Reports


A first look at Gov. Snyder’s 2018-2019 budget: Little revenue growth and few new initiatives

pdficon                                   Budget Brief JPG USE THIS ONE                     February 2018

2018-2019 budget graphic 1Governor Rick Snyder’s 2019 budget proposal includes level funding for many health and human services programs for Michigan families with low wages, people with disabilities and seniors. There are few new investments largely because state leaders have not addressed the ongoing need for additional revenues, opting instead to reduce taxes on businesses while failing to support sufficient sources of new funding for their initiatives—including needed road improvements.

The result over time has been a deep loss in purchasing power in the state’s General Fund—the pot of state money over which the Michigan Legislature has the most control. At $10 billion, the state’s General Fund is nearly 30% lower than it was in 2000 when adjusted for inflation.1 Sixty percent of the state’s General Fund is used for healthcare, basic human services and education, putting these very fundamental functions of government at risk if revenues fall short of the need.

Despite this loss in purchasing power, state lawmakers are debating additional tax cuts that could set the state’s economy back by forcing disinvestments in the fundamentals of growth—a high-quality educational system from cradle to career; healthy children ready to learn with parents ready to earn; and strong communities with the infrastructure businesses need such as good roads, clean air and water, and dependable police and fire protection.

The governor’s budget, which was presented to legislative leaders on Feb. 7, 2018, contains his plan for allocating state resources for the 2019 budget year that begins on Oct. 1, 2018, and ends on Sept. 30, 2019. Legislative committees will now consider the governor’s proposals and craft their own budgets. The decisions they make have the potential to help or hurt children and families who have not yet benefited from the state’s economic recovery, including a disproportionate number of children of color whose parents have been held back from the traditional pathways to economic opportunity because of state policies and budgets that don’t address the cumulative effects of racism and discrimination.

The League is promoting spending priorities that could grow Michigan’s economy by giving all children and families the opportunity to thrive. At the top of the list is our call for state lawmakers to incorporate an analysis of the racial, ethnic and social justice impact of budget options during their deliberations. The League believes that policies that limit economic security based on race, ethnicity and place will have a lasting impact on generations to come and slow economic growth.

TOTAL FUNDING FOR 2019

The governor recommends a total state budget of $56.8 billion, an increase of less than 1%. And, at $10 billion, state General Fund spending in the governor’s budget is slightly lower than what was initially approved for the current budget year. In recent years, the state’s General Fund has hovered around $10 billion annually—after dipping as low as $7.7 billion during the height of the Great Recession.

Federal funds currently account for $4 of every $10 spent by the state, making Michigan second only to Mississippi in its reliance on federal dollars. With great uncertainty about the continuation of federal funds, this reliance makes Michigan’s budget extremely vulnerable—even in a relatively good economy. With the possibility of deep cuts in federal funding to Michigan, it is even more critical that state leaders address the adequacy of Michigan’s tax system and resist risky efforts to further reduce state taxes. The League has documented the potential impact of federal budget cuts on your county—information we hope you will share with your elected officials.

HEALTH

Healthy Michigan: Last year, Congress made four serious attempts to repeal the Affordable Care Act (ACA), threatening the healthcare of over 675,000 Michiganders who have gained coverage through the Healthy Michigan Plan. With the ACA protected for now, the governor continues needed state investments in the program. The federal government pays 93% of the costs of the Healthy Michigan Plan for the 2019 budget year, meaning the state’s General Fund investment is $217.6 million. Healthy Michigan has resulted in the creation of jobs, additional tax revenue and a decreased reliance on hospital emergency departments.

Public Health Investments: With the ongoing Flint water crisis, a hepatitis A outbreak, and polyfluoroalkyl substances (PFAS) water contamination, the governor recommends full-year funding for PFAS clean-up and additional funding to local public health departments to help address emergency health threats including vapor intrusion, drinking water contamination and hepatitis C.

Wage Increases at State Psychiatric Hospital: Psychiatrists at our state psychiatric hospitals are paid significantly less than our Great Lakes neighbors, and the Michigan Department of Health and Human Services (MDHHS)—with the approval of the Civil Service Commission—has proposed an increase in wages. The investment, which is included in the governor’s 2019 budget, is expected to cost the state $1.4 million. This wage increase will allow the state to attract and retain high-quality psychiatrists and reduce waiting lists at the hospitals.

Flint Water Crisis Funding Continues: As Flint continues to deal with the effects of the ongoing water crisis, the governor reduces MDHHS assistance by $16.9 million but provides one-time funding for food and nutrition services, health services at child and adolescent health centers and schools, lead poisoning prevention and lead abatement.

Behavioral Health Integration: A hot topic during the past few budget cycles was the integration of the behavioral health and physical health proposed by the governor through budget boilerplate language. The 2019 budget encourages the department to continue pursuing the pilot projects it was directed to take on this year. The MDHHS is currently in the process of identifying the three sites for the pilot projects, with a decision expected on those locations in early March.

Lead Prevention Board: In 2016, the governor created the Child Lead Poisoning Elimination Board, which was charged with designing a long-term strategy to eliminate child lead poisoning. For 2019, the governor includes $1.25 million to carry out the recommendations of the board, including expanded home testing, a statewide database and a requirement to test all children for lead exposure.

HUMAN SERVICES

Food Assistance/Access to Healthy Food:

  • The “heat and eat” policy is continued, ensuring increased access to food for Michigan residents with low incomes. The continuation of the “heat and eat” policy is a priority for the League and helps to ensure that nearly 340,000 Michigan residents with low incomes have access to adequate food. In 2017, 1.4 million people in the state used food assistance to ensure basic nutrition, including approximately 1 in 4 of the state’s children. African-American and Latinx families are more likely to face food shortages, as well as live in high-poverty neighborhoods with few sources of healthy food.
  • The number of families receiving food assistance continues to fall. After peaking at 967,566 cases in 2011, the number of families receiving assistance fell to 727,396 in 2017 (a reduction of 25%), and fell below 694,970 in December of 2017. The governor’s budget reflects that decline and provides $1.9 billion in federal funds for food assistance—down from the $2.3 billion initially budgeted for this year. Declining caseloads are due to changes in policy, such as the state’s food assistance asset test, along with improvements in the economy.2
  • The asset test currently in place for food assistance is retained. The League supports the removal of the current asset test because it can discourage families with low incomes from saving enough to weather a temporary crisis like the breakdown of a car, unusually high heating costs or a potential eviction. Since 2002, approximately 35 states have eliminated their assets tests. Michigan was one of the first states to do so, but reinstated the asset test in 2012.

Income Assistance/Basic Needs:

  • Children receiving income assistance would receive a small increase in their monthly grant—the first in many years. Since 1996 there have been only a few very small increases in Family Independence Program (FIP) grants, and the purchasing power of FIP benefits has consequently fallen from 42% of poverty to only 29%. The governor recommends $1 million to increase the FIP grant by $2 per person per month, resulting in a maximum monthly benefit for a single parent with two children of $498.
  • The school clothing allowance would remain at its current level. The governor provides level funding of $6.3 million for the school clothing allowance for children in families receiving FIP income assistance. The League has supported the governor’s previous efforts to increase the annual per-child clothing allowance to $200, and continues to believe that the basic needs of children must be met.
  • The number of children receiving income assistance continues to fall. Despite continuing high rates of poverty—particularly for children of color—state funding for the FIP program that is intended to ensure that children’s basic needs are met has plummeted. Eighty percent of those receiving FIP benefits are children, and many are very young. With continued declines in the number of families eligible for income assistance, total funding for FIP is expected to fall again next year from the $82.4 initially appropriated for 2018 to $81.2 million in 2019.

2018-2019 budget graphic 2

Child Abuse and Neglect:

  • Michigan continues to invest in foster care and other out-of-home placements for children. In recent years foster care costs have increased largely because of efforts to meet the requirements of a settlement agreement that resulted from a lawsuit against the state by the Children’s Rights organization based on failures in the state’s child welfare system, including high caseloads for workers and delays in finding permanent homes for children. For 2019, the governor includes $37.9 million ($22  million state General Fund) for increased foster care caseloads and costs.
  • Child abuse and neglect prevention and family preservation services continue to be underfunded. The governor provides no new funding for services to prevent child abuse and neglect or to strengthen families, despite increasing rates of confirmed victims of child abuse and neglect. Prevention services were not specifically addressed in the lawsuit against the state and investments have declined. In 2006, Michigan spent over $65 million on family preservation and prevention services and had fewer than 29,000 confirmed victims of child abuse and neglect. For the upcoming fiscal year, the governor proposes to spend approximately $51 million—despite an increase in the number of confirmed victims to nearly 40,000.

CHILD CARE AND EARLY EDUCATION

Child Care Subsidies:

  • Payments to child care providers would not be increased. The governor includes flat funding in 2019 for child care subsidies for families with low incomes. Payments to providers depend on the age of the child, the type of child care setting and participation in the state’s Great Start to Quality child care rating system. Following rate increases in the current budget year, the highest child care rate in the state is $5.50 per hour for child care centers with 5 stars in the state’s star quality rating system. The lowest rates are paid to unlicensed providers (generally family, friends or neighbors), who receive a base rate of $1.60 per hour. More than half (55%) of child care providers in the state are at the 0 or 1 star level, so are not eligible for an enhanced rate, and in many areas of the state parents cannot find or afford high-quality child care.32018-2019 budget graphic 3
  • 2018-2019 budget graphic 4Michigan’s low income eligibility cutoff for child care assistance would not be raised. Michigan’s income eligibility cutoff for child care assistance has been one of the lowest in the nation, and despite small increases in recent years, many families with low wages are not eligible for the subsidies that could help them find and keep jobs. The governor proposes no further eligibility expansions for child care in 2019. However, policy changes in the last several years—many of which were required of states following reauthorization of the federal Child Care Development Block Grant—have stemmed the decline of child care cases. Included in the changes was a new “exit” income eligibility threshold which allows families who have qualified at the lower threshold to retain their child care assistance until their income reaches 250% of poverty.

Great Start Readiness Preschool Program (GSRP):

  • Funding for state-funded preschool will remain at current-year levels. Gaps in learning can be identified very early in life, and children of color lag behind their peers in skills related to reading and math when they enter kindergarten.4 The governor provides continuation funding for the GSRP at $243.6 million, along with $300,000 for an ongoing evaluation of the long-term effectiveness of the program. Under the governor’s budget, the program will continue to be offered only to 4-year-olds from eligible families. Some other states provide services to 3-year-olds to ensure the best possible start for all young children, and the League has supported that expansion in Michigan.

Early Intervention:

  • For the first time, state funds would be invested in the state’s early intervention program—Early On. The governor recommended $5 million for the state’s Early On program that helps identify and serve very young children with developmental delays and their families, as well as $500,000 for mediation training and parental supports. Federal funds for Early On have been available since 1986, but they are insufficient to both identify infants and toddlers with delays and provide the services needed to ensure their development and reduce the need for special education services. Michigan has been the only state that does not provide a statewide budget allocation for early intervention, and while it is a commendable start, the governor’s recommendation falls short of the need.

K-12 SCHOOL AID/EDUCATION

Per-Pupil Spending:

  • Per-pupil spending is increased. The governor provides an additional $312 million to increase the per-pupil allowance to public schools by between $120 and $240. This would bring the minimum School Aid payment to $7,871 per student and the maximum to $8,409. Two of every $3 in the School Aid budget are used to support per-pupil payments, which are the primary source of funding for school operations.
  • Additional allowances would be given for high school students or those in career and technical education programs. The governor recommends the continuation of the current $25 payment for students in grades 9-12—in recognition of the higher costs of the high school curriculum. Also in the governor’s budget are additional payments of up to $50 per pupil for high school students engaged in training in high-demand fields.
  • Increases in per-pupil spending are funded in part by reductions in funding for shared services and cyberschools. The governor recommends reducing reimbursements for cyberschools by 25% to reflect lower facility and transportation costs. In addition, he recommends capping payments for educational programs provided to part-time private, nonpublic and home-schooled students. These funds are used for instruction in areas that are not core academics, and would be redirected to core academics through the basic foundation allowance.

Funding for Students Academically At Risk:

  • Funding for students at risk of low achievement is not increased. The governor provides level funding for the At-Risk School Aid program that ensures that high-poverty schools have the resources they need to address the educational challenges of children exposed to the stresses of poverty. With two years of increased funding (in 2017 and 2018), Michigan is moving closer to fully funding the At-Risk program based on the state’s adopted formula, but the League advocates for full funding.
  • Level funding is provided for programs to improve reading by third grade. The governor recommends no increases in early literacy programs for 2019, with total funding remaining at $26.9 million. In the current year, funding for early literacy coaches in Intermediate School Districts was increased from $3 million to $6 million statewide, with the majority of the remaining funds used for added instructional time for students, and professional development. Sufficient resources for early literacy are crucial in light of Michigan’s third-grade retention law, which could result in the holding back of students who can’t read proficiently by that time. Given historical barriers to opportunity for many children of color, high percentages of African-American and Latinx children are not reading proficiently by third grade and could be negatively affected by implementation of the law if sufficient resources are not provided.

Adult Education:

  • Funding for adult education remains stagnant. The governor recommends continuation funding of $25 million for adult education programs, along with $2 million for pilot programs focused on career and technical education. Despite the importance of adult education as a workforce development tool, Michigan has greatly reduced funding for the program over the last 16 years, and the League is recommending an increase in funding of $10 million.

