Reports


Support Clean Energy in Michigan

 

Reducing air pollution will make Michigan cleaner and healthier

Michigan gets more than half of its electricity from burning coal. The dangerous pollution from coal-fired power plants is associated with asthma, cancer, and heart and lung disease. According to a 2011 study by the Michigan Environmental Council, 180 premature deaths, 680,000 cases of asthma exasperations and 140 asthma emergency room visits are attributed to pollution from burning coal in Michigan every year.

Clean energy will help Michigan’s most vulnerable populations

People of color and those who are economically vulnerable are most likely to suffer these health complications. This is because the coal-fired power plants tend to be in neighborhoods of low- to moderateincome people, affecting those populations disproportionately. By transitioning from coal to clean energy, we can reduce pollution and improve the health of Michiganians across the state.

Asthma hospitalization rates are significantly higher for African Americans

 

Labor Day in Michigan Report: Pay Falls for Low-Wage Men yet Women Still Far Behind

 

Raising the minimum wage, strengthening workplace policies, restoring the Earned Income Tax Credit, increasing funding for education and encouraging unionization would help correct dramatic wage losses in Michigan since 1979. Wages in the state have dropped over the past 35 years, particularly for low- and middle-wage men. Over this same period of time, women’s wages, participation in the labor force and educational attainment have increased somewhat. Yet, gender-based wage disparities persist. The labor and economic policies suggested above would boost the pay of Michigan workers of all genders, and help close the gender wage gap.

Wage Trends and the Gender Wage Gap

For a number of years in the mid-twentieth century, wages rose in tandem with productivity. Between 1949 and 1979, productivity (a measure of the value of goods and services that is produced, on average, per each hour of work) increased 108.1% nationwide, while wages for non-supervisory workers increased 93.4%.1 This suggests that economic prosperity was widely shared by businesses and employees, alike. After 1979, however, the link between productivity and wages began to break. Productivity continued to rise, though at a slower pace, while wages lagged substantially behind. Between 1979 and 2013, productivity grew 64.9%, but hourly wages rose just 8.2%.2

In Michigan, compensation for low- and mid-wage workers of prime working age3 fell substantially between 1979 and 2013.4 Real hourly wages dropped 13.4% for low-wage workers and 12.7% for mid-wage workers (see Appendix A.1). With the exception of the years 1998 to 2010, relatively high levels of educational attainment did little to curb this trend. The median hourly wages of prime age workers with bachelor’s degrees fell 4.3%, while wages for workers with master’s degrees or higher increased only 10.7%. Workers without a postsecondary education saw the steepest decreases: The wages of workers without a high school diploma dove 46.3%, while workers with only a high school education saw their wages decrease by 32.1% (See Figure 1 and Appendix A.2).

 Men’s Wages in Michigan

The wages of many Michigan male workers fared worse than the state average. Low-wage men’s hourly earnings plummeted 31.2%, while mid-wage male workers’ wages fell 16.0%. The decline in male wages in Michigan continued even during the nationwide labor market strength of the late 1990s.5 The sharp wage decline abated just a bit during this time, but did not result in wage increases for male workers earning at or under the middle of the wage distribution (see Figure 2).

Michigan Women’s Wages

From 1979 to the late 1990s, wages for low- and mid-wage women declined or saw only modest improvements. However, beginning in the late 1990s, wages for these workers improved the most, averaging 14.6% between 1999 and 2010 for mid-wage women, and 11.3% for low-wage women, before dropping substantially after 2010. Overall, real hourly earnings for low-wage women increased only 4.2% in 2013 relative to 1979, and 10.1% for mid-wage women (see Figure 3).

While the rest of the Michigan workforce saw a decline or stagnation in their hourly earnings, the wages of the highest paid workers of any gender grew consistently – particularly of those earning at the top 10% of the wage distribution. Their wages increased between 8.3% and 39.7% from 1979 to 2013 (see Appendix A.1). Disparity in wage growth – with increases for a relatively small sector of the workforce and declines for the vast majority – is one of the most important factors influencing the shrinking of the middle class and the faltering of living standards in the country.6

 

Gender Wage Gap

As will be shown in the next two sections of this report, over the past three decades, women have increased their labor force participation and have obtained educational credentials at greater proportions than their male counterparts. These improvements help explain the rise in women’s wages7 – particularly for women earning in the top 20% of the wage distribution (see Figure 3 and Appendix A.1) – and the narrowing of the gender wage gap.

The gender wage gap – the difference between the earnings of women relative to men’s – began to improve nationwide in the late 1970s. According to one calculation, the nationwide gender wage gap decreased from 37.3% in 1979 to 17.2% in 2012. However, more than one-quarter of this improvement can be traced to the erosion of men’s wages, rather than to gains in women’s wages.8 As we saw above, the wages of Michigan men of prime working age, earning at or under the middle of the wage distribution, declined sharply – by as much as 31.2% between 1979 and 2013.

Economists caution that a narrowing of the wage gap based on decreases in men’s wages is problematic, as it hurts not only men, but also women. The same factors that harm men’s wages are also exerting a negative influence on women’s wages. If, for a time, protections against discrimination, higher levels of educational attainment and increased labor force participation helped curb the downward pressure on women’s wages, policy choices – such as monetary policy focusing on inflation rather than full-employment, the deregulation of industries, the weakening of labor standards, the erosion in the real value of the minimum wage, and decreased unionization – threaten to reverse these positive wage gains in women’s wages.9

Despite wage gains for women (and wage losses for men), Michigan women experience the seventh-widest gender wage gaps (26.3%) in the nation.11 On average, Michigan women working full-time year-round earned just $0.74 for every $1 a similarly employed man earned.12 The state’s gender wage gap has been stuck in the 70-cent range since 2005, despite nominal increases in the state’s wage floor13 (see Table 1). The wage gap for women of color is much wider: In 2012, an African American woman made just two-thirds what a man made ($0.67 for every $1), and a Hispanic woman earned a little over one-half ($0.54).14

The persistence of a gender wage gap is influenced in part by women’s continued over-representation in the low-wage workforce (see Table 2 and appendices C and D). Although women 16 years and over composed around half (49%) of Michigan’s overall workforce between 2008 and 2012, they represented well over two-thirds (69%) of the low-wage workforce.15 The share of women of prime working age who are employed in low-wage occupations was 20.8% in 2012, while for men this share was just 8.9%. This makes women in the state more than twice as likely as men to be low-wage workers.16

However, the over-representation of women in low-wage occupations does not, alone, explain the gender wage gap. High-earning women have not been spared the pernicious effects of wage disparity. In fact, they experience the highest wage gap among all groups in the wage distribution (see Appendix A.3). While low-wage women earn $1.53 less than men in the same wage group (a 12.91% difference) and have a wage gap of $0.13, women in the highest-wage group earn $9.67 less than their male counterparts (a 23.6% difference) and have a wage gap of $0.21.

Various research has found that a significant proportion of the wage gap (between 7% and 12%) cannot be explained away by women’s choices in occupation.19 This “unexplained” wage gap hurts even college-educated women many of whom, 10 years after graduation, earn just 69% of what men earn. One possible explanation is that when women become mothers, they experience a “motherhood penalty” that extends well beyond the time they are out of the workforce. Research suggests that employers are less likely to hire mothers compared with childless women, and that when they do hire mothers, they tend to offer these women lower salaries than their childless counterparts. Fathers, on the other hand, do not suffer a similar parental penalty.20 Differences in the treatment of men and women – and mothers and fathers – likely account for a significant portion of the unexplained wage gap, and the overall wage gap.

Women’s Contribution to the Economy

While the gender wage gap persists and the wages for the majority of women have stagnated, the contribution of female workers to the nation’s economy has increased over the past 35 years. If women had abstained from working outside the home from 1979 to 2012, the economy would be significantly smaller than it is now.21 Nationwide, the share of women working full-time year-round increased significantly, from 28.6% in 1979, to a peak of 44.2% in 2000, before decreasing slightly to 40.7% in 201222 in the wake of the Great Recession and the jobless recovery that followed.23 The increase in the share of mothers working full-time year-round was even more dramatic, rising from 27.3% in 1979 to 46.0% in 2007 and 44.1% in 2012.24 Women’s work hours nearly doubled between 1979 and 2007 – from 925 annual hours to 1,820 – and increased 80% from 1979-2012 (a figure that accounts for the effects of the recession).25 Employment trends for Michigan women are likely similar.

During this period, women’s contribution to their total household incomes also increased substantially, particularly for low-income families. While in 1979, low-income women contributed just over one-third (33.5%) of their total household earnings, by 2012 their contribution rose to nearly half (45.8%). For middle-income households, women’s contribution rose from 25.0% to 38.6%, and for wealthier households, from 23.8% to 33.5%.26

Through their increased participation in the labor market and the greater number of hours worked, women helped expand the nation’s economy by $1.7 billion (11%) from 1979 to 2012. This increase in the economy is equivalent to almost twice the combined contribution of the information, communications and technology industries in 2012.27

Demographic Portrait of Michigan Women

Women are the backbone of Michigan’s economy. In 2012, women made up over half (51.7%) of the state’s population of prime working age and a slightly smaller but highly significant share (48.9%) of the total employed population in this age group.28

Michigan women have relatively high levels of education. With the exception of professional and doctorate-level degrees, they hold higher shares of various postsecondary degrees compared to men, including 58.1% of bachelors and 57.1% of masters degrees (see Table 3).

When looking at the state’s female population, alone, we can observe that nearly half (45.3%) of Michigan women of prime working age hold postsecondary degrees of any type, including 20.6% with bachelor’s, 13.5% with an associate, and 9.4% with master’s degrees. Another 20.7% attended college but did not earn a degree (see Figure 4 and Appendix B).

Michigan men of this age group, in comparison, have significantly lower levels of postsecondary educational attainment. Only 37.6% of men in the state hold a postsecondary degree of any type, including 15.9% with a bachelor’s, 10.2% with an associate and 7.5% with a master’s degree. However, a higher percentage of men have doctorates or professional degrees (4.0%), than do women (1.8%).Total postsecondary educational attain-ment at the national level is 46.4% for women and 41.3% for men.

Over the past three decades, women’s participation in the labor force increased significantly, while men’s and the state’s average for all genders decreased. From 1979 to 2013, the labor force participation rate29 for women 16 years and older increased 4 percentage points from 50.7% to 54.9%, while men’s participation fell 13 percentage points from 79.0% to 66.5% (see Table 4). In 2012, women of prime working age had a much higher labor force participation rate (70.3%), making their contribution to the state’s economy vital. (Men’s labor force participation rate for this age group was 80.7%).

Michigan women are more likely than their male counterparts to live in poverty, despite increases in educational attainment and labor force participation. Of the state’s population of prime working age who are living in poverty, over half (54.7%) are women.30 In fact, the state’s poverty rate for women of this age group is 24.8% – nearly 6 percentage points higher than the rate for men.31

 

 Female-Headed Households

The poverty rate of Michigan’s female-headed households in the prime working age group is higher than for women of this age group as a whole. Although these households had an employment rate of 70.8% in 2012, over one-quarter (27.7%) lived in poverty. Their median household income was just $35,030.32

Of the almost 315,300 low-income working families in Michigan, more than two in five (41.9%) are headed by women.33 Although mothers of very young children make up just 4.6% of the state’s workforce, they represent a higher share (6.9%) of the low-wage workforce.34 One in five (22.0%) of these mothers were employed in a low-wage occupation.

In 2012, significant shares of Michigan working households (whether headed by women or men, or both equally) received food assistance (formerly known as food stamps and now called the Supplemental Nutrition Assistance Program, or SNAP). Almost half (48.8%) of working families with household incomes below 200% of the federal poverty threshold received food assistance. The SNAP participation rate for families below 100% of poverty was even higher – close to three-quarters (70.3%).35

Median Wages in the Midwest: A Comparison

As we saw in the first section of this report, median wages dropped 12.7% in Michigan between 1979 and 2013. The drop was larger for low-wage workers (13.4%), while high-wage workers saw their wages increase by 8.3% or more (see Appendix A.1). Men’s wages declined more than women’s.

Much of the Midwest also experienced wage declines or stagnation. Illinois and Indiana both had negative real median wage growth, while wages stagnated in Wisconsin, Iowa and Missouri, which experienced growth between 0% and 2.3%. Minnesota, on the other hand, bucked the trend. The state saw real median wage growth of 11%, much of it occurring after 1997, around the time when the nation’s workers enjoyed the employment and wage benefits of a tight labor market. The difference in wage growth between Minnesota’s and Michigan’s wage trends between 1979 and 2013 is a whopping 23.7 percentage points (see Table 5 and Figure 5).

Men’s median wages throughout the Midwest also declined significantly – nearly all of it in the double-digit range. Michigan led the pack, with the steepest decline of 16.0%, while Minnesota, though unable to avoid negative growth, saw the smallest decline in the region: 4.9% (see Table 5 and Figure 6). Once again, the turning point seems to be the late 1990s, when men’s wage decline in Minnesota began to lose steam (and in fact, turned positive between 1999 and 2005) while in Michigan it continued on a downward trend that accelerated after 2009.

Although all Midwestern states experienced positive wage growth for women, Minnesota and Michigan stand out once again. Women in Minnesota saw the most cumulative wage growth in the region (40.1%), while Michigan women saw the least (10.1%). In 1979, women in Minnesota were paid 8.8% less than women in Michigan. But by 2013, the former’s wages had surpassed the latter’s. Minnesota women now earn 17.0% more than their Michigan counterparts. Unlike male wages, the diverging trends in female wages in Minnesota and Michigan began much earlier than the late 1990s. By 1982, women’s wages in Michigan had turned negative (2.5%), while in Minnesota they had turned positive (2.0%). This trend picked up steam in the late 1990s, resulting in the 30 percentage point gap that exists today.

What explains the dramatic differences seen in Minnesota and Michigan? One part of the answer points to deindustrialization. Over the past two decades, Michigan has struggled with a declining manufacturing sector, much of it concentrated around the auto industry. This industry, which throughout much of the twentieth century had expanded the middle class in Michigan – and especially in Detroit – began to falter with the global decline in manufacturing, foreign competition in the auto industry, and the increased automation of many assembly-line jobs.36 From 1990 to 2011, manufacturing employment in Michigan declined by 37% and employment earnings in this sector declined by a similar figure (35%). Deindustrialization and the near collapse of the auto industry led to a decade-long recession in the state, from which Michigan is still recovering. Minnesota was not as reliant on the manufacturing sector, and certainly not on the auto industry. During this same period of time, manufacturing employment in the state fell by a relatively smaller rate (11%), while related employment earnings fell 6%.37

While manufacturing was declining, the knowledge-based sector of the economy was expanding, and Minnesota was able to take advantage of it. The knowledge-based economy, in which today’s high-wage jobs are concentrated, can be defined as production and services based on knowledge-intensive activities – such as information technology, finance, insurance and private health care and social services.38 Between 1990 and 2011, Minnesota grew its employment in the knowledge-based economy by 60%, twice Michigan’s rate of 30%. Minnesota’s employment earnings in this sector expanded even more: 74%, more than twice Michigan’s 32% growth.39

While deindustrialization and the near collapse of the domestic auto industry were, to some extent, unavoidable and greatly impacted Michigan’s economy – something that Minnesota was mostly spared – that alone did not set these two states is such diverging economic paths. Policy choices have played an important role in their differing outcomes.

