130,000 Michigan workers have had wages stolen by employers

People across the political spectrum may differ in their ideas about how high the minimum wage should be and how often it should be increased, but there is a general consensus that if a minimum wage is put into law, it should be honored. Many people may be surprised, however, at the frequency with which such laws are flouted and workers are paid less than minimum wage.

A recent report from the Economic Policy Institute (EPI) finds that in Michigan and other states, minimum wage theft often occurs. From 2013 to 2015, approximately 130,000 Michigan workers experienced a minimum wage violation, with an average underpayment of $2.05 per hour (or $3,300 if for a full year). According to the report, minimum wage theft can take one or more of the following forms:

  • Overt minimum wage violations: Paying workers less than the legal minimum wage;
  • Overtime violations: Failing to pay nonexempt employees time-and-a-half for hours worked in excess of 40 hours per week;
  • Off-the-clock violations: Asking employees to work off-the-clock before or after their shifts;
  • Meal break violations: Denying workers their legal meal breaks;
  • Pay stub and illegal deductions: Taking illegal deductions from workers’ wages or not distributing employee pay stubs;
  • Tipped minimum wage violations: Confiscating tips from workers or failing to pay tipped workers the difference between their tips and the legal minimum wage (the tipped wage is also too low in general); or
  • Employee misclassification violations: Misclassifying employees as independent contractors to pay a wage lower than the legal minimum.

workers wages stolen by employersMore than 61% of Michigan’s workers experiencing minimum wage theft are women. Black and Hispanic workers are more likely to be victims than White workers or workers of other races, and Hispanic workers experience the most severe wage theft ($2.47 average hourly underpayment, compared with $2.11 for White workers and $1.72 for Black workers). Workers in the “food or drink service” industry are the most likely to be exploited, with 21.3% of such workers having experienced at least one minimum wage violation and workers in that industry making up 38.2% of the total number of Michigan workers experiencing violations. Nine out of 10 workers experiencing minimum wage theft are U.S.-born citizens.

The report estimates that nationally, unscrupulous employers are stealing around $15 billion annually from employees in minimum wage violations—an amount that exceeds the value of property crimes (robberies, burglaries, larceny and motor vehicle theft) committed in the United States each year, which in 2015 was $12.7 billion. One can surmise that in Michigan most cases of wage theft are not reported; the Michigan Department of Licensing and Regulatory Affairs says that each year it receives over 5,000 claims and collects more than $2.0 million in wages and fringe benefits owed to Michigan workers—clearly far below EPI’s estimate of the frequency and magnitude of wage theft occurrence.

Wage theft is costly to society. Federal and state income taxes, along with payroll taxes that support Social Security and Medicare, are not fully deducted at the levels they should be. Moreover, when lower-paid workers are not paid the entire earnings that they are due, they likely spend less at local businesses and pay less in state sales taxes than they otherwise would. The hardship caused to workers should itself be a reason for alarm and outrage at wage theft, but the costs that are passed on to businesses, entitlement programs and state budgets provide an additional reason to take this crime seriously.

The League’s Making Ends Meet report shows that it’s nearly impossible to get by on minimum wage in Michigan, and we support raising the minimum wage and instituting other policies to protect wages and support workers. If you believe that you have been the victim of a wage theft violation, you can file a complaint with the State of Michigan. More information on how to do that is available here.

— Peter Ruark

CB…oh no?!

Earlier this month, the House Republicans in Congress passed the American Health Care Act (AHCA) without an updated Congressional Budget Office (CBO) score. The CBO is an independent, nonpartisan office that analyzes the cost and impact of proposed federal legislation. Wednesday, in full nerd behavior I anxiously awaited the release of the new report.

While earlier versions of the AHCA revealed that over 24 million people would lose their health coverage, the effect of amendments that allowed for waivers for essential health benefits and pre-existing conditions was not yet known … until now. (Yes, 20 days after the bill was voted on by the House). What we know from the newest CBO score is that not much has changed. According to the report released yesterday:

CBO Uninsured Rate F 448 x 457

  • 23 million more people would be uninsured by 2026;
  • $8 billion dollars allocated for high-risk pools would not be sufficient to cover the large increases in premiums for high-cost enrollees;
  • Medicaid enrollment (including children, people with disabilities and the elderly) would decrease by 14 million people;
  • People needing maternity, substance abuse & mental health care would incur thousands of dollars in extra out-of-pocket costs in states who apply for a waiver.
  • Premiums would go up 20 percent more than current law in 2018.
  • In states that pursue waivers, the report says that average premiums would fall but “less healthy people would face extremely high premiums.”

Last week, our national partners at the Center on Budget and Policy Priorities released two reports on the effects the AHCA has on rural America and home- and community-based services. Both of these reports once again put on display the great harm this legislation would bring.