POSTSECONDARY EDUCATION

Financial Aid:

Funding for the Tuition Incentive Program (TIP) is increased. Of Michigan’s three need-based financial aid programs, TIP is the one program in which eligibility is based on household income level rather than estimated family contribution, and thus serves the neediest and most economically vulnerable of students. The governor’s budget includes a $1.5 million increase for TIP, for a total of $59.8 million. This is expected to assist approximately 22,000 students in the upcoming school year.

Tuition Grant award is slightly increased while Competitive Scholarship award remains flat. The governor’s budget moves some of this year’s funding for the Competitive Scholarship to the Tuition Grant to raise the Tuition Grant maximum award from $2,000 to $2,100, and leaves the maximum Competitive Scholarship maximum award at $1,000.

Operations Funding and Retirement Costs:

School Aid Fund (SAF) dollars continue to be pulled from K-12 to fund community colleges and universities. The governor’s budget continues to pull School Aid Fund dollars from K-12 to provide full operations funding for community colleges, and for budget year 2019 also funds 100% of the Michigan Public School Employees Retirement System (MPSERS) allocation for community colleges from the SAF, for a total of $405 million diverted from K-12 to community colleges. The governor’s budget also diverts $385.6 million from K-12 to public universities for a portion of university operations and retirement funding.

Full funding for each university is contingent on tuition restraint. Tuition restraint was introduced several years ago into the university funding budgets and requires universities to limit any tuition increases they adopt in order to receive full funding. Generally, the maximum increase is double the expected level of inflation, which equates in budget year 2019 to 3.8%, for a tuition increase cap of $490 per student.

CORRECTIONS

Prison Population and Costs: After peaking in 2006, the prisoner population has declined significantly, dropping below 40,000 for the first time in over 20 years. The Michigan Department of Corrections (MDOC) budget is almost entirely funded with state general funds, and total spending is expected to remain at $2 billion in 2019. Approximately $1.6 billion or roughly 80% of the Corrections budget is allocated to prisoner housing, physical and mental healthcare, food, transportation, and treatment and vocational programs for prisoners.5 Citing a recent decline in the prison population, MDOC announced the closure of the West Shoreline Correctional Facility in Muskegon, expected to occur in March. The governor claims $18.8 million in General Fund savings as a result of this forthcoming closure. The prison employs 174 employees.

2018-2019 budget graphic 5Residential Alternative to Prison Program: The governor maintains $1.5 million for the Residential Alternatives to Prison program which expanded to counties in West Michigan last year. The program provides vocational and educational services for probation violators who might otherwise be sentenced to prison.

Education and Job Training for Prisoners: The governor maintains $2 million in funding for the Vocational Village program in Jackson. The program trains prisoners in the skilled trades. The governor also recommends $2.4 million in one-time funding to expand educational services to higher custody-level prisoners.

Prison Food Services: The governor recommends $13.7 million in state General Fund support to move food service operations in-house, ending the privatization of the service following a series of highly publicized failures by contractors.

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

Prisoner Healthcare and Mental Health Services: Between 2002 and 2016, Corrections spending increased by an average of 1.3% annually. During this period, per-prisoner costs for healthcare increased by an average of 3.7% annually (2002-03 through 2016-17).6 The aging prison population is a major factor in the rise in per-prisoner healthcare costs. The governor maintains $6.7 million in funding for drug treatment of prisoners with hepatitis C.

THRIVING COMMUNITIES

Increased constitutional revenue sharing due to higher sales tax revenues: Our state constitution automatically dedicates a portion of sales tax revenues to support Michigan cities, villages and townships. This is an automatic per-person payment that is determined based on the amount of sales tax generated. This year, we anticipate stronger sales tax revenues which will automatically increase payments to cities, villages and townships.

Cuts to city, village and township (CVT) or “statutory” revenue sharing results in some communities seeing reductions in state support: The governor eliminates about $12 million in CVT revenue sharing, which has not received full funding since 2001, that was used to increase payments to several large townships as well as expand revenue sharing to CVTs that were not previously eligible. The result is that, even when combined with increased per-person payments under constitutional revenue sharing, at least 100 CVTs will see reductions in payments compared to current year projections, and countless more will see a smaller increase than neighboring communities.

Full funding for county revenue sharing payments: The governor proposes to fully fund county revenue sharing payments, for which all but two counties in the state would be eligible to receive in 2019. However, for counties eligible in the current year, the budget had included a 1% increase in payments, as counties have not seen an increase or even an inflationary adjustment in their state payments. The governor’s budget includes only full funding and does not provide an additional increase.

Continued funding for financially distressed communities: The governor would continue to provide $5 million in grants to financially distressed communities. Eligible communities may receive up to $2 million in grants to help reduce unfunded liabilities (such as retirement costs), repair publicly owned infrastructure, or transition to shared services.

ENDNOTES

  1. Cleary, M.A., and Wicksall, B., Budget Briefing: State Budget Overview, House Fiscal Agency (August 2017).
  2. Wild, V.B., Budget Briefing: HHS – Human Services, House Fiscal Agency (January 2018).
  3. Great Start to Quality Participation Data, Early Childhood Investment Corporation (February 2018).
  4. Friedman-Krauss, A., Barnett, W. S., and Nores, M., How Much Can High-Quality Universal Pre-K Reduce Achievement Gaps? Center for American Progress and the National Institute for Early Education Research (April 2016). 
  5. R. Risko, R. Budget Briefing: Corrections, House Fiscal Agency (January 2017).
  6. Ibid.

Falling short 2017

pdficon January 2018
 Peter Ruark, Senior Policy Analyst

MI UI chart 1

working poor graph

In 1935, President Franklin D. Roosevelt signed into law the Social Security Act containing, among other things, provisions for Unemployment Insurance (UI) as a state-federal partnership program. UI is an important safety net program that can help ensure that workers and their families can avoid economic catastrophe following a layoff. However, Michigan has implemented policies over the years that have directly weakened this safety net, and failed to pass other policies that could have strengthened it.

MICHIGAN’S WEEKLY BENEFIT HAS ERODED OVER TIME

In 1995, the Advisory Council on Unemployment Compensation to the President and Congress recommended that state UI systems replace at least 50% of eligible workers’ lost earnings over a six month period, and that the way to do this was to set a maximum benefit equal to two-thirds (66%) of the state’s average weekly wage.1 This objective dates back to the founding of the UI system and was endorsed by President Dwight Eisenhower and most presidents thereafter. President Richard Nixon said that UI should replace 50% of lost wages for four-fifths of all UI recipients—this became known as the “one-half for four-fifths” criterion.2

MI UI quoteMichigan falls far short of this standard. Since 1989, the earliest year for which data are available for this report, Michigan has not met either the two-thirds standard for the maximum benefit or the 50% standard for the average weekly benefit. Until 1993, the maximum benefit was pegged at 58% of the average weekly wage, but in 1994 the maximum benefit was decoupled from average wages and set at $293 per week. The maximum has been increased two times since then: to $300 in 1995 and $362 in 2002 (Figure 1).3

Decoupling the maximum benefit from the average weekly wage and converting it to a flat numerical amount has resulted in a significant erosion and a loss to Michigan’s workers. If Michigan had kept its maximum benefit at 58% of the average weekly wage, the maximum benefit would have been $542 per week in 2016 rather than $362. If the maximum benefit were equal to 66% of the average weekly wage, as recommended by the advisory council and most United States presidents, it would have been $623 per week. It is currently 39% of the average wage. Michigan’s average benefit, at only 33% of the average weekly wage in 2016, falls far short of the 50% level recommended by the advisory council (Figure 2).

MI UI fig 1

MI UI fig 2 a

MICHIGAN PAYS THE LOWEST MAXIMUM BENEFIT IN THE MIDWEST, RESULTING IN A LOW AVERAGE BENEFIT

When compared with the other Midwestern states, Michigan’s maximum benefit ranks last, both as a nominal amount and as a percent of the state average weekly wage. During 2016, none of the eight Midwestern states had maximum benefits that met the two-thirds standard, but Michigan’s maximum was significantly below all the other states at only 37%. If Michigan had kept its maximum at 58%, as it had prior to 1994, its maximum benefit of $542 per week would rank second among the eight states. Partly as a result of Michigan’s low maximum benefit, its average weekly benefit is 31% of its average weekly wage, last among the eight states (Figure 3).

MI UI fig 3 a

MICHIGAN’S UI BENEFIT FALLS FAR SHORT OF NEED

According to the Working Poor Families Project, nearly 310,000 (32%) working families with children are low income, meaning that their household incomes are less than two times the poverty level.4 Nearly half of these low-income working families pay more than one-third of their household income on housing, the level at which housing is considered unaffordable.5 These families likely do not have savings or other resources to deal with an unexpected job loss, and therefore, a safety net to provide for them while the unemployed parent looks for work is essential.

As a lifeline for workers and their families, Michigan’s Unemployment Insurance program does not keep up with economic realities. The average weekly benefit will not keep a family with children out of poverty while the unemployed parent looks for work, and the maximum weekly benefit will not keep a family with more than two people above the federal poverty level. For families in which the wages of the unemployed parent provide the only (or primary) income, this can create significant hardship.

If Michigan’s maximum weekly benefit were still pegged to 58% of the average weekly wage and if the average benefit covered 50% of wages for most workers, UI would keep the families of unemployed workers well above the poverty line as they look for jobs (Figure 4).

MI UI fig 4

Many two-parent families are dual income and hence would not likely fall into poverty based on the UI benefit, but all would fall below the level considered “low income” as they look for work. Especially for the long-term unemployed, whose benefits expire after 20 weeks even if they have not yet found work, the consequences of the low benefit can be disruptive and harmful.

MICHIGAN’S DEPENDENTS’ ALLOWANCE IS OUT OF DATE

States have the option to add a dependents’ allowance to a UI recipient’s basic weekly benefit. The dependents’ allowance can be either a fixed numerical amount per dependent or one that increases with the level of the basic weekly benefit. Michigan’s dependents’ allowance is $6 per dependent. Recipients can claim up to five dependents for a maximum of $30 for the dependents’ allowance. The dependents’ allowance may not bring the total household UI benefit higher than the $362 weekly maximum benefit.

Interestingly, the dependents’ allowance in 1951 was $2 for the first dependent and a maximum of $4 for all additional dependents for a total of $6, equal to $58 today.6 The maximum weekly benefit during that year was $35, equal to $340 today, but unlike today, the dependents’ allowance in 1951 could bring the total benefit to higher than the established maximum.7,8

Michigan neglected to increase the dependents’ allowance to $15 per dependent in 2008 and thus declined federal funding that had been offered as part of the Unemployment Insurance Modernization Act. Given that $15 per week (or $60 per month) for each child or other dependent would go much further to help families struggling with unemployment than the current allowance level, Michigan’s Legislature should raise the dependents’ allowance accordingly even in the absence of the federal incentive. This would be especially helpful in light of the failure by the Legislature to update the basic weekly benefit.

MICHIGAN HAS THE LOWEST UNEMPLOYMENT INSURANCE COVERAGE IN THE MIDWEST

Covered employment is defined as the number of employees who are covered by the UI system should they become unemployed, as reported to the state UI agency by employers. As a percent of the total labor force, Michigan’s covered employment during the fourth quarter of 2016 improved significantly since the 2012 edition of this paper, but remains the lowest in the Midwest (though not by far), while Minnesota’s is the highest at 93% (Figure 5).

MI UI fig 5 aWhen comparing Michigan’s Insured Unemployment Rate (1.2) against its Total Unemployment Rate (4.5), the state has a gap of 3.3 percentage points, placing it sixth out of the eight Midwestern states. This is an improvement over the 2012 version of this report when its gap was worst in the Midwest at 7.2 percentage points.9

Michigan’s lower UI coverage relative to the rest of the Midwest may be due in part to the higher base period and high quarter wage eligibility levels. The base period is the time period during which wages determine eligibility for UI benefits, usually the first four of the last five completed calendar quarters preceding the filing of the claim.10 The high quarter is the quarter with the highest earnings within the base period.

Because each state uses its own qualifying formula to determine eligibility, it is difficult to do a straightforward comparison of eligibility requirements. However, when Michigan’s minimum wages for eligibility during the base period and high quarter are compared to those of its Midwestern peers, it is clear that Michigan’s UI program eligibility is much more restrictive than most of the others. While five of its peer states have base period minimums lower than $3,000, Michigan has the highest in the Midwest with $5,180. Of the four peer states with high quarter wage minimums, Michigan’s is $3,453 while the other three have minimums below $2,700 (Figure 6).

MI UI fig 6

MICHIGAN SPENDS LESS ON UI PER UNEMPLOYED WORKER THAN MOST MIDWESTERN STATES

One way to compare the overall responsiveness of state UI programs is to calculate the amount of UI benefit dollars spent per unemployed worker in each state, taking into account all unemployed workers and not just those covered by UI. In 2010, Michigan was last among the eight Midwestern states in this measure (even with federal long-term UI funds included), but in 2016 was sixth out of eight, spending $299 per unemployed worker. While this is an improvement compared to peer states, Michigan spends considerably less than Minnesota, Iowa, Pennsylvania and Illinois, which pay more than $100 more per worker than Michigan (Figure 7). Minnesota and Illinois pay nearly $300 more per worker than Michigan.

MI UI fig 7

MICHIGAN ALLOWS THE FEWEST WEEKS OF UI BENEFITS IN THE MIDWEST

MI UI fig 8In 2011, despite having one of the highest unemployment rates in the nation and having been hit especially hard by the economic downturn, Michigan’s Legislature voted to make Michigan the first state to reduce the maximum number of weeks of Basic UI from 26 weeks to 20 weeks. This change took effect in January 2012. No other Midwest state has reduced its benefit weeks this drastically; the one other Midwest state to reduce its weeks, Illinois, shaved off only one week but restored the maximum to 26 a couple years later (Figure 8).

