Reports


A warm home is a healthy home

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 December 2017
Julie Cassidy, Policy Analyst

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

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December 2017
Lorenzo Santavicca, Intern

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Most Michiganians won’t benefit from federal tax reform

pdficonRachel Richards, Legislative Coordinator
November 2017

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

THE BASICS

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

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

NOT MUCH FOR WORKING FAMILIES

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

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

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

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

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

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

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

WHAT’S THIS MEAN FOR MICHIGANIANS?

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

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

Immigrant families in Michigan: A state profile

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 October 2017
 Victoria Crouse, State Policy Fellow

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

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

MICHIGAN IMMIGRANTS HAVE VARIED ORIGINS AND EXPERIENCES

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

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

A GROWING GENERATION OF YOUNG IMMIGRANTS

table1Children of Immigrants

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

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

Young Adult Immigrants

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

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

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

MICHIGAN IMMIGRANTS AND THE ECONOMY

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

FIGURE 2IMMIGRANTS IN THE LABOR FORCE

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

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

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

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

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

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

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

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—  SUMMARY—

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

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

ECONOMIC SECURITY

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

These systemic barriers have their roots in historical racism and discrimination, but persist today in part because of budgets and other public policies that do not recognize the extra resources required to overcome the cumulative effects of inequities based on race and ethnicity.
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2018 BUDGET DECISIONS AFFECTING CHILDREN’S ECONOMIC SECURITY:

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

HEALTH

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

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

2018 BUDGET DECISIONS AFFECTING CHILDREN’S HEALTH:

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

FAMILY AND COMMUNITY

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

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

2018 BUDGET DECISIONS AFFECTING FAMILIES AND COMMUNITIES:

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

EDUCATION

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

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

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

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

2018 BUDGET DECISIONS AFFECTING EDUCATIONAL SUCCESS:

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

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

pdficonPat Sorenson, Senior Policy Analyst
September 2017

mlpp and kids count sept_26_2017

Budget Brief JPG USE THIS ONE

 

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

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

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

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

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

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

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

ECONOMIC SECURITY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For 2018, the Michigan Legislature:

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

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

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

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

HEALTH

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

FAMILY AND COMMUNITY

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

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

How Michigan Children and Families Are Faring:

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

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

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

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

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

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

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

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

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

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

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

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

EDUCATION

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

How Michigan Children and Families Are Faring:

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

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

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

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

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

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

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

BB-Chart 13

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

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

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

 

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

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

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

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

BB-Chart 17

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

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

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

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

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

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

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

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

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

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

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

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

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

 

ENDNOTES
BB-Making change endnotes

Poverty improves in 2016 for Michigan, some racial groups

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Peter Ruark, Senior Policy Analyst
September 2017

 

 

Poverty improves in 2016 Michigan_some racial groups_9_22_2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Labor Day report: Michigan has lost 326,000 workers since 2000

pdficonPeter Ruark, Senior Policy Analyst
September 2017

THE LOST WORKERS

In July 2017, Michigan’s monthly unemployment rate dropped to 3.7%. This was the lowest jobless rate since 2000, the state’s best economic year in several decades according to most measures. While falling unemployment is certainly something to celebrate, using the unemployment rate alone to gauge Michigan’s economic recovery ignores important long-term trends in Michigan’s employment situation.

The unemployment rate is defined as the percent of the civilian labor force that is unemployed. Two other measures, when added to the unemployment rate, tell a more comprehensive story of the attrition of workers from Michigan’s job market: the labor force participation rate, which measures the percent of the civilian population 16 years old and over that is in the labor force (that is, working or looking for work), and the employment-population ratio, which measures the percent of the population that is actually employed (and will directly reflect the relationship between the unemployment rate and the labor force participation rate).

LDR fig 1Workers drop out of a state’s labor force in several ways: physically leaving the state, death, institutionalization (i.e., incarceration), or stopping both work and the search for work (i.e., retirement, disability, staying home with children, etc.). Michigan’s labor force, after nearly two decades of steadily climbing, reached its numerical peak of 5.16 million in 2000. During the severe economic downturn in the decade that followed, that number fell to as low as 4.7 million in 2011-12 and has risen slightly in the years since then. The size of Michigan’s labor force is now where it was in the mid-1990s, but well below its peak in 2000. In 2016,  Michigan had a net loss of 326,000 workers since 2000 (Figure 1).

LDR fig 2While changes in the actual size of the labor force tell a modest story, far more illuminating is Michigan’s labor force participation rate, which for several years has been at a historic low. As seen in Figure 2, even during the severe recession during the early 1980s when the state’s unemployment rate reached as high as 15%, the labor force participation rate remained steady at around 64% before gradually rising to a peak of nearly 69% in 2000. With the economic downturn of the 2000s, the rate fell to a low of 60% in 2011 and 2000. At 61.4% in 2016, it has not significantly moved since then despite the improving unemployment rate.

