Governor’s 2016 Budget: Impact on Children and Families

 

Governor Proposes Positive Investments Despite Threats to Revenues

While the governor has proposed a balanced budget for 2016 that includes important investments for children and families, there are many threats to the state’s fiscal health on the horizon. Top among them is the potential loss to the state and its economy if voters do not approve the bipartisan compromise transportation package, leaving few other options to fix the roads without further depleting scarce state funds needed for services for children and their families.

Also acting as an anchor dragging on the state budget are deep business tax cuts adopted in 2011, along with the expected costs of outstanding business tax credits, which are now projected to be up to $600 million a year through 2030, at a total state cost of $9.4 billion. Without replacing revenues, cuts of this magnitude could so weaken basic public services in Michigan, such as public safety, transportation, education and public health, that the state’s economy could be crippled for years to come.

Finally, significant cuts in the federal budget could have a disastrous effect on many health and human services in Michigan. Over 40% of the governor’s $53 billion budget for 2016 is supported by federal funds, and the state’s reliance on federal funds has been growing.

 

Important Steps Forward for Children and Their Families

Gov. Rick Snyder’s budget for 2016 includes many important investments in families and children, despite lower than expected revenues, including:

Continued funding for Michigan’s preschool program for low-income children. The governor maintains funding for Michigan’s successful Great Start Readiness preschool program for low-income 4-year-olds. Over the last two years, funding for the preschool program more than doubled, with the number of half-day slots increasing from 32,140 in 2013 to 63,250 in 2015.

A new initiative to improve reading by third grade. The governor proposes nearly $49 million for a new initiative to raise third-grade reading scores, including $23.6 million for childcare quality improvements. Included are:

  • Home visits for at-risk families to encourage early literacy activities and identify children with disabilities and developmental delays ($5 million).
  • Parent education pilot programs for families with children under age 4 ($1 million).
  • Testing of new elementary teachers on reading instruction capabilities prior to their certification to teach, as well as professional development for current teachers ($1.45 million).
  • Training of teachers and administrators in the use of literacy diagnostic tools ($1.45 million).
  • Additional instruction time for students who need extra assistance with reading, including after school, as well as summer school programs ($10 million).
  • New literacy coaches for K-3 teachers ($3 million).
  • Continued implementation of the Kindergarten Entry Assessment ($2.6 million).
  • A new oversight commission, with business and philanthropic leadership, to monitor progress toward improving third-grade reading proficiency.

More funding for children at risk of falling behind their peers academically. The governor recommends an additional $100 million for children at risk of falling behind their peers academically, bringing total funding to $409 million. Funds are to be used to ensure that children are reading at grade level by the end of third grade and are career and college ready when they graduate from high school. Funds are allocated based on the number of students eligible for free meals, giving districts that are educating a high number of low-income children additional resources.

An increase in the number of child care licensing inspectors the state needs to keep children safe. The governor recommends a 50% expansion in the number of child care licensing inspectors to ensure basic health and safety in child care settings. With one inspector for every 153 licensed child care centers and homes, Michigan has come under federal scrutiny for its failure to ensure compliance with child care licensing rules, including required criminal record and protective services background checks for teachers and caregivers. The governor includes $5.7 million to reduce the ratio to the national average of one inspector for every 98 child care settings.

Investments in child care quality through increases in payments to providers, and policy changes that allow families to keep their child care even if their incomes increase. The inability of parents to find reliable, high- quality child care affects businesses’ bottom lines because of employee absenteeism and turnover. In recent years, state funding for child care has dropped dramatically, along with the number of families who can receive help with high child care costs. The decline is partly due to changes in state policy, reimbursement rates that fall far below market rates, and income eligibility guidelines that create a “cliff” that results in families losing child care assistance if they receive a raise or new job at a higher wage—even though they cannot afford child care with their earnings alone. The governor’s budget begins to address those problems by:

  • Providing a rate increase for higher-quality child care providers of approximately 25 cents per hour. This year, small rate increases were given to providers who received three, four or five stars on the state’s quality rating system. For 2016, the governor proposes to also provide increases for providers earning two stars ($6.1 million).
  • Allowing families to remain eligible for child care for up to one year, even if their incomes rise ($16 million).
  • Permitting families that are eligible for care under Michigan’s current guidelines (121% of poverty) to continue to receive child care subsidies until household income exceeds 250% of poverty ($1.5 million).