One of the things that really stood out to me was the huge effect the AHCA would have on our rural Michiganians. In Michigan, 113,800 people in rural communities gained coverage through Michigan’s Healthy Michigan Plan. That’s nearly 20 percent of the total enrollment of the program. Those suffering from opioid addiction (of which rural Michigan has been greatly affected) have been particularly helped by the expansion of Medicaid. The coverage gained allowed these people to access the necessary treatment and education they need to fight this growing epidemic.

Home- and community-based services are optional services that states are not required to provide but many individuals rely on as a way to receive care at home rather than in a nursing home. In 2013, 102,810 Michigan residents relied on these services. Restructuring Medicaid through per capita caps and the ultimate end of Medicaid expansion would result in a significant cost shift to states, so much that states could choose to no longer provide these important services to seniors and people and kids with disabilities.

There is no doubt that the Affordable Care Act needs to be improved and as the U.S. Senate moves forward in its process, we can hope that they look at this data to develop legislation that rejects caps on the Medicaid program, continues successful Medicaid expansion programs—including Michigan’s Healthy Michigan program, and increases the number of insured individuals.

We know you are being pulled in a lot of directions right now, but we still have a lot of work to do on the healthcare front and we need you to keep fighting. We have a helpful website set up with our coalition partners so you can contact your member of Congress, and all these reports to help keep you informed on the devastating impact of the AHCA. And they come in handy when you battle your friends on the intricacies of Medicaid financing … oh wait, I’m the only one that does that?

— Emily Schwarzkopf

Now is the time for investing, not cutting taxes

pdficon

May 2017
Rachel Richards, Legislative Coordinator

Budget Brief JPG USE THIS ONE

As Michigan legislators continue to debate state spending for the upcoming budget year, the Michigan League for Public Policy advocates for a budget that helps make Michigan the place where businesses, communities and residents thrive, including affordable, high-quality child care; good public schools and access to college; safe communities; and drivable roads.

The Michigan Senate and House have approved separate versions of the 2018 state budget. Differences between the two will now be worked out in joint House/Senate conference committees which will be convening in the coming weeks after expected revenues for the upcoming year were determined at the May gathering of economists and budget experts.

Both the House and Senate budgets fall short in several key areas, and more could be done. The House underspent the governor’s budget by about $270 million, and the Senate underspent the governor by about $540  million. Neither chamber spent all state General Fund dollars available that could be utilized to help enhance many important state programs instead saving them to be later allocated for tax relief, pension reform or “rainy days.”

The League opposes tax cuts that further reduce the state’s General Fund or School Aid Fund because they could derail the state’s long-term economic vitality. The evidence is clear that investments in education and infrastructure are directly connected to economic growth. Yet, when adjusted for inflation, ongoing General Fund revenues in the current year are lower than they were 50 years ago—increasing the state’s reliance on uncertain federal funds.

WHAT ABOUT REVENUES?

The final budget will be based on state revenue amounts, namely General Fund and School Aid Fund revenues, which were determined at the second Consensus Revenue Estimating Conference of the year. Revenue estimating conferences are held in January, which create the basis for the governor’s proposed budget, and May, which provide the basis for the final budget negotiated between the Legislature and the administration.

At the May revenue estimating conference, combined School Aid and General Fund revenues were slightly up as compared to January. While School Aid revenues are coming in above January estimates, General Fund revenues are not as strong as originally anticipated. When combining adjustments for both the current budget year and next year, lawmakers will have $293 million less in General Fund revenues but $340 million more in school aid fund revenues to craft the 2018 budget. While the state is not in a deficit, and we are anticipating revenues to grow year after year, lawmakers will not be able to provide the necessary investments to help Michigan’s businesses, residents and economy.

BB-Now is the time for investing graphic

NO WIGGLE ROOM FOR TAX CUTS

What is clear from the revenue estimating conference is that the state cannot afford a tax cut. Rolling back the state income tax would ultimately eliminate a funding stream worth about $10 billion and put a significant strain on the state’s ability to fund schools, roads, communities, healthcare, safety net programs and public safety. Even a small 0.1 percentage point reduction in the income tax rate—about $250 million—impacts Michigan’s budget, which includes growing costs. In return for increasingly underfunded schools and crumbling roads, Michigan taxpayers would receive a small annual benefit, which for many would be barely noticeable as it is spread over paychecks. A tax cut would benefit the wealthy most, while the rest of the state would have to deal with worsening roads, underfunded schools and fewer services. Lawmakers should avoid the tax cut gimmick.

Michigan has been down the tax-cut road before. General Fund revenues have not kept up with the rate of inflation; between budget year 2000 and anticipated 2019, inflation increased 73% while General Fund revenues are actually down about 1%.1 Tax policy changes, including Personal Property Tax reform and the recent transportation package, will further constrain General Fund revenue growth. These changes, along with the ongoing costs of business tax credits, will cost the state over $2 billion by budget year 2022. At the same time as the state has been cutting taxes, lawmakers have started looking at spending reforms that put the state’s long-term fiscal stability at risk without improving educational or other important state services. The state will be required to spend more as it has been provided with less, which simply leaves fewer and fewer quality services for Michigan residents. Further tax cuts, and greater spending necessities, would only impair the state’s ability to pay for its basic needs.

