Making kids count in the state budget

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Conditions for Michigan’s kids are progressing in some areas of child well-being but in others…. well, let’s just say we’ve got some major work ahead of us, particularly when it comes to economic security. That’s the upshot of the newly released Kids Count in Michigan Data Book.

Fortunately, the budget plan spelled out by Gov. Rick Snyder last month does a good job in a tight budget year of addressing inequities by making some investments that will drive improvements for Michigan’s kids.

Most welcome is a $49 million initiative, including $24 million for child care quality improvements, to increase the chances of more children reading proficiently by the end of third grade.

If approved by lawmakers, the initiative would ramp up school and family programs to identify children with developmental delays as early as possible, pay for additional instruction before or after school or during the summer and put literacy coaches around the state, among other interventions. This plan focuses on the positive – getting all kids reading by the end of third grade. This is a good direction for Michigan, and we applaud the governor for his leadership in this critical area.

Other highlights in the budget include $100 million in additional funding for children at risk of falling behind their peers academically. This is a significant increase (up from $309 million) and would go to help students from families with low incomes.

It was also heartening to see $6 million for new child care inspectors. Michigan’s caseloads are far too high, as the League pointed out in a January report. Making sure kids in child care are in safe environments is a smart economic strategy – good for families and good for businesses.

The governor’s budget also expands the Healthy Kids Dental plan for all children 0-8 to the three remaining counties without the plan: Wayne, Oakland and Kent. In 80 other counties the plan is available to all children 0-17 on Medicaid. That means that 63% of African American kids eligible for Medicaid but only 28% of white Medicaid-eligible children live in the three counties without the program. As the Kids Count in Michigan report points out, that’s a racial inequity that needs to be addressed.

All children, no matter where they live, should have access to oral healthcare.

The budget also increases funding for mental health services for people not eligible for Medicaid and offers $6 million in new funding for community college part-time student grants. The governor’s plan would reverse the trend in Michigan, which has ended all grant programs for adult learners to attend public higher education institutions. Helping parents improve their skills and job readiness is another positive move for kids.

The Kids Count report makes policy recommendations to address child well-being. Among them is encouraging voters to vote ‘yes’ on the May 5 road funding ballot. This is the last, best chance we have to fix the roads while protecting working families with low incomes. A successful ballot proposal will trigger the restoration of the state Earned Income Tax Credit to 20%, helping more than 1 million children in our state. Read more on the Safe Roads Yes! website.

In light of growing child poverty, the Kids Count report also calls for restoration of safety net programs that have taken a huge hit in recent years: unemployment insurance and cash and food assistance. In addition, child care subsidies haven’t kept pace with inflation and parents have to be poorer and poorer and poorer to qualify each year.

While the governor’s budget unfortunately does not beef up those programs, it does address some very critical needs for children and families, including the grade-level reading initiative. It appears that kids do count in the executive budget.

– Gilda Z. Jacobs

‘Yes’ on road funding is right direction

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It’s a pivotal time for Michigan public policy. Decisions made in the next few months will determine the path Michigan takes into the future.

In three short months, voters on May 5 will decide Proposal 1, the road funding package. There’s no doubt that this is Michigan’s single best chance to raise sorely needed money to pay for road repairs and put new dollars into school classrooms all while protecting families earning the least.

A ‘yes’ vote on May 5 would end the era of delaying needed road repairs or paying for them with borrowed dollars. All with a penny sales tax increase. The sales tax increase to 7 cents will put Michigan in the middle of the pack of states — the same as Indiana’s.

For working families earning the least in Michigan, the penny tax will be offset by a full restoration of the state Earned Income Tax Credit to 20% of the federal credit.

The EITC is the best tool we have to reward work and lift families from poverty. More than 1 million Michigan children will benefit. What a win-win!

Also, this month, on Feb. 11, Gov. Snyder will unveil his executive budget, offering both challenges and opportunities.

The governor, in his State of the State address, announced the merger of the Department of Community Health and the Department of Human Services to a new Department of Health and Human Services under the leadership of Nick Lyon, the director of DCH and interim director of DHS.

At DCH, Lyon continued impressive strides in implementing the Healthy Michigan Plan so that a half-million previously uninsured or underinsured adults in Michigan get wellness care and care when they are sick.

Lyon has kept the League and other advocates informed about the merger and he seems sincere in efforts to help Michigan families and children. I pledge to work with him to find solutions that will make a positive difference in the lives of Michigan’s economically vulnerable kids and adults.

As the new department works to streamline programs with a “people first” rather than a “programs first” approach, we’ll monitor with this principle in mind: True efficiency must be found in making sure services match the needs of families rather than measuring success by the number of kids and adults dropped from programs.

In addition, there will be strong pressure to cut programs as the deep business tax cuts from 2011 resulted in revenue shortfalls that are now apparent.