In the same way, while Michigan’s 2016 employment-population ratio shows clear improvement since 2011 concurrent with falling unemployment, it is below where it was during the economically difficult years of the early and mid-2000s and the 20 years prior. The unemployment rate tells us the short-term story that more people who are looking for work are finding it. It masks the longer-term story that a smaller share of people in the state are working or looking for work.

LDR fig 3Using Michigan’s peak employment year of 2000 as a baseline, we can measure the number of net “lost” workers against the number of currently unemployed workers in a given year. As mentioned earlier, Michigan in 2016 had 326,000 fewer workers in its labor force than in 2000, and these lost workers outnumbered the 238,000 unemployed workers that year. Between 2009 and 2011, a jaw-dropping 219,000 workers dropped out of Michigan’s labor force, and the number of lost workers has exceeded the number of currently unemployed workers in each year since then (Figure 3).

LDR fig 4In Michigan’s three largest counties, which comprise roughly one-third of the total state population, the net number of workers lost from the labor force since 2000 is considerably higher than the number of currently unemployed workers (Figure 4). And in the sparsely-populated Upper Peninsula, the workforce continues to shrink while the number of lost workers continues to rise LDR fig 5(Figure 5).

For a table of the unemployed and lost workers in each county in Michigan, please see the appendix.

MICHIGAN’S GRAYING LABOR FORCE

Not only has Michigan’s labor force shrunk over time, its composition has begun to shift toward older workers. From 1979 (the earliest year data on worker ages is available) to 1982, the share of Michigan’s labor force that was 55 years of age or older was between 12% and 13.2%, leveling out at 10-12% from 1983 to 2000. Following 2000, however, this age group began comprising a steadily larger share of the workforce, and in 2016 their share (22.2%) nearly doubled that in 2000, while the portion in prime working age decreased from 70.4% to 62.3%. Younger workers, those from age 16-24, comprised a moderately smaller share of the workforce in 2016 (15.4%) than in 2000 (17.9%) but considerably smaller than in 1979, when they accounted for more than a quarter of the workforce (Figure 6).

LDR fig 6To understand Michigan’s shrinking labor force and the shift in its composition, it is helpful to look at the labor force participation rate of each of the three age groups. In recent years, a larger percentage of Michigan residents 55 years and older are participating in the workforce than before. In 1995, participation by this age group was at its ebb (26%), but has risen fairly steadily since then and by 2016, nearly 37% of residents 55 and older were in the workforce either employed or looking for work (Figure 7). The lack of a “big dip” in the participation rate of older workers suggests that the decline in the labor force was not driven significantly by unemployed workers choosing to retire early.

LDR fig 7The higher labor force participation rate for workers 55 years old and over is likely driven by a number of reasons. According to one study, factors include: rule changes in Social Security and pensions that incentivize later retirement, improved longevity, higher levels of education, less physically demanding jobs and the decline of retiree health insurance.1

YOUNGER MICHIGAN RESIDENTS ARE NOT JOINING THE WORKFORCE AS BEFORE

A moderately smaller percentage of prime working-age residents are in the workforce compared to 2000, but the most significant change in labor force participation is with younger workers. In keeping with the pattern of the previous 20 years, 72% of residents aged 16-24 were either working or looking for work in 2000, but that percentage took a sharp and steady plunge over the following decade. By 2011, only a bit more than half of all 16-24-year-olds in Michigan were in the workforce. The percentage has gone up in fits and starts since then, but at 63% remains significantly lower than in any year prior to 2006.

It is quite telling to compare the younger workforce during the Great Recession of the late 2000s with that during previous recessions, particularly the deep recession of the early 1980s. While the employment-population ratio for young people in 1982 plunged to just under 51% and took several years to rebound, the labor force participation rate dipped only slightly (as reflected in the high unemployment rate during those years). The same was true in the milder recession of the early 1990s.

LDR fig 8In the years following 2000, the labor force participation rate for young workers began a startlingly different pattern from previous economic downturns. Not only did the employment-population ratio for young people go down steadily to record lows over the next decade, but so did the labor force participation rate, which fell from 72% in 2000 to 55% in 2011. That year saw a record low of only 45% of Michigan residents age 16-24 employed, and fewer than half employed during the six years from 2008 to 2013, yet the recorded unemployment rate for those years was considerably lower than in the early 1980s (16-19% compared to 21-26%) due to the very low workforce participation (Figure 8).