Minnesota is a high-tax state, which enables it to invest more in its residents. Since the early 1970s, Minnesota lawmakers have made the conscious choice to implement and protect various tax and fiscal reforms – collectively known as the “Minnesota Miracle” – that succeeded in curbing disparities in the quality of public education, and shifted more of the burden of financing local governments from property taxes to state income and sales taxes.40 Minnesota has a progressive state income tax rate that varies between 5.35% and 9.85%, with the higher tax rate reserved for wealthier Minnesotans. In contrast, Michigan has a flat income tax rate of 4.25%, which applies to everyone – rich or poor. In combination with other state and local taxes, Minnesota’s tax structure allowed it to collect $5,016 in taxes, per capita, in 2011. In contrast, Michigan’s combined state and local taxes, per capita in 2011, was just $3,655. Minnesota’s enhanced ability to collect revenue also allows it to spend more on services for its residents compared to Michigan: $4,443 per capita in Minnesota vs. $2,813 in Michigan.41

Minnesota’s spending priorities include early childhood education, K-12 education, higher education, the state’s social safety net, infrastructure and public transit – all of which are funded much more generously than in Michigan,42 and all of which help prepare its workforce for the demands of the modern global economy and give Minnesotans a chance to succeed – even in bad times.

The stark differences in wages seen in Minnesota and Michigan, therefore, should not come as a surprise. Minnesota’s wage gains are in great part the result of the state’s resolve to invest in the public good, while Michigan’s wage declines are the result of both a shift in the global economy and, most importantly, of policy choices that have hurt its working men and women.

Policy Recommendations

Raise the Minimum Wage and Eliminate the Tipped Wage. Raising the wage floor to $10.10 per hour would reduce poverty in the state (including child poverty), boost the state’s economy, and create thousands of jobs.43 Increasing the minimum wage, and in particular eliminating the tipped wage would also help reduce the gender wage gap. As discussed above, women are more likely than men to work in low-wage occupations, including jobs as servers in the restaurant industry where they make up 70% of the workforce.44 The Michigan Legislature recently passed a law that would increase the state’s minimum wage to $9.25 by 2018 and index it to inflation. This law also pegged the tipped wage to 38% of the regular minimum wage. While a step in the right direction, the increases would still leave many families in poverty, including thousands of Michigan children whose parents struggle to make ends meet on these wages.45 Increasing the wage floor to $10.10 or above and bringing the tipped wage to parity with the regular minimum wage would boost many families above poverty and narrow the gender wage gap.

Encourage Collective Bargaining. As discussed above, since the 1970s, wages have been eroding or stagnating for men and women earning at or under the middle of the wage distribution. Wages for higher-paid workers, on the other hand, have increased, resulting in an increase in wage inequality. These trends coincide with a decline in unionization rates – which fell to 13.1% in 2011 – and has resulted in the loss of worker’s bargaining power. Studies suggest that deunionization explains about a third of the growth of wage inequality among men and a fifth of the growth among women. Higher rates of union membership could curb wage erosion. Unionization enhances worker’s ability to bargain for better wages and usually results in higher wages for those who are covered by a collective bargaining contract. This “union wage premium” (as the phenomenon is known) is 17.3% higher wages for men, 9.1% for women, and 13.6% overall.46

Strengthen Workplace Policies. As discussed above, women’s contributions to the national economy have steadily increased since 1979. More women and mothers have entered the labor force and increased their work hours. Through their work, they have substantially expanded the nation’s economy. Women’s higher participation rate in the labor force means that workplace policies need to change to accommodate the needs of dual-income and single-parent families, especially for those who are in low-wage jobs. Michigan should enact legislation requiring paid family and medical leave and standards for scheduling, to help workers plan for and meet their family needs. Michigan should also increase its child care subsidy to be more in line with market rates, improving both the quality and affordability of child care options for low-paid workers. Evidence suggests that access to stable, high-quality child care increases labor force participation, reduces employee absenteeism and turnover, and helps workers maintain their employment.

Restore the State Earned Income Tax Credit (EITC). The EITC is a refundable tax credit that promotes work and offsets the tax burden of many low- and middle-income working families. In tax year 2012, the Legislature reduced the Michigan EITC from 20% to 6% of the federal credit. This change increased the taxes paid by many working families by 70%, with low-income households most affected. The EITC is a tool that has been proven to reduce poverty and boost the work efforts of many families, particularly for single-parent households with low educational attainment.47 Restoring the credit to 20% would encourage more of these households to join the workforce and increase their work hours. This, in turn, would increase the state’s labor force participation rate and over time increase those workers’ hourly earnings.

Increase Education Funding, Including Higher Education. As discussed in the section, “Median Wages in the Midwest: A Comparison,” wage trends in Michigan and Minnesota could not be more different. While wages dropped dramatically in Michigan (particularly for men), in Minnesota wages increased for the overall population and for women, and decreased only slightly for men. Although there are a number of factors that led to the different outcomes for these two states, Minnesota spends substantially more on the education of its residents, from pre-kindergarten to university. Minnesota’s higher rates of investment on education – and in particular, in higher education – not only produces a highly educated workforce and an attractive business climate for high-paying knowledge-based jobs, but it also curbs tuition increases at state colleges and universities. Lower tuition increases results in lower amounts of student loan debt, a type of debt that can reduce the discretionary income of student debtors and reduces their ability to fully participate in the consumer economy. From 2013 to 2014, tuition at public colleges and universities in Minnesota decreased 0.4%, which in Michigan it increased 2.1%.48

Acknowledgments:

I would like to extend a very special thank you to David Cooper (Economic Policy Institute) and Katherine Gallagher Robbins (National Women’s Law Center) for their assistance gathering and processing data. I am also grateful to Luke Reidenbach (California Budget Project), for his perceptive insights on wage trends.

Endnotes

  1. Josh Bivens, Elise Gould, Lawrence Mishel and Heidi Shierholz, Raising America’s Pay: Why It’s Our Central Economic Policy Challenge, Economic Policy Institute, June 2014.
  2. Ibid.
  3. Although more commonly referring to individuals between the ages of 25 and 54, in this report “population of prime working age” refers to persons 25 to 64 years of age. This expanded definition allows us to capture data for workers who are midway between the minimum age (62) for the receipt of partial Social Security benefits, and the age (66) for the receipt of full benefits and therefore near full-retirement. Unless otherwise noted, data in sections “Wage Trends and the Gender Wage Gap” and “Demographic Portrait of Michigan Women” will refer to this age group only.
  4. Low-wage workers are those with hourly earnings in the 20th percentile of the wage distribution. Mid-wage workers are those with earnings exactly in the middle. High-wage workers are those with earnings in the 80th percentile, and top 10% are workers with earnings in the 90th percentile.
  5. During the late 1990s, the nation as a whole experienced low levels of inflation and unemployment, a productivity surge that was mostly led by computer-based information technology, and an increase in the federal minimum wage. These events led to a short-lived but positive increase in hourly wages for workers of all gender at the national level. Michigan bucked this wage trend, however. For more information of the dynamics of the U.S. labor market during this period, see Lawrence F. Katz and Alan B. Krueger, “The High Pressure U.S. Labor Market of the 1990s,” Brookings Papers on Economic Activity, 1999; and Gavin Wright, “Productivity Growth and the American Labor Market: The 1990s in Historical Perspective,” Understanding the 1990s, in Paul Rhode and Gianni Toniolo (eds.), Cambridge University Press, 2006.
  6. Josh Bivens et al. Op. Cit.
  7. Heidi Shierholz, Commentary: The Wrong Route to Equality – Men’s Declining Wages, Economic Policy Institute, June 12, 2013.
  8. Ibid.
  9. Ibid.
  10. Data refers to workers 16 years and older, working full time year-round.
  11. Julie Vogtman and Katherine Gallagher Robbins, Higher State Minimum Wages Promote Fair Pay for Women, National Women’s Law Center, Mach 2014. Gender wage gap data refers to population 16 years and older.
  12. Ibid. The wage gap comparison is to earnings of non-Hispanic white males, who generally have the highest earnings among all men and whose earnings are, therefore, the benchmark on which the gender wage gap measurements (including those for minority women) are based.
  13. Increases in the minimum wage could potentially affect women more than men, because women are more likely than men to be employed in low-wage occupations. See discussion of the over-representation of women in low-wage jobs, below.
  14. National Women’s Law Center, The Wage Gap by State for Women Overall, November 2013.
  15. National Women’s Law Center, Underpaid and Overloaded: Women in Low-Wage Jobs, July 2014. Here, the low-wage workforce is defined as those in occupations with median hourly wages of $10.10 or less.
  16. Ibid.
  17. Joan Entmacher, Katherine Gallagher Robbins and Lauren Frohlich, Women are 76 Percent of Workers in the 10 Largest Low-Wage Jobs and Suffer a 10 Percent Wage Gap, National Women’s Law Center, April 2014.
  18. Estimates on total number employed, and median hourly and annual wages refer to workers (both genders combined) between the ages of 25 to 64 years.
  19. American Association of University Women, The Simple Truth About the Gender Wage Gap, Fall 2013.
  20. Ibid.
  21. Eileen Appelbaum, Heather Boushey and John Schmitt. The Economic Importance of Women’s Rising Hour of Work: Time to Update Employment Standards, Center for American Progress and Center for Economic and Policy Research, April 2014.
  22. Ibid. Data in this section refers to women ages 16 to 64 years old.
  23. The Great Recession officially lasted from December 2007 to June 2009. However, high levels of unemployment remain a problem in several states, including Michigan, which in June 2014 had an unemployment rate of 7.5%, the fourth highest in the nation and significantly above the national rate of 6.1%.
  24. Op. Cit. Data refers to mothers in households with children under the age of 18.
  25. Ibid.
  26. Ibid. These figures are based on a “middle three quintiles” definition of middle-class. See Appelbaum et al. for other definitions of middle class and their respective data. See also Craig K. Elwell, The Distribution of Household Income and the Middle Class (Congressional Research Service, March 2014) for expanded definitions of middle class.
  27. Ibid.
  28. Current Population Survey, Annual Social and Economic Supplements, 2013. U.S. Census Bureau, CPS Table Creator.
  29. The labor force participation rate is the share of the civilian population who are either working or looking for work relative to the total civilian non-institutional population, and should not be confused with the unemployment or the employment-to-population rates, which are difference measures. The labor force participation rate can be influenced by individuals’ decisions to pursue education or to drop out of the labor market altogether, particularly during economic downturns.
  30. Current Population Survey, Annual Social and Economic Supplements, 2013, op. cit.
  31. 2012 American Community Survey, 1-Year Estimates.
  32. Op. Cit.
  33. Deborah Povich, Brandon Roberts and Mark Mather, Low-Income Working Families and State Policy: Investing for a Better Economic Future, Working Poor Families Project, Winter 2013-2014. This data refers to households of any age group headed by women without a spouse present, with children under the age of 18.
  34. Helen Blank, Karen Schulman and Lauren Frohlich, Nearly One in Five Working Mothers to Very Young Children Work in Low-Wage Jobs, National Women’s Law Center, April 2014. The term “mothers of very young children” is defined as women raising at least one child under the age of 3; the data refers to employed workers only. “Low-wage occupations” is defined as occupations with median hourly wages of $10.10 or less.
  35. Working Poor Families Project analysis of the 2012 American Community Survey microdata. Data does not specify age groups.
  36. Lou Glazer and Don Grimes, The New Path to Prosperity: Lessons for Michigan from Two Decades of Economic Change, Michigan Future, October 2013; and Thomas J Sugrue, Motor City: The Story of Detroit, The Gilder Lehrman Institute of American History, accessed August 13, 2014.
  37. Glazer and Grimes, ibid.
  38. Ibid.
  39. Ibid.
  40. Ibid.
  41. Ibid.
  42. Ibid.
  43. Yannet Lathrop, Raising the Minimum Wage: Good for Working Families, Good for Michigan’s Economy, Michigan League for Public Policy, February 2014.
  44. Yannet Lathrop, Raising the Minimum Wage Helps Women, Promotes Pay Equity, Michigan League for Public Policy, April 2014.
  45. Gilda Z. Jacobs, Michigan League for Public Policy, Testimony on Senate Bill 934, House Government Operations Committee, May 21, 2014.
  46. Lawrence Mishel, Unions, Inequality, and Faltering Middle-Class Wages, Economic Policy Institute, August 29, 2012.
  47. Yannet Lathrop, The Michigan EITC: A Small Investment that Makes a Big Difference, Michigan League for Public Policy, June 2013.
  48. Michael Mitchell, Vincent Palacios and Michael Leachman, States Are Still Funding Higher Education Below Pre-Recession Levels, Center on Budget and Policy Priorities, May 1, 2014.

 

State Financial Aid Leaves Adult Learners Behind

 

Michigan needs to revamp its financial aid system to ensure that adult learners can build their skills, get a job and become economically secure.

Michigan’s job market is changing. For decades, many individuals became employed in the manufacturing sector immediately after graduating from high school at age 18, built up their skills on the job, and attained a livable wage with which they could support their families and retire with a pension.

Today, rather than teaching needed occupational skills on the job from “square one,” most employers who pay a livable wage expect their new hires to already possess those skills at some level. Sometimes prior experience is sufficient, but for many workers the attainment of required skills must be signified by a recognized credential such as a degree, license or certificate. These credentials are most often attained through completion of a postsecondary program at a community college, technical school or university.

Many workers find themselves needing to acquire new marketable skills with the expectation that doing so will lead to re-employment, higher pay or more job security. Some such workers may have been laid off, others may be trapped in low-wage jobs, and still others may be re-entering the workforce after an extended time as full-time homemakers. Many such individuals do not possess a postsecondary credential and will have a difficult time in the labor market (see Appendix 1).

 

Unfortunately, tuition has increased at community colleges by 31%, though it still compares favorably to other states. Universities increased by 49% since 2005, and Michigan’s public university tuition is the sixth-highest in the nation (Fig. 1). Due to the rising costs, these older workers often need financial aid to help pay for their training. Each year, more than 100,000 (and sometimes more than 150,000) individuals over age 30 in Michigan fill out the Free Application for Federal Student Aid, or FAFSA, which is also used to determine eligibility for state as well as federal aid. (Fig. 2).

 

 

 

 

 

 

The Problem

The decision to get trained in new skills is often made more than 10 years after graduation from high school. While state financial aid helps many students of traditional college age, there are no state financial aid programs to help students attend public community colleges or universities if they have been out of high school for more than 10 years. Two of the three existing grant programs explicitly exclude such individuals from eligibility, and the third is available only to those attending a private, not-for-profit institution:

Tuition Incentive Program: Eligibility rules require applicants to apply prior to high school or GED completion and before the 20th birthday, and the award must be used within 10 years of high school or GED completion—effectively preventing anyone older than age 28-30 from using the award.

Michigan Competitive Scholarship: Workers are ineligible if they are out of high school for more than 10 years, preventing students who graduated “on time” at age 18 from using the award once they pass age 28.

Michigan Tuition Grant: Workers and parents of any age are eligible, but their postsecondary education must be at a private not-for-profit institution. It is not available for use at community colleges, which offer programs specifically designed for students who are working or raising families (Fig. 3).

