Senate and House Subcommittees Approve DHS FY 2015 Budget

Full report in PDF

Appropriations subcommittees in both the Michigan Senate and House of Representatives have approved their versions of the Department of Human Services budget for Fiscal Year 2015, which begins on Oct. 1, 2014, and ends Sept. 30, 2015.

After years of declining investments, the DHS budgets approved by the House and Senate subcommittees further reduce total funding for DHS. The governor’s budget cut DHS by $397 million or 6.6% from the current year appropriation. The Senate subcommittee cut DHS by approximately 7% or $418 million, while the House subcommittee reduced funding by $436 million or 7.2%.

Reductions in spending partly reflect policy decisions that have made fewer families and children eligible for public assistance benefits, including lifetime limits on income assistance, and new asset tests for food assistance.

In the current fiscal year, the DHS budget is the state’s third largest, accounting for 12.3% of total spending from federal and state resources. Federal funds now account for more than 80% of DHS funding, up from 70% in Fiscal Year 2004. Other sources of revenue for DHS are state General Funds (17%); and state restricted, local and private funds.

DHS administers a range of services, including the Family Independence Program; the Food Assistance Program; State Disability Assistance; State Emergency Relief; and child protective, foster care, adoption and juvenile justice services. Decisions made by the Legislature will affect nearly 2.4 million Michigan residents—including over 1 million children—who receive some form of public assistance to help them hold low-wage jobs, feed and shelter their children, access healthcare, or survive when faced with serious illnesses or disabilities.

Income Assistance

Governor’s Budget:

  • Another deep reduction in funding for income assistance for families with children. The governor’s budget for Fiscal Year 2015 includes $151.6 million for the FIP program, a reduction of 29% from the amount appropriated in the current fiscal year ($214.3 million). The governor assumes that FIP caseloads will fall from 44,400 this year to 33,200 in 2015, a reduction of 25% in a single fiscal year.
  • Expansion of funds for out-stationed DHS workers. The governor recommends $19.3 million in federal, private and local funds to expand the number of out-stationed DHS workers by 150. With this funding, DHS would be able to expand the number of workers in hospitals, long-term care facilities, schoolbased centers or businesses that agree to pay a portion of the cost, using their contributions to draw down federal funding.
  • Continuation of the current Extended-FIP policy, which gives households leaving FIP due to earnings $10 per month in FIP assistance for six months. In 2011, when the state tightened its 48-month lifetime limit on FIP, those six months of very minimal assistance began to count against a family’s lifetime limit. The governor’s budget also removes language requiring DHS to notify persons eligible for Extended-FIP that receiving it will count toward federal and state lifetime limits.
  • Continuation of the current FIP children’s clothing allowance. The governor’s budget includes $2.9 million for the annual clothing allowance for children. The allowance was originally designed to make sure that school-age children have the opportunity to at least start the school year with a set of clothes. The program was restricted in 2011 to only those children in FIP cases that do not include an adult—e.g., children living with ineligible grandparents or other caregivers.

House Subcommittee:

  • The House subcommittee agrees with the governor’s recommended FIP caseload of 33,200, and total funding of $151.6 million.
  • The House subcommittee also allocates $2.9 million for the annual FIP children’s clothing allowance, but expands eligibility to all children ages 4 through 18.
  • The House subcommittee continues current policy of counting minimal Extended-FIP benefits against lifetime limits, but expands budget language requiring DHS to notify families of the effect on lifetime benefits on both the FIP application and the form that informs families of their eligibility.
  • The subcommittee agrees with the governor’s expansion of out-stationed workers, but transfers current DHS staff and funding, rather than increasing funding or the number of workers.

Senate Subcommittee:

  • The Senate subcommittee agrees with the governor’s projected FIP caseload of 33,200, a reduction of 11,200 cases monthly, reducing FIP funding by $62.3 million.
  • The Senate subcommittee adds budget language requiring DHS to report quarterly on: (1) the number and percentage of nonexempt FIP recipients who are employed; (2) the average and range of wages of employed FIP recipients; and (3) the number and percentage of employed FIP recipients who remain employed for 6 months or more.
  • The Senate subcommittee agrees with the governor’s expansion of out-stationed workers by $19.3 million and 150 full-time positions.
  • The Senate subcommittee agrees with the governor by continuing to count minimal Extended-FIP benefits against a family’s lifetime limits—affecting 1,105 families next year. The subcommittee retains the current requirement to notify families that Extended-FIP will count toward federal and state lifetime limits.
  • The Senate subcommittee includes new budget language requiring DHS to create a workgroup to determine how Michigan Works! job training programs can be revised to reflect declining FIP caseloads, including possible reductions in the amount of federal Temporary Assistance for Needy Families (TANF) funding that is provided to Michigan Works!

Food Assistance

Governor’s Budget:

  • A reduction of $444.5 million in FAP funding, to a total of $2.4 billion. The cut reflects the loss of federal ARRA funding as well as a projected drop in FAP households, from 894,750 this year to 890,000 in Fiscal Year 2015. Nearly 1.7 million Michigan residents received FAP benefits in January 2014, including over 700,000 children. Of those children, 242,408, or more than one-third, were under the age of 6.
  • Continuation of the optional state asset test for FAP benefits. Beginning in October 2011, DHS adopted an asset test for FAP eligibility that is not required under federal law. FAP households/groups must now have less than $5,000 in assets, including the value of vehicles after certain exemptions.
  • No resolution of the “Heat and Eat” provisions of the federal Farm Bill. The governor’s budget was released right before the Farm Bill was passed by Congress and therefore does not address federal cuts related to the “Heat and Eat” provisions of the bill. The Heat and Eat option, which has been utilized by 16 states including Michigan, allows states to use a standard utility allowance in determining food assistance benefits, including situations where eligible households receive a nominal $1 per year in energy assistance through the Low Income Health and Energy Assistance Program (LIHEAP). As a result, Michigan has been able to enhance the very modest Food Assistance benefits for some households, particularly important on the heels of a cut in benefits for all FAP recipients in November of 2013 due to the loss of funds from the American Recovery and Reinvestment Act.