Michigan is not unique; the declining participation rate mirrors the trend for younger workers nationally. The Bureau of Labor Statistics reports that the age group with the largest decrease in labor force participation since 2000 is teenagers age 16-19, with white teenagers being the racial group with the largest decrease and Black teenagers with the smallest. Among teenagers, the most often cited reason for not working was school attendance. However, while teenagers not enrolled in school are generally more likely to participate in the labor force than those enrolled in school, the labor force participation rate of out-of-school teenagers also fell. The participation rate for adults age 20-24 has also fallen nationally since 2000, but less steeply than that of teenagers.2

For the portion of younger residents who are deferring entering the workforce due to enrolling in postsecondary education, it can be assumed that their foregone wages from not working now will be more than offset by higher wages after completing their education. Younger people not working, looking for work or going to school, on the other hand, are gaining neither educational credentials nor work experience that could help them in the job market. The cause for this lower labor participation rate among young people not in school is not clearly established, but according to the Bureau of Labor Statistics, could include a lack of desire to enter the workforce due to stagnant wages and to competition from low-skilled workers in other age groups.

POLICY SOLUTIONS FOR WORKERS OF ALL AGES

A significant factor, but not the only factor, in the shrinking of Michigan’s labor force is the lower likelihood of residents age 16-24 to participate in it, particularly those under 20. Although a higher portion of older individuals are remaining in the workforce, as they retire there are fewer younger workers to replace them.

The participation rate of younger workers remains low, but it is slowly rebounding. While there may not be easily identifiable policy strategies to encourage more young workers to enter the workforce, Michigan can undertake the following actions to help both younger individuals who are not yet in the workforce and older individuals who are choosing to stay employed at a later age:

  • Make college education less expensive by lowering tuition and increasing financial aid, which will help cut down on student debt;
  • Encourage universities to offer more academically relevant work-study for students with low incomes so that they may gain meaningful work experience;
  • Make postsecondary training for “middle skills credentials” (a short-term or two-year credential such as a license, certificate or associate degree) more accessible to young people, especially those who live in areas with high unemployment and poverty and few available jobs;
  • Provide support services to young single mothers that encourage them to participate in postsecondary education or training and facilitate their completion and success; and
  • Retain Medicaid expansion in order to help provide healthcare for older workers earning lower wages.

ENDNOTES

  1. Munnel, A.H., The Average Retirement Age—An Update, Center for Retirement Research at Boston College, March 2015. (http://crr.bc.edu/wp-content/uploads/2015/03/IB_15-4_508_rev.pdf, accessed on August 7, 2017)
  2. U.S. Department of Labor Bureau of Labor Statistics, Labor Force Participation: What Has Happened Since the Peak?, Monthly Review, September 2016. (https://www.bls.gov/opub/mlr/2016/article/labor-force-participation-what-has-happened-since-the-peak.htm, accessed on August 7, 2017.)

Michigan’s child care assistance program: Challenges and opportunities

pdficonPat Sorenson, Senior Policy Analyst
August 2017

Budget Brief JPG USE THIS ONE

CHILD CARE COSTS ARE HIGH WHILE PROVIDERS STRUGGLE

Access to child care is a necessity for working parents and a foundation for Michigan’s economic growth and vitality. Unfortunately, the high cost of child care has become a major barrier for parents earning low wages, often forcing parents to rely on a patchwork of relatives, neighbors and friends who may be unable to make long-term commitments.

The predictable results for parents are frequent work disruptions that can jeopardize their jobs or force them to leave their children in care they don’t believe is safe or adequate. For employers, the bottom line is a smaller pool of workers for lower-wage jobs, and employee absenteeism and turnover.

Child care costs are some of the largest that families will face, rivaling housing and even the price of a year of college.

  • Cost for one infant in a child care center in Michigan: $10,178
  • Average annualized rent: $9,168
  • Average annualized mortgage: $14,640
  • Average tuition and fees at public colleges: $11,994

Child care costs are high in comparison to wages for many families, but not because child care providers are well paid or their businesses are thriving. Child care providers, who earned an average of just $19,620 in 2015, are some of the lowest-paid workers in the state, with wages that fall below those of veterinary assistants, animal control workers, manicurists and telemarketers—who are similarly underpaid. Nationally, nearly half of child care providers are themselves eligible for some form of public assistance.

MI child care challenges opportunities graph 1

MICHIGAN’S CHILD CARE PROGRAM HAS LAGGED BEHIND OTHER STATES

Michigan ranks among the lowest states in the country in its investments in child care for families with low and moderate incomes—even turning back federal child care funds because of restrictive state policies that prevented families from getting the care they need to work and support their families. In 2003, Michigan’s spending on child care was the 11th highest in the nation; by 2013 the state dropped to the 11th lowest in the country.1

Michigan’s Child Development and Care (CDC) program helps families with low wages who are: 1) working; 2) completing high school/GED courses; 3) participating in job training programs; or 4) engaging in family preservation activities.

Parents can choose from a number of child care settings—provided affordable options exist in their communities and are willing to take children with child care subsidies. The options include licensed child care centers; family/group homes; and relatives, friends and neighbors.