On this indicator, as with so many others, Michigan’s policies have put the state last in the Midwest. While many workers receiving UI find work before reaching the maximum number of weeks, it is important that Michigan restore the 26-week maximum, especially for workers in areas with few jobs.

MICHIGAN’S FRAUD DETERMINATION SYSTEM HAS VICTIMIZED TENS OF THOUSANDS OF UI RECIPIENTS

Beginning in 2013, workers who became unemployed began filing claims using Michigan’s new online unemployment system, called the Michigan Integrated Data Automated System (MiDAS). In ensuing years many workers received notices in the mail, in some cases long after they had found work and stopped receiving UI benefits, informing them that the UI benefits they received were fraudulent and that they owed thousands of dollars in benefit repayment plus interest and large penalties. The notices did not provide information as to the reason for the fraud determination.

While some workers were able to respond to their first notification in a timely manner and resolve the problem, many did not receive that notification because it was sent to an old address, or sent through online UI accounts that they no longer checked after they stopped receiving benefits. By the time these workers received a subsequent notification, they had passed the 30-day period in which they could contest or appeal the fraud determinations. Many began paying what the government said they owed, while others had wages and tax refunds garnished. Some workers filed for bankruptcy or experienced home foreclosure.

An internal investigation by the Michigan Unemployment Insurance Agency showed that more than 37,000 determinations of fraud by the Unemployment Insurance Agency since 2013 were wrongly determined (false) and that there had been in fact no fraud committed in those cases. Of the cases in which the fraud determination had been done entirely by computer, without human involvement, 93% were false determinations. Of the cases in which there was human as well as computer involvement, just under half were false, underscoring that while the computer system played a major role, there were structural problems and not just technical problems that contributed to the false fraud determinations.

The structural problems spanned the full range of the process:

  • Determination—Fraud determinations were often triggered by small mistakes or by inconsistencies that were not the fault of the claimant.
  • Notification—Notifications to the claimant of the fraud determination were often sent out more than a year after the claimant stopped receiving benefits, sometimes to an old mailing address or to an online UI account that the claimant had stopped checking due to having found employment. Many claimants found out about the determinations long after the 30-day response period had ended.
  • Claimant Ability to Respond—The questionnaire provided to claimants who wanted to contest the false fraud findings against them included questions and answer choices that were unclear and self-incriminating.
  • Recoupment—Many claimants unexpectedly had large portions of wages or tax refunds garnished, leaving little money left to pay for living expenses.
  • Penalties—The federal requirement is that states have a penalty of at least 15% of the amount overpaid, but states can implement higher penalties if they choose. At 400% of the amount overpaid, Michigan had the harshest fraud penalties in the nation, and by far the harshest in the Midwest (Figure 9). Those falsely accused of fraud were told they owed the amount ostensibly overpaid, plus four times that amount, plus interest.

MI UI fig 9

Michigan has recently enacted legislation to undertake serious reform on how fraud is determined and addressed, including:

  • Requiring the UI agency to provide advocacy services for claimants who believe they have been wrongly determined;
  • Prohibiting the agency from charging interest for at least one year after the fraud determination;
  • Clarifying and strengthening the penalties for stealing another worker’s identity in order to receive UI benefits in their name and for failure of an employer to provide adequate or timely information to the UI agency about an employee’s unemployment status (two factors leading to some of the false fraud determinations);
  • Providing hardship waivers from collection of overpaid funds;
  • Making it easier for individuals accused of fraud to show good cause (i.e., the notice was sent by the UI agency to the wrong address) in not responding within the 30-day period; and
  • Reducing fraud penalties to 100% of the amount overpaid for the first violation and 150% for subsequent violations (penalties for identity theft would remain at 400%).

ONE RECENT POLICY IMPROVENT: WORK SHARING

In 2012, Michigan became the 24th state to adopt a UI work-sharing program (there are now 28 states with a program), which in Michigan is called Work Share. The program provides an alternative to layoffs for businesses that need to reduce their payroll hours due to decreased demand for their products or services, allowing qualifying employers to reduce the payroll hours of a large pool of employees by an equal amount (usually 15%-40%) rather than eliminate some workers altogether. The employer informs the state UI agency of the percentage of payroll hours that will be reduced, and upon approval from the agency, each employee would be eligible for a proportional percentage of the UI benefits he or she would receive if laid off entirely.

Employers must provide assurance that during the work-sharing period they will not hire or transfer employees into the affected work unit, will not lay off or further reduce the hours of participating employees, and have attained the approval of the collective bargaining representative if the workforce is unionized. Participating in work sharing does not count against a worker’s available weeks of Unemployment Insurance, nor is the employee required to participate in job search activities since it is expected that he or she will eventually work full time again for the employer.

Workers benefit from work sharing because they will have less disruption in their household income than if they were laid off, and will continue receiving health insurance and other benefits without interruption (this is a requirement of the law). Employers benefit from work sharing because being able to retain their skilled workers rather than having to search for, hire and train new workers when business improves reduces unpredictability and costs.

WHAT DECISIONS HAVE LED TO MICHIGAN’S UI PROGRAM COMPARING SO POORLY TO PEER STATES?

  1. The decoupling of benefit levels from average weekly wages in 1994. While the maximum benefit had been set as a percentage (58%) of the average weekly wage prior to 1994, it was changed that year to a flat rate that erodes each year compared with wages unless increased by the Legislature. It has only been increased once since 1995 and is now equal to only 39% of the average weekly wage.
  2. An eligibility system that makes it difficult for workers to be eligible for UI. While Illinois, Iowa, Minnesota, Pennsylvania and Wisconsin allow some workers to collect benefits with base period earnings as low as $1,600-$2,800, Michigan’s minimum is $5,180. Likewise, Michigan’s high quarter minimum wage requirement is $3,453—more than $1,700 higher than other Midwest states with a high quarter requirement for eligibility.
  3. Failure to modernize the UI system in 2008 despite federal funding of much of the costs. Under the Unemployment Insurance Modernization Act of 2008, Michigan had the opportunity to receive federal funding to cover a significant portion of the costs of making at least two modernizations to its eligibility and benefit rules. Such updates included making UI available to those looking only for part-time work, those participating in skills training instead of job search, and/or those who left work for compelling family reasons such as spouse relocation, caring for an ill or disabled family member, or domestic violence. Increasing Michigan’s dependent allowance from $6 to $15 per dependent would have also counted as one modernization. While four other Midwestern states (and 33 states nationally) modernized their systems before the August 2011 deadline and thus became eligible for the funding, Michigan opted to do nothing and leave the money on the table.
  4. A reduction in 2011 to the number of weeks of UI available to workers. Despite having had some of the worst unemployment in the country, Michigan became the first state to reduce its maximum number of available UI weeks from 26 to 20.

RECOMMENDATIONS

These four indicators show that Michigan, despite having one of the higher unemployment rates in the Midwest, has the least responsive Unemployment Insurance system. This is bad for not only workers and their families, but for local economies and small businesses as well. Following are recommendations that would help Michigan’s UI system to more adequately respond to economic downturns in the state.

  1. First, do no harm. As the Legislature considers further UI legislation, it should take into account whether such legislation will strengthen Michigan’s UI program and bring it in line with other states or cause it to fall further behind in responding to the needs of workers. Michigan’s Legislature should say no to any legislation that will make it more difficult for unemployed workers to access UI as they look for work.
  2. Restore the 26-week maximum for Basic UI. Just as it took legislative action to reduce the maximum number of weeks for UI from 26 to 20, it will take legislative action to reverse this action. The Legislature can continue being “penny wise and pound foolish” and letting job providers lose money through reduced customer revenue as unemployed workers exhaust their benefits. Or, it can help workers, their families and job providers by restoring the 26-week maximum and providing a safety net for those who remain unable, despite their efforts, to secure employment after 20 weeks of job search.
  3. Peg the maximum benefit to the average weekly wage. Until 1994 the maximum benefit was set at 58% of the average weekly wage. Unlike the flat rate currently in use, pegging the maximum benefit to wages enables it to keep pace with economic realities without the need for periodic legislative adjustments. As the average wage increases, the maximum benefit increases accordingly; when the average wage falls, as it did in 2009 and 2010, the maximum benefit also falls. When determining the percentage, keep in mind the advisory council recommendation that the maximum benefit equal two-thirds of the average weekly wage. Although Michigan’s 58% standard fell short of this recommendation, it would have enabled a more generous maximum in recent years than the flat rate of $362 currently in place.
  4. Lower the minimum base period and high quarter earnings requirements for unemployed workers to collect UI benefits. Many workers who are firmly attached to the labor force do not qualify for UI because their earnings when employed were not high enough. Revisiting and adjusting these minimums will allow more workers to collect benefits as they look for work.
  5. Expand eligibility for UI to unemployed workers seeking part-time work, workers who left their jobs out of necessity for compelling family reasons, and/or workers who became unemployed and are using their time to acquire new skills through training rather than looking for immediate employment. Each of these eligibility expansions were options under the Unemployment Insurance Modernization Act that would have enabled Michigan to receive federal funding. While the federal money is no longer available, Michigan can still undertake one or more of these eligibility expansions for the good of its workers and its local economies.
  6. Raise the dependents’ allowance from $6 to $15. This was also an option that would have allowed Michigan to receive funding under the Unemployment Insurance Modernization Act. Increased benefits due to a larger dependents’ allowance would still be subject to the current $362 weekly maximum benefit level, so this would ideally be done in tandem with an increase in the maximum benefit.

Unemployment Insurance is good for the economy. When consumer spending is interrupted by high unemployment, businesses suffer. UI keeps consumer dollars flowing into local businesses such as retail stores, automobile service shops, home repair contractors, gas stations and hair salons. Economic analysis has shown that for every one dollar of unemployment benefits provided during the Great Recession, two dollars were added to the nation’s gross domestic product.11

Likewise, Unemployment Insurance helps workers and their families preserve their way of life and avoid serious economic hardship as they look for work. Allowing more workers, particularly workers with lower earnings, to access UI would enable many more families to weather a period of unemployment without major disruption, and raising benefits would result in UI better helping families keep up with expenses and bills. Strengthening Michigan’s system is the right thing to do.

ENDNOTES:

  1. Advisory Council on Unemployment Compensation, Collected Findings and Recommendations 1994-1996, Reprinted from Annual Reports of the Advisory Council on Unemployment Compensation to the President and Congress, 1996. (https://workforcesecurity.doleta.gov/dmstree/misc_papers/advisory/acuc/collected_findings/adv_council_94-96.pdf, accessed on January 8, 2018.)
  2. O’Leary, C. J., The Adequacy of Unemployment Insurance Benefits, W. E. Upjohn Institute for Employment Research, 1995.
  3. Evangelist, M. and R. McHugh, Coming Back for More: Michigan Lawmakers Aim to Cut Unemployment Insurance for Second Time in Six Months, National Employment Law Project, September 2011.
  4. Working Poor Families Project data generated by the Population Reference Bureau from the American Community Survey, 2015.
  5. Ibid.
  6. Halsey, O. S., Bulletin: Dependents’ Allowances Under State Unemployment Insurance Laws, Social Security Administration, February 1951. (https://www.ssa.gov/policy/docs/ssb/v14n2/v14n2p3.pdf, accessed on November 12, 2017.)
  7. Bulletin: State Unemployment Insurance Legislation, 1951, Social Security Administration, December, 1951. (https://www.ssa.gov/policy/docs/ssb/v14n12/v14n12p11.pdf, accessed on November 12, 2017.)
  8. Calculated using the Consumer Price Index Inflation Calculator of the Bureau of Labor Statistics.
  9. The Insured Unemployment Rate is computed by dividing the number of insured unemployed workers for the current quarter by the number of workers in “covered employment” for the first four of the last six completed quarters. The Total Unemployment Rate refers to the seasonally adjusted unemployment rate that is computed by dividing the number of unemployed workers by the total number of workers in the labor force. (U.S. Department of Labor Employment and Training Agency).
  10. Michigan and some other states (including all of the peer states compared in this report) use an alternative or expanded base period for workers who fail to qualify under the regular base period. In Michigan and some other states, if a worker fails to qualify using wages and employment in the first four of the five most recent completed calendar quarters, the state will use wages and employment in the most recent four completed calendar quarters.
  11. Boushey, H. and J. Eizenga, Toward a Strong Unemployment Insurance System: The Case for an Expanded Federal Role, Center for American Progress, February 2011.

 

The benefits of Deferred Action for Childhood Arrivals (DACA) on immigrants in Michigan

pdficon Victoria Crouse, State Policy Fellow
December 2017

INTRODUCTION

The Deferred Action for Childhood Arrivals (DACA) policy was initially established in 2012 by President Barack Obama in an effort to address the needs of young undocumented immigrants who arrived to the country as minors. DACA provides temporary protection from deportation and work authorization (applicants must apply for renewal after two years), and has led to an increase in employment opportunities and participation in higher education among many beneficiaries.

DACA graph 1In the five years since its inception, DACA has proven to be an effective strategy for boosting beneficiaries’ wages, employment opportunities and education. While there are several shortcomings to this policy, DACA was a good first step in addressing our outdated immigration system. The recent termination of the DACA program threatens the livelihood and well-being of these young undocumented immigrants and their families, and this in turn threatens our economy and the well-being of our state.

Unless there is action in Congress or by President Donald Trump’s administration, all 689,800 DACA beneficiaries across the U.S. will lose their work permits and be subject to deportation over the next two years as their permits expire. In Michigan, 5,400 young immigrants currently enrolled in the program stand to lose their status. This report describes the many ways in which young undocumented immigrants help strengthen our state, the positive impact that DACA has had on their lives, and recommendations that policymakers can take to ensure their well-being as well as that of their families.