Under the new Farm Bill, the nominal LIHEAP payment was increased to a minimum of $20 per years. Eight states, including New York, Pennsylvania, Connecticut, Rhode Island, Oregon, Montana, Massachusetts and Vermont have already announced that they will meet the new $20 minimum and continue current benefits for low income families, while two additional states and the District of Columbia are considering the change.

The House Fiscal Agency estimates—based on Fiscal Year 2010 data—that continuing the Heat and Eat option in Fiscal Year 2015 will require an additional $8.4 million in LIHEAP spending, but will prevent the loss of approximately $250 million in federal food assistance. Failure to raise the LIHEAP payment to $20 will result in the loss of $88 per month in food assistance for more than 235,000 low income families.

House Subcommittee:

  • The House subcommittee agrees with the governor on the projected FAP caseload of 890,000, as well as the loss of ARRA funding, resulting in a total cut in FAP funding of $445.5 million.
  • The House subcommittee also retains the FAP asset test.
  • The subcommittee’s budget bill does not address the “Heat and Eat” provisions of the federal Farm Bill.

Senate Subcommittee:

  • The Senate subcommittee concurred with the governor and the House on FAP caseloads and related funding.
  • The Senate subcommittee also retained the FAP asset test.
  • The subcommittee did not address the “Heat and Eat” provisions of the federal Farm Bill.

State Disability Assistance and Services

Governor’s Budget:

  • A reduction in funding for State Disability Assistance of 14%. The governor’s budget includes $17.9 million for the SDA, down from the $20.8 million appropriated in the current fiscal year. SDA caseloads have been decreasing since Fiscal Year 2010, in part because of efforts to ensure that SDA recipients who are eligible for federal Supplemental Security Income are transferred to that program.
  • A continued reduction in SDA cases. The governor assumes that the SDA caseload will also fall by 14% from the level budgeted in the current fiscal year, with total cases of 6,693 next year.
  • An increase in funding for Michigan Rehabilitative Services. The governor includes $4.4 million ($2.4 million in one-time funding) to allow DHS to draw down federal matching funds for rehabilitative services and avoid waiting lists.

House Subcommittee:

  • The House subcommittee agrees with the governor on a caseload of 6,693 for SDA, a reduction in funding of $2.9 million in state General Funds, and total funding for SDA payments of $17.9 million.
  • The House subcommittee includes only $2 million for Michigan Rehabilitative Services (down from the governor’s recommendation of $4.4 million), along with a $100 “placeholder” to ensure later budget discussions about the remaining $2.4 million that the governor designated as “one-time” funding.
  • The House subcommittee appropriates $1 million to expand a pilot project begun this year through the Centers for Independent Living, bringing total funding to $2.5 million. The goal is to develop accessible, comprehensive and coordinated services for persons with disabilities to improve financial self-sufficiency.

Senate Subcommittee:

  • The Senate subcommittee agrees with the governor’s overall reduction in funding for SDA payments from $20.8 million this year to $17.9 million in Fiscal Year 2015, as well as the projected SDA caseload of 6,693.
  • The Senate subcommittee agrees with the governor and expands funding for Michigan Rehabilitative Services by $4.4 million. In addition, the subcommittee adds $3 million to match $11.1 million in funding in the Department of Corrections to provide vocational and other services to persons with histories of probation and parole violations (not currently incarcerated), as well as those with severe mental health needs.
  • The Senate subcommittee also appropriates $1 million to continue and expand the Center for Independent Living pilot project.
  • The subcommittee includes new budget language that would limit the number of times persons could apply for disability assistance to two times per year—subject to federal approval.

State Emergency Services

Governor’s Budget:

  • Continuation of current energy assistance policies and appropriations. In addition to federal funding from the Low Income Home Energy Assistance Program (LIHEAP), in the past, Michigan received funds through the state’s Public Service Commission for energy assistance. After the courts ruled that the PSC did not have authority to collect restricted fee revenues, a decision that reduced funding by $60 million annually, the Legislature approved a new surcharge on electric meters to fund the Michigan Energy Assistance Program (MEAP). The MEAP was created in state law (P.A. 615 of 2012), and required DHS to establish a consolidated energy assistance program with a single, simplified application. For Fiscal Year 2015, the governor includes nearly $175 million in LIHEAP funding, as well as $60 million for the MEAP.
  • Continuation funding for State Emergency Relief services, including $13.6 million for local DHS office emergency services, $15.7 million for homeless services through the Salvation Army, $4.3 million for indigent burial services, $1.8 million for the Food Bank Council, and $3 million for multicultural services.

House Subcommittee:

  • The House subcommittee includes $165 million for LIHEAP—$10 million less than the governor—including approximately $85 million for home heating credits and $80 million for energy crisis assistance. The subcommittee used $10 million in federal LIHEAP to fund the MEAP, reflecting a statutory cap on the new surcharge of $50 million in collections, and bringing total spending for the MEAP in the House subcommittee budget to $60 million.
  • The House subcommittee concurs with the governor and provides $13.6 million for local office emergency services, $15.7 million for homeless programs, $4.3 million for indigent burials, $1.8 for food banks, and $3 million for multicultural integration funding and the Chaldean Community Foundation.

Senate Subcommittee:

  • The Senate subcommittee concurred with the governor, providing $175 million for LIHEAP, and $60 million for the MEAP.
  • The Senate subcommittee includes a $200,000 increase in funding for food banks, bringing total funding to nearly $2 million.