MI child care challenges opportunities graph 2FEWER FAMILIES SERVED ALONG WITH LESS FUNDING TO COMMUNITIES

In part because of Michigan’s restrictive child care policies, the number of families receiving a CDC subsidy has dropped dramatically, along with the dollars flowing to communities to help support working parents, employers and the local economy. In January of 2007, Michigan provided child care subsidies to 57,268 families, including 111,526 children; by January of 2016 only 17,047 families and 30,134 children received child care assistance. Child care payments followed suit, dropping by 80% statewide during this period.

LOW REIMBURSEMENTS AND STRINGENT ELIGIBILITY MAKE IT HARDER FOR FAMILIES

Payments to providers are too low to ensure access to high-quality child care. Rates paid to child care providers depend on the age of the child, the type of child care setting, and the number of stars a provider has in the state’s five-star quality rating system (Great Start to Quality). Federal guidance recommends rates at the 75th percentile of market rates, but Michigan’s rates have fallen significantly below that level. Payments currently range from $1.35 per hour for unlicensed providers to a maximum of $4.75 per hour for infants and toddlers in a five-star child care center, although funds were approved for the 2018 budget to increase child care provider rates.

Michigan’s child care eligibility levels are among the lowest in the country. In 2016, Michigan had the lowest income eligibility level in the nation. Despite a small eligibility increase in 2017 from 120% to 125% of poverty ($25,525 for a family of three), Michigan has remained at the bottom of the states. The budget signed by the governor for 2018 includes an increase in eligibility from 125% of poverty to 130%.

STATE ADMINISTRATIVE POLICIES ARE A BARRIER

In addition to low reimbursement rates, child care providers in Michigan are required to bill for their services hourly—contrary to normal business practices.

MI child care challenges opportunities graph 3MICHIGAN’S CHILD CARE SUBSIDY IS LARGELY FEDERALLY FUNDED

The bulk of the funding for child care subsidies in Michigan comes from the federal government through the Child Care and Development Block Grant (CCDBG). Total funding for child care subsidies in the 2017 budget year is $134 million, with approximately $106 million (79%) coming through the federal CCDBG. Approximately $25.8 million (19%) is from the state General Fund.

The CCDBG gives states wide latitude in setting reimbursement rates and eligibility, and programs vary from state to state. The federal law limits eligibility to 85% of state median income and sets a goal (not a mandate) that rates be set at the 75th percentile of market rate, meaning that the subsidy would cover 75% of the providers in a family’s market area. At 38% of state median income, Michigan’s income eligibility cutoff falls far below that standard.

In 2014, the CCDBG was reauthorized to create several new mandates for states—the first reauthorization in 19 years. Unfortunately, there was little new federal funding attached. Included in the federal requirements are:

  • More extensive requirements related to health and safety in child care, including pre-service and ongoing training of providers, additional licensing requirements, on-site inspections, and comprehensive background checks for all providers, including those who are exempt from licensing (family, friends and neighbors).
  • An increased focus on improving quality, including an increase in the percentage of CCDBG funds that need to be used for that purpose.
  • More family-friendly policies, including a minimum 12-month eligibility period (if income remains below the eligibility limit), and a graduated phase-out of assistance.
  • Payment policies and practices that reflect generally accepted practices for child care providers.

MI child care challenges opportunities graph 4POLICY CHANGES HAVE IMPROVED ACCESS AND QUALITY BUT MORE NEEDS TO BE DONE

A stronger focus on quality. State and federal initiatives have increased attention on the importance of high-quality child care in recent years. When the federal CCDBG was adopted in 1990, followed by national welfare reform in 1996, the goal was primarily to provide child care as a work support—with a focus on access rather than quality.

As scientific research began to prove the importance of the earliest years of life to children’s learning and development, the need for high quality settings became undeniable. In Michigan, public/private partnerships began to spring up to improve the quality of child care, culminating in the launch of the Office of Great Start within the Department of Education, bolstered by the work of the Early Childhood Investment Corporation. The result was a significant increase in funding for the state’s preschool program (Great Start Readiness Program), regional resource centers to improve access to high-quality care, the state’s child care rating system (Great Start to Quality), and other quality improvement initiatives through the state’s Race to the Top Early Learning Challenge grant.

Small increases in child care payments related to Great Start to Quality. Michigan’s last across-the-board increase in child care rates occurred in 2009. In 2011, rates for care provided by families, friends and neighbors who are legally exempt from licensing were reduced if new training requirements were not met.

In July of 2015, rate increases were provided to licensed providers (child care centers and homes) based on the number of stars they earn in the state’s five-star quality rating system—with the full-year cost in the 2016 budget year of $6.1 million in federal funding. While tiered reimbursements can create incentives for quality improvements, the reality is that in Michigan’s grossly underfunded child care system, many child care providers did not receive the higher payment rates.