BACKGROUND: WHO ARE THE DREAMERS?

The term “Dreamers” was coined in 2001 to describe young immigrants who would benefit from the passage of the Development, Relief and Education for Alien Minors (DREAM) Act, a bill offering a pathway to citizenship for young undocumented immigrants who were brought to this country as young children by their parents. Today, “Dreamers” is used more broadly to describe all young immigrants who were brought to the U.S. as kids and identify as Americans in every sense of the word, but do not have legal status. In 2012, the federal Deferred Action for Childhood Arrivals (DACA) program granted temporary reprieve from deportation and a renewable two-year work permit to Dreamers who met age and education requirements (hold a high school diploma or GED), and passed a background check. By opening the doors to legal employment without the fear of deportation, DACA became a vital policy for enabling this group of young immigrants to succeed in this country. Researchers and recent data on beneficiaries confirm that the DACA program enabled many participants to pursue educational and professional dreams, contribute to their family’s household income and make their first big purchases such as buying a car or a home.1

DACA graphs 2 and 3As of September 2017, there were 689,800 active DACA beneficiaries across the country. The Migration Policy Institute estimates that in 2017 there were approximately 1.3 million undocumented immigrants who met the eligibility requirements to apply for DACA, and approximately 68% ultimately submitted an application for the program as of June 30, 2017. In Michigan there are approximately 5,400 young adults enrolled in the program.2 The total share of DACA-eligible immigrants in Michigan totaled 15,000 as of 2014.3 High application fees, legal fees and a shortage of community resources to navigate the application process were common barriers for many Dreamers hoping to enroll in the program but who ultimately did not apply.

Among those individuals who are no longer enrolled in the program, approximately 70,000 individuals did not renew their benefits or were denied, and approximately 40,000 adjusted their status and obtained green cards, granting them permanent residence in the United States and a path to citizenship.4

DACA RESCINDED

Shortly after the DACA program’s fifth anniversary on Sept. 5, 2017, the U.S. Attorney General announced that the Justice Department would end the program over a six-month phasing out period. As of that date, United States Immigration and Citizenship Services (USCIS) stopped accepting new DACA applications. As of Oct. 5, 2017, the federal government is no longer accepting renewal applications. Nearly 700,000 beneficiaries across the country will be affected by the termination of this program. In Michigan, thousands of undocumented immigrants currently enrolled in DACA stand to lose their ability to work and go to school without fear of deportation.

CHARACTERISTICS OF DACA BENEFICIARIES

DACA graph 4DACA beneficiaries come from different regions and countries around the world. In the U.S., the top five countries of origin for beneficiaries are: Mexico (79.4%), El Salvador (3.7%), Guatemala (2.6%), Honduras (2.3 %) and Peru (1.1%). In Michigan, the top country of origin for DACA-eligible immigrants is Mexico.5 The majority (53%) of DACA beneficiaries across the country are women, and two-thirds of them are 25 years of age or younger.

Compared to its Midwestern neighbors, Michigan is home to a smaller number of DACA beneficiaries. Illinois, with 35,600 beneficiaries, is a traditional immigrant destination and home to the largest number of beneficiaries in the region. Across the country, DACA program participants are largely concentrated in densely populated urban areas. Detroit, for example, is one of 20 metro areas across the country where three-quarters of all DACA beneficiaries reside.

DACA graph 5DACA’S IMPACT ON BENEFICIARIES

Impact on Employment

By providing beneficiaries with temporary work permits, DACA enabled individuals to access better paying jobs and pursue careers in their areas of interest.6 A 2016 study of DACA beneficiaries found that DACA increased the likelihood of participants’ employment through expanded labor force participation, while also decreasing the rate of unemployment for individuals.7

As of September 2017, more than half (55%) of all DACA program participants across the country were employed (48% were female and 64% were male), making up a total of 382,400 workers in the labor force. Meanwhile, a large majority (62%, 154,108) of those not in the labor force were enrolled in school.8

Thousands of Dreamers are balancing work and school. Researchers at the Migration Policy Institute found that about a quarter of DACA enrollees are juggling both college classes and work, suggesting that beneficiaries must work in order to afford their education. When it comes to occupational groups, DACA beneficiaries are most commonly employed in white-collar occupations. Compared to undocumented immigrants without DACA status, DACA beneficiaries are more likely to work in office settings, and less likely than their counterparts to work in blue-collar occupations like construction, suggesting that DACA opens the door to better employment opportunities for individuals.9

Impact on Education

In a 2013 research study, researchers sampled over a thousand DACA beneficiaries and found that a majority of respondents perceived that their DACA status enabled them to pursue educational opportunities they previously did not have access to.10 Researchers at the Migration Policy Institute (MPI) confirm these findings, providing a fuller picture of their education and enrollment statuses.

Researchers estimate that a total of 37% of DACA participants were enrolled in some type of postsecondary education program as of September 2017. Of these students, one-third were also working, while 8% were unemployed and 59% were not in the labor force.11 Though more than a third of individuals were estimated to be enrolled in school, the majority (62%) were not. Among beneficiaries who were not enrolled in school, 69% were employed, while 9% were unemployed and 22% were not participating in the labor force, as of September 2017.12

DACA graph 6When it comes to college, researchers found that DACA beneficiaries are almost as likely as their U.S.-born adult counterparts to be enrolled in college (18% versus 20%), but are much less likely to graduate. This latter finding can at least partially be attributed to the steep tuition costs undocumented immigrant students are required to pay each year. In states like Michigan, where there is no statewide tuition-equity policy, undocumented students’ state residency is not recognized, and students are forced to cover out-of-state tuition costs to stay in school. Additionally, these young adults are not eligible for federal financial aid and must instead lean on personal savings, private scholarships and high-interest private loans to cover tuition and college-related costs. Michigan is unique in that the only way to achieve a statewide tuition-equity policy is by amending the state constitution. Despite this, a number of public and private universities in Michigan have begun to implement tuition-equity policies to alleviate the burden of tuition on undocumented students.

As millennials, young immigrants enrolled in DACA are part of the most educated generation of Americans, but data shows that even with DACA status, these young adults’ educational gains still lag behind those of U.S.-born Americans and other immigrants residing in the United States.13 What is even more alarming is the impact that a loss of DACA status will have on thousands of beneficiaries who are currently enrolled in school. Without the prospect of being able to work legally in their profession, many students may drop out of school and lose out on their educational dreams and the promise of increased earnings that a college degree affords.

THE ECONOMIC IMPACT OF DREAMERS

DACA has enabled a generation of young immigrants to not only pursue professional goals, but also help fill gaps in the labor market and grow the country’s skilled workforce. As workers and consumers, DACA participants and their families have helped revive local economies in the post-recession era. As taxpayers, these individuals and their families contribute to important public investments every year. Researchers at the Institute on Taxation and Economic Policy (ITEP) estimate that nationwide, DACA enrollees contribute $2 billion in state and local taxes each year. In Michigan, these young adults contribute $13 million in state and local taxes annually.14 If federal elected officials fail to pass a replacement to DACA and beneficiaries’ work permits expire, their tax contributions will drop by more than half to $5 million in revenue—an amount that is equivalent to 220 teacher salaries in Michigan.15 This loss would prevent our state leaders from being financially able to make important investments in our schools, our hospitals and our communities. Alternatively, if Dreamers have a path to citizenship their naturalization will enable them to access better-paying jobs, leading to an increase in tax contributions. In Michigan, researchers estimate that as citizens, Dreamers would contribute $6 million more in state and local taxes each year.16

DACA graph 7IMPLICATIONS OF ENDING DACA

The heightened policy backlash from state and federal elected officials against the undocumented immigrant community in the last year has led to the permanent separation of families due to deportations and the threat of everyday harassment in public spaces. For DACA enrollees, the DACA program’s termination has placed thousands at risk of losing the ability to live and work in the United States. Researchers at MPI estimate that every day between March 6, 2018, and March 5, 2020, an average of 915 DACA enrollees will see their work permits expire and lose their protection from deportation across the country.17 DACA participants are currently employed across numerous industries make important contributions in our schools, hospitals and communities every day. The loss of their work permits could lead to job loss and place Dreamers and their families in economic jeopardy while endangering professional and educational dreams. This tenuous policy landscape gives reason to examine the consequences of eliminating DACA, and what it will mean for Michigan.

The end of DACA could result in thousands of unnecessary deportations of Dreamers, which would not only be inhumane, but it would also translate into significant losses for Michigan. If program participants are removed from our economy as workers and consumers, Michigan would experience a $418 million annual Gross Domestic Product (GDP) loss.18 Over 10 years, our nation would lose $433.4 billion in GDP. A loss in productivity at the state and national level impacts Michigan’s ability to sustain a post-recession recovery.

The end of the DACA program hurts our labor market. Research points to the central role that immigrants and children of immigrants will play in growing our labor force in the years to come. In fact, immigrants and their children are projected to be the primary drivers of growth in the working-age population through the year 2035. Specifically, the number of working age immigrants in the U.S. is projected to rise from 33.9 million in 2015 to 38.5 million by 2035. Given these projections, it is imperative that policymakers work toward integrating undocumented immigrants into our communities to ensure that our skilled and educated workforce remains solvent for years to come.

POLICY RECOMMENDATIONS

  1. A Pathway to Citizenship. The DACA program provided only temporary relief from deportation for most participants (though there has already been one reported case of a DACA beneficiary being deported to their country of birth).19 A pathway to citizenship would enable young immigrants and their families to contribute fully to their communities and the economy. Given the program’s recent termination, it is crucial that federal policymakers act now to pass a permanent solution to the issue.
  2. Tuition-Equity Policies at all Michigan Colleges and Universities. The high cost of higher education continues to be a barrier to college for many DACA participants. Pursuant to the state constitution, undocumented students are considered “out-of-state” for tuition purposes and are therefore required to pay out-of-state tuition at many Michigan higher-education institutions, despite the fact that many have lived in Michigan long enough to otherwise qualify as state residents. All Michigan universities and private colleges should adopt tuition-equity policies to recognize these students’ residency for tuition purposes.
  3. Access to Occupational and Professional Licenses. Another way policymakers can strengthen outcomes among young undocumented immigrants is by making them eligible for occupational and professional licenses. In Michigan, no state law has been passed that specifies DACA beneficiaries as a category of non-citizens eligible for obtaining occupational and professional licenses. Their ineligibility means that some cannot put their education and training into action despite their investment in their education. The absence of this policy can also be a deterrent to enrollment in programs that require licensure, and it contributes to a shortage of skilled labor in our state.
  4. Policies for Social and Economic Inclusion. Recent waves of anti-immigrant policies and legislation in our state and at the federal level threaten the well-being of thousands of immigrant families in Michigan. Through a flood of anti-immigrant executive orders signed by President Trump earlier this year, the Department of Homeland Security ramped up immigration enforcement forces across the country, which has led to the senseless separation of many immigrant families in Michigan.20 Research shows that inclusive policy is the best way forward for states with growing immigrant communities. Members of Congress and the Michigan Legislature can act immediately to abandon policies of exclusion and introduce policies that eliminate barriers to success for Michigan’s immigrant families.

DACA graph 8

 

 

A warm home is a healthy home

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 December 2017
Julie Cassidy, Policy Analyst

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Neither U.S. Senate nor House tax plan is good for Michigan

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December 2017
Lorenzo Santavicca, Intern

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Most Michiganians won’t benefit from federal tax reform

pdficonRachel Richards, Legislative Coordinator
November 2017

Lawmakers in Washington are pushing through tax cuts for profitable corporations and wealthy Americans that will hardly give anything back to working families. Instead, the plan will jeopardize the things that Michigan residents need the most—housing, food, education and infrastructure.

THE BASICS

Unpaid-for tax cuts. The federal budget that was approved allows Congress to massively cut taxes without paying for them, significantly increasing our deficit. If alternative revenues are not provided, or if an equal amount of harmful cuts is not produced, our deficit will grow by $1.5 trillion in 10 years under the guidelines.

Tax cuts mean cuts toCuts to services will harm us all. Even though the budget does not mandate specific cuts to help offset revenue losses from tax reform, as the deficit increases, lawmakers will be under more pressure to right-size the budget. This will likely trigger cuts in the things Michigan residents rely on—healthcare, basic needs assistance, education, college financial aid, housing assistance, infrastructure and more.

NOT MUCH FOR WORKING FAMILIES

No one really pays the estate tax. Currently, only about 2 in every 1,000 estates (the top 0.2% of estates) pay an estate tax. This is because the law exempts the first $5.49 million ($10.98 million for married filing jointly) from the estate tax. This year, only about 5,200 out of 2.7 million estates nationally are expected to pay the tax; of those, only about 80 will be small farms or business estates.

Bad tradeoff hinders state and local governments’ ability to raise needed revenues. Michigan residents could lose their deduction for state sales, income and/or property taxes. This change is misleading, because on the surface an elimination of the state and local tax deduction would help progressivity in our federal tax code. But this framework uses the elimination to pay at least partially for rate cuts that heavily benefit the wealthiest taxpayers. Even if the deduction is eliminated, 80% of the tax cuts would still go to the top 1% by 2027 nationally. Additionally, this would make it harder for states and local governments to raise or maintain revenue for necessary services, such as infrastructure and education, as taxpayers would be less likely to support funding for current services.