Child Welfare and Family Services

Governor’s Budget:

Foster Care and Protective Services

  • A slight increase in funding for foster care services. The governor recommends $190.3 million for foster care payments, up slightly from the $187.7 million appropriated for this year.
  • A small reduction in projected foster care cases. The governor cuts $2.4 million ($1 million state General Funds) to reflect a projected decline in foster care cases from 6,250 this year to 6,075 in Fiscal Year 2015. Foster care cases have been falling and, with the governor’s projections, will be down 43% between Fiscal Years 2005 and 2015.
  • Funding to pay 100% of private agency administrative rates. The governor includes a $5 million increase in funding to pay 100% of the private child placing agency administrative rate for new cases entering care. Those costs are currently split between the state and counties.
  • An increase of 4% in the County Child Care Fund. The governor includes $178 million for the Child Care Fund, an increase of 4% over the current year appropriation. The Child Care Fund provides for the care and treatment of delinquent or maltreated children who are court wards and not eligible for federal payments through Title IV-E. The primary sources of funding for the Child Care Fund are state General Funds (49.8%) and federal TANF (48.5%).
  • Increased funding for medical and psychiatric evaluations of abused and neglected children. The governor includes an additional $2.1 million for medical and psychiatric evaluations for children in the child welfare system, increasing total funding from $6.6 million to $8.7 million.
  • Funding to launch a new performance-based contracting model for child welfare services. The governor includes $1.4 million for the first phase of a new financing model for child welfare services.

Adoption Services

  • A small decrease in funding for adoption subsidies. The governor includes $241 million for adoption subsidies, a small decrease from the current year appropriation of $244 million. Subsidies are provided to families adopting children with special needs, and include both cash and medical subsidies for pre-existing medical or mental health conditions. Adoption subsidy average monthly caseloads increased by 11% between Fiscal Years 2005 and 2010, and have since stabilized at approximately 27,000. The major sources of funding for adoption subsidies are Title IV-E (46%), state General Funds (33%), and federal TANF (21%).
  • An increase in incentive payments for private agencies finalizing adoptions. The governor includes a total of $3.2 million—an increase of 5%—for private agencies that are placing children for adoption, including incentive payments to encourage more timely adoption turnaround times.

Family Preservation and Prevention

  • No reinvestment in prevention and family preservation services. The governor provides continuation funding for Strong Families/Safe Children ($12.35 million), Family Reunification ($3.98 million), and family preservation and prevention services programs ($2.5 million). Small cuts were made in the Families First program (from $17.2 million to $16.9 million), and the Child Protection and Permanency program ($13.2 million to $12.9 million). Total funding for family preservation and prevention programs fell from $60.6 million in Fiscal Year 2005 to $49.3 million in the current fiscal year—a reduction of nearly 19%, in the face of a 20% increase in the number of substantiated victims of child abuse and neglect.

Other Child and Family Services

  • An increase in funding for domestic violence prevention. The governor includes $514,200 for domestic violence prevention and treatment programs, increasing total funding from $15.2 million to $15.7 million.
  • Small increase in funding for juvenile justice reentry services. The governor recommends $800,000 for services for youths in the juvenile justice system to ease their re-entry into the community.
  • Funding for the Healthy Michigan Plan call center. The governor recommends $20.6 million (all federal funding) for a call center for Healthy Michigan Plan/Medicaid applicants and recipients.

House Subcommittee:

Foster Care and Protective Services

  • The House subcommittee recommends total funding for foster care payments of $188.4 million, slightly below the governor’s budget, but accepts the governor’s estimated foster care caseload of 6,075, at a projected cost of $28,061 per case for the year.
  • The House subcommittee increases the Child Care Fund to $185.2 million. The subcommittee agrees with the governor to pay 100% of the private agency administrative rate for new cases next year (rather than splitting costs with the counties), but appropriated those funds to the Child Care Fund, rather than to the foster care portion of the budget.
  • The House subcommittee includes the governor’s recommended increase in funding for incentive payments for private agencies that finalize adoptions in a timely manner ($3.2 million).
  • The subcommittee revises the goal limiting the number of children in foster care for longer than 24 months from 31% to 25%.
  • The House subcommittee appropriates an additional $3.7 million to increase rates paid to private agency residential care providers by slightly over 2%—provided the county match rate is eliminated for the increase.
  • The House subcommittee agrees with the governor to fund the launching of a new performance-based contracting model for child welfare services. In addition to the $1.4 million provided by the governor, the subcommittee provides $100,000 for a technical assistance contract for Kent County—the first county to pilot the new financing approach. Under the subcommittee bill, Kent County would privatize all foster care and adoption services (not child protective services) by Oct. 31, 2014, with performance-based funding in place at that time.
  • The House subcommittee accepts the governor’s proposed increase in funding (additional $2.1 million) for medical and psychiatric evaluations of abused and neglected children.

Adoption Services

  • The House subcommittee agrees with the governor on the projected adoption subsidy caseload of 26,800 at an estimated cost of $732 per month per case, as well as total spending for the program of $241.1 million.
  • The House subcommittee added budget language prohibiting DHS from using the income of the adoptive parent in determining eligibility for adoption support subsidies.
  • The House subcommittee adds $1 million for a “Parent to Parent” program to provide support for adoptive parents.

Family Preservation and Prevention

  • The House subcommittee concurs with the governor’s recommendation on funding for family preservation and prevention programs, with continuation funding for Strong Families/Safe Children, Family Reunification, and family preservation and prevention services programs, as well as small cuts in the Families First and Child Protection and Permanency programs.

Other Child and Family Services

  • The House subcommittee allocates $3 million for before- and after-school programs, as well as $500,000 for a school success partnership program through the Northeast Michigan Community Services Agency.
  • The House subcommittee approves the governor’s recommendation of $800,000 for services for youths in the juvenile justice system to ease their re-entry into the community.
  • The House subcommittee cuts $8.2 million ($3 million in state General Fund) by closing the Maxey Training School for delinquent youths, transferring those youths to other facilities.
  • The House subcommittee also approves $20.6 million in federal funding for the Healthy Michigan Plan call center.
  • The House subcommittee accepts the governor’s proposed increase in funding for domestic violence and prevention services.
  • The House subcommittee approves $350,000 for the Michigan Reading Corps to provide literacy services and tutors for students in kindergarten through third grade who are identified as being at risk of reading failure.