Michigan has made progress in engaging licensed child care providers in the state’s child care quality rating system. In 2014, 82% of the state’s 9,963 licensed providers were only meeting basic licensing requirements—the absolute floor for safety in care signified by an “empty star” in the state’s five-star system. By May 1, 2017, 57% of providers were only meeting licensing guidelines. Nonetheless, rate increases tied to a provider’s quality rating are currently available to only 3,530 providers, or 42% of licensed providers in the state.

A small increase in income eligibility thresholds for those applying for child care assistance. In 2017, Michigan increased its entry eligibility threshold from 120% to 125% of poverty, but remains at the bottom of the states. An increase to 130% of poverty is included in the 2018 budget.

A new policy that allows some families to keep their child care assistance if their wages increase. In compliance with the reauthorization of the federal CCDF, Michigan increased its “exit” income eligibility threshold to 250% of poverty in July of 2015. To receive child care assistance, families still have to be eligible at the lower “entry” eligibility level (now 125% of poverty), but once receiving a subsidy could earn up to 250% of poverty and still receive a subsidy. This avoids the steep eligibility cliff that could increase child care costs for a single mother with two children in care from approximately $2,900 per year to over $18,000 because of a small pay raise.2

Adoption of 12-month continuous eligibility. Also beginning in 2015 and in response to the federal CCDBG reauthorization, Michigan implemented 12-month continuous child care eligibility after enrollment for child care assistance—at a full year cost in the 2016 budget year of $16 million in federal CCDBG funding. This change is intended to avoid child care disruptions for working parents and children.

MI child care challenges opportunities graph 5The hiring of additional child care licensing consultants to improve oversight. In the 2016 budget year, the state approved $5.6 million in federal funding to hire an additional 39 child care licensing consultants. Michigan’s child care oversight had been hampered by very high caseloads, resulting in two federal audits that found the state could not consistently ensure basic health and safety in licensed child care settings. This increase is particularly important in light of tightened federal requirements for oversight and on-site visits.

Updating of payment policies. The Office of Great Start has made changes to help payments to providers and parents flow more quickly and easily. Included are a shortened timeframe for determining eligibility (from 45 to 30 days) and a policy allowing child care payments for up to 208 hours for children who are absent from care.

THE 2018 BUDGET INCLUDES ADDITIONAL CHILD CARE IMPROVEMENTS

In recognition of the connection between child care and work for families with low wages, as well as the state’s failure to use all available federal funds, the governor recommended an increase of $6.8 million in the current budget year (2017) as well as $27.2 million ($8.4 million in state funds) in the 2018 budget to increase rates paid to child care providers. The final 2018 budget approved by the Legislature and signed by the governor includes the following:

  • A total of $19.4 million ($11 million of federal CCDBG and $8.4 million of state General Fund) to increase reimbursement rates to child care providers based on the number of stars in the state’s quality rating system.
    • Licensed/registered centers and homes will receive the following increases: 25 cents per hour for those who have 0, 1 or 2 stars; 50 cents per hour for those at 3 or 4 stars, and 75 cents per hour for 5-star centers or homes.
    • Unlicensed family, friends and neighbors will receive an increase of 25 cents per hour if they are at the Tier 1 training level, while those at Tier 2 would receive an additional 75 cents per hour.
  • An increase of $5.5 million in federal funding to raise the program’s eligibility threshold from 125% of poverty to 130%.
  • An additional $1.4 million in federal funding to increase monitoring of license-exempt family, friend and neighbor care as required in the federal reauthorization, as well as $800,000 for staff in the Department of Licensing and Regulatory Affairs to do newly required background checks and fingerprinting of providers.
  • $1 million in federal funding for TEACH scholarships for child care providers working to increase their quality star rating.

2017 Supplemental Spending: Also passed by the Legislature was a supplemental budget bill for the current year that includes:

  • An increase of $4.9 million total ($2.8 million CCDF and $2.1 million in state General Fund) to implement the reimbursement rate increase for child care providers in the current year.
  • Funding to ensure that Michigan complies with new federal requirements related to the monitoring of child care settings, including: 1) $7.1 million for comprehensive fingerprinting and background checks of all child care providers and others in child care settings with unsupervised access to children; and 2) $1.5 million for technology improvements needed to implement new changes.

FEDERAL BUDGET UNCERTAINTIES ARE A CLOUD OVER STATE CHILD CARE INITIATIVES

Michigan relies heavily on federal funding for child care and other basic needs programs. With 42% of its total budget coming from the federal government, Michigan is second most reliant on federal funds of all states. Federal budget cuts in Washington, D.C., could threaten Michigan’s progress in providing child care to families with low wages.