 

 

 

 

 

 

 

 

 

 

In addition, none of the three current grant programs are available to students enrolled less than half time or who are in short-term occupational programs. Students who are juggling employment, family and school must often go less than half time or enroll in a short-term program due to having to work and care for family members. As discussed in a recent paper by the Working Poor Families Project, while low-income adult students are likely to need employment to support their families and finance their education, working more than a few hours at a job can often result in lower grades and even dropping out. Not having financial aid may discourage adult learners from going to school less than half-time.1

In 2010, the Legislature eliminated a number of grant programs that were available to adult learners: the Adult Part-Time Grant, the Michigan Educational Opportunity Grant, the Michigan Nursing Scholarship and Work-Study. This may have been a factor in the 31% decline in FAFSA applicants age 30 and over for school year 2013-14. (See Appendicies 2 and 3).

It should be pointed out that there are employer-sponsored training programs in some areas of the state that are of low cost or no cost at all to the student. Michigan supports such programs through its Skilled Trades Training Fund and there are other programs available in some areas as well. However, for older working students who are in non-employer-based programs at community colleges and universities, there is no state financial aid available.

Policy Recommendations

Michigan should do the following to make it easier for adult learners to receive financial aid:

1.  Make need-based grants available to older workers by

a) reauthorizing funding for either the Adult Part-Time Grant or the Educational Opportunity Grant, both of which were specifically designed to serve adult learners in a wide variety of circumstances, or

b) modifying the eligibility rules of the Michigan Competitive Scholarship and/or the Tuition Incentive Program to allow older workers to qualify and to allow the money to be used for less than half time enrollment or for short-term occupational programs.

2. Implement a Work-Study program that subsidizes academically relevant work for low-income adult students while paying a livable wage. Studies show that working students are less likely to drop out or suffer academic setbacks if their work is related to their courses of study. Although the traditional Work-Study program was ended in 2010, Michigan could replace it with a carefully targeted program that connects employment to academics. (For more information, see the Working Poor Families Project paper Earn to Learn: How States Can Reimagine and Reinvest in Work-Study to Help Low-Income Adults Pay for College, Enhance Their Academic Studies.)2 

Conclusion

Helping older workers attain new skills leading to in-demand jobs will help grow Michigan’s economy. With the layoffs in manufacturing and other sectors, many workers with families are unemployed, under­employed or earning less than what they used to. This results in less tax revenue for the state and less economic stability for the families. Michigan should provide grants that enable working parents to get skilled jobs. It is good workforce development.

Endnotes

  1. Alstadt, D., Earn to Learn: How States Can Reimagine And Reinvest In Work-Study To Help Low-Income Adults Pay For College, Enhance Their Academic Studies, And Prepare For Post-College Careers, The Working Poor Families Project. Washington, DC: 2014. (http://www.workingpoorfamilies.org/wp-content/uploads/2012/03/WPFP-Spring-2014-Brief.pdf, accessed April 18, 2014)
  2. Ibid.

 

 

 

Education Funding Lags in Michigan

 

Final Corrections Budget Invests in Prevention, Reflects Health Care Savings

The Department of Corrections budget for the budget year that begins Oct. 1 includes new efforts to prevent individuals from entering the justice system, helps inmates transition back into their communities and improves other re-entry programs. The Corrections final budget also reflects expected savings from the implementation of the Healthy Michigan Plan, which would allow the Department to claim federal reimbursement for some healthcare costs for inmates, probationers and parolees.

The final DOC budget approved is $2.04 billion in total funding, including $1.98 billion in state General Fund. This is a 0.4% ($8.1 million) increase in total funding, and a 1.2% ($22.8 million) increase in state General Fund dollars, compared with this year’s funding.

The DOC budget is the fifth largest, accounting for approximately 4% of total appropriations from all fund sources in the current fiscal year. When state General Fund monies are considered alone, the DOC budget is the state’s second largest, accounting for 21.3% of the General Fund. General Funds made up over 96% of the Corrections budget in Fiscal Year 2014.

The final budget is lower than the governor’s recommendation by $9.4 million in GF and total funding. Included in the DOC budgets are the following changes:

Healthy Michigan Plan

Governor:

  • Recognizes full-year savings of $19.1 million in state General Fund in Fiscal Year 2015 as a result of the implementation of the Healthy Michigan Plan. Under this plan, low-income individuals ages 19-64 – who are not eligible for or enrolled in Medicaid or Medicare, are not pregnant, and have incomes up to 133% of the federal poverty level – qualify for comprehensive healthcare. The current-year budget assumed that most prisoner inpatient hospitalizations, certain services for mentally ill and medically fragile inmates, and some re-entry services would be covered. However, it was subsequently determined that certain treatments for sex offenders and substance abuse are not eligible for Medicaid reimbursement. The executive budget acknowledges that these services are not covered by federal funds, and reinstates $5.1 million in state funds to cover the costs.

House:

  • Concurs with the governor.

Senate:

  • Concurs with the governor.

Final Budget:

  • Concurs with the governor.

New Hepatitis C Treatment Protocol

Governor:

  • Includes $4.9 million in new funding to implement a treatment protocol for Hepatitis C, as recommended by the Centers for Disease Control and Prevention. Current treatment duration can take up to one year; includes side effects such as depression, anxiety and anemia; and is not guaranteed to cure the disease. The drugs recently approved by the Federal Drug Administration shorten the treatment period to 12 weeks, have fewer side effects, and a success rate of approximately 95%.

House:

  • Does not concur with the governor.

Senate:

  • Includes a $100 placeholder to ensure discussion of the issue in conference committee, expressing concerns about the higher cost of the new treatment protocol.

Final Budget:

  • Includes $4.4 million in General Funds.

Mental Health Diversion Council

Governor:

  • Includes $1 million in state funding for a pilot project that will connect inmates in one local jail with comprehensive mental health treatment as they transition back into the community. This funding is part of the implementation of the recommendations of the Mental Health Diversion Council created by the governor in 2013. This council is tasked with developing methods to divert individuals with mental illness or substance abuse problems out of the criminal justice system and into appropriate treatment.

House:

  • Concurs with the governor.

Senate:

  • Concurs with the governor.

Final Budget:

  • Concurs with the governor.

Prisoner Education Enhancement

Governor:

  • Includes $4.3 million General Fund (of which $1.1 million is one-time funding) to expand prisoner vocational education and prepare parolees for entry into the workforce. The added funding will be used to hire 15 additional employment counselors and five instructors. This initiative will focus on helping inmates acquire skillsets that are in demand by employers and connect inmates with employers prior to their release.

House:

  • Concurs with the governor.

Senate:

  • Does not include this funding.

Final Budget:

  • Concurs with the governor.

Michigan State Industries

Governor:

  • Includes $12.3 million in restricted funds to cover the administrative costs of Michigan State Industries. MSI is a DOC program that employs inmates while imprisoned. MSI’s stated goal is to give inmates an opportunity to acquire job skills and experience in preparation for their release.

House:

  • Concurs with the governor.

Senate:

  • Reduces funding for this program by $6.2 million (50%) in restricted funds, and calls for a study of the program by December 2014.

Final Budget:

  • Concurs with the governor.

Goodwill Flip the Script

Flip the Script is a program of Goodwill Industries of Greater Detroit, which provides education, job training and mentoring for young males, 16-30 years old, to encourage their self-sufficiency and prevent their entry into the justice system.

Governor:

  • Does not include funding for the program, which is a new line item in the Senate budget.

House:

  • Does not include new funding.

Senate:

  • Includes $4.5 million in state funds for Flip the Script.

Final Budget:

  • Includes $2.5 million in state funds.

Swift and Sure

The Swift and Sure Sanctions Probation Program is a joint project with Michigan Rehabilitation Services in the Department of Human Services, and is designed to assist mentally and physically disabled probationers find employment.

Governor:

  • Does not include new funding, which is a new line item in the Senate budget.

House:

  • Does not include new funding.

Senate:

  • Includes $3 million in additional state funding. These funds would be transferred to the Department of Human Services to expand The Swift and Sure Sanctions Probation Program.

Final Budget:

  • Includes $1 million in additional state funds.

Prisoner Re-Entry Legal Services

Re-entry legal services is a pilot program that would assist ex-offenders with employment, housing, child support and other related matters by providing outreach, education and legal representation.

Governor:

  • Does not include funding for the program, which is a new line item in the House budget.

House:

  • Adds $449,000 in state General Fund for two pilot programs to be established in Kent and Oakland counties (the latter also serving Wayne County).

Senate:

  • Does not include new funding.

Final Budget:

  • Includes $149,000 in state funds.

Re-Entry, Parole, Probation and Community Programs

Governor:

  • The governor recommends $311.7 million in total funding for re-entry, parole, probation and community programs, a decrease of 4.9% ($15.9 million) compared with year-to-date funding. This decrease reflects expected savings from the implementation of the Healthy Michigan Plan, expected reductions in federal grants, and a transfer of funds to the Correctional Facilities Unit for the newly re-opened Detroit Detention Center.

House:

  • Includes $312.1 million, a decrease of 4.7% ($15.5 million) compared with year-to-date funding.

Senate:

  • Approves $315.5 million, a decrease of 4.3% ($14.1 million) compared with year-to-date funding.

Final Budget:

  • Includes $313.6 million, a decrease of 4.3% ($14.0 million) compared with year-to-date funding.

Human Services Budget Reflects Continuing Steep Caseload Declines

 

After years of declining investments, the Department of Human Services budget signed by the governor for the year beginning Oct. 1 further reduces total funding by 4.8%, from $6.05 billion to $5.76 billion.1 Driving the reductions has been an unprecedented drop in the number of families with children able to access income assistance through the state’s Family Independence Program. FIP cases are expected to fall from their recent peak of 85,389 in 2007 to 32,800 next year—a drop of 62% in less than a decade.2

Reductions in caseloads and spending partly reflect policy decisions that have made fewer families and children eligible for public assistance benefits, including lifetime limits on income assistance, and a new asset test for food assistance.

In the current fiscal year, the DHS budget is the state’s third largest, accounting for 12.3% of total spending from federal and state resources. Federal funds now account for more than 80% of DHS funding, up from 70% in Fiscal Year 2004. Other sources of revenue for DHS are state General Funds (17%); and state restricted, local and private funds.

DHS administers a range of services, including the Family Independence Program; the Food Assistance Program; State Disability Assistance; State Emergency Relief; and child protective, foster care, adoption and juvenile justice services. Decisions made by the Legislature will affect nearly 2.4 million Michigan residents—including over 1 million children—who receive some form of public assistance to help them hold low-wage jobs, feed and shelter their children, access healthcare, or survive when faced with serious illnesses or disabilities.

Income Assistance

Governor’s Budget:

  • Cuts funding for income assistance for families with children. The governor’s budget for Fiscal Year 2015 includes $152 million for the FIP program, a reduction of 29% from the current level of $214.3 million. The governor assumes that FIP caseloads will fall from 44,400 this year to 33,200 in 2015, a reduction of 25% in a single fiscal year.
  • Expands funding for outstationed DHS workers. The governor recommends $19.3 million in federal, private and local funds to expand the number of outstationed DHS workers by 150. With this funding, DHS would be able to expand the number of workers in hospitals, long-term care facilities, school based centers or businesses that agree to pay a portion of the cost, using their contributions to draw down federal funding.
  • Continues the current Extended-FIP policy, which gives households leaving FIP due to earnings $10 per month in FIP assistance for six months. In 2011, when the state tightened its 48-month lifetime limit on FIP, those six months of very minimal assistance began to count against a family’s lifetime limit. The governor’s budget also removes language requiring DHS to notify persons eligible for Extended-FIP that receiving it will count toward federal and state lifetime limits. The governor projects monthly Extended-FIP caseloads of 1,105 next year, down by 155 cases.
  • Continues the current FIP children’s clothing allowance. The governor’s budget includes $2.9 million for the annual clothing allowance for children. The allowance was originally designed to make sure that school-age children have the opportunity to at least start the school year with a set of clothes. The program was restricted in 2011 to only those children in FIP cases that do not include an adult—e.g., children living with ineligible grandparents or other caregivers.

House:

  • Agrees with the governor’s recommended FIP caseload of 33,200, and total funding of $152 million.
  • Allocates $2.9 million for the annual FIP children’s clothing allowance, but expands eligibility to all FIP children ages 4 through 18.
  • Continues current policy of counting minimal Extended-FIP benefits against lifetime limits, but expands budget language requiring DHS to notify families of the effect on lifetime benefits on both the FIP application and the form that notifies families of their eligibility.
  • Agrees with the governor’s expansion of outstationed workers, but transfers non-child welfare DHS staff to offset the expected increase in donated funds positions, rather than increase the number of authorized positions.

Senate:

  • Agrees with the governor’s projected FIP caseload of 33,200, a reduction of 11,200 cases monthly, reducing FIP funding by $62.3 million.
  • Adds budget language requiring DHS to report quarterly on: (1) the number and percentage of nonexempt FIP recipients who are employed; (2) the average and range of wages of employed FIP recipients; and (3) the number and percentage of employed FIP recipients who remain employed for 6 months or more.
  • Agrees with the governor’s expansion of outstationed workers by $19.3 million and 150 full-time positions.
  • Agrees with the governor by continuing to count minimal Extended-FIP benefits against families’ lifetime limits.
  • Includes new budget language requiring DHS to create a workgroup to determine how Michigan Works! job training programs can be revised to reflect declining FIP caseloads, including possible reductions in the amount of federal Temporary Assistance for Needy Families (TANF) funding that is provided to Michigan Works!

Final Budget:

  • Cuts funding for income assistance for families with children below the governor’s recommendation. The final budget includes $147 million for the FIP program, a reduction of 31% from the current year level of $214 million. The governor had originally assumed that FIP caseloads would fall from 44,400 this year to 33,200 in 2015, a reduction of 25% in a single fiscal year. With the May revenue estimating conference, the current year caseload is now expected to be only 36,100, falling to 32,800 in Fiscal Year 2015.
  • Includes $25.7 million to expand the number of outstationed DHS workers by 200—above the governor’s recommendation of $19.3 million—but rejects a House proposal to transfer 150 non-child welfare DHS staff to offset the expected increase in donated funds positions.
  • Continues the current Extended-FIP policy, which gives households leaving FIP due to earnings $10 per month in FIP assistance for six months, which counts against a family’s lifetime limit. The budget assumes that an average of 1,000 families monthly will receive Extended-FIP benefits.
  • Continues the current FIP children’s clothing allowance, limiting it to children in FIP cases that do not include an adult—e.g., children living with ineligible grandparents or other caregivers—and rejecting the House proposal to expand eligibility to all FIP children ages 4 through 18.
  • Includes new language requiring specific outcome and performance reporting from the Michigan Strategic Fund for TANF funded job readiness and welfare-to-work programs, including the number and percent of persons who obtained employment through Michigan Works!; those that fulfilled their work requirements through other job readiness programs; average TANF spending per client; and the number and percent of clients who were referred to Michigan Works! but did not receive a job or placement, and the reasons why.

Food Assistance

Governor’s Budget:

  • Reduces FAP funding by $444.5 million, to a total of $2.4 billion. The cut reflects the loss of federal American Recovery and Reinvestment Act funding as well as a projected drop in FAP households, from 894,750 this year to 890,000 in Fiscal Year 2015. Nearly 1.7 million Michigan residents received FAP benefits in January 2014, including over 700,000 children. Of those children, 242,408, or more than one-third, were under the age of 6.
  • Continues the optional state assets test for FAP benefits. Beginning in October 2011, DHS adopted an asset test for FAP eligibility that is not required under federal law. FAP households/groups must now have less than $5,000 in assets, including the value of vehicles after certain exemptions.
  • Provides no resolution of the “Heat and Eat” provisions of the federal Farm Bill. The governor’s budget was released right before the Farm Bill was passed by Congress and therefore did not address federal cuts related to the “Heat and Eat” provisions of the bill. The Heat and Eat option, which was utilized by 16 states including Michigan, allowed states to use a standard utility allowance in determining food assistance benefits, including situations where eligible households receive a nominal $1 per year in energy assistance through the Low Income Health and Energy Assistance Program (LIHEAP). Under the new Farm Bill, the nominal LIHEAP payment was increased to a minimum of $20 per year.