Senate Subcommittee:

Foster Care and Protective Services

  • The Senate subcommittee agrees with the governor on foster care caseloads and costs, projecting a decline in foster care cases to 6,075 next year, and a total reduction in related foster care costs of $2.4 million.
  • The Senate subcommittee agrees with the governor on a nearly $7 million increase (4%) in the County Child Care Fund, with total funding of $178 million.
  • The Senate subcommittee agrees with the governor’s recommendation to allocate $1.4 million for the new performance-based contracting model for child welfare services.
  • The Senate subcommittee increases funding for medical and psychiatric evaluations of children in the protective services and foster care systems by $2 million over the governor’s recommendation (an increase of $2.1 million), bringing total funding up to $10.7 million—up nearly 63% from the current fiscal year.
  • The Senate subcommittee agrees with the governor in approving a $5 million increase in funding to pay 100% of the private child placing agency administrative rate for new cases entering care.
  • The Senate subcommittee includes $300,000 to cover the costs foster parents incur in transporting their foster children to parent-child visitations.
  • The Senate subcommittee revises budget language to change the goal of limiting the number of children in foster care for longer than 24 months from 31% to 30%.
  • The Senate subcommittee adds new budget language requiring DHS to set clear policies for parent-child visitations, including written plans with a minimum of 3 hours per child per week.

Adoption Services

  • The Senate subcommittee concurs with the governor and includes $241 million for adoption subsidies, a decrease of $2.9 million from the current year based on a projected drop in the caseload of 350 cases to 26,800.
  • The Senate subcommittee increases funding for incentives payments for private agency adoptions by only 3.3% (compared to the 5% recommended by the governor), for a total increase of $2.2 million.
  • The Senate subcommittee includes $18.8 million to allow adoptive parents to claim enhanced payment rates for children who had special needs that existed at the time of adoption, but were not identified until later. Adoptive parents would be allowed to receive the enhanced rate one time for any eligible child from birth to age 18. This recommended change is in response to complaints filed by adoptive parents claiming that they were not notified that their adopted children had special needs, and includes physically disabled children needing greater supervision and care, as well as children with special mental health needs, requiring special diets, or with antisocial behaviors.
  • The Senate subcommittee includes budget language prohibiting DHS from negotiating adoption subsidies that are below the standard payment for foster care.

Family Preservation and Prevention

  • The Senate subcommittee concurs with the governor’s recommendation on funding for family preservation and prevention programs, with continuation funding for Strong Families/Safe Children, Family Reunification, and family preservation and prevention services programs; and small cuts in the Families First and Child Protection and Permanency programs.

Other Child and Family Services

  • The Senate subcommittee agrees with the governor’s recommended increase in funding for domestic violence prevention and treatment.
  • The Senate subcommittee includes $125,000 in state funds to match federal funding for the Michigan Reading Corps—for the purpose of literacy and tutoring services for children in kindergarten through third grade—as well as $300,000 to expand the School Success Partnerships program to four new counties through the Northeast Michigan Community Services Agency.
  • The Senate subcommittee includes $2.9 million for a database to track youths in the juvenile justice system.
  • The Senate subcommittee includes $500,000 to expand grants to rural communities to fund new and expanded in-home juvenile justice programs, bringing total funding to $1.5 million.
  • The Senate subcommittee includes the governor’s proposed increase in funding for juvenile justice reentry services of $800,000.
  • The Senate subcommittee includes funding for the Healthy Michigan Plan call center ($20.6 million in federal funds).

Could you buy your groceries on just $42 per week?

Last week was 2014’s National Week of Action, or Economic Security Week, organized by the Progressive States Network.

During this week, legislators across the nation participated in events and activities that lift up a shared progressive vision for economic security in America. In our state, Sen. Hoon-Yung Hopgood and Rep. Rashida Tlaib, representing Wayne County, were two of the legislators who stepped up to take the minimum wage grocery challenge, purchasing their groceries on just $42.

While this may have been a project for our state legislators, it is a way of life for many Michiganders. With the state’s minimum wage set at $7.40, many people are unable to make ends meet and provide the very most basic of needs for their families, such as food and housing. In fact, according to the Making Ends Meet report released last month, in Wayne county, a single adult must make $11.64 per hour in order to meet their most basic needs, and that is without any dependents to care for.

The Michigan League for Public Policy participated in an event held to raise awareness of the economic insecurity throughout our state on Tuesday, April 8 – Equal Pay Day. I was able to join with state Sens. Virgil Smith and Hoon-Yung Hopgood, as well as Mothering Justice and minimum wage mothers, to call attention to the fact that regardless of what county in Michigan you reside in, there is not a single county where a family of any type can support themselves on minimum wage alone.

This is especially significant as a female earner, who on average earns $0.74 for every dollar a man earns ($0.67 for African American women and $0.54 for Hispanic women), as highlighted in a new fact sheet on Pay Equity.

It has become clear that our current minimum wage is not enough and we must act to do more to raise our families out of poverty.

To learn more about efforts to raise the minimum wage in Michigan, visit Raise Michigan.

Shannon Nobles 

 

A Closer Look at the FY 2015 Budget: Department of Human Services

Full report in PDF

After years of declining investments, the governor’s Fiscal Year 2015 budget reduces total funding for DHS by 6.6% from the current year appropriation, from $6 billion to $5.6 billion. Reductions in spending reflect in part policy decisions that have made fewer families and children eligible for public assistance benefits, including lifetime limits on income assistance, and new asset tests for food assistance.

