Reports


School aid and education conference committees include expanded funding for early learning and high-poverty schools

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Pat Sorenson, Senior Policy Analyst
June 2017

Budget Brief JPG USE THIS ONE

Joint House/Senate conference committees have resolved differences between the House and Senate School Aid Fund and Department of Education budgets for 2018, and the budgets contain several much-needed expansions in funding for high-poverty schools, as well as child care services for working families with low wages.

K-12 EDUCATION

BB School Aid and Ed Conf Committees Include Expanded FundPer-Pupil Spending: 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. For 2018, the governor recommended an additional $128  million to raise per-pupil spending by between $50 and $100, with districts currently receiving the lowest payments per pupil receiving the largest increase. The goal is to further reduce the gap in state funding between the lowest-funded districts and the highest.

The governor also proposed higher per-pupil payments for high school students, reduced payments to cyber schools, and a cap on funding for instructional programs for nonpublic and home-schooled students (cutting total funding by $55 million).

  • The Senate increased per-pupil payments to between $88 and $176—using $100 million currently provided to districts to offset teacher retirement costs under the Michigan Public School Employees Retirement System (MPSERS). The Senate rejected the governor’s proposal for higher per-pupil payments for high school students, as well as the cuts in payments to cyber schools. The Senate cut programs for nonpublic/home-schooled pupils by only $2 million.
  • The House provided an across-the-board increase for all districts in the state of $100 per pupil—rejecting the use of the formula that provides higher payments for the districts that currently receive lower per-pupil foundation allowances. The House rejected the governor’s proposals to increase payments for high school students, as well as cuts for cyber schools and nonpublic/home-schooled student programs.
  • The conference committee: 1) increased per-pupil payments by $60 to $120, with the biggest increases going to districts with the lowest funding currently (total cost of the increase is $153 million); 2) rejected the governor’s proposal to provide higher per-pupil payments for high school students; 3) rejected the governor’s proposals to reduce payments to cyber schools; and 4) reduced the governor’s recommended cut of $55 million for programs for nonpublic and home-schooled students to $2 million.

The League supported increases in school funding that help raise the quality of education and mitigate the impact of inflation and fixed costs on school operating funds. In the last decade, the minimum K-12 per-pupil foundation allowance rose 5.7%—less than half the rise in inflation at 15.1%.1

Declining Student Enrollment: Since Proposal A, the reliance on a per-pupil foundation allowance for public school operations has meant that schools with rapidly declining enrollments can face at least short-term difficulties in adjusting to large funding losses. In recognition of the impact on local schools and students, the governor included $7 million for two years of supplementary funding for districts that have experienced large enrollment declines (more than 5% over two years).

  • Both the Senate and the House rejected the governor’s proposal for supplementary funding for schools with declining enrollments.
  • The conference committee rejected the governor’s proposal to provide funding for schools with rapidly declining enrollments.

The League supported funding to ameliorate the impact of declining enrollments on local schools and their students.

Funding for Students Academically at Risk: The At-Risk School Aid program is the state’s best vehicle for addressing the educational challenges children who are exposed to the stresses of poverty bring through the schoolhouse doors. The governor recognized the need to focus on high-poverty schools by recommending an additional $150 million in At-Risk funding for 2018 and by expanding eligibility. The governor also established a new set of goals and metrics for districts, including chronic absenteeism rates; English language proficiency in third grade; math proficiency in eighth grade; and the rate of enrollments and completions in career/technical education, advanced placement and dual enrollment programs.

Currently, the At-Risk program provides state funds to schools based on the number of children receiving free school meals (130% of poverty). Under the governor’s proposal, districts could receive funding for children up to 185% of poverty. In addition, the governor would provide funding to “out-of-formula” or “hold-harmless” districts that are currently not eligible. These are districts that have combined state and local per-pupil foundation allowances that are higher than the basic amount, even though they may have a high number of children living in poverty. The governor projects that with these changes an additional 131,000 children could be served.

  • The Senate increased At-Risk spending by $100 million and agreed with the governor on changes in student eligibility. The Senate altered the allocation formula as follows: 1) $5 million of the new funding would be earmarked for English language learners; and 2) districts that are currently eligible for At-Risk funding would be guaranteed at least as much per pupil as they are receiving in the current school year (applied to the broader base of economically disadvantaged students), with the remaining new funds (estimated to be approximately $41 million) awarded to all districts, including those currently not eligible.
  • The House increased At-Risk funding by $129 million and agreed with the governor on changes in student eligibility. The House also adopted the governor’s proposal to expand eligibility to “hold-harmless” and “out-of-formula” districts but capped the per-pupil At-Risk payment to those districts at 50%. The House added budget language indicating an intent to use a portion of 2019 At-Risk funds to reimburse school districts that provide transportation to pupils enrolled in schools of choice or charters.
  • The conference committee: 1) increased At-Risk funding by $120 million to a total of $499 million; 2) included the governor’s changes in student eligibility and funding formulas for currently-eligible districts; and 3) capped payments to newly-eligible “hold harmless” and “out-of-formula” districts at 30%. Under the conference agreement, currently-eligible districts will receive an estimated $777 per eligible pupil, while newly-eligible districts would receive $233. The conference committee did not adopt the governor’s new goals and metrics for the At-Risk program.

The League supported full funding of the At-Risk program, as well as expansion of eligibility to all children who are economically disadvantaged or at risk of educational failure.

Reading by Third Grade: Michigan law now allows for grade retention if children are not reading proficiently by third grade, making the need for early literacy programs even more critical. The governor proposed doubling funding for early literacy coaches at Intermediate School Districts (ISDs) from $3 million to $6 million. The governor also eliminated funding ($1 million) for the Michigan Education Corps. The largest component of the state reading initiative—funding for additional instructional time for children who are behind in reading—was retained at $17.5 million by the governor.

  • The Senate agreed with the governor and increased funding for ISD early literacy coaches by $3 million.
  • The House slightly reduced total funding for early literacy and allocated remaining funds ($25.4 million) through grants to districts, with an estimated $245 per first-grade pupil.
  • The conference committee agreed with the governor on the $3 million increase for early literacy coaches in ISDs, but increased funding for the Michigan Education Corps, from $1 million to $2.5 million. The conference committee consolidated all other early literacy programs and required that those funds be allocated to districts based on the number of first-grade students. Funding for professional development and diagnostic tools are both capped at 5%.

The League supports increased investments in early literacy, including programs that address learning in the earliest years of life such as early intervention through the Early On program, expanded home visitation programs, and a state-funded preschool option for 3-year-olds in high-risk schools and communities.