The House Fiscal Agency estimates—based on Fiscal Year 2010 data—that continuing the Heat and Eat option in Fiscal Year 2015 would have required an additional $8.4 million in LIHEAP spending, while preventing the loss of approximately $250 million in federal food assistance. The failure to raise the LIHEAP payment to $20 will result in the loss of $88 per month in food assistance for more than 235,000 low income families.

House:

  • Agrees with the governor on the projected FAP caseload of 890,000, as well as the loss of ARRA funding, resulting in a total cut in FAP funding of $445.5 million.
  • Retains the FAP asset test.
  • Does not address the “Heat and Eat” provisions of the federal Farm Bill.

Senate:

  • Concurs with the governor and the House on FAP caseloads and related funding.
  • Retains the FAP assets test.
  • Does not address the “Heat and Eat” provisions of the federal Farm Bill.

Final Budget:

  • Reduces FAP funding by $286.6 million, to a total of $2.55 billion. The cut reflects the loss of federal ARRA funding as well as a projected drop in the number of FAP households, from 894,750 this year to 860,000 in Fiscal Year 2015, at an average monthly cost per case of $247.
  • Continues the optional state assets test for FAP benefits.
  • Provides no resolution of the “Heat and Eat” provisions of the federal Farm Bill.

State Disability Assistance and Services

Governor’s Budget:

  • Reduces funding for State Disability Assistance by 14%. The governor’s budget includes $17.9 million for the SDA, down from the $20.8 million appropriated in the current fiscal year. SDA caseloads have been decreasing since Fiscal Year 2010, in part because of efforts to ensure that SDA recipients who are eligible for federal Supplemental Security Income are transferred to that program.
  • Projects continued reductions in SDA cases. The governor assumes that the SDA caseload will also fall by 14% from the level budgeted in the current fiscal year, with total cases of 6,693 next year.
  • Increases funding for Michigan Rehabilitative Services. The governor includes $4.4 million ($2.4 million in one-time funding), allowing DHS to draw down an additional $14.8 million in federal matching funds for rehabilitative services and avoid waiting lists.
  • Expands disability determination staff. The governor’s budget includes an additional $20.6 million in available federal funding, allowing the state to add 80 staff positions to determine eligibility for disability services.

House:

  • Agrees with the governor on a caseload of 6,693 for SDA, a reduction in funding of $2.9 million in state General Funds, and total funding for SDA payments of $17.9 million.
  • Includes only $2 million for Michigan Rehabilitative Services (down from the governor’s recommendation of $4.4 million).
  • Appropriates an additional $1 million for the Centers for Independent Living for accessible, comprehensive and coordinated services for persons with disabilities—with the goal of improving financial self-sufficiency.
  • Concurs with the governor on the expansion of federal disability determination workers.

Senate:

  • Agrees with the governor’s overall reduction in funding for SDA payments from $20.8 million this year to $17.9 million in Fiscal Year 2015, as well as the projected SDA caseload of 6,693.
  • Agrees with the governor and expands funding for Michigan Rehabilitative Services by $4.4 million, drawing down an additional $14.8 million in federal funds. In addition, the Senate adds $3 million to match $11.1 million in funding in the Department of Corrections to provide vocational and other services to persons with histories of probation and parole violations (not currently incarcerated), as well as those with severe mental health needs.
  • Concurs with the governor on the expansion of federal disability determination workers, and takes savings of $2.2 million in the budget, assuming that additional staff support would reduce the average number of months individuals would receive state disability assistance from 12 months to 9 months (for half the caseload).
  • Agrees with the House and appropriates $1 million to continue and expand the Center for Independent Living project.

Final Budget:

  • Reduces funding for State Disability Assistance by 20%. The budget includes $16.6 million for the SDA, down from the $20.8 million appropriated in the current fiscal year. SDA caseloads have been decreasing since Fiscal Year 2010, and the budget assumes that the SDA caseload will fall to 6,500 next year.
  • Increases funding for Michigan Rehabilitative Services by $3.4 million, allowing DHS to draw down additional federal matching funds to expand rehabilitative services and avoid waiting lists.
  • Includes an additional $20.6 million in available federal funding to allow the state to add 80 staff positions to determine eligibility for disability services. The final budget also cuts $2.2 million to reflect the Senate’s assumed reduction in the average number of months individuals would receive State assistance before moving to federal assistance from 12 to 9 months.
  • Agrees with the Senate to add $3 million through an interdepartmental grant with the Department of Corrections to draw down additional federal dollars to provide vocational and other services to persons with histories of probation and parole violations, as well as those with severe mental health needs, who are not currently incarcerated (the Swift and Sure Sanctions Probation Program).
  • Appropriates an additional $500,000 (down from $1 million in the House and Senate budgets) for the Centers for Independent Living for accessible, comprehensive and coordinated services for persons with disabilities—with the goal of improving financial self-sufficiency.
  • Adds new language requiring DHS to set up a workgroup to look at licensing standards and performance measure for adult assisted living facilities to ensure greater safety and supervision.

State Emergency Services

Governor’s Budget:

  • Continues current energy assistance policies and appropriations. In addition to federal funding from the Low Income Home Energy Assistance Program (LIHEAP), Michigan used to receive funds through the state’s Public Service Commission for energy assistance. After the courts ruled that the PSC did not have authority to collect restricted fee revenues, a decision that reduced funding by $60 million annually, the Legislature approved a new surcharge on electric meters to fund the Michigan Energy Assistance Program (MEAP). The MEAP was created in state law (P.A. 615 of 2012), and required DHS to establish a consolidated energy assistance program with a single, simplified application. For Fiscal Year 2015, the governor includes nearly $175 million in LIHEAP funding, as well as $60 million for the MEAP.
  • Provides continuation funding for State Emergency Relief services, including $13.6 million for local DHS office emergency services, $15.7 million for homeless services through the Salvation Army, $4.3 million for indigent burial services, $1.8 million for the Food Bank Council, and $3 million for multicultural services.

House:

  • Includes $165 million for LIHEAP—$10 million less than the governor—including approximately $85 million for home heating credits and $80 million for energy crisis assistance. The House uses $10 million in federal LIHEAP to fund the MEAP, reflecting a statutory cap on the new surcharge of $50 million in collections, and bringing total spending for the MEAP in the House budget to $60 million.
  • Concurs with the governor and provides $13.6 million for local office emergency services, $15.7 million for homeless programs, $4.3 million for indigent burials, $1.8 for food banks, and $3 million for multicultural integration funding and the Chaldean Community Foundation.

Senate:

  • Concurs with the governor, providing $175 million for LIHEAP, and $60 million for the MEAP.
  • Includes a $200,000 increase in funding for food banks, bringing total funding to nearly $2 million.

Final Budget:

  • Agrees with the governor and continues current energy assistance policies, with $175 million for LIEAP, and $50 million for the MEAP.
  • Provides $11.5 million for local DHS office emergency services, $15.7 million for homeless services through the Salvation Army, $4.3 million for indigent burial services, $1.8 million for the Food Bank Council, and $3 million for multicultural services.

Child Welfare and Family Services

Governor’s Budget:

Foster Care and Protective Services

  • Provides a slight increase in funding for foster care services. The governor recommends $190.3 million for foster care payments, up slightly from the $187.7 million appropriated for this year.
  • Projects a small reduction in projected foster care cases. The governor cuts $2.4 million ($1 million state General Funds) to reflect a projected decline in foster care cases from 6,250 this year to 6,075 in Fiscal Year 2015. Foster care cases have been falling and, with the governor’s projections, will be down 43% between Fiscal Years 2005 and 2015.
  • Provides funding to pay 100% of private agency administrative rates. The governor includes a $5 million increase in funding to pay 100% of the private child placing agency administrative rate for new cases entering care. Those costs are currently split between the state and counties.
  • Increases funding for the County Child Care Fund by 4%. The governor includes $178 million for the Child Care Fund, an increase of 4% over the current year appropriation. 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 (49.8%) and federal TANF (48.5%).
  • Increases funding for medical and psychiatric evaluations of abused and neglected children. The governor includes an additional $2.1 million for medical and psychiatric evaluations for children in the child welfare system, increasing total funding from $6.6 million to $8.7 million.
  • Provides funding to launch a new performance-based contracting model for child welfare services. The governor includes $1.4 million, including $1 million in state General Fund for the first phase of a new financing model for child welfare services.

Adoption Services

  • Includes a small decrease in funding for adoption subsidies. The governor includes $241 million for adoption subsidies, a small decrease from the current year appropriation of $244 million. Subsidies are provided to families adopting children with special needs, and include both cash and medical subsidies for pre-existing medical or mental health conditions. Adoption subsidy average monthly caseloads increased by 11% between Fiscal Years 2005 and 2010, and have since stabilized at approximately 27,000. The major sources of funding for adoption subsidies are Title IV-E (46%), state General Funds (33%), and federal TANF (21%).
  • Increases incentive payments for private agencies finalizing adoptions. The governor includes a total of $3.2 million—an increase of 5%—for private agencies that are placing children for adoption, including incentive payments to encourage more timely adoption turnaround times.

Family Preservation and Prevention

  • Fails to reinvest in prevention and family preservation services. The governor provides continuation funding for Strong Families/Safe Children ($12.35 million), Family Reunification ($3.98 million), and family preservation and prevention services programs ($2.5 million). Small cuts were made in the Families First program (from $17.2 million to $16.9 million), and the Child Protection and Permanency program ($13.2 million to $12.9 million). Total funding for family preservation and prevention programs fell from $60.6 million in Fiscal Year 2005 to $49.3 million in the current fiscal year—a reduction of nearly 19%, in the face of a 20% increase in the number of substantiated victims of child abuse and neglect.

Other Child and Family Services

  • Provides a small increase in funding for juvenile justice reentry services. The governor recommends $800,000 for services for youths in the juvenile justice system to ease their re-entry into the community.
  • Provides funding for the Healthy Michigan Plan call center. The governor recommends $20.3 million for a call center for Healthy Michigan Plan/Medicaid applicants and recipients.

House:

Foster Care and Protective Services

  • Recommends total funding for foster care payments of $188.4 million, slightly below the governor’s budget, but accepts the governor’s estimated foster care caseload of 6,075, at a projected cost of $28,061 per case for the year.
  • Increases the Child Care Fund to $185.2 million. The House agrees with the governor to pay 100% of the private agency administrative rate for new cases next year (rather than splitting costs with the counties), but appropriated those funds to the Child Care Fund, rather than to the foster care portion of the budget.
  • Includes the governor’s recommended increase in funding for incentive payments for private agencies that finalize adoptions in a timely manner ($3.2 million).
  • Revises the goal limiting the number of children in foster care for longer than 24 months from 31% to 25%.
  • Appropriates an additional $3.7 million (including $3.3 million in state funds) to increase rates paid to private agency residential care providers by slightly over 2%—provided the county match rate is eliminated for the increase.
  • Agrees with the governor to fund the launching of a new performance-based contracting model for child welfare services. The House shifts $100,000 of state funds (from the total $1.4 million recommended by the governor) for a technical assistance contract for Kent County—the first county to pilot the new financing approach. Under the House bill, Kent County would privatize all foster care and adoption services (not child protective services) by Oct. 31, 2014, with performance-based funding in place at that time.
  • Expands the governor’s proposed increase in funding for medical and psychiatric evaluations of abused and neglected children by $100,000 to a total of $2.2 million.

Adoption Services

  • Agrees with the governor on the projected adoption subsidy caseload of 26,800 at an estimated cost of $732 per month per case, as well as total spending for the program of $241.1 million.
  • Concurs with the governor and adds $3.2 million in state funds for incentives for private agency adoptions.
  • Adds budget language prohibiting DHS from using the income of the adoptive parent in determining eligibility for adoption support subsidies.
  • Adds $1 million for a “Parent to Parent” peer mentoring program to provide support for adoptive parents.

Family Preservation and Prevention

  • Concurs with the governor’s recommendation on funding for family preservation and prevention programs, with continuation funding for Strong Families/Safe Children, Family Reunification, and family preservation and prevention services programs, as well as small cuts in the Families First and Child Protection and Permanency programs.

Other Child and Family Services

  • Allocates $3 million for before- and after-school programs, as well as $500,000 for a school success partnership program through the Northeast Michigan Community Services Agency.
  • Approves the governor’s recommendation of $800,000 for services for youths in the juvenile justice system to ease their re-entry into the community.
  • Cuts $8.1 million ($3 million in state General Fund) by closing the Maxey Training School for delinquent youths, transferring those youths to other facilities.
  • Approves $20.3 million for the Healthy Michigan Plan call center.
  • Approves $350,000 for the Michigan Reading Corps to provide literacy services and tutors for students in kindergarten through third grade who are identified as being at risk of reading failure.

Senate:

Foster Care and Protective Services

  • Agrees with the governor on foster care caseloads and costs, projecting a decline in foster care cases to 6,075 next year, and a total reduction in related foster care costs of $2.4 million.
  • Agrees with the governor on a nearly $7 million increase (4%) in the County Child Care Fund, with total funding of $178 million.
  • Agrees with the governor’s recommendation to allocate $1.4 million for the new performance-based contracting model for child welfare services.
  • Increases funding for medical and psychiatric evaluations of children in the protective services and foster care systems by $2 million over the governor’s recommendation, for a total increase of $4.1 million. Total funding would rise to $10.7 million—up nearly 63% from the current fiscal year.
  • Agrees with the governor in approving a $5 million increase in funding to pay 100% of the private child placing agency administrative rate for new cases entering care.
  • Includes $300,000 to cover the costs foster parents incur in transporting their foster children to parent-child visitations.
  • Adds new budget language requiring DHS to set clear policies for parent-child visitations, including written plans with a minimum of 3 hours per child per week.

Adoption Services

  • Concurs with the governor and includes $241 million for adoption subsidies, a decrease of $2.9 million from the current year based on a projected drop in the caseload of 350 cases to 26,800.
  • Increases funding for incentive payments for private agency adoptions by only 3.3% (compared to the 5% recommended by the governor and approved by the House), for a total increase of $2.2 million.
  • Includes $18.8 million to allow adoptive parents to claim enhanced payment rates for children who had special needs that existed at the time of adoption, but were not identified until later. Adoptive parents would be allowed to receive the enhanced rate one time for any eligible child from birth to age 18. This recommended change is in response to complaints filed by adoptive parents that they were not notified that their adopted children had special needs, and includes physically disabled children needing greater supervision and care, as well as children with special mental health needs, requiring special diets, or with antisocial behaviors.
  • Includes budget language prohibiting DHS from negotiating adoption subsidies that are below the standard payment for foster care.

Family Preservation and Prevention

  • Concurs with the governor’s recommendation on funding for family preservation and prevention programs, with continuation funding for Strong Families/Safe Children, Family Reunification, and family preser¬vation and prevention services programs; and small cuts in the Families First and Child Protection and Permanency programs.

