Reports


Michigan should eliminate its asset limit for food assistance

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July 2016
Senior Policy Analyst, Peter Ruark

What is the food assistance asset limit and why is it a problem?

Families who experience financial difficulty due to unemployment or a medical emergency often seek assistance from the Supplemental Nutrition Assistance Program (SNAP; formerly known as Food Stamps) for purchasing food. This assistance can help keep their household stable, including keeping food on the table for children, until the family can get back on its feet. Many seniors and people with disabilities also depend on SNAP to keep from going hungry.

MI Should Eliminate SNAP Asset TestUnfortunately, in some states including Michigan, there is a limit to how much a family can have in assets in order to be eligible for SNAP. This is commonly referred to as the “asset test.” Assets are resources available to purchase food, such as bank savings. Houses, personal property and retirement savings do not count as assets, although automobiles do. Michigan’s asset limit is $5,000, which means that if a Michigan family has more than $5,000 saved in a bank account or a savings plan, it must spend down its savings to below that level in order to qualify for food assistance. This policy essentially punishes families for saving for emergencies and for their children’s futures.

There is a federal asset limit for SNAP, but in 2002 the federal government gave each state the option to raise its asset limit or eliminate it entirely. Recognizing that the SNAP asset limit is counterproductive, 34 states and the District of Columbia have eliminated it. Michigan was one of the first states to eliminate the asset limit, but reinstated it in 2012, a time when many Michigan families were still struggling to make ends meet.

Is it unfair for Michigan to impose a SNAP asset limit when so many other states have eliminated theirs?

Yes. Michigan suffered more than most other states during the 2000s, including four years when it had the highest unemployment rate in the nation, and although its economy has improved to some degree, many families continue to struggle.

Families who have saved up money to weather future economic storms or to invest in their children’s future should not have to spend down all but $5,000 of their savings if they need to receive temporary help from SNAP. By requiring this, Michigan is punishing prudence and long-term thinking. Because SNAP functions for most households as a temporary stopgap (58% of new recipients leave the program within one year), it makes sense to allow families to retain their savings as they get back on their feet.

Why and how did Michigan reinstate the asset limit?

In 2012, media publicity around a lottery winner continuing to receive food assistance while collecting winnings prompted the Michigan Legislature to pass Public Act 79, which states simply, “For the purposes of determining financial eligibility for the Family Independence Program or the Food Assistance Program administered under this act, the department shall apply an asset test.” That year, Michigan also passed Public Act 78, which requires that the Michigan Lottery inform the Department of Health and Human Services (DHHS) of lottery winnings of over $1,000, and that lottery and other gambling winnings be counted as unearned income (if received in installments) or as assets (if received in a lump sum) for determining continuing eligibility for SNAP benefits. The Department of Human Services (now the Department of Health and Human Services) responded by establishing an asset limit of $5,000.

What can Michigan do to make it easier for struggling families with some savings to receive food assistance?

Current law requires Michigan to have a SNAP asset limit but does not stipulate a specific amount; that is left up to DHHS to determine. The department can raise or lower the limit but cannot eliminate it under current law. Likewise, if the current law requiring an asset limit is eliminated, the department can still choose to impose an asset limit.

Because it would require only a departmental and not a legislative change, the easiest way to allow families to save more money while they are receiving SNAP benefits is to raise the limit rather than eliminate it entirely. Nebraska has an asset limit of $25,000, five times the amount of Michigan’s limit, allowing families to build savings while receiving assistance.

Michigan can also join the 34 states and District of Columbia in eliminating the asset limit entirely. This would require a legislative change to eliminate the requirement to impose an asset test, followed by a departmental action to remove the asset limit itself. If the Legislature wants to keep the restriction on lottery winnings, it would need to modify that wording accordingly.

MI Should Eliminate SNAP Asset Test (Read-Only)

 

Ask your candidates

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Taxes and revenues

1Since the 1970s, the federal Earned Income Tax Credit (EITC) has been considered a significant poverty reduction tool that encourages individuals to work. In 2006, Michigan created its own state-level EITC based on 20% of the federal tax credit. The governor and state lawmakers scaled back the Michigan EITC to 6% in 2011.

Would you support fully or partially restoring the state-level EITC to 10% or 20% of the federal tax credit?

2Michigan is one of only seven states that continues to rely on a flat income tax rather than a graduated income tax, like the federal income tax. States with graduated income tax structures tax at higher rates as income rises making it a more modern and equitable system.

Would you support reforming Michigan’s income tax structure from a flat income tax rate to a graduated one?

3Sales taxes are typically considered to be the most regressive type of tax, costing individuals earning low wages a larger proportion of their income compared to wealthier individuals. Expanding the sales tax to apply to services can serve to both increase revenue and make the sales tax less regressive. Even still, the sales tax will remain regressive, which is the reason some states offer sales tax credits to provide relief for individuals who earn the least.

Would you support extending the state’s sales tax to services with a sales tax credit for filers with low wages?

4While Michigan’s actual tax revenues have grown year after year, when adjusted for inflation, revenues are below 2000 levels by about 18%, and state lawmakers have continually pulled funds away from general state coffers to fund specific programs, such as road funding and the Personal Property Tax repeal reimbursements. At the same time, the costs of providing Michigan residents the most basic services have grown, increasing pressure on our budget. This has meant that programs have had to be funded at the expense of others, furthering Michigan’s disinvestment in its communities, education, infrastructure and other services on which its residents and businesses rely.

Would you support exploring new revenue sources or expanding existing ones, for example by eliminating outdated and unnecessary tax exemptions or credits, to fund vital state services?

Help for struggling people and families

5Out of 16 states offering families additional heating assistance to qualify for additional food benefits, Michigan was one of four that declined to add dollars to keep the Heat and Eat program going when federal rules changed. That means an average loss of $76 a month in food benefits for 150,000 families, seniors and people with disabilities. It would take only $3.2 million in state dollars to bring in $138 million in extra federal food assistance for these Michigan residents.

Do you favor spending $3.2 million to bring in this additional food assistance?

6Michigan has one of the most stringent income eligibility levels in the country for child care subsidies for families with low wages. Given the high cost of child care, without assistance many parents find themselves in the difficult position of relying on unstable or even unsafe arrangements for their children or placing their jobs in jeopardy.

Would you support the use of state and available federal funds to expand child care subsidies to more families with low incomes?

7Children in families that must rely temporarily on state income assistance live in increasingly deep poverty as a result of the very low payments provided by the state (a maximum of $492/month for a family of three). Michigan provides a one-time payment of $140 for all school-age children in families receiving Family Independence Program assistance so children can start school with at least a decent set of clothes, but with current prices, this doesn’t carry children very far into the school year.

Would you support an increase in the annual school clothing allowance to ensure that children can purchase the clothes, shoes and overcoats needed for school?

8Food assistance (Supplemental Nutrition Assistance Program) helps families experiencing financial difficulties purchase food, helping parents feed and provide for their children without disrupting their lives. In 2012, Michigan passed a law that required the state to limit the amount of assets a person could have in order to qualify for food assistance. This was implemented just as the state was exiting a decade-long recession and at a time when most states (about two-thirds plus D.C.) were eliminating their own asset tests. This penalizes families that have saved for emergencies, for their retirements or for their children’s futures by requiring them to spend their assets in order to receive food assistance.

Would you support legislation or policy changes that either increase the asset limit on food assistance or completely eliminate the requirement, joining most other states in the nation in doing so?

Addressing child poverty and education

9Nearly half (49.9%) of Michigan third-graders did not demonstrate proficiency in English Language Arts (reading and writing) in 2015. Legislation under consideration would require that third-graders who are not proficient in English Language Arts as measured by the state test would be required to repeat the grade; although, if the student is proficient in other subjects, then instruction for those may be given in a fourth-grade classroom. Alternate tests and portfolios may be used to document reading skills and some good cause exemptions are provided, however, the school superintendent would make the final decision. Critics contend research on retention shows a higher likelihood of dropout for retained students while supporters of retention decry the negative impact of social promotion.

Would you support mandatory retention of Michigan third-graders who are not proficient in English Language Arts ?

10Child poverty in Michigan has escalated by almost 60% over the last 15 years. Almost 1 of every 4 children in the state lives in a family with income below the poverty level: $19,000 for a family of three and $24,000 for a family of four. Several policy initiatives to alleviate child poverty have been suggested, such as reinstating the state Earned Income Tax Credit to 20% of the federal EITC, expanding adult education and other workforce development opportunities, and raising the child care subsidy and eligibility so parents earning low wages can have access to child care.

Would you support any of these initiatives?

11Michigan has been a leader in investments in preschool programs for 4-year-olds, but funding for families with infants and toddlers living in poverty or near poverty has declined—despite scientific evidence that the first three years of life are when children’s brains are growing most rapidly, affecting their lifelong development, learning and achievement.

Would you support additional state funds for proven programs for parents of very young children, including home visiting, parenting programs and Early On?

12One in 10 children, or 228,000, in Michigan have had a parent in their household incarcerated at some point in their lives—one of the highest rates and largest populations of children impacted in the country. Having a parent incarcerated can lead to increased poverty, stress and unstable environments, affecting kids’ health and academic performance. Additionally, approximately 95% of Michigan’s prison population will return to the community after serving their sentences making reentry and family reunification services critical for the formerly incarcerated, their children and communities.

Would you support a comprehensive, multigeneration approach, including the expansion of support programs, family reunification and reentry services, to ensure that the needs of children and their parents, families and communities are met while a parent is incarcerated and upon their return home?

13With the recent housing bubble burst dropping property taxes, declining enrollment and the inability of the state to fully invest in K-12 education, many Michigan schools have fallen into financial crisis. Recently the state legislatively dissolved two school districts and Detroit Public Schools, our largest public school district, nearly fell into bankruptcy despite years of state control. Two other schools have emergency managers, and two are under a consent agreement, with many more under deficit elimination plans or state review.

Do you believe the state should be doing more and providing more financial help to Detroit Public Schools and other school districts that have fallen into, or are on the verge of falling into, financial crisis?

Jobs and the economy

14Workers who are laid off, or who work in low-paying jobs, can often improve their financial situation by building skills at a community college or university. However, Michigan’s financial aid grants are not available to workers who have been out of high school more than 10 years. There was a legislative proposal last year to reinstate the Part-Time Independent Student Grant, which helps older workers (including many with families and full-time jobs) go back to school and get a degree. This grant was discontinued in 2009.

Would you support the reinstatement of the Part-Time Independent Student Grant to help older workers get the skills they need for family-supporting jobs?

