposed on individuals applying for federal food assistance, and which is a state option.

    • The House and Senate agreed with the governor.
    • Final Budget: The Legislature continued current policies that impose an asset test on individuals and families applying for federal food assistance.

State Emergency Relief

In the current budget year, $36.3 million is provided for emergency relief for low-income families. Included are: (1) $11.5 million for local DHS offices to provide emergency services such as housing payments or repairs, rent or moving expenses, or non-energy utility assistance; (2) $15.7 million for the Salvation Army to provide services to the homeless; (3) $4.3 million for indigent burials; (4) $3 million for multicultural contract; and (4) $1.8 million for the Food Bank Council. Over the last decade, funding for the State Emergency Relief program has ranged from $39.2 million in 2006 to a low of $33 million in 2014.

Local DHS office emergency relief funds: The governor included continuation funding of $11.5 million for local emergency assistance.

    • House: The House reduced funding by $500,000 in state funds, based on Executive Order reductions taken to balance the budget this year.
    • Senate: The Senate cut $1.2 million in state and federal funds, also reflecting current-year cuts.
    • Final Budget: The Legislature adopted the Senate cut of $1.2 million for local emergency assistance.

Programs for the homeless: The governor provides continuation funding of $15.7 million for Salvation Army services for the homeless.

    • House: The House reduced funding by $1 million.
    • Senate: The Senate reduced funding by $300,000.
    • Final Budget: The Legislature retained current-year funding for programs for the homeless.

Multicultural programs: The governor retains current-year funding of $3 million for multicultural programs.

    • House: The House reduced funding by $250,000, funds that were primarily used for services for refugees.
    • Senate: The Senate agreed with the governor.
    • Final Budget: The Legislature agreed with the governor and retained current-year funding for multicultural programs.

State Disability Assistance

The State Disability Assistance program, a completely state-funded program, provides cash assistance to adults with disabilities who are permanently or temporarily unable to work, and who have annual incomes of less than $5,400 and under $3,000 in assets. The average monthly payment for a single person is $225 per month, and the average length of time on SDA is approximately one year.

Between 2011 and 2012, the number of people receiving state disability assistance fell by 14%, and has steadily declined since. There was a 35% drop in the number receiving assistance between budget years 2011 and 2015.

Total funding for the State Disability Assistance program: The governor recommended a small increase in funding for the State Disability Assistance program—up from $14.4 million this year to $14.89 million in 2016. The governor assumes that 5,800 individuals will receive assistance.

    • House: The House agreed with the governor on the number of families receiving assistance, but reduced state funds for the program by $4.5 million, leaving total funding at $9.9 million.
    • Senate: The Senate agreed with the governor.
    • Final Budget: The Legislature adopted the governor’s and Senate’s recommendation, rejecting the House cut of $4.5 million in State Disability Assistance.

Energy Assistance

Michigan uses federal Low-Income Home Energy Assistance Program (LIHEAP) block grant funding for four programs: the Home Heating Credit, State Emergency Relief, the new Michigan Energy Assistance Program, and weatherization.

Federal energy assistance funding: The governor’s budget included a continuation of current-year spending of $175 million in federal funds for energy assistance.

    • The House and Senate agree with the governor.
    • Final Budget: The Legislature adopted continuation funding of $175 million in federal energy assistance.

Michigan Energy Assistance Program: The governor recommended continuation funding of $50 million for the Michigan Energy Assistance Program, which was created in response to a state law (P.A. 615 of 2012) requiring the DHS to establish a new consolidated energy program with a single, simplified application.

    • The House and Senate agree with the governor.
    • Final Budget: The Legislature included continuation funding of $50 million for the Michigan Energy Assistance Program.

Child Welfare Services

Michigan’s child welfare system includes protective services, foster care, adoption, and family preservation and prevention services. To comply with requirements related to a lawsuit against the state for its failure to protect children, the state has been required to increase child welfare funding for staffing, training, and other programs. A shortfall is the lack of a mandate to adequately fund family preservation and prevention services.