Other Child and Family Services

  • Includes $125,000 in state funds to match federal funding for the Michigan Reading Corps—for the purpose of literacy and tutoring services for children in kindergarten through third grade—as well as $300,000 to expand the School Success Partnerships program to four new counties through the Northeast Michigan Community Services Agency.
  • Includes $2.9 million for a database to track youths in the juvenile justice system, funding not included in the governor’s budget or the House budget.
  • Includes $500,000 to expand grants to rural communities to fund new and expanded in-home juvenile justice programs, bringing total funding to $1.5 million.
  • Includes the governor’s proposed increase in funding for juvenile justice reentry services of $800,000.
  • Includes $20.3 million for the Healthy Michigan Plan call center.

Final Budget:

Foster Care and Protective Services

  • Includes $190.8 million for foster care payments, up approximately $3 million from year-to-date 2014 estimated spending. The final budget projects that there will be 6,500 foster care cases in Fiscal Year 2015 at an average cost of $27,085 per year. While recently leveling out, foster care cases have fallen 39% since Fiscal Year 2005.
  • Agrees with the governor to pay 100% of the private agency administrative rate for new cases next year rather than splitting costs with the counties.
  • Increases the Child Care Fund to $175 million, based on new estimates from the May consensus revenue conference.
  • Includes the governor’s recommendation to increase funding for medical and psychiatric evaluations of abused and neglected children by $2.1 million, expanding total funding from $6.6 million to $8.7 million.
  • Agrees with the governor to provide $1.4 million for the launching of a new performance-based contracting model for child welfare services. Also accepts the House decision to shift $100,000 of state funds (from the total $1.4 million recommended by the governor) for a technical assistance contract for Kent County—the first county to pilot the new financing approach.
  • Appropriates an additional $3.7 million as recommended by the House to increase rates paid to private agency residential care providers by slightly over 2%.
  • Includes budget language requiring the DHS to reimburse foster parents who transport foster children to parent-child visitations, as well as clear DHS policies, goals and written plans for visitations, and training for court personnel on the importance of parent-child visitations in foster care cases. Does not include the $300,000 added by the Senate to cover travel reimbursements for foster parents.

Adoption Services

  • Includes $239.8 million for adoption subsidies, a reduction of $4.3 million based on an anticipated caseload of 26,725.
  • Increases incentive payments for private agencies to finalize adoptions in a timely way by 3.3% for a total increase of $2.2 million—down from the governor’s recommended increase of $3.2 million or 5%.
  • Revises Senate budget language prohibiting DHS from negotiating adoption subsidies that are less than 95% of the standard payment for foster care.
  • Includes $7.9 million (down from the Senate recommendation of $18.8 million) to allow adoptive parents to claim enhanced payment rates for children who had special needs that existed at the time of adoption, but were not identified until later.
  • Adds $700,000 (down from the $1 million approved by the House) for the adoptive family support network to operate and expand into additional regions.

Family Preservation and Prevention

  • Provides continuation funding for most prevention and family preser¬vation services, after a reduction of nearly 19% in programs to prevent child abuse and neglect between fiscal years 2005 and 2014.

Other Child and Family Services

  • Rejects the House proposal to spend $3 million for before- and after-school programs.
  • Includes the House proposal to provide $350,000 for the Michigan Reading Corps to provide literacy services and tutors for students in kindergarten through third grade who are identified as being at risk of reading failure.
  • Includes $300,000 to expand the School Success Partnerships program to four new counties through the Northeast Michigan Community Services Agency.
  • Rejects the House plan to cut $8.1 million by closing the Maxey Training School for delinquent youths.
  • Includes $800,000 recommended by the governor for services for youths in the juvenile justice system to ease their re-entry into the community.
  • Includes $1 million (down from the $2.9 million approved by the Senate) for a database to track youths in the juvenile justice system.
  • Includes $250,000 (down from the $500,000 adopted by the Senate) to expand grants to rural communities to fund new and expanded in-home juvenile justice programs.
  • Provides slightly less funding ($19.5 million) for the Healthy Michigan Plan call center.

Endnotes:

1 Based on Senate Fiscal Agency estimates of year-to-date Fiscal Year 2014 spending, from F. Carley, Human Services S.B. 769 Decision Document, Senate Fiscal Agency (June 12, 2014).
2 K. Koorstra, Human Services Background Briefing, House Fiscal Agency (December 2013), and memorandum from K. Koorstra regarding FIP and FAP caseloads (June 12, 2014).

Postsecondary Education Budgets Take Good Steps, But University Tuition Remains Unaffordable

Michigan is taking some small steps toward postsecondary education affordability in the FY 2015 budget by continuing to make a portion of university funding contingent on keeping tuition increases within 3.2% (“tuition restraint”), by adding a performance funding indicator that rewards universities based on enrollment of students with Pell Grants, and by increasing appropriations for financial aid.

Because Michigan does not have a state agency that exercises financing or policy authority over its universities and community colleges, decisions made during the budget process are often designed to force policy changes.

For Fiscal Year 2014-15, funding for the Tuition Incentive Program, a needs-based grant for Medicaid-eligible students, is increased by $1.5 million (3.2%). This grant pays all expenses for an Associate Degree or certificate from a community college, and $2,000 for continuation at a four-year university. Funding for the Tuition Grant, a needs-based grant for attendance at private institutions, is increased by $1.9 million (5.9%). Funding for the Michigan Competitive Scholarship, for which eligibility is based on both merit and need, comes from Michigan’s TANF block grant and remains at the current level.

Community colleges remain affordable in Michigan, but university education is not, due to appropriations decisions over the past 12 years. Since 2002, universities have become increasingly dependent on tuition as the state reduced its support, and as a result, nearly 75% of current university operations funding comes from student tuition and fees, while less than 25% comes from state General Fund appropriations. Most universities doubled their tuition between 2003 and 2013 to make up for the loss in state funding, and Michigan now has the sixth-highest university tuition in the nation while Michigan students hold some of the highest debt. While the 5.9% increase in university appropriations and the 3.2% limit on tuition increases are steps in the right direction, they do not go far enough toward making university tuition affordable.

Community Colleges

Governor’s Budget:

  • Appropriates a 3% ($8.9 million) increase in total funding for community college operations, which is distributed among the 28 Michigan community colleges according to the following metrics: proportional increase from FY 2013-14 funding (50%), weighted completions (17.5%), student contact hours (10%), administrative costs (7.5%) and local strategic value (15%). (Colleges receive the local strategic value portion if they meet four out of five listed best practices in each of the following areas: a) economic development and business/industry partnerships, b) educational partnerships, and c) community services.)
  • As in previous recent years, the majority of overall funding in the governor’s budget for community colleges comes from the School Aid Fund ($197.6 million, an amount equal to the current School Aid Fund appropriation) and the rest comes from the General Fund ($173.9 million, a 26% increase over the current General Fund appropriation).
  • Includes, for the first time, a tuition restraint prerequisite (similar to the one for universities) that conditions receipt of metric funding on limiting FY 2014-15 tuition and fee increases for resident students to 3.2%.

Senate:

  • Concurs with the governor on the increase in operational and performance funding.
  • Appropriates more money from the General Fund ($323.9 million) than the governor, and less from the School Aid Fund ($47.6 million).
  • Does not include the governor’s recommended tuition restraint provision.

House:

  • Concurs with the governor on the increase in operational and performance funding.
  • Concurs with the governor on the amount of funding from the General Fund ($173.9 million) and from the School Aid Fund ($197.6 million).
  • Does not include the governor’s tuition restraint provision.
  • The House Appropriations Committee included boilerplate, supported by the League, and a $100 placeholder to develop a program by which students could obtain a GED at a community college free of charge if committing to enroll in an academic or vocational program. The state would reimburse community colleges for eligible costs associated with providing the GED programs or testing. The boilerplate language and placeholder were removed on the House floor.

Final Budget:

  • Increases community college operations by $8.9 million. Continues to use money from the School Aid Fund for more than half of the total community college funding (operations plus employee retirement system payments), with $167.1 million from the General Fund and $197.6 million from the School Aid Fund.
  • Does not include tuition restraint provision.
  • Does not include House budget language establishing a new program by which students could obtain a GED at a community college free of charge.

Universities

Governor’s Budget:

  • Increases the total appropriation for university operations by $76.9 million (6.1%) over the current fiscal year. As in previous recent years, this increase is in the form of performance funding, though the formula has been modified so that half of the increase goes proportionally to universities to make up for funding lost in 2012.
  • Includes a new performance metric that rewards institutions based on the number of students receiving Pell Grants, a positive change that attempts to encourage universities to become more accessible to low-income students.
  • Continues the practice begun two years ago of requiring universities to limit tuition increases to 3.2% or less in order to receive any performance funding. This “tuition restraint” prerequisite for receiving performance funding helps to keep postsecondary education affordable for low-income students.

Senate:

  • Concurs with the governor in increasing the total appropriation for university operations by $76.9 million (6.1%) over the current fiscal year.
  • Concurs with the governor’s performance funding and tuition restraint changes.

House:

  • Increases university operations funding by $70.4 million (5.6%) over the current fiscal year.
  • Concurs with the governor’s performance funding and tuition restraint changes.

Final Budget:

  • Increases university operations by $74.6 million (5.9%) in performance funding, an amount slightly lower than what was proposed by the governor. Despite the increase, the total General Fund appropriation for universities remains lower than that of all fiscal years from FY 2001 to FY 2011.
  • Includes the governor’s new Pell Grant indicator for performance funding.
  • Maintains the governor’s 3.2% tuition restraint requirement for receiving performance funding.

Financial Aid

Michigan’s three financial aid grants are funded through the Higher Education budget even though students at community colleges and private, not-for-profit institutions are also eligible.

Governor’s Budget:

  • Increases the Tuition Incentive Program by $1.5 million over the current fiscal year, for a total of $48.5 million. The increase is entirely from the General Fund, but $43.8 million (90%) of total funding for TIP is from the state’s TANF funds.
  • Provides total funding for all financial aid grant programs of $103.1 million, some of which comes from the federal Temporary Assistance for Needy Families allocation.
  • Does not increase the Michigan Tuition Grant program, but adds a requirement that independent colleges submit data, including student performance data (Tuition Grant students enrolled in remedial education and/or completing degrees, Pell Grant students completing degrees), to the P-20 system in order to participate in the Tuition Grant program—a change supported by the League.

House:

  • Increases the Tuition Incentive Program by $1.5 million over current year, and the Michigan Tuition Grant by $1.8 million over the current year.
  • Includes the governor’s P-20 data reporting requirement for participation in the Tuition Grant program.

Senate:

  • Increases the Tuition Incentive Program by $1.5 million over current year.
  • Does not increase the Michigan Tuition Grant. Requires only that participating independent colleges submit data on students receiving the Tuition Grant, instead of including the governor’s proposed requirement that they submit data on all students.

Final Budget:

  • Increases funding for the Tuition Incentive Program by $1.5 million (3.2%) to a total of $48.5 million, 90% of which is paid out of Michigan’s TANF block grant.
  • Increases funding for the Michigan Tuition Grant by $1.9 million (5.9%) and includes the Senate’s data reporting requirement rather than that proposed by the governor. Complete data reporting to Michigan’s P-20 longitudinal data system is crucial for evaluating strategies to help at-risk and low-income students, so it is hoped that the governor’s requirement will be in the final budget next year.
  • Maintains $18.4 million in funding for the Michigan Competitive Scholarship, which is merit-based as well as need-based. Although it is awarded to students who are not low-income as well as to those who are, all of this funding comes from Michigan’s TANF block grant.

Community Health Budget Invests in Healthy Workforce

 

For a state to prosper, it must have healthy residents. For individuals to prosper, they must be healthy and have access to the healthcare services they need. The Department of Community Health budget for the year that begins Oct. 1 provides substantial investments to achieve a healthy population and healthy workforce.

The budget includes full-year funding for the Healthy Michigan Plan (Michigan’s Medicaid expansion program), continues expansion of Healthy Kids Dental to Kalamazoo and Macomb counties, continues half of the primary care provider rate increase implemented in 2013, includes funds to begin implementation of the Mental Health and Wellness Commission recommendations, restores funding for senior meals and services, increases Medicaid obstetric payments for both the doctors and some hospitals and expands Medicaid coverage of breast pumps. The budget also funds a number of initiatives or pilot programs to improve the health and health outcomes of Michigan residents.

Potential funding shortfalls for Medicaid health plan services, as well as public mental health services, were identified during the budget process. A reserve fund for managed care plan services was included in the final budget to cover new costs health plans will be responsible for under the Affordable Care Act. No additional funding was included in the final budget for non-Medicaid mental health services as the Senate-recommended additional funding of $4.8 million was ultimately rejected.

The controversy about adequacy of funding to maintain the same level of services for non-Medicaid eligible recipients continues. A Senate Fiscal Agency memorandum, released on June 19 concludes: “There are legitimate reasons to be concerned whether FY 2014-15 funding for CMH non-Medicaid services is sufficient to maintain services at the same level as in prior years.” This issue must be resolved to ensure services and programs are not reduced or eliminated for those fragile and vulnerable populations who depend on them.

The Health Insurance Claims tax shortfall of $110 million was resolved in the final budget through the restoration of the previous use tax on Medicaid managed care organizations rather than by adding state General Funds. The claims tax shortfall has created a funding problem in each of the last three fiscal years.

Of concern is the practice of taking ongoing program funding and reclassifying it as “one-time” funding as has been done with graduate medical education and several other programs over the last few years, making program planning and administration very difficult. Long-term success, requires long-term investments.

The Community Health budget is the state’s largest, growing by over 72% between Fiscal Years 2006 and 2015. Of note, the state General Fund investment has only increased 9% over the Fiscal Year 2006 appropriation. This year, federal funds make up nearly 70% of the budget. The bulk of the total funding, nearly three-fourths, is for the state’s Medicaid and Healthy Michigan Plan programs.

Medicaid

Approximately one in every five Michigan residents is enrolled in Medicaid for their healthcare coverage, and more than half of all births in the state are paid for by the program. In each of the last three years, half of the children in the state have been covered by Medicaid as child poverty in Michigan continues to increase.

In the current fiscal year, the governor projects that 1.82 million Michigan residents will be covered by Medicaid, and recently set a target of enrolling 322,000 individuals in the Healthy Michigan Plan that opened for enrollment on April 1. Program enrollment is off to a great start with more than 315,000 individuals enrolled as of June 30, 2014.