15Although Michigan’s economy and unemployment rate have improved, there are many workers still seeking work, and there continue to be businesses that for some reason or another face difficulty and need to lay off workers. Yet, Michigan is one of a few states that allows unemployed workers to receive up to only 20 weeks of Unemployment Insurance (UI) while they look for jobs—nearly all other states have a maximum of 26 allowable weeks of UI which Michigan also provided until cutting back in 2011. While some unemployed workers find another job within 20 weeks of becoming unemployed, it is important that they have additional weeks if they do not to prevent further family disruption.

Would you support reinstating the 26-week maximum for unemployed workers to receive Unemployment Insurance while they look for work?

16More than 1.7 million (44%) Michigan workers cannot take time off with pay when they or one of their children are ill. Becoming sick puts these workers in the difficult position of having to either stay home and lose wages, or go to work and risk becoming sicker and exposing coworkers (and often the public) to illness. Parents feel pressure to forgo needed medical care for themselves and their children, and to send their child to school sick because they cannot miss work to take care of them. An earned sick leave law similar to what several other states and cities have would help Michigan workers by requiring most employers to bank sick time for their workers based on the number of hours they have worked.

Would you support a Michigan earned sick leave law?

Criminal justice reform

17Michigan is one of nine states that automatically charges 17-year-olds as adults in the criminal justice system. In nearly every other aspect of the law, whether it is voting, buying a lottery ticket, serving in the military or signing a contract, 18 years of age is legally required, yet 17-year-old youths must be prosecuted, convicted and sentenced as adults in criminal courts in Michigan. Research on development shows that 17-year-olds are not adults and are better served in juvenile justice systems.

Would you support raising the age of juvenile jurisdiction to age 18?

18Persons of color are arrested, detained and incarcerated at higher rates in Michigan as well as around the country, though national statistics demonstrate that higher crime rates do not account for this disparity. While only comprising 14% of Michigan’s population, African-Americans comprise over half, or 53%, of the state’s prison population, and they are detained at a rate more than six times higher than white people.

Do you support training for police, judges and others in the criminal justice system, along with the use of a race equity policy tool, to expand understanding of the disparate impact of the system and its policies on communities of color?

19An estimated 20-25% of prisoners have been diagnosed with severe mental illness and many more with mental health problems. Nine of every 10 prisoners with severe mental illness also suffer from substance use disorders, and upwards of 65% of those with mental health symptoms do not receive treatment. Michigan has recognized the need for alternatives to incarceration for those suffering from behavioral health issues by implementing mental health courts and substance abuse programs for those serving time and on probation and parole.

Do you support diversion programs and improved mental health and substance abuse treatment programs within prison facilities to improve access for incarcerated people?

Flint water crisis

20In April 2014, Flint switched its drinking water source to the highly corrosive Flint River, and a decision to not properly treat the water caused lead to be leached from the pipes into the water. This resulted in thousands of Flint residents, including children, being poisoned by the water they drink daily. Unfortunately, lead poisoning has no cure, and all Flint residents, especially children, will require lifelong services to help detect and treat developmental and educational delays and health problems caused by lead. Furthermore, lead continues to be a problem in almost all of our communities, either through lead pipes or lead in paint in older homes, and it needs to be remedied statewide.

Would you support continuing to provide long-term funding to help residents affected by the Flint water crisis? Would you also support looking at a statewide solution to abate existing lead, prevent future poisoning and provide services to those already affected?

 

 

 

 

 

 

 

 

 

The 2017 state budget fails to protect all children and families and perpetuates economic disparities

June 2016

Budget Brief JPG USE THIS ONEpdficonThe 2017 state budget approved by the Legislature falls short by failing to address long-term solutions to the public health and educational crises in Flint and Detroit, as well as the infrastructure and public health crises brewing in other areas of the state.

The exposure of Flint residents—and especially infants and toddlers—to toxic lead in their water, and the unsafe conditions and looming insolvency of the Detroit Public Schools (DPS) became national news this year, exposing many governmental failures and a history of inadequate investments.

highlights 2017By not addressing the risks to children and families statewide, reversing disinvestments in basic services or drawing down all available federal dollars, the state budget fails to protect all children and families and perpetuates the economic and racial disparities that plague the state’s economy.

While some quick fixes have been approved, Michigan still lacks a long-term strategy to address the state’s crumbling infrastructure and public services. Across the state, communities are struggling to maintain high-quality schools, provide basic services and protect their residents from threats to health and safety.

  • There are hotspots of lead poisoning all over the state, with 70% of lead exposure associated with paint in older homes.
  • School districts in both urban and rural areas are struggling financially as state funding has failed to keep pace with inflation or reflect rapidly declining enrollment.
  • State policies—including stringent lifetime limits on public assistance, the ending of assistance for an entire family when one child is truant, child care eligibility levels that are among the lowest in the country, and an asset test for food assistance—have pushed more Michigan families into deep poverty and made it harder for them to find and keep jobs.

Long-term fixes to the problems in Flint, Detroit and all areas of the state cannot be achieved by dividing up a shrinking “budget pie,” and state tax policies have created a difficult hill to climb in rebuilding Michigan’s infrastructure and basic services. In recent years, shifts in the way the state taxes businesses, the state’s failure to update its tax system to reflect the new service economy, and continued earmarking of the state’s General Fund all limit the state’s choices and must be part of the ultimate fix.

THE FLINT WATER CRISIS

As part of the final budget, the Legislature approved an additional $114 million ($87 million in state funds) to address the lead exposure crisis in Flint during the current budget year—on top of three smaller funding increases already approved. Funds are to be used in part to:

  • Provide half-day child care services for children ages 0-3 in Flint who live in households earning less than 300% of the federal poverty level ($8 million, with an additional $8 million reserved for future child care services for children in Flint through 2018).
  • Replace lead service lines in high-risk, high-hazard homes in Flint ($25 million).
  • Provide mental health services for children affected by lead exposure ($1.5 million).
  • Expand access to nutrition programs ($1.3 million), and increase resources for food banks ($430,000).
  • Establish a statewide childhood lead poisoning prevention program ($1.3 million).
  • Provide an additional $12.8 million to cover portions of Flint residents’ water bills (in addition to $30 million approved earlier).

THE CRISIS IN DETROIT PUBLIC SCHOOLS

In a contentious late-night session, the Legislature approved a package of bills intended to help Detroit Public Schools (DPS) as it struggles to remain solvent and maintain safe, high-quality schools. The final agreement retains the current school district as a vehicle to pay off the district’s debt (funded by the 18 mill property tax currently used for the school per-pupil foundation allowance), and establishes a new school district to operate the schools, completely funded with state funds.

At issue were: (1) the adequacy of funding for the new school district, which at $617 million falls $88 million short of what is needed; (2) how the funding shortfall would be addressed—resulting in an amendment ensuring that it doesn’t affect other schools by coming from the School Aid Fund; (3) the rejection of the proposed Detroit Education Commission, a body that would have had the authority to help manage the proliferation and location of schools in Detroit which has partly led to DPS’s fiscal crisis; and (4) a range of changes in teacher hiring, pay and accountability systems that apply only to DPS.

THE 2017 STATE BUDGET

The Legislature approved a total of nearly $55 billion for 2017. More than 4 of every 10 dollars spent by the state are federal, with state general funds representing only 18%. The state’s General Fund—the dollars over which the Legislature has the most discretion and control—are 29% below 2000 budget year levels when adjusted for inflation.

Health

Flint Emergency Funds: The Legislature agreed with the governor on $15.1 million ($9.1 million in state funds) for partial-year funding of public health services for persons exposed to lead in Flint. Additional funding could come from a Flint Emergency Reserve Fund.

The League supports investments to address the Flint crisis in multiple state departments, including public health enhancements in 2017.

Healthy Kids Dental: The Legislature approved full funding—as recommended by the governor—of $8.9 million in state funds ($25.6 million in total funds) to expand the Healthy Kids Dental program to an estimated 131,000 Medicaid-eligible youths and young adults (ages 13-20) in Kent, Oakland and Wayne counties. With this expansion, all children and young adults insured by Medicaid are now eligible for dental coverage through the program.

The League supports the expansion of Healthy Kids Dental to all eligible children in Michigan. Tooth decay remains the most prevalent chronic disease in children resulting in lost school days and diminished learning, as well as the potential for long-term negative health consequences.

Adult Dental: The final budget does not include $23 million ($8 million in state funds) that the Senate recommended to increase access to dental services for adults insured by Medicaid through a managed care program. The Legislature did support $1.6 million for local health departments that partner with nonprofit dental providers to expand services for seniors, children, uninsured low-income persons and adults enrolled in Medicaid. Also included was $2.7 million ($950,000 in state funds) to increase reimbursement rates for dental services provided to pregnant women.

The League supports funding to expand access to dental services for adults covered by Medicaid. Nationwide, the erosion of private dental insurance, the increased cost of dental care, and the limited number of dentists accepting public insurance have resulted in increased emergency room visits related to dental emergencies and barriers to employment.

Healthy Michigan Plan: The Legislature provided $110.6 million in state funds for the Healthy Michigan Plan to address the decline in federal match from 100% to 95% effective January 1, 2017. However, the final budget reduces the Healthy Michigan Plan call center by $8.1 million ($1.6 million in state funds), and reduces marketing and advertising for the program by $1 million ($500,000 in state funds).

The League supports funding for the state required contribution to the Healthy Michigan Plan and strongly opposes limits on outreach for the program. By meeting the new state match, the Legislature ensures that the program will continue to cover more than 600,000-plus enrollees. The Healthy Michigan Plan should be available to all who qualify, and the Department of Health and Human Services (DHHS) should be encouraged to reach out to currently uninsured individuals.

Specialty Drugs for Medicaid Enrollees: The Legislature approved an additional $105 million ($30 million in state funds) for new specialty drugs for Hepatitis C and cystic fibrosis treatment—down nearly 50% from the governor’s recommendation. With this added funding, total spending for the two drugs is expected to top $300 million next year, including $110 million in state funds. The Legislature also rejected the governor’s proposal for a specialty drug reserve fund of $86 million to cover costs associated with other specialty drugs in the pipeline.

The League supports adequate funding for specialty drugs for Medicaid enrollees. These new drugs, while expensive, have the potential to prolong life, and in the case of Hepatitis C, potentially provide a cure.

Integration of Physical and Behavioral Health Services: The Legislature rejected budget language proposed by the governor that would have transferred funding for all mental health and substance use disorder services for Medicaid and Healthy Michigan Plan beneficiaries to Medicaid Health Plans by September 30, 2017. New budget language was adopted that establishes a workgroup to make recommendations on how to integrate services. The budget also requires legislative authorization before funds are transferred, and provides for pilot programs.

The League supports the Legislature’s initiative to set up a thoughtful process to determine the best way to integrate physical and behavioral health services, and was a member of the DHHS behavioral health workgroup that addressed the issue.

