Let’s get real about adult education

Michigan underfunds and underutilizes adult education, the Michigan League for Public Policy testified to a Senate subcommittee this morning.

Citing a new report by the League, members learned that Michigan is not reaching anywhere near enough of the working age adults who lack basic skills to be part of the state’s workforce development push.

The governor and the Legislature have been rightly pushing to build and update the skills of Michigan’s workforce, but by neglecting adult education as a skill-building strategy, they are leaving behind a large pool of workers who have the potential to become skilled workers and better support their families. (more…)

A First Look at the Governor’s Fiscal Year 2016 Budget

Governor Proposes Positive Investments Despite Revenue Losses

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

  • A new $49 million initiative to improve reading by third grade;
  • $100 million in additional funding for children at risk of falling behind their peers academically;
  • Funding to expand the number of child care licensing inspectors the state needs to keep children safe;
  • Increases in child care provider payments and policy changes that allow families to keep their child care even if their incomes increase;
  • Increased investment in dental payments for adult Medicaid enrollees to promote access;
  • An expansion of dental care to children ages 0-8 receiving Medicaid in the state’s most populous counties of Wayne, Oakland and Kent;
  • An increase in funding for mental health services for people not eligible for Medicaid;
  • $6 million in new funding for community college independent part-time student grants; and
  • Increased funding for universities contingent on limits in tuition increases of 2.8% or less.

Despite these wins for lower-wage families and their children, there are many critical state services that continue to be underfunded, ultimately thwarting the state’s economic growth. Children are living in deeper poverty in Michigan in part because of policy changes that reduced eligibility for income assistance programs – including stringent lifetime caps on assistance and the elimination of income support for an entire family due to the truancy of a single child. Fewer families can receive food assistance and food assistance benefits have been reduced, in part the result of a state asset test. And, while there have been small increases recently in support for public schools, universities and communities, in most cases, they have not fully restored cuts taken during the Great Recession even without factoring in the pressures created by inflationary increases in costs.

While the governor has proposed a balanced budget for 2016, 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 the state with few other options to fix the roads without further depleting scarce state funds needed for other vital state services.

Also acting as an anchor dragging on the state budget are the 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 offsetting 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.

The 2016 Executive Budget

While Michigan’s economy is growing, shortsighted tax policy decisions by state lawmakers created budget shortfalls in excess of $300 million this year and $500 million in the upcoming fiscal year. Most of the shortfall is the result of deep cuts in business taxes that were approved by the Michigan Legislature in 2011 – in the face of known outstanding business tax credits that are expected to be a drain on the budget for many years to come.

As part of the effort to balance the current year budget, the governor issued an Executive Order on Feb. 11 cutting nearly $103 million in state funds, with additional cuts to be taken through mid-year budget-cutting legislation. Together, these cuts will essentially zero out overall funding increases in the current budget year, and many of the reductions are maintained or expanded in the governor’s 2016 budget proposal.

The total budget proposed by the governor is $53 billion, including all state and federal revenue. Over 40% of the budget is supported by federal funds. In addition, Michigan has two major State funds for services: the General Fund ($9.5 billion in the governor’s budget), and the School Aid Fund ($14.4 billion). The School Aid Fund can only be used to fund public education, including more recently postsecondary education.

The governor recommends a $95 million deposit to the state’s “rainy day fund,” bringing the balance to nearly $616 million by the end of the 2016 fiscal year.

Among the governor’s stated objectives for the 2016 budget are investments in: (1) education, with a focus on early learning 0–3; (2) skilled trades; (3) public safety; and (4) health and human services.

SCHOOL AID

The governor’s 2016 School Aid budget includes total state and local funding of $13.96 billion, an increase of $88.6 million over the current year or less than 1%. The governor recommends that in 2016, School Aid revenues be used to fund universities ($205 million) and community colleges ($256.7 million).

In the current fiscal year, approximately $2 of every $3 in the School Aid budget are used for the per-pupil foundation allowance, which is the bedrock of school operations. Other major expenditures include special education (10%), programs for children at-risk of educational failure (2%), and early childhood education programs (2%).

Per-Pupil Funding: Each year the Michigan Legislature determines the level of per-pupil payments school districts will receive. After reductions in the per-pupil payments of $470 between 2009 and 2012, in the current school year districts receiving the minimum payment are still receiving $65 less per pupil than they were in school year 2010-11, and those at the maximum payment level are receiving $390 less per-pupil.

The minimum per-pupil state payment to districts this year is $7,251, while the maximum is $8,099. One goal for school financing reforms adopted in 1994 in Michigan was to close the funding gap, and this year the gap between districts receiving the maximum and minimum payments was reduced to $848 per pupil.

For 2016, the governor recommends:

  • A $75 per pupil increase for all districts, bringing the minimum payment to $7,326 and the maximum to $8,174 ($108 million total investment).
  • A 60% cut in funding for school districts implementing best practices, from $75 million to $30 million. The best practices criteria are changed by the governor to focus on school district fiscal stability, as well as early reading and kindergarten entry assessments.
  • The elimination of funding for performance grants ($51 million).

Although the governor proposes an across-the-board increase of $75 per pupil, for some districts that will be offset by the loss of funding from best practices or performance grants. Some districts could actually lose per-pupil funding if they are currently receiving both best practices and performance grants.

Funding for School Districts in Fiscal Distress: The governor proposes a significant increase in funding for financially struggling school districts. The 2016 budget includes $75 million for districts with severe academic and fiscal stress, although details on how those funds would be allocated are still to be determined, based on recommendations from a coalition of business, academic and civic leaders.

At-Risk Programs: Michigan provides funds to school districts for a range of instructional and noninstructional services for at-risk students based on the number of children qualifying for free- and reduced-price meals. This year, budget language was adopted to focus those dollars on: (1) improving third-grade reading proficiency; and (2) graduating students who are career and college ready. Funding for at-risk students has not been increased in over a decade, remaining at $309 million.

For 2016, the governor recommends:

  • An additional $100 million for at-risk students, bringing total funding to $409 million.
  • A continuation of current year funding for adolescent health centers ($3.6 million) and hearing and vision screenings ($5.2 million).

Early Childhood Education and Care: Over the last two years, Gov. Snyder and the Legislature approved a $130 million increase in funding for the Great Start Readiness preschool program for low-income and at-risk 4-year-olds. For 2016, the governor proposes a budget that addresses school readiness and third-grade reading proficiency comprehensively, starting in the earliest years of life.

For 2016, the governor recommends:

  • Continued funding for the Great Start Readiness program ($239.6 million).
  • A new third-grade reading initiative with total funding of $48.6 million ($25 million state funds) that includes:
    • An expansion of home visits to at-risk families to encourage early literacy activities and identify children with disabilities and developmental delays, with funds going to Intermediate School Districts ($5 million).
    • New funds for parent education pilot programs for families with children under age 4. The programs would be open to families regardless of income, with fees on a sliding scale ($1 million).
    • Funding to test new elementary teachers on reading instruction capabilities prior to their certification to teach, as well as professional development for current teachers ($1.45 million).
    • Funds to train teachers and administrators in the use of literacy diagnostic tools ($1.45 million).
    • Funding for additional instruction time for students who need extra assistance with reading, including assistance before, during and after school, as well as summer school programs ($10 million).
    • New literacy coaches for K-3 teachers, coordinated through Intermediate School Districts ($3 million).
    • Funds to implement the Kindergarten Entry Assessment ($2.6 million).
  • A new oversight commission outside of state government to monitor progress toward improving third-grade reading proficiency. The governor’s proposal is based on a model in Kentucky where the commission has business and philanthropic support and leadership.

Career and College Readiness:

For 2016, the governor recommends:

  • Continuation funding of $22 million for adult education. Michigan has cut state funding for adult education drastically in the past 20 years, from $185 million in 1996 to $22 million this year. The state is currently in the process of changing how it allocates those funds statewide, focusing on the percentage of people in a region who are not high school graduates or lack basic English proficiency.
  • An expansion of career and technical education through early/middle college programs in the 10 prosperity regions ($17.8 million) as part of a total $36 million investment in the governor’s new talent initiative.
  • Funds to expand the level of awareness of available college and career choices and increase the number of college advisors in schools ($2.2 million).

EDUCATION

The budget for the Michigan Department of Education grew significantly in 2012 with the launching of the Office of Great Start and the transfer of the state’s subsidized child care program from the Department of Human Services. Two of every $3 spent by the Department are from federal sources, with the Child Development and Care program accounting for $110 million (38%) of the total $287 million budget.

Overall funding for child care, as well as the number of families served by the child care program, fell steeply in recent years, in part because of changes in state policy and reimbursement rates that fall far below market rates. The governor’s budget begins to address those problems by providing funds to increase rates slightly and by allowing families to remain eligible for child care even, if their incomes rise in some circumstances.

For 2016, the governor recommends:

  • A new policy that would allow families to remain eligible for child care for up to one year, even if their incomes rises. The goal is to provide greater work and child care stability ($16 million).
  • In addition, once families are eligible for care under Michigan’s current low-income guidelines (121% of poverty), they could remain eligible until household income exceeds 250% of poverty ($1.5 million).
  • 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).
  • A 50% expansion in the number of child care licensing inspectors needed to ensure basic health and safety in child care settings. The governor includes $5.7 million to reduce the number of providers each child care licensing inspector is responsible for from approximately 150 to 98. Michigan has come under federal scrutiny for its failure to ensure compliance with child care licensing rules, and recent federal law changes require states to do both prelicensure and annual inspections.

HUMAN SERVICES

The governor’s fiscal year 2016 budget includes $5.73 billion in total funding for the Department of Human Services (DHS), including $978.9 million in state dollars, a reduction of 0.4% from initial current year funding of $5.75 billion.