Instead, what the revenue estimating conference shows is Michigan’s need for adequate and stable revenue streams, and lawmakers should start looking at revenue enhancements:

  • Regularly review existing tax deductions, exemptions and credits and eliminate those no longer meeting their purposes;
  • Improve the fiscal note process so lawmakers have a clear understanding of the costs of future tax changes;
  • Review Michigan’s current business tax structure to ensure everyone who uses state resources pays their fair share;
  • Implement a graduated income tax; or
  • Diversify Michigan’s sales tax base to tax personal services.

WHAT SHOULD BE DONE INSTEAD?

In the light of lacking political will to raise revenue, lawmakers this budget season need to start looking at places to get the biggest impact—especially places where small state investments draw down significant federal funds. By providing a small amount of heating assistance, less than $7 million total, the state will leverage more than $300 million in federal funds, and 338,000 families in Michigan would receive an average of $76 more in food assistance each month. Additionally, expanding eligibility for child care assistance would help us meet state match requirements and ensure that we are not turning back federal dollars. Ultimately, investments above and beyond what have been included in either the House or Senate budgets are necessary to make sure Michigan becomes a state where all businesses, communities and residents succeed.2

ENDNOTES

  1. Elizabeth Pratt and David Zinn, Senate Fiscal Agency, General Fund/General Purpose Revenue Growth, State Notes, Spring 2017.
  2. For ways we can improve the state through the budget process, please see “Budget Briefs” produced by the League.

President Trump’s budget attacks anti-poverty programs, not poverty

For Immediate Release
May 23, 2017

Contact:
Karen Holcomb-Merrill
karenhm@mlpp.org
517-487-5436

Budget includes billions in appalling cuts to Medicaid, food assistance and other vital programs

LANSING—The Michigan League for Public Policy issued the following statement on President Donald Trump’s budget proposal released today. This statement can be attributed to Michigan League for Public Policy President & CEO Gilda Z. Jacobs.

“Time and again, our work shows that millions of people in Michigan are already walking a precarious tightrope of economic security and our state and federal governments should be doing more to help them. Yet today, President Trump’s proposed budget cuts a two-trillion dollar hole over 10 years in the safety net designed to catch them if they fall. The president’s budget calls for $600 billion in cuts to Medicaid over ten years, on top of massive cuts proposed in the House-passed repeal and replacement of the Affordable Care Act, severe changes to federal food assistance and significant reductions in services for people with disabilities and more.”

“The Trump budget is anti-poor people, not anti-poverty, as his proposals attack government support services that are working for Michigan families. At the same time, the President is proposing massive tax cuts largely for the wealthy and corporations that would likely cost several trillion dollars over the coming decade, if honestly measured. The budget relies on unrealistic economic assumptions and gimmicks to hide that the President’s tax cuts would dramatically increase deficits and debts.”

“Trump’s budget largely hurts the people who are struggling economically and have felt that their government hasn’t been listening to them or responsive to their needs. Medicaid and food assistance are just as vital in rural areas as they are in our cities, and these cuts will be felt just as badly by those residents.”

“As Congress prepares to advance its own budget plans, our delegation must not simply oppose the Trump budget. They must oppose any Congressional budget plan that follows the same architecture. They must oppose cuts to assistance that helps millions in Michigan achieve a basic living standard. They must oppose cuts to investments in long-run economic growth and basic public services. And, they must oppose massive tax cuts to the nation’s wealthiest.”

The League has been speaking out on potential federal budget cuts since President Trump’s “skinny budget” in March and has warned against changes to how states receive federal food assistance funding. The League also continues to advocate for the Healthy Michigan Plan and Medicaid expansion, and oppose the American Health Care Act and other potential funding changes to Medicaid.

###

The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

CREC yourself before you wreck yourself

“CREC yourself before you wreck yourself.” For the last 11 years, I have been trying to slip that joke into my work in the Legislature and now the League. And I had an epiphany yesterday that I might finally be able to do it…as long as I put my own name on it.

I also need to give it a proper explanation, as there’s probably a small sliver of people who know what CREC is AND get 90s Ice Cube lyrics. CREC stands for Consensus Revenue Estimating Conference. Held in January and May of every year, CREC is comprised of the directors of the House and Senate Fiscal Agencies and the state treasurer or budget director.

These fiscal experts analyze and report on economic indicators and state revenue projections. The consensus that is reached during the January conference becomes the revenue basis for the governor’s budget proposal, and the consensus reached during the May conference become the revenue basis for the budget bills passed by the Legislature.

The May Consensus Revenue Estimating Conference was earlier this week, and the news on state revenues is not great. But there is a silver lining, at least to me—it makes “wreck yourself” particularly relevant.

