When are we going to really value education?

Earlier this month, yet another damning report came out showing how badly the state of our educational system in Michigan is. We’ve seen the national 2016 KIDS COUNT Data Book rank Michigan in the bottom ten in the nation on education. An adequacy study commissioned by the State of Michigan—which seems to have received little attention from state leaders—found that the state isn’t spending nearly enough on education, especially for students from families with low incomes. Then there’s the Education Trust—Midwest report predicting that Michigan will fall to 48th in the country in fourth-grade reading achievement by 2030 without changes. Now, our beloved state is one of a handful of states to be highlighted for its rate of growth in corrections spending, which was five times more than spending in education. (more…)

Mass incarceration and the kids left behind

Losing a parent to incarceration can be very traumatic for children. Not understanding why a parent is gone and can’t come home, wondering why he or she might be far away, being frustrated because frequent visits might not be possible all while the other parent undergoes tremendous financial and emotional stress.

In Michigan at least 1 in 10 children has been impacted by parental incarceration. This is one of the highest rates in the country—only Indiana (11%) and Kentucky (13%) have higher percentages of children who have had a parent incarcerated. As a result of mass incarceration and the “tough on crime” movement many children and families have been left behind in communities without adequate support and resources. (more…)

A first look at the Governor’s 2016-2017 budget: Short-term fixes, long-term challenges

pdficonBB highlights governor 2017 budgetThe centerpiece of Governor Rick Snyder’s budget for the upcoming year is funding to address two crises that were long in the making and preventable—the exposure of thousands of Flint children to toxic lead in their drinking water and the unsafe conditions and looming insolvency of the Detroit Public Schools. These crises have exposed many governmental failures that must be fixed, and the governor’s budget lays out his short-term plan to do so.

The governor’s 2017 budget fails, however, to provide adequate, long-term solutions to infrastructure problems across the state, or reverse ongoing disinvestments in public services. There are many communities in Michigan that struggle to deliver the basic services needed to protect their residents from threats to health and safety. There are hotspots of lead poisoning all over the state, with 70% of lead exposure associated with paint in older homes. And school districts in both urban and rural areas are struggling financially as state funding has failed to keep pace with inflation or reflect rapidly declining enrollment.

Sadly, state policies have pushed more Michigan families into deep poverty. Stringent lifetime limits on public assistance, the ending of assistance for an entire family when one child is truant, and an asset test for food assistance all increase the chances that children will live in poorly maintained homes with lead paint, and make it more difficult for parents to provide the good nutrition that is known to mitigate the impact of lead exposure.

While the governor recommends important investments in the immediate needs of Flint and Detroit, there are challenges on the horizon. Serious threats to the state’s General Fund are approaching, including the cost of fixing the roads, changes in Medicaid financing that threaten the amount of federal revenue that the state can draw down, and the high cost of business tax credits. Long-term fixes to the problems in Flint, Detroit and other areas of the state that are achieved by dividing up a shrinking “budget pie” could set the stage for more crises and suffering down the road.

BB 2017 budget chart 1Total Funding for 2017

The governor recommends a total of $54.9 billion in spending for 2017, an increase of less than 1% over the current budget year. Four of every 10 dollars spent by the state are federal, with state general funds representing only 18%. The state’s General Fund (GF/GP)—the dollars over which the Legislature has the most discretion and control—are expected to be 29% below 2000 budget year levels when adjusted for inflation.

The Flint Water Crisis

The Legislature has already approved two funding increases for Flint in the current budget year totaling over $37 million. The funds are being used to reconnect Flint to the Detroit water system, provide bottled water and filters, allow Flint to hire additional school nurses and Early On staff to monitor children’s development, improve lead testing and abatement, increase services through child and adolescent healthcare centers and local community mental health, and boost food and nutrition programs. An additional $30 million is being sought to help defray Flint residents’ ongoing water bills until clean water can be guaranteed.

Over the two upcoming budget years (2017 and 2018), the governor recommends an additional $195 million in assistance to Flint for health and educational support, as well as infrastructure, with funding spread out over several state departments.

Highlights of the Governor’s 2017 Budget Proposal to Assist Flint

DEPARTMENT OF EDUCATION: The governor includes $8.1 million in federal Child Care and Development Fund dollars to:

  • Expand half-day child care services to all children ages 0 to 3 in Flint, regardless of household income, at a cost of $8.1 million. Currently, parents must have incomes of less than 121% of the federal poverty line to be eligible for child care subsidies. The governor recommends that the child care eligibility expansion be implemented in the current budget year (also at $8.1 million).
  • Provide information to child care providers on how to identify the effects of lead poisoning and intervene effectively ($50,000).