The single largest program in the human services budget is the federally funded Food Assistance Program, which accounts for 45% of total departmental spending. Federal funds account for nearly 80% of the DHS budget, up from 70% in 2004. Other major programs include children’s services (20%), administration and field operations (18%) and other public assistance programs (8%).

Income Assistance: The Family Independence Program (FIP) provides minimal income assistance to low-income households with dependent children. To be eligible for FIP, an average family of three must have 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.

For 2016, the governor recommends:

  • A 6% cut from current year FIP spending (from $146.6 to $138 million), partly due to a reduction in the number eligible, which the governor projects will be 31,400 families next year. Policy changes made in 2011 resulted in dramatic decreases in FIP cases, despite continued high poverty rates, particularly among children. Between 2007 and the current budget year, spending on income assistance declined by 66%.
  • An expansion of the Pathways to Potential program with $20.6 million in private contributions and federal funding. In addition to schools, staff will be located in health clinics, hospitals and with private employers to determine eligibility and assistance obtaining services.
  • Elimination of Extended-FIP that gives households who are no longer eligible for income assistance due to increased earnings a nominal $10 per month in assistance for six months after they leave the program, ostensibly to help them access other state services as well as allowing the state to continue counting the households in its federally mandated work participation rate. This minimal assistance does, however, count against the state’s more stringent lifetime limits and could hurt children in the long run.
  • Continued funding of $2.88 million for the annual children’s school clothing allowance. The assistance is available only for children who are living with grandparents and others who are not eligible for assistance.

Food Assistance: 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 FAP recipients receive no other cash assistance from the state. The number receiving food assistance began to fall in Michigan in 2011, the same year that the state imposed a new asset limit. Between fiscal years 2011 and 2015, cases dropped by 13%.

Beginning Oct. 1, 2014, food assistance recipients no longer receive $1 in federal energy assistance (LIHEAP) that previously helped recipients claim the maximum utility deduction, which subsequently increased their food assistance. The 2014 federal Farm Bill increased the required amount of LIHEAP funding for eligibility purposes from $1 to $20, which essentially left states with the option of increasing the minimum energy assistance benefit to $20, or accepting food assistance cuts for many Michigan residents, along with the associated loss of federal funds. Michigan chose the latter.

For 2016, the governor recommends:

  • Continuation funding of $2.56 billion for food assistance.
  • No change in the policy that rejects additional federally funded food assistance because of a needed increase in the minimum energy assistance benefit.
  • No change in the asset test that was imposed on individuals applying for federal food assistance, and which is a state option.

State Disability Assistance: The State Disability Assistance program, a completely state-funded program, provides cash assistance to adults with disabilities who are permanently or temporarily unable to work and who have annual incomes of less than $5,400 and under $3,000 in assets. The average monthly payment for a single person is $225 per month, and the average length of time on SDA is approximately one year.

Between 2011 and 2012, the number of people receiving state disability assistance fell by 14% and has steadily declined since. There was a 35% drop in the number receiving assistance between fiscal years 2011 and 2015.

For 2016, the governor recommends:

  • A small increase in funding for the State Disability Assistance program – up from $14.4 million this year to $14.89 million in 2016.

Energy Assistance: Michigan uses federal Low-Income Home Energy Assistance Program (LIHEAP) block grant funding for four programs: the Home Heating Credit, State Emergency Relief, the new Michigan Energy Assistance Program, and weatherization.

For 2016, the governor recommends:

  • Continuation of current year spending of $175 million in federal funds for energy assistance.
  • Continuation funding of $50 million for the Michigan Energy Assistance Program, which 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.

Child Welfare Services: Michigan’s child welfare system includes protective services, foster care, adoption, and family preservation and prevention services. To comply with requirements related to a lawsuit against the state for its failure to protect children, the state has been required to increase child welfare funding for staffing, training and other programs.

For 2016, the governor recommends:

  • FOSTER CARE: A reduction in foster care payments attributed to a decline in number of children under state supervision. The governor’s budget recommends a change in the foster care payment system to focus on actuarially sound rates and performance-based outcomes.
  • CHILD CARE FUND: A decrease of nearly 3% for the Child Care Fund (from $182.2 to $177.3 million). The Child Care Fund reimburses counties for 50% of their costs related to the care and treatment of children who are wards of the court, including out-of-home and in-home services. In the current fiscal year, several foster care rate increases were implemented that deviate from the 50/50 cost-sharing arrangement. The governor’s budget reduces the private agency administrative rate from $40 to $37 per day, and returns to a 50/50 state and county cost-sharing model to save $10.4 million ($8.7 million state funds).
  • ADOPTION: A 3% decrease from the initial current year funding for adoption subsidies (from $247.7 to $239.9 million). Subsidies are provided to families who are adopting children with special needs and include both cash and medical assistance. The number of families receiving adoption subsidies has been relatively stable since fiscal year 2011, between 26,000 and 27,000. The governor’s budget includes savings of $6.9 million ($6.5 million state funds) by restricting eligibility for a supplemental payment now available to parents whose children display additional medical needs after adoptions are completed.
  • YOUTH IN TRANSITION: $15 million for Youth in Transition programs, a slight decrease from initial current year funding. The Youth in Transition program assists 14- to 20-year-olds who are currently or were previously in foster care. Funds are used to provide independent living services, housing assistance, education or employment support, mentoring and other assistance to meet basic needs. Youth in Transition dollars also fund intervention programs for runaway or homeless youths. The governor’s budget continues the practice of setting aside $750,000 for Fostering Futures Scholarships for youths attending college in the state.
  • PREVENTION SERVICES: The governor’s budget provides continuation funding for Strong Families/Safe Children ($12.35 million), as well as $38.86 million for family preservation programs, including Families First ($16.98 million), Child Protection and Permanency ($12.89 million) and Family Reunification ($6.49 million).

Juvenile Justice Services: The governor recommends slightly decreased funding for the state’s three DHS-operated juvenile justice facilities: W.J. Maxey Training School, Bay Pines Center and Shawono Center. Funding previously provided to expand in-home community care programs to rural areas is reduced by 60%, from $1 million to $400,000.

COMMUNITY HEALTH

The governor’s budget recommends a mixture of initiatives, funding and program reductions, and significant funding shifts. Total recommended funding for the Department of Community Health is $19 billion, including $3 billion in state funds, which is lower than the initial appropriation for the current budget year. The bulk of DCH’s funding is for the state’s Medicaid and Healthy Michigan Plan programs (78%), followed by mental health and substance abuse services (16%). In 2016, federal funds will make up over 70% of the DCH budget.

Medicaid and Healthy Michigan Plan: Nearly one in every four Michigan residents relies on Medicaid or the Healthy Michigan Plan for healthcare coverage. In the current budget year, the governor projects that 1.7 million Michigan residents will be covered by Medicaid, with an additional 540,000 recipients enrolled in the Healthy Michigan Plan. The governor’s budget for 2016 projects a very small increase in Medicaid enrollees (about 13,000) and continued growth in Healthy Michigan Plan (40,000) enrollees (40,000), bringing total enrollment for the Healthy Michigan Plan to 580,000.

For 2016, the governor recommends:

  • Continuation of $100 million savings in state funds for Medicaid based on lower projections of the number of persons who will be enrolled in the current year.
  • $3.5 billion for the Healthy Michigan Plan, which is financed with all federal funds for the final year. For the program to continue, Michigan must submit a second waiver to the federal government and it must be approved by the end of 2015.
  • Removal of prescription drugs from the Medicaid managed care contracts and development of a separate pharmacy benefit contract. This proposal is expected to generate higher drug rebates, as well as administrative savings for a total of $22.1 million in state funds.
  • $36.8 million for autism services, restoring the reduction made in 2015 due to the slow start of the program. The budget also recommends increasing coverage to age 21 from the current age 6. One-time funding is continued to train autism services providers through Michigan State University, Western Michigan University, Central Michigan University, Oakland University and Eastern Michigan University. Total funding for training is reduced from $7 million to $2.5 million, with $500,000 allocated to each university.
  • Funding of $8.3 million in state funds ($24.2 million in total) to provide full-year funding to continue approximately half of the rate increase for primary care providers. This critical state investment is intended to encourage primary care doctors to serve the Medicaid population.
  • Funding is recommended starting July 1, 2015, to develop a statewide managed care contract for dental services for adult Medicaid enrollees to increase dental access for adults. An investment of $23 million, of which $7.9 million is state funds, is recommended and is financed from savings in other program areas.
  • Elimination of $11 million in total payments, $3.8 million from state funds, to rural hospitals for the special payment implemented in the 2015 budget year for obstetrical services.

Healthy Kids Dental: Michigan currently provides enhanced dental services to more than 600,000 children in 80 counties. Access to dental services is essential to prevent tooth decay, the No. 1 chronic disease in children. Healthy Kids Dental improves access to care by partnering with Delta Dental of Michigan to increase provider reimbursement rates and simplify administration. With the expansion in in 2015, all counties are now covered except Wayne, Kent and Oakland.

For 2016, the governor recommends:

  • Expansion of the Healthy Kids Dental program to an additional 210,000 children ages 0 through 8 in Kent, Oakland and Wayne counties with an investment of $15.7 million ($5.4 million in state funds). With this expansion, the program would cover over 800,000 children, but not all eligible children in the state. Yet to be covered would be more than 170,000 older children in Wayne, Oakland and Kent counties.

Mental Health and Substance Abuse Services: Implementation of the Healthy Michigan Plan resulted in dramatic reductions in the state funds needed to serve those not eligible for Medicaid, as the vast majority of individuals were expected to transition from state-funded services to Healthy Michigan Plan services, which are 100% federally funded. The transition has not been smooth, and concerns have been raised that state funding reductions were too large and too fast.