Since January, some Michigan legislators have been really hot on cutting the state income tax. This is a bad idea on its face, but especially in this current context. As League CEO Gilda Z. Jacobs said, “Given the fluctuations in state revenues, it was and continues to be foolhardy to consider tax cuts that would further jeopardize state services.”

if-only-i-had-checked-myselfSee! “CREC yourself before you wreck yourself” is not just a (bad) pun—it’s a valid point. The very intent of the Consensus Revenue Estimating Conference is for lawmakers to check themselves and incorporate these estimates into their state spending and budgets. And if they don’t take these forecasts seriously and make poor fiscal decisions, they stand to wreck our state budget, our state services and ultimately our state.

The Legislature needs to let talk of an income tax cut die. And when the House and Senate budget committees begin meeting soon, lawmakers should be sensible and strategic with our state dollars, investing in the programs and services that support our workers and families and get the most bang for our state bucks. For example, increasing state funding for child care and heating assistance can leverage hundreds of millions of dollars in federal funding.

The next few weeks are critical to the state budget and the priorities you and I value. To help you get involved, the League has put together a timeline and advocacy tips on the state budget. We also continue to produce budget briefs on some of the issues that are most important to us and to you: supporting education, including child care, K-12 schools and colleges and universities, protecting healthcare and the Healthy Michigan Plan, and reducing incarceration and providing adequate support for prisoners.

Whether you can work a rap reference in or not, I hope you will join the League in standing up for these budget priorities and urging lawmakers to make smart investments in our state’s future.

Alex Rossman

Reducing incarceration is good, but corrections spending must ensure adequate services

PDF

May 2017
Peter Ruark, Senior Policy Analyst

Budget Brief JPG USE THIS ONE

After peaking in 2006, Michigan’s prisoner population has decreased by nearly 20%, and prison-related costs have decreased and flattened during that time. The Department of Corrections budget is almost entirely funded with state general funds, and total spending is expected to remain at approximately $2 billion in 2018. Around $1.6 billion, or almost 80%, of the current budget for the Department of Corrections is used for custody, housing, healthcare, treatment programs and academic/vocational programs for prisoners.

PRISON OPERATIONS

BB Reducing incarceration is good graphic 1The governor funds prison operations at a total of approximately $1.2 billion, spread across the state’s 29 prison facilities and including regional support systems for those facilities.

  • The Senate cuts $41.6 million from prison operations, with the rationale that as prison populations are decreasing, prison spending should decrease as well.
  • The House agrees with the governor’s funding level.

The League encourages the state to do what it can to reduce the prison population and supports responsible adjustments in corrections funding that correspond to such long-term reductions. The League is concerned, however, that the Senate proposal cuts too much too soon, and that the magnitude of the cut could lead prisons to reduce important services such as healthcare, training and rehabilitation.

INCARCERATION ALTERNATIVES

Residential Alternative to Prison Program: In 2015, probation violators made up 28.3% of Michigan’s prison intake. The Wayne Residential Alternative to Prison program provides low-risk probation violators an opportunity to avoid going to prison and instead enter a residential program in which they receive occupational training and cognitive behavioral programming. The governor’s budget continues funding this program at $500,000, and adds $1.5 million to replicate it in 13 counties on the west side of the state.

  • The Senate does not include funding for either the Wayne County or Westside Residential Alternative to Prison programs.
  • The House concurs with the governor’s spending on both programs.

The League encourages efforts to help probation violators avoid prison and instead receive occupational skills training and rehabilitative services in a residential setting, and supports the continuation of the Wayne County program and the implementation of the Westside program.

OCCUPATIONAL TRAINING

Many incarcerated individuals do not have occupational skills that enable them to acquire gainful employment upon their release. Providing occupational training in the prisons increases the likelihood that returning residents will become employed and decreases their likelihood of recidivism and the need for public services and assistance.

Vocational Village: The governor maintains $2 million in state funding for the Vocational Village program for 200 prisoners in Jackson. The program trains prisoners in the skilled trades, enabling them to earn nationally recognized certificates before returning to their communities.

  • The Senate and House concur with the governor.

Goodwill Flip the Script: The governor eliminates funding for the Flip the Script program operated by Goodwill Industries in Wayne County. The program has been funded since the 2015 budget year, and provides education, job training and mentoring to 16- to 39-year-olds who have entered the criminal justice system—with the goal of keeping them out of the prison system.

  • The Senate budget doubles funding for this program to $3 million.
  • The House retains the current funding level of $1.5 million.

The League believes that occupational skills training programs are key to helping former prisoners reintegrate into mainstream society and attain gainful employment that helps their families become economically secure. The League supports funding for training programs that have been shown to work, and expansions of successful programs to reach more of the incarcerated population.

HEALTH-RELATED SERVICES

Between the 2002 and 2016 budget years, corrections spending overall increased at an average annual rate of 1%, while funding for prisoner healthcare and mental health services grew by nearly 3%.