DEPARTMENT OF HEALTH AND HUMAN SERVICES: The governor recommends a total of $15.1 million in assistance to Flint through the Department of Health and Human Services (DHHS) budget in 2017. Additional funds would be available for the rest of 2017 if needed through a $50 million Flint Emergency Reserve Fund in the Department of Treasury, Management and Budget, or a $6.1 million contingency fund in DHHS. Included are funds to:

  • Expand nutrition services through food banks, the Women, Infants and Children program, and other existing nutrition programs ($4.7 million).
  • Increase services in local child and adolescent health centers, along with DHHS staff in local schools (Pathways to Potential Program) to help connect children to available services ($1.1 million).
  • Increase the capacity of local community mental health providers to evaluate and refer children with elevated lead blood levels ($6.9 million).
  • Support lead investigations a plan for lead mitigation, and food inspection ($1.7 million).

K-12 SCHOOL AID: For 2017, the governor recommends slightly over $10 million in School Aid dollars for part-year services to the children of Flint. Additional funds would be available for the rest of the year if needed through a Flint Emergency Reserve Fund or a $15 million contingency fund. Funds would be used to:

  • Continue to hire school nurses and social workers to help identify and intervene with children exposed to lead ($1.3 million).
  • Strengthen services through the Early On program, which currently identifies children ages 0 to 3 with disabilities or developmental delays. The governor provides $950,000 for additional Early On and nutrition assistance staff, and $6.4 million for needed Early On services. The governor’s budget requires that all children be assessed at least twice annually for developmental delays. The governor also recommends $9.2 million in the current budget year for universal Early On assessments of Flint children ages 0 through 4.
  • Expand the Great Start Readiness Program in Flint to all 4-year-olds regardless of income ($1.5 million).

The Crisis in the Detroit Public Schools

The Detroit Public Schools (DPS) financial crisis has been years in the making and the district now faces an estimated $515 million in operating debt, along with long-term liabilities related to deferred debts. The district is expected to run out of cash by the spring of this year. As the district has struggled financially, conditions in the schools have deteriorated placing children’s safety and educational progress in peril.

While DPS has been cutting costs, the district has overspent in nine of the last 10 years, in part due to the rapid decline in students. Part of that decline was the result of the growth of charter schools in Detroit. Between 2007 and 2015, the percentage of Detroit children attending DPS decreased from 80% to 47%, while enrollment in charters increased from 20% to 53%. The end result is that enrollment in DPS has fallen 70% since 2003.1 With this large decline in enrollment, it is very difficult for any school district to adjust overhead spending quickly enough, and state payments to school districts have not been tailored to meet the needs of districts with declining enrollment.

To address the Detroit crisis, the governor proposes a three-part plan that includes:

  • Maintaining the current school district as a vehicle to pay off the district’s debt, funded by the 18 mill property tax currently used for the school per-pupil foundation allowance.
  • Establishing a new school district to operate the schools, completely funded with state funds.
  • Creating a commission to hire a manager to oversee DPS and charter public schools in Detroit.

The governor proposes to pay off the DPS debt through the existing local school millage. To offset the loss of local funds, the governor recommends that $72 million from Michigan’s tobacco settlement proceeds be dedicated to DPS over the next 10 years, with the goal of avoiding cuts to other school districts. Tobacco settlement funds are currently used to support several programs including Medicaid and the Family Independence Program. Maintaining the state funds to hold those programs harmless will be important.

The Legislature is currently debating several versions of aid to DPS. On the table are proposals to use state General Fund or School Aid Fund dollars to help pay off the debt. If those approaches are adopted, additional cuts would be required in programs currently using those funding sources.

Health

HEALTHY KIDS DENTAL: The governor recommends an investment of $8.9 million in state funds, $25.6 million in total funds to fully expand the Healthy Kids Dental program to the remaining Medicaid-eligible kids ages 13-20 in Kent, Oakland and Wayne counties. An estimated 131,000 children in the three counties will gain access to the program. Tooth decay remains the most prevalent chronic disease in children resulting in lost school days and diminished learning, as well as the potential for long-term negative health consequences.

HEALTHY MICHIGAN PLAN: The recommendation for the Healthy Michigan Plan includes the state funds required, nearly $109 million, when the federal funding declines from 100% to 95% effective January 1, 2017. The federal government approved the waiver on December 17, 2015, which allows the program to continue after April 30, 2016, for its 600,000-plus enrollees.