The President’s 2018 budget maintained CCDBG at 2016 levels, eliminating a $95 million increase in the current year. In addition other funding sources that can be used to fund child care—Temporary Assistance for Needy Families (TANF) and the Social Services Block Grant (SSBG)—are on the chopping block, with TANF reduced by 10% and the SSBG eliminated.

Congress has not yet adopted a 2018 Budget Resolution, but the House Appropriations Committee is moving forward. The House proposal includes an increase of only $4 million for the CCDBG, and includes the following cuts: 1) elimination of the Child Care Access Means Parents in School (CCAMPIS) program, which is the only federal grant supporting child care services for low-income parents on college campuses; and 2) a $191 million cut in the 21st Century Community Learning Centers program, which funds afterschool activities including child care in low-income communities.

Also in the mix at the federal level is tax reform and vague proposals to reduce child care costs through tax and regulatory changes. During the campaign, President Trump advocated for a tax deduction for child care expenses, as well as a limited credit for some families with lower incomes and child care savings accounts. The Tax Policy Center found that the 70% of the benefits of the campaign proposals would go to families with incomes above $100,000, and more than 25% to those with incomes over $200,000.3

More recently, discussions have turned to Dependent Care Assistance Plans, Dependent Care Savings Accounts and tax credits for employers and businesses that provide child care, which disproportionately advantage wealthier families.

There are tax policies that could be adopted at the national level that could benefit families with low wages including: 1) an increase in the amount of the Child Tax Credit to better reflect the cost of raising young children, as well as lowering the earned income threshold for families to be eligible to receive a refund through the Additional Child Tax Credit; and 2) making the Child and Child and Dependent Care Tax Credit refundable so more low-income families could benefit, as well as changes in the credit’s sliding scale and increases in the child care expense limit to better reflect the actual cost of child care.

The President’s tax plan and budget call for requiring a Social Security number to qualify for the federal Earned Income Tax Credit (EITC) and Child Tax Credit. The IRS already requires a taxpayer to have a Social Security number to receive the EITC, so this is not a policy change but instead simply fuels the anti-immigrant rhetoric. Furthermore, by targeting assistance that is currently intended to benefit children—and which studies have shown have long-lasting positive impacts on the lives and well-being of children—this only hurts many U.S. children who have no control over their parents’ immigration status.

MI child care challenges opportunities graph 6

Final decisions about federal tax reform will be significant for working families in Michigan. The Trump Administration’s proposal to overhaul the federal tax code would provide the wealthiest 1% of taxpayers in Michigan with over half of the state’s tax cuts. The richest 1% of Michigan taxpayers would receive an average tax cut in 2018 of over $120,000, compared to on $830 for the middle 20%, and $100 for the bottom 20%.4 Tax reforms could also reduce the revenues available for programs that would assist families who most need help with the high cost of child care, including adequate funding for the CCDBG that provides direct subsidies and improves child care quality and safety.

WHAT MICHIGAN NEEDS TO DO MOVING FORWARD

Increase eligibility for child care subsidies so more families with low wages can find and keep jobs. The League estimates that a single parent of two children would need to earn over $47,000 a year to meet the family’s basic needs for housing, child care, food, transportation, healthcare and personal needs.5 Setting the state’s child care eligibility level at 200% of the federal poverty level ($40,840 for a family of three) should be the state’s goal if it is serious about encouraging work and full employment. Michigan should incrementally increase eligibility to meet that standard, beginning with an increase to 150% of poverty ($30,630 for a family of three).

Increase access to high-quality providers through rate increases. Michigan should continue to adopt rate increases until it reaches the national CCDF standard of the 75th percentile of market rates. Without adequate payments, parents with low wages will continue to have difficulty finding high-quality care and many child care providers will have insufficient resources to improve quality.

Support early childhood businesses and the child care workforce through appropriate business practices. As a first step, Michigan should follow most other states and move away from hourly billing, opting for billings to half- or full-day care, or weekly—similar to the process used by many for non-subsidized children. Without predictable income, it is difficult for providers to maintain their small businesses and accept children with subsidies.

Improve the supply of care for families needing off-hours or infant care, as well as care for children with special needs. An additional approach Michigan should take is to establish contracts with providers for care—a funding mechanism used in some other states to ensure capacity and increase stability in the child care market. Instead of making payments for hours of child care provided, contracts can be used to ensure slots for children from families with low incomes. As part of the contractual process, the state could focus on expanding the supply of high-quality care for underserved communities and populations, including parents needing evening and weekend care, children with special needs, and infants and toddlers.

Expand eligibility to children and families in high-poverty communities. An innovative alternative to contracts that could target specific underserved communities is the model used in the National School Lunch program of community eligibility, where all children in a high-poverty area are eligible for school meals without applying.6 Michigan was one of the pilot states that experienced a significant increase in the number of children receiving school meals as a result of the program.