Hepatitis C Treatment: The current budget has $14.9 million appropriated for drug treatment of prisoners with Hepatitis C. The governor has requested an additional $13.9 million from the current year Department of Health and Human Services (DHHS) budget to expand this program. Assuming the DHHS transfer goes through, the governor reduces the 2018 corrections appropriation for this program by $3.19 million, to $11.7 million, bringing the total funding for Hepatitis C treatment to $25.6 million.

  • The Senate reduces the 2018 corrections appropriation to $4.9 million, for a total of $18.8 million if the transfer is approved.
  • The House reduces the 2018 corrections appropriation to $6.7 million, for a total of $20.5 million if the transfer is approved.

Cancer Treatment: For 2018, the governor’s budget adds $2.3 million for oncology treatment for a total of $73.9 million, reflecting the fact that the number of inmates treated for cancer increased by 48% from 2015 to 2016, and that growth is expected to continue.

  • The Senate and House concur with the governor on cancer treatment funding.

Mental Health Services: The governor increases mental health services by $778,000 for the 2018 budget year, for a total of $61.2 million.

  • The Senate and House concur with the governor on mental health services funding.

Substance Abuse Testing and Treatment Services: The governor provides a very small increase of $5,700 to cover a net increase in costs for salary and wage increases, for a total of $21.6 million.

  • The Senate and House concur with the governor on substance abuse services funding.

The League supports adequate funding for healthcare, mental health and substance abuse services. Lack of adequate funding for these services endangers the well-being of incarcerated individuals and poses a greater burden on their families when they reenter mainstream society.

House and Senate healthcare budgets: A mixed bag for families and children

pdficon

May 2017
Emily Schwarzkopf, Policy Analyst

Budget Brief JPG USE THIS ONEWith much attention being paid to healthcare at the national level as Congress and President Donald Trump continue to debate the fate of the Affordable Care Act, it is important to continue to focus on investments in healthcare right here in Michigan as final decisions are being made on the 2018 state budget.

HEALTHCARE FOR 650,000 MICHIGANIANS

Healthy Michigan Plan: The Legislature has continued to fund the highly successful Healthy Michigan Plan which went into effect in 2014. Currently, over 650,000 Michiganians receive robust coverage and services through this program. The continuation of the Healthy Michigan Plan is critical for residents and the state’s economy. Sixty percent of Healthy Michigan enrollees report that their ability to access primary care was better than prior to being enrolled, and 70% stated that they were more likely to contact a primary care provider before going to the emergency room. Eighty-six percent of enrollees have reported that their ability to pay their medical bills has improved since being enrolled in the program.

BB 2018 healthcare budget graphic 1For 2018, the governor has recommended continued funding through federal funds and required state matching funds to support the program.

  • The Senate and House agree to continue funding the program with federal and state funds.

The League supports adequate funding to support the Healthy Michigan Plan in the 2017-2018 budget year and beyond.

BEHAVIORAL HEALTH

Direct Care Worker Wages: The governor recommended funding that would result in wage increases for direct care workers who provide services through the state’s community mental health services. For 2018, the governor requested a total of $45 million to provide a 50-cent per-hour increase. The request for this increase follows a report that highlighted the challenges of recruiting and retaining direct care staff. The report found that wages for direct care staff were uncompetitive compared to entry-level wages in other similar occupations.

  • The Senate recommends the 50-cent increase, but delays its implementation by six months.
  • The House recommends a per-hour increase of 25 cents.

Behavioral Health Integration: One of the hotly contested issues in the Department of Health and Human Services budget continues to revolve around budget language (Section 298) that was placed in the current-year budget calling for the integration of behavioral and physical health. Last year, a workgroup was created to discuss and look for ways to improve the coordination of physical and behavioral health. The workgroup was tasked with submitting two reports to the Legislature that outlined policy recommendations, recommendations for financing models and benchmarks for implementation. The final report was not due until after the governor’s 2018 budget proposal was released, so the governor recommended continued conversations on how to coordinate services while maintaining the core values adopted by the workgroup.

  • The Senate includes additional boilerplate (Section 234) along with making changes to boilerplate Section 298. The Senate recommendation calls for continued improvement in the system but also an unspecified number of pilot projects. There is legislative intent that calls for a move toward a single contracting model by September 30, 2020.
  • The House includes authorization for three pilot studies to test financial integration between Medicaid health maintenance organizations and behavioral health providers. The language requires the department to provide a report on the timetable and plan for full integration.

The League continues to monitor the progress and conversations regarding integration of physical and behavioral health services. As participants in the 298 workgroup, it is our belief that any action should continue to follow the core values and benchmarks as established. It is also the League’s position that we continue to work to provide competitive wages for all individuals, especially those providing critical services to our state’s most vulnerable residents.