The Michigan Legislature is now working on its version of the Fiscal Year 2015 DHS budget, which affects nearly 2.4 million Michigan residents—including over 1 million children—who receive some form of public assistance to help them hold low-wage jobs, feed and shelter their children, access healthcare, or survive when faced with serious illnesses or disabilities.1

The governor’s recommendation, if adopted, would result in a total funding loss to the DHS of $1.5 billion or 21% in just five fiscal years. Total appropriations for DHS increased by an average of 9.4% annually between Fiscal Years 2007 and 2011, largely because of the increased need for federally funded food assistance.

Since 2011, appropriations have declined an average of 5.1% annually, as caseloads for Michigan’s income assistance program, the Family Independence Program, dropped precipitously.2

 

 

 

 

 

 

 

In the current fiscal year, the DHS budget is the state’s third largest, accounting for 12.3% of total spending from federal and state resources.3 The DHS administers a range of services, including the Family Independence Program; the Food Assistance Program; State Disability Assistance; State Emergency Relief; and child protective, foster care, adoption and juvenile justice services.

Federal funds now account for more than 80% of DHS funding, up from 70% in Fiscal Year 2004. Other sources of revenue for the DHS are state General Funds (17%); and state restricted, local and private funds.4

Income Assistance

Michigan’s income assistance program for families with children, the Family Independence Program, provides a maximum monthly benefit of $492 per month for a family of three. To be eligible, a family of three must have income below $9,780 annually, and financial assets of less than $3,000. The state’s youngest children are most likely to be in families receiving FIP benefits, and are most hurt by budget cuts that limit income assistance. In January 2014, 67,851 children received FIP assistance, with 43.9% of those children being under the age of 6.

The governor’s budget for Fiscal Year 2015 includes:

  • Another deep reduction in funding for income assistance for families with children. The governor’s budget for Fiscal Year 2015 includes $151.6 million for the FIP program, a reduction of 29% from the amount appropriated in the current fiscal year ($214.3 million). The governor assumes that FIP caseloads will fall from 44,400 this year to 33,200 in 2015, a reduction of 25% in a single fiscal year.5

Beginning in 2011, changes to state and federal lifetime limits for FIP resulted in unprecedented caseload declines.6 Assuming the governor’s budget is adopted, FIP caseloads will fall by 58% in just five fiscal years, while funding will fall by 64%.

These declines have occurred despite continued high unemployment in Michigan and rising child poverty. Between 2001 and 2012, child poverty nearly doubled, with one of every four children now living in poverty. During that same time, the percentage of the state’s children receiving FIP assistance fell by 40%. In January 2014, 68,000 children received FIP, down from 145,000 in January of 2009.7

  • Continuation of the Pathways to Potential program, with a new investment of $20.1 million in largely federal funds. The Pathways to Potential program currently locates DHS staff in 159 public schools around the state to make it easier for them to address families’ needs. With the new funding, DHS will also locate workers in hospitals, long-term care facilities, community mental health agencies, with private employers, and in corrections facilities to help with prisoner re-entry.
  • Continuation of the current Extended-FIP policy, which gives households leaving FIP due to earnings $10 per month in FIP assistance for six months. In 2011, when the state tightened its 48-month lifetime limit on FIP, those six months of very minimal assistance began to count against a family’s lifetime limit. The governor’s budget also removes language requiring DHS to notify persons eligible for Extended-FIP that receiving it will count toward federal and state lifetime limits. In Fiscal Year 2007, the monthly average Extended-FIP caseload was 3,534, with 10,901 recipients.8 For Fiscal Year 2014 (monthly average through February 2014), there were only 1,229 Extended-FIP cases, with 3,286 recipients.9 The governor’s budget assumes that the Extended-FIP caseload will drop to 1,105 in Fiscal Year 2015.
  • Continuation of the current FIP children’s clothing allowance. The governor’s budget includes $2.88 million for the annual clothing allowance for children. The allowance was originally designed to make sure that school-age children have the opportunity to at least start the school year with a decent set of clothes. The program was restricted in 2011 to only those children in FIP cases that do not include an adult—e.g., children living with ineligible grandparents or other caregivers.

Food Assistance

Food Assistance benefits (formerly called Food Stamps) are completely federally funded, with an average monthly benefit for a two-person household of $245. To be eligible, families must have incomes under approximately 200% of poverty or $38,180 for a family of three. More than 70% of FAP recipients receive no other state cash assistance.10

Between 2011 and 2013, the number of children receiving FAP dropped from 968,000 to 910,000, while child poverty remained high at 25%.

The governor’s budget for Fiscal Year 2015 includes:

  • A reduction of $444.5 million in FAP funding, to a total of $2.4 billion. The cut reflects a projected drop in FAP households, from 894,750 this year to 890,000 in Fiscal Year 2015.11 Nearly 1.7 million Michigan residents received FAP benefits in January 2014, including over 700,000 children. Of those children, 242,408, more than one-third, were under the age of 6.12
  • Continuation of the optional state asset test for FAP benefits. Beginning in October 2011, the Department of Human Services adopted an asset test for FAP eligibility that is not required under federal law. FAP households/groups must now have less than $5,000 in assets, including the value of vehicles after certain exemptions.
  • No resolution of the “Heat and Eat” provisions of the federal Farm Bill. The governor’s budget was released right before the Farm Bill was passed by Congress and therefore does not address federal cuts related to the “Heat and Eat” provisions of the bill. The Heat and Eat option, which has been utilized by 16 states including Michigan, allows states to use a standard utility allowance in determining food assistance benefits, including situations where eligible households receive a nominal $1 per year in energy assistance through the Low Income Health and Energy Assistance Program (LIHEAP). As a result, Michigan has been able to enhance the very modest Food Assistance benefits for some households, particularly important on the heels of a cut in benefits for all FAP recipients in November of 2013 due to the loss of funds from the American Recovery and Reinvestment Act.