SPECIAL HOSPITAL PAYMENTS: The governor recommends continuation of the special payments to rural hospitals and the special obstetrical payments to stabilize obstetrical services implemented in budget year 2015. These special payments were eliminated in the 2016 Executive Budget, but were retained by the Legislature.

MENTAL HEALTH FUNDING AND BOILERPLATE:

  • The governor’s 2017 budget includes continuation funding of $117 million for behavioral health services provided to those not eligible for Medicaid or the Healthy Michigan Plan.
  • The governor’s budget includes boilerplate language that mandates all mental health and substance use disorder funding for Medicaid and Healthy Michigan Plan beneficiaries and autism services funding be transferred to the Medicaid Health Plan line item by September 30, 2017. The boilerplate requires the development of a plan to integrate behavioral health and physical health services, with stakeholder participation. It also requires the Medicaid health plans to contract with Community Mental Health Services Programs for specialty services and supports.

PUBLIC HEALTH: The governor recommends a $2 million increase in local public health funding for essential services.

Human Services

FOOD ASSISTANCE: The governor recommends a reduction of $71 million in federal funds from the current year budget for the Food Assistance Program (FAP) for low-income families and individuals, and projects that 795,000 families will need assistance next year. FAP is completely federally funded, with an average monthly benefit for a two-person household of $230.2 More than 70% of recipients receive no other cash assistance from the state. The number of people receiving food assistance began to fall in Michigan in 2011, the same year that the state imposed a new asset limit for recipients. Most states have moved away from asset limits, and Michigan is turning away significant federal dollars because of its adoption here.

BB 2017 budget chart 2FAMILY INDEPENDENCE PROGRAM:

  • Fewer families are receiving assistance: The governor projects that the number of families receiving cash assistance through the Family Independence Program (FIP) will continue to fall. Since 2011, more stringent lifetime limits for FIP have resulted in many families failing to receive needed assistance, with caseloads falling from nearly 80,000 families in 2011 to only 25,000 in 2016. The maximum monthly assistance for a family of three is $492, or less than one-third of the federal poverty level. The FIP grant is significantly less than the lowest fair market rent in all regions of the state.3
  • Children’s clothing allowance is expanded: The governor expands the clothing allowance for children in families receiving FIP income assistance to include all children, not just those living with grandparents or other adults who are not eligible for FIP. In addition, the annual clothing allowance is increased from $140 per child to $200 (total cost of $6.1 million—all federal Temporary Assistance for Needy Families funding).

CHILD ABUSE AND NEGLECT:

  • Prevention services: The governor included an increase of $10 million in one-time funding to expand the Parent Partner and Family Reunification Programs. The goals of the programs are to prevent the need for foster care, ensure that children are more quickly reunified with their families when it is safe to do so, and assist parents after children are returned home.
  • Child welfare information system improvements: The state has been implementing a new information system that needs additional improvements to comply with federal regulations and be an effective tool for protective services and foster care workers. The governor recommends $22.3 million for improvements.

Child Care and Early Education

CHILD CARE: The governor recommends $124.2 million for child care services, including an increase of $8.1 million in both 2016 and 2017 for child care expansions in Flint. Statewide, the number of low-income families receiving child care subsidies fell by nearly 75% in the last decade—from 63,000 in 2006 to only 17,000 in 2015. Child care funding that communities and businesses need to keep low-wage parents on the job fell from $460 million to $105 million. The decline is partly the result of Michigan’s low child care eligibility and provider payment levels.

GREAT START READINESS PROGRAM: The governor recommends funding level for the Great Start Readiness preschool program ($243.6 million), allowing for 63,000 half-day slots for low-income 4-year-olds. Children are eligible if their family’s income is below 250% of poverty (300% if all children at 250% are served), with the priority given to children with the greatest needs. The governor adds language prioritizing services to homeless children, children in foster care and those in special education—regardless of family income.

INTERMEDIATE SCHOOL DISTRICT EARLY CHILDHOOD BLOCK GRANT: The governor recommends the continuation of funding for early childhood programs through the Intermediate School Districts ($13.4 million). Services are available for children from birth through age 8, with part of the money used to support Great Start collaboratives and parent coalitions around the state. An additional $2.5 million is continued for home visits for at-risk children and their families—part of the 3rd grade reading initiative adopted this year.