Selected Medicaid Provider Rates: The final budget does not include the $21.3 million ($7.4 million in state funds) approved by the Senate for a 6% increase in rates for Medicaid primary care physicians. However, an increase of 15% was approved for private duty nursing services for persons under the age of 21 covered by Medicaid.

The League supports increased Medicaid primary care provider rates. Access to primary care is a problem in both rural and some urban areas, and addressing low Medicaid rates for primary care physicians is a critical step toward preventive care for families and individuals. The League also supports increases for private duty nurses for Medicaid beneficiaries as a way to improve the quality of care for children and adults with complex medical needs and allow them to remain in the most homelike setting possible.

Human Services

Food Assistance: The final budget does not include a House proposal—adopted through a bipartisan vote—to draw down approximately $138 million in federal food assistance dollars with an investment of only $3.2 million in state funds. If adopted, Michigan would have been able—at a very small state cost—to restore cuts in food assistance for about 150,000 families, reductions that occurred in 2014 when the state opted to not participate in the federal “Heat and Eat” program.

The League strongly supported state funding for the Heat and Eat program, as well as the elimination of the state asset test for food assistance.

Family Independence Program: The final 2017 budget adopted by the Legislature perpetuates the chronic underfunding of state income assistance programs, including the Family Independence Program: (FIP).

  • The Legislature rejected the governor’s proposal to expand the annual clothing allowance for children in families receiving FIP from $140 per child to $200 at a total cost of $6.1 million in federal funds, although $3.4 million was provided to expand the allowance to all FIP children—not just those living with a relative or others not receiving FIP.
  • The Legislature took no steps to reverse state policies that have resulted in a precipitous drop in the number of families eligible for FIP—including strict lifetime limits and the sanctioning of an entire family if one child is truant.

The League supports an expansion of the school clothing allowance. The League continues to oppose state policies that create deeper poverty and hardship for children, including more stringent FIP lifetime limits and sanctions which have resulted in many families failing to receive needed assistance, with caseloads falling from nearly 80,000 families in 2011 to only 25,000 in 2016.

Child Abuse and Neglect: The final budget includes $6.1 million in one-time federal funding to expand the Parent Partner and Family Reunification Programs—down from the governor’s recommendation of $10 million. The goals of the programs are 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 League strongly supports programs to prevent child abuse and neglect and strengthen families. While the number of victims of child maltreatment has been climbing, funding for prevention has largely declined or remained stagnant.

Child Care and Early Education

Child Care: The final budget included $7.7 million in federal funds for a modest increase in the initial eligibility level for subsidized child care. At 121% of poverty, Michigan currently has one of the most restrictive child care eligibility levels in the country, and the 2017 budget will increase eligibility to 125% of poverty. Also included is $8.1 million for half-year funding of child care eligibility for Flint children ages 0 to 3 in families with incomes of 300% of poverty or less—with the possibility that additional funds could be transferred from the Flint Emergency Reserve Fund if needed. The Legislature did not address the reality that Michigan is one of only a handful of states nationwide that is not drawing down all federal child care funds to which it is entitled.

The League supports an increase in child care eligibility to 150% of poverty as well as increases in payment levels and access to high-quality child care. Statewide, the number of low-income families receiving child care subsidies fell by nearly 75% in the last decade—from 63,000 in 2006 to only 17,000 in 2015. Child care funding that communities and businesses need to keep low-wage parents on the job fell from $460 million to $105 million. The decline is partly the result of Michigan’s low child care eligibility and provider payment levels.

Great Start Readiness Program: The Legislature provided continuation funding for the Great Start Readiness preschool program ($243.6 million), allowing for 63,000 half-day slots for low-income 4-year-olds. Children are eligible if their family’s income is below 250% of poverty (300% if all children at 250% are served), with the priority given to children with the greatest needs.

The League strongly supports the state’s continued investment in preschool opportunities for 4-year-old children from low-wage families, as well as an expansion—on a pilot basis—to 3-year-olds.

K-12 Schools/Education

Per-Pupil Spending:

  • The Legislature retained the governor’s per-pupil increase of between $60 and $120, with districts receiving the lowest payment per pupil receiving the largest increases. The minimum per-pupil payment will increase to $7,511, while the maximum will rise to $8,229. This year, the difference between the highest- and lowest-funded districts is $778—down from a gap of $2,300 when Proposal A was first adopted.
  • The final budget includes the $72 million recommended by the governor to pay the additional foundation allowance costs associated with diverting Detroit Public Schools’ property tax revenue to pay off the district’s debt.

The League supports school funding levels that increase the quality of education, mitigate the impact of inflation and fixed costs on school operating budgets, and increase funding equity. Two of every 3 dollars in the School Aid budget are used to support per-pupil payments, which are the primary source of funding for school operations. Part of the challenge facing school districts has been declining enrollment, in part the result of the growth of charter schools.

Funding for At-Risk Students: The final budget approved by the Legislature did not increase funding for high-needs students—rejecting a House increase of $18 million for a small number of districts that are currently not eligible for At-Risk program funding, but have more than 50% of their students eligible for the free lunch program due to family income below 130% of poverty (about $26,000 a year for a family of three). Total funding for the program is maintained at the current year level ($379 million). Ongoing funding of $5.6 million is available for adolescent teen health centers and $5.2 million for hearing and vision screenings in schools.

The League supports full funding of the At-Risk program. In the current year, the Legislature approved an increase of $70 million for at-risk students—the first increase in over a decade. By statute, districts are supposed to receive a set amount of At-Risk dollars based on the number of children receiving free breakfast and lunch (135% of poverty). However, because the At-Risk program has been underfunded by a total of $1.9 billion since 1995, districts receive much less. Fully funding the At-Risk program this year would have cost an estimated $134 million more than was appropriated.

Reading by Third Grade: The final budget reduces funding for this year’s initiative to improve reading by third grade by $2.5 million, from $26.4 million to $23.9 million, through the elimination of pilot projects and one-time funding. The largest component of the initiative—funding for additional instructional time for children who are behind in reading—is retained at $17.5 million. Also included are funds for early literacy screenings, teacher coaches and professional development.

The League supports state investments in early literacy, including expanded instruction time and professional development for teachers. The League also supports early intervention and early childhood education programs that give children a jumpstart before they enter the schoolhouse doors.

Lead Testing in Schools Statewide: The Legislature approved $4.5 million in state funds (in the budget of the Department of Education) to reimburse school districts that choose to test their water for lead levels, with a cap of $950 per school building. The governor’s budget included $9 million in the School Aid budget for lead testing in schools statewide.

The League recognizes that lead exposure—from water, paint, demolition debris or other sources—is a threat in many areas of the state, and supports a statewide approach to lead exposure prevention, abatement and amelioration.

Adult Education:

  • The Legislature expanded eligibility for adult education to adults age 18-19. Currently, adult education is available for persons age 20 and over, and the governor had proposed expanding eligibility to adults age 18-19 and to high school students and out-of-school youths under age 18. While the final budget’s expansion puts less strain on adult education providers’ budgets than the governor’s proposal, it still increases the likelihood that some adult education programs will be strapped for money to the degree that they cannot effectively serve their priority population (individuals 20 years of age and over).
  • The Legislature followed the governor’s lead by continuing to fund adult education at $25 million, the same amount as last year. This is despite the demonstrated need for more funding, as the League and adult education providers have shown that fewer students in Michigan are enrolling in and completing adult education programs and many counties have cut their programs due to a shortage of money.

The League opposes the expansion of adult education eligibility to any new groups without concurrent additional funding to providers to accommodate the increase in students. The League also recommends an increase of at least $10 million in adult education funding. At an estimated cost of $1,240 per student, this would enable 8,000 more students to be served, and would enable adult education to serve the equivalent of 10% of students age 25-44 without a high school diploma.

Postsecondary Education

Financial Aid:

  • The Legislature added $4.5 million in new funding for the Tuition Incentive Program (TIP), which serves students from households that are eligible for Medicaid, bringing the total funding for the program to $53 million.

The League supported the increase in funding for the TIP, as it is specifically targeted to students from low-income households.

  • Neither the governor nor the Legislature included funding for the Part-Time Independent Student Grant, which serves individuals who have been out of high school for more than 10 years and/or are over 30 years of age. This grant had been included in the 2016 Community Colleges budget, but was cut from the final budget in conference committee. The failure to include funding for the grant in 2017 means that the upcoming school year will be the seventh year in a row that there is no state financial aid to help this population attend a community college or public university.

The League supports reinstating and funding the Part-Time Independent Student Grant to help older students, many of whom are low-paid workers raising families.

  • The final budget includes just under $1 million in new funding for the Michigan Tuition Grant, a means-tested grant that helps students attend private not-for-profit institutions. No additional funding was provided for the Student Competitive Scholarship which is based on both merit and need.

The League supports keeping these two financial aid programs strong, as they are accessible to students from low-income families in addition to those from financially secure families.

Tuition Restraint: Tuition restraint is a limit on the amount a university may increase tuition and fees annually and still receive full funding from the state. For 2017, the Legislature increased the cap by a smaller amount than recommended by the governor, 4.2% vs 4.8%, and added language that universities that exceed the cap will not receive capital outlay funds (for school construction projects) in the 2018 or 2019 budget years and that the Legislature may adjust the appropriations for those universities.

The League supports tuition restraint as an attempt to keep tuition from rising too quickly, but prefers that Michigan undertake other strategies to actually bring tuition down and reduce student debt. Because much of the cost burden of supporting public universities has been shifted from the state to students, reducing tuition can only be done if the state restores the university funding that has been cut over the past decade.

Community Revenue Sharing

Statutory Revenue Sharing for Cities, Villages and Townships: The Legislature maintained the funding amount ($248.8 million in restricted funding) and statutory revenue sharing distribution formula used in the current year, which makes all cities, villages and townships (CVTs) eligible for 100% of the payment they received in the current budget year so long as they meet already established accountability and transparency requirements. This does not do enough to reverse the trend of disinvestment, as Michigan currently funds statutory revenue sharing at less than 30% of the statutorily set level.

County Revenue Sharing and Incentive Program: The Legislature approved a total of $217.3 million in restricted funding, expanding county revenue sharing to two newly eligible counties and providing a 1.0% increase to all eligible counties. In the 2017 budget year, 78 counties are eligible for state-paid county revenue sharing, up from 76 in the current year.

The League supports full funding of statutory and county revenue sharing. The increase provided to counties is a step in the right direction to start reversing years of disinvestment in our local communities, but CVT revenue sharing is still woefully underfunded. While holding CVTs harmless is preferable over cuts, more must be done to provide the increases that these municipalities require.

