Highlights of the 2018 state budget

July 2017

The 2018 state budget bills have passed the Michigan Legislature and are awaiting Governor Rick Snyder’s signature into law. Though there are still concerns about certain elements of the final budget, it was largely created with the well-being of residents in mind and included several hard-fought victories for the people of Michigan. Below is a list of some of the major highlights in the 2018 budget, along with some of the remaining issues. The League will be preparing a more thorough analysis of the final budget once it is signed.

HUMAN SERVICES

Access to Healthy Food

• “Heat and eat” policy continued. The governor recommended $6.8 million in state funds to continue the “heat and eat” policy that increases food assistance benefits for nearly 340,000 Michigan residents. The final budget includes $2.5 million for “heat and eat” with the intention of using unexpended funds from this year’s budget that can carry over to the 2018 budget year.
• “Double Up Food Bucks” program increased in current budget year. The Legislature included $750,000 in the current budget year and $380,000 in the 2018 budget to match a three-year federal grant to encourage the use of food assistance dollars for healthy foods.
• Federal funding for nutrition education to increase. The budget designates an additional $10 million in federal funding for nutrition education programs for persons receiving food assistance.
• Incentives for farmers markets serving families receiving food assistance. The budget includes $500,000 ($250,000 in state funds) for the purchase of wireless equipment by farmers markets so families can use their Bridge Cards to purchase healthy food.

Income and Family Support

• No increase in school clothing allowance for children in families receiving income assistance. The governor recommended an increase from $140 to $200 per child annually. The final budget retains the current allowance of $140 per child.
• Pathways to Potential program expanded. The governor recommended an increase of $5.6 million ($3.3 million in state funds) to provide human services to families through local schools. The final budget increased the program by a total of $4.9 million ($2.9 million in state funding).
• Increased support for homeless shelters. The Legislature approved the governor’s recommendation to increase the rate paid to homeless shelters from $12 to $16 per person, per night at a cost of $3.7 million.

Child and Adult Safety

• Expanded funding for the recruitment and support of foster families, as well as the Michigan Youth Opportunities Initiative (MYOI). The Legislature approved the governor’s recommendation to spend $3.6 million to support regional resource teams to recruit, train and support foster families, as well as an expansion of the MYOI program that helps young people make the transition from foster care to independent living.
• Prevention funding reduced. The Legislature approved the governor’s proposal to cut $6.1 million from the current year expansion of the Parent Partner and Family Reunification programs. The expansion funds are currently being used in Genesee and Macomb counties, and are intended to prevent the need for foster care and reunify children with their families when it is safe to do so.
• More resources for adult protective services. The Legislature approved the governor’s recommendation for an additional $11.3 million for 95 new adult services staff who can respond to reports of abuse, neglect or exploitation of adults.

HEALTHCARE

Medicaid and Healthy Michigan

• Healthy Michigan Plan continues. The Legislature and the governor continue to support the Healthy Michigan Plan with both federal and state funding. The plan provides healthcare coverage to over 660,000 people with low incomes. It is important to note that the Healthy Michigan Plan faces great risks should Congress move forward in repealing and replacing the Affordable Care Act.
• Nonemergency medical transportation expansion altered. The governor had proposed an expansion of the nonemergency medical transportation program into additional counties. Currently, a contracted program is available in Macomb, Oakland and Wayne counties. Other counties rely on local Department of Health and Human Services (DHHS) field staff workers to coordinate nonemergency medical transportation. The final budget, however, does not include expansion of the private program and instead includes $1.4 million to expand the use of local public transportation entities to coordinate nonemergency medical transportation.

Behavioral Health

• Increased wages for direct care workers. The Legislature approved the governor’s recommendation for a $.50 per hour wage increase for direct care workers. The wage increase is expected to help recruit and retain direct care staff.
• Behavioral health integration moves forward. The final budget updates Section 298 to require a pilot project for full integration of physical and behavioral health in Kent County as well as three pilot projects to integrate financing. DHHS would be required to begin the process of implementation of the pilot projects by October 1, 2017, with full implementation by March 1, 2018. The language requires that all benefits and savings from integration be reinvested into behavioral health services. The stated goal of the pilots and demonstrations is to test how the state can improve outcomes and efficiencies. The budget includes $3.1 million to support implementation of the pilot projects including project facilitation, evaluation costs and modifications to state contracts.
• State psychiatric hospital staffing increased. The Legislature supported the governor’s recommendation to increase staffing at state psychiatric hospitals. Total costs are $7.2 million, which will support the hiring of additional employees.