Working family tax credits aren’t enhanced enough. The expansion of the Child Tax Credit (CTC) will likely not help those who need it most because the expanded credit is nonrefundable. Instead, much of the increased benefit would be felt by families making six-figure incomes who are currently marginally eligible or ineligible for the credit. Recent analysis estimates that about 16 million American children in families with low incomes would be left out of the increase. Additionally, other provisions in the proposal could negate some of the benefits felt through a CTC expansion. No increase or expansion of the federal Earned Income Tax Credit (EITC), with its proven positive impact on the lives of kids in poverty, has been proposed. For example, recent proposals to strengthen the EITC for workers not raising children in their homes would help up to 15 million more families working in jobs with low wages.

who gets most of the tax cuts 3BIG CORPORATE TAX CUTS

Pass-through tax rate would not help many small businesses but would encourage tax avoidance. Most small businesses that are set up as pass-through entities, such as partnerships, are already taxed at a rate of 25% or lower. Instead, having a lower pass-through entity rate would simply encourage high-income individuals to reclassify their income as business income to benefit from the lower rate.

Trickle down does not work (don’t expect a huge raise from corporate tax cuts.) Cutting the corporate tax rate from 35% to 20% will not help workers as much as plan proponents say it will. Most research shows that only a quarter or less of corporate taxes fall on workers. Instead, corporate tax cuts will give huge payouts to high-income investors and those at the top, while leaving little for employees, especially those working low-wage jobs.

Tax cuts don’t create jobs. Taxes are only one factor when a company looks at whether to move or expand. We saw this play out in Kansas over the past five years. Huge tax cuts expected to boost the economy never produced the promised effects. Instead, Kansas’ job and economic growth has lagged behind much of the rest of the nation. What’s worse is that the resulting revenue loss from the tax cuts caused huge cuts in the things Kansans needed the most; school funding was cut to the point where some schools had to close early and the state went from being able to maintain its roads every nine years to every 50 years.

WHAT’S THIS MEAN FOR MICHIGANIANS?

Massive tax cuts for the top 1% and not much for the rest of us. Based on an analysis of the current Republican tax plan, Michigan taxpayers among the richest 1%—those making $500,760 or more a year—would see an average tax cut of $52,820. On the other hand, Michigan families making less than $22,870 would see an average cut of $110. Middle-class Michiganians would see $730 in tax benefits.

Inequality in tax cuts 3Over the next 10 years, the value of the tax cut would decline for every income group except for the very richest. While the richest would see their tax benefit grow by $24,560, middle-income Michiganians could see their tax cut shrink by $140. This is due to tax cuts for the wealthiest phasing in over time as tax cuts for everyone else expire. In fact, some taxpayers in all income levels could see tax increases. In the end, taxpayers with low-to moderate incomes pay for tax cuts for high income earners.

Immigrant families in Michigan: A state profile

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 October 2017
 Victoria Crouse, State Policy Fellow

Michigan has long been home to thousands of immigrants from all over the world. Immigrants in Michigan are neighbors, students, workers and Main Street business owners. They help our state maintain a strong, modern economy and they enrich our communities.

Michigan has seen a significant increase in the number of immigrants in our state over the past several decades. Between 2000 and 2015, the immigrant population in Michigan increased by almost a quarter (24.5%), and has nearly doubled since 1990. The majority of immigrants in Michigan (51.4%) arrived to the state before 2000, with only 20.8% having arrived since 2010.1 Michigan’s immigrant population is high among other small states in the country, but still smaller than many large states like Illinois. Furthermore, the rate of growth of the immigrant population in Michigan remains outpaced by growth at the national level.2 About half of immigrants in Michigan are naturalized citizens (51.1%) while some maintain some form of legal status such as a temporary visa or permanent residency. As of 2014, 97,000 immigrants in Michigan were undocumented or had no form of legal status.3

MICHIGAN IMMIGRANTS HAVE VARIED ORIGINS AND EXPERIENCES

From Latin America to South Asia, immigrants in Michigan come from regions all over the world, helping to enrich the Great Lakes state. Almost half of Michigan immigrants (48.4%) arrived from Asian countries, making it the most common world region of origin for immigrants in the state. The top Asian countries of origin are: India, Iraq, China, Korea and Lebanon. Among the other top four regions of origin for Michigan immigrants were: Europe (21.7%), followed by Latin America (18.9%) and Africa (4.3%).

Immigrants who come from the same world region can have vastly different experiences in the United States due to race, socioeconomic status and level of English language proficiency. Immigrants of color, in particular, are more likely to experience discrimination and barriers to opportunity than their White counterparts. These barriers often take the form of residential segregation, limited access to well-paying quality jobs, and poorly funded schools in their communities among others. Public policies that address racial inequalities in health and economic well-being are needed to ensure that more families of color, both immigrant and U.S.-born, can thrive.

A GROWING GENERATION OF YOUNG IMMIGRANTS

table1Children of Immigrants

In Michigan, among all native-born children under age 6, 6.9% (51,112) have at least one immigrant parent, and 14.9% (4,846) of children with at least one immigrant parent are immigrants themselves. Like the rest of Michigan children, children of immigrants also need access to healthy food, a stable home and a quality education to succeed. Many children of immigrants, however, face a higher risk of having poor health and economic outcomes if their parents are experiencing poverty or are undocumented.4 Among children of immigrants in Michigan, 14.8% were experiencing poverty and struggling to get by in 2014 (the most recent year available).5 As Table 1 shows, Hispanic children of immigrants are disproportionately more likely to experience poverty than other non-White racial and ethnic groups. Furthermore, more than half of all children of immigrants in Michigan are children of color who are more likely to face barriers to success that stem from structural racism. These longstanding disadvantages impact everything from the quality of education in schools to access to health institutions and community resources.

Many children with immigrant parents also live with the constant fear of separation from loved ones due to immigration status. As of 2014, approximately 28,000 undocumented immigrant parents with at least one U.S.-citizen child under the age of 18 lived in Michigan.6 Research shows that children who are permanently separated from parents can experience long-term psychological trauma and economic hardship. Therefore, policies that enable families with mixed legal status to stay together are imperative for ensuring child well-being.

Young Adult Immigrants

figure 1Many children of immigrants who have grown up in Michigan are now enrolling in college or entering the workforce. Their contributions as students and workers are vital for maintaining a healthy economy. When it comes to educational outcomes, immigrants in Michigan are more likely to have both an advanced college degree and a bachelor’s degree than U.S.-born state residents. However, some immigrants in Michigan are also much less likely to have completed a high school education than their U.S.-born counterparts. Figure 1 provides an overview of educational outcomes among all immigrants in the state. This disparity in educational outcomes demonstrates that while some immigrants have made gains in accessing higher education (though some also arrive with higher education degrees from their countries of origin), many others still face barriers to completing high school and obtaining a college degree.

A subset of the young adult population is known as the “Dreamers”—immigrants who were brought to this country as children and identify as Americans in every sense of the word, but do not have legal status. In 2012, the federal Deferred Action for Childhood Arrivals (DACA) program granted temporary reprieve from deportation and a renewable two-year work permit to beneficiaries and became a vital policy for enabling this group of young immigrants to succeed in this country. Approximately 6,430 young undocumented immigrants in Michigan are currently enrolled in the DACA program.7 Several studies have confirmed that the DACA program has enabled many beneficiaries to pursue educational and professional dreams, contribute to their family’s household income, and make their first big purchases such as buying a car or a home.8

On Sept. 5, 2017, the U.S. Justice Department, under the direction of President Donald Trump, announced the end of the DACA program. Under new instructions set forth by the administration, the Justice Department announced it would no longer consider new applicants for the program, but would consider renewals for those beneficiaries whose permits expire before March 5, 2018, so long as they submitted renewal applications by Oct. 5, 2017.9 The end of the DACA program has left young immigrants feeling uncertain about their futures in this country. Not only does the end of DACA mean harm to thousands of immigrant students and professionals in our state, it also negatively affects local communities and the state’s economy.

MICHIGAN IMMIGRANTS AND THE ECONOMY

As workers and business owners, immigrants can make regional economies competitive, improving the employment prospects and wages for all workers. From 2006 to 2010, immigrant business owners in Michigan generated $1.8 billion in net business income.10 In 2015, immigrants contributed 9% of the total state GDP in Michigan, and made up 11% of all business owners in the state.11 Michigan immigrants also contribute millions in tax revenue each year, and in doing so help pay for important public programs and infrastructure in the state. In 2015 for example, undocumented immigrants in Michigan paid approximately $86.6 million in state and local taxes.12 Young undocumented immigrants also contribute their share in taxes. In 2015, DACA-eligible immigrants contributed approximately $15 million in state and local taxes.13 While Michigan immigrants should not be valued solely for their economic contributions, it is important to recognize the countless ways in which they help strengthen our state and our local communities.

FIGURE 2IMMIGRANTS IN THE LABOR FORCE

As workers, Michigan immigrants are highly engaged in the labor force, working in a variety of occupations. In 2016, the employment rate among Michigan immigrants 16 years and older was almost identical to that of their U.S.-born counterparts, and had improved from the previous year. In the same year, 57.9% of Michigan immigrants were employed compared to 57.3% of native-born residents and 57.3% of all Michigan residents.14 Michigan immigrants are also less likely to be unemployed than U.S.-born residents. In 2015, the unemployment rate among Michigan immigrants was 4.7% (the most recent year available), compared to 6.7% among U.S.-born residents. Michigan immigrants also work in a diverse number of industries and occupations in our state. Many serve as teachers, nurses, agricultural workers and more. Figure 2 provides an overview of the occupations held by Michigan immigrants as of 2015. Most Michigan immigrants worked in sales, office, service, and management or professional jobs as of 2015.

Step in right directionCREATING A WELCOMING STATE FOCUSED ON INCLUSION NOT EXCLUSION: POLICY RECOMMENDATIONS

When Michigan immigrants succeed, we all succeed. Policymakers can immediately address the lack of policies in place to support our immigrant neighbors. While many immigrants in our state have been able to thrive post-recession, many more are still struggling to make ends meet for their families. Here are some of the ways state and federal policymakers can strengthen Michigan immigrant outcomes:

  • In-State Tuition. The high cost of a college degree continues to be a barrier to higher education for many immigrants, particularly undocumented immigrant students. Most Michigan universities consider undocumented students “out-of-state” residents and require them to pay out-of-state tuition, despite the fact that many have lived in Michigan long enough to otherwise qualify as state residents. Granting in-state tuition to these aspiring students would require a change to our state constitution. A more feasible solution could be that public and private universities adopt tuition equity policies.
  • Access to Occupational and Professional Licenses. Policymakers can also strengthen outcomes among young undocumented immigrants by making them eligible for occupational and professional licenses. In Michigan, no state law has been passed that specifies DACA beneficiaries as a category of non-citizens eligible for obtaining occupational and professional licenses.
  • Pathway to Citizenship. Legal status allows immigrants to focus on their careers and families without having to worry about the potential separation from loved ones due to deportation. Providing a pathway to citizenship for thousands of undocumented immigrants in Michigan is a critical step in helping immigrants achieve positive outcomes for their families.
  • Leaving Behind Policies of Exclusion. The most recent wave of anti-immigrant legislation in our state presents a serious threat to immigrant families and undermines American values of justice and equality. Certain bills, like a proposal to make English the official state language, are introduced for purely symbolic purposes that only serve to divide our communities. Other proposals, like cracking down on sanctuary cities, carry more dangerous implications for undocumented immigrant families. Research shows that inclusive policy is the best way forward for all Michiganians.16 Members of Congress and state legislators can act immediately to abandon policies of exclusion and introduce policies that eliminate barriers to success for Michigan’s immigrant families.

Unless otherwise noted, all state-level data comes from the Census Bureau’s 2011-2015 American Community Survey. “Immigrant” generally describes a foreign-born person living in the U.S., regardless of their immigration status or whether they have become a U.S. citizen.

Endnotes

 

 

Making change: The state budget as a tool for racial and ethnic equity

pdficon

mlpp and kids count sept_26_2017 September 2017
Pat Sorenson, Senior Policy Analyst

Budget Brief JPG USE THIS ONE

—  SUMMARY—

The 2018 budget includes several investments that address pervasive, unacceptable and avoidable barriers to opportunity for many of the state’s children of color, but a much more intentional effort is needed to overcome long-standing inequities that can be traced to public policies in Lansing and nationwide. State budgets are not “colorblind”—even if their disproportionate impact is unintended.

Through its Kids Count program, the League documents the well-being of children in Michigan, and advocates for policies that can eliminate the indefensible outcomes experienced by children of color and their families. For every negative outcome there is a backstory—a history of inequities based on race, income and place. Michiganians share a value of opportunity for all children, but the data show us that good intentions have not always resulted in good outcomes.

ECONOMIC SECURITY

Differences in economic security and opportunity are at the core of racial and ethnic disparities in outcomes for families and their children. The systemic barriers to economic security include housing discrimination, the historical impact of redlining on homeownership, segregation in public schools, differences in educational quality and opportunity, racial discrimination in the workplace, and inequities in the ability to accumulate assets and wealth.

These systemic barriers have their roots in historical racism and discrimination, but persist today in part because of budgets and other public policies that do not recognize the extra resources required to overcome the cumulative effects of inequities based on race and ethnicity.
BB-Chart 1

2018 BUDGET DECISIONS AFFECTING CHILDREN’S ECONOMIC SECURITY:

  1. Expanded funding for food assistance, but more work needs to be done to ensure access to healthy food. In 2018, the state’s “heat and eat” policy will continue, providing more food assistance to nearly 340,000 Michigan residents, including thousands of children of color and their parents. Still lacking is enough support for access to healthy foods for the many children of color who live in “healthy food deserts.”
  2. Continued to endorse policies that have led to the decline in funding for income and family support programs. The Legislature rejected a small increase in the clothing allowance for children receiving income assistance—all of whom are living in deep poverty. Funds were included to expand access to child care services so parents can work, as well as the Pathways to Potential program in schools around the state.