Corrections

Mental Health Services: The Legislature approved approximately $1 million for an additional nine full-time mental health care staff positions—below the governor’s recommendation of 17 new full-time mental health services positions in the 2017 budget year.

The League supports increased funding for prisoner mental health care and substance use disorder treatment. An estimated 20-25% of prisoners have been diagnosed with severe mental illness, and many more with mental health problems. Nine of every 10 prisoners with severe mental illness also suffer from substance use disorders, and upwards of 65% of those with mental health symptoms do not receive treatment.

Reentry Services: The final budget did not include increases for contract rebids to adjust for inflation as proposed by the governor; however, an additional $4.5 million was appropriated as “criminal justice reinvestment” in order to expand current evidenced-based reentry programs along with $500,000 for medication-assisted substance abuse programs, and $2 million for expansion of the Vocational Village pilot program that connects prisoners with employers that provide job training for future employment.

The League supports efforts to adequately fund and improve reentry programming and advocates for further funding geared towards reducing recidivism. Currently over 50% of the prison population is made up of probation and parole violators.

It is time for earned sick leave in Michigan

pdficonJune 2016
Senior Policy Analyst, Peter Ruark

Michigan should enact an earned sick leave law. This would help low-paid workers keep their jobs, increase productivity and reduce employee turnover, and protect the health of other employees and the public.

Many middle- and upper-income workers have the ability to take time off for sickness or family needs. But for many low-paid workers in Michigan, becoming sick can cause loss of money or even a job. It can put a worker in the difficult position of having to decide whether to stay home and lose wages, or to go to work and risk becoming sicker, work less productively and expose coworkers (and in many cases the public) to illness. Parents may feel pressure to forgo needed doctor checkups and medical care for themselves or their children because they cannot afford to lose the wages due to absence from work. They may even send their child to school sick because they cannot afford to stay home to take care of them.

An earned sick leave law in Michigan would require most employers to bank sick time for their workers based on the number of hours they have worked. Several cities and states have already passed sick leave laws and it is time for Michigan to do the same.

Its time for earned sick leave in michiganWho Would Benefit From an Earned Sick Leave Law?

More than 1.7 million (44%) Michigan workers cannot take time off with pay when they or one of their children are ill.1 This is true for 55% of Michigan’s Hispanic workers, 46% of African-American workers, 67% of workers in service occupations and 78% of workers who work less than 35 hours per week.2 (See appendix for more figures on earned sick leave by demographic.)

Missing work due to sickness causes not only a loss of wages for workers without sick leave, but can also lead to a loss of employment. Working mothers are especially at risk. In a 2013 survey commissioned by Oxfam America, 1 out of 7 low-wage workers and 1 out of 5 low-wage mothers reported losing a job in the past four years because they were sick or needed to care for a family member.3 Such job instability and its resulting stress can harm the social and intellectual development of children who already are at risk due to poverty.4

Workers without earned sick leave have reported working while in immense pain, delaying needed treatment, leaving sick children alone at home or in the hospital, spreading germs in the workplace and among the public, and receiving threats of retaliation from their employers for caring for a sick family member rather than going in to work.5 The fact that so many workers in the service industries do not get earned sick days indicates that an earned sick leave law will protect public health in addition to family well-being.

Its time for earned sick leave in michiganWould an Earned Sick Leave Law be Good for Michigan Businesses?

A study of Connecticut’s earned sick leave law shows that while businesses were concerned about a negative impact, for the most part the law imposed minimal burdens.6 Employers indicated that most employees used fewer sick days than available and appeared to save up their sick days for when they were really needed; only two-thirds of workers had used the sick days available to them and workers took an average of four days per year.7 The study also found that only 10% of employers reported increased payroll costs of 3% or more, and that administrative costs of tracking earned sick leave were minimal.8 Although business groups in Connecticut had initially strongly opposed the legislation, 40% of employers were very supportive of it 18 months after the law took effect and 37% were somewhat supportive.9 These figures suggest that although business groups in Michigan oppose enactment of a mandatory earned sick leave law, the effects of such a law would be far less dire (and more beneficial to the state overall) than the warnings of these opponents would suggest.

Michigan Should Enact an Earned Sick Leave Law

The United States is 1 of only 3 out of 22 high-income countries that do not require employers to provide earned sick leave that would cover a five day illness. Most of the countries guarantee at least five days of sick leave per year, while a few have social insurance programs to cover both short-term and long-term leave.10 In the absence of movement by Congress to pass earned sick leave bills that have been introduced, and because Michigan now has a preemption law prohibiting localities from enacting earned sick leave on their own, Michigan should establish earned sick leave statewide.11

Its time for earned sick leave in michiganFive states and Washington, DC have sick leave laws. In 2011, Connecticut became the first state to enact such a law, and California and Massachusetts followed suit with laws that took effect in July 2015. Oregon’s law took effect in January 2016 and Vermont’s law will begin in January 2017.12 Massachusetts’ law was enacted through a ballot initiative, while earned sick leave laws in the other states and Washington, DC were enacted through legislation.13

In Michigan, both legislative chambers have bills pending that would require all employers to provide earned sick leave at a rate of one hour for every 30 hours worked, up to 40 hours per year for employees of a small business (ten employees or less) and up to 70 hours annually for all other workers. The bills have strong public support: A recent poll shows 86% of Michigan voters agree that every worker should be able to earn sick days in order to take time off without losing pay, and 83% would be supportive of the Legislature passing a bill that would allow workers to earn one hour of sick time for every 30 hours worked.

Michigan currently has a preemption law that prohibits localities from enacting their own earned leave laws, underscoring the need to do this on the statewide level. Our state ought to follow the initiative of the five states and Washington, DC that have already passed such laws, and do what is right for Michigan workers and their families, businesses and the public.

Appendix

Endnotes

  1. Institute for Women’s Policy Research analysis of the 2012-2014 National Health Interview Survey and the 2014 American Community Survey.
  2. Ibid.
  3. Oxfam America, Hard Work, Hard Lives: Survey Exposes Harsh Reality Faced by Low-Wage Workers in the US, 2013, as referenced in Ben-Ishai, Liz, Access to Paid Leave: An Overlooked Aspect of Economic & Social Inequality, Center for Law and Social Policy, April 14, 2014. (www.clasp.org/resources-and-publications/publication-1/2014-04-09-Inequities-and-Paid-Leave-Brief_FINAL.pdf.)
  4. For more on this topic, see Babcock, Elizabeth, Using Brain Science to Design New Pathways Out of Poverty, Crittenton Women’s Union, 2014. (www.liveworkthrive.org/research_and_tools/reports_and_publications/EF_Report.)
  5. Family Values at Work, Voices from the Front Lines: Real Stories of American Families Living Without Paid Leave—and Glimpses of a Brighter Future, June 2014.(http://familyvaluesatwork.org/wp-content/uploads/2014/05/FVAW-2014-0005_FINAL_4web_spreads.pdf.)
  6. Appelbaum, E., R. Milkman, L. Elliot and T. Kroeger, Good for Business? Connecticut’s Paid Sick Leave Law, Center for Economic Policy Research, March 2014. (https://cepr.net/documents/good-for-buisness-2014-02-21.pdf.)
  7. Ibid.
  8. Ibid.
  9. Ibid.
  10. Heymann, Jody and Hye Jin Rho, John Schmitt and Alison Earle, Contagion Nation: A Comparison of Paid Sick Day Policies in 22 Countries, Center for Economic Policy Research, May 2009. (www.cepr.net/documents/publications/paid-sick-days-2009-05.pdf.)
  11. One bill in Congress is the Healthy Families Act introduced by Rep. Rosa DeLauro (CT). For more information on this bill, see National Partnership for Women and Families, Fact Sheet: The Healthy Families Act, February 2015. (www.nationalpartnership.org/research-library/work-family/psd/the-healthy-families-act-fact-sheet.pdf.)
  12. A Better Balance, Overview of Paid Sick Time Laws in the United States, updated March 2, 2016. (www.abetterbalance.org/web/images/stories/Documents/sickdays/factsheet/PSDchart.pdf; accessed on March 2, 2016.)
  13. National Partnership for Women and Families, State and Local Action on Paid Sick Days, November 2014. (www.nationalpartnership.org/research-library/campaigns/psd/state-and-local-action-paid-sick-days.pdf.)

 

Review tax expenditures to help fix Michigan’s broken revenue stream

pdficonMichigan has a budget problem, and simply put, there just isn’t enough money to go around. Michigan has experienced crisis after crisis—the Great Recession, nearly record-high unemployment, municipal financial emergencies, the city of Detroit’s bankruptcy, the Flint water crisis and the financial struggles of Detroit Public Schools to name a few. In attempting to fix them, the state has relied on budget cuts, temporary Band-Aids or one-time pots of money. It hasn’t worked. Michigan’s disinvestment in its schools, infrastructure, communities and people needs to be reversed, and it cannot do so without more revenue.

Revenue tax expenditures chart 1Unfortunately, at the same time that the state needs more money, policy trends have continually pulled more out of our state budget. In recent history, we have spent more in state and local tax credits, deductions and exemptions each year than we do in total budget spending from state general and restricted funds—a difference of roughly $4 billion in 2015. On top of this, instead of increasing revenues to cover increasing costs, the Legislature shifts around our revenue streams, leaving potential shortfalls to be resolved with budget cuts. Lawmakers need to have a better idea of how much money we are failing to collect, review existing tax expenditures and earmarks to make sure they are still good policy, and provide accountability for new tax breaks and other policy changes.

Revenue tax expenditures chart 2State Revenues Can’t Keep Up

Michigan’s revenues have not been able to keep up with inflation. In terms of actual dollars, total state General Fund and School Aid Fund revenues anticipated for budget year 2017 have grown about 22.7% since 2010, the trough of Michigan’s recent recession. However, when adjusted for inflation, the state is 17.7% below 2000 levels. What is most interesting though is that in actual dollars, for budget year 2017, state General Fund dollars are anticipated to be 4.4% below 2000 levels despite the fund’s more robust growth since 2010.

Revenue tax expenditures table 1While state revenues continued to be negatively affected by the decade-long recession felt in Michigan, the state became increasingly reliant on federal funds to help balance its budget. In 2001, the state General Fund and federal funds contributed nearly equal amounts to the state budget at 26.4% and 27.1% respectively, but the trends have diverged significantly since. Even after the federal government withdrew the American Recovery and Reinvestment Act (ARRA) funds following 2011, federal revenues still contribute over 40% of the funds necessary for Michigan’s budget, while state General Fund revenues have dropped to below 20%. Over the past 10 years, our total budget has grown by 29.7%, and federal funds appropriated in our state budget have grown by 75.1% in that same time period, while state spending from state resources has only grown by 8.8%.