For 2016, the governor recommends:

  • Restoration of $20 million in state funds to cover services provided to those not eligible for Medicaid or the Healthy Michigan Plan.
  • Funding to continue to implement the recommendations of the Mental Health and Wellness Commission ($12.7 million in state funds of which $1.5 million continues to be one-time funding).

Public Health and Children’s Services: Two of every $3 spent on public health services is federal. 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 recommends:

  • Restoration of the $1.5 million increase provided in the 2015 budget to local public health departments for essential services, which was subsequently eliminated in Executive Order reductions. The governor’s recommendation brings funding for local public health essential services to the level it was 10 years ago.
  • Continuation funding for a pilot program begun in 2015 to improve child and adolescent health services by working with existing school-based clinics to develop satellite locations that will provide nursing and behavioral health services ($2 million in one-time funding).

Services for the Aging: The governor’s budget continues funding of $84 million for senior in-home and nutrition services. The state is working to become a “no wait” state for services.

For 2016, the governor recommends:

  • Expansion of PACE (Programs for All-Inclusive Care for the Elderly) to more areas, funded through corresponding savings in nursing home costs.

POSTSECONDARY EDUCATION

Because Michigan does not have a state agency that exercises financing or policy authority over its universities and community colleges, the Legislature funds those institutions through the Higher Education and Community Colleges budgets.

Michigan’s three existing financial aid grant programs (the Tuition Incentive Program, the Competitive Scholarship and the Tuition Grant) are funded through the Higher Education budget, even though community college students may also apply for and receive those grants. The reinstatement of a grant for adult learners has been proposed in the community college budget.

For 2016, the governor recommends:

  • No funding increases for the three major financial aid grant programs – the first time in many years that the Tuition Incentive Program has received no increase. However, the community college budget funds, for the first time since 2009, the Part-Time Independent Student Grant, which helps older students. None of the grants currently funded through the higher education budget are available to students who have been out of high school for more than 10 years. Of the total funding for the higher education budget grant programs, $98.3 million comes from the federal Temporary Assistance for Needy Families allocation, while $7.8 million comes from the state’s General Fund.
  • A 1.4% increase ($4.3 million) in total operational funding for Michigan’s 28 community colleges, half of which is distributed as performance funding for weighted degree and certificate completions, enrollment and administrative costs as a percentage of core expenditures. This is a smaller increase than in 2015, which was a 3% increase of $8.9 million, or 3%. As in previous recent years, the majority of overall funding for community colleges (which includes not only operational and financial aid funding, but retirement funding, etc.) comes from the School Aid Fund, and only 35% ($137.1 million) is from the General Fund.
  • A total increase in funding for university operations of $28 million (2%) over the current fiscal year. As in previous recent years, this increase is in the form of performance funding using the following metrics: weighted undergraduate completions in critical skills areas, research expenditures, six-year graduation rates, total completions, administrative costs as a percentage of core expenditures, and the percentage of students receiving Pell Grants. The budget continues the practice of requiring universities to limit tuition increases in order to receive any performance funding, but has lowered the limit from 3.2% to 2.8%. This “tuition restraint” prerequisite for receiving performance funding helps to keep post-secondary education affordable for low-income students.

CORRECTIONS

The governor reduces funding for the Department of Corrections by 3%, from $2.04 billion this year to $1.98 billion in 2016. The majority of the funding is for prison operations (76%), followed by parole, probation and community services (16%) and administration (6%). In the current fiscal year, more than 97% of the MDOC budget comes from state funds.

The corrections budget is the state’s second largest in terms of its share of state General Fund dollars. After about two decades of strong growth, corrections funding has grown modestly as the prisoner population has stabilized. Increased spending is mostly driven by increased costs in prisoner health and mental health care.

Prisoner Healthcare: Most prisoner inpatient hospitalizations, certain services for mentally ill and medically fragile inmates, and some re-entry services are now covered by Medicaid, which when expanded allowed an estimated 80% of inmates and parolees to obtain Medicaid for covered services outside of secure facilities.

For 2016, the governor recommends:

  • $309.4 million for prisoner health care services, the vaccination program, substance abuse testing and treatment, and clinical and mental health services and support.
  • $1.08 million for administrative costs related to eligibility determination and enrollment in the Healthy Michigan Plan.

Prisoner Education: State prisoner re-entry programs include education services to facilitate reintegration into the community. Prisoner education programs aim to provide marketable skills to offenders through academic, workplace and social competency training. In 2014, the governor signed legislation to allow qualifying parolees who complete a career or technical education course to receive a certificate of employability to help the parolee obtain a job upon re-entry to the community (PA 359).

For 2016, the governor recommends:

  • A total of $35.9 million for prisoner education programs, which is an increase of $500,000 due to additional federal funds.

Parole, Probation and Community Programs: MDOC currently supervises about 47,000 offenders on felony probation and more than 14,000 offenders on parole.

For 2016, the governor recommends:

  • $323 million in total funding ($304 million General Fund) for parole, probation, and community programs, down approximately 7% from initial current year. Changes include the elimination of the Goodwill Flip the Script program ($2.5 million), the transfer of the jail mental health diversion project to the Department of Community Health ($1 million) and other reductions in re-entry services.

Mental Health Diversion Council: The governor created the Mental Health Diversion Council in 2013, tasking the council with developing methods to divert individuals with mental illnesses or substance abuse problems from the criminal justice system and into appropriate treatment.

For 2016, the governor recommends:

  • Transfers funding ($1 million) to the Department of Community Health to streamline mental health diversion programs and services. The current year budget funded a pilot project to connect inmates with appropriate mental health treatment as they are released into the community.

 

 

Moving from mass incarceration to mass education

Michigan needs to spend less on prisons and more on schools.

Between 1986 and 2013, Michigan’s spending on prisons jumped 147% when inflation is counted, according to research by the Center on Budget and Policy Priorities. Meanwhile, per-pupil foundation spending in Michigan remains lower than before the Great Recession began.

“Even as states spend more on corrections, they are underinvesting in educating children and young adults, especially those in high-poverty neighborhoods. At least 30 states (including Michigan) are providing less general funding per student this year for K-12 schools than before the recession, after adjusting for inflation…’’ a recent report by the Center on Budget and Policy Priorities concludes.

Dennis Schrantz of the Michigan Council on Crime and Delinquency and Shaka Senghor of the Atonement Project at the League's recent policy forum.

Just last month, the League sponsored a policy forum on reducing mass incarceration. The upshot of the forum is that Michigan’s unusually long prison sentences mean that more dollars than necessary are being spent on corrections without improving public safety. And students are not getting what they need to avoid the “school to prison” pipeline.

Laura Sager, executive director of the Citizens Alliance on Prisons and Public Spending, spoke about the need for a sentencing commission to examine Michigan’s sentencing structure with an eye on reducing the prison population.

Sager said that mandatory minimums and harsh penalties for drug offenses are not the cause of mass incarceration in Michigan. Unusually long prison sentences drive high costs without providing additional safety, she said. Judges set a minimum and maximum sentence but it is the state Parole Board has the ultimate decision on how much time a prisoner will serve after the minimum sentence is completed.Incarceration also costs $35,000 per inmate per year — more than a year of college at the University of Michigan.

A package of bills by Rep. Joe Haveman, R-Holland, that could see action in lame-duck session next month, is aimed at reducing the time offenders spend in prison and jail. It would require “presumptive parole” for inmates who have served their minimum sentence unless there were “substantial and compelling” reasons to deny parole. The language of the package is still being negotiated, according to CAPPS, but the introduction is a very hopeful step.

Michigan’s parole system has long been criticized for allowing parole board members to pile on additional punishment beyond the judges’ sentences rather than look at the inmate’s prison record.

“The economic health of many low-income neighborhoods, which face disproportionately high incarceration rates, could particularly improve if states reordered their spending in such a way. States could use the freed-up funds in a number of ways, such as expanding access to high-quality preschool, reducing class sizes in high-poverty schools, and revising state funding formulas to invest more in high-poverty neighborhoods,’’ the Center’s report suggests.

Michigan spends $1.2 billion more on corrections in 2013 than it did in 1986, the report found. That’s a lot of money that could be better invested in our students and in our future.

– Judy Putnam

World class colleges, sluggish financial aid

It is a point of pride among Michiganians that we have great public universities and private colleges.

We have two Top Ten universities that are friendly rivals, and high-quality regional universities. In addition to providing an excellent education for Michigan residents, our universities attract respected scholars and cream-of-the crop students from all over the world. We have a number of widely respected private colleges as well. (more…)

Right Start in Michigan’s Legacy Cities: Inequity Begins at Birth

 

As Michigan retools for a post-industrial economy, it must address the needs of its legacy cities. These cities have borne the brunt of the state’s long sustained economic decline and dwindling resources, but they continue to be the home for a substantial share of young children. On a range of indicators of maternal and infant well-being babies born to women living in these cities are much worse off than those born in the out-county areas.

Substantial numbers of children are affected. In 2012 roughly one-quarter of all newborns in the state were born to mothers living in these 15 cities across the southern half of the state.1 On average, one of every three county births was to a legacy city resident. To improve the lives of young children, the well-being of mothers and infants in these cities must be addressed.

Despite their decline, these 15 cities still have the largest number of births among the cities in their counties.2 While Detroit had by far the largest number of births (over 10,000) among the cities, representing slightly less than half of all births in Wayne County, the cities of Lansing (Ingham) and Battle Creek (Calhoun) had the majority of births in their counties. Clearly the fate of these legacy cities not only affects the current and future well-being of many children but also the social and economic fate of the state.