PUBLIC HEALTH

Flint Water Crisis: The Legislature has been providing funding to address the health and safety concerns as a result of the Flint water crisis. For budget year 2018, the governor recommended $13.4 million total for food and nutrition services, health services at child and adolescent health centers, water filter cartridges and replacements, and other services.

  • The Senate supports the governor’s recommendation and additionally includes funding for the double-up food bucks program and additional water testing by the Genesee County Health Department.
  • The House agrees with the governor to continue to support the ongoing crisis response and recovery in Flint.

Lead Poisoning Elimination Recommendations: The Childhood Lead Poisoning Elimination Board, created in 2016, reported 80 recommendations. The governor included $2 million to begin implementation of these recommendations.

  • The Senate reduces the funding for implementation of these recommendations to $100—a placeholder to ensure continued discussions in the joint House/Senate conference committee.
  • The House allocates $500,000 in funding to begin implementation of the board’s recommendations.

The League is supportive of additional funding to address the concerns surrounding the Flint water crisis and continues to advocate for increased investments in our cities and policy changes that will ensure this does not happen in any other Michigan city.

SERVICES FOR SENIORS

In-Home Services: With our aging population, proper investments are needed to ensure that we continue to care for them. In order to address waiting lists, the governor proposed an increase of $2.1 million for in-home services.

  • The Senate agrees with the governor and increases the funding for in-home services to eliminate waiting lists.
  • The House recommendation does include an increase, but totaling only $1 million.

Meals on Wheels: With potential threats to grants that fund Meals on Wheels programs coming from the recent release of the federal administration’s “skinny” budget, it is important that as a state, we support efforts to provide meals to seniors. In order to address the growing waiting list, the governor asked for $1.5 million.

  • The Senate supports the governor’s inclusion of $1.5 million for senior nutrition services.
  • The House reduces the amount of funding for this program, only providing $750,000 to support Meals on Wheels.

The League is supportive of additional funding for senior services to ensure that our aging population is able to live out their lives in the comfort of their own homes.

Lawmakers should abandon tax cut, uphold strategic investments in light of downward revenue estimates

For Immediate Release
May 17, 2017

Contact:
Alex Rossman
arossman@mlpp.org
517.487.5436

State budget funding for child care and heating assistance will bring in vital federal dollars

LANSING—The Michigan League for Public Policy issued the following statement on the revenue projections being announced at today’s Consensus Revenue Estimating Conference. It can be attributed to Michigan League for Public Policy President & CEO Gilda Z. Jacobs.

“Today’s downward revenue estimates should tell Michigan lawmakers two things. One, given the fluctuations in state revenues, it was and continues to be foolhardy to consider tax cuts that would further jeopardize state services. The state’s General Fund has not kept pace with inflation, and Michigan now has the second highest reliance in the nation on federal funds for basic services. Deep cuts sure to come in the federal budget—along with existing demands on state general funds—could put Michigan in a very precarious fiscal position and threaten the state’s ability to support the services and infrastructure needed to keep the economy growing. Lawmakers should be focused on creating a tax system that is fair and able to withstand economic downturns or swings in federal policy. We simply can’t afford to cut taxes in a time of unpredictable revenues.

“Two, in the context of lower than expected revenues, legislators must be very strategic when allocating state revenues to make sure that state spending priorities match the needs of Michigan’s residents. This includes investing funds in the current state budget in child care and heating assistance to leverage hundreds of millions in federal dollars to support working parents and put food on the tables of kids, seniors and people with disabilities through ‘heat and eat.’”

For more information, see the League’s budget briefs on child care and education and “heat and eat” and human services.

###

The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

Michigan must invest further in postsecondary education and financial aid to improve economic security for all

PDF  

May 2017
Peter Ruark, Senior Policy Analyst

Budget Brief JPG USE THIS ONEMichigan’s economy and job market continue to demand skilled workers with a postsecondary credential. Yet today’s university students face increasingly high tuition as huge cuts in state funding require universities to meet operational costs by charging students more, in turn producing an unprecedented level of student loan debt. At the same time, Michigan’s state-funded financial aid hasn’t kept up with tuition costs, and older students currently cannot get any state financial aid at all.

Michigan’s budget over the past several years has made significant investments in financial aid for “traditional” college students (age 18-24 and not raising families), but has neglected financial aid for the growing number of students who are “nontraditional” and make up the majority at community colleges. Michigan has also taken important steps to keep already high university tuition from rising further too quickly, but has not made investments in restoring funding to universities that would enable them to actually reduce tuition. Finally, Michigan continues to fund postsecondary institutions and financial aid from restricted sources that are primarily intended for other purposes and populations in order to free up state General Fund dollars.

FINANCIAL AIDBB postsecondary ed budget graphic 1

Part-Time Independent Student Grant: Currently, there is no state financial aid for students who have been out of high school more than 10 years. The Part-Time Independent Student Grant helps this population, but has not been funded since the 2009-10 school year. The governor’s budget provides $2 million for the Part-Time Independent Student Grant, with added language that it can only be used at community colleges.