Revenue tax expenditures chart 3It would be easy to blame Michigan’s revenue problems on the economy, but we are in our sixth year of economic recovery and still struggling. Our situation has been compounded by tax changes that have done little to help and even caused harm, including a tax reform that largely benefited businesses but meant less money for Michigan’s people and the state, and policy shifts that have made more of our revenue streams restricted in use. Michigan needs to take a hard look at the money it foregoes due to preferential tax treatment to ensure that Michigan has a fair and adequate revenue system.

Tax Expenditures: Not Just Loopholes Anymore

Revenue tax expenditures chart 4Tax expenditures, commonly called loopholes, are broadly defined as revenue foregone because of preferential tax treatment in the form of credits, deductions and exemptions, or lower tax rates given to individuals and businesses. The state generally divides them into five main categories: business privilege, consumption (such as sales and use taxes or tobacco taxes), personal income, transportation and local/property. These tax expenditures are often called silent spending because, like appropriations, they allocate resources for public purposes but do so through the tax code rather than through the annual state budget process. They have a significant impact on the annual budget process as they reduce or eliminate revenue that would have otherwise been collected, but are not regularly reviewed and evaluated.

Typically, these tax credits, deductions and exemptions are used for two purposes. First, they redistribute or reduce the impact of taxes on low-income individuals and businesses. For example, the Homestead Property Tax Credit helps lower property taxes and makes living in Michigan more affordable for residents with high property taxes. Additionally, the constitutional sales tax exemption on food helps level the playing field for lower income families as they tend to spend a higher proportion of their incomes on food, and without the exemption, would also spend more of their money on taxes. However, even with this targeted tax relief, Michigan’s lower-income families still pay nearly twice the tax rate of the wealthiest in terms of state and local taxes.

Revenue tax expenditures chart 5The second purpose of tax expenditures is to influence the behavior of individuals or businesses. The federal and state Earned Income Tax Credits are only provided to individuals who have income from a job or self-employment and are intended to encourage work while helping individuals make ends meet. And local property tax abatements encourage either the establishment of or the renovation or replacement of various business facilities (e.g., industrial facilities tax abatements or obsolete property rehabilitation abatements).

While they are commonly called loopholes, most true “loopholes” do not exist. The foregone revenue resulting from these credits, exemptions or deductions is not an unintended consequence of tax changes or unintended tax avoidance methods. Most of these expenditures were purposely written in the tax code. However, other intended policy changes can have tax implications whether intended or not. For example, changes made in 2012 to the Insurance Code resulted in automobile insurance providers being able to claim a tax credit amounting to $60 to $80 million per year. But this unintended consequence was not discovered until 2016. However, once these tax expenditures are written into the tax code, they are difficult to be unwritten, and their effect often grows.

Revenue tax expenditures chart 6Continued Erosion of the General Fund

Another trend in Michigan fiscal policy is to make funds restricted in use. These revenues are restricted by the State Constitution or state statute, or otherwise are only available for specified purposes, and generally remain in the restricted fund if they go unused during a budget. These include most fee revenue, the School Aid Fund and most funds that are used for transportation purposes. Most of the state-sourced revenue in Michigan’s budget is restricted funds.

Revenue tax expenditures table 2Over the past five years, the Legislature has passed two main packages that have continued the trend in making funds restricted: the Personal Property Tax repeal and the roads plan of 2015. The repeal of the Personal Property Tax was originally enacted in 2012, amended in 2014, and made effective by a ballot initiative in August of 2014. Most of the discussion centered on how to reimburse schools and local units of government for the revenue lost due to the repeal, and the mechanism for making them whole was dedicating some of the currently unrestricted Use Tax revenue exclusively for that purpose.

Revenue tax expenditures chart 7Furthermore, in 2015, lawmakers enacted a road funding plan that included some new restricted revenue in tax and fee increases, but also dedicated a significant amount of currently unrestricted income tax revenue to transportation purposes. Ultimately, this will shift $600 million annually away from our General Fund to be used for road repairs and maintenance.
These two changes are anticipated to divert over $800 million away from our state General Fund by budget year 2020, potentially squeezing our budget and jeopardizing other funding priorities. Once changes to the Homestead Property Tax Credit are taken into consideration, the diversion and foregone revenue total around $1 billion. This will have a long-term, lasting and detrimental impact on our state budget.

Where to Go from Here?

Michigan has already endured enough crises—the state’s dissolution of two public school districts, the city of Detroit bankruptcy, the Flint water crisis, the Detroit Public Schools financial crisis, in addition to many other schools and municipalities that are struggling—and is one more crisis away from not being able to fund the basic services Michigan residents rely on. Policymakers are intentionally stifling the state from being able to invest in its infrastructure, schools, people and businesses. Michigan must take a look at its inadequate revenue streams to determine where there is room for improvement.

 

Revenue tax expenditures chart 8Stop the erosion of state funds: Every year, the state nickels and dimes away at state funds without regard to—or sometimes knowledge of—the possible budget implications. These changes include new tax breaks, tax policy changes and shifting funds to pay for different services and programs. The funding that is left is often strained by growing budgetary pressures. Lawmakers should review existing restricted fund streams to ensure that they are sufficient to meet the state’s needs. Legislators must also understand the costs of each tax policy change to make sure that the benefit actually offsets the cost to other important state programs.

Review existing tax expenditures: Michigan lawmakers need to determine whether the benefits of various forms of preferential tax treatment still outweigh the costs to the state. While some of these credits, deductions and exemptions continue to suit the purpose for which they were intended, many go unchecked and simply cost the state money with little return. Michigan does have an annual report on state tax expenditures, but it does not include vital information as to the funds affected, the history of the expenditure, or an analysis as to whether it is serving its purpose. The state should establish a process for reviewing these spending measures to ensure that they are still accomplishing set goals and that the loss of state revenue is justified. As part of this evaluation, expenditures that no longer meet their intended purposes—or are no longer necessary—should be eliminated.

Revenue tax expenditures chart 9Make tax relief strategic, measurable and adjustable: The truth is, no one really likes paying taxes. But we should not cut taxes simply for this reason. Tax benefits should be given for a reason, whether to balance the scales for lower-income individuals through the Homestead Property Tax Credit or to encourage specific behaviors like the Earned Income Tax Credit, and the outcomes should be measurable. New tax expenditures should include measures to allow lawmakers to determine their usefulness, such as expiration sunsets for periodic review, accountability measures, or clawbacks to reclaim money from recipients that do not comply with requirements.

Endnotes:

  1. Patricia Sorenson. Losing Ground: A Call for Meaningful Tax Reform in Michigan. Michigan League for Public Policy. January 2013. Rachel Richards and Alicia Guevara Warren. Enough is Enough: Business Tax Cuts Fail to Grow Michigan’s Economy, Hurt Budget. Michigan League for Public Policy. November 2015.
  2. Both the Personal Property Tax repeal and the 2015 road funding plan took parts of revenue streams currently devoted to the General Fund and made them restricted funding.
  3. State of Michigan, Department of Treasury. Executive Budget Appendix on Tax Credits, Deductions, and Exemptions: Fiscal years 2015 and 2016. 2014. Retrieved from http://www.michigan.gov/documents/treasury/ExecBudgAppenTaxCreditsDedExempts_FY_20152016_476553_7.pdf.
  4. Institute on Taxation and Economic Policy. Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, 5th edition. January 2015. Retrieved from http://www.itep.org/whopays/.
  5. David Eggert. Michigan Budget: Inadvertent Tax Break for Car Insurers Targeted for Repeal. Associated Press. February 20, 2016.
  6. Mary Ann Cleary and Kyle Jen. A Legislator’s Guide to Michigan’s Budget Process. House Fiscal Agency. October 2014.
  7. See House Fiscal Agency analyses for House Bills 6022 and 6024-6026 and Senate Bills 1065-1071 of 2012; Senate Bills 821-830 of 2014, and Ballot Proposal 1 of 2014.
  8. See Senate Fiscal Agency analyses for House Bills 4370, 4376-4378, 4614 and 4616 and Senate Bill 414 of 2015.
  9. Michigan League for Human Services. Silent and Stealthy: Michigan Gives Away $35 Billion a Year. April 2010.

 

 

 

Increase reforms and support services in Department of Corrections budget

Budget Brief JPG USE THIS ONEpdficonMichigan spends approximately $2 billion each year to house prisoners, with Department of Corrections spending accounting for 19% of the total state General Fund—more money than higher education spending. As the 2017 state budget negotiations heat up this month, sweeping reform is needed to safely reduce the prison population. The League supports evidence-based alternatives to incarceration along with reentry services that keep individuals from reoffending or violating conditions of probation and parole and successfully reintegrate prisoners and reunite families. The League’s priorities for 2017 include increased funding for mental health services, full funding for Hepatitis C drug treatment for infected prisoners, and investment in effective reentry programs that provide opportunities for education and training and connections to future employers.

BB CorrectionsSince the release of the governor’s budget proposal in February, the House and Senate have approved their own versions of the 2017 budget for the Department of Corrections (DOC). The second consensus revenue estimating conference will be held on May 17th, where state economists and budget experts will brief legislators on updated state revenue estimates and set final spending targets. It is expected that joint House/Senate conference committees will meet right after the May 17th conference to negotiate differences between the House and Senate versions and come to agreement on the final budget bill that will be voted on by both houses and ultimately approved by the governor.

This brief compares the Department of Corrections budget bills that were approved by the House and Senate with the governor’s executive budget recommendations made in February, and includes the League’s recommendations for the final budget.

Prisoner Healthcare

Hepatitis C Drug Treatment: The governor recommended $17.3 million for Hepatitis C treatment for Michigan prisoners—$3.4 million for 2017 on top of the $13.9 million already transferred into the 2016 budget to cover Hepatitis costs this year. In 2013, approximately 4,445 prisoners, or 10% of the prison population, tested positive for Hepatitis C. With approximately 1,000 prisoners released from prison each year, many prisoners with Hepatitis C will return to their communities still suffering from—and potentially spreading—the disease if not treated.

  • Senate: The Senate did not increase funding for Hepatitis C treatment.
  • House: The House agreed with the governor to provide funding, however at a lower level of $12.3 million.

The League supports the governor’s recommendation to provide adequate and humane care for prisoners, including medical treatment, along with protecting the general public from infection from untreated prisoners who return to their communities.

Mental Health Services: The governor included $2 million for 17 new employees to address waiting lists for mental health services in prisons. Approximately 1 in 5 prisoners currently receive some form of mental health treatment.

  • Senate: The Senate provided $1 million for nine new mental health employees and related services.
  • House: The House agreed with the governor to provide $2 million for 17 new employees and related services.