Adult Education: Despite a high level of need, state funding for adult education has dropped 70% since the 1997-2001 budget years. The governor recommended flat funding of $25 million for adult education programs in 2018.

  • The Senate agreed with the governor on flat funding for adult education and provided $2.5 million for career and technical education pilot projects in the state’s five prosperity regions.
  • The House agreed with the governor on flat funding for adult education.
  • The conference committee provided continuation funding for adult education programs of $25 million, and provided $2 million for the Senate-proposed expansion of career and technical education pilot programs.

The League supports an increase in funding for adult education of at least $10 million for $35 million total, which would help nearly 8,000 additional students and serve as an important tool for improving educational achievement and adult literacy—part of a two-generation approach to improving the state’s economy.

CHILD CARE AND EARLY EDUCATION

Child Care Subsidies: The number of Michigan parents with low wages who received assistance with their child care costs fell by over 70% between 2003 and 2016—in part because of the state’s stringent income eligibility standards and low child care payments. In addition to forcing parents to either stay out of the workforce or find care that isn’t suitable for their children, the state’s child care policies made Michigan one of only a handful of states that had to turn away federal child care funds because of a lack of state matching dollars. In recognition of the need for high-quality child care, the governor included an increase of $6.8 million in the current budget year (2017), as well as $27.2 million ($8.4 million in state funds) in the 2018 budget to increase rates paid to child care providers.

  • The Senate provided $23.8 million ($7.1 million in state funds) for increased child care provider rates, as well as $5.8 million to increase the income eligibility threshold from 125% to 130% of poverty. Rate increases would be based on the number of stars a provider has in the state’s quality rating system, ranging from a maximum increase of 50 cents per hour for providers with no stars to $1.50 per hour for child care centers with a five-star rating. Unlicensed providers (family, friends and neighbors) who care for infants or toddlers could receive an increase of 25 cents per hour.
  • The House agreed with the governor to include $27.2 million for rate increases for child care providers.
  • The conference committee included: 1) $19.4 million total ($11 million in federal Child Care and Development Block Grant funding and $8.4 million in state General Fund money) to increase child care reimbursement rates based on the Great Start to Quality rating system; 2) $5.5 million in federal funds to increase the child care eligibility level from 125% to 130% of poverty; and 3) $1 million for TEACH scholarships for child care providers trying to increase their quality ratings.

The League supported payment increases for child care providers as well as a boost in income eligibility levels, both of which are needed to ensure that parents can secure and keep their jobs while children are in safe and supportive settings that encourage optimal learning. In addition, the League supports efforts to bolster the supply of high-quality child care businesses, including the movement away from hourly billing to biweekly or monthly payments, which make it easier for providers to care for children from families with low wages.

Great Start Readiness Preschool Program: The governor recommended level funding for the Great Start Readiness Program ($243.6 million) which provides a high-quality preschool education for 4-year-olds from families with low incomes. Currently, the program is for children from families with incomes below 250% of poverty, but districts can expand it to children with incomes of up to 300% of poverty if they can demonstrate that all children with lower incomes who want to participate have had the opportunity to do so. For 2018, the governor restricted eligibility to children in families with incomes of 250% of poverty or less, and required that 100% of children meet that income eligibility level, rather than 90% as currently required. In addition, the governor changed the allocation formula to ISDs.

  • The Senate agreed with the governor on spending levels and on the new allocation formula, but retained the option of serving children in families with incomes of up to 300% of poverty.
  • The House adopted the governor’s recommendations for the Great Start Readiness Program funding and allocations.
  • The conference committee retained current funding and income eligibility levels for the Great Start Readiness Program, allowing children living in families with incomes of up to 300% to be enrolled—if all children at 250% of poverty and below have been served. Children from families with incomes above 250% of poverty would be subject to tuition on a sliding scale basis. Districts would still be required to contract with nonprofit and for-profit community-based providers for at least 30% of the children served.

FLINT WATER EMERGENCY

Given the long-term damage lead exposure can inflict on children, the need for ameliorative services and supports for Flint is ongoing. While there are investments in other state budgets, the governor recommended that School Aid funds for the Flint School District and the Genesee ISD be reduced by $1.4 million in 2018. Total funding in the School Aid budget would be cut from $10.1 million to $8.7 million, with remaining funds allocated to expand Great Start Readiness preschool program eligibility ($3 million), school nurses and social workers ($2.6 million), ISD support to Flint residents that attend districts other than Flint ($2.5 million), and nutrition programs ($605,000).

  • The House, Senate and conference committee agreed with the governor on the $1.4 million cut in School Aid funding for the Flint water crisis.

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1. K-12 Schools Minimum Foundation Allowance History, Senate Fiscal Agency (Oct. 1, 2016).

 

Human services conference committee budget falls short in reducing poverty

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Pat Sorenson, Senior Policy Analyst
June 2017

Budget Brief JPG USE THIS ONEA joint House/Senate conference committee has resolved differences between the House and Senate human services budgets for 2018, and while funding for several League priorities was retained—including the “heat and eat” policy for food assistance—overall the budget fails to address long-term disinvestments in children and families living in poverty.

BB-Joint House Senate_Bdg fall graphicACCESS TO HEALTHY FOOD

Effective this year (the 2017 budget year), the Michigan Legislature approved $6.8 million in state funding to reinstate the “heat and eat” policy that allows Michigan to leverage additional federal funds and increase food assistance benefits for nearly 340,000 Michigan families, seniors and people with disabilities.

  • The Senate used federal energy assistance money to continue the “heat and eat” policy.
  • The House agreed with the governor to provide continued state funding for “heat and eat” food assistance benefits. The House also added language that prohibits the state from seeking a waiver to exempt able-bodied adults without dependents from food assistance work requirements in areas with high unemployment.
  • The conference committee: 1) agreed to continue the “heat and eat” policy using federal energy assistance funds; and 2) included House language to eliminate waivers from work requirements for able-bodied adults without dependents.

The League supported state funding for “heat and eat” as a way to prevent hunger for children, families, seniors and people with disabilities. The League opposed work requirements for persons in areas of high unemployment.

Increasing Access to Healthy Foods:

  • The Senate included an increase of $380,000 for the Double Up Food Bucks program in Flint.
  • The House included a placeholder for a new “Michigan Corner Store Initiative,” which if funded would provide grants to small food retailers to increase the availability of fresh, nutritious foods in lower-income neighborhoods.
  • The conference committee: 1) included a place-holder for the Michigan Corner Store Initiative; 2) provided $500,000 to help farmers markets purchase wireless equipment that will allow them to accept food assistance payments; and 3) included an increase of $380,000 for the Double-Up Food Bucks program in Flint.