Racial/Ethnic Diversity is Concentrated in Michigan’s Legacy Cities and Their Counties.

The diversity of Michigan’s newborns is concentrated in its 15 legacy cities and their counties. While these cities have only 18% of the total state population, they house one-quarter of all births and half of all infants born to mothers in communities of color. Furthermore, almost all (90%) of the state’s infants born to women of color were located in the 15 counties where Michigan’s legacy cities are situated.

In four of the 15 Michigan legacy cities, the majority of infants were born to women of color, and almost all the legacy cities experienced an increase in minority births between 2006 and 2012. Only Grand Rapids, Holland and Ann Arbor experienced slight decreases over the trend period.3 While the state’s largest city, Detroit, had the largest concentration of infants born to women of color—over 90%, Warren in Macomb County sustained the steepest jump (70%)—minority births rose from 22% to 38% of all births.

While the percentage of infants being born to women of color increased in the legacy cities, the overall number of births decreased with the largest declines occurring in the cities of Muskegon and Jackson where births dropped by roughly one-third between 2006 and 2012. Warren, with the largest increase in diversity among its infants, experienced the smallest drop in its births—only 4%.

Women Giving Birth in the Legacy Cities Are More Likely to be Uninsured and Low-Income.

The trends in the numbers of births, the racial/ethnic diversity and economic status of mothers of newborns all shape the well-being of the next generation. Women residing in the legacy cities were much less likely to have health insurance and incomes adequate for basic needs. In 2012 just over three of every five women who had a baby while living in one of the legacy cities qualified for Medicaid compared with two of every five in the out-county areas in the 15 counties. While income eligibility for Medicaid extends to almost double the poverty level (185%) for uninsured pregnant women, coverage for the mother at this income level ended six weeks after delivery and for the baby after the first year of life.4

Access to health care for women will significantly improve under the Affordable Care Act that requires comprehensive services, including preventive services at no cost and maternity benefits that have not been generally included in private coverage. The Healthy Michigan Plan will provide comprehensive coverage, including dental and vision, with minimal copays for those with income up to 133% of the federal poverty level.5 For women with income above that level, coverage is available through the market place with sliding scale premiums and cost-sharing subsidies.

Overview of Maternal/Infant Well-Being in Michigan’s Legacy Cities.

Michigan’s legacy cities have many characteristics in common but the ranges on the following eight key measures for maternal and infant risk (see table above) also reflect substantial differences among the cities. For example, Ann Arbor had lower risk on most measures than those in the out-county. In contrast, the cities of Pontiac, Flint and Detroit have some of the highest levels of risk for mothers and infants among the cities and were worse on every measure than their out-county areas.

Overall, the legacy cities had worse outcomes than their out-county areas on the eight key measures of maternal and infant well-being tracked in this report. Three indicators reflected dramatically worse conditions for mothers.6 Compared with infants born to women from out-county areas, those in the legacy cities were:

  • more than twice as likely to be born to women without a high school diploma or GED,
  • roughly twice as likely to be born to a teenager and
  • nearly twice as likely to be born to a single parent.

In contrast, a legacy city infant had only a 20% higher risk than an out-county peer of being born too soon. These inequities in birth circumstances get amplified as children spend their growing up years in communities with sparse resources and intensify over time as fewer state-supported early prevention and intervention programs are available.

Trends in maternal and infant well-being moved in the same direction for the legacy cities and their out-county areas, only the changes are more dramatic in the cities on four of the five measures.7 Only the largest change in the out-county areas—the 25% increase in births to single women—reflected a more substantial change than the cities.

Overall for both groups only two of the five risks—teen births and repeat teen births—have declined while percentages of unhealthy births and those to unmarried women have risen. The most disturbing finding was the dramatic (24%) increase in the percentage of babies born too soon among women in the legacy cities although the 15% average increase in out-county preterm births should also be a cause for concern. The next sections review each indicator in more detail across the 15 legacy cities.

1. Teen births declined in all but one legacy city.

The percentage of teen births averaged 13% of live births across the legacy cities, and the cities with the largest percentages –Saginaw, Detroit and Flint –reflected only slight decreases over the trend period.8 While it is troubling to see the minimal decline in teen childbearing in the cities with the largest percentages of births to this age group, some cities, such as Jackson, Bay City and Lansing experienced substantial progress on this measure between 2006 and 2012. Furthermore, among the legacy cities only Warren experienced an increase in its share of births to teens although it still had the second lowest percentage (9%). Ann Arbor had by far the smallest percentage of births to teenagers—only 2% compared with 9% in Warren (the second smallest percentage).

Large percentages of births to teenagers in a community strain resources as these young women and girls are also more likely to be single and lack a high school diploma or GED. Most will not be able to compete for a job that has a wage that will allow them to support themselves and a child. Low-income women struggle to afford child care. The average cost of infant care from a licensed provider in Michigan, ranging from $529 a month in a family home to $756 in a day care center, would consume nearly half or more of the gross income from a full-time minimum wage job ($7.40 an hour or $15,392 annual). Michigan’s child care subsidy program with its per-hour payments, administrative intricacies and low rates fails to assist most low-income parents.

2. In roughly half the legacy cities one of every four teen births was to a teen already a parent.

While having a baby as a teenager can pose a major hurdle to finishing an education and getting post-secondary training, a second or third baby further intensifies parental responsibilities that can interfere with school or work—critical activities for a successful transition to adulthood. The higher costs of child care for additional children may also present a significant barrier to securing work or going to school.

In seven of Michigan’s legacy cities roughly one of every four teen births was to a teen who was already a parent. The seven cities with the highest percentages of births to teens who were already parents were within a few percentage points. The city of Jackson had the worst rate with 26% of teens giving birth being parents while Bay City and Warren had the lowest percentages, 14% and 15% respectively—still substantially higher than the state average (9%).

Bay City had the largest decrease on this measure— 37% decline over the trend period— while Jackson and Battle Creek saw their rates bump up by 12%.9

3. Non-marital births rose in all but one legacy city

While the condemnation of child-bearing among unmarried women has eased compared with previous generations, children in mother-only families in Michigan face substantial challenges to their well-being. In today’s economy most families require more than one wage earner to meet the cost of basic needs such as housing, transportation and food. Numerous studies have demonstrated that an income of double the poverty level is required (roughly $36,000 for a family of three and $44,000 for a family of four). 10

Fathers who do not acknowledge paternity may not be involved in supporting their offspring financially. Lack of support from absent parents weakens economic security for single mothers and their children since women, especially mothers, earn less than their male counterparts in similar jobs. Furthermore single parents often struggle to combine job and parental responsibilities, particularly in low-wage employment.

Non-marital births are concentrated among younger women and those with a high school degree or less, who are more likely to work in these jobs that rarely offer any flexibility or vacation or sick time. Roughly 60% of Michigan women with a high school diploma/GED who gave birth in 2013 were single compared with only 10% of those with a bachelor’s degree. Half of women with less than a high school education lose their jobs or quit after having a baby.11

Finding or affording child care can be a challenge to sustained employment. The average cost of infant care, which requires a lower ratio per provider, can easily exceed over half the net income from a minimum wage job. Michigan’s child care subsidy payment falls well below the average cost and requires extensive online documentation by the parent and provider.

A growing number of young children live in single parent households, not only in the state but in the legacy cities. Births to single women increased between 2006 and 2012 in all legacy cities except Ann Arbor, with the largest increase (41% higher) occurring in the city of Warren. In the four cities with the highest rates, three or more of every four births were to unmarried women.

4. On average, roughly one of every five babies in the legacy cities was to a woman with no high school diploma or GED.

The four cities with the largest percentages of births to unmarried women also had the largest percentages of births to women who had no high school diploma or GED: one of every three newborns in Pontiac and Detroit was born to a mother without a secondary education completion credential. Ann Arbor had the lowest rate (3%) by far: The second lowest (15%) in Warren was five times higher.

Without strong programs to help these mothers continue or complete their education and gain some postsecondary training, they will be hard-pressed to earn enough to support themselves and their children. Their only options will be low-wage jobs with little or no flexibility, vacation or sick time so their ability to engage in the health and education needs of their children will be compromised.

 

 5. One of every four babies was born to women who smoked during pregnancy.

Michigan has one of the highest smoking rates in the nation (23% vs. 19% US) yet spends just over $ 1 million on prevention, and well over half of the funding for its prevention programs comes from federal funds. Even more disheartening, none of the $279 million from the tobacco settlement is allocated to staunch tobacco use and its deadly consequences on children and families. The Centers for Disease Control and Prevention recommends investing at least 15% of tobacco settlement funds in a well-sustained multi-media campaign, an approach that has demonstrated success.

Smoking endangers not only the health of the prospective mother by elevating her risk for cancer, heart disease and other health problems, but it also heightens the likelihood her baby may be born too soon, too small or have birth defects. Tobacco’s harmful chemicals such as tar, nicotine and carbon monoxide, reduce oxygen supply to the baby, slowing growth and development.

Secondhand smoke also harms mothers and children. It can precipitate respiratory ailments in infants and young children who live in homes where adults smoke. While roughly 22,000 Michigan women who gave birth in 2013 reported smoking during their pregnancy, in more than half these households someone else smoked as well. An additional 8,000 stated that although they did not smoke during the pregnancy, another adult in the house did. With more restrictions on smoking in public and work spaces secondhand smoke exposure has been drastically reduced for pregnant women and young children.

Bay City had the largest percentage of births to women who reported smoking during their pregnancies—roughly two of every five newborns were affected—while Ann Arbor had the smallest percentage (8%). Port Huron, Saginaw and Jackson also had relatively large percentages of births to women who smoked during pregnancy—with almost two of every five newborns affected.