The League supports the governor’s funding level, which may bring the state closer to providing needed mental health services to the high proportion of mentally ill inmates. Prisons and jails house more mentally ill people than psychiatric hospitals in Michigan.

Substance Abuse Services for Probation Violators: The governor recommended $750,000 for a new 30-day program to prevent relapse and serve as an alternative to residential treatment for prisoners on probation that violate due to substance use. Approximately 250 probation violators would be treated.

  • Senate: The Senate did not include funding for this initiative.
  • House: The House agreed with the governor and provided the full recommended amount of $750,000.

The League supports the governor’s recommendation to improve rehabilitation programs for parole violators.

 

Flint and beyond: Cities in crisis need more funding from the state

Budget Brief JPG USE THIS ONEpdficonAs the Legislature rushes to finalize the state’s budget, the League continues to prioritize funding for municipalities that are struggling because of a long economic downturn and inadequate state support. The League supports the emergency services provided to Flint, as well as ongoing and long-term state efforts to help identify and treat developmental delays in children and other related health issues for all residents. To prevent future crises, the League also supports full funding of statutory and county revenue sharing, and urges lawmakers to evaluate and reform Michigan’s tax system to ensure that there are adequate resources to keep children and families healthy and safe.

The recent Detroit bankruptcy, the problems facing Detroit Public Schools and the ongoing water crisis in the city of Flint have drawn national attention, but municipal finance problems are not unique to Detroit and Flint and are not even unique to Michigan’s urban centers. Falling property values during the Great Recession resulted in decreased property tax revenue, compounded by state government’s continual cutting and underfunding of statutory revenue sharing. While lawmakers do need to urgently help resolve the Flint water crisis and take care of the kids and people it harmed, they must also think of the state as a whole to ensure that other municipalities do not fall victim to similar problems.

BB Flint and Beyond graphic 1The House and the Senate have both voted out their separate 2017 Treasury budget bills which include revenue sharing, and the Senate has approved a current year budget supplemental to provide $128 million for some additional services to the city of Flint that is awaiting House action. On Tuesday, May 17th, the May Consensus Revenue Estimating Conference will be held to allow state budget experts and economists to reassess expected state revenues. From there, the budget is on a fast track, with legislative and administration leadership setting departmental spending targets and House/Senate conference committees meeting right after the conference to reconcile the differences in their budget bills.
This report outlines the League’s continued support for Flint and our priorities in the 2017 budget to ensure that other municipalities have the funding they need in order to avoid a future financial—and public health—crisis.

Flint Water Crisis

Just before our current budget year began (October 1, 2015), the state was mired in a crisis. High blood lead levels had been found in an increased number of Flint children, caused by high lead levels pouring from the faucets in their houses. The exposure of the residents of an entire city to lead toxins is a disaster that was preventable and compounded by state government’s denial and delayed response. This crisis now calls for an aggressive and long-term state response, and current year and future budget considerations are being made to address it.

Enacted 2016 Supplemental Budget Funding

Enacted Emergency Provisions: After the water crisis became too severe to be ignored, Michigan lawmakers did come to Flint’s aid, enacting a number of emergency funding provisions totaling $67.4 million ($59.8 million state funding). Much of this early aid focused on getting much-needed water-related resources to Flint residents, including bottled water, lead-removing water filters, funding to reconnect to the Detroit Water and Sewerage Department, and a partial credit to residents on bills for the water they are unable to use. Also included in some of these early budget supplementals was funding for additional school nurses, Early On service coordinators, testing for lead in both blood and water, and nutrition services through the WIC (Women, Infants and Children Special Supplemental Nutrition) program.

Proposed 2016 Supplemental Budget Funding Awaiting Action

Educational Services: The governor recommended $25.6 million ($6 million state funding) for half-day child care services for children up to age 3 regardless of income to help mitigate developmental delays; intervention services for children with lead-associated developmental delays; and nutrition programs to ensure access to healthy fruits and vegetables. An additional $9.2 million (all state funds) was recommended by the governor for Early On services to children under 5 years old who did not participate in the Great Start Readiness Program.

  • Senate: The Senate agreed with the governor on both the $25.6 million for child development and nutrition services and $9.2 million for early intervention services through Early On.
  • House: The House only supported the governor’s recommendation of $9.2 million for Early On and has not yet considered $25.6 million for child development and nutrition, indicating that it would consider Flint assistance during its deliberations on the 2017 budget.

Health and Human Services: The governor proposed $8.3 million ($2.2 million state funding) for food bank resources including use of mobile food banks, evidence-based home visitation programs to provide parenting resources and identify developmental delays, and intensive services for children.

  • Senate: The Senate agreed with the governor’s recommendation of $8.3 million for these resources and also provided $321,000 for the increased costs of department-contracted private child welfare agencies providing increased care and supervision of foster care children.
  • House: The House has not yet approved funding for these services, indicating that it would consider Flint assistance during its deliberations on the 2017 budget.

The state has also received approval from the federal government to expand Medicaid services in Flint to children up to 21 years old and pregnant women who were served by the Flint water system since April 2014, and who have income of up to 400% of the federal poverty level ($80,360 for a family of three). The federal waiver was approved May 3, 2016, and enrollment began on May 9, 2016, after the necessary state funding was found within the existing budget.

Infrastructure Updates: The governor proposed $25 million (all state funds) to begin replacing lead service lines in high-risk, high-hazard Flint homes.

  • Senate: The Senate agreed with the governor’s $25 million recommendation for lead service line replacement.
  • House: The House has not yet approved funding for these services, indicating that it would consider Flint assistance during its deliberations on the 2017 budget.

The League has supported the emergency services provided to Flint, but also recognizes the need for ongoing and long-term services to help identify and treat developmental delays in kids and health issues related to the Flint water crisis. The Flint water crisis is a canary in a coal mine, and infrastructure problems like Flint’s exist in municipalities statewide. Michigan must evaluate and reform its tax system to ensure that the state has adequate resources to fix the problems in Flint as well as prevent future crises statewide.

Funding for Michigan Cities and Local Governments in the 2017 State Budget

Constitutional Revenue Sharing: The governor recommended $781.5 million for constitutional revenue sharing, which appears to be a $2.4 million reduction from current year appropriated amounts but is actually a 3.9% increase above the January 2016 Consensus Revenue Estimating Conference (CREC) estimate for the current year. Under Michigan’s Constitution, 15% of the sales tax levied at the rate of 4% is distributed to all Michigan cities, villages and townships (CVTs) on a per capita basis. This is an automatic, mandatory payment and is not subject to annual appropriations. Adjustments are made based on the January and May CREC estimates, and the amounts appropriated are based on these estimates. However, actual payments will be based on the amount of sales tax collected.

  • The House and the Senate agreed with the governor’s recommendation.

Cities, Villages and Townships Revenue Sharing: The governor proposed eliminating $5.8 million in one-time restricted sales tax revenue and removing the per capita distribution component. By doing so, 101 cities, villages and townships (CVTs) that were included in the current year distribution would not receive a payment next year, and CVTs that were eligible for a higher per capita payment would be reduced to the previous appropriation level.

Michigan’s statutory revenue sharing program has a long history. In the late 1990s, the statute was amended to implement a new distribution formula. However, since budget year 2002, actual appropriations have been routinely well below the full funding guideline, and changes in the formula have completely eliminated statutory revenue sharing for 1,033 CVTs. Actual statutory revenue sharing was last used in budget year 2011. Currently, all allocations and distribution formulas are provided for in the annual appropriations bill, and 587 CVTs are eligible for a total of $248.8 million in revenue sharing in the current budget year.

  • The Senate reduced funding by 1.5% but maintains eligibility for all local units that are eligible for a payment in the current year.
  • The House retained current year funding levels to ensure that all CVTs eligible for a payment in the current year will be eligible for 100% of that amount in the next budget year.

County Revenue Sharing and County Incentive Program: The governor proposed increasing county payments by $467,500 in 2017 to accommodate two new counties (Alcona and Charlevoix) returning to state revenue sharing, as well as maintain full funding. In an agreement to balance the budget, county revenue sharing was suspended in the 2005 budget year. Counties created reserve funds with their own revenues from which they were allowed to draw an annual amount. Once their reserve funds were exhausted, the counties would be eligible for state revenue sharing payments equal to their final authorized withdrawal amount. In the current year, about 76 counties receive state revenue sharing payments, and seven counties still draw from their reserve funds.

  • Senate: The Senate provides funding for the newly eligible counties and increases payments to all eligible counties by 2%.
  • House: The House agreed with the governor.

Financially Distressed Cities, Villages and Townships: The governor recommended level funding of $5 million for a program that provides grants of up to $2 million for cities, villages and townships with signs of fiscal distress for projects that move the municipality toward financial stability.

  • The Senate and House agreed with the governor.

The League supports full funding of statutory and county revenue sharing. For too long lawmakers have shortchanged our struggling municipalities and counties, and it should come as no shock that many of them have fallen on financial hard times. The infrastructure and financial problems in Flint and Detroit are due in part to continued state disinvestment. While an immediate influx of state support in statutory revenue sharing is likely impossible, the state should at least maintain what has been provided in the current year and should start making strides to provide the increases that these municipalities require.

Budget funding for adult education, training will help workers and boost economy

Budget Brief JPG USE THIS ONEpdficonWith the 2017 state budget expected to be wrapped up by the end of May, the League continues to push for a strong postsecondary education system that enables lowpaid workers to increase their marketable skills while working and taking care of their families. The League supports financial aid for low-paid workers with families who are trying to acquire occupational skills and have been out of high school for more than 10 years, stronger tuition restraints for public universities coupled with additional funding, and increased investments in adult education (School Aid budget). Inadequate access to adult education negatively affects community colleges, because many students needing remediation will be required to take developmental education at the colleges rather than beginning their occupational training programs college-ready.

BB Budget funding for adult educationVersions of the 2017 Community Colleges and Higher Education budgets have already been passed separately by the House and Senate. At the Consensus Revenue Estimating Conference on May 17th, lawmakers will get an update from state budget experts and economists on state revenues that will inform the final budget spending targets. The Legislature is looking to complete the 2017 budget and send it to the governor by the end of May. Differences between the House and Senate budgets will be negotiated in joint conference committees, which will begin meeting soon after the May 17th conference.

This report examines the differences in postsecondary education and training in the budgets that were approved by the House and Senate and the primary decisions that will need to be made before the budget is finalized.

Financial Aid

Tuition Incentive Program: The governor’s Higher Education budget recommended $2 million in new funding for the Tuition Incentive Program (TIP), which serves students from households that are eligible for Medicaid, bringing the total funding for the program to $50.5 million.

  • Both the House and Senate agreed with the governor’s recommendation to add $2 million for the TIP.