Under the new Farm Bill, the nominal LIHEAP payment was increased to a minimum of $20 per years. Eight states, including New York, Pennsylvania, Connecticut, Rhode Island, Oregon, Montana, Massachusetts and Vermont have already announced that they will meet the new $20 minimum and continue current benefits for low income families, while three additional states are considering the change.

The House Fiscal Agency estimates—based on Fiscal Year 2010 data—that continuing the Heat and Eat option in Fiscal Year 2015 will require an additional $8.4 million in LIHEAP spending, but will prevent the loss of approximately $250 million in federal food assistance. Failure to raise the LIHEAP payment to $20 will result in the loss of $88 per month in food assistance for more than 235,000 low income families.

State Disability Assistance

The SDA, a totally state funded program, provides cash assistance to disabled adults who are permanently or temporarily unable to work, and have annual incomes of less than $5,400, and assets of less than $3,000.13 The average monthly payment for a single person is $225 per month, and the average length of time on SDA is approximately one year.

Beginning Oct., 2011, new SDA cases in independent living arrangements can receive at most $200, rather than the $269 available under previous policy.14 With fair market rent for a one-bedroom home of $530 in 2013, the typical SDA recipient has no income left to cover other basic needs such as transportation, personal items, clothing, utilities and other shelter costs.

Adjusted for inflation, SDA payments decreased (in 2005 dollars) from $264 in Fiscal Year 2005 to $169 in Fiscal Year 2013—a decline of 36%. SDA payments have fallen from 31% of the federal poverty line in 2006 to 20% of poverty in 2013. Even with the addition of food assistance benefits, new SDA recipients subsisted at 40% of the federal poverty line in 2013.16

The governor’s budget for Fiscal Year 2015 includes:

  • A reduction in funding for the SDA of 14%. The governor’s budget includes $17.9 million for the SDA, down from the $20.8 million appropriated in the current fiscal year. SDA caseloads have been decreasing since Fiscal Year 2010, in part because of efforts to ensure that SDA recipients who are eligible for SSI are transferred to that program.17
  • A continued reduction in SDA cases. The governor assumes that the SDA caseload will also fall by 14% from the level budgeted in the current fiscal year, with total cases of 6,693 next year.

State Emergency Services

Michigan provides a range of services to low-income families facing emergency situations, including State Emergency Relief (SER), and energy assistance programs. In the current fiscal year, $38.4 million was allocated for SER to be used for local office emergency payments for rent, moving expenses, housing payments and repairs, and non-energy utility assistance; homeless programs; burial costs for indigents; the Food Bank Council; and multicultural contracts.

A total of $197.4 million is available in the current fiscal year for energy assistance, including $164 million in federal block grant funding for the Low Income Home Energy Assistance Program (LIHEAP). In the past, Michigan also received grants from the state’s Public Service Commission for energy assistance, but the courts ruled that the PSC did not have authority to collect restricted fee revenue. The revenue lost from that court decision—nearly $60 million annually—was replaced in Fiscal Year 2013 by nearly $60 million in one-time state General Funds, while the Legislature worked out a new funding mechanism. For Fiscal Year 2014, the Michigan Legislature approved a new surcharge on electric meters to fund the Michigan Energy Assistance Program (MEAP).18

The governor’s budget for Fiscal Year 2015 includes:

  • No change in energy assistance appropriations. The governor recommends restoring $25 million to LIHEAP that was transferred in the current fiscal year to an energy self-sufficiency program. The federal LIHEAP block grant is determined each year through the federal appropriations process.
  • Continuation funding of $60 million for the Michigan Energy Assistance Program (MEAP). The MEAP was created in response to a state law (P.A. 615 of 2012) requiring DHS to establish a new consolidated program with a single, simplified application.
  • Continuation funding of $38.4 for State Emergency Relief services, including $13.6 million for local DHS office emergency services, $15.8 million for homeless services through the Salvation Army, $4.3 million for indigent burial services, $1.8 million for the Food Bank Council, and $3 million for multicultural services. The governor removes budget boilerplate language that specified certain multicultural services grants, adding new language that appropriates the funding based on as competitive grant process that includes performance-related metrics.

Child Welfare Services

Michigan’s child welfare system, including protective services, foster care, adoption and family preservation and prevention services account for approximately 28% of all state General Funds in the DHS budget. Funding for child welfare staffing has increased in recent years as the state has been required to comply with a settlement agreement resulting from a lawsuit related to its failure to protect children.

The governor’s budget for Fiscal Year 2015 includes:

  • A slight increase in funding for foster care services. The governor recommends $190.3 million for foster care payments, up slightly from the $187.7 million appropriated for this year. Included are a reduction of $2.4 million ($1 million state General Funds) to reflect a projected decline in foster care cases from 6,250 this year to 6,075 in Fiscal Year 2015, as well as a $5 million increase in funding to pay 100% of the private child placing agency administrative rate for new cases entering care.

Foster care cases have been falling, and with the governor’s projections will be down 43% between Fiscal Years 2005 and 2015.19

  • An increase of 4% in the County Child Care Fund. The governor includes $178 million for the Child Care Fund, an increase of 4% over the current year appropriation. The Child Care Fund provides for the care and treatment of delinquent or maltreated children that are court wards and not eligible for federal payments through Title IV-E. The primary sources of funding for the Child Care Fund are state General Funds (49.8%) and federal TANF (48.5%).