6. One of every 20 Michigan mothers in legacy cities received late or no prenatal care.

Pregnant women who start prenatal care in the last three months of their pregnancy or not at all heighten their risk of having babies with health problems and suffering from complications themselves. Women who do not receive prenatal care are more likely to give birth to a low-birthweight baby. Unfortunately the women at highest risk of unhealthy births are often the least likely to have access to timely prenatal care. Multiple barriers such as lack of insurance, unintended pregnancy, limited access to transportation, variable work schedules and traditional clinic hours can stand in the way.

The expansion of eligibility under the Healthy Michigan Plan to all state residents with incomes below 133% of the poverty level will provide low-income women better access to health services before pregnancy to address chronic conditions that can compromise a healthy birth. Similarly, residents with income above 133% of poverty level can access private coverage through the Health Insurance Marketplace with sliding scale federal subsidies and cost-sharing assistance.

Among the legacy cities Detroit has the highest rate of late or no prenatal care with roughly 1 of every 11 mothers of newborns affected. In Bay City the percentage of mothers with late or no prenatal care was one-third (3%) of the Detroit rate.

7. One of every 10 babies in Michigan’s legacy cities was born too small.

Babies who weigh less than 5 pounds 8 ounces at birth encounter heightened risk for developmental delay, chronic disease and even death. It is the leading cause of infant mortality among African American infants, who are roughly 2.5 times more likely to die before their first birthday compared with white infants. While chronic maternal health issues such as infections, diabetes, heart defects or kidney disease can result in an underweight infant, stress, poor nutrition and lack of social support during the pregnancy have also been identified as critical factors.

Although Ann Arbor had one of the smallest percentages of babies weighing less than 5.5 pounds, the city rate sustained the largest increase (27%) in its rate over the trend period. All but three legacy cities saw larger percentages of babies born too small. Among these three the city of Kalamazoo had the most substantial decline (20%), the Detroit rate improved only slightly (4%) and the Saginaw rate remained the same.

8. Roughly one of every eight babies in Michigan’s legacy cities was born too soon.

Babies born before 37 weeks in the womb are considered preterm and experience higher risk of intellectual disabilities, cerebral palsy, hearing loss and problems with breathing, vision and digestion than babies born at term. Prevention of premature delivery has become a major focus in efforts to reduce infant mortality. Babies born too soon are often too small as well.

All but two of Michigan’s legacy cities have preterm birth rates in the double digits, and most (11) saw sharply escalating rates over the trend period. In fact, in the two cities—Flint at 19% and Saginaw at 18%—with the highest rates, rates almost doubled between 2006 and 2012. Four of the five cities with the lowest rates experienced the most substantial declines, with Lansing having by far the largest drop (20%). The exception was Ann Arbor where the rate was still the lowest but had jumped up over the trend period.

Summary

As Michigan looks to strengthen its economy and improve education outcomes among the next generation, it must address the challenge of ensuring more infants have the right start to early childhood in its legacy cities. These cities house a significant number of young children, particularly some of the most economically disadvantaged and those in communities of color. Roughly half of the state’s children of color live within these cities.

The number of births in these legacy cities ranges from slightly less than 500 in Bay City and Port Huron to over 10,000 in Detroit, which represents 40% of all births in the legacy cities. On average, roughly one of every three births in the 15 counties is to a mother in the legacy city.

All of the legacy cities except Ann Arbor reflected worse outcomes across most or all indicators for mothers and their babies than for their counterparts in the rest of the county. Ann Arbor with its large public university and highly educated population is well-suited to compete in the emerging post-industrial economy. Overall Ann Arbor was an anomaly among the legacy cities in that on most (6) measures of maternal/infant well-being, the city was better than the rest of Washtenaw County: It matched the out-county rate only for late or no prenatal care and low-birthweight babies. The relative affluence of the city contrasts sharply with the average legacy city: Only 18 percent of the city’s women giving birth were uninsured and low-income, substantially below the legacy city average (63%).

Unfortunately several cities consistently fell on the other end of the range. Flint, Saginaw, Detroit and Pontiac were often those with the worst rates. For example, although Flint had the worst outcomes for babies born too soon or too small, Pontiac and Detroit had rates within 1 or 2 percentage points on both those measures. The cities with majority of births to women of color generally had the worst outcomes. Only the incidence of smoking during pregnancy deviated from this pattern with Bay City having by far the largest percentage of births affected, which was 6 percentage points above the next largest (43% vs. 37%).

Only two of the five indicators where a trend could be calculated showed improvement. The most consistent progress across the legacy cities was on the declining percentage of births to teens. Only Warren in Macomb County experienced a worsening trend. Similarly, only six cities sustained increased births to teens who were already parents. On the other hand, unhealthy births— babies born too soon or too small— increased over the trend period in 11 of the 15 legacy cities.12 These children are at higher risk for developmental delays, chronic health problems and even death as infants than children born at term with All cities except Ann Arbor sustained an increase in the percentage of births to unmarried women between 2006 and 2012.

Recommendations

Provide the funding to fully implement the strategies in the state’s Infant Mortality Reduction Plan. All of the indicators examined in this report reflect a risk to mother and infant, and several are addressed in the state’s Infant Mortality Reduction Plan 2012 that outlined eight strategies to reduce infant mortality in Michigan.13 The strategies include promoting safe sleep practices for infants, expanding home visiting to high-risk women and reducing unintended pregnancies. Unfortunately, in the last two budgets policy makers have allocated only a tenth of the funding required to fully implement the plan.

Coordinate efforts across state departments to address the social/economic determinants of health, especially in the target cities – Pontiac, Saginaw, Flint and Detroit. This recommendation from the Infant Mortality Reduction Plan focuses on the legacy cities that have suffered the highest risk to maternal and infant health in recent years. While several initiatives such as Project LAUNCH (Linking Actions for Unmet Needs in Children’s Health) in Saginaw, Sew up the Safety Net in Detroit, REACH (Racial and Ethnic Approaches to Community Health) in Flint and FIMR (Fetal Infant Mortality Review) teams in Pontiac address health issues, resources from other departments, including Human Services and Education, have key roles to play in improving maternal and infant well-being. Despite increasing focus on the social/economic factors that imperil maternal and infant well-being, policies, such as increasing the Earned Income Tax Credit and the Cash Assistance grant, to reduce poverty have not been widely supported by policy makers.

Strengthen work supports and education/employment opportunities. Many women struggle to find affordable child care, and the state’s child care subsidy rate is so far below the current market rate that it provides limited access to licensed care. Most center-based care does not accept infants and fails to meet the needs of low-income women working erratic schedules during evening and week-end hours. Increasing opportunities for low-income women to complete an education or training program so they can secure better-paying jobs with more flexibility would improve their lives and those of their children. Strengthening supports to family, friend and neighbor care would be a key strategy.

Invest the recommended amount in a smoking prevention campaign. The health of Michigan’s children and their parents is compromised by the prevalence of smoking among pregnant women and the other adults in the households of young children. Tobacco is the leading cause of preventable illness and death in the U.S.: It has been linked to several different cancers as well as chronic lung diseases such as emphysema and bronchitis, and heart disease. Secondhand smoke triggers numerous health problems in infants and children, including more frequent and severe asthma attacks, respiratory and ear infections, and sudden infant death syndrome (SIDS).

Support early interventions to improve maternal and infant health. During the first three years of life roughly 85% of the brain architecture is developed, which provides the foundation for lifelong learning.14 The quality of the interaction between the child and his/her caregivers affects the emotional and social well-being as well as cognitive development. Early interventions such as home visiting have demonstrated an impact on improving maternal and infant well-being and later outcomes such as high school graduation and employment. Michigan has been able to expand its home visiting programs dramatically through its successful applications for federal funds totaling $34 million authorized in the Affordable Care Act. State funding has been erratic for these efforts.

Legacy City Profiles:

Michigan | Ann Arbor | Battle Creek | Bay City | Detroit | Flint | Grand Rapids | Holland | Jackson | Kalamazoo | Lansing | Muskegon | Pontiac | Port Huron | Saginaw | Warren

Endnotes

  1. Only counties with total population over 100,000 and a central city were included in this analysis.
  2. Holland Township, which actually had the largest number of births in Ottawa County and a larger share of minority births than the city (44% vs. 38%), was not included as it is not a city.
  3. In Washtenaw County, Ypsilanti Township rather than Ann Arbor actually had a larger percentage of births to women of color (45%) and to low-income uninsured women (43%).
  4. Numerous cost of living assessments have determined that income below double the poverty level(200%) is insufficient to meet the average basic needs in the modern American economy. (Poverty level income is 100%.)
  5. Those with income between 100% and 133% of poverty must pay 2% of their income for their coverage.
  6. The legacy city average is calculated on the average for each city rather than the total births to counter the disproportionate impact from the large number of births in Detroit.
  7. Only five of the eight measures could be assessed for trends between 2006 and 2012 due to changes in the birth record in 2007 for data on education level of the mother, receipt of prenatal care and smoking during pregnancy. Each reported year in the trend analysis is based on a three-year average to stabilize the estimate.
  8. Please note that the percentage of teen births can be affected by increases or decreases in the number of births to women over the age of 19 as well.
  9. Ann Arbor did not have enough incidences to calculate a rate for this indicator in 2012.
  10. Full-time income from the current minimum wage of $7.40 falls more than $3,000 short of the poverty threshold for a family of three. By the time Michigan’s recent law to increase the minimum wage to $9.25 an hour in 2018 is implemented, its value will still remain below the poverty line, which rises with inflation.
  11. Liz Ben-Ishai. Access to Paid Leave: An Overlooked Aspect of Social and Economic Inequality. Center for Law and Social Policy. April 14, 2014.
  12. Only five of the eight measures could be assessed for trends due to changes in the birth record for data on education level of the mother, receipt of prenatal care and smoking during pregnancy. Each reported year in the trend analysis is based on a three-year average to stabilize the estimate.
  13. The plan is available on-line at http://www.michigan.gov/documents/mdch/MichiganIMReductionPlan_393783_7.pdf.
  14. Jack Shankoff. Center on the Developing Child. Harvard University.