  • The Senate agrees with the governor’s appropriation of $2 million to reinstate the grant. It adds the restriction that only students who have completed at least 15 credit hours at a community college are eligible, eliminates the grant limit of $600 and raises the two-year limit on receiving grants to three years.
  • The House does not include funding for the grant.

The League supports reinstating the Part-Time Independent Student Grant and eliminating the $600 limit. Because tuition costs even at lower-priced community colleges can sometimes be prohibitive for students with very low incomes, the League is concerned that making students with fewer than 15 credit hours ineligible will not encourage students to go to college for the first time or facilitate their success. However, making the grant available even with this added restriction is far better than the current absence of a grant for this population. Given that the two grants previously available for this population were funded at a total of more than $4.7 million during the most recent years prior to their elimination, we encourage an appropriation of $4.7 million to meet the true need for financial assistance of older students and workers.

Tuition Incentive Program: The Tuition Incentive Program (TIP) serves students from households that are eligible for Medicaid, and is Michigan’s only needs-based student aid grant in which eligibility is based on household income rather than estimated family contribution. The governor recommends $5.3 million in new federal Temporary Assistance for Needy Families (TANF) funding for the grant, bringing the total funding for the program to $58.3 million (a 10% increase). This is expected to support 18,500 students in the upcoming school year. In addition, the governor replaces $4.7 million in General Fund funding with TANF funding, making TIP 100% funded by TANF.

  • The Senate and House both concur with the governor’s spending level and the decision to make TIP fully funded by TANF.

The League believes that having a financial aid grant that specifically targets students from families with very low incomes is important, and supports the increase for this grant to keep up with increased need.

Michigan Competitive Scholarship and Michigan Tuition Grant: The Michigan Competitive Scholarship is currently 100% TANF-funded and the Michigan Tuition Grant 90% TANF-funded, but all new funding recommended by the governor comes from the General Fund. For the Competitive Scholarship, a merit- and need-based grant based on ACT/SAT score and estimated family contribution, the governor recommends an increase of $8 million from the General Fund. The governor also recommends an increase of $3 million from the General Fund for the Tuition Grant, which helps students attend private not-for-profit institutions and is based on estimated family contribution.

  • The Senate concurs with the governor’s recommended General Fund increases for both grants.
  • The House increases each of the two grants by only half the amount recommended by the governor, $4 million for the Competitive Scholarship and $1.5 million for the Tuition Grant, both using General Fund dollars.

Because tuition costs can be prohibitive for students from middle-income families as well as those who are financially struggling, the League supports keeping these two grant programs strong and accessible. The League questions the use of federal TANF funds to pay for these grants, however, because while technically acceptable to give middle- and upper middle-class students the grants under the purpose of “preventing out-of-wedlock pregnancies,” the League believes TANF funds should be targeted primarily to families near or below the poverty level and that the state should use General Fund dollars or other sources to pay for these grants.

TUITION RESTRAINT

The huge tuition increases during the past two decades, along with decreased regulation of student loans, have made postsecondary education less affordable and resulted in greater student debt. Tuition restraint is a cap on the amount a university may increase its tuition “sticker price” in order to receive full funding from the state, which in turn helps keep net tuition (the cost after financial aid, scholarships and family assistance are applied) from increasing significantly. Because community colleges remain affordable, their funding is not subject to tuition restraint requirements. The governor recommends lowering the tuition restraint cap from 4.2% to 3.8% or $475 per student, whichever is greater. While the lower cap is welcome, it remains higher than the cap of 3.2% in the 2015 and 2016 budget years. Adding a numerical cap as well as a percentage cap helps provide fairness to universities that have kept tuition lower than their peer universities over the years and who should not be “punished for having done the right thing” when they need to raise tuition.

  • The Senate and House agree with the governor’s tuition restraint cap of 3.8% or $475, whichever is greater.

Because tuition has risen at such a fast pace over the past 15 years, many students have either been discouraged from attending college, have to work more hours while in college (hence jeopardizing their academic performance), or have to take out loans which often carry high interest and result in a high amount of debt. The League supports tuition restraint as one way to address this problem; however, the League would like to see Michigan go further and restore the funding to universities that has been cut over the years, coupling some of the new funding with tuition reduction requirements rather than just tuition restraint.

USE OF SCHOOL AID FUND FOR POSTSECONDARY EDUCATION

The primary purpose of the School Aid Fund (SAF) is to fund K-12 public schools in Michigan. The governor’s 2018 budget continues the practice started in the 2000s, and which became regular practice in the 2012 budget year, of using a portion of SAF dollars to fund Michigan’s universities and community colleges. What is significant in the current proposed budget is that it appropriates nearly all total state funding for community colleges from the School Aid Fund. The governor’s budget uses $235.6 million in SAF dollars for universities and $395.1 million in SAF dollars for community colleges, thus taking a record amount of $630.8 million out of the funding meant for K-12 schools and using it for postsecondary education.