Governor’s Budget:

  • Provides full-year funding of $2.2 billion, all federal funds, for the Healthy Michigan Plan, along with 36 new positions to administer the program. The Healthy Michigan Plan, championed by Gov. Snyder, provides comprehensive healthcare coverage to individuals with incomes up to 133% of the federal poverty level ($15,521 for an individual, $31,721 for a family of four).
  • Recognizes state General Fund savings of over $243 million as a result of Michigan’s implementation of the Healthy Michigan Plan. The savings are realized because the state previously spent 100% state funds for limited services to very low-income uninsured individuals, and with the expansion, federal funds will be available to pay for services for this population. The governor recommends that half of the savings, or $122 million, be placed in a newly created Health Savings Fund that would ensure that the state has sufficient funds to cover future reductions in federal matching funds. Healthy Michigan Plan funding is 100% federal for calendar years 2014, 2015, and 2016. The federal funding declines during calendar years 2017- 2019, reaching 90% in 2020, where it remains.
  • Includes $25.2 million for autism services, down from $35.2 million in the current year. The funding reduction is not a program reduction, but reflects a slow start-up for the program due to the need to develop provider capacity. To increase needed capacity, $3 million in continuing “one-time” funding– increased from $2 million in the current fiscal year–is recommended to train autism services providers through the creation of university autism centers. In Fiscal Year 2014, grants of $500,000 each are allocated to Eastern Michigan, Western Michigan, Central Michigan and Oakland universities. The Fiscal Year 2015 recommendation allocates $1 million each to Eastern Michigan, Western Michigan and Michigan State universities.
  • Recommends $26 million in state funds, bringing in $49.4 million in federal funds, to continue approximately half of the rate increase for primary care providers. This rate increase, which brings Medicaid rates up to Medicare levels, is required by federal law in calendar years 2013 and 2014, and is 100% federally funded. In calendar year 2015, the rate increase is no longer required or 100% federally funded, so a state investment is required to continue.
  • Eliminates $35.6 million in special payments for rural and sole community hospitals, saving $12 million in state General Fund. These funds were classified as “one-time” funding in Fiscal Year 2012, but converted to ongoing funding for Fiscal Years 2013 and 2014.

House:

  • Concurs with the governor’s recommendation for full-year funding for the Healthy Michigan Fund, as well as the additional staff to administer the program, but creates a separate staffing line-item.
  • Concurs with the governor on state General Fund savings of over $243 million as a result of implementation of the Healthy Michigan Plan.
  • Concurs with the $10 million budget reduction in autism services, but does not concur with the recommended increase in university training funds. The House reduces the training funding from $2 million to $1.5 million in “one-time” grants, and specifies $500,000 in continuing grants to Eastern and Western Michigan universities and adds $500,000 for Michigan State University.
  • Concurs with continuing a portion of the primary care provider rate increase, but recommends a lower level of funding — $21.4 million in state funds and $40.7 million in federal funds.
  • Rejects the Executive recommendation to eliminate special payments to rural and sole community hospitals, and recommends continuation funding with a new mix of funds, including provider taxes and federal funds—maintaining the state General Fund savings proposed by the governor.

Senate:

  • Concurs with the governor and the House on full-year funding and additional staffing, in a new line-item, for the Healthy Michigan Plan.
  • Concurs with the governor and the House on state General Fund savings of over $243 million from implementation of the Healthy Michigan Plan.
  • Concurs with the $10 million budget reduction in autism services, and recommends that $4 million from the Autism Coverage Fund be used to replace $4 million in General Fund. This would require a law change. The Senate also recommends increases rather than reductions in university training funds. The Senate restores funding of $500,000 each to Central Michigan and Oakland universities, concurs with the governor on the $1 million grants each to Eastern Michigan, Western Michigan and Michigan State universities, and adds $1.5 million for “autism navigators” to assist families in choosing treatment and services.
  • Concurs with the governor on the primary care provider rate increase.
  • Rejects the Executive recommendation to eliminate special payments for rural and sole community hospitals, and recommends continuation with the current financing of state and federal funds.

Final Budget:

  • Includes full-year funding, all federal funds, for the Healthy Michigan Plan as well as 36 new positions to administer the program.
  • Includes state General Fund savings of $232 million in recognition of previously state-funded services provided to newly eligible Healthy Michigan Plan enrollees that will be covered by the federal government. The governor recommended that half of the savings be deposited in a healthcare savings account to be used in future years when the state must contribute a small percentage of the cost of the Healthy Michigan Plan. Due to the reduced May 2014 revenue projections, that deposit will not be made.
  • Includes $25.2 million for autism services, a reduction of $10 million in recognition of the slow start-up of the program and the need to develop provider capacity. This is not a program reduction. In addition, $5.5 million in new funding from the Autism Coverage Fund is added to $3 million in state General Funds ($1 million new funds) to provide grants for university autism centers to provide research, education and training, as well as a new support program for families. University grants include: $4 million to Western Michigan University Autism Center for Excellence, $1 million each to Michigan State and Eastern Michigan Universities, $500,000 each to Central Michigan and Oakland Universities. The $1.5 million family support program will assist families in choosing service and treatment options. The new funding is designated as one-time funding.
  • Includes funding to continue about half of the primary care rate increase implemented in calendar year 2013. A state investment of $25 million is included to continue a portion of this key provider rate increase.
  • Continues $35.6 million for special payments for rural and sole community hospitals.
  • Provides an increase in obstetrical service payments to physicians ($4.8 million in state funds, $9 million in federal funds) and to qualifying rural hospitals ($3.8 million in state funds, $7.2 million in federal funds). Over the last several years, many hospitals have closed their obstetrical units due to low Medicaid reimbursement, leaving many communities without obstetrical services.
  • Includes funding of $1.7 million in state funds, $3.3 million in federal funds to recognize the impact of the recently passed minimum wage increase on the Adult Home Help program.
  • Provides a 6% rate increase for adult foster care personal care services.
  • Transfers $4.3 million in Graduate Medical Education funding from one-time back to ongoing funding.
  • Does not include Senate-recommended restoration of funding for the Harper/Hutzel Hospital’s special payment. The hospital operates an infant mortality program with the National Institutes of Health, and has indicated it would maintain the current focus on improving the health status of women and children.

Healthy Kids Dental

Michigan currently provides enhanced dental services to more than 500,000 children in 78 counties. Access to dental services is essential to prevent tooth decay, the NO. 1 chronic disease in children. Healthy Kids Dental improves access to care by partnering with Delta Dental of Michigan to increase provider reimbursement rates and simplify administration. With Michigan’s dismal ranking in the Race for Results for African American children, expanding Healthy Kids Dental to the remaining counties presents a tremendous public policy opportunity.

Governor’s Budget:

  • Includes $5.4 million in state General Fund and $10.3 million in federal funds to expand the Healthy Kids Dental program to an additional 100,000 children in Kalamazoo and Macomb counties. With that expansion, the program would cover over 611,000 children in 80 of 83 Michigan counties. Not yet covered are more than 400,000 children in three of the most populated Michigan counties that are the home to many low-income children and children of color, including Wayne, Oakland and Kent counties.

House:

  • Concurs with the governor and makes no recommendation to expand Healthy Kids Dental to the remaining counties.

Senate:

  • Concurs with the governor and the House on Healthy Kids Dental funding and makes no recommendation to expand the program to the remaining counties.

Final Budget:

  • Includes $15.7 million recommended by the governor to expand Healthy Kids Dental to Kalamazoo and Macomb counties, covering an additional 100,000 children. However, more than 400,000 low-income children in Wayne, Kent and Oakland counties are left behind, nearly 40% of the eligible children.

Mental Health and Substance Abuse Services

Since Fiscal Year 2005, Medicaid-related mental health spending has increased by over 50%, while non-Medicaid spending has decreased, leaving thousands of residents without needed services. Funding for substance use disorder services increased by 12%, largely because of increases in federal funding, but fewer individuals were served in Fiscal Year 2013 than in the previous 9 years, despite the growing problem with heroin and other opiate addictions.

Governor’s Budget:

  • Supports the Healthy Michigan Plan, and with the expansion of Medicaid eligibility, enrolled individuals will also have access to comprehensive mental health and substance use disorder services. Again, great concern has been raised about the adequacy of the funding to provide the promised services.
  • Recommends $15.6 million in state General Fund, $5 million of which is “one-time” funding, to begin implementation of the recommendations of the Mental Health and Wellness Commission, which released its recommendations for improvements in mental health services in January 2014.
  • Recommends $3.4 million in state General Fund for the Mental Health Diversion Council to treat those with mental illness or developmental disabilities in settings other than the criminal justice system. Additional funding of $2.7 million is included in the Judiciary and Corrections budgets.

House:

  • Concurs with the Executive recommendation to expand mental health and substance use disorder services through the Healthy Michigan Plan.
  • Concurs with the governor on $15.6 million in state funding to implement Mental Health and Wellness Commission recommendations, and also adds potential federal funding (yet to be identified), to increase programming capacity by $22 million.
  • Concurs with the governor and adds $3.4 million in state General Fund for the Mental Health Diversion Council.

Senate:

  • Concurs with the governor and the House on expansion of services through the Healthy Michigan Plan, and also adds $4.8 million General Fund for community mental health non-Medicaid services.
  • Adds $100 placeholders for additional legislative discussions on expanded funding to implement the recommendations of the Mental Health and Wellness Commission.
  • Includes a $100 placeholder for additional funding for the Mental Health Diversion Council.

Final Budget:

  • Includes federal funding to cover mental health and substance use disorder services for the newly eligible Healthy Michigan Plan enrollees. Savings associated with the implementation of Healthy Michigan Plan were reduced $16 million in recognition of lower projected mental health savings. However, as mentioned above, there has been considerable controversy about the adequacy of remaining state funding to maintain the same level of services for non-Medicaid eligible individuals, and services not funded by the Medicaid program. State funds for non-Medicaid/Healthy Michigan Plan services were reduced by two-thirds.
  • Includes $14.3 million in state funds and $22.2 million in federal funds to begin implementing the recommendations of the Mental Health and Wellness Commission. Of the appropriated amounts, $5 million of the state funds and $4 million of the federal funds are classified as one-time funds.
  • Includes $3.4 million to implement recommendations of the Mental Health Diversion Council to treat those with mental illness or developmental disabilities in settings other than the criminal justice system.

 Public Health and Children’s Services

Nearly two of every three dollars spent on public health services is federal. Over the last decade, nearly all increases in total public health funding have been from federal grants or other sources, while state funding has remained essentially flat.

Governor’s Budget:

  • Recommends continuation funding of $39.4 million for local public health services. Appropriations for local public health essential services, while increased by $2 million in Fiscal Year 2014, remain below the Fiscal Year 2005 appropriation.
  • Includes $2.5 million in state funds to conduct a regional needs assessment and expand home visiting services to at-risk families with young children in rural areas in the Upper Peninsula and Northern Lower Peninsula.
  • Includes $2 million in “one-time” state funding for a pilot program to improve child and adolescent health services by working with two existing school-based clinics to identify satellite locations that will be serviced by mobile teams, increasing access to nursing and behavioral health services in schools.
  • Increases the essential health provider program by $600,000 to reflect projected additional private revenue. This program assists primary care providers who practice in medically underserved areas with the repayment of their educational loans.

House:

  • Provides a $1.5 million state General Fund increase for local public health services, bringing total funding to the level of the Fiscal Year 2005 appropriation.
  • Concurs with the governor by adding $2.5 million for home visiting services in rural areas, but funds the expansion with federal (TANF) funds, rather than state funds.
  • Concurs with the governor on adding $2 million for a child and adolescent health services pilot program, but funds with federal (TANF) funds, rather than state funds.
  • Concurs with the governor by increasing the essential health provider program by $600,000.

Senate:

  • Includes a $100 placeholder for discussion of the House-recommended expansion of funding for local public health services.
  • Concurs with the House by adding $2.5 million in federal TANF funds for home visiting services in rural areas, and also adds a $100 placeholder for a potential funding increase for evidence-based home visiting.
  • Concurs with the House by adding $2 million in federal TANF funds for a child and adolescent health services pilot program.
  • Concurs with the governor and House, adding $600,000 in private funds for the essential health provider program, and also adds $500,000 in state General Fund.

Final Budget:

  • Includes $1.5 million in state funds to bring total funding for local public health operations back to the level of the FY2005 appropriation.
  • Includes $2.25 million in state funds to expand home visiting programs in northern Michigan and the Upper Peninsula to pregnant women and families with children up to age 5. A regional needs assessment will identify sites and potential participants.
  • Includes $1.5 million to test a new financing tool for certain services in limited target areas. Known as Social Impact Bonds, but referred to as Pay for Success Contracts in the Community Health budget, the goal is to deliver needed services in an innovative manner that improves outcomes and reduces government costs. Non-governmental organizations provide up-front funding and assume the risk for programs that are developed and delivered by non-profit organizations.. Government payments are then made only when performance measures are achieved and savings are documented. The Fiscal Year 2015 pilot projects will focus on home visiting programs for mothers and infants, and community supports in high risk neighborhoods.
  • Includes $100,000 state General Fund to increase the Pregnancy and Parenting Support Program to $800,000.
  • Includes $150,000 state General Fund to increase diabetes prevention funding to $800,000.
  • Includes $150,000 state General Fund to establish a pilot program to provide more comprehensive services and supports to individuals with Alzheimer’s disease to enable them to remain in their homes as long as possible, delaying potential moves to long term care facilities.
  • Includes $100,000 state General Fund to increase the Pregnancy and Parenting Support Program to $800,000.
  • Includes $150,000 state General Fund to increase diabetes prevention funding to $800,000.
  • Includes $150,000 state General Fund to establish a pilot program to provide more comprehensive services and supports to individuals with Alzheimer’s disease to enable them to remain in their homes as long as possible, delaying potential moves to long term care facilities.
  • Includes $2 million, classified as one-time funds, for a pilot project to increase child and adolescent access to nursing and behavioral health services using two existing school clinics as hubs with mobile health teams serving satellite locations.
  • Includes $1.1 million in new funding for the essential health provider program. About half of the funding is state General Fund, the remainder is private funds.
  • Includes $200,000 in state funds to support efforts to combat human trafficking in Michigan.
  • Includes $500,000 in additional funding to create more healthy homes through lead abatement.
  • Includes $500,000 for breast cancer screening and services. These funds represent a partial restoration of the prior Health and Wellness funded services. All funds for “cancer prevention and control” services from the Health and Wellness fund were eliminated in the current fiscal year.

Services for the Aging

Governor’s Budget:

  • Includes $5 million in state funds to help eliminate the waiting list of an estimated 4,500 seniors eligible for home-delivered meals ($1.8 million) and in-home services ($3.2 million) provided through Area Agencies on Aging around the state. With this increase in home-delivered meals, the reductions in funding over the last decade have been completely restored.
  • Expands funding by $9 million in state funds, $17.2 million in federal funds, to eliminate the waiting list for the MIChoice program that provides in-home and community services to help seniors or those with disabilities remain in their homes rather than moving to nursing homes, serving an additional 1,250 individuals.
  • Recommends the expansion of PACE (Programs for All-Inclusive Care for the Elderly) to more counties, expanding sites to Flint, Lansing, and Saginaw, with funding from corresponding savings in nursing home costs.

House:

  • Concurs with the governor, adding $5 million for home-delivered meals and in-home services for seniors.
  • Concurs with the governor by expanding the MIChoice program by $9 million in state funds and $17.2 million in federal funds.
  • Concurs with the governor on the expansion of the PACE program.

Senate:

  • Concurs with the governor and House, adding $5 million for home-delivered meals and in-home services for seniors.
  • Concurs with the governor and House by expanding the MIChoice program by $9 million in state funds and $17.2 million in federal funds.
  • Concurs with the governor and House on the expansion of the PACE program.

Final Budget:

  • Includes $5 million for home-delivered meals and in-home services for seniors.
  • Expands the MIChoice program to eliminate waiting lists and allow seniors and those with disabilities to remain in their own homes or the community rather than moving to nursing homes by adding $9 million in state funds and $17.2 million in federal funds.
  • Expands PACE (Program for All-Inclusive Care for the Elderly) to Flint, Lansing, and Saginaw, and Muskegon funded by projected savings from reduced nursing home utilization.