 

  • A small decrease in funding for adoption subsidies. The governor includes $241 million for adoption subsidies, a small decrease from the current year appropriation of $244 million. Subsidies are provided to families adopting children with special needs, and include both cash and medical subsidies for preexisting medical or mental health conditions. Adoption subsidy average monthly caseloads increased by 11% between Fiscal years 2005 and 2010, and have since stabilized at approximately 27,000. The major sources of funding for adoption subsidies are Title IV-E (46%), State General Funds (33%), and federal TANF (21%).
  • No reinvestment in prevention and family preservation services. The governor provides continuation funding for Strong Families/Safe Children ($12.35 million), Family Reunification ($3.98 million), and family preservation and prevention services programs ($2.5 million). Small cuts were made in the Families First program (from $17.2 million to $16.9 million), and the Child Protection and Permanency program ($13.2 million to $12.9 million).

Funding for major child abuse and neglect prevention programs has been stagnant or cut—in the face of increased reports of maltreatment and growing victimization. Total funding for family preservation and prevention programs fell from $60.6 million in Fiscal Year 2005 to $49.3 million in the current fiscal year—a reduction of nearly 19%.20 The number of substantiated victims of child abuse and neglect grew by more than 20% between Fiscal Years 2005 and 2013, with 37% of those victims under the age of 4.21

Endnotes

1. Green Book Report of Key Program Statistics, Michigan Department of Human Services (January 2014). Includes FIP, SDA, FAP, CDC and Medicaid recipients.
2. Koorstra, K., Human Services Background Briefing, House Fiscal Agency (December 2013).
3. Jeffries, E., State Budget Overview, Senate Fiscal Agency (January 13, 2014).
4. Koorstra, K., Human Services Background Briefing, op. cit.
5. Review and Analysis of FY 2014-15 and FY 2015-16 Executive Recommendation, House Fiscal Agency (February 2014).
6. Koorstra, K., Human Services Background Briefing, op. cit.
7. Trend Report of Key Programs Statistics, January 2014; and Key Statistics for FY 2007, FY 2008 and FY 2009, Michigan Department of Human Services.
8. Extended Family Independence Program (EFIP) Cases, Recipients and Payments—Fiscal Years 2005, 2006, and 2007, Michigan Department of Human Services.
9. Trend Report of Key Program Statistics, Department of Human Services (February 2014).
10. Koorstra, K., Summary: Executive Budget Recommendation for Fiscal Years 2014-15 and 2015-16, Department of Human Services, House Fiscal Agency (February 19, 2014).
11. Ibid.
12. Green Book Report of Key Program Statistics, op. cit.
13. Koorstra, K., Human Services Background Briefing, op. cit.
14. Koorstra, K., and Burris, T., Line Item and Boilerplate Summary for Human Services, House Fiscal Agency (September 2013).
15. Michigan Department of Human Services Information Packet, DHS Budget and Grant Management Division (June 2013).
16. Ibid.
17. Ibid.
18. Koorstra, K., Human Services Background Briefing, op. cit.
19. Koorstra, K., Human Services Background Briefing, House Fiscal Agency (December 2013), and FY 2014-15 and FY 2015-16 Budget Detail for Health and Human Services, House Fiscal Agency (February 2014).
20. Information from K. Koorstra, House Fiscal Agency.
21. Letter to Senator Bruce Caswell, Chair, Senate Appropriations Subcommittee on the Department of Human Services, and Representative Peter MacGregor, Chair, House Appropriations Subcommittee on the Department of Human Services, from Susan Kangas, Chief Financial Officer, Michigan Department of Human Services (January 1, 2014).

 

War on Poverty: Part 2

From the League’s First Tuesday newsletter
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Today marks the 50th anniversary of President Lyndon Baines Johnson’s now-famous State of the Union address that launched the War on Poverty:

“Unfortunately, many Americans live on the outskirts of hope — some because of their poverty, and some because of their color, and all too many because of both. Our task is to help replace their despair with opportunity.

While some pundits will undoubtedly seize the anniversary as an opportunity to wrongly declare the War on Poverty a failure, we should instead recommit to LBJ’s vision, as there is plenty of evidence that it worked. And what an incredible return on investment! (more…)

A gift for the future

From the First Tuesday newsletter
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 The holidays are upon us, and I’d like to offer Michigan the gift that keeps on giving – 10 ways to invest in our future.

The generations that came before us knew what it took to build a Mighty Mac, freeways and strong universities. Yet today, when you hear about economic development, you often hear about tax cuts, not investments. We can’t cut our way to prosperity. We simply must pay it forward for future generations and give them the investments they need for a strong economy.

A recent report by Senior Policy Analyst Pat Sorenson offers 10 ways to invest in our economy. It’s the League’s gift for the future:

1.
Invest
In early childhood.
2. Make sure all kids get
a great education – and a diploma!
3. Make college affordable 4. Encourage good health
with access to physical and mental health treatment 5. Offer help
with basic needs to those who cannot work or who cannot find
a job. 6. Invest in community services to attract businesses and young
professionals. 7. Generate revenue by strengthening the personal income tax,
based on the ability to pay. 8. Make sure businesses pay their fair share 9. Bring sales tax
into the modern age by taxing services and Internet sales. 10. End ineffective tax breaks
and put funds
into what works.

Happy holidays, and make sure to sign up for our Dec. 9 policy forum!

– Gilda Z. Jacobs

As economy improves, food assistance goes down

A new report from the Center on Budget and Policy Priorities found that spending for the food assistance program called SNAP (Supplemental Nutrition Assistance Program) fell slightly in fiscal year 2013. This trend is expected to continue as the economy recovers and fewer low-income people qualify for SNAP.

As seen in previous recessions, this is expected enrollment behavior for SNAP: Caseloads go up when unemployment rises and the economy struggles and then they go down when the economy recovers and more jobs become available. The recent increase in SNAP caseloads is due almost exclusively to the deep recession and our current slow recovery.  The Congressional Budget Office predicts that SNAP spending will return to its 1995 levels by 2019. (more…)

Ten steps to boost Michigan’s economy

new report by the League outlines 10 steps Michigan must take to improve its economy, refuting the myth that tax cuts are a shortcut to economic prosperity. Included in the report are strategies for investing in the services and infrastructure needed to create jobs and fuel economic growth, as well as tax changes that modernize and strengthen the state’s revenue system.