The League supported state efforts to improve access to healthy foods in lower-income neighborhoods.

INCOME AND OTHER SUPPORTS TO STABILIZE FAMILIES

Family Independence Program (FIP) Benefits: The number of Michigan families receiving FIP is at its lowest level since 1957, and the governor and Legislature are projecting that it will continue to fall to only 17,000 in 2018. As a result of falling caseloads, the FIP budget is expected to drop from $98 million this year to only $76 million in 2018—a reduction of 22%.

With fewer children being served by FIP and benefit levels stalled (maximum of $492 per month for a family of three with average monthly payments of $366), children are living in deep poverty, and parents are finding it hard to both care for their children and find and keep work. In recognition of this hardship, the governor proposed an increase in the FIP yearly clothing allowance from $140 per child to $200 for a total cost of $2.7 million in federal Temporary Assistance for Needy Families (TANF) funds.

  • The Senate rejected the increase in the annual FIP clothing allowance.
  • The House included under $900,000 to increase the yearly benefit from $140 to $160.
  • The conference committee failed to increase funding for the FIP clothing allowance, leaving it at the current yearly benefit level of $140 per child.

The League supported the governor’s recommendation to increase the annual FIP clothing allowance as a small step toward addressing the insufficiency of income assistance programs for children and their parents.

Expand the Pathways to Potential Program: The governor recommended $5.6 million to expand the Pathways to Potential program that places “success coaches” in schools to identify barriers faced by students and their families and make appropriate referrals for needed services. The program is currently in 259 schools in 34 counties.

  • The Senate did not fund the expansion but included a $100 placeholder to ensure continued discussions in the joint House/Senate conference committee.
  • The House rejected the governor’s recommendation to increase funding for Pathways to Potential.
  • The conference committee rejected the governor’s proposal to expand Pathways to Potential funding, but added budget language requiring the Department of Health and Human Services to dedicate 29 new public assistance field staff to the Pathways to Potential project.

The League supported the governor’s recommendation to expand Pathways to Potential, which is a promising model for meaningful school/community partnerships and a two-generation approach to school success for all children.

Increased Support for Homeless Shelters: 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 the state’s homeless are African-American, and the senior homeless population continues to grow significantly each year.1

In recognition of the problem, the governor increased the daily rate provided to emergency homeless shelters from $12 per night per person to $16, at a total cost of $3.7 million in state general funds. The governor indicated that he intends to recommend another $4 per person increase in the 2019 budget year.

  • The Senate rejected the governor’s increase in payments to homeless shelters, but included a $100 placeholder to ensure continued discussions in the joint House/Senate conference committee.
  • The House agreed with the governor to increase funding for homeless shelters, using both state general funds and federal TANF dollars.
  • The conference committee included the rate increase for homeless shelters, using both state general funds and federal TANF dollars.

The League supported increased funding for emergency homeless shelters, as well as policy and budget changes that could prevent homelessness such as: 1) increases in income assistance payments; 2) housing policies that could prevent homelessness; and 3) tax changes that benefit workers with low wages including a restoration of the Michigan Earned Income Tax Credit.

CHILD AND ADULT SAFETY

Child Abuse and Neglect Programs: More than 1 of every 100 children in Michigan lives in a family that has been investigated for potential child abuse or neglect and over 37,000 are confirmed victims.2 As of February 2017, the Department of Health and Human Services was responsible for the supervision of 12,800 children in out-of-home care, with the majority placed with relatives, in licensed foster homes, child caring institutions or emergency shelters.3

While most families with low incomes are not more likely to abuse or neglect their children, living in poverty can limit the ability of parents to provide for their children’s basic needs. The vast majority (81%) of confirmed victims in Michigan’s child welfare system are there because of “neglect,” which can include a failure to provide adequate food, clothing, shelter or medical care.

More than a decade ago, the state was sued by a national child advocacy organization for its failure to move children quickly into safe, stable and permanent homes; provide children in foster care with adequate medical, dental and mental health services; and prepare children who age-out of the foster care system. To comply with a court settlement agreement resulting from that lawsuit, the state has increased resources for “tail-end” child welfare services, but relatively little has been done to prevent child neglect, including efforts to move children out of poverty.

For 2018, the governor recommended an additional $3.6 million for: 1) regional resource teams to recruit, train and support foster families; and 2) to expand the Michigan Youth Opportunities Initiative (MYOI) to all Michigan counties (currently in 64 of Michigan’s 83 counties). The MYOI helps young people who are in or have recently exited foster care make a successful transition to independent living through housing, education, employment and community engagement services.

The governor also cut “one-time” funding of $6.1 million—approved in the 2017 budget year—to expand the Parent Partner and Family Reunification programs. Funds are being used this year in Genesee and Macomb counties to prevent the need for foster care, ensure that children are more quickly reunified with their families when it is safe to do so and assist parents after children are returned home.

  • The Senate rejected the governor’s recommendation to increase funding for regional resource teams and the Michigan Youth Opportunities Initiative by $3.6 million, but included a $100 placeholder to ensure further discussion in the joint House/Senate conference committee. The Senate agreed with the governor to reduce prevention funding by $6.1 million.
  • The House agreed with the governor on regional resource teams and the Michigan Youth Opportunities Initiative, increasing funding by $3.6 million. The House also reduced prevention funding by $6.1 million, and further cut funding for the Fostering Futures program by $750,000.
  • The conference committee: 1) adopted the governor’s proposal to include $3.6 million for foster parent support through regional resource teams, as well as additional funding for the Michigan Youth Opportunities Initiative; 2) included $1 million in state funding to increase payments for licensing relatives as caregivers (not in the governor’s budget); 3) cut family preservation programs by $6.1 million; and 4) retained funding for the Fostering Futures program.

The League strongly advocated for increased funding for services that can strengthen families, prevent child neglect and reduce the need for out-of-home placements for children. The state’s efforts to improve its child welfare system as required by the court settlement agreement are important, but more needs to be done to prevent child abuse and neglect by strengthening families—including ensuring parents can meet their children’s basic needs and have access to mental health and other services.

Adult Services: As Michigan’s population ages, the need for services for seniors and people with disabilities continues to grow. A 2014 audit found that Michigan was unable to respond quickly to reports of abuse, neglect or exploitation of adults—in large part because of staffing shortages.

In response, the governor recommended $11.3 million to hire 95 new workers who could assist adults with high needs by providing protective services, independent living services and adult community placement assistance.