HEALTH

Michigan has a history of effectively covering children through the Medicaid and MIChild programs, and with the Affordable Care Act, the rate of uninsured children dropped even further. However, the state’s children of color still have less access to needed physical and mental healthcare, are more frequently born underweight and likely to die before their first birthdays, and face environmental injustices related to exposure to toxins in their homes and neighborhoods.

BB-Chart 5

As a result of historical and current barriers to a high-quality education and career path for many African-American and Latino parents, their children have less access to private health insurance. Two of every 3 African-American children—and half of Latino children—in Michigan rely on public health insurance programs. Consequently, expansions in publicly funded healthcare coverage can significantly improve equity for children.

2018 BUDGET DECISIONS AFFECTING CHILDREN’S HEALTH:

  1. Supported the Healthy Michigan Plan with both federal and state funding, providing healthcare coverage to 650,000 Michigan residents with low incomes.
  2. Provided funding for Medicaid services for over 390,000 pregnant women and children.
  3. Established pilot projects to integrate the administration of behavioral health services—a controversial move that will begin as a pilot project in Kent County.
  4. Provided a small funding increase to address the need for transportation for families seeking nonemergency healthcare, a persistent barrier to access for many families with low incomes.
  5. Continued to invest in efforts to address the Flint lead exposure crisis, approving a slight decrease in the state portion of the costs of services from $43.7 million this year to $41.5 million in 2018. Still at issue is the prevention of similar crises in other areas of the state, and the Legislature included $1.25 million to begin implementing the recommendations of the Child Lead Poisoning Elimination Board.
  6. Approved $815,000 to prevent dangerous chemical vapor intrusions. The Legislature appropriated the funds to continue a new response program for the intrusion of volatile chemical vapors into homes and buildings.
  7. Continued to underfund local public health services. Funding to local public health departments is approximately the same as it was in 2004.
  8. Eliminated a health innovation mini-grant program. The Legislature eliminated the $1 million Health Innovation Program that provided mini-grants to a range of community agencies for efforts to address the needs of special populations, including families of color.

FAMILY AND COMMUNITY

A long history of racial and economic inequality, along with racial segregation, have led to gross differences in the resources available in the neighborhoods many Michigan children of color grow up in. Too frequently children of color are living in high-poverty areas where safety is a concern, and access to parks, fresh food, and after-school and other enrichment activities is limited. African-American children in Michigan are eight times more likely to live in high-poverty communities than White children.

In addition, the barriers and economic stresses facing parents in lower-income communities of color often affect their ability to provide the support and care their children need. As a result, children of color are overrepresented in Michigan’s child welfare system.

2018 BUDGET DECISIONS AFFECTING FAMILIES AND COMMUNITIES:

  1. Failed to adequately fund revenue sharing payments to cities, villages and townships. The 2018 budget includes $6.2 million in one-time funding for cities, villages and townships, which is not enough to overcome years of lagging funding, resulting in current payments at only 30% of the statutory level.
  2. Provided funding for child protective services and foster care, but continued to underfund services that could prevent child abuse and neglect. Funding is available for child welfare staffing and services needed to move children out of the foster care system and into permanent homes—as required by a settlement agreement stemming from a lawsuit against the state for failures in its child welfare system. However, the lawsuit does not specifically address the disproportionate representation of children of color in the state’s child welfare system or require additional efforts to prevent child abuse and neglect. In fact, the 2018 budget reduces funding for family preservation by $6.1 million.

EDUCATION

A high-quality education is a vital path to equity for children in Michigan, yet the data show that Michigan has a long way to go. Children of color have less access to highquality early learning experiences and face barriers throughout the educational system. Three of every 4 African-American students and two-thirds of Latino students in the state are considered economically disadvantaged, a stark reminder of broader social issues that result in inequities in educational achievement, high school completion and college readiness.

Of great concern are disparities in third-grade reading given Michigan’s new retention law. More than half (56%) of African-American third-graders would have been subject to retention if the policy had been implemented in 2015-16, compared to only 21% of White students. For the retention law to be successful and avoid contributing to racial and ethnic inequities, it is critical that there be sufficient funding for the services needed to address the cumulative impact of inadequate early learning opportunities for children of color, including the early identification and treatment of developmental delays and high-quality child care and preschool.

Further, despite evidence that having at least one teacher of the same race increases the likelihood of school success for children of color, Michigan teachers do not reflect the demographics of their students. In the 2015-16 school year, 67% of Michigan students and 91% of the state’s teachers were White—making Michigan’s teaching workforce less diverse than the national average.

Finally, reflecting diminished opportunities beginning early in life and accelerating during the school years, only 10% of African-American students and 19% of Latino students met or exceeded the SAT benchmark for college readiness in 2015-16. As a result, African-American and Latino youths are less likely to pursue postsecondary education within six months of graduating and are much more likely to require remedial coursework once in college.

2018 BUDGET DECISIONS AFFECTING EDUCATIONAL SUCCESS:

  1. Increased per-pupil spending with larger increases for districts currently receiving the lowest payments. The Legislature approved an increase of between $60 and $120 per pupil, using a formula that benefits districts with lower payments. In the 10 years between 2007 and 2017, the minimum per-pupil payment increased 6%, while the cost of living increased 12.6%.
  2. Increased payments for high school students. The final budget includes $11 million to provide a bonus payment of $25 per pupil in grades nine through 12—recognizing the costs associated with the high school curriculum.
  3. Increased funding for students at risk of educational failure. The Legislature approved an increase of $120 million for the At-Risk School Aid program—bringing total funding to $499 million—and expanded eligibility to an estimated 131,000 students. The At-Risk School Aid program is the state’s best vehicle for addressing the educational challenges faced by children who are exposed to the stresses of poverty and has the potential to help improve equity for children of color.
  4. Failed to provide sufficient funding to address racial and ethnic disparities in early literacy. For 2018, the Legislature approved $3 million in new funds to double the amount available for early literacy coaches to $6 million statewide. Other early literacy funds ($20.9 million) were consolidated to be distributed to districts.
  5. Failed to invest in adult education. Despite a high level of need, state funding for adult education has dropped by 70% since the 2001 budget year. For 2018, the Legislature provided continuation funding of $25 million for adult education programs, along with $2 million for pilot programs focused on career and technical education.
  6. Providing too little financial aid for students with low incomes. Average tuition in Michigan was the sixth highest in the nation during the 2015-16 school year and the state currently spends less than half the national average on needs-based tuition grants. Michigan has also completely eliminated state financial aid for students who have been out of high school for more than 10 years. For 2016, the Legislature: (1) tightened the tuition cap for universities; (2) slightly increased funding for financial aid programs; and (3) failed to reinstate the Part-Time Independent Student Grant for older students.

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Making change: The state budget as a tool for racial and ethnic equity

pdficonPat Sorenson, Senior Policy Analyst
September 2017

mlpp and kids count sept_26_2017

Budget Brief JPG USE THIS ONE

 

The 2018 budget includes several investments that address pervasive, unacceptable and avoidable barriers to opportunity for many of the state’s children of color, but a much more intentional effort is needed to overcome long-standing inequities that can be traced to public policies in Lansing and nationwide. State budgets are not “colorblind”—even if their disproportionate impact is unintended.

The annual budget has been aptly described as the best measure of the state’s priorities. Each year, lawmakers must distribute state funds in ways that meet basic needs, maintain critical infrastructure, ensure basic health and safety and invest in the future—most critically for children.

How lawmakers divide up the state budget has the potential to help or hinder children’s development and ability to learn, create or limit economic opportunities for families and communities, and protect or threaten public health and safety.

Through its Kids Count program, the League documents outcomes for children and their families, including racial and ethnic disparities. The League has as a primary goal equity for all children and knows that to get there, policymakers and the public must first understand and acknowledge that inequities exist.

Job one is to educate ourselves and our community leaders, which is only possible if there is adequate data to inform budget and policy decisions. There is a tradition of close and ongoing monitoring of economic data including, for example, Gross Domestic Product (GDP) and the Consumer Price Index (CPI). Our children deserve the same.

But documenting indefensible outcomes for children of color and their families is not enough. For every negative outcome there is a backstory—a history of inequality based on race, income and place. Michiganians share a value of opportunity for all children, but the data show us that good intentions have not always resulted in good outcomes.

Michigan cannot afford to take lightly the undeniable obstacles being faced by its growing number of children of color. To move from indexing inequality to making change, lawmakers and other leaders must be intentional in facing the true impact of the policy and budget decisions they make on children, families and communities of color; they must support investments that help remove the long-standing structural barriers to opportunity for all children.

ECONOMIC SECURITY

Differences in economic security and opportunity are at the core of racial and ethnic disparities in outcomes for families and their children. The systemic barriers to economic security include housing discrimination, the historical impact of redlining on homeownership, segregation in public schools, differences in educational quality and opportunity, racial discrimination in the workplace, and inequities in the ability to accumulate assets and wealth.

These systemic barriers have their roots in historical racism and discrimination, but persist today in part because of budgets and other public policies that do not recognize the extra resources required to overcome the cumulative effects of inequities based on race and ethnicity. The data are clear. Families and children of color are being held back from many of the traditional pathways to economic opportunity and security. Given the growing diversity of the state, this threatens the economic growth all state residents depend on.BB-Chart 1

How Michigan Children and Families Are Faring: Inequities in economic opportunity have a strong and well-documented impact on the next generation of Michiganians. Children who grow up in poverty are more likely to have poor nutrition, live in homes and neighborhoods where they are exposed to environmental toxins, and have untreated health conditions. Their parents struggle to provide the enrichment activities children need in the earliest years of life, including books, toys, activities and high-quality early learning opportunities. Further, the economic stresses faced by parents are linked to depression and anxiety, which raise the risk of substance use disorders.1

BB-Chart 2The rising economy has not lifted all boats. Lower unemployment rates in Michigan have not translated into secure employment for all families. More than half of the state’s African-American children live in families where no parent has full-time, year-round employment, along with 40% of Hispanic/Latino children or those of two or more races.

Children of color are two to three times more likely to live in poverty. Despite overall improvements in the state’s economy, the number of children living in poverty has remained stubbornly high, particularly for children of color. More than 1 of every 5 children in the state lives in poverty, with child poverty rising from 19% in 2007 to 22% in 2015. Most unacceptable is the fact that nearly one-third of Latino children or children of two or more races lives in poverty, as do half of African-American children.

BB-Chart 3Even larger numbers of children are living in homes where it is difficult to make ends meet. The League has estimated that a single parent with two children under age 5 would need to earn approximately $47,000 per year to cover the costs of housing, child care, food, transportation and other personal expenses.2 Almost 3 of every 4 African-American children in Michigan, along with 2 of every 3 Latino children, live in households with incomes of 200% of poverty or less (approximately $48,000 per year).

Many children face the possibility of not having enough food. In 2014, 338,000 Michigan children lived in households facing the possibility of not having adequate food. And despite overall economic growth in Michigan, almost half of the state’s children are eligible for free or reduced-price meals in school. African-American and Latino families experience higher levels of food insecurity, a dynamic that has continued in the aftermath of the Great Recession.3

Housing is unaffordable for many families. Nearly half of African-American children, and over one-third of Latino children or those of two or more races, live in homes where housing costs are particularly burdensome, representing more than 30% of monthly income.

Budget Decisions Affecting Economic Security: Despite continuing high rates of poverty and economic insecurity for the state’s children, and particularly for children of color, state funding for programs to ensure that children’s basic needs are met has plummeted. The result has been continuing struggles for families with children, as well as the shrinking of funding to low-income communities.

BB-Chart 4For example, in the 10 Michigan counties with the highest percentages of children of color, funding for income assistance fell by between 53% and 81% in the five years from 2010 to 2015. Funding for child care subsidies to ensure that parents with low-wage jobs can work to support their children fell by between 20% and 56%. For 2018, lawmakers:

Expanded funding for food assistance, but more work needs to be done to ensure access to healthy food. The budget for the upcoming fiscal year includes:

  • A continuation of the “heat and eat” policy. The final budget authorizes funding for the “heat and eat” policy, which increases food assistance for nearly 340,000 Michigan residents. Four of every 10 recipients of food assistance are children. Given income inequalities based on race and place in Michigan, this expansion is likely to improve the health of thousands of children of color as well as their parents.
  • A small investment in access to healthy food. Federally-funded food assistance does not ensure access to healthy food. The 2018 state budget includes: (1) $750,000 in the current budget year and $380,000 in the 2018 budget to match a three-year federal grant to encourage the use of food assistance dollars for healthy foods; (2) $500,000 ($250,000 in state funds) for the purchase of wireless equipment by farmers markets so families can use their Bridge Cards to purchase healthy food; and (3) an additional $10 million in federal funding for nutrition education programs for persons receiving food assistance. The Legislature failed to fund a Michigan Corner Store Initiative that was intended to provide grants to small food retailers to increase the availability of fresh and nutritious foods in low- and moderate-income areas.