Use what is learned about high-quality child care through the investments of the philanthropic sector to guide statewide investments of public dollars. The philanthropic sector has had a sustained interest and investment in early childhood services including child care. The United Way for Southeastern Michigan supported Early Learning Communities—a community-led effort to increase kindergarten readiness by providing two-generational services and connecting families to social and other local services. More recently, the W.K. Kellogg and Kresge Foundations have promoted a community-driven partnership to strengthen and grow early childhood services in Detroit, beginning with a citywide action plan to create coordinated, high-quality early childhood systems that ensure children are born healthy, prepared for kindergarten and ready for success in third grade and beyond. These efforts should help guide public-sector responses to the needs of young children and families for child care and other early childhood services.

ENDNOTES

  1. Child Development and Care (CDC) Program, presentation by Lisa Brewer Walraven, Director, Child Development and Care Program, Michigan Department of Education to the House School Aid and Education Appropriations Subcommittee (February 21, 2017).
  2. Testimony of Lisa Brewer Walraven, Director, Child Development and Care Program, Michigan Department of Education to the House Appropriations Subcommittee on Education (March 9, 2016).
  3. Who Benefits from President Trump’s Child Care Proposals? Tax Policy Center, Urban Institute and Brookings Institution (February 28, 2017).
  4. Trump Tax Proposals Would Provide Richest One Percent in Michigan with 53.2 Percent of the State’s Tax Cuts, Institute on Taxation and Economic Policy (July 20, 2017).
  5. Making Ends Meet in Michigan: A Basic Needs Income Level for Family Well-Being, Michigan League for Public Policy (May 2017).
  6. Building a Better Child Care System, prepared by Public Sector Consultants for the Michigan Department of Education Office of Great Start (September 2016). 

 

Still hungry: Economic recovery leaves many Michiganians without enough to eat

KCLOGOjpg102x75pdficon

August 2017
Julie Cassidy, Policy Analyst

 

 

The economic gains of Michigan’s recovery from the Great Recession have not been equally distributed, and families at the lower end of the economic scale continue to struggle more than others with unemployment, underemployment and low wages.1 While unemployment has decreased substantially and median household income has risen since the Recession officially ended in 2009, the poverty and food insecurity rates have not yet declined to their pre-Recession levels, indicating that the employment and income gains among those with low incomes are too small to overcome rising food prices and other barriers to healthy food access.

Still hungry blog graphic 1Under these conditions, proposed budget cuts to the Supplemental Nutrition Assistance Program (SNAP) and other federal programs that many families rely on to make ends meet would leave millions of people without access to the fuel their bodies need to lead healthy, productive lives. These cuts would disproportionately affect children, people with disabilities, people of color, seniors and rural residents. Policymakers should preserve and expand existing nutrition programs that have proven effective and implement other state and local reforms that protect public health and the economy from the costly impacts of hunger.

NEARLY 1.5 MILLION MICHIGANIANS ARE FOOD INSECURE

Food insecurity: Limited or uncertain availability of nutritionally adequate and safe food; limited or uncertain ability to acquire acceptable food in socially acceptable ways.

The causes of food insecurity and hunger include:

  • Insufficient funds to buy food;
  • Unavailability of nutritious food in a given area (a “food desert” or “food swamp”);
  • Lack of transportation;
  • Unaffordable utility bills; and
  • Poor oral health.

Hunger: A potential consequence of food insecurity that, because of prolonged, involuntary lack of food, results in discomfort, illness, weakness or pain that goes beyond the usual uneasy sensation.

Source: U.S. Department of Agriculture, Economic Research Service

Still hungry blog graphic 2WHO’S ESPECIALLY VULNERABLE TO HUNGER?

Children: Households with children, particularly those headed by single parents, are less food secure than those without children. Hunger creates an intergenerational cycle: it’s difficult for parents to raise healthy children to reach their full potential when they don’t have enough to eat themselves. In Michigan, about 338,000 children experienced food insecurity in 2014.2 Hunger peaks during the summer when kids no longer have access to the daily meals and snacks provided at school; for example, summer nutrition programs in Michigan serve only about one-twelfth of the children who receive free or reduced-price lunch during the school year.3

Still hungry blog graphic 3Rural Residents: Although Wayne County is the least food secure of all Michigan counties, a number of rural counties also report high food-insecurity rates, especially in Northern Michigan.4 In these areas, poverty is higher than average, full-service grocery stores may be rare and dental providers may be scarce. The lack of public transit magnifies these challenges. Ultimately, rural Michiganians may struggle with issues of food availability, accessibility and affordability even more than some of their city-dwelling counterparts.