  • The Senate reduced the number of new adult services workers to 71 (with a delay in their hiring), resulting in total spending of $1.9 million in the 2018 budget year.
  • The House cut the number of new adult services workers in half to 47, at a cost of $5.6 million.
  • The conference committee approved only 35 new adult services staff for 2018, at an additional cost of $4.2 million.

The League supported the governor’s expansion in funding for adult services workers to ensure that seniors and people with disabilities are safe. Between 2002 and 2015, the number of adults needing protection from the state more than tripled, while the number of staff fell by 14%.

ENDNOTES

  1. Ending Homelessness in Michigan: 2015 Annual Report, Michigan Coalition Against Homelessness and the Michigan State Housing Development Authority.
  2. 2017 Kids Count in Michigan Data Book: A Michigan Where All Kids Thrive, Michigan League for Public Policy.
  3. Children’s Services Agency: Foster Care Overview, Presentation to the House Committee on Families, Children and Seniors, Michigan Department of Health and Human Services (March 9, 2017).

 

 

Federal budget cuts threaten Michigan

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June 2017
Pat Sorenson, Senior Policy Analyst

 graphic for pat.pub - Publisher

Now is the time for investing, not cutting taxes

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May 2017
Rachel Richards, Legislative Coordinator

Budget Brief JPG USE THIS ONE

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

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

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

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

WHAT ABOUT REVENUES?

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

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

BB-Now is the time for investing graphic

NO WIGGLE ROOM FOR TAX CUTS

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

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

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

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

WHAT SHOULD BE DONE INSTEAD?

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

ENDNOTES

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

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

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May 2017
Peter Ruark, Senior Policy Analyst

Budget Brief JPG USE THIS ONE

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

PRISON OPERATIONS

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

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

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

INCARCERATION ALTERNATIVES

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

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

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

OCCUPATIONAL TRAINING

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

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

  • The Senate and House concur with the governor.

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

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

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

HEALTH-RELATED SERVICES

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

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

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

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

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

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

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

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

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

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

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

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May 2017
Emily Schwarzkopf, Policy Analyst

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

HEALTHCARE FOR 650,000 MICHIGANIANS

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

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

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

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

BEHAVIORAL HEALTH

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

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

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

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

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

PUBLIC HEALTH

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

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

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

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

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

SERVICES FOR SENIORS

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

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

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

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

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

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

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May 2017
Peter Ruark, Senior Policy Analyst

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

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

FINANCIAL AIDBB postsecondary ed budget graphic 1

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

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

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

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

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

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

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

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

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

TUITION RESTRAINT

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

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

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

USE OF SCHOOL AID FUND FOR POSTSECONDARY EDUCATION

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

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

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

BB postsecondary ed budget graphic 2

House and Senate human services budgets fail to address the needs of families and children in poverty

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Pat Sorenson, Senior Policy Analyst

Budget Brief JPG USE THIS ONEAfter years of underfunding, both the Michigan Senate and House have passed budget bills that fail to address the needs of children and families in poverty. Since 2007, state lawmakers have restricted eligibility for public assistance through more stringent lifetime limits, toughened sanctions and asset tests.

The result has been a steep decline in the number of Michigan children eligible for the state’s primary income assistance program while childhood poverty has remained stubbornly high—with nearly 1 of every 4 children in the state living below the poverty line.

BB House and senate human services budgets fail graphic 1In addition, 4 of every 10 food assistance recipients in Michigan are children. The combination of basic income and food assistance can help stabilize families, making it possible for them to meet their children’s basic needs while they find employment that will support their family. For those unable to work due to age or disability, access to nutritious food is an absolute necessity for maintaining their health and avoiding emergency or long-term healthcare costs.

The Senate and House versions of the human services budget—which is part of the larger budget for the Michigan Department of Health and Human Services (MDHHS)—will now be considered by a joint House/Senate conference committee that will convene to iron out differences.

ACCESS TO HEALTHY FOOD

Food Assistance “Heat and Eat” Policy: Effective this year (the 2017 budget year), the Michigan Legislature approved $6.8 million in state funding to reinstate the “heat and eat” policy that allows Michigan to leverage additional federal funds and increase food assistance benefits for nearly 340,000 Michigan families, seniors and people with disabilities. For 2018, the governor recommends that the policy be continued as a smart way to leverage more than $300 million in federal funding to prevent hunger.

  • The Senate used federal energy assistance money to continue the “heat and eat” policy.
  • The House agreed with the governor to provide continued state funding for “heat and eat” food assistance benefits.

The League supports state funding for “heat and eat” as a way to prevent hunger for children, families, seniors and people with disabilities.

INCOME AND OTHER SUPPORTS TO STABILIZE FAMILIES

Family Independence Program (FIP) Benefits: The number of Michigan families receiving FIP is at its lowest level since 1957, and the governor and Legislature are projecting that it will continue to fall to only 17,000 in 2018. As a result of falling caseloads, the FIP budget is expected to drop from $98 million this year to only $76 million in 2018—a reduction of 22%.

With fewer children being served by FIP and benefit levels stalled (maximum of $492 per month for a family of three with average monthly payments of $366), children are living in deep poverty, and parents are finding it hard to both care for their children and find and keep work. In recognition of this hardship, the governor proposed an increase in the FIP yearly clothing allowance from $140 per child to $200 for a total cost of $2.7 million in federal Temporary Assistance for Needy Families (TANF) funds.

  • The Senate rejected the increase in the annual FIP clothing allowance.
  • The House included under $900,000 to increase the yearly benefit from $140 to $160.

The League supports the governor’s recommendation to increase the annual FIP clothing allowance as a small step toward addressing the insufficiency of income assistance programs for children and their parents.

Expand the Pathways to Potential Program: The governor recommended $5.6 million to expand the Pathways to Potential program that places “success coaches” in schools to identify barriers faced by students and their families and make appropriate referrals for needed services. The program is currently in 259 schools in 34 counties.

  • The Senate did not fund the expansion but included a $100 placeholder to ensure continued discussions in the joint House/Senate conference committee.
  • The House rejected the governor’s recommendation to increase funding for Pathways to Potential.

The League supports the governor’s recommendation to expand Pathways to Potential, which is a promising model for meaningful school/community partnerships and a two-generational approach to school success for all children.

Increased Support for Homeless Shelters: 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 the state’s homeless are African-American, and the senior homeless population continues to grow significantly each year.1

In recognition of the problem, the governor increased the daily rate provided to emergency homeless shelters from $12 per night per person to $16, at a total cost of $3.7 million. The governor indicated that he intends to recommend another $4 per person increase in the 2019 budget year.