It is an agenda for long-term economic prosperity that includes investments in education from early childhood through higher education, access to the health and mental health services needed for a healthy workforce, basic income security for those who cannot work or find jobs, and support for the community services businesses and consumers rely on. (more…)

Hunger grows at time of thanks

From the League’s First Tuesday newsletter
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It’s November and time to look forward to Thanksgiving — a treasured American holiday, symbolized by the bounty of the pilgrim harvest. For my family, that means turkey, stuffing and all the trimmings.

For too many in Michigan, however, Thanksgiving will be a reminder of the ongoing struggle to put enough food on the table.

Nearly one in every seven Michigan households reported difficulty affording food at some point last year. And a plan before Congress, if adopted, will worsen hunger and jeopardize Michigan’s fragile economic recovery as well. (more…)

Food Assistance at Risk

Full report in PDF

A proposal being considered by Congress could eliminate food assistance for almost 4 million Americans, including seniors, children, people with disabilities, and veterans. Yet more than 1.6 million people still live in poverty in Michigan and 424,000 cannot find work in this still struggling economy. Cutting food assistance funding would hurt families and jeopardize Michigan’s fragile economic recovery.

In September the U.S. House of Representatives passed a bill to cut the Supplemental Nutrition Assistance Program (SNAP), known as Food Assistance in Michigan, by almost $40 billion over the next 10 years. This is in sharp contrast to the $4 billion in cuts over the same period contained in the bipartisan Senate Farm Bill that passed this past summer. The cuts in the House SNAP bill are found in very harmful provisions that will strike at millions of the most vulnerable Americans and would come on top of an estimated $5 billion in cuts to food assistance when Recovery Act expansions to the SNAP program expire Nov. 1 and 1.7 million Michiganians see their benefits cut by $183 million. Here is an overview of the major SNAP cuts in the House legislation (H.R. 3102):

Paying States for Ending Snap for Poor Families That Cannot Find Work:

Not quite a “work” requirement: This provision introduces a “work” requirement that would allow states to cut off an entire family’s SNAP benefits, including children, if the parent is not working or participating in job training. This is true regardless of the availability of jobs or job training slots and the family can be cut off for an unlimited time.

THE HOUSE BILL uses a carrot-and-stick approach by pushing states to kick families off of SNAP and punishing them if they don’t.

The carrot: States that implement this option would be rewarded by being able to keep up to half of the federal savings found in ending SNAP for these families. States could then use that money for any purpose – including tax cuts and special interest subsidies.

The stick: States that decline to cut families that can’t find work from SNAP would lose all federal matching funds for their SNAP employment and job training programs. This punishes the state and exhibits a total lack of commitment to helping the poorest families get jobs in our still-struggling economy.

Outcome: Despite this provision’s focus on “work” it does not provide any funding for work supports but instead encourages states to remove families from SNAP and rewards the states with money that they can spend however they like.

Cutting Off Unemploymed Childless Adults Even When Jobs Are Scarce:

A three-month time limit: Currently, childless adults without disabilities who receive SNAP are subject to a three-month time limit out of every three years unless the recipient is working or participating in job training at least 20 hours a week.

The waiver: States are allowed a temporary waiver from this time limit in areas with high unemployment. In the wake of the recession, 45 states are currently using this waiver, including Michigan. In fact, Michigan’s history of high unemployment has resulted in the state utilizing the waiver for almost a decade. Even now, approximately 1 in 11 Michiganians are unable to find work in an economy that is simply not producing enough jobs for all that want and need to work.

THE HOUSE BILL eliminates this waiver, regardless of the level of unemployment or lack of jobs.

Outcome: Nationally, 1.7 million people will lose SNAP benefits including 50,000 veterans, even if they want to work and are willing to take a job or participate in a training program, but nothing is available. In Michigan, 212,000 of the poorest adults in the state will lose food assistance in 2014 alone under this provision. The waiver would also become unavailable in the future should unemployment soar again.

Did you know?

These waivers are designed to kick in during periods of high unemployment. As the economy improves, they would automatically end anyway, without this legislation.

Eliminating a Cost-Sharing Option That Helps Poor Working Families With High Child Care and Housing Expenses:

The Categorical Eligibility Option allows states to extend benefits to certain low-income households with gross incomes or assets modestly above federal SNAP limits. States use this option to reduce paperwork, cut administrative costs, serve working families with high child care or shelter costs and allow poor households to retain modest assets. Over 40 states have taken this option, including Michigan.

THE HOUSE BILL eliminates the categorical eligibility option.

Outcome: 2.1 million people would lose SNAP in 2014, as would another 1.8 million over the next decade. In addition, 210,000 children would lose free school meals they were receiving because of categorical eligibility.

 Other Benefit and program Cuts Contained in the Bill Would:

  • Eliminate the “Heat and Eat” option that allows states to simplify the way they determine household eligibility when considering a family’s utility costs. 850,000 households are expected to lose an average of $90 a month in SNAP benefits.
  • Eliminate the current performance incentives system that encourages states to reduce payment errors and improve services to low-income families. Under this system the SNAP error rate for overpayment dropped to just 2.77% in 2012.
  • Permanently deny SNAP to certain ex-offenders for life if they were convicted of one of a specified list of violent crimes after the bill’s enactment, regardless of whether they had served their sentence and complied with all terms of release, probation, and parole.
  • Cut funding for nutrition education that promotes healthy eating choices among low-income households.

 

Not all blessed with food

Next month many of us will celebrate Thanksgiving with a big meal and lots of good food. Not everyone will be so blessed, though.

On Nov. 1, 1.8 million children, veterans, seniors and others in Michigan will see their food assistance reduced. Over the next year, food assistance will be cut $183 million in our state alone. (more…)

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