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

 

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

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

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

Human Services

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

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

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

Community Health

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

School Aid & Education

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

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

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

Higher Education and Community Colleges

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

Endnotes

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