  • The Senate rejected the governor’s increase in payments to homeless shelters, but included a $100 placeholder to ensure continued discussions in the joint House/Senate conference committee.
  • The House agreed with the governor to increase funding for homeless shelters.

The League supports the governor’s recommendation to increase funding for emergency homeless shelters, as well as policy and budget changes that could prevent homelessness such as: 1) increases in income assistance payments; 2) housing policies that could prevent homelessness; and 3) tax changes that benefit workers with low wages including a restoration of the Michigan Earned Income Tax Credit.

CHILD AND ADULT SAFETY

Child Abuse and Neglect Programs: More than 1 of every 100 children in Michigan lives in a family that has been investigated for potential child abuse or neglect and over 37,000 are confirmed victims.2 As of February 2017, the MDHHS was responsible for the supervision of 12,800 children in out-of-home care, with the majority placed with relatives, in licensed foster homes, child caring institutions or emergency shelters.3

While most families with low incomes are not more likely to abuse or neglect their children, living in poverty can limit the ability of parents to provide for their children’s basic needs. The vast majority (81%) of confirmed victims in Michigan’s child welfare system are there because of “neglect,” which can include a failure to provide adequate food, clothing, shelter or medical care.

More than a decade ago, the state was sued by a national child advocacy organization for its failure to move children quickly into safe, stable and permanent homes; provide children in foster care with adequate medical, dental and mental health services; and prepare children who age-out of the foster care system. To comply with a court settlement agreement resulting from that lawsuit, the state has increased resources for “tail-end” child welfare services, but relatively little has been done to prevent child neglect, including efforts to move children out of poverty.

For 2018, the governor recommended an additional $3.6 million for: 1) regional resource teams to recruit, train and support foster families; and 2) to expand the Michigan Youth Opportunities Initiative (MYOI) to all Michigan counties (currently in 64 of Michigan’s 83 counties). The MYOI helps young people who are in or have recently exited foster care make a successful transition to independent living through housing, education, employment and community engagement services.

The governor also cut “one-time” funding—approved in the 2017 budget year—to expand the Parent Partner and Family Reunification programs. Funds are being used this year in Genesee and Macomb counties to prevent the need for foster care, ensure that children are more quickly reunified with their families when it is safe to do so, and assist parents after children are returned home.

  • The Senate rejected the governor’s recommendation to increase funding for regional resource teams and the Michigan Youth Opportunities Initiative by $3.6 million, but included a $100 placeholder to ensure further discussion in the joint House/Senate conference committee. The Senate agreed with the governor to reduce prevention funding by $6 million.
  • The House agreed with the governor on regional resource teams and the Michigan Youth Opportunities Initiative, increasing funding by $3.6 million. The House also reduced prevention funding by $6 million, and further cut funding for the Fostering Futures program by $750,000.

The League strongly advocates for increased funding for services that can strengthen families, prevent child neglect, and reduce the need for out-of-home placements for children. The state’s efforts to improve its child welfare system as required by the court settlement agreement are important, and while progress has been made, more needs to be done to prevent child abuse and neglect by strengthening families—including ensuring parents can meet their children’s basic needs, as well as access sufficient mental health and other services.

Adult Services: As Michigan’s population ages, the need for services for seniors and people with disabilities continues to grow. A 2014 audit found that Michigan was unable to respond quickly to reports of abuse, neglect or exploitation of adults—in large part because of staffing shortages.

In response, the governor recommended $11.3 million to hire 95 new workers who can assist adults with high needs by providing protective services, independent living services and adult community placement assistance.

  • The Senate reduced the number of new adult services workers to 71 (with a delay in their hiring) resulting in total spending of $1.9 million in the 2018 budget year.
  • The House cut the number of new adult services workers in half to 47, at a cost of $5.6 million.

The League supports the governor’s expansion in funding for adult services workers to ensure that seniors and people with disabilities are safe. Between 2002 and 2015, the number of adults needing protection from the state more than tripled, while the number of staff fell by 14%.

ENDNOTES

  1. Ending Homelessness in Michigan: 2015 Annual Report, Michigan Coalition Against Homelessness and the Michigan State Housing Development Authority.
  2. 2017 Kids Count in Michigan Data Book: A Michigan Where All Kids Thrive, Michigan League for Public Policy.
  3. Children’s Services Agency: Foster Care Overview, Presentation to the House Committee on Families, Children and Seniors, Michigan Department of Health and Human Services (March 9, 2017).

League advocates for improvements in education from cradle to career

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Pat Sorenson, Senior Policy Analyst

Budget Brief JPG USE THIS ONEAs Michigan legislators continue to debate state spending for the upcoming budget year, the Michigan League for Public Policy is advocating for improvements in education for all children in Michigan, including full funding for the services to children at risk of educational failure, expansions in access to high-quality child care, and additional funding for early literacy programs. The League is also calling for increased funding for adult education programs.

BB League advocates for improving education graphic 1The Michigan Senate and House of Representatives have approved separate versions of the 2018 state budgets for School Aid and the Department of Education. Differences between the two will now be worked out in joint House/Senate conference committees, which will convene after a May 17th gathering of economists and budget experts to determine expected revenues for the upcoming year.

While there are a number of budget enhancements in the current House and Senate budget bills that the League supports, both the House and Senate recommended funding levels below the governor’s budget proposal, including reductions in key programs that assist children in high-poverty schools.

House and Senate leaders have said that they plan to cut between $200 million and $500 million in state General Funds from the governor’s overall budget—in part to show that a state income tax cut is affordable. Other potential uses of the funds that have been discussed include debt reduction, more money in the state’s rainy day fund, or investments in state priorities other than those outlined by the governor.

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

K-12 EDUCATION

Per-Pupil Spending: 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. For 2018, the governor recommended an additional $128 million to raise per-pupil spending by between $50 and $100, with districts currently receiving the lowest payments per pupil receiving the largest increase. The goal is to further reduce the gap in state funding between the lowest-funded districts and the highest.

The governor also proposed higher per-pupil payments for high school students, reduced payments to cyber schools, and a cap on funding for instruction programs for nonpublic and home-schooled students (cutting total funding by $55 million).

  • The Senate increased per-pupil payments to between $88 and $176—using $100 million currently provided to districts to offset teacher retirement costs under the Michigan Public School Employees Retirement System (MPSERS). The impact on individual districts varies, ranging from Public School Academies that are not part of MPSERS and lose no offset funding to some traditional districts that lose more in MPSERS offset dollars than they gain in a per pupil increase. The Senate Fiscal Agency has calculated the likely impact for all districts in the state.

The Senate rejected the governor’s proposal for higher per-pupil payments for high school students, as well as the cuts in payments to cyber schools. The Senate cut programs for nonpublic/home-schooled pupils by only $2 million.