Accessing healthy food is a challenge for many families, particularly those living in urban communities of color or in more remote rural areas. With few grocery stores in urban areas, many families live in “food deserts,” requiring them to travel to find healthier foods. Fast-food restaurants and other businesses that sell processed foods with little nutritional value have replaced food retailers in these communities. A national study found that low-income, urban neighborhoods of color have the least availability of grocery stores and supermarkets compared with both low- and high-income White communities.4

The lack of access to healthy foods can have long-term effects on children of color concentrated in urban areas. Living closer to sources of healthy food has been shown to decrease the risk of obesity and diet-related illness. In Michigan, 1 in 3 children is overweight or obese, and 70-80% of obese children become obese adults who are more likely to suffer from heart disease, diabetes and some cancers. This comes at a cost to the state: Michigan is expected to spend $12.5 billion on obesity-related health care costs in 2018.5

Continued to endorse policies that have led to the decline in funding for income and family support programs. The 2018 budget fails to reverse the state’s dramatic disinvestment in income support programs for families with children, which has pushed the number of Michigan families receiving Family Independence Program (FIP) benefits to its lowest level since 1957. The dismantling of this basic needs program has had a disproportionate effect on children of color, whose parents have been less able to take advantage of economic recovery and job growth in the state. More than 70% of the recipients of FIP are children—many of them very young children of color.

For 2018, the Michigan Legislature:

  • Rejected a small increase in the clothing allowance that was proposed by the governor. The Legislature ultimately rejected a small increase in the school clothing allowance for children in families receiving income assistance through the FIP. The clothing allowance remains at $140 per child per year.
  • Expanded the Pathways to Potential program. The Pathways to Potential program, which places “success coaches” in schools to identify barriers faced by students and their families and makes appropriate referrals for services, is in 259 schools in 34 counties. The final 2018 budget increased the program by a total of $4.9 million. Pathways to Potential is intended to work with families through their children’s schools and in conjunction with community partners. It is a promising model for a two-generational approach to the barriers facing many families of color and parents with low incomes.
  • Increased support for homeless shelters. The 2018 budget increases the rate paid to homeless shelters from $12 to $16 per person, per night at a cost of $3.7 million. Because nearly half of African-American children—and more than a third of Latino children or those of two races—are living in homes where housing costs consume a significant portion of the family income, homelessness is a looming threat for many children of color. An estimated 100,000 people in Michigan are either homeless or imminently at risk of homelessness, and families with children make up half of the homeless population. More than half of people who are homeless in the state are African-American.6

Expanded funding for child care services that parents need to find and keep jobs that can help them support their children. The Legislature increased funding for child care by $19.4 million (including $8.4 million in state funds) to increase reimbursement rates to child care providers, as well as $5.5 million to raise the eligibility threshold for a child care subsidy from 125% of poverty to 130%.

Child care costs are some of the largest that families face, rivaling housing and even the price of a year of college. Without assistance, many parents are either forced out of the workforce or required to rely on relatives or neighbors who may be facing health problems or other hardships of their own. A family with wages of 150% of poverty (approximately $29,000 per year for a family of three in 2016) would need to spend over 60% of its income to place two children in a child care center; a family child care home would consume nearly half of the family’s income.

BB-Chart 5The median family income for an African-American family with children in Michigan in 2015 was $27,200—two and a half times less than the median income for non-Hispanic White families at $71,600.7 The high cost of child care perpetuates disparities in income as more families of color are unable to afford the child care they need to work. High child care costs relative to family income also further hamper children’s development by increasing the likelihood that children of color will be placed in lower quality child care settings.

HEALTH

How Michigan Children and Families Are Faring: Michigan has a history of effectively covering children through the Medicaid and MIChild programs, with the percentage of children uninsured consistently below the national average. With the Affordable Care Act, the rate of uninsured children dropped even further. However, the state’s children of color still have less access to needed physical and mental healthcare, are more frequently born underweight and die before their first birthdays, and face environmental injustices related to exposure to toxins in their homes and neighborhoods.

Fewer children of color have access to private health insurance. As a result of historical and current barriers to a high-quality education and career path for many African-American and Latino parents, their children have less access to private health insurance. Two of every 3 African-American children—and half of Latino children—in Michigan rely on public health insurance programs for healthcare coverage. Consequently, improvements in access to comprehensive publicly funded healthcare coverage can significantly improve equity for children.

BB-Chart 6The number of uninsured children continued to fall after adoption of the Affordable Care Act, and more women had access to healthcare prior to pregnancy, improving birth outcomes. Nationwide, the rate of uninsured children fell from 7.1% to 4.8% between 2013 and 2015—the largest two-year decline on record, which coincided with the implementation of most provisions of the Affordable Care Act.8 Michigan also experienced improvements in coverage, with the number of uninsured children falling from 90,000 in 2013 to 68,000 in 2015. Coverage for parents also improved, and research shows that extending new coverage to parents results in more children obtaining coverage.9

BB-Chart 7Mental health services for parents and children are still insufficient. It is estimated that 1 of every 5 Michigan children (410,000) has one or more emotional, behavioral or developmental conditions.10 Approximately 50,000 are served by Michigan’s public community mental health system.11

In addition, there is strong evidence that maternal depression can have a severe impact on both mother and child, ultimately affecting children’s growth and development, and there has been an increase in the suicide rate for both White and African-American youths.12

BB-Chart 8Fewer women of color are receiving early prenatal care and more of their children do not survive to celebrate their first birthdays. In its recent Kids Count Right Start report, the League documented racial and ethnic disparities in maternal and child health. Among the problems facing mothers and their babies are maternal smoking during pregnancy, preterm births, the lack of access to timely prenatal care and a higher frequency of infants born low-weight.

Of great concern is that African-American, Hispanic and Middle Eastern infants are much more likely to die before their first birthdays. The infants most at risk are those born prematurely with low birthweights, babies born to mothers with low incomes or covered by Medicaid, and babies that are the result of unintended pregnancies.

The reality is that access to healthcare coverage—which has expanded—does not ensure that pregnant women are able to find a provider within a reasonable distance from their home who will accept them as patients; or overcome the many barriers to adequate care, including provider bias or language and transportation issues. As a result of these barriers, African-American and Latina mothers are much more likely to receive late or no prenatal care, and their children are more likely to be born too early and too small.

BB-Chart 9In low-income communities and older urban areas where children of color are more concentrated, the rates of exposure to environmental hazards like lead are higher. The lead poisoning public health disaster in Flint put Michigan in the national spotlight, and brought to the public’s attention the disastrous effects of the state’s failure to invest in basic infrastructure and public health services. But the threats to children from lead and other environmental hazards are not limited to Flint. In the 2016 budget year, over 150,000 children under the age of 7 were tested for lead exposure, and approximately 5,500 (3.6%) had elevated blood lead levels.13

While the number of children tested and found to be exposed to lead was higher in the city of Detroit than any county in Michigan, the counties with the highest percentage of children under age 6 with elevated blood lead levels in 2015 were Lenawee, Mason and Kent.14 Data from Kent County show that African-American and Hispanic children ages 0-5 in the county are more than twice as likely to be exposed to harmful levels of lead.15

Budget Decisions Affecting Children’s Health: While Michigan continues to invest in healthcare coverage for children and families, access to physical and mental healthcare for families with low incomes and children of color remains a problem. In addition, Michigan has failed to invest adequately in the public health infrastructure needed to ensure that all children are born healthy, that pregnant women and new mothers—particularly those of color who are now underserved—have access to healthcare and adequate supports in the difficult job of parenting, and that children are not subject to the types of environmental injustices that made Flint’s lead exposure crisis a national disgrace. The Michigan Legislature made some significant investments to support the health of Michigan’s children, but missed several other opportunities to better care for kids.

Continued funding for Medicaid and the Healthy Michigan Plan. Continued investments in publicly funded health insurance options are critical to improving equity, in part because of discrimination in the workplace that has resulted in very low private coverage for children of color and their families. For 2018, lawmakers:

  • Supported the Healthy Michigan Plan with both federal and state funding. The plan provides healthcare coverage to about 650,000 people with low incomes, but the potential remains for congressional action to gut the program. Increased state funding is required because the federal match, which is at 95% in the 2017 calendar year, will drop annually until it reaches 90% in 2020 and subsequent years.16
  • Provided funding for Medicaid services for pregnant women and children. Children represent 39% of all Medicaid recipients, but account for only 20% of Medicaid expenditures.17 In July of 2017, 391,129 pregnant women and children under the age of 19 were covered by Medicaid.18
  • Established pilot projects to integrate the administration of behavioral health services. The Legislature moved forward on the controversial integration of physical and behavioral health in Michigan by authorizing a pilot project for full integration in Kent County, as well as three demonstration projects that integrate financing. The stated goal is to test how the state can improve outcomes and efficiencies in serving persons receiving behavioral health services.

Provided a small funding increase to address the need for transportation for families seeking healthcare. The governor had proposed an expansion of the current transportation programs in Macomb, Oakland and Wayne counties, where there are contracts for coordinating transportation for persons needing nonemergency care. In other counties, families must rely on local Department of Health and Human Services (DHHS) workers—who are already stretched thin—to coordinate transportation. The final budget includes $1.4 million to expand the use of local public transportation.

Children and families of color are more likely to be covered by public health insurance programs like Medicaid and the Healthy Michigan Plan, but access remains a problem—in part because of difficulty finding providers within a reasonable distance from home, as well as less access to reliable transportation.

Continued to invest in efforts to address the Flint lead exposure crisis. Michigan’s failure to invest in the public health infrastructure needed to prevent lead poisoning has come at a very high human and fiscal cost. Exposure to lead can thwart a child’s growth and development in ways that can last into adulthood, so the true costs are incalculable. However, it is estimated that the state will spend $478 million ($246 million in state funds) on the crisis between the 2016 and 2018 budget years.19 The bulk of those funds were appropriated to the Department of Environmental Quality ($158 million) and the Department of Health and Human Services ($143 million). For 2018, lawmakers:

  • Decreased the state portion of the costs of services to address the Flint water crisis from $43.7 million this year to $41.5 in 2018.20 Within the DHHS, funds are used for health services, food and nutrition services (including Double-Up Food Bucks), case management, education and outreach, child and adolescent health centers and schools, lead testing and abatement, water filters, and lead testing at local food service establishments.21
  • Included $1.25 million to begin implementing the recommendations of the Child Lead Poisoning Elimination Board. The Board was created by the governor in 2016 and made 80 recommendations for state action.
  • Approved $815,000 to prevent dangerous chemical vapor intrusions. The Legislature appropriated the funds to continue a new response program for the intrusion of volatile chemical vapors into homes and buildings.

Continued underfunding of public health services. One of the major goals of Michigan’s public health system is to provide services that address the health issues of populations with high needs in the state, including maternal and children’s health services. Services are provided through the state’s 45 local public health departments. Funding for public health has been relatively flat since 2007, with increases primarily in federal grants for lead abatement and state health system innovations. Funding to local public health departments is approximately the same as it was in 2004.22 For 2018, lawmakers:

  • Added legislative intent that more be done to encourage access to prenatal care. As of 2014, there were 5.1 obstetrician/gynecologists (ob-gyns) for every 10,000 Michigan women ages 15 to 25, which is below the national average, and 28 of Michigan’s 83 counties did not have any ob-gyns—furthering the likelihood that families with fewer resources are unable to find care.23 Because women with low incomes and women of color have less access to prenatal care, initiatives to improve access can also improve equity and outcomes for newborns.

The 2018 budget adds language requiring the DHHS to engage in outreach activities that will encourage early, continuous and routine prenatal care, and promote policies and practices that improve access to prenatal and obstetrical care. Unfortunately, this budget language is not connected to adequate funding.

  • Eliminated a health innovation mini-grant program. The Legislature eliminated the $1 million Health Innovation Program that provided mini-grants to a range of community agencies. Among the current grants are efforts to provide housing for homeless people being discharged from the hospital; increase access to healthy foods for teens, parents and persons with chronic illnesses; add physical activity to summer feeding programs; train students of color to become Certified Nurse Aides or in other allied health careers; promote breastfeeding by African-American women through peer mentoring; and link people in supportive housing to primary healthcare services.

FAMILY AND COMMUNITY

A long history of racial and economic inequality, along with racial segregation, have led to gross differences in the resources available in the neighborhoods many Michigan children of color grow up in. Too frequently children of color are living in high-poverty areas where safety is a concern, and access to parks, fresh food, and after-school and other enrichment activities is limited.

In addition, the barriers and economic stresses facing parents in lower-income communities of color often affect their ability to provide the support and care their children need. High rates of maternal depression with limited access to mental health and substance use disorder services, the scarcity of jobs providing a living wage, problems finding safe and reliable child care, inadequate transportation and substandard housing are all examples of the stresses facing parents.

How Michigan Children and Families Are Faring:

African-American children are eight times more likely to live in high-poverty communities. More than 1 in 6 children in the state lives in concentrated poverty, or census tracts where the poverty rate is 30% or higher, including more than half of African-American children ages 0-17 (55%), and 29% of Hispanic children and youths. Neighborhoods with concentrated poverty tend to have higher rates of crime and violence, higher unemployment rates with fewer job opportunities, and poor health outcomes with increased toxic stress for children and their families.24

BB-Chart 10Four of every 10 African-American children in Michigan have been exposed to two or more adverse childhood experiences, including frequent economic hardship; parental divorce or separation; parental death; parental incarceration; family violence; neighborhood violence; living with someone who is mentally ill, suicidal or has a substance use disorder; or facing racial bias. Research shows that these adverse childhood experiences can have long-term effects on children, including poor health as adults, learning and behavioral issues, and adolescent pregnancy.