Next year, business tax revenue is projected to contribute a small share (8.3%) of Michigan’s General Fund — the state’s main checking account that covers public safety, higher education, healthcare and other needed services.

That’s a far, far cry from two decades ago when business revenue contributed nearly a third (29%) of the General Fund. To succeed, businesses need those public services, and it’s a reminder, once again, that business tax cuts do not grow the economy.

So buckle your seat belts as we head into 2015 public policy debates! It’s going to be a bumpy ride. The League will keep you informed of developments, and we hope you will be engaged in these important decisions ahead.

– Gilda Z. Jacobs

Lopsided income growth hurts Michigan

The top 1% in Michigan earned 25 times the income of the bottom 99%, a new report from Economic Policy Institute concludes.

The report ranks Michigan as the 15th most unequal state in the country and offers new evidence on why Michigan policymakers should refuse more tax cuts so that they can invest in building the skills of a 21st century workforce.

In Michigan, inequality looks like this:

•    $942,993 a year on average for the top 1% of taxpayers.
•    $37,324 average annual income for the rest.

And what does it take to be a top 1% in Michigan? An income of $300,570 lets you in. It’s much harder to get to the very top – 0.01%. For that, you have to have income of nearly $7 million a year or more.

The report for the Economic Analysis and Research Network looks back to 1917 to find that income inequality – measured from the top to the bottom – is as large has it has been since 1928.

Since the Great Recession ended, incomes for the top 1% grew faster than the incomes of the bottom 99% in every state except West Virginia. In Michigan, the top 1% percent captured 82% percent of income growth in the period following the Great Recession.

“This is clear evidence why the economic recovery has not been felt by all  families in Michigan — only those who were already doing well,’’ said Gilda Z. Jacobs, president and CEO of the Michigan League for Public Policy, an EARN affiliate, said in today’s news release on the report. “Our lawmakers should look to this as they create the next budget. They should resist more tax cuts so that Michigan can help struggling families and grow the skilled workforce we need.’’

The lopsided growth is not new. From 1979 to 2012, the top 1% in Michigan saw a 115% jump in income. Meanwhile the bottom 99% realized nearly a 17% decline. Overall, income declined by 5%.

The report comes on the heels of a forum I attended last week hosted by the Institute for Public Policy and Social Research at Michigan State University. At the forum, I was reminded that it could have been far worse in our state.

Charles Ballard, MSU economics professor and vice chair of the League’s board of directors, cited research estimating that without the successful rescue of the auto industry, 1 million more jobs would have been lost in the Great Recession – most of them in Michigan and Ohio.

Michigan has 500,000 fewer jobs today than it did at the peak employment year in 2000, Ballard noted.

As the EPI report concludes, Michigan already has a large and growing income inequality problem. It’s hard to imagine what that would look like if tens of thousands or even hundreds of thousands of good-paying auto manufacturing jobs disappeared in addition to the 850,000 Michigan jobs that evaporated between 2000 and 2010.

– Judy Putnam

Tax policies gone wild

Shortsighted tax policy decisions by Michigan lawmakers have created a budget shortfall of $325 million in the current fiscal year, despite growth in the state’s economy.

Because Michigan must balance its budget every year, cuts will be made in the state’s General Fund, the major source of funds for health and human services, higher education and public safety – before the end of September. The 2016 budget, scheduled to be released by the governor on Feb. 11, has an additional revenue shortfall of $532 million.

This was the consensus of state economic and fiscal experts who met with lawmakers last week to determine how much the state has to spend for the remainder of this year and the upcoming year. They all agreed that although the economy is growing, revenues are not following suit.

At first blush, it is difficult to understand how state revenues can be dropping so quickly in a time of economic growth. One of the justifications for the 80% cut in business taxes approved by the Legislature in 2011 was that lower taxes would attract new businesses, create jobs, and ultimately increase state coffers by spurring economic growth.

So what happened? Why the budget gap?

  • Business tax cuts don’t grow the economy. With the 2011 changes, taxes on businesses were cut by $1.6 billion, placing Michigan 49th in the U.S. for business tax contributions to the state. Michigan businesses are now the source of only 2% of total state revenue, despite the fact that employers rely on many essential state services, including police and fire protection, the roads and bridges needed to transport their products, and a good educational system that can create the workforce they need. A major cause of the state’s current budget problem was the deep cut in business taxes in the face of known outstanding business tax credits that are expected to be a drain on the budget for many years to come. Net business refunds could exceed $680 million in 2015, and rise to more than $800 million in 2016.
  • Tepid economic growth. Michigan suffered a 10-year recession from 2000 to 2010, and while the state economy has strengthened in the last several years along with the rest of the nation, we have not yet regained lost ground. The state has recouped less than two-thirds of the jobs lost during the recession, and too many of those jobs are low-wage. And, while Michigan’s unemployment rate has dropped significantly, much of that decline can be attributed to nearly 90,000 discouraged and other workers leaving the labor force.