  • The House provided an across-the-board increase for all districts in the state of $100 per pupil—rejecting the use of the formula that provides higher payments for the districts that currently receive lower per-pupil foundation allowances.

The House rejected the governor’s proposals to increase payments for high school students, as well as cuts for cyber schools and nonpublic/home-schooled student programs.

The League supports increases in school funding that help raise the quality of education and mitigate the impact of inflation and fixed costs on school operating funds. In the last decade, the minimum K-12 per-pupil foundation allowance rose 5.7%—less than half the rise in inflation at 15.1%.1

Declining Student Enrollment: Since Proposal A, the reliance on a per-pupil foundation allowance for school operations has meant that schools with rapidly declining enrollments can face at least short-term difficulties in adjusting to large funding losses. In recognition of the impact on local schools and students, the governor included $7 million for two years of supplementary funding for districts that have experienced large enrollment declines (more than 5% over two years).

  • Both the Senate and the House rejected the governor’s proposal for supplementary funding for schools with declining enrollments.

The League supports funding to ameliorate the impact of declining enrollments on local schools and their students.

Funding for Students Academically at Risk: The At-Risk School Aid program is the state’s best vehicle for addressing the educational challenges children who are exposed to the stresses of poverty bring through the schoolhouse doors. The governor recognized the need to focus on high-poverty schools by recommending an additional $150 million in At-Risk funding for 2018 and by expanding eligibility.

Currently, the program provides state funds to schools based on the number of children receiving free school meals (130% of poverty). Under the governor’s proposal, districts could receive funding for children up to 185% of poverty. In addition, the governor would provide funding to “out-of-formula” or “hold-harmless” districts that are currently not eligible. These are districts that have combined state and local per-pupil foundation allowances that are higher than the basic amount, even though they may have a high number of children living in poverty. The governor projects that with these changes an additional 130,000 children could be served.

  • The Senate increased At-Risk spending by $100 million and agreed with the governor on changes in student eligibility. The Senate altered the allocation formula as follows: 1) $5 million of the new funding would be earmarked for English language learners; and 2) districts that are currently eligible for At-Risk funding would be guaranteed at least as much per pupil as they are receiving in the current school year (applied to the broader base of economically disadvantaged students), with the remaining new funds (estimated to be approximately $41 million) awarded to all districts, including those currently not eligible.
  • The House increased At-Risk funding by $150 million and agreed with the governor on changes in student eligibility. The House also adopted the governor’s proposal to expand eligibility to “hold-harmless” and “out-of-formula” districts but capped the per-pupil At-Risk payment to those districts at 50%. The House added budget language indicating an intent to use a portion of 2019 At-Risk funds to reimburse school districts that provide transportation to pupils enrolled in schools of choice or charters.

The League supports full funding of the At-Risk program, as well as expansion of eligibility to all children who are economically disadvantaged or at risk of educational failure.

Reading by Third Grade: Michigan law now allows for grade retention if children are not reading proficiently by third grade, making the need for early literacy programs even more critical. The governor proposed doubling funding for early literacy coaches at Intermediate School Districts (ISDs) from $3 million to $6 million. The largest component of the state reading initiative—funding for additional instructional time for children who are behind in reading—was retained at $17.5 million by the governor.

  • The Senate agreed with the governor and increased funding for ISD early literacy coaches by $3 million.
  • The House slightly reduced total funding for early literacy and allocated remaining funds ($25.4 million) through grants to districts, with an estimated $245 per first-grade pupil.

The League supports increased investments in early literacy, including programs that address learning in the earliest years of life such as early intervention through the Early On program, expanded home visitation programs, and a state-funded preschool option for 3-year-olds in high-risk schools and communities.

Adult Education: Despite a high level of need, state funding for adult education has dropped 70% since the 1997-2001 budget years. The governor recommended flat funding of $25 million for adult education programs in 2018.

  • The Senate agreed with the governor on flat funding for adult education and provided $2.5 million for Career and Technical Education pilot projects in the state’s five prosperity regions.
  • The House agreed with the governor on flat funding for adult education.

The League supports an increase in funding for adult education of at least $10 million for $35 million total, which would help nearly 8,000 additional students and serve as an important tool for improving educational achievement and adult literacy—part of a two-generational approach to improving the state’s economy.

CHILD CARE AND EARLY EDUCATION

Child Care Subsidies: The number of Michigan parents with low wages who received assistance with their child care costs fell by over 70% between 2003 and 2016—in part because of the state’s stringent income eligibility standards and low child care payments. In addition to forcing parents to either stay out of the workforce or find care that isn’t suitable for their children, the state’s child care policies made Michigan one of only a handful of states that had to turn away federal child care funds because of a lack of state matching dollars. In recognition of the need for high-quality child care, the governor included an increase of $6.8 million in the current budget year (2017), as well as $27.2 million ($8.4 million in state funds) in the 2018 budget to increase rates paid to child care providers.

  • The Senate provided $23.8 million ($7.1 million in state funds) for increased child care provider rates, as well as $5.8 million to increase the income eligibility threshold from 125% to 130% of poverty. Rate increases would be based on the number of stars a provider has in the state’s quality rating system, ranging from a maximum increase of 50 cents per hour for providers with no stars to $1.50 per hour for child care centers with a five-star rating. Unlicensed providers (family, friends and neighbors) who care for infants or toddlers could receive an increase of 25 cents per hour.
  • The House agreed with the governor to include $27.2 million for rate increases for child care providers.

The League supports payment increases for child care providers, as well as a boost in income eligibility levels—both needed to ensure that parents can secure and keep their jobs while children are in safe and supportive settings that encourage optimal learning. In addition, the League supports efforts to bolster the supply of high-quality child care businesses, including the movement away from hourly billing to biweekly or monthly payments, which make it easier for providers to care for children from families with low wages.

Great Start Readiness Preschool Program: The governor recommended level funding for the Great Start Readiness program ($243.6 million) which provides a high-quality preschool education for 4-year-olds from families with low incomes. Currently, the program is for children from families with incomes below 250% of poverty, but districts can expand it to children with incomes of up to 300% of poverty if they can demonstrate that all children with lower incomes who want to participate have had the opportunity to do so. For 2018, the governor restricted eligibility to children in families with incomes of 250% of poverty or less, and required that 100% of children meet that income eligibility level, rather than 90% as currently required. In addition, the governor changed the allocation formula to ISDs.

  • The Senate agreed with the governor on spending levels and on the new allocation formula, but retained the option of serving children in families with incomes of up to 300% of poverty.
  • The House adopted the governor’s recommendations for the Great Start Readiness Program funding and allocations.

