The FY 2014 Budget: Gains for Some Children & Families but Deep Disparities Persist

Full report in PDF | Executive Summary

The Fiscal Year 2014 budget has been signed by the governor, and despite some exciting wins for children and families, there were several critical issues left undone, including improvements in economic security. Of great concern is the reality that even where some progress was made, many children were left behind, with disparities based on race and ethnicity continuing to be deep and discouraging.

The governor has established a set of performance measures through the MI Dashboard (www.michigan.gov/midashboard). In addition, the Michigan League for Public Policy, in conjunction with the Annie E. Casey Foundation and the Skillman Foundation, annually publishes KIDS COUNT data that can be used as a barometer of the state’s success in addressing the needs of children. Together, these performance measures give Michigan residents the opportunity to compare the decisions made by policymakers with outcomes for Michigan families, children, schools and communities.

ECONOMIC SECURITY

Performance outcomes:

  • Child poverty: Child poverty, a key indicator in the governor’s dashboard, is rising dramatically, with especially high rates for certain racial and ethnic groups. One in four Michigan children—nearly 560,000 statewide—now live in poverty. Michigan’s child poverty rate is up 32% since 2007, when less than one in five children were poor.1 Half of all black or African American children, and 38% of all Hispanic or Latino children, now live in poverty.
  • Parents without secure employment. More than one-third of Michigan children (35%) live in families where no parent has full-time, year-round employment—up 13% since 2008.2 In 2011, 61% of black or African American children, 44% of Hispanic or Latino children, and 49% of children identifying with two or more races lived in families where no parent had full-time, year-round employment.
  • Food insecurity. More children are now facing the possibility of not having adequate food. The percentage of Michigan children who in the previous 12 months faced an uncertainty of having enough food increased by 25% between 2006 and 2010, with over 450,000 children facing food insecurity.

The Legislature took the following actions affecting economic security for families with children:

  • Cut tax credits for many low- or moderate-income working families. 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, Michigan’s Earned Income Tax Credit, an effective anti-poverty tool that helps hard-working families with incomes below or moderately above the federal poverty line, was cut by 70%. As a result, nearly 12,000 more children are at risk of falling into poverty, as their parents lose the struggle to cover work-related costs and make ends meet. Also lost were credits to offset high housing costs for families and the child deduction. Despite the EITC’s proven success and past bipartisan support, lawmakers failed to restore the credit even in the face of an unexpected $702 million in revenue for fiscal years 2013 and 2014.
  • Limited access to Family Independence Program benefits. Changes in FIP policies and eligibility have resulted in thousands of very poor Michigan children losing basic income assistance. The Fiscal Year 2014 budget reduces funding for the FIP by $41 million to a total of $214.3 million, projecting caseloads will fall 14% in the upcoming fiscal year. 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. Approximately seven of every 10 FIP recipients are children, and 60% of those children are under the age of 9. In the face of rising child poverty, FIP caseloads will have fallen 42% in the five-year period between fiscal years 2010 and 2014.
  • Partially restored the clothing allowance for children in families receiving FIP. The Michigan Legislature included $2.9 million in the Fiscal Year 2014 budget to partially restore the clothing allowance provided to 21,000 children in FIP cases that do not include an adult 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 cuts. Because of earlier cuts, an additional 120,000 children who had previously received a fall clothing allowance will still be left behind.
  • Reduced unemployment insurance. In 2011, the Michigan Legislature became the first in the country to cut state unemployment benefits for families from 26 to 20 weeks—at a time when Michigan’s unemployment rate was fifth highest in the nation. And, the 75,000 unemployed Michigan families who have exhausted their 20 weeks of state unemploy-ment benefits and are relying on federally funded Emergency Unemployment Compensation had their federal benefits cut by 11% as part of federal sequestration.
  • Restricted access to food assistance. In the Fiscal Year 2014 budget, Michigan legislators cut funding for the Food Assistance 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. The budget assumes that caseloads will fall from the appropriated level for this year of 1.1 million cases, to 876,650 in 2014—a 19.4% drop. Until the adoption in 2011 of an asset limit for families receiving FAP, caseloads had been rising rapidly, along with the need for food assistance.