Right Start in Michigan 2014: Maternal and Infant Well-Being in Michigan’s Legacy Cities

 

 

  

As Michigan retools for a post-industrial economy, it must address the needs of its legacy cities. These cities have borne the brunt of the state’s long sustained economic decline and dwindling resources, but they continue to be the home for a substantial share of young children. On a range of indicators of maternal and infant well-being babies born to women living in these cities are much worse off than those born in the out-county areas.

Substantial numbers of children are affected. In 2012 roughly one-quarter of all newborns in the state were born to mothers living in these 15 cities across the southern half of the state.1 On average, one of every three county births was to a legacy city resident. To improve the lives of young children, the well-being of mothers and infants in these cities must be addressed.

Despite their decline, these 15 cities still have the largest number of births among the cities in their counties.2 While Detroit had by far the largest number of births (over 10,000) among the cities, representing slightly less than half of all births in Wayne County, the cities of Lansing (Ingham) and Battle Creek (Calhoun) had the majority of births in their counties. Clearly the fate of these legacy cities not only affects the current and future well-being of many children but also the social and economic fate of the state.

Racial/Ethnic Diversity is Concentrated in Michigan’s Legacy Cities and Their Counties.

The diversity of Michigan’s newborns is concentrated in its 15 legacy cities and their counties. While these cities have only 18% of the total state population, they house one-quarter of all births and half of all infants born to mothers in communities of color. Furthermore, almost all (90%) of the state’s infants born to women of color were located in the 15 counties where Michigan’s legacy cities are situated.

In four of the 15 Michigan legacy cities, the majority of infants were born to women of color, and almost all the legacy cities experienced an increase in minority births between 2006 and 2012. Only Grand Rapids, Holland and Ann Arbor experienced slight decreases over the trend period.3 While the state’s largest city, Detroit, had the largest concentration of infants born to women of color—over 90%, Warren in Macomb County sustained the steepest jump (70%)—minority births rose from 22% to 38% of all births.  

While the percentage of infants being born to women of color increased in the legacy cities, the overall number of births decreased with the largest declines occurring in the cities of Muskegon and Jackson where births dropped by roughly one-third between 2006 and 2012. Warren, with the largest increase in diversity among its infants, experienced the smallest drop in its births—only 4%.

Women Giving Birth in the Legacy Cities Are More Likely to be Uninsured and Low-Income.

The trends in the numbers of births, the racial/ethnic diversity and economic status of mothers of newborns all shape the well-being of the next generation. Women residing in the legacy cities were much less likely to have health insurance and incomes adequate for basic needs. In 2012 just over three of every five women who had a baby while living in one of the legacy cities qualified for Medicaid compared with two of every five in the out-county areas in the 15 counties. While income eligibility for Medicaid extends to almost double the poverty level (185%) for uninsured pregnant women, coverage for the mother at this income level ended six weeks after delivery and for the baby after the first year of life.4

Access to health care for women will significantly improve under the Affordable Care Act that requires comprehensive services, including preventive services at no cost and maternity benefits that have not been generally included in private coverage. The Healthy Michigan Plan will provide comprehensive coverage, including dental and vision, with minimal copays for those with income up to 133% of the federal poverty level.5 For women with income above that level, coverage is available through the market place with sliding scale premiums and cost-sharing subsidies.

Overview of Maternal/Infant Well-Being in Michigan’s Legacy Cities.

Michigan’s legacy cities have many characteristics in common but the ranges on the following eight key measures for maternal and infant risk (see table above) also reflect substantial differences among the cities. For example, Ann Arbor had lower risk on most measures than those in the out-county. In contrast, the cities of Pontiac, Flint and Detroit have some of the highest levels of risk for mothers and infants among the cities and were worse on every measure than their out-county areas.

Overall, the legacy cities had worse outcomes than their out-county areas on the eight key measures of maternal and infant well-being tracked in this report. Three indicators reflected dramatically worse conditions for mothers.6 Compared with infants born to women from out-county areas, those in the legacy cities were:

  • more than twice as likely to be born to women without a high school diploma or GED,
  • roughly twice as likely to be born to a teenager and
  • nearly twice as likely to be born to a single parent.

In contrast, a legacy city infant had only a 20% higher risk than an out-county peer of being born too soon. These inequities in birth circumstances get amplified as children spend their growing up years in communities with sparse resources and intensify over time as fewer state-supported early prevention and intervention programs are available.

Trends in maternal and infant well-being moved in the same direction for the legacy cities and their out-county areas, only the changes are more dramatic in the cities on four of the five measures.7 Only the largest change in the out-county areas—the 25% increase in births to single women—reflected a more substantial change than the cities.

Overall for both groups only two of the five risks—teen births and repeat teen births—have declined while percentages of unhealthy births and those to unmarried women have risen. The most disturbing finding was the dramatic (24%) increase in the percentage of babies born too soon among women in the legacy cities although the 15% average increase in out-county preterm births should also be a cause for concern. The next sections review each indicator in more detail across the 15 legacy cities.

1. Teen births declined in all but one legacy city.

The percentage of teen births averaged 13% of live births across the legacy cities, and the cities with the largest percentages –Saginaw, Detroit and Flint –reflected only slight decreases over the trend period.8 While it is troubling to see the minimal decline in teen childbearing in the cities with the largest percentages of births to this age group, some cities, such as Jackson, Bay City and Lansing experienced substantial progress on this measure between 2006 and 2012. Furthermore, among the legacy cities only Warren experienced an increase in its share of births to teens although it still had the second lowest percentage (9%). Ann Arbor had by far the smallest percentage of births to teenagers—only 2% compared with 9% in Warren (the second smallest percentage).

Large percentages of births to teenagers in a community strain resources as these young women and girls are also more likely to be single and lack a high school diploma or GED. Most will not be able to compete for a job that has a wage that will allow them to support themselves and a child. Low-income women struggle to afford child care. The average cost of infant care from a licensed provider in Michigan, ranging from $529 a month in a family home to $756 in a day care center, would consume nearly half or more of the gross income from a full-time minimum wage job ($7.40 an hour or $15,392 annual). Michigan’s child care subsidy program with its per-hour payments, administrative intricacies and low rates fails to assist most low-income parents.

2. In roughly half the legacy cities one of every four teen births was to a teen already a parent.

While having a baby as a teenager can pose a major hurdle to finishing an education and getting post-secondary training, a second or third baby further intensifies parental responsibilities that can interfere with school or work—critical activities for a successful transition to adulthood. The higher costs of child care for additional children may also present a significant barrier to securing work or going to school.

In seven of Michigan’s legacy cities roughly one of every four teen births was to a teen who was already a parent. The seven cities with the highest percentages of births to teens who were already parents were within a few percentage points. The city of Jackson had the worst rate with 26% of teens giving birth being parents while Bay City and Warren had the lowest percentages, 14% and 15% respectively—still substantially higher than the state average (9%).

Bay City had the largest decrease on this measure— 37% decline over the trend period— while Jackson and Battle Creek saw their rates bump up by 12%.9

3. Non-marital births rose in all but one legacy city

While the condemnation of child-bearing among unmarried women has eased compared with previous generations, children in mother-only families in Michigan face substantial challenges to their well-being. In today’s economy most families require more than one wage earner to meet the cost of basic needs such as housing, transportation and food. Numerous studies have demonstrated that an income of double the poverty level is required (roughly $36,000 for a family of three and $44,000 for a family of four). 10

Fathers who do not acknowledge paternity may not be involved in supporting their offspring financially. Lack of support from absent parents weakens economic security for single mothers and their children since women, especially mothers, earn less than their male counterparts in similar jobs. Furthermore single parents often struggle to combine job and parental responsibilities, particularly in low-wage employment.

Non-marital births are concentrated among younger women and those with a high school degree or less, who are more likely to work in these jobs that rarely offer any flexibility or vacation or sick time. Roughly 60% of Michigan women with a high school diploma/GED who gave birth in 2013 were single compared with only 10% of those with a bachelor’s degree. Half of women with less than a high school education lose their jobs or quit after having a baby.11

Finding or affording child care can be a challenge to sustained employment. The average cost of infant care, which requires a lower ratio per provider, can easily exceed over half the net income from a minimum wage job. Michigan’s child care subsidy payment falls well below the average cost and requires extensive online documentation by the parent and provider.

A growing number of young children live in single parent households, not only in the state but in the legacy cities. Births to single women increased between 2006 and 2012 in all legacy cities except Ann Arbor, with the largest increase (41% higher) occurring in the city of Warren. In the four cities with the highest rates, three or more of every four births were to unmarried women.

 4. On average, roughly one of every five babies in the legacy cities was to a woman with no high school diploma or GED.

The four cities with the largest percentages of births to unmarried women also had the largest percentages of births to women who had no high school diploma or GED: one of every three newborns in Pontiac and Detroit was born to a mother without a secondary education completion credential. Ann Arbor had the lowest rate (3%) by far: The second lowest (15%) in Warren was five times higher.

 Without strong programs to help these mothers continue or complete their education and gain some postsecondary training, they will be hard-pressed to earn enough to support themselves and their children. Their only options will be low-wage jobs with little or no flexibility, vacation or sick time so their ability to engage in the health and education needs of their children will be compromised.

 

 

 5. One of every four babies was born to women who smoked during pregnancy.

Michigan has one of the highest smoking rates in the nation (23% vs. 19% US) yet spends just over $ 1 million on prevention, and well over half of the funding for its prevention programs comes from federal funds. Even more disheartening, none of the $279 million from the tobacco settlement is allocated to staunch tobacco use and its deadly consequences on children and families. The Centers for Disease Control and Prevention recommends investing at least 15% of tobacco settlement funds in a well-sustained multi-media campaign, an approach that has demonstrated success.

Smoking endangers not only the health of the prospective mother by elevating her risk for cancer, heart disease and other health problems, but it also heightens the likelihood her baby may be born too soon, too small or have birth defects. Tobacco’s harmful chemicals such as tar, nicotine and carbon monoxide, reduce oxygen supply to the baby, slowing growth and development.

Secondhand smoke also harms mothers and children. It can precipitate respiratory ailments in infants and young children who live in homes where adults smoke. While roughly 22,000 Michigan women who gave birth in 2013 reported smoking during their pregnancy, in more than half these households someone else smoked as well. An additional 8,000 stated that although they did not smoke during the pregnancy, another adult in the house did. With more restrictions on smoking in public and work spaces secondhand smoke exposure has been drastically reduced for pregnant women and young children.

Bay City had the largest percentage of births to women who reported smoking during their pregnancies—roughly two of every five newborns were affected—while Ann Arbor had the smallest percentage (8%). Port Huron, Saginaw and Jackson also had relatively large percentages of births to women who smoked during pregnancy—with almost two of every five newborns affected. 

6. One of every 20 Michigan mothers in legacy cities received late or no prenatal care.

Pregnant women who start prenatal care in the last three months of their pregnancy or not at all heighten their risk of having babies with health problems and suffering from complications themselves. Women who do not receive prenatal care are more likely to give birth to a low-birthweight baby. Unfortunately the women at highest risk of unhealthy births are often the least likely to have access to timely prenatal care. Multiple barriers such as lack of insurance, unintended pregnancy, limited access to transportation, variable work schedules and traditional clinic hours can stand in the way.

The expansion of eligibility under the Healthy Michigan Plan to all state residents with incomes below 133% of the poverty level will provide low-income women better access to health services before pregnancy to address chronic conditions that can compromise a healthy birth. Similarly, residents with income above 133% of poverty level can access private coverage through the Health Insurance Marketplace with sliding scale federal subsidies and cost-sharing assistance.

Among the legacy cities Detroit has the highest rate of late or no prenatal care with roughly 1 of every 11 mothers of newborns affected. In Bay City the percentage of mothers with late or no prenatal care was one-third (3%) of the Detroit rate.  

7. One of every 10 babies in Michigan’s legacy cities was born too small.

Babies who weigh less than 5 pounds 8 ounces at birth encounter heightened risk for developmental delay, chronic disease and even death. It is the leading cause of infant mortality among African American infants, who are roughly 2.5 times more likely to die before their first birthday compared with white infants. While chronic maternal health issues such as infections, diabetes, heart defects or kidney disease can result in an underweight infant, stress, poor nutrition and lack of social support during the pregnancy have also been identified as critical factors.

Although Ann Arbor had one of the smallest percentages of babies weighing less than 5.5 pounds, the city rate sustained the largest increase (27%) in its rate over the trend period. All but three legacy cities saw larger percentages of babies born too small. Among these three the city of Kalamazoo had the most substantial decline (20%), the Detroit rate improved only slightly (4%) and the Saginaw rate remained the same. 

8. Roughly one of every eight babies in Michigan’s legacy cities was born too soon.

Babies born before 37 weeks in the womb are considered preterm and experience higher risk of intellectual disabilities, cerebral palsy, hearing loss and problems with breathing, vision and digestion than babies born at term. Prevention of premature delivery has become a major focus in efforts to reduce infant mortality. Babies born too soon are often too small as well.

All but two of Michigan’s legacy cities have preterm birth rates in the double digits, and most (11) saw sharply escalating rates over the trend period. In fact, in the two cities—Flint at 19% and Saginaw at 18%—with the highest rates, rates almost doubled between 2006 and 2012. Four of the five cities with the lowest rates experienced the most substantial declines, with Lansing having by far the largest drop (20%). The exception was Ann Arbor where the rate was still the lowest but had jumped up over the trend period.

Summary

As Michigan looks to strengthen its economy and improve education outcomes among the next generation, it must address the challenge of ensuring more infants have the right start to early childhood in its legacy cities. These cities house a significant number of young children, particularly some of the most economically disadvantaged and those in communities of color. Roughly half of the state’s children of color live within these cities.

The number of births in these legacy cities ranges from slightly less than 500 in Bay City and Port Huron to over 10,000 in Detroit, which represents 40% of all births in the legacy cities. On average, roughly one of every three births in the 15 counties is to a mother in the legacy city.

All of the legacy cities except Ann Arbor reflected worse outcomes across most or all indicators for mothers and their babies than for their counterparts in the rest of the county. Ann Arbor with its large public university and highly educated population is well-suited to compete in the emerging post-industrial economy. Overall Ann Arbor was an anomaly among the legacy cities in that on most (6) measures of maternal/infant well-being, the city was better than the rest of Washtenaw County: It matched the out-county rate only for late or no prenatal care and low-birthweight babies. The relative affluence of the city contrasts sharply with the average legacy city: Only 18 percent of the city’s women giving birth were uninsured and low-income, substantially below the legacy city average (63%).

Unfortunately several cities consistently fell on the other end of the range. Flint, Saginaw, Detroit and Pontiac were often those with the worst rates. For example, although Flint had the worst outcomes for babies born too soon or too small, Pontiac and Detroit had rates within 1 or 2 percentage points on both those measures. The cities with majority of births to women of color generally had the worst outcomes. Only the incidence of smoking during pregnancy deviated from this pattern with Bay City having by far the largest percentage of births affected, which was 6 percentage points above the next largest (43% vs. 37%).

Only two of the five indicators where a trend could be calculated showed improvement. The most consistent progress across the legacy cities was on the declining percentage of births to teens. Only Warren in Macomb County experienced a worsening trend. Similarly, only six cities sustained increased births to teens who were already parents. On the other hand, unhealthy births— babies born too soon or too small— increased over the trend period in 11 of the 15 legacy cities.12 These children are at higher risk for developmental delays, chronic health problems and even death as infants than children born at term with All cities except Ann Arbor sustained an increase in the percentage of births to unmarried women between 2006 and 2012.