An expansion of dental care to children ages 0-8 receiving Medicaid in the state’s most populous counties of Wayne, Oakland and Kent. The governor proposes to expand the Healthy Kids Dental program to an additional 210,000 children ages 0 through 8 in the three counties with an investment of $15.7 million ($5.4 million in state funds). With this expansion, 800,000 children statewide can access dental care, but more than 170,000 older children in Wayne, Oakland and Kent counties would still not be covered. Access to dental services is essential to prevent tooth decay, the No. 1 chronic disease in children.

What’s Missing From the Governor’s Budget?

Children are more likely to thrive when their parents are able to meet their basic needs, yet many critical state services that promote economic security continue to be underfunded.

Fewer families are receiving the income supports needed to ensure that they can provide adequate housing and meet their children’s other basic needs. The long-term effects of homelessness and extreme poverty on children are well documented, but policy changes over the last five years have reduced eligibility for income assistance programs, in part through stringent lifetime limits on assistance and the ending of income assistance for an entire family due to the truancy of a single child. Between 2007 and the current budget year, spending on income assistance in Michigan declined by 66%, despite continuing high child poverty rates.

The failure to increase income assistance payments has also pushed more children into extreme poverty. To be eligible for assistance, an average family of three must have an income below $9,780 annually and financial assets of less than $3,000. The maximum benefit for a family of three is $492 per month. Over 70% of those who benefit are children.

Between Oct. 1 and Dec. 31, 2014, nearly 2,400 children under the age of 6 were living in households that were sanctioned for failure to complete all steps required to retain full eligibility for income assistance. Approximately 85 families lost assistance because of lifetime limits during that quarter and 68 were affected by the state’s truancy policy.

More families are unable to adequately feed their children because of changes in food assistance policies and benefits. Fewer families can receive food assistance, and benefits have been reduced, in part the result of a state asset test. The Food Assistance Program (formerly the Food Stamp Program) is completely federally funded, with an average monthly benefit for a two-person household of $245. More than 70% of the families and individuals who get assistance with food receive no other cash assistance from the state. The number receiving food assistance began to fall in 2011, the same year that the state imposed a new asset limit. Between fiscal years 2011 and 2015, cases dropped by 13%. Over 40% of all food assistance recipients are children.

Michigan will continue to do too little to prevent child abuse and neglect. Almost one in every 10 children in Michigan lived in a family investigated for abuse or neglect in 2013, and almost 34,000 children ages 0 through 17 were confirmed victims. And, the numbers are growing—the rate of confirmed victims escalated by almost one-third between 2006 and 2013. Sadly, funding for the major programs to prevent child maltreatment has been reduced from $65.4 million in 2006 to $48.7 million in the governor’s budget proposal.

State investments in public health and children’s health services continue to lag. Two of every $3 spent on public health services is federal money. Over the last decade, nearly all increases in total public health funding have been from federal grants or other sources, while state investments have not been made. For 2016, the governor restores $1.5 million in funds to local public health departments, bringing funding to the level it was 10 years ago. Funding to expand home visiting services to at-risk families with young children in rural areas of the Upper Peninsula and Northern Lower Peninsula ($2.5 million in state funds) was kept at current year levels. A pilot program to improve child and adolescent health services and projects to test innovations in addressing a range of health issues, including health disparities in children, were also retained ($1.5 million).

Many public schools are struggling financially. The governor recommends a $75 per pupil increase for all districts. In addition, he proposes a 60% cut in funding currently available for school districts implementing best practices and the elimination of funding for performance grants ($51 million). Some districts that have been receiving best practice and performance grants will see a drop in per pupil funding under the governor’s plan, while others will benefit.

There have been needed increases recently in support for public schools, but they have not fully restored cuts taken during the Great Recession—even without factoring in the pressures created by inflation. In the current school year, districts receiving the minimum payment are still receiving $65 less per pupil than they were in 2011, and those at the maximum payment level are receiving $390 less per pupil.