The League supports the increase in funding for the TIP, as it is specifically targeted to students from low-income households.

Part-Time Independent Student Grant: Neither the Community Colleges budget nor the Higher Education budget proposed by the governor for 2017 included funding for the Part-Time Independent Student Grant, which serves individuals who have been out of high school for more than 10 years and/or are over 30 years of age. This grant had been included in the 2016 Community Colleges budget, but was cut from the final budget in conference committee. The failure to include funding for the grant in 2017 means that the upcoming school year will be the seventh year in a row that there is no state financial aid to help this population attend a community college or public university.

  • Neither the House nor the Senate added funding for the Part-Time Independent Student Grant.

The League supports funding for the Part-Time Independent Student Grant to help older students in either the Community Colleges or Higher Education budget.

Other Financial Aid Programs: There are two other grant programs in the Higher Education budget, both of which are means-tested based on the amount a family needs to meet tuition levels rather than on the family’s income. The Michigan Tuition Grant helps students attend private not-for-profit institutions and the Student Competitive Scholarship is based on both merit and need. The governor did not recommend increases for either of these grants.

  • Senate: The Senate added $404,000 for the State Competitive Scholarship and $748,800 for the Michigan Tuition Grant.
  • House: The House agreed with the governor’s recommendation to not add funding for the State Competitive Scholarship and adds $1,157,200 for the Michigan Tuition Grant.

The League supports keeping these two financial aid programs strong, as they are accessible to students from low-income families in addition to those from financially secure families.

Tuition Restraint

Tuition restraint is a limit on the amount a university may increase tuition and fees annually and still receive full funding from the state. The governor recommended increasing the cap from 3.2% to 4.8%, enabling universities to increase tuition and fees by a higher percentage than has been allowable in the past several years.

  • Senate: The Senate agreed with the governor’s recommendation to increase the cap from 3.2% to 4.8%, and added language that universities that exceed the cap will also not receive capital outlay funds (for school construction projects) in the 2018 or 2019 budget years.
  • House: The House agreed with the governor’s recommendation to increase the cap from 3.2% to 4.8% and added “or $500, whichever is greater” to the bill language.

The League supports tuition restraint as an attempt to keep tuition from rising too quickly, but prefers that Michigan undertake other strategies to actually bring tuition down and reduce student debt. Because much of the cost burden of supporting public universities has been shifted from the state to students, reducing tuition can only be done if the state restores the university funding that has been cut over the past decade.

 

 

More funding needed for low-income students and families in 2017 School Aid, Education budgets

Budget Brief JPG USE THIS ONEpdficonThe League continues to advocate for a high-quality education—from cradle to career—for all Michigan children and youths as the state budget moves quickly through the Legislature. The League’s priorities for 2017 include ongoing early education and intervention services for children exposed to lead in Flint, funding for lead testing in schools around the state, full funding of the At-Risk School Aid program, and an increase in income eligibility caps for child care services from 121% to 150% of poverty.

Both the House and Senate have approved their versions of the 2017 budget for School Aid and the Department of Education (MDE). State economists and budget experts will get together with legislators on May 17th to reevaluate expected state revenues and set final spending targets. Legislators are planning to send final budgets to the governor by the end of May, and joint House/Senate conference committees are expected to meet right after the May 17th revenue estimating conference to iron out differences between the House and Senate versions.

This report highlights the League’s priorities in the 2017 School Aid and MDE budgets approved by the House and Senate, with a focus on decisions that will need to be made before the budget is finalized.

BB Education Pre ConfK-12 Schools/Education

Flint Emergency Funds: In response to Flint’s lead exposure crisis, the governor recommended $10 million in state funds to cover the half-year costs of programs for the children of Flint, including additional school nurses and social workers, early childhood and nutritional services, an expansion of early intervention services for infants and toddlers through Early On, and preschool programs for all 4-year-olds—regardless of household income. Funding for the remainder of the year would come from a Flint Emergency Reserve Fund.

  • The Senate and House approved the governor’s funding recommendation for Flint.

The League supports the governor’s funding recommendations related to the Flint crisis in multiple state departments, including funds in the School Aid and MDE 2017 budgets. Investments in Flint in the 2017 budget are only a part of the solution to the long-term education, health, infrastructure, housing and economic needs in Flint and other Michigan communities. The state must evaluate and reform its tax system to ensure that adequate resources are available to fix the problems in Flint and prevent similar crises in other areas of the state.

School Lead Testing Statewide: The governor recommended $9 million in the 2017 budget for school districts around the state that voluntarily test their water for lead levels.

  • Senate: The Senate reduced funding for voluntary lead testing to $4 million, placing a cap of $1,000 per school building.
  • House: The House shifted the $9 million for school lead testing to the Department of Environmental Quality budget.

The League supports the investment of $9 million for lead testing in schools across the state. While the crisis in Flint must be a top priority, there are hot spots of lead exposure all over the state that must be addressed to avoid further harm to children.

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 2017, the governor recommended increases of between $60 and $120 per pupil, with districts receiving the lowest payments per pupil currently receiving the largest increases in the new budget.

  • Both the Senate and the House adopted the governor’s per-pupil increase for 2017.

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 allowance increased by 6%—less than half the rise in inflation at 14%.

Funding for Students Academically At Risk: The governor recommended that funding for districts with high numbers of students who are at risk academically be continued at the current year level ($379 million). Level funding is also included for adolescent health centers ($5.6 million) and hearing and vision screenings in schools ($5.2 million).

  • Senate: The Senate agreed with the governor on At-Risk School Aid funding, as well as funding for adolescent health centers and hearing and vision screenings.
  • House: The House agreed with the governor on funding for adolescent health centers and hearing and vision screenings. In addition, the House increased funding for the At-Risk program by $18 million to provide payments to a small number of high-risk districts that are currently not eligible under the state funding formula. To be eligible for the expansion, the affected districts must have more than 50% of their students eligible for the free lunch program due to family income below 130% of poverty, or $26,117 for a family of three. Finally, the House included $3.5 million for grants to at-risk districts (at least 50% eligible for free school meals) for year-round instructional programs.

The League supports full funding of the At-Risk School Aid program. The program provides state funds to schools based on the number of very low-income students enrolled. Children living in poverty often require additional services and resources to keep up with their peers, all of which comes at a higher cost to schools. Funds are available to districts based on a formula, but because the program has been underfunded by a total of $1.9 billion since 1995, schools receive less than they are owed and need. Fully funding the At-Risk program in 2017 would cost slightly over $100 million.

Adult Education: The governor recommends flat funding for adult education programs. In 2016, funding for adult education was increased by $3 million, to just under $25 million. While maintaining funding at current year levels, the governor recommended significant changes in eligibility and fund allocation for adult education programs, including the removal of the current cap on the payment amount per participant ($2,850 per full-time equivalent) and expanding adult education eligibility to individuals younger than 20 years of age.

  • The House agreed with the governor’s recommendation to not increase adult education funding and to remove the cap on the payment amount per participant, but did not support the recommendation to expand eligibility to individuals younger than 20 years of age.
  • The Senate agreed with the governor’s recommendation to not increase adult education funding, but did not support removing the participant payment cap or expanding eligibility.

The League supports an increase in adult education funding of at least $10 million, and opposes an expansion of eligibility until there is sufficient additional funding to cover the increased number of students. Low educational achievement is a drag on Michigan’s economy, and despite the ongoing need for adult education, funding has been slashed over the past 20 years—from $185 million in 1996 to below $22 million in 2015.

Child Care and Early Education

Flint Emergency Funds: The governor included $8 million in the upcoming budget year to cover a half-day of child care for children ages birth to 3 in Flint—regardless of income.

  • Both the Senate and House agreed with the governor on child care funding for Flint.

The League supports additional funding for child care in the city of Flint as an emergency measure, and believes that income eligibility caps for child care should be increased statewide so low-income families can afford to work, and children have the benefit of a high-quality early learning experience (see below).

Child Care Subsidies: The governor made no changes in child care eligibility caps or provider payments in his 2017 budget. Child care subsidies are currently provided to families with incomes of 121% of poverty or less, giving Michigan one of the lowest initial eligibility levels in the country. Payments to child care providers also fall far below the federally suggested level of the 75th percentile of market rate, making it difficult for low-income families to find safe, stable and higher-quality child care while they work to support their children.

  • Senate: The Senate followed the governor’s lead, approving no increases in child care eligibility or payments.
  • House: The House included a budget placeholder to ensure discussion in the joint House/Senate conference committee of an increase in the child care eligibility level from 121% to 125% of poverty.

The League supports an increase in the initial child care income eligibility cap from 121% of poverty to 150%. In addition, the League supports higher payments for child care providers, bringing them closer to current market rates and allowing them to open their doors to more children receiving state subsidies. Restricted eligibility and low provider payments have resulted in fewer families receiving state assistance, even though the cost of child care is often outside their budgets. As a result, despite the persistence of low-wage jobs, the number of families receiving child care assistance has fallen by 75% in the last decade.

Great Start Readiness Preschool Program: The governor recommended level funding ($243.6 million) for the Great Start Readiness program (GSRP) for at-risk 4-year-olds. Eligibility would be retained at 250% of poverty (up to 300% if all children below that level who want to participate are already enrolled). Children who are in foster care, homeless or in special education programs are eligible regardless of family income. The governor recommended budget language prioritizing the enrollment of homeless children or children in foster care.

  • Senate: The Senate agreed with the governor on GSRP funding and eligibility. In addition, the Senate included funding for a partnership between a school district or Intermediate School District (ISD) and a local early learning collaborative to pilot early childhood education for 3-year-olds, testing the impact on at-risk children of two years of preschool.
  • House: The House agreed with the governor on continuation funding and eligibility.

The League supports ongoing funding for the GSRP as well as efforts to test the impact of expanding state-funded preschool programs to at-risk 3-year-olds.

Early Literacy: The governor proposed to reduce early literacy programs by 10% in 2017 by eliminating: (1) $1 million for the Parent University pilot program; (2) $1 million for the Michigan Education Corps, and (3) $500,000 for a certification test of teacher literacy. Last year, the budget included $25.4 million for early literacy programs. Over two-thirds of those funds are being used for additional instruction time for students in grades kindergarten through 3rd, using proven models for reading instruction and behavioral supports. Also funded were early literacy coaches through ISDs ($3 million), grants for diagnostic tools to monitor early reading skills, and professional development for teachers.

  • Senate: The Senate agreed with the governor to eliminate the certification test of teacher literacy and the Parent University pilot, but retained $1 million for the Michigan Education Corps.
  • House: The House adopted the governor’s recommendation.

The League supports state investments in early literacy, including expanded instruction time using proven models, literacy coaches and professional development for teachers. The League also believes that learning begins long before a child reaches the schoolhouse doors, and strategies to increase reading proficiency should, too—including, for example, state funding for 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.