ENDNOTE

  1. K-12 Schools Minimum Foundation Allowance History, Senate Fiscal Agency (October 1, 2016).

 

Making ends meet in Michigan: A basic income level for family well-being 2017

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Making Ends Meet in Michigan 2017 is the seventh edition of the report formerly known as Economic Self-Sufficiency in Michigan. This report provides a Basic Needs Income Level: the amount of household income a family or individual needs to have in order to meet basic needs without public or private assistance. The Michigan League for Public Policy produces this for the policymaker, the advocate, the social services or nonprofit administrator, and anyone else with an interest in the well-being of Michigan’s families.

makings ends meet graph 1The Basic Needs Income Level can be used in the following ways:

  • As an indicator for measuring the progress of Michigan’s working families toward economic security;
  • As a guide for determining worker wages and benefits or assessing their adequacy;
  • As an advocacy tool for promoting programs and policies that assist families in reaching economic security; and
  • As a benchmark by which to assess the quality of jobs created through economic development projects.

Why We Need a Basic Needs Income Level

The federal poverty threshold determines who is counted as officially poor but tells us little about whether a person or family is living in economic security. It does not reflect regional and local differences in the cost of living and is based on a model that, while adequate when first devised in 1965, is less reflective of today’s economic realities. Similarly, the minimum wage, both state and federal, is not enough for a family to make ends meet. So we use the Basic Needs Income Level to understand how much income a family needs in order to pay for all of their basic expenses.

The Michigan League for Public Policy seeks to reframe the discussions around need, wage standards, public assistance and what it means to live in economic security. Lifting people above the poverty line clearly is not enough. Instead, we need to make sure that all Michiganians can meet their families’ basic needs.

What This Report Measures

Using established and widely accepted estimates of various living expenses, the Basic Needs Income Level shows us how much income a household must have in order to meet the following needs:

  • Housing—We use the Fair Market Rent (the 40th percentile of rents in each county) provided by the United States Department of Housing and Urban Development (HUD) to calculate the housing costs for a one-bedroom apartment for a single individual and a two-bedroom apartment for a single parent or a two-parent family with two children. However, a three-bedroom housing unit may be more appropriate for families in which the two children are of opposite genders.
  • HUD considers housing to be “affordable” if its costs do not exceed 30% of a household’s income. At the Basic Needs Income Levels established in this report, the percentage of income spent on housing at Fair Market Rent is affordable, but for many parents earning only minimum wage, it is not, especially in areas with high rents. For example, a single parent with two children in Washtenaw County earning minimum wage ($8.90 per hour in 2017) would spend 66% of total household income to rent a two-bedroom dwelling, and in Wayne County, a similar family would spend 56%.
  • Food—In using the United States Department of Agriculture’s Low-Cost Food Plan, the report assumes a nutritious diet using generic and less expensive foods, and assumes that ingredients for every meal and snack are purchased at the store and prepared at home. Unfortunately, however, grocery stores located in low-income areas (both rural and urban) tend to charge higher prices than large suburban supermarkets and be heavily stocked with highly processed convenience foods, while offering little in the way of fresh produce and other nutritious food items. Inadequate transportation forces many families with low incomes to spend more on food than their middle-class counterparts, while limiting their nutritional choices.
  • Child Care—The largest expense for both single-parent and two-parent families is child care. The total expenses are substantially lower for a two-parent family in which one parent can care for the children because the family does not need to pay for child care. In addition to budgeting and finances, concerns about the quality of affordable care may also drive some families with low incomes to make this decision. For other two-parent families, the sole breadwinner would earn wages far too low to meet the family’s needs, making this option undesirable. Because this decision is so often grounded in economics, this report calculates expenses for both types of two-parent families.

Our child care cost estimate assumes all children are below age 5 and are not in school and therefore require full-time child care while parents work. However, parents of children over age 5 sometimes need to pay for child care during summer vacation and holiday breaks, or if the parents work outside of school hours (i.e., second or third shifts or weekends).

  • Healthcare—Most low-paid workers do not have health insurance provided by their employer. If their household income is at or below 138% of the poverty threshold ($19,337 for a family of three, $24,339 for a family of four), the family qualifies for Medicaid. Others without employer-sponsored insurance must buy their insurance in the private market. This report assumes they are buying it on the marketplace exchange set up in accordance with the Affordable Care Act of 2010.

makings ends meet graph 2

  • Transportation—Because access to adequate public transportation is limited in most areas of Michigan, this report bases transportation costs on the assumption that families use their own car to drive to work and take care of family needs. Because metropolitan Detroit lacks a regional public transportation system and there is a shortage of jobs in the urban core, Detroit residents with low incomes often need to own and maintain a car to commute to the suburbs for work. This cuts into their ability to meet other expenses and underscores the importance of investment in public transportation as a strategy to help families with low incomes.
  • Clothing, Household Necessities, Personal Care and Telephone—These figures come from the Bureau of Labor Statistics Consumer Expenditure Survey and may vary depending on the family’s circumstances.

After adding up the above expenses to determine the amount of income necessary for a household to cover its needs, the report estimates the amount of federal and state income tax the family needs to pay (or will get refunded) on that income and adjusts the amount accordingly. This adjusted amount is the Basic Needs Income Level. (For more information on the methodology used to calculate the expenses and taxes, please see Appendix C.)

We acknowledge that many families have opportunities and support systems to reduce some of their expenses. Some parents have relatives that help care for their children, and some two-parent families are able to arrange work shifts so that there is always at least one parent at home with the children. Some working parents live close to their places of employment or have carpool arrangements that reduce transportation costs. Unfortunately, many families with low incomes do not have such supports or flexibility and as such are not able to reduce costs in these ways.

The Basic Needs Income Level has obvious limitations. At this time, we are able to only provide expense calculations for four household styles. In addition, estimated monthly expenses identified in this report do not allow for savings or emergencies, nor do they account for common family expenditures related to a child’s education. Some similar calculations done in other states are far more generous in determining what common family expenditures constitute a need and include the cost of appliances, furniture, reading materials, entertainment (television, music and toys), union dues and banking fees. The wages and incomes given in this report, however, reflect only the very basic monthly expenses of families. It is a “bare bones” benchmark for economic security.

making ends meet graphs 3-5


MI chart

In recent years, the Affordable Care Act (ACA) has improved health insurance access and affordability. The ACA’s expansion of Medicaid makes a larger population of the poorest Americans eligible for coverage. The premium tax credits help families afford health insurance plans that they purchase on the online exchange (in Michigan the exchange is at Healthcare.gov), and the rules governing the plans available on the exchange help to ensure that families with significant medical needs do not suffer extreme financial hardship.