  • The Senate and House concur with the governor’s postsecondary appropriations out of the School Aid Fund.

The League believes that K-12 public schools, community colleges and universities should all receive adequate funding, but objects to the annual practice of using School Aid Fund money to fund postsecondary education. Every dollar going to postsecondary institutions is a dollar not going to K-12 schools, setting up a zero-sum game among equally worthy public educational institutions. When the dollars in the SAF exceed expected levels, the “surplus” should go toward increasing per-pupil funding or other funding that directly benefits K-12 students and the schools that serve them.

BB postsecondary ed budget graphic 2

Republican health bill would hit rural Michiganians hard

For Immediate Release
May 16, 2017

Contact:
Alex Rossman
arossman@mlpp.org
517.487.5436

U.S. Senate should oppose any bill that ends the Healthy Michigan Plan, caps or cuts Medicaid or makes coverage less affordable

LANSING—The U.S. House Republican health bill would be particularly harmful to Michigan’s rural communities, according to a new report released today by the Washington, DC-based Center on Budget and Policy Priorities. With debate now underway in the Senate, Senators Debbie Stabenow and Gary Peters–longstanding champions for affordable healthcare—can work with their colleagues to prevent the bill’s harmful cuts and other changes from ultimately becoming law. The Michigan League for Public Policy strongly opposed the American Health Care Act and continues to work with state and national partners to advocate for the protection of the Affordable Care Act and the Healthy Michigan Plan and the affordable, quality healthcare they provide for millions of state residents.

“Despite the economic and health struggles of our state’s rural residents, nearly all of Michigan’s congressional delegation that represents rural communities surprisingly voted against the interests and needs of their constituents with their passage of the American Health Care Act,” said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy. “Medicaid and the Healthy Michigan Plan are vital lifelines to quality healthcare for rural Michiganians, and we hope the Senate will stand up for these programs and reject the House bill that would decimate coverage for these residents and people around the state.”

The House bill would effectively end the Affordable Care Act’s (ACA) Medicaid expansion, known as the Healthy Michigan Plan in Michigan, under which 113,800 rural Michiganians have gained coverage. This is the fourth-highest number of rural enrollees of all states that have expanded Medicaid. Roughly 1 in 5 Michigan residents who have gained coverage under the expansion live in rural communities. The Healthy Michigan Plan has also expanded access to substance use disorder treatment at a time when many of Michigan’s rural communities have been ravaged by the opioid crisis. The League has been a strong supporter of the Healthy Michigan Plan in the state budget process as well as the federal healthcare debate.

The House-passed bill would roll back progress in coverage and harm rural providers by effectively ending the Medicaid expansion. Beginning in 2020, states would receive only the regular federal Medicaid matching rate for any new enrollees under the expansion instead of the permanent expansion matching rate of 90 percent. This would force states to pay 2.8 to 5 times more than under current law for each new enrollee. In seven states including Michigan, these higher costs would automatically trigger immediate or eventual termination of the Medicaid expansion, with no action by state policymakers necessary. Laws in these states either explicitly require the expansion to end if the federal matching rate falls or require the state to prevent an increase in state Medicaid costs.

The bill also would dramatically cut and radically restructure the entire Medicaid program through a per capita cap or block grant (see League fact sheet), putting coverage for seniors, people with disabilities, and families with children at risk across the state. In combination with ending expansion, the bill’s per capita cap would shift $17 billion in costs to Michigan over the next decade. Medicaid plays a particularly important role in Michigan’s rural communities, and these cuts would threaten access to care for rural residents, including by harming Michigan’s rural hospitals.

In addition, the bill would replace the ACA’s premium tax credit and cost-sharing protections with an inadequate tax credit that would make coverage unaffordable for many of Michigan’s rural residents. Nearly 1 in 4 Michiganians who buy their coverage in the ACA marketplace are from rural communities. The House bill would raise total costs for State marketplace consumers by $1,519, on average.

“The healthcare bill Congress sent to the Senate reduces coverage and raises costs for rural and urban residents alike, and we need to keep fighting to make sure this bill or any similar proposals stop dead in their tracks,” Jacobs said. “To that end, we will keep working to remind federal and state lawmakers of the human impact of their decisions on healthcare.”

The House bill also removes key protections that the ACA put in place nationwide to let people with pre-existing conditions get affordable coverage that provides the health services they need. These protections are especially critical to people in rural communities, who are more likely to have disabilities or die as a result of a chronic disease.

To learn more about this report, please visit: http://www.cbpp.org/research/health/house-passed-bill-would-devastate-health-care-in-rural-america.

The League is part of the Protect MI Care coalition, an organization of consumer, healthcare and insurer groups in the state who are working together to protect the ACA, the Healthy Michigan Plan and the care they provide. More information on the coalition is available at www.protectmicare.com.

###

The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.

Next Page »