Recommendations

Provide the funding to fully implement the strategies in the state’s Infant Mortality Reduction Plan. All of the indicators examined in this report reflect a risk to mother and infant, and several are addressed in the state’s Infant Mortality Reduction Plan 2012 that outlined eight strategies to reduce infant mortality in Michigan.13 The strategies include promoting safe sleep practices for infants, expanding home visiting to high-risk women and reducing unintended pregnancies. Unfortunately, in the last two budgets policy makers have allocated only a tenth of the funding required to fully implement the plan.

Coordinate efforts across state departments to address the social/economic determinants of health, especially in the target cities – Pontiac, Saginaw, Flint and Detroit. This recommendation from the Infant Mortality Reduction Plan focuses on the legacy cities that have suffered the highest risk to maternal and infant health in recent years. While several initiatives such as Project LAUNCH (Linking Actions for Unmet Needs in Children’s Health) in Saginaw, Sew up the Safety Net in Detroit, REACH (Racial and Ethnic Approaches to Community Health) in Flint and FIMR (Fetal Infant Mortality Review) teams in Pontiac address health issues, resources from other departments, including Human Services and Education, have key roles to play in improving maternal and infant well-being. Despite increasing focus on the social/economic factors that imperil maternal and infant well-being, policies, such as increasing the Earned Income Tax Credit and the Cash Assistance grant, to reduce poverty have not been widely supported by policy makers.

Strengthen work supports and education/employment opportunities. Many women struggle to find affordable child care, and the state’s child care subsidy rate is so far below the current market rate that it provides limited access to licensed care. Most center-based care does not accept infants and fails to meet the needs of low-income women working erratic schedules during evening and week-end hours. Increasing opportunities for low-income women to complete an education or training program so they can secure better-paying jobs with more flexibility would improve their lives and those of their children. Strengthening supports to family, friend and neighbor care would be a key strategy.

Invest the recommended amount in a smoking prevention campaign. The health of Michigan’s children and their parents is compromised by the prevalence of smoking among pregnant women and the other adults in the households of young children. Tobacco is the leading cause of preventable illness and death in the U.S.: It has been linked to several different cancers as well as chronic lung diseases such as emphysema and bronchitis, and heart disease. Secondhand smoke triggers numerous health problems in infants and children, including more frequent and severe asthma attacks, respiratory and ear infections, and sudden infant death syndrome (SIDS).

Support early interventions to improve maternal and infant health. During the first three years of life roughly 85% of the brain architecture is developed, which provides the foundation for lifelong learning.14 The quality of the interaction between the child and his/her caregivers affects the emotional and social well-being as well as cognitive development. Early interventions such as home visiting have demonstrated an impact on improving maternal and infant well-being and later outcomes such as high school graduation and employment. Michigan has been able to expand its home visiting programs dramatically through its successful applications for federal funds totaling $34 million authorized in the Affordable Care Act. State funding has been erratic for these efforts.

Legacy City Profiles:

Michigan | Ann Arbor | Battle Creek | Bay City | Detroit | Flint | Grand Rapids | Holland | Jackson | Kalamazoo | Lansing | Muskegon | Pontiac | Port Huron | Saginaw | Warren

Endnotes

  1. Only counties with total population over 100,000 and a central city were included in this analysis.
  2. Holland Township, which actually had the largest number of births in Ottawa County and a larger share of minority births than the city (44% vs. 38%), was not included as it is not a city.
  3. In Washtenaw County, Ypsilanti Township rather than Ann Arbor actually had a larger percentage of births to women of color (45%) and to low-income uninsured women (43%).
  4. Numerous cost of living assessments have determined that income below double the poverty level(200%) is insufficient to meet the average basic needs in the modern American economy. (Poverty level income is 100%.)
  5. Those with income between 100% and 133% of poverty must pay 2% of their income for their coverage.
  6. The legacy city average is calculated on the average for each city rather than the total births to counter the disproportionate impact from the large number of births in Detroit.
  7. Only five of the eight measures could be assessed for trends between 2006 and 2012 due to changes in the birth record in 2007 for data on education level of the mother, receipt of prenatal care and smoking during pregnancy. Each reported year in the trend analysis is based on a three-year average to stabilize the estimate.
  8. Please note that the percentage of teen births can be affected by increases or decreases in the number of births to women over the age of 19 as well.
  9. Ann Arbor did not have enough incidences to calculate a rate for this indicator in 2012.
  10. Full-time income from the current minimum wage of $7.40 falls more than $3,000 short of the poverty threshold for a family of three. By the time Michigan’s recent law to increase the minimum wage to $9.25 an hour in 2018 is implemented, its value will still remain below the poverty line, which rises with inflation.
  11. Liz Ben-Ishai. Access to Paid Leave: An Overlooked Aspect of Social and Economic Inequality. Center for Law and Social Policy. April 14, 2014.
  12. Only five of the eight measures could be assessed for trends due to changes in the birth record for data on education level of the mother, receipt of prenatal care and smoking during pregnancy. Each reported year in the trend analysis is based on a three-year average to stabilize the estimate.
  13. The plan is available on-line at http://www.michigan.gov/documents/mdch/MichiganIMReductionPlan_393783_7.pdf.
  14. Jack Shankoff. Center on the Developing Child. Harvard University.

Fiscal Year 2015 Budget: Wins and Losses for Families and Children

 

The Michigan Legislature has finalized the budget for Fiscal Year 2015, and despite grappling with revenue projections that are nearly $300 million lower than January estimates, there were a number of important wins for low- and moderate-income families and children. The Legislature restored funding for several programs that were cut during the worst of the recession, and expanded funding for a number of important services, including early childhood education, the Healthy Michigan Plan, and dental care for low-income children.

Legislative leaders had hoped to have the budget done by the beginning of June, but were slowed down by several big ticket legislative issues that had the potential to affect the amount of money available next year, including efforts to address crumbling roads and bridges in Michigan, and the dedication of “rainy day” funds to help offset the statewide impact of Detroit’s bankruptcy.

Included in the budget agreements for Fiscal Year 2015, which begins Oct. 1 and ends Sept. 30, 2015, are the following:

Human Services

  • Continued deep cuts in income assistance caseloads and funding. Despite continuing high child poverty and unemployment rates, Family Independence Program, or FIP, caseloads continue to plummet. Based on falling caseloads, the final Department of Human Services budget reduces spending for FIP to $146.6 million—down 32% from the current fiscal year, and $152 million below the governor’s recommended budget. Caseloads are at their lowest level in more than 40 years, and while there is little data to explain the precipitous drop, a number of state policies have had a major impact, including strict enforcement of lifetime limits for FIP, the state decision to provide six months of very minimal assistance ($10 per month) to persons leaving FIP that count against their lifetime limits, and new procedures that increase sanctions and create barriers for public assistance recipients seeking help.
  • Continuation of policies that limit access to food assistance. The final budget includes $2.5 billion in federal funding for food assistance. Nearly 1.7 million Michigan residents received help from the Food Assistance Program in April 2014, including nearly 688,000 children, with approximately one-third of those children under the age of 6. After years of growth, food assistance caseloads have begun to fall slightly, dropping 5% between 2012 and the current fiscal year. State policies affect caseloads, including the imposition of an optional state asset test for food benefits, and the failure to address the “Heat and Eat” provisions of the federal Farm Bill, which could affect more than 235,000 low-income families in the state.
  • Continued limitations on eligibility for the annual school clothing allowance. Despite action by the House to expand eligibility for the school clothing allowance to all FIP children—not just those in cases that do not include an adult—the final budget retains the current policy. As a result, low-income children living with grandparents or other caregivers that don’t receive FIP will not receive help purchasing school clothing.
  • Continued investments in protective services and foster care, but no restoration of funding for programs to strengthen families and prevent child abuse and neglect. The final budget includes funding to help the state meet the requirements of a lawsuit settlement based on weaknesses in its child welfare system, however there are no restorations of funding for prevention services. Despite double-digit growth in the number of substantiated victims of child abuse and neglect, the final budget includes $46.2 million for prevention services, down from $65.3 million in 2008.1

The Fiscal Year 2015 budget includes $7.9 million to allow adoptive parents to seek higher adoption assistance payments if they discover their children have special needs that weren’t identified at the time of adoption, funding to increase rates for some private agency providers, and initial funding for the implementation of a new performance-based funding system for child welfare services.

  • Maxey Training School will stay open. The final budget rejects the House plan to save $8.1 million by closing the Maxey Training School for delinquent youths.

Community Health

  • An expansion of dental care for low-income children. The Legislature approved an increase in the Healthy Kids Dental program that would expand dental coverage to an additional 100,000 children, but still leaves out more than 400,000 children in three of the most populated counties—Wayne, Oakland and Kent–that are home to many low-income children and children of color.
  • Funding to reduce waiting lists for services for seniors and the disabled. The Legislature included $5 million to restore funding and help an estimated 4,500 seniors on waiting lists for home-delivered meals and in-home services, as well $9 million in state funds (drawing down $17.2 million in federal funds) to eliminate the waiting list for the MIChoice program that helps seniors and those with disabilities remain in their homes rather than move to nursing homes.
  • Full-year funding for the Healthy Michigan Plan. The Legislature included full-year funding for the Healthy Michigan Plan, which is 100% federally funded for calendar years 2014, 2015, and 2016. Also included are projected savings of $232 million from state-funded programs that had previously served the Healthy Michigan Plan population. The governor recommended that half of the projected savings be deposited into a healthcare savings account to be available in future years when the state would contribute a small portion of the cost. With the reduced revenue projection, that deposit will not be made.
  • Funding to continue a portion of increased payments to primary care providers. The Legislature concurred with the governor to retain about half of the primary care rate increase implemented in calendar year 2013. Full federal funding of this increase expires in December 2014, and Michigan was not obligated to continue the increase. The Legislature added $25 million in state funds and $47.5 million in federal funds to maintain about half of this increase which is critical to maintaining the primary care providers needed to care for Medicaid and Healthy Michigan Plan enrollees.
  • Increases for obstetrical services. The Legislature added $4.8 million in state funds and $9 million in federal funds to increase Medicaid obstetric payments to physicians (to 95% of Medicare rates) and $3.8 million in state funds and $7.2 million in federal funds to increase payments for obstetrical services to qualifying rural hospitals.
  • Harper/Hutzel special payment not continued. The Legislature did not restore full-year funding, $6.5 million in state funds and $12.3 million in federal funds, as recommended by the Senate, to Harper/Hutzel Hospital, which operates an infant mortality program with the National Institutes of Health.
  • No additional state funding for mental health services for those not eligible for Medicaid or Healthy Michigan Plan. The Legislature did not increase state funding for services for those not eligible for Medicaid or the Healthy Michigan Plan, rejecting the Senate recommendation to restore $4.8 million for Community Mental Health services.
  • Funding to implement the Mental Health and Wellness Commission recommendations. The Legislature added $14.3 million in state funds and $22.2 million in federal funds to begin implementing the recommendations of the Commission which were released in January 2014. In addition, the Legislature included $3.4 million in state funds to treat those with mental illness or developmental disabilities in settings other than the criminal justice system.
  • Restoration of funds for local public health services. The Legislature added $1.5 million in state funds for local public health services, bringing the total funding to the level of the Fiscal Year 2005 appropriation.
  • Funding to recognize minimum wage increase impact on Adult Home Help. The Legislature added $1.7 million in state funds and $3.3 million in federal funds to address the impact of the recently passed minimum wage increase on the Adult Home Help program.

School Aid & Education

  • An additional $65 million to expand early childhood education. Taking the governor’s lead, the Legislature approved another expansion of the Great Start Readiness program by $65 million, bringing total funding to $239 million. With these funds, an additional 16,000 half-day slots will be available for at-risk 4-year-olds, increasing their school readiness and later life success. Access to a high-quality early education has been shown to be a powerful tool in creating more equity in educational outcomes.

Although it rejected the governor’s recommendation to increase the per pupil allocation by $100 to $3,725, the Legislature authorized up to $10 million to cover the costs of transporting children. Next year, Intermediate School Districts (ISDs) will be able to enroll children in families with incomes of up to 300% poverty—up from the current cap of 250% of poverty—but must enroll the lowest-income children first.

  • Continued cuts in funding for subsidized child care, but increased funding for quality improvements and hours of care. The Legislature included $6.9 million to increase the maximum allowable reimbursable hours of subsidized child care from 80 hours to 90 hours in a two-week period, as well as $3.7 million to increase reimbursement rates to higher-quality child care providers, based on the state’s Great Start to Quality rating system. Both changes were implemented this year through a supplemental budget bill. Child care cases and costs are expected to continue to drop, with total funding for the child care subsidy program falling from $136.3 million this year to $110.3 million in Fiscal Year 2015—a drop of 19% in just one year.
  • An increase in the K-12 public school foundation allowance. After per pupil reductions of $470 between Fiscal Year 2009–when they were at their peak–and Fiscal Year 2012, the Legislature approved a small increase for 2015. Districts will receive a minimum of $50 per pupil, and those receiving less per pupil now (with foundation allowances below $7,251 per pupil) could receive up $125 per pupil from a new equity payment, for a total possible increase of $175 per pupil. The cost of the increase approved by the Legislature is $177 million, up from the $150 million recommended by the governor.
  • New funding for districts facing fiscal distress. The Legislature agreed to a total of $4 million (down from the governor’s recommendation of $10 million) for a new fund for emergency grants to school districts in financial distress.
  • No new funding for year-around school pilot projects. The governor, House and Senate had approved $2 million for pilot projects for year-around schools in districts eligible for the Community Eligibility Program option for free and reduced-price meals, but the final budget eliminates the funding.
  • New criteria for the use of At-Risk funding. The Legislature provided continuation funding for the At-Risk program of $309 million. The final budget also sets new criteria for the program, including a requirement that districts that don’t have at least half of at-risk 3rd graders reading at grade level, or show improvements over 3 years in the percentage of at-risk pupils that are college- and career-ready, must spend a portion of At-Risk funds on tutoring or other services to improve those two outcomes.
  • No increase in adult education, but a new allocation formula. The Legislature approved continuation funding of $22 million for adult education, down from a peak of $185 million in 1996. Also adopted was a new method for allocating adult education funds based on 10 “Prosperity Regions,” and new criteria related to the percentage of high school graduates and English language proficiency. ISDs will serve as fiduciaries for adult education funds and may keep up to 5% to cover administrative costs, which means money going directly to programs will be reduced by up to 5% in each Prosperity Region.

Higher Education and Community Colleges

  • A 3% increase in funding for Michigan’s 28 community colleges and nearly $77 million for a 6% increase for universities. While funding for community colleges has increased over the last decade along with enrollments, funding for universities declined by more than 19% between Fiscal Years 2004 and 2014.2 To receive increases in 2015, universities must cap tuition increases at 3%.
  • An increase of $1.5 million for the Tuition Incentive Program. The Legislature approved an increase in the Tuition Incentive Program for low-income students. While there is universal agreement that a highly educated and skilled workforce is the key to Michigan’s economic growth, over the past decade, Michigan cut need-based grants and scholarships by 20%, while other states increased theirs by 84%.

Endnotes

1 Includes spending for Families First, Child Safety & Permanency, Strong Families/Safe Children, Family Reunification, Teen Parent Counseling, O to 3 Secondary Prevention, and Children Protection/Community Partners.
2 Ellen Jeffries, State Spending for State Resources Appropriations Total Compared in Selected Budget Areas, State Budget Overview, Senate Fiscal Agency (May 27, 2014).

 

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