Public Health

• Child Lead Poisoning Elimination Board recommendations funded. The Child Lead Poisoning Elimination Board, created by the governor in 2016, recommended 80 actions the state should take. The budget includes $500,000 to begin implementation of these recommendations.
• Vapor intrusion response program continues. The final budget includes an increase of $815,000 to continue a new response program for vapor intrusion of volatile chemicals into homes and buildings.

Senior Services

• In-home services funding increased. The Legislature approved the governor’s recommendation of an increase of $2.1 million intended to address demand and waiting lists for additional in-home services for seniors.
• Meals on Wheels waiting lists addressed. The final budget includes an additional $3.2 million, including $1.5 million in state funding, to provide senior in-home meals through Meals on Wheels.

EDUCATION

Per-Pupil Spending

• Per-pupil spending increased. The Legislature increased the per-pupil payment to schools by between $60 and $120, with larger increases for districts currently receiving the lowest payments. This is above the governor’s recommended increase of $50 to $100 per pupil.
• Increased payments for high school students. The final budget includes $11 million to provide a bonus payment of $25 per pupil in grades 9 through 12. The governor had recommended a $50 per pupil high school bonus payment at a cost of $22 million.
• No new funding for schools with declining enrollment. The Legislature rejected the governor’s proposal to provide $7 million in transitional funding to schools with rapidly declining enrollment.
• Funding for cyber schools and shared-time nonpublic/homeschooled students will continue. The Legislature largely rejected the governor’s proposed cuts in funding for cyber schools and shared-time programs for nonpublic and homeschooled students. The governor’s proposal would have saved $55 million in funding reductions for shared-time programs and $16 million for cyber schools. The final budget leaves cyber school funding at current levels (100% of the minimum per-pupil foundation allowance), and caps shared-time programs for a savings of only $2 million.

At-Risk School Aid

• Increased funding for at-risk students. The Legislature approved an increase of $120 million for the At-Risk School Aid program, bringing total funding to $499 million. The governor had recommended an increase of $150 million to a total of $529 million. Both the governor and the Legislature changed the distribution formula and expanded the definition of “at risk” to include economically disadvantaged students—including those eligible for free- and reduced-price meals; pupils receiving income or food assistance; or those who are homeless, in migrant families or in foster care.
• Funding available for “out-of-formula” or “hold-harmless” districts that are not currently eligible. These are districts that have combined state and local per-pupil foundation allowances that are higher than the basic amount, even though they may have a high number of children living in poverty. While the governor recommended full funding for eligible students, the final budget caps payments for newly eligible hold-harmless and out-of-formula districts at 30%.

Early Literacy

• Funding for early literacy programs increased—with a new funding formula. The Legislature agreed with the governor to increase funding for early literacy coaches from $3 million to $6 million. The Legislature also increased funding for the Michigan Education Corps—a program the governor had recommended eliminating—from $1 million to $2.5 million. A total of $20.9 million in early literacy funding that is currently allocated to professional development, screening and diagnostic tools, and added instructional time is combined and distributed to districts in an amount equal to $210 for every first grade student. Funding for professional development and diagnostic tools are both capped at 5%.

Partnership Districts

• New funding available to support state partnerships with high-poverty and struggling schools. The governor recommended $3 million in School Aid funds (along with staffing in the Michigan Department of Education budget) for a new effort to develop partnerships with school districts and communities to determine what intensive supports are needed to overcome low educational achievement and prevent unnecessary school closures. The final budget includes $6 million for the program.

Early Childhood Education and Care

• Child care payments and eligibility increased. The Legislature approved $19.4 million total ($8.4 million in state funds) to increase hourly rates paid to child care providers based on the Great Start to Quality rating system. In addition, $5.5 million in federal funding is appropriated to increase the entrance income eligibility threshold for child care assistance from 125% of poverty to 130%. Funds were included in the 2017 budget to increase rates before October.
• Funding provided to comply with new federal requirements related to safety in child care settings. The Legislature approved $7.1 million for comprehensive fingerprinting and background checks of child care providers and others with unsupervised access to children in child care settings in the current budget year, as well as $800,000 for staffing to complete checks in 2018, and $1.4 million for oversight of license-exempt family, friend and neighbor care.

Flint Water Emergency Funding

• School Aid funds for the Flint water emergency reduced. The Legislature approved the governor’s recommendation to reduce School Aid funds for the Flint water emergency by $1.4 million (from $10.1 million to $8.7 million). Remaining funds are to be used for: 1) expanded eligibility for the Great Start Readiness Preschool program ($3 million); 2) school nurses and social workers in Flint schools ($2.6 million); 3) Intermediate School District support for students that attend districts other than Flint ($2.5 million); and 4) nutrition programs ($605,000).
• Provided funding to address health and safety concerns. The Legislature approved funding for additional water testing, food and nutrition services, health services at child and adolescent health centers and schools, and water filter cartridges and replacements, though it was $1.1 million below what was included in the 2017 budget. Increased funding of $380,000 was included for nutrition services in Flint through the Double Up Food Bucks program.