Bad for MI: higher ed less affordable

Those of us moving our college students home for the summer this week probably are not surprised by a new national report showing that Michigan has made deep cuts in funding for colleges and universities, leading to steep increases in tuition.

Compared with other states, I’m afraid Michigan doesn’t look so good. Policymakers in Michigan cut per-student state spending more than 37 other states from 2008 to 2014—a 28% cut in state support. Michigan’s average tuition increase of over $2,000 (a 21% increase) during that time is higher than 34 other states. (more…)

Senate and House Appropriations Committees Approve Higher Education, Community Colleges FY 2015 Budgets

Full report in PDF

Because Michigan does not have a state agency that exercises financing or policy authority over its universities and community colleges, the Legislature makes direct appropriations to those institutions through the Higher Education and Community Colleges budgets. Michigan’s three financial aid grant programs are funded through the Higher Education budget even though community college students may also apply for and receive those grants.

Community Colleges

Governor’s Budget:

  • The governor’s budget appropriates a 3% ($8.9 million) increase in total funding for community college operations, which is distributed among the 28 Michigan community colleges according to the following metrics: proportional increase from FY 2013-14 funding (50%), weighted completions (17.5%), student contact hours (10%), administrative costs (7.5%) and local strategic value (15%). (Colleges receive the local strategic value portion if they meet four out of five listed best practices in each of the following areas: a) economic development and business/industry partnerships, b) educational partnerships, and c) community services.)
  • As in previous recent years, the majority of overall funding for community colleges comes from the School Aid Fund ($197.6 million, an amount equal to the current School Aid Fund appropriation) and the rest comes from the General Fund ($173.9 million, a 26% increase over the current General Fund appropriation).
  • For the first time, the governor’s budget includes a tuition restraint prerequisite (similar to the one for universities) that conditions receipt of metric funding on limiting FY 2014-15 tuition and fee increases for resident students to 3.2%.

Senate Appropriations Committee:

  • Concurs with the governor on the increase in operational and performance funding.
  • Appropriates more money from the General Fund ($323.9 million) than the governor, and less from the School Aid Fund ($47.6 million).
  • Does not include the governor’s recommended tuition restraint provision.

House Appropriations Committee:

  • Concurs with the governor on the increase in operational and performance funding.
  • Concurs with the governor on the amount of funding from the General Fund ($173.9 million) and from the School Aid Fund ($197.6 million).
  • Does not include the governor’s tuition restraint provision.
  • Adds a $100 placeholder to develop a program by which students could obtain a GED at a community college free of charge if committing to enroll in an academic or vocational program. The state would reimburse community colleges for eligible costs associated with providing the GED programs or testing. The League supports this addition to the budget and its boilerplate language, as such a program would help more low-skilled adults enter community college occupational training.

Universities

Governor’s Budget:

  • The governor’s budget increases the total appropriation for university operations by $76.9 million (6.1%) over the current fiscal year. As in previous recent years, this increase is in the form of performance funding, though the formula has been modified so that half of the increase goes proportionally to universities to make up for funding lost in 2012.
  • The governor includes a new performance metric that rewards institutions based on the number of students receiving Pell Grants, a positive change that attempts to encourage universities to become more accessible to low-income students.
  • The governor continues the practice begun two years ago of requiring universities to limit tuition increases to 3.2% or less in order to receive any performance funding. This is the first budget that applies the same requirement to community colleges as well, even though community college tuition increases have been much smaller than those of universities over the past decade. This “tuition restraint” prerequisite for receiving performance funding helps to keep postsecondary education affordable for low-income students.

Senate Appropriations Committee:

  • Concurs with the governor in increasing the total appropria­tion for university operations by $76.9 million (6.1%) over the current fiscal year.
  • Concurs with the governor’s performance funding and tuition restraint changes.

House Appropriations Committee:

  • Increases university operations funding by $70.4 million (5.6%) over the current fiscal year.
  • Concurs with the governor’s performance funding and tuition restraint changes.

Financial Aid

Governor’s Budget:

  • The governor’s budget increases the Tuition Incentive Program by $1.5 million over the current fiscal year, for a total of $48.5 million. The increase is entirely from the General Fund, but $43.8 million (90%) of total funding for TIP is from the state’s TANF funds. The League supports the increase.
  • Total funding for all financial aid grant programs in the governor’s budget is $103.1 million, some of which comes from the federal Temporary Assistance for Needy Families allocation.
  • The governor does not increase the Michigan Tuition Grant program, but adds a requirement that independent colleges submit data, including student performance data (Tuition Grant students enrolled in remedial education and/or completing degrees, Pell Grant students completing degrees), to the P-20 system in order to participate in the Tuition Grant program.

House Appropriations Committee:

  • Increases the Tuition Incentive Program by $1.5 million over current year, and the Michigan Tuition Grant by $1.8 million over the current year.
  • Includes the governor’s P-20 data reporting requirement for participation in the Tuition Grant program.

Senate Appropriations Committee:

  •  Increases the Tuition Incentive Program by $1.5 million over current year.
  • Does not increase the Michigan Tuition Grant or include the governor’s P-20 requirement for participation in the Tuition Grant program.

Tax cuts won’t grow the economy

A new report by the League demonstrates that across-the-board cuts in the state’s personal income tax would not boost Michigan’s economy, but could affect long-term prosperity by locking in cuts in funding for public schools, community colleges, universities, health care and public safety—the very services that fuel economic growth.

Despite the claims of several legislative leaders advocating for a tax cut, there is no evidence that income tax cuts generate good jobs or economic growth. In fact, a study of 65 years of data by the Congressional Research Service found that top income tax rates have had no discernible impact on economic growth, and states that cut taxes the most during the 1990s and 2000s saw their economies fall behind in job creation, as well as production and income growth. (more…)

Moving in the wrong direction

The latest U.S. Census Bureau data confirms what we all suspected. While there have been improvements in the economy, it has not been enough to float all boats, and state poverty rates, especially for children, remain 25% to 30% above pre-recession levels.

Certainly there have been cuts in state and local services in Michigan that affected low-income families with children, thwarting their opportunities to share in the American dream by earning enough through hard work to move into the middle class. Deep cuts in basic income assistance have forced more children into extreme poverty, exposing them to homelessness and hunger, and creating barriers to academic success. A failure to invest in child care for low-income families has resulted in fewer parents having the care they need to secure and retain jobs that support their children. (more…)

The 2014 State Budget: Some Opportunities Missed

 Full report in PDF

THE BIG PICTURE

The 2014 state budget, as passed recently by the Michigan Legislature, includes some positive investments in Michigan’s future, but also misses the opportunity to improve economic security and health for many Michigan residents. The Legislature completed its work on the $48.7 billion budget in record time, meeting a self-imposed deadline of early June.

The final budget consists of two omnibus budgets, including: (1) the Education Omnibus Budget ($15.4 billion), which funds School Aid ($13.4 billion), community colleges ($336 million), and higher education ($1.4 billion); and (2) the General Omnibus Budget ($33.3 billion), that funds all other state departments and services, including Community Health ($15.4 billion), Human Services ($6 billion), and Transportation ($3.6 billion). Both budgets have been presented to the governor for his signature. In Michigan, the governor also has the power to make line item vetoes.

Sadly, in formulating the state budget for next year, state lawmakers turned their backs on more than $1.5 billion in 100% federal funding available to expand Medicaid eligibility to very low-income parents and childless adults up to 133% of the federal poverty level.

This expansion would reduce the number of uninsured adults by 46%, and result in savings in the state’s General Fund of $206 million in Fiscal Year 2014 alone by allowing the state to use federal funds to provide comprehensive services to a population that is currently eligible for very limited state funded health benefits. Cumulative savings to the state’s General Fund would grow to $1.2 billion through 2020.

It is not too late, however, to accept the federal funds available to Michigan to expand Medicaid eligibility, and legislative discussions continue. House Republicans proposed legislation, H.B. 4714, that initially would have partially expanded Medicaid eligibility to nondisabled adults (ages 21-65) and imposed a 48-month time limit.

Now redrafted, the bill modifies the 48-month time limit, and instead requires those with incomes between 100% and 133% of poverty who are eligible under the expansion to purchase private insurance through the healthcare marketplace, or increase cost sharing or out-of-pocket expenses after 48 months. Some relief may be available if enrollees adopt healthy behaviors or assist the state in detecting medical fraud and abuse.

The final Fiscal Year 2014 budget also included unexpected funds based on more favorable revenue projections adopted at the May 15th Revenue Estimating Conference. The new revenue consensus by state fiscal experts assumes that Michigan will have an additional $702 million in fiscal years 2013 and 2014, including $579 million in state General Funds, and $123 million in the School Aid Fund.

With these unexpected revenues, along with the potential infusion of federal Medicaid funds, the Michigan Legislature had the opportunity to build a 2014 budget that begins to reverse some of the damaging policy decisions made during the worst of the Great Recession to balance the budget and provide business tax cuts. With this budget, lawmakers had the opportunity to reinvest in the educational and human services that have been shown to improve economic competitiveness.

While some progress was made, including a significant expansion in funding for Michigan’s state-funded preschool program, an expansion of dental care to low-income children, and a small restoration of K-12 per-pupil allocations, the opportunity was largely missed to reverse tax and policy changes that disproportionately hurt low- and moderate-income working families, children and seniors.