ACCESS TO HEALTHCARE

Performance outcomes:

  • Insurance coverage for children for health and mental health services. Michigan has a history of effectively covering children through the Medicaid and MIChild programs. In 2011, only 4% of Michigan children were uninsured, compared with 7% nationwide. However, uninsured rates were significantly higher for American Indian, Asian and Pacific Islander, and Hispanic and Latino children.
    Poorly covered are low-income adults, including low-income women of childbearing age who are at high risk for poor birth outcomes because of pre-existing and untreated health conditions, and the lack of access to preconception care.
  • Infant mortality. Despite being a key indicator on the governor’s dashboard, Michigan’s infant mortality rate continues to be higher than most states, with Michigan ranking 37th among the states. While overall infant mortality rates fell slightly recently, too many Michigan infants, and particularly infants of color, continue to die unnecessarily. Death rates for African American infants are more than two-and-one-half times higher than white babies.
  • Preventive dental care. Currently more than 440,000 low-income children are covered by the Healthy Kids Dental 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.
  • Lead poisoning. While the number of children with confirmed elevated lead blood levels has declined dramatically in Michigan, some areas of the state still have very high rates of lead poisoning, disproportionately affecting children of color. The city of Detroit had over half the state’s lead poisoning cases in 2012; the second highest was in Grand Rapids. The highest percentage of lead poisoning cases in 2012 was in Highland Park.3

 

The Legislature took the following actions affecting children’s health:

  • Approved, following the signing of the final budget for Fiscal Year 2014, a bill to expand Medicaid to low-income parents and individuals. The passage of Medicaid expansion in Michigan will extend healthcare and mental health services to 320,000 low-income parents and individuals, including women of childbearing age. By giving more women access to healthcare before and between pregnancies, Medicaid expansion will improve both the preconception health of mothers and birth outcomes, including reductions in infant mortality.
  • Expanded funding for preventive dental care for children. The Legislature 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, including Ingham, Ottawa and Washtenaw.
  • Approved a small increase in funding to prevent infant mortality. The Legislature approved—at a reduced level of $2 million—the governor’s recommendation for new funding to continue to implement Michigan’s infant mortality reduction plan.
  • Expanded funding to remove lead hazards in areas with high incidences of lead-poisoned children. The final 2014 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. This increase brings total funding to $4.15 million, an increase of 43%.

EDUCATION

Performance outcomes:

  • Third grade reading. Reading proficiency by third grade is a critical predictor of academic success, and is a core indicator in the governor’s dashboard. Roughly three of every four third-graders without the requisite literacy skills will still have reading difficulties as high school students, and are at higher risk of retention, behavioral problems and ultimately school dropout. The percentage of students who are proficient at reading by third grade, as measured by the Michigan Educational Assessment Program, has increased from 63% in 2007-08 to 68% in 2012-13.4 However, based on national standards—the National Assessment for Education Progress—the percentage of Michigan fourth-graders with reading skills below proficiency level is more than double the state percentage calculated on the MEAP.

Of even more concern is the fact that reading proficiency among fourth-graders varies so dramatically by race/ethnicity and family income. Among Michigan fourth-graders, nine of every 10 African Americans and almost eight of every 10 Hispanic or low-income students cannot demonstrate proficiency compared with slightly over half of white non-Hispanic students and slightly under half of higher-income students.5

  • High school completion. Although fewer young people have been dropping out of high school, great disparities still ex-ist based on race, ethnicity and economic status. Statewide, for the class of 2012, of a total cohort of 129,689 students, 98,881 (76.2%) graduated on time, 13,884 (10.7%), dropped out, and 15,203 (11.7%) were not able to complete on schedule, but were still engaged in their high school education.6

Overall, young men are more likely to drop out (12.7%) than women (8.6%). The highest dropout rates are among African American (19.4%), Hispanic (18.3%), and homeless (17.8%) students, as well as English Language learners (17%).

  • College access. The governor’s dashboard includes as a core indicator for postsecondary education the cost of higher education as measured by tuition and fees as a percent of median family income. MI Dashboard shows the state moving in the wrong direction on this indicator, with the cost of Michigan four-year colleges and universities increasing from 15.9% of median family income in 2008-09, to 17.1% in 2010-11—an increase of nearly 8% in just two years. By contrast, the national average for tuition and fees at four-year institutions was only 12% of median family income in 2010-11.

At most Michigan public universities, tuition has more than doubled in the past 10 years. Tuition also climbed at the state’s more affordable two-year colleges, but not as dramatically. Still, many community college students are low income and have struggled to foot the bill without tuition assistance. Unfortunately, Michigan ranks 40th in the nation in the percentage of full-time students receiving need-based grants, and over the last 10 years, while states across the country increased investments in need-based grants by an average of 84%, Michigan decreased its funding by 20%.7

The Legislature took the following actions related to a high quality education for all children:

  • Significantly expanded state-funded preschool for at-risk 4-year-olds. The final 2014 budget increases funding for Michigan’s Great Start Readiness Program by $65 million, for total funding next year of $174.3 million. This increase opens up approximately 16,000 new half-day slots for 4-year-olds. As part of the increase, the Legislature also raised the payment for a half-day slot and targeted funds to the lowest income children.
  • Provided a small increase to K-12 public schools. The Legislature, in contrast to the governor, included a partial restoration of the per-pupil foundation allowance for public schools, although the increase was not enough to make up for the cuts already suffered by school districts. Also approved was $36 million (up from the governor’s recommendation of $24 million) for equity payments to districts with foundation allowances of less than $7,076.
  • Increased funding for university operations slightly. The Legislature approved a 1.8% increase for university operations, slightly under the governor’s recommendation of 2.0%. This small increase does little to rectify the deep cuts taken in higher education over the last decade, including a 15% cut in Fiscal Year 2012. Total Fiscal Year 2013 university appropriations per student in Michigan are 31.4% lower than they were in Fiscal Year 2001 in real dollars, and 48% lower on an inflation-adjusted basis.8
  • Provided a small increase for financial aid for low-income students. The Fiscal Year 2014 budget includes an increase of 7% (from $43.8 million to $47 million) for the state’s Tuition Incentive Program, which provides financial aid to students who are Medicaid-eligible.