 

 

Support for struggling families hinges on 2017 Health and Human Services budget

Budget Brief JPG USE THIS ONEpdficonAs the Legislature gets closer to finalizing the 2017 state budget, the League continues to advocate for services for low-income children and families, unemployed adults and persons with disabilities. The League’s priorities for 2017 include a restoration of cuts in food assistance benefits, better access to preventive dental services for children and adults, an expansion of the school clothing allowance for children in families receiving income assistance, and more funding to prevent child abuse and neglect.

DHHS Pre-confBoth the House and Senate have approved their versions of the 2017 budget for the Department of Health and Human Services (DHHS). On May 17th, state economists and budget experts will meet with legislators to reassess expected state revenues and set final spending targets. With legislators on the fast track—determined to send final budgets to the governor by the end of May—joint House/Senate conference committees are expected to meet right after the May 17th Consensus Revenue Estimating Conference to iron out differences between the House and Senate versions.

This report highlights the DHHS budgets that were approved by the House and Senate, with a focus on decisions that will need to be made before the budget is finalized.

Health

Flint Emergency Funds: In response to Flint’s lead exposure crisis, the governor recommended $15.1 million ($9.1 million in state funds) for partial-year funding of public health services. Funds are to be used for food inspections and nutritional services, child and adolescent health centers and school health services, community mental health services for children with elevated lead levels, and lead investigations and abatements. Additional funding could come from a $50 million Flint Emergency Reserve Fund in the Department of Technology, Management and Budget.

  • Senate: The Senate included the governor’s recommended funding for public health services for Flint. The Senate also included a placeholder in the budget to ensure discussion of potential increases for Michigan’s 2-1-1 system during conference committee deliberations.
  • House: The House agreed with the governor on public health funding for Flint. The House also included a $950,000 increase in state funding for Michigan’s 2-1-1 system, with $500,000 as one-time funding for additional support during emergency and disaster events.

The League supports the governor’s funding recommendations related to the Flint crisis in multiple state departments, including public health enhancements in the DHHS 2017 budget. Investments in Flint in the 2017 budget are only a part of the solution to the long-term health, infrastructure, housing and economic needs in Flint and other Michigan communities. The state must evaluate and reform its tax system to ensure that adequate resources are available to fix the problems in Flint and prevent similar crises in other areas of the state.

Healthy Kids Dental: The governor recommended an investment of $25.6 million ($8.9 million in state funds) to complete the expansion of the Healthy Kids Dental program to the estimated 131,000 Medicaid-eligible children in Kent, Oakland and Wayne counties who are not currently eligible for the program.

  • Both the House and Senate agreed with the governor on the Healthy Kids Dental expansion.

The League supports this much-needed expansion that will make the program available to all eligible children statewide. Tooth decay is the most prevalent chronic disease in children, resulting in lost school days as well as the potential for long-term health consequences.

Adult Dental: The governor did not recommend an increase in funding for adult dental services in his 2017 budget proposal.

  • Senate: The Senate included $23 million ($8 million in state funds) for a contract with a managed care organization for the administration of the Medicaid adult dental benefit. The program would begin in July of 2017 and would address the problems adults insured by Medicaid have finding dentists who will provide their care.
  • House: The House followed the governor’s lead and did not provide additional funding for adult dental care.

The League supports the Senate budget expansion of access to dental services for adults. Nationwide, the erosion of private dental insurance, the increased cost of dental care and the limited number of dentists that accept public insurance have resulted in increased emergency room visits related to dental emergencies and barriers to employment.

Healthy Michigan Plan: The governor included the state funds needed to continue the Healthy Michigan Plan when federal funding declines from 100% to 95% on January 1, 2017—approximately $109 million.

  • Senate: The Senate funded the state portion of the Healthy Michigan Plan. In addition, the Senate allocated $1 million to Medicaid health plans to inform residents about Healthy Michigan Plan incentives shown to improve health outcomes, but prohibited the department from using funds to advertise enrollment in the Healthy Michigan Plan.
  • House: The House followed the governor’s lead and included the state’s required contribution to the Healthy Michigan Plan. In addition, the House removed $19.5 million ($5.6 million in state funds) for the Healthy Michigan Plan call center, and reduced marketing and advertising for the program by $1 million ($500,000 in state funding).

The League supports the governor’s recommendation to provide the needed state funds to continue the Healthy Michigan Plan and opposes House and Senate proposals to limit outreach for the program.

Funding for Specialty Drugs for Medicaid Enrollees: The governor added $195 million total ($70 million in state funds) to cover the Medicaid cost of drugs now available to treat Hepatitis C and cystic fibrosis. Total state costs are expected to exceed $394 million next year. The governor also included $86 million in a reserve fund to cover potential costs related to other emerging drugs.

  • Senate: The Senate retained the governor’s recommendation for specialty drugs, for total spending of $394 million in the 2017 budget year. The Senate reduced the reserve fund from the governor’s recommendation of $86 million to approximately $57 million.
  • House: The House added $113 million for specialty drugs (down from the governor’s recommendation of an additional $195 million), with expected total spending in 2017 of $246 million. The House cut the governor’s proposed reserve fund by half to $43 million.

The League supports adequate funding for specialty drugs for Medicaid enrollees, as well as the reserve fund recommended by the governor. These new drugs, while expensive, have the potential to prolong life, and in the case of Hepatitis C, potentially cure.

Proposal to Integrate Physical and Behavioral Health Services: The governor included budget language to transfer funding for all mental health and substance use disorder services for Medicaid and Healthy Michigan Plan beneficiaries, as well as autism services, to Medicaid Health Plans by September 30, 2017. The governor’s proposal required Medicaid health plans to contract with Community Mental Health Services programs for specialty services and supports.

  • Senate: The Senate replaced the governor’s proposal with new budget language that requires a workgroup to develop plans for increasing the integration of behavioral and physical healthcare and related reforms.
  • House: The House also rejected the governor’s budget language and instead established a process for determining the best financing model and policies to integrate behavioral and physical health services for persons with mental illnesses, developmental disabilities and substance use disorders. The House established goals for the process, and recommended pilot projects prior to statewide implementation.

The League supports a thorough and thoughtful planning process to determine the best approach to the integration of behavioral and physical health services that includes all major stakeholders. The League is a member of the current DHHS behavioral health workgroup addressing the issue.

Selected Medicaid Provider Rates: Both the House and Senate included rate increases for some Medicaid providers that were not in the governor’s budget.

  • Senate: The Senate added $21.3 million ($7.4 million in state funds) to increase Medicaid primary care provider rates by 6%. The Senate also increased Medicaid private duty nursing rates by 20% at a cost of $6.6 million ($2.3 million in state funds), restored funding ($2.5 million in state funds) for hospice services, and included a placeholder in the budget to ensure discussion in conference committee of a wage increase for mental health direct care workers.
  • House: The House included $3.3 million ($1.2 million in state funds) for a 10% rate increase for private duty nursing services for Medicaid beneficiaries under the age of 21. The House also includes $1.8 million in state funding to support a 1.5% increase in non-Medicaid mental health services provided by Community Mental Health Services programs. Finally, the House requires the DHHS to commission a study on funding strategies to maximize Medicaid reimbursements for children eligible for early intervention services through Early On.

The League supports the Senate proposal to increase Medicaid primary care provider rates. Access to primary care is a problem in both rural and some urban areas, and addressing Medicaid reimbursement rates for primary care physicians is a critical step toward comprehensive, preventive care for families and individuals.

The League supports state funding for early intervention services through Early On, beginning with a study of the feasibility of maximizing that investment through Medicaid. Michigan’s Early On program has been historically underfunded and serves only one-third of the estimated 53,000 infants and toddlers, birth to age 3, with established developmental delays or conditions.

The League supports Senate increases for private duty nurses for Medicaid beneficiaries as a way to ensure high- quality services and allow children and adults with complex medical needs to remain in the most homelike setting possible, as well as increases in hospice services and payments for mental health direct care workers.

Human Services

Food Assistance: The governor’s budget projected a drop in the number of families receiving food assistance through the Food Assistance Program (FAP), and failed to address policies that have restricted access to food—including an asset test for FAP recipients, and the state’s decision to not participate in the federal “Heat and Eat” program after federal changes increased the state cost slightly.

  • Senate: The Senate concurred with the governor.
  • House: The House included $141 million ($3.2 million in state funds) to restore cuts in FAP benefits for about 150,000 families as a result of the state’s decision in 2014 to not participate in the federal “Heat and Eat” program.

The League supports the House restoration of federally funded food assistance benefits. By investing approximately $3 million in state funds, Michigan will be able to draw down $140 million in federal dollars and restore approximately $76 per month in food assistance for 150,000 low-income households. The League also strongly supports the removal of the state asset test for FAP. Michigan is one of a dwindling number of states that imposes the test for the 100% federally funded program.

Income Assistance: The governor recommended an increase in the school clothing allowance for children living in families receiving benefits from the Family Independence Program (FIP), at an additional cost of $6.1 million. The governor expanded eligibility for the program to an estimated 25,000 school-age children by providing benefits to all children instead of only those living with grandparents or other caretakers not receiving FIP benefits. The governor also increased the annual benefit from $140 per child to $200.

The governor’s budget did not reverse state policies that have resulted in a drop in the number of families receiving FIP assistance from nearly 80,000 in 2011 to an estimated 25,000 next year, including strict lifetime limits on the receipt of assistance, and the sanctioning of an entire family if one child is truant.

  • Senate: The Senate included $3.4 million to expand the FIP clothing allowance to all school-age children, but left the per-child annual benefit at its current level of $140.
  • House: The House agreed with the governor’s proposal to expand the FIP school clothing allowance to all school-age children, but increased the per-child annual benefit from $140 to $170, at a cost of $4.8 million.

The League supports the governor’s proposal to expand the school clothing allowance. The maximum monthly FIP payment for a family of three is $492, or less than one-third of the federal poverty level, making it nearly impossible for families to provide basic school clothing for their children without additional support.

Child Abuse and Neglect: The governor provided $10 million in federal funding for an expansion of family preservation programs, including the Parent Partner Program and Family Reunification. The programs prevent the need for foster care and ensure that children are more quickly reunified with their parents when it is safe to do so.

  • Senate: The Senate included $3.1 million in federal funds for the expansion of family preservation services.
  • House: The House included a $3.4 million increase in federal funding for family preservation programs.

The League supports the governor’s proposal to expand family preservation programs by $10 million. While the number of children in families investigated for child abuse and neglect, as well as the number of victims, rose between 2006 and 2014, funding for prevention services has declined or remained stagnant.

 

 

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