African-American children and youths are much more likely to live in unsafe neighborhoods. More than one-third (35%) of African-American children live in neighborhoods that their parents or caretakers describe as sometimes or rarely safe, compared to 26% of Latino children and just 7% of non-Hispanic White children.25

Children of color are overrepresented in the state’s child welfare system. At nearly every point in the child welfare system, children of color have historically been over-represented, although changes in data collection systems at the state level have resulted in data gaps related to outcomes for children of color.26

In 2014, the Michigan Race Equity Coalition found that children of color are more likely to live in families investigated for abuse or neglect, are more likely to be removed from their homes than White children, and are twice as likely to stay in foster care until they age out. Given the known relationship between the lack of a permanent home and a heightened risk of homelessness, unemployment, incarceration, substance abuse and other negative outcomes, the overrepresentation of children of color has dire consequences.27

Contributing to the problem is the high level of family stress resulting from the lack of economic opportunities for families of color and related high child poverty rates. Of the confirmed victims of child maltreatment, approximately 8 in 10 show evidence of neglect—including conditions related to poverty such as a failure to provide adequate food, clothing, shelter or medical care.

Budget Decisions Affecting Families and Communities: Michigan lacks a comprehensive strategy to address poverty through an interdepartmental, two-generational approach that focuses on the impact of income and racial inequities that have limited opportunities for many families and children based on race, ethnicity and geography. In fact, investments in communities have lagged and supports to families are inadequate. For 2018, lawmakers:

Failed to adequately fund revenue sharing payments to cities, villages and townships. The 2018 budget includes $6.2 million in one-time funding for cities, villages and townships. This follows years of budgets that did not include the payments to local communities that are statutorily required. State budget and policy changes have reduced the number of cities, villages and townships eligible for state revenue sharing payments. In 2016, only 587 out of 1,772 Michigan cities, villages and townships received payments; in 2001, all were eligible. In addition, the portion of revenue sharing that is not provided through the Michigan Constitution (previously known as “statutory revenue sharing”) has declined almost 70% since the 1998 budget year, and current payments are at only 30% of the statutory level.28

Provided a small increase for social services offered by multicultural organizations. The 2018 budget expands funding for social services programs for a range of organizations, including the Arab Community Center for Economic and Social Services (ACCESS), the Arab Chaldean Council, the Jewish Federation and the Chaldean Community Foundation. Funding for the programs is currently at $13.3 million.

Provided funding for child protective services and foster care, but continued to underfund services that could prevent child abuse and neglect. The Legislature continues to provide funding for the child welfare staffing and services needed to move children out of the foster care system and into permanent homes—as required by a settlement agreement stemming from a lawsuit against the state for failures in its child welfare system. The lawsuit does not address the disproportionate representation of children of color in the state’s foster care system or require additional efforts to prevent child abuse and neglect. For 2018, lawmakers:

  • Increased rates paid to private agencies for foster and residential care for abused and neglected children. The 2018 budget includes $14.2 million for rate increases for providers of foster care, independent living, family reunification and residential services.
  • Expanded funding for the recruitment and support of foster families, as well as the Michigan Youth Opportunities Initiative (MYOI). Because children of color are overrepresented in the state’s foster care system and are more likely to age out of foster care as young adults, efforts to find stable, high-quality foster homes, as well as services to improve the transition to independence are critical in reducing inequities. The Legislature approved the governor’s recommendation to spend $3.6 million to support regional resource teams to recruit, train and support foster families, as well as an expansion of the MYOI programs.
  • Reduced funding for family preservation. In 2018, family preservation programs will be cut by $6.1 million. The funds were used this year for Parent Partner and family reunification programs in Macomb and Genesee counties and are intended to prevent the need for foster care and reunify children with their families when it is safe to do so.

Programs that help build on family strengths, prevent out-of-home placements of children and facilitate reunification can be of special benefit to families of color and families with low incomes—both of which are overrepresented in the state’s child welfare system. Unfortunately, the state has invested far too little in family preservation and prevention services that could help reduce the stresses families with fewer resources face, and enhance parents’ ability to care for and nurture their children—including access to sufficient income supports needed for stable housing and other basic needs.

EDUCATION

A high-quality education is a vital path to equity for children in Michigan, yet the data show that Michigan has a long way to go. Children of color have less access to high-quality early learning experiences and face barriers throughout the educational system.

How Michigan Children and Families Are Faring:

More needs to be done to ensure all children have access to supports that can improve their ability to learn—beginning before birth. Learning begins with a healthy mom and a healthy birth, and is at its peak in the earliest years of life. Michigan has made strides in making sure that 4-year-olds from families with low incomes have access to preschool, but there is no state funded preschool program for 3-year-olds, and funding for services for infants and toddlers and their parents are grossly underfunded.

Statewide, access to a preschool education is more limited for Latino children, with 59% of 3- and 4-year-olds not in preschool.29 The research is strong. Access to high-quality early learning and family support programs—beginning at birth—is one of the best tools we have for overcoming disparities in achievement and ultimately in earnings.

Students of color are more likely to be in families with low incomes. Because of the indisputable connection between family income and student achievement, the high level of economic disadvantage faced by children of color is a stark reminder of broader social issues that result in inequities in educational achievement.

BB-Chart 11Three of every 4 African-American students and two-thirds of Latino students in the state are considered economically disadvantaged because they: (1) are eligible for free or reduced-price school meals; (2) are in households receiving cash or food assistance; or (3) are homeless, in migrant families or in foster care.

Michigan teachers do not reflect the diversity of their students. There is mounting evidence that having at least one teacher of the same race increases the likelihood of school success, including test scores, attendance and fewer suspensions. A recent study also shows that for African-American students, an African-American teacher in elementary school increases the likelihood that male students will graduate from high school, and that both male and female students will aspire to attend a four-year college.30

BB-Chart 12Despite the benefits of teacher diversity, Michigan teachers do not reflect the demographics of their students. In the 2015-16 school year, 67% of Michigan students and 91% of the state’s teachers were White. Nationally, 82% of public school teachers were White in 2011-12, making Michigan’s teaching workforce less diverse than the national average four years earlier.31

Racial and ethnic disparities affect educational out-comes. While there are inequities in educational achievement in all subjects, significant focus has been placed on reading by third grade, including Michigan legislation that allows for retention of students in certain circumstances. In the 2015-16 school year, 20% of African-American students were reading proficiently by third grade, compared to 54% of their White counterparts. More than half (56%) of African-American third-graders would have been subject to retention if the policy had been implemented in 2015-16, compared to only 21% of White students.

BB-Chart 13

Graduation rates vary by race, ethnicity and gender. While the state’s high school dropout rate has been falling, high percentages of children of color are still not graduating, and young men of color are at the highest risk. In the 2015-16 school year, 18% of African-American boys and 11% of African-American girls dropped out of school—significantly above the rates for their White peers at 8% and 6% respectively. Latino youths were approximately twice as likely to drop out of high school as White youths.

BB-Chart 14African-American and Latino young adults are less likely to be ready for college after graduating from high school. Reflecting diminished opportunities beginning early in life and accelerating during the school years, only 10% of African-American students and 19% of Latino students met or exceeded the SAT benchmark for college readiness in 2015-16. As a result, African-American and Latino youths are less likely to pursue postsecondary education within six months of graduating and are much more likely to require remedial coursework once in college.BB-Chart 15

BB-Chart 16Educational inequities persist, affecting success in college. Even when young men and women of color are able to enter college, financial and other barriers to their continued success remain. Four years after graduating high school and directly entering a postsecondary program, 38% of African-American students are no longer enrolled and have not completed a degree program, and only 7% have completed their degrees. By contrast, 23% of White students completed their postsecondary program in four years.

 

Budget Decisions Affecting Educational Success: Michigan’s recent investments in early learning and programs for students in high-poverty communities are a good start, but there is more work to be done to overcome persistent and deep disparities in educational opportunities for Michigan children based on income, race and geography. For 2018, state lawmakers:

Increased per-pupil spending with larger increases for districts currently receiving the lowest payments. The Legislature approved an increase of between $60 and $120 per pupil, using a formula that benefits districts with lower payments. Two of every $3 in the School Aid budget are used to support per-pupil payments, which are the primary source of funding for school operations.

After a cut of $470 per pupil in 2010-2012, per-pupil payments to schools have begun to increase, and additional state funds have been used to hold districts harmless from increasing retirement liability costs. Nonetheless, total funding for foundation allowances and other operational costs is still below the 2007 peak.32 Further, in the 10 years between 2007 and 2017, the minimum per-pupil payment increased 6%, while the cost of living increased 12.6%.33

Increased payments for high school students. The final budget includes $11 million to provide a bonus payment of $25 per pupil in grades nine through 12—recognizing the costs associated with the high school curriculum.

BB-Chart 17

Increased funding for students at risk of educational failure. The Legislature approved an increase of $120 million for the At-Risk School Aid program, bringing total funding to $499 million. The distribution formula for the funds was altered to include “out-of-formula” or “hold-harmless” districts that are not currently eligible even though they may have high numbers of children living in poverty, but payments to those districts were capped at 30%. Finally, the definition of “at risk” was changed to include pupils eligible for free and reduced-price meals; those receiving income or food assistance; or those who are homeless, in migrant families or in foster care. The changes support an increase in eligible pupils of 131,000 due to expansions in both the number of eligible school districts and broader pupil eligibility.34

The At-Risk School Aid program is the state’s best vehicle for addressing the educational challenges faced by children who are exposed to the stresses of poverty and has the potential to help improve equity for children of color. After a decade of flat spending, increases in the current and upcoming budget years have expanded the program by over 60%—a positive and needed move in the right direction.

Failed to provide sufficient funding to address racial and ethnic disparities in early literacy. Proficient reading by the end of third grade is critical. A child’s ability to read by third grade is an important predictor of whether or not he or she will drop out of school, find regular employment or even end up incarcerated. By the time children enter kindergarten, there are already large gaps in vocabulary between students from families with low and higher incomes.

State law now allows for grade retention if children are not reading proficiently by third grade, so the stakes are high—particularly for students of color who are disproportionately at risk of retention. For the retention legislation to be successful and avoid contributing to racial and ethnic inequities, it is critical that there be sufficient funding for the services needed to address the cumulative impact of inadequate early learning opportunities for children of color, including the early identification and treatment of developmental delays and high-quality child care and preschool.

While some improvements have been made in improving access to child care, there is much more work to be done to ensure that children are healthy and ready to learn, to expand the state’s Early On program and other efforts to identify developmental problems early, to improve child care quality as well as access to early learning, and to adequately address reading problems prior to third grade. For 2018, the Legislature approved:

  • Increased funding for early literacy coaches. For 2018, $3 million in new funds will be available to double the amount available for early literacy coaches to $6 million statewide.
  • The consolidation of other early literacy funds. The Legislature consolidated a total of $20.9 million that is currently allocated to early literacy for professional development, screening and diagnostic tools and added instructional time—with funds to be distributed to districts in an amount equal to $210 for every first grade student. Funding for professional development and diagnostic tools are both capped at 5%.

Failed to invest in adult education. Despite a high level of need, state funding for adult education has dropped by 70% since the 2001 budget year. For 2018, the Legislature provided continuation funding of $25 million for adult education programs, along with $2 million for pilot programs focused on career and technical education.

More than half of adult education students read below the eighth-grade level, and over one quarter (27%) list English as their second language.35 Adult education is an important tool for improving educational achievement and adult literacy, which are critical to a two-generational approach for lifting children out of poverty and improving the state’s economy. Sadly, only 5% of Michigan adults who do not speak English “very well” enroll in English as a Second Language adult education programs, and only 7% of the over 210,000 Michigan adults ages 25-44 who lack a high school diploma or GED are enrolled in adult education.36

Continued Michigan’s sad tradition of providing too little financial aid for students with low incomes. College tuition more than doubled at almost every state university between 2003 and 2015, making the state’s average tuition cost the sixth highest in the nation and second highest in the Midwest during the 2015-16 school year.

As a result, 2 of every 3 Michigan college students graduate with debt, which averaged nearly $30,000 in 2014. While there is no state data by race and ethnicity, national studies have found that African-American students and their families owe significantly more in student debt (averaging over $43,000), and Latino parents and grandparents incur the most student debt on behalf of their children.37

Further, Michigan invests far less in needs-based scholarship grants proportional to its student population than most other states, and has completely eliminated state financial aid for students who have been out of high school for more than 10 years. Michigan currently spends less than half the national average of state spending on needs-based tuition grants. Given the barriers that young people of color face in being prepared for and able to afford college, the lack of investment in financial aid is a clear component of the cumulative impact of racial and ethnic disparities in educational achievement and ultimately earnings.

BB pull outThere is a direct correlation between state support for public universities and tuition costs, and between 2003 and 2017, Michigan cut university funding by more than $262 million, a 30% decrease in public support after adjusting for inflation. For 2018, Michigan lawmakers:

  • Tightened the tuition cap for universities. Michigan has adopted a “tuition restraint” policy requiring public universities to limit tuition increases to no more than 3-4% each year in order to receive full state funding. While a small move in the right direction, given the steep tuition increases that universities have already put in place, this change does little to reduce the high cost burden faced by students in Michigan universities, and precludes many young people of color from entering and completing four-year degree programs.
  • Slightly increased funding for financial aid programs. The amount of the grants is still not enough to significantly help students pay high tuition costs, however.
  • Failed to provide financial assistance for students who have been out of high school more than 10 years. The Part-Time Independent Student Grant, which helps older students, was eliminated in 2010. There have been efforts since 2015 by the Legislature and the governor to reinstate the grant, but they have failed to be signed into law. For the 2018 budget year, the governor recommended $2 million for the grant, but the Legislature rejected that proposal.

 

ENDNOTES
BB-Making change endnotes

Poverty improves in 2016 for Michigan, some racial groups

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Peter Ruark, Senior Policy Analyst
September 2017

 

 

Poverty improves in 2016 Michigan_some racial groups_9_22_2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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