CHILD SAFETY

Performance outcomes:

  • Suspected and confirmed child abuse or neglect. Between 2005 and 2011, child abuse and neglect investigations and confirmed victims rose in Michigan. In 2011, 7% of all children in Michigan lived in a family investigated for alleged abuse or neglect—a total of 171,200 children. Children in Michigan were 14% more likely to live in a family investigated for abuse or neglect in 2011 than in 2005. The number of confirmed victims of child abuse and neglect rose by over one-quarter (29%) during that time, with over 33,000 confirmed victims in 2011. Over 80% of the cases involved neglect, often a by-product of poverty, which escalated dramatically throughout Michigan during that same period.
  • Children in out-of-home care. Despite increases in suspected child abuse and neglect and confirmed victims, the rate of out-of-home care placement (in the homes of foster parents or relatives) due to maltreatment dropped by almost one-third in Michigan between 2005 and 2011. African American or black children are disproportionately over-represented in Michigan’s child welfare system, and are more likely to be placed in foster care.9

The Legislature took the following actions related to child safety:

  • Reduced funding for foster care services based on caseloads, but increased payments to private agencies. The final budget includes $181.1 million for foster care payments, a reduction of 12% over the current year, and 5% below the governor’s recommendation for Fiscal Year 2014. Foster care caseloads are expected to continue to fall to 6,250 next year. Foster care administrative rates for private child placing agencies will increase by $3 to a total of $40 per child per day.
  • Recognized increased subsidies for adoptive parents. Lawmakers included $28 million for a $3 per child per day rate increase for all adoption subsidy cases. The increase was implemented this year, but funding had only been included for new adoption subsidy cases.
  • Reduced funding for child welfare staffing expansions related to the settlement agreement from a lawsuit against the state by Children’s Rights, Inc., a national advocacy organization. Michigan entered into a settlement agreement related to a lawsuit claiming that DHS was unable to move children quickly into safe, stable and permanent homes, provide children with adequate services, provide safe and stable foster homes, or prepare children who “age out” of the child welfare system. To address the settlement, the governor in May 2012 requested a total of 577 new child welfare workers for the current fiscal year. The governor’s Fiscal Year 2014 budget cut the recommended number of workers by 81 positions to a total 496. The Legislature cut another 80 positions, for a total staffing cut of 161.
  • Continued to underfund prevention and family support services. While funding for some child welfare services has increased in recent years as a result of the litigation against the state, resources for services to prevent maltreatment, and to strengthen and reunify families, continues to be woefully inadequate. Lawmakers:
    • Provided $2.5 million in federal funds for pilot programs in Kalamazoo, Macomb and Muskegon counties to prevent children from birth through age 5 from entering foster care.
    • Reduced funding for other family preservation programs by $4.2 million, including cuts in Families First, Child Protection and Permanency, and Family Reunification.
    • Cut contracts for runaway youth services by 10%.

 

ENDNOTES

1. KIDS COUNT data center, the Annie E. Casey Foundation at www.datacenter.kidscount.org.
2. Ibid.
3. 2012 Annual Data Report on Blood Lead Levels of Children in Michigan, Michigan Department of Community Health (April 30, 2013)
4. Education Dashboard Data File, Michigan Education Dashboard.
5. Kids Count in Michigan 2012 Data Book, Michigan League for Public Policy. Higher income is defined as family income above 185% of the federal poverty level ($42,200 for a family of 4.)
6. 2011-12 Graduation Dropout Snapshot, MI School Data, Michigan Department of Education (6/12/2013).
7. Ruark, P., Keeping It Affordable in Michigan:  Disinvestment in Financial Aid Grants Hurts Students and Their Families, Michigan League for Public Policy (November 2012).
8. Jen, K.I., Higher Education Background Briefing, House Fiscal Agency (February 2013). Calculations are based on fiscal year equated students.
9. Kids Count in Michigan 2012 Data Book, Michigan League for Public Policy; and KIDS COUNT data center, the Annie E. Casey Foundation, using a Child Trends analysis of data from the Adoption and Foster Care Analysis and Reporting System (AFCARS), made available through the National Data Archive on Child Abuse and Neglect, at www.datacenter.kidscount.org.