THE FY 2014 BUDGET: HOW IT AFFECTS LOW-INCOME MICHIGAN RESIDENTS

Michigan tax policies hurt working families and thwart economic growth: Because Michigan’s Constitution requires that the state budget be balanced each year, tax policy decisions drive budget decision-making. In the long run, Michigan will not be able to consistently make the types of investments needed to create a competitive workforce and build the community infrastructure, services and amenities needed to attract and retain businesses until it updates its outdated tax system to ensure sufficient revenues in good economic times and bad.

The tax changes adopted in the last several years have unfortunately moved Michigan in the wrong direction by making the state’s tax system more regressive and creating additional barriers to employment for low-wage workers. More significantly, by relieving businesses of the obligation to pay their fair share for the community services they rely on, recent tax changes further jeopardized the basic public services needed to grow Michigan’s economy, including basic human services, K-12 education, access to higher education and vital community services.

In 2011, the Michigan Legislature adopted an unprecedented tax shift that reduced taxes on businesses by 83%, while increasing taxes on individuals by 23%. As part of that shift:

Tax credits for many low- or moderate-income workers and families were cut or eliminated.

  • Michigan’s Earned Income Tax Credit, an effective anti-poverty tool that helps hard-working families whose incomes put them and their children below or moderately above the federal poverty line was cut by 70%.
  • The Homestead Property Tax Credit was restricted for some low-income families and reduced for others.
  • The child deduction of $600 per child for children ages 18 and under was eliminated.
  • Credits for city income taxes and college tuition and fees were eliminated.

Tax credits for many charitable contributions were eliminated, including contributions to:

  • Michigan college foundations, universities, public broadcast stations, and public libraries and state museums.
  • Homeless shelters, food banks and community foundation.
  • Medical savings accounts.
  • Individual or Family Development Accounts.

Taxes on pensioners were increased.

  • The full impact of the 2011 tax changes on individual taxpayers and low-income workers and their families is just being felt this year, as taxes for 2012 are completed.
  • EITC payments, which totaled $353.5 million statewide before the Great Tax Shift, are expected to fall to $106 million for the 2012 tax year. As a result, an additional 9,000 children are expected to fall into poverty, as their parents lose the struggle to cover work-related costs and make ends meet.
  • Donations to community foundations are down 28% statewide, with the Community Foundation for Southeast Michigan experiencing a 40% drop in donations to endowments for the 185 nonprofits they partner with.
  • In the face of rising poverty and restricted access to basic public income and food assistance, donations to homeless shelters and food banks are falling. For example, the Food Bank Council of Michigan reports that donations of $200 to food banks have dropped by 29%, while $400 donations have fallen by 47%.

During the debates over the Fiscal Year 2014 budget, lawmakers had an opportunity to reverse some of the 2011 tax changes that hurt low- and moderate-income workers, seniors and charitable organizations. Despite unexpected revenues of more than $700 million, and a transfer of funds into the state’s “rainy day” fund, the Legislature failed to do so.

The Fiscal Year 2014 budget fails to compensate for years of disinvestment in basic public services. While the Fiscal Year 2014 budget includes some increases for state programs and services, it fails to compensate for more than a decade of cuts and the erosion of purchasing power. Michigan’s economic problems began before the national Great Recession, and deepened dramatically during that period. Recent projections show that Michigan’s economy is inching forward, but it would be an exaggeration to say it is rebounding, and many Michigan families are grappling with higher taxes, fewer services, and lower incomes.

The rationale for the Great Tax Shift of 2011 was that the combination of reducing business taxes and increasing individual income taxes—with a net loss of revenue—would improve the state’s economy and spur job growth. The evidence doesn’t support that policy goal. Research shows that corporate income tax cuts are unlikely to have a strong positive effect on a state’s rate of economic growth or create many new jobs.

In fact, raising taxes on the working poor creates a clear drag on the state’s economy, in part because lower-income people spend nearly all the money they make, mainly on necessities, so for every dollar they lose due to a tax increase, total spending drops by around a dollar. Further, tax changes and cuts in public services that reduce available income and supports for working families and increase poverty have a negative effect on children’s health, school achievement, and ultimately their success in the workforce.

Over the last decade, Michigan’s outdated tax structure failed to produce the revenues needed to maintain basic services and invest in the human and other capital needed to grow the state’s economy. While total state spending (state General Fund and state restricted funds) rose by 7% between 2003 and 2013, with the exception of the Departments of Community Health and Corrections, every other major state department and service suffered cuts—even before calculating the impact of a 21% increase in the Detroit Consumer Price Index over that decade.

Instead of fixing the state’s revenue problems, lawmakers chose to make deep cuts in programs for low-income and working families, public schools, institutions of higher learning, and vital community services. To ensure Michigan’s competitive advantage, it is critical that the state begin to reverse those failing policies and reinvest in its most precious resource, its human capital. While much has been said about Michigan as a “comeback” state, the truth is that tax and budget decisions have forced hard-working, low-income families in Michigan to make sacrifices, and closed them off from the benefits of the “comeback.”

THE FY 2014 BUDGET: SEVERAL STEPS FORWARD, BUT MORE SLIDING BACK 

Economic Security and Work:

More very poor children will be denied access to basic income assistance. The Fiscal Year 2014 budget reduces funding for Family Independence Program by $41 million to a total of $214.3 million to reflect continued reduction in caseloads—projecting caseloads will fall from 53,298 in the current year (appropriated) to 45,710 in Fiscal Year 2014—a 14% reduction.

  • FIP caseloads have been declining dramatically in recent years, in large part the result of policy decisions, including the adoption in 2011 of changes in lifetime limits for assistance. Between 2010 and the projections for 2014, caseloads will have fallen from 79,233 to 45,710—a drop of 42% in just five fiscal years.
  • Approximately seven of every 10 FIP recipients are children, and 60% of those children are under the age of 9.
  • To be eligible for FIP, the average family of three must have an annual income of less than $9,800, and the maximum benefit is $492 per month, representing less than one-third of the poverty line. 

Approximately  30,000 very poor children will have their fall clothing allowance restored. The Michigan Legislature included $2.9 million in the Fiscal Year 2014 budget to restore the clothing allowance provided to children in child-only FIP families in the 2013-14 school year. The Snyder Administration chose to eliminate the clothing allowance this fall—the only direct client benefit cut as a result of federal sequestration.

  • 30,000 children will have their clothing allowance restored in school year 2013-14, but because of earlier policy changes limiting the benefit to FIP cases that do not include adults, 120,000 children who had previously received a fall clothing allowance will still be left behind.
  • The fall clothing allowance is an important support for low-income children, particularly in light of the failure to raise FIP grants.

The number of Michigan residents with access to basic food assistance will continue to decline: The final budget reduces funding for the Food Assistance program (formerly called the Food Stamp program) by $683.7 million in recognition of the loss of temporary federal funds, as well as caseload reductions—largely based on changes in FAP eligibility, including the adoption of an asset test. The Legislature assumes that caseloads will fall from 1.1 million cases appropriated this year, to 876,650 in 2014—a 19.4% reduction. The actual average monthly FAP caseload through April of this year was much lower than appropriated at 912,339.

  • Between 2004 and 2011, FAP caseloads grew by 135%. In 2011, Michigan adopted an asset limit for FAP, limiting access to food assistance and creating an unreasonable hardship for some families, as well as turning away federal funds available to assist low-income families. Since that time, FAP caseloads have been declining.
  • Over 70% of FAP recipients receive no other state cash assistance, and the average monthly benefit for a two-person household is $267.

Low-income working families will continue to struggle after losing significant income with the 70% cut in the state’s Earned Income Tax Credit: In 2011,the Michigan Legislature slashed the state Earned Income Tax Credit from 20% of the federal EITC to just 6%. The state EITC is a refundable tax credit for working families, designed to promote and reward work and offset other taxes paid by low wage workers that consume a higher percentage of their total income. Despite unexpected new state revenues, the Legislature did not recommend EITC restorations.

  • The EITC is a proven tool in the fight against poverty. Last year, at 20% of the federal credit, the state EITC kept 14,000 children from falling into poverty. This year, at just 6%, only 5,000 children will escape poverty, leaving another 9,000 behind.
  • The EITC serves as a temporary income supplement for most families—three out of five use the credit for just 1 or 2 years while they get back on their feet.
  • The credit has been shown to increase employment, reduce the need for public assistance, boost local economies, and benefit businesses by helping low-wage workers cover work-related costs such as transportation and child care.  

Healthy Workers, Families and Children:

Thousands of currently uninsured Michigan residents may not have access to healthcare that is fully federally funded: The Legislature rejected, as part of the budget process, the governor’s recommendation to accept Michigan’s share of federal funds to expand healthcare coverage to 320,000 low-income parents and individuals through the Medicaid programs. A separate bill to expand eligibility for Medicaid is currently under discussion.

  • More than 1.9 million Michigan residents (19.4%) now rely on Medicaid for their basic health services.
  • Because Medicaid expansion would be 100% federally funded, it would result in savings to the state of more than $200 million in Fiscal Year 2014 alone, allowing the state to use federal funds to provide comprehensive services to a very low-income population that is currently eligible for very limited state funded health benefits.
  • The Legislature’s decision to date denies coverage for uninsured Michigan residents for both Medicaid health and mental health services. Michigan’s mental health system is underfunded, and without this expansion more people will be forced to go without needed services, be added to waiting lists for services, or receive services through the corrections system. Funding for community mental health services for persons not eligible for Medicaid was reduced by nearly $54 million between fiscal years 2010 and 2012.
  • By giving more women access to healthcare before and between pregnancies, Medicaid expansion would improve both the preconception health of mothers and birth outcomes, including a reduction in infant deaths. Approximately 60% of women eligible for Medicaid deliveries report that their pregnancies are unintended, compared with 27% of privately insured women.
  • Medicaid expansion could increase economic activity and decrease the state’s long-term healthcare liabilities—with federal funds covering 100% of the costs through 2016, phasing down to 90% in 2020 and beyond.
  • The Department of Community Health estimates that Medicaid expansion would cut Michigan’s uncompensated care costs—caused by those who must turn to emergency rooms for their care — by $320 million through 2022.