Adult Education

• Adult education funding remains stagnant. The Legislature provided continuation funding of $25 million for adult education programs, and provided $2 million for pilot programs focused on career and technical education.

HIGHER EDUCATION

Financial Aid

• Still no state financial aid for students who have been out of high school more than 10 years. The governor recommended $2 million for the Part-Time Independent Student Grant, with added language that it could only be used at community colleges. The Legislature did not include funding for the grant.
• Increase for Tuition Incentive Program (TIP) serving students eligible for Medicaid. The Legislature approved the governor’s recommendation for $5.3 million in new Temporary Assistance for Needy Families (TANF) funding for the grant, bringing total funding to $58.3 million (a 10% increase), which is expected to support 18,500 students in the upcoming school year. The Legislature also approved replacing $4.7 million in General Fund dollars with TANF funding, making TIP 100% funded by TANF.
• Increases for the Michigan Competitive Scholarship and Michigan Tuition Grant. The Competitive Scholarship is currently 100% TANF-funded and the Tuition Grant 90% TANF-funded, but all new funding comes from the General Fund. The governor recommended an increase of $8 million from the General Fund for the Competitive Scholarship, a merit- and need-based grant based on ACT/SAT score and estimated family contribution, and an increase of $3 million from the General Fund for the Tuition Grant, which helps students attend private not-for-profit institutions and is based on estimated family contribution. The Legislature concurred with the governor’s increases for both grants.

Tuition Restraint

• Tuition restraint cap is tightened. The Legislature supported the governor’s recommendation to lower the tuition restraint cap from 4.2% to 3.8% or $475 per student, whichever is greater.
  School Aid Fund for Postsecondary Education
• All community college funding is from the School Aid Fund. The governor’s budget continued the practice of using a portion of School Aid Fund (SAF) dollars to fund Michigan’s universities and community colleges, but for the first time, nearly all total state funding for community colleges is appropriated from the SAF. The governor’s budget used $231.2 million in SAF dollars for universities and $319.1 million in SAF dollars for community colleges, taking a record $550.2 million out of the funding meant for K-12 schools. The Legislature approved these appropriations.

CORRECTIONS

Prison Operations

• Small cut in prison operations. The governor funded prison operations at a total of approximately $1.2 billion, spread across the state’s 29 prison facilities and including regional support systems for those facilities. The Legislature cut $6.5 million from prison operations by permanently closing housing units at five prison facilities.
  Incarceration Alternatives and Occupational Training
• Wayne Residential Alternative to Prison is expanded to West Michigan. The Wayne Residential Alternative to Prison program provides low-risk probation violators an opportunity to avoid going to prison and instead enter a residential program in which they receive occupational training and cognitive behavioral programming. The governor continued funding this program at $500,000, and added $1.5 million to replicate it in 13 counties on the west side of the state. The Legislature supported the governor’s proposal.
• Funding for training is maintained. The governor retained $2 million in current funding for the Vocational Village program in Jackson, which trains prisoners in the skilled trades, but eliminated $1.5 million in current funding for Goodwill Industries’ Flip the Script program in Wayne County, which provides education, job training and mentoring to 16- to 39-year-olds in the criminal justice system. The Legislature retained current funding for both programs.

Health-Related Services

• Increase in Hepatitis C treatment. The governor requested a $13.9 million transfer from the current year DHHS budget to expand drug treatment of prisoners with Hepatitis C, which the Legislature approved at $10 million. Assuming the DHHS transfer would go through, the governor reduced the 2018 Corrections appropriation for this program by $3.19 million to $11.7 million, bringing the total funding for Hepatitis C treatment to $25.6 million. The Legislature reduced the 2018 appropriation to $6.7 million, for a total of $16.7 million when the transfer is included—an increase of $1.8 million over the current budget.
• Increase for cancer (oncology) treatment. The governor added $2.3 million for oncology treatment for a total of $73.9 million, reflecting the fact that the number of inmates treated for cancer increased by 48% from 2015 to 2016, and that the growth is expected to continue. The Legislature approved the transfer.
• Small increases for mental health and substance abuse services. The Legislature approved the governor’s $778,000 increase for mental health services (for a total of $61.2 million) and the very small increase of $5,700 for substance abuse testing and treatment for prisoners.