Foster Care Payments: The governor recommended a small reduction in spending for foster care payments with an estimate of 6,400 cases in 2016 at an annual cost per case of $27,085. The governor’s budget also reduces the private agency administrative rate from $40 to $37 per day ($5.1 million), and rescinds a current-year increase in payments to private residential providers ($3.7 million).

    • The House and Senate retained current-year increases for private agency administrative rates and private residential facilities.
    • Final Budget: The Legislature retained current-year private agency rate increases.

Child Care Fund: The governor recommended a decrease of nearly 3% for the Child Care Fund (from $182.2 to $177.3 million). The Child Care Fund reimburses counties for 50% of their costs related to the care and treatment of children who are wards of the court, including out-of-home and in-home services. The governor eliminated a county “hold harmless” provision that required DHS to pay 100% of the private agency administrative rate for new cases only, and provided funds to transfer cases back to the public sector.

    • House: The House provides $181.4 for the Child Care Fund, and continued the current-year hold harmless funding.
    • Senate: The Senate provides $180.6 for the Child Care Fund and retained the hold harmless funding.
    • Final Budget: The Legislature included $177.1 million for the Child Care Fund and retained the hold harmless funding.

Adoption: The governor recommended a 3% decrease from the initial current year funding for adoption subsidies (from $247.7 to $239.9 million). Subsidies are provided to families who are adopting children with special needs, and include both cash and medical assistance. The number of families receiving adoption subsidies has been relatively stable since budget year 2011 at between 26,000 and 27,000.

The governor’s budget included savings of $6.9 million ($6.5 million state funds) in the adoption subsidy by restricting eligibility for a supplemental payment available to parents whose children had medical needs that existed before an adoption but were not identified until after the adoption was completed (a reduction already taken this year through the governor’s budget-cutting Executive Order). The governor left $1 million for the supplemental adoption subsidy payment.

    • House: The House eliminated the supplemental adoption subsidy payment, for a total cut of $7.9 million.
    • Senate: The Senate reduced funding for the payment by $7.3 million assuming only 100 families would be eligible in 2016.
    • Final Budget: The Legislature included a total of $229.3 million for the adoption subsidy payments, and eliminated funding for the supplemental adoption subsidy payment.

Youth in Transition: The governor recommended $15 million for Youth in Transition programs, a slight decrease from initial current-year funding. The Youth in Transition program assists 14- to 20-year-olds that are currently or were previously in foster care. Funds are used to provide independent living services, housing assistance, education or employment support, mentoring, and other assistance

to meet basic needs. Youth in Transition dollars also fund intervention programs for runaway or homeless youths.

    • Both the House and the Senate approved small cuts in funding for the Youth in Transition program.
    • Final Budget: The Legislature included $15 million for the Youth in Transition program.

Prevention Services: The governor’s budget provided continuation funding for Strong Families/Safe Children ($12.35 million), as well as $38.86 million for family preservation programs, including Families First ($16.98 million), Child Protection and Permanency ($12.89 million), and Family Reunification ($6.49 million). Funding for prevention services has been declining while the number of children found to be abused or neglected has been rising.

    • House: The House cut funding for prevention services, including $500,000 from Families First, $500,000 from the Child Protection and Permanency program, and $250,000 for the Family Reunification program.
    • Senate: The Senate agreed with the governor.
    • Final Budget: The Legislature adopted the governor’s and Senate’s recommendation for continuation funding.

Juvenile Justice Services

The governor recommended slightly decreased funding for the state’s three DHS operated juvenile justice facilities: W.J. Maxey Training School, Bay Pines Center, and Shawono Center. Funding previously provided to expand in-home community care programs to rural areas was reduced by 60%, from $1 million to $400,000 (continuing a reduction contained in the governor’s budget-cutting Executive Order).

    • House: The House cut an additional $400,000 from the W.J. Maxey Training School, and agreed with the governor on the continued reduction in in-home community care programs.
    • Senate: The Senate closed the W.J. Maxey Training School for a savings of $7.5 million. Funds are retained ($2.8 million) to close the facility and transfer the 40 youths housed there to new facilities. The Senate agreed with the governor on the continued reduction of in-home community care programs.
    • Final Budget: The Legislature closed the W.J. Maxey Training School, and reduced funding for in-home community care programs.