The state budget director has made it clear that there will be “real cuts.” We should be clear when we talk to our lawmakers that those cuts are the result of tax policies that have benefited Michigan businesses, but have not led to economic recovery for all of the state’s citizens. Government restructuring and efficiencies, while commendable if they can increase opportunities for families who are struggling to make ends meet, are not going to fill the gap.

– Pat Sorenson

Children thrive when parents succeed

Roughly half of Michigan’s young children ages 0-8 live in low-income families where meeting basic needs is a daily challenge.

Living in a financially stressed family during childhood has a long-term impact on education and employment. A child who spends the critical early years in poverty is less likely to graduate from high school and remain employed as an adult. To be more effective in assisting these families, public and private programs need to address the needs of both parents and children.

In the majority of Michigan’s low-income families with young children no parent has a year-round full-time job (56%) nor a credential beyond a high school diploma (79%) severely limiting their opportunities to secure well-paid job, according to the latest policy report, Creating Opportunity for Families: A Two-Generation Approach, from the Annie E. Casey Foundation.

Getting access to higher education as a nontraditional student has become much more difficult at a time the state needs a more educated workforce. Over the past decade Michigan policymakers have eliminated all public university and community college grants for older students. Most (85%) parents of young children in Michigan families with income below 200% of the poverty level (roughly $47,000 for a family of four) are over age 25.

Not only does the state not offer financial support to help with college costs for older adults, the state’s woefully inadequate child care subsidy fails to meet the needs of low-wage workers and students. It offers payments substantially below the market rate and only on an hourly basis — severely limiting child care options for families in need of care. Furthermore, eligibility for the subsidy ends when parental income rises only marginally above the poverty level where absorbing the cost of care, which averages over $500 a month, would not be feasible, thus disrupting the stability of care.

One of every eight parents in the state’s low-income families with young children reported that problems with child care resulted in changing, quitting or not taking a job.

Employer practices impose additional stress on working parents who struggle to meet their responsibilities as parents. Parents in part-time, low-wage employment typically lack benefits, as well as flexible and predictable schedules. The constant juggle of changing work schedules and family responsibilities exacts an emotional as well as a physical toll.

Unfortunately programs targeted to assist low-income families rarely address the needs of both parents and children in the family. For example, job training programs do not focus on the quality or accessibility of child care. This latest Casey report makes several recommendations on strategies to strengthen the whole family, including:

  • Providing parents with multiple pathways to family-supporting jobs and financial stability through access to employment and training programs, and state and federal assistance such as the Earned Income Tax Credit and the Supplemental Nutrition Assistance Program.
  • Structuring public systems to respond to the realities of today’s families through interagency collaboration and streamlined application systems.
  • Using existing neighborhood programs and platforms to build evidence for practical pathways out of poverty.

In order for children to thrive, their parents must have access to the tools and supports they need to be successful as parents, as well as workers in an economy that requires postsecondary training or education for a job with a family-supporting wage. We cannot afford to delay addressing these issues. The future of over half a million of the state’s young children is at stake.

– Jane Zehnder-Merrell

Oh Michigan!

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‘O’ stands for October — and it also stands for Opportunity.

With just a few short weeks before the Nov. 4 election, now is your best chance as a concerned Michigan citizen to make a difference. (more…)

Census numbers tell of stagnancy and slow recovery

Today is the big day that comes each year: the release of American Community Survey figures on income and poverty.

Ready for some numbers?

Michigan’s household median income in 2013 ($48,273) was a bit higher than in 2012, but is nearly $1,000 lower than in 2009. The income bracket that grew the largest from 2009 to 2013 was the share of Michigan households who make under $10,000 a year. The only other income bracket with a significant share increase was households making more than $200,000 a year. These numbers taken together suggest that the slow economic recovery in Michigan is primarily benefiting those at higher incomes. (more…)

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…)

Flood waters: a taxing problem

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My family and I were unfortunate enough to experience the recent flooding in Southeast Michigan. Despite the fact that we lost appliances, some precious photos and an assortment of stuff we had accumulated over the past 37 years, we will be OK. We had insurance and were able to get a company to clean and sanitize our basement very quickly. And we will not need to go into our retirement funds to make our losses whole. (more…)

If there’s a will, there’s a way

A new video and visually engaging report out today strongly makes the case for rebuilding the state’s education system, protecting Michigan’s abundant natural resources and investing in roads and our communities.

The project is called The Michigan Dream at Risk, from the Michigan Economic Center, an affiliate of Prima Civitas, a nonprofit organization that works to create resilient, adaptable communities in Michigan.

Gilda Z. Jacobs, the League’s president and CEO, and board members Charley Ballard and Bob Kleine were interviewed for the project. (more…)

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