Approximately  70,500 more low-income Michigan children will have access to dental care: The Legislature ultimately approved the governor’s proposal to add $11.6 million to expand the Healthy Kids Dental program to cover an additional 70,500 children in three Michigan counties—part of a multi-year plan to cover all children in the state.

  • Approximately 70,500 children in Ingham, Ottawa and Washtenaw counties will have access to preventive oral health care.
  • Currently, more than 440,000 children are covered by the program in 75 of Michigan’s 83 counties. Many of the state’s most populated areas are not yet covered, including Oakland, Macomb, and Wayne counties—with a disproportionate impact on children of color.
  • Access to preventive dental care reduces dental emergencies and related costs. Children enrolled in Healthy Kids Dental are 60% more likely to receive preventive dental care by age 3, and 25% less likely to have dental emergencies.

Michigan infants, and particularly infants of color, will continue to die unnecessarily: While the Michigan Legislature adopted—at a reduced level of $2 million—the governor’s recommendation for new funding to begin to implement Michigan’s infant mortality reduction plan, this increase is more than offset by lawmakers’ current decision to reject Medicaid expansion to uninsured Michigan residents, including women whose infants would be born healthier if adequate preconception care was available.

  • Despite being a key indicator on the governor’s dashboard, Michigan’s infant mortality rates continue to be higher than most states. Michigan ranks 37th among the states in infant mortality, with death rates for African American infants that are more than two-and-one-half times higher than white babies.
  • Michigan’s efforts to reduce infant mortality remain underfunded. The plan includes regional perinatal care, initiatives to reduce medically unnecessary deliveries before 39 weeks, the promotion of safe sleep practices for infants, and expanded home visiting programs.

Additional funding will be available to prevent toxic lead poisoning: The final budget includes $1.25 million in state General Funds to remove lead hazards from homes in areas with high incidences of lead-poisoned children—funding that was not included in the governor’s budget. Last year, the Michigan Legislature approved an additional $2 million for Michigan’s lead abatement program, known as Healthy Homes, for total funding of $4.9 million. The governor vetoed the expansion, and the program is funded at $2.9 million this year.

  • Lead has a particularly devastating effect on young children when it can compromise the developing central nervous system and cause irreversible damage to cognitive capacity and behavior.
  • Of the nearly 69,000 children targeted for lead poisoning testing (who are insured by Medicaid or live in one of 14 targeted communities), 57% were tested in 2012. Testing for lead poisoning peaked in 2010, and has decreased slightly since. Nearly 150,000 children under the age of 6 were tested in 2012.
  • Prevention works. While, the number of children with confirmed elevated lead blood levels has declined dramatically, some areas of the state still have very high rates of lead poisoning. The city of Detroit had over half the state’s lead poisoning cases in 2012; the second highest total was in Grand Rapids.

A Top-Notch Cradle to Career Education:

More low-income 4-year-olds will benefit from early childhood education: The final Fiscal Year 2014 budget includes the governor’s proposal to increase funding for Michigan’s Great Start Readiness Program by $65 million, but reserved $25 million of the increase in a newly created GSRP reserve fund which could only be tapped through legislative action if there is sufficient need for the preschool slots. Total funding for the state-funded preschool program is increased from $109.3 million in the current year to $174.3 million in Fiscal Year 2014, opening up approximately 16,000 new half-day slots for 4-year-olds.

The Legislature made several changes to GSRP policy, including: (1) raising the payment for a half-day slot from $3,400 to $3,625; (2) eliminating the current competitive GSRP program that provides funds to private sector providers, instead requiring Intermediate School Districts to establish a local process to contract out at least 30% of their slots to public or nonprofit community organizations or for profit businesses; (3) targeting GSRP funds to the lowest income children by lowering the income cap, requiring that at least 90% of children served are from families with incomes below 250% of poverty and the lowest income children are served first; (4) requiring GSRP providers to have quality ratings of at least three out of five start through Great Start to Quality, Michigan’s quality rating system; and (5) requiring GSRP providers to use a sliding fee tuition scale for children who do not meet the income eligibility requirements.

  • Evaluations of the GSRP show that participants are more likely to be ready when they enter kindergarten and pass 4th grade MEAP tests. In addition, fewer GSRP participants were retained in grade and more graduated on time from high school.
  • A growing number of economists and business leaders, including heads of Fortune 500 companies, the Federal Reserve Bank, and Nobel Prize-winning economists agree that early childhood programs can generate government savings and produce returns that exceed public investments, with savings accruing from lower costs related to such public services as special and remedial education, high school graduation rates, lower unemployment, higher earnings, and reductions in the need for public assistance.

Michigan public schools will continue to struggle to balance their budgets: Although the Legislature, in contrast to the governor, included a partial restoration of the per-pupil foundation allowance for public schools, the increase was not enough to make up for the cuts already suffered by school districts. The Legislature increased the maximum (basic) foundation allowance by $30 to $8,049, and the minimum foundation by $60 to $7,026. The final budget also includes $6 million to ensure that all districts receive a minimum increase of $5 per pupil.

The Legislature also approved $36 million (up from the governor’s recommendation of $24 million) for equity payments to districts with foundation allowances of less than $7,076. The payment would be the lesser of $50 per pupil or the difference between the district’s Fiscal Year 2014 foundation allowance and $7,076.

The final budget retains funding for best practices grants at the current year level of $80 million, with districts eligible for $52 per pupil if they meet seven out of eight best practices. The governor recommended that best practices grants be reduced by 70% to $25 million. Lawmakers also increased performance funding for districts from $30 million to $46.4 million, to reflect the number of districts that are expected to be eligible next year.

  • In 2011 and 2012, Michigan public schools suffered total cuts of $470 per pupil in their foundation allowances, and this budget fails to offset those cuts.
  • In the decade between fiscal years 2004 and 2014, total state spending through the School Aid Fund increased approximately 4%, while the Detroit Consumer Price Index increased nearly 21%.
  • Lawmakers once again chose to transfer funds from the School Aid Fund, which has traditionally been used to fund K-12 education, to universities and community colleges. A total of approximately $400 million will be transferred in Fiscal Year 2014. Transferred School Aid Fund dollars now account for almost 60% of total funding for Michigan’s communities colleges, and 15% of university funding.

Many low-income youths and adults will not be able to afford a college education—the ticket to long-term economic security: Lawmakers included an increase of 7% (from $43.8 million to $47 million) in the Fiscal Year 2014 budget for the state’s Tuition Incentive Program, which provides financial aid to students who are Medicaid-eligible. While sorely needed, this relatively small increase is unlikely to substantially change Michigan’s ranking of 40th in the country in needs-based grants, or its placement last in the Midwest.

  • Over the last 10 years, states across the country increased investments in need-based grants by an average of 84%. Michigan, running counter to the national trend, decreased state funding by 20%—one of only two Midwest states to cut needs-based grant funding during that period.
  • In 2010-11, Michigan invested the least in grant dollars per student of all Midwestern states. The state spent 4.5% of its higher education budget on state grants in that year, while Pennsylvania, Indiana and Illinois all spent higher than the national average of 12.5%.
  • In 2010-11, only 14% of Michigan’s full-time students received some kind of grant aid, ranking the state second to lowest in the Midwest and 40th in the nation in the number of students receiving aid.

Without incentives for universities and community colleges to focus on the success of low-income and nontraditional students, many will continue to find barriers to the completion of postsecondary education: For Fiscal Year 2014, the Michigan Legislature again failed to incorporate performance standards that reward universities and community colleges for helping at-risk students. The final budget includes a 2% increase for both universities ($24.9 million) and community colleges ($5.8 million), with funding allocated based on performance metrics. In the current year budget, lawmakers included additional funding for universities and community colleges that meet specific performance standards, however only one of those performance standards—tuition restraint—addresses the unique needs of low-income and nontraditional students, including those needing remediation.

For Fiscal Year 2014, the performance measures for universities will remain largely the same, including tuition restraint; degree completions overall, as well as in key areas such as science, technology, engineering, mathematics and health; six-year graduation rates; research and development expenditures; and institutional support as a percentage of core expenditures. In the final budget however, the Legislature strengthened incentives for tuition restraint by making it a condition for receiving any performance funding and by lowering the tuition increase limit from 4% to 3.75%.

For community colleges, the metrics are also largely unchanged, and include degree completions, student contact hours, and administrative costs as a portion of total spending. For Fiscal Year 2014, lawmakers rejected a new metric proposed by the governor for job placements in the skilled trades.

  • Michigan’s economic growth depends on a skilled workforce, and the performance funding system put in place this year for public universities and community colleges does not adequately focus on the success of low-income students or those needing remediation.
  • The most recent data available show that 36.5% of community college students and 13% of university students in Michigan were enrolled in at least one developmental education course—at a cost to both the students and the institution.
  • Michigan’s decision to appropriate a portion of its higher education and community college funding using performance metrics provides an opportunity to address student success in the budget process and reward institutions that are successful in helping low-income and nontraditional students.

Low-income students or those needing remediation face more barriers to educational access and success, are more expensive to serve, and more likely to drop out. If there are no financial incentives for institutions to devote additional resources to this population, they could be viewed as a liability in terms of the other standards, including graduation rates.

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