A family of four that depends on one parent’s wages while the other stays home to take care of their children (perhaps due to the high costs of child care or lack of access to quality care) would have had to pay as much as $800 per month for a suitable family plan prior to the ACA. In the past, this family would likely live without health insurance, risking the chance of a medical emergency that could easily cause bankruptcy. Now, with the help of the new subsidies, the same family can get an adequate health plan for less than $300 per month. This policy change has put decent health coverage for all Michigan families within reach.

On the other hand, the largest expense for most families, child care, has not been made more affordable for families at the lower end of the economic spectrum. Michigan has been negligent in taking the steps that many other states have taken in order to make it easier for parents to keep jobs knowing that their children have adequate care.

The Michigan League for Public Policy recommends that Michigan enact the following policies to make it easier for people to get and keep jobs that provide a Basic Needs Income:

Protect Michigan’s expansion of Medicaid: Currently, Michigan families who are at or below 138% of the federal poverty threshold are eligible for Medicaid through the Healthy Michigan Plan and the ACA. This is because Michigan legislatively chose to expand Medicaid eligibility beyond just the families at or below 100% of poverty. Some states did not expand Medicaid and hence are covering far fewer people than they otherwise could have. The Michigan Legislature must push back on any attempts to reverse Michigan’s Medicaid expansion, which would make health insurance coverage less affordable for many families living near poverty. For more information, see the Michigan League for Public Policy’s report Healthy Michigan Plan: A Great Deal for the State and Its Residents.

Restore and strengthen the Michigan Earned Income Tax Credit: The Michigan Earned Income Tax Credit (EITC) enables working families who earn low wages or who have fallen on hard times to keep more of what they earn to afford the basics. The Michigan EITC was enacted in 2006 at 20% of the federal Earned Income Tax Credit, meaning a tax filer could claim 20% of the dollar amount that he or she claimed on the federal tax return. In 2011, the Michigan Legislature slashed the Michigan credit to 6%, eliminating a significant source of help for many working families with low incomes and making it more difficult for them to make ends meet. At 20% of the federal credit, the state EITC lifted more than 20,000 families out of poverty, but at the current level it only raises just under 7,000 out of poverty. The Michigan Legislature should restore the state EITC to its former level of 20% of the federal credit. For more information, see the Michigan League for Public Policy’s EITC webpage, www.mlpp.org/our-work/eitc.

Update Michigan’s child care subsidy: Quality child care in Michigan is expensive, particularly in counties with high demand or a low supply of caregivers (see Appendix A). Michigan has not kept up with the need by updating the child care subsidy for low-paid workers. Although the Michigan Legislature increased the eligibility for child care assistance from 121% of the poverty level to 125% in 2017, it has kept the subsidy well below market rates. Many providers do not accept the subsidy due to the low reimbursement rate and the onerous reporting requirements. Michigan should raise the eligibility to 150% of the poverty level, increase the subsidy and convert the reporting forms from a half-day to an hourly basis. For more information, see the Michigan League for Public Policy’s report Child Care for Working Families–A Foundation for Growing the State’s Economy.

Raise the minimum wage: Michigan has recently raised its minimum wage, which became $8.90 in January 2017 and will increase to $9.25 in 2018. While better than it would have been without an increase, it is not enough to bring a family of three above the poverty threshold, much less to a Basic Needs Income Level. If working families cannot make ends meet, they must often make difficult decisions regarding food, shelter and basic necessities. Furthermore, employers who do not pay an adequate wage push that cost onto the government and taxpayers through programs like food and cash assistance. A higher minimum wage covering more of the cost of living is beneficial to both workers and the public as a whole and has not been shown to drive up unemployment as some suggest. For more information, see the Michigan League for Public Policy’s report Raising the Minimum Wage: Good for Working Families, Good for Michigan’s Economy.

Invest in skills training and adult education: The best way out of economic hardship is through employment that is secure and pays enough to support a family, yet such employment now usually requires skills beyond those gained in high school. Michigan must make it easier for low-paid, low-skilled individuals to acquire occupational skills through postsecondary education and training—whether through a four-year bachelor’s degree, a two-year associate degree, or a license or certificate that takes less than two years to complete. The state can increase the number of workers with postsecondary credentials by expanding access to adult education for those who need remediation in order to succeed in college or vocational training. Michigan can also make college more affordable through better financial aid, including providing aid to students over 30 years old who currently cannot receive state aid. For more information, see the Michigan League for Public Policy’s reports Willing to Work and Ready to Learn: More Adult Education Would Strengthen Michigan’s Economy and State Financial Aid Leaves Adult Learners Behind.

Enact workplace protection policies such as earned sick leave and predictable scheduling: Meeting basic needs and becoming economically secure depends not only on being able to get a job, but on keeping a job. Many low-paid workers lose wages if they have to take time off to recover from illness or to take care of an ill child. In some cases, this can even lead to loss of employment. Some workers also are subject to frequent last-minute schedule changes that upend their child care arrangements and make accommodating their family’s needs difficult. A law requiring employers to provide earned sick leave would help ensure that workers are able to miss work due to illness or medical needs without the fear of getting behind on bills or losing their job, and a predictable schedules law would enable parents to better plan for child care and other family needs. For more information, see the Michigan League for Public Policy’s report Valuing Families, Valuing Work: Four Ways Policymakers Can Help Low-Paid Workers and Their Children.

Create a more adequate state tax system: Programs that help struggling families meet their needs and become financially secure benefit the state as a whole, not just the individuals being helped. Such programs include temporary cash assistance, child care assistance, training programs and college financial aid. However, in Michigan these programs are often inadequate and underfunded due to a lack of available state revenue to strengthen or update them. At the same time, Michigan is one of only 17 states that does not have a graduated income tax and also does not charge sales tax on services, even though consumers now spend more money on services than on goods. The Michigan Legislature needs to proactively address this ongoing revenue shortage by enacting both of these tax reforms: a) passing a bill converting Michigan’s flat income tax to a graduated income tax, which will then go to the voters via a referendum (as required by the state constitution); and b) broadening the sales tax on goods to cover sales of services, which does not need to be approved by voters through referendum. Michigan should also reexamine its tax expenditures and loopholes to ensure that the state is not missing out on needed revenue. For more information, see the Michigan League for Public Policy’s reports Review Tax Expenditures to Help Fix Michigan’s Broken Revenue Stream and Who Pays More? The Case for a Fairer Income Tax.

See PDF for Appendices

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