People With Disabilities: Due to educational, mobility and workplace barriers as well as discrimination, adults with disabilities face lower employment rates, less consistent employment, longer periods of unemployment and lower earnings than adults without disabilities. At the same time, they often have increased medical costs and other expenses of living in a world that’s not designed to meet their basic needs. Thus, households including people with disabilities are more likely to experience food insecurity and to feel it the most severely of all food-insecure households.5

People of Color: A long history of public policy shaped by racism, from slavery to redlining to mass incarceration, has led to inequities that persist long after the removal of explicit racism from American law. For example, the median wealth of White households currently is 14 times that of Latino households and 16 times that of African-American households.6 As a result, African-Americans and Hispanics in Michigan experience higher levels of food insecurity than Whites and Asians do, a dynamic that has continued in the aftermath of the Great Recession.

Still hungry blog graphic 4

Seniors: Aging is often accompanied by increased healthcare needs, income limitations and mobility challenges. As medicine advances, people are living longer but may not have the resources to maintain a basic living standard, especially after suffering losses in the Great Recession. More than 160,000 Michigan seniors struggle to pay for all of their essentials, including food.7 Furthermore, they don’t take full advantage of all available anti-hunger resources—nationwide, it’s estimated that only 41% of eligible seniors have enrolled in SNAP, compared to 83% of the entire SNAP-eligible population.8

WE ALL PAY THE HIGH PRICE OF HUNGER

Still hungry blog graphic 5

 

Stigma compounds the negative health and economic impacts of food insecurity, as those living with hunger may feel shame over their situation and decline available food assistance.

Hunger would be even more widespread if it were not for a number of public agencies and nonprofit organizations that provide food and funds for vulnerable households. SNAP and other federal programs such as Women, Infants, and Children, The Emergency Food Assistance Program; the National School Lunch Program; and the Child and Adult Care Food Program attack the hunger problem through various local avenues—schools, food pantries, child and adult day care centers, emergency shelters, etc. State- and local-level partnerships involving government, nonprofit organizations, farmers and grocers further help fight hunger while boosting Michigan’s agriculture industry.

Still hungry blog graphic 6

A number of state and local initiatives to fight hunger in our communities depend on federal funds or are otherwise connected to federal programs, so structural changes and budget cuts at the federal level can put Michigan’s efforts at risk. For example, converting SNAP from an entitlement program to a block grant, as has been proposed, could cut benefit levels, restrict eligibility and make the program less responsive to economic crises.

All of these services help many families achieve food security, keep people out of poverty and stimulate our economy—for example, every $5 spent in new SNAP benefits generates up to $9 in economic activity.9 These resources, however, aren’t sufficient to serve everyone in need and address all of the root causes of hunger, so society continues to incur billions of dollars in avoidable costs every year through poor health and a less dynamic workforce. Ensuring access to adequate healthy food presents one of the most cost-effective opportunities to strengthen our state’s greatest resource—its people—and promote our state and national prosperity.

Still hungry blog graphic 7 report

ENDNOTES

  1. Ruark, P. & Singh, S. Michigan League for Public Policy. (2015, September). Labor Day report: Economic recovery eludes many Michigan families. Retrieved from http://www.mlpp.org/wp-content/uploads/2015/09/Labor-Day-Sept-2015.pdf.
  2. Annie E. Casey Foundation, Kids Count Data Center, http://datacenter.kidscount.org/data/tables/5201-children-living-in-households-that-were-food-insecure-at-some-point-during-the-year?loc=24&loct=2#detailed/2/24/false/869,36,868,867,133/any/11674. Accessed June 22, 2017.
  3. Food Research & Action Center. (2017, June). Hunger doesn’t take a vacation: Summer nutrition status report. Retrieved from http://frac.org/wp-content/uploads/2017-summer-nutrition-report-1.pdf.
  4. Feeding America, Map the Meal Gap: Food Insecurity in Michigan, http://map.feedingamerica.org/county/2015/overall/michiganhttp://map.feedingamerica.org/county/2015/overall/michigan. Accessed July 21, 2017.
  5. Food Research & Action Center. (2015, July). SNAP matters for people with disabilities. Retrieved from http://frac.org/wp-content/uploads/snap_matters_people_with_disabililties.pdf.
  6. Center for Global Policy Solutions. (2016, January 11). Racial wealth gap. Retrieved from http://globalpolicysolutions.org/resources/infographics/racial-wealth-gap/.
  7. Elder Law of Michigan, MiCAFE Network, http://www.elderlawofmi.org/micafe. Accessed July 3, 2017.
  8. Feeding America, The Senior SNAP Gap, http://www.feedingamerica.org/take-action/campaigns/solve-senior-hunger/the-senior-snap-gap.html. Accessed July 3, 2017.
  9. United States Department of Agriculture, Economic Research Service. (2016). Supplemental Nutrition Assistance Program (SNAP) linkages with the general economy. Retrieved from https://www.ers.usda.gov/topics/food-nutrition-assistance/supplemental-nutrition-assistance-program-snap/economic-linkages/.

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