KINDERGARTEN ENTRY ASSESSMENT: Funding for the kindergarten entry assessment, which was a pilot project last year, has been removed. An alternate test is proposed that would be given to kindergartners in the spring.

K-12 Schools/Education

PER-PUPIL SPENDING: Two of every 3 dollars in the School Aid budget are used to support per-pupil payments, which are the primary source of funding for school operations. The governor recommends increases of between $60 and $120 per pupil, with districts receiving the lowest payment per pupil receiving the largest increases. The minimum per-pupil payment will increase to $7,511, while the maximum will rise to $8,229. With this change, the difference between the highest- and lowest-funded districts will be reduced to $778—down from a gap of $2,300 when Proposal A was first adopted.4

CONTINUED STUDENT DECLINE: The budget for 2017 assumes that there will be a decline of 9,800 students from the current school year. The number of K-12 students has been declining for more than a decade, translating into revenue losses for schools that cannot always reduce their costs as quickly. Since the 2002-2003 school year, the number of students in public schools has dropped 13%.5

FUNDING FOR STUDENTS ACADEMICALLY AT RISK: The governor recommends that funding for districts with high numbers of students who are at-risk academically be continued at the current year level ($379 million). Ongoing funding of $5.6 million is available for adolescent teen health centers and $5.2 million for hearing and vision screenings in schools. In the current year, the Legislature approved an increase of $70 million for the At-Risk Program—the first increase in over a decade. By statute, districts are supposed to receive a set amount of At-Risk dollars based on the number of children receiving free breakfast and lunch (130% of poverty). However, because the At-Risk Program has been underfunded by a total of $1.9 billion since 1995, districts receive much less. Fully funding the At-Risk Program this year would have cost an estimated $134 million more than was appropriated.6

READING BY 3rd GRADE: Funding for this year’s initiative to improve reading by 3rd grade is reduced by $2.5 million, from $26.4 million to $23.9 million, through the elimination of pilot projects and one-time funding. The largest component of the initiative—funding for additional instructional time for children who are behind in reading—is retained at $17.5 million. Also included are early literacy screening, teacher coaches and professional development.

LEAD TESTING IN SCHOOLS STATEWIDE: The governor recommends $9 million in the 2017 budget to reimburse school districts that voluntarily choose to test their water for lead levels. Another $9 million is proposed for the current budget year to ensure a quicker start to the program.

GRANTS FOR LOW-PERFORMING SCHOOLS: The governor includes $5 million in new funding for the lowest achieving 5% of public schools. Funds can be used for CEOs in the schools under the control of the State School Reform/Redesign Office ($1 million) as well as supplemental payments to schools ($4 million).

ADULT EDUCATION: The governor recommends flat funding for adult education programs ($25 million). This year, funding for adult education was increased by $3 million. However, over the past 20 years adult education funding was slashed from $185 million in 1996 to a low of $22 million in the 2014-2015 budget. While maintaining funding at current year levels, the governor recommends significant changes in eligibility and fund allocation for adult education programs, including the removal of the current cap on the payment amount ($2,850 per full-time participant) and the increase in eligibility to students with reading or math skills below the 12th grade (up from 9th grade).

Postsecondary Education

FINANCIAL AID: The governor recommends $2 million in new funding for the Tuition Incentive Program, which serves students from households that are eligible for Medicaid, bringing the total funding for the program to $50.5 million. The governor did not recommend increases for the two other grant programs, the Michigan Tuition Grant (which helps students attend private not-for-profit institutions) or the Student Competitive Scholarship, both of which are means-tested based on the amount a family needs to meet tuition levels rather than household income. The community college budget does not include funding for the Part-Time Independent Student Grant, which had been included in the 2016 budget, but was cut from the final budget.

TUITION RESTRAINT: Tuition restraint is a cap on the amount a university may increase tuition costs in order to receive full funding from the state. The governor recommends increasing the cap from 3.2% to 4.8%, enabling universities to increase tuition by a higher percentage than has been allowable in the past several years.

Community Revenue Sharing

BB 2017 budget chart 3STATUTORY REVENUE SHARING FOR CITIES, VILLAGES AND TOWNSHIPS: Michigan currently funds statutory revenue sharing at less than 30% of the statutorily set level, and the governor’s budget continues to underfund Michigan’s communities. The governor recommends $243 million in statutory revenue sharing for 486 cities, villages and townships, and maintains payments so long as they meet accountability and transparency requirements. However, the governor proposes to shift $5.8 million from current year one-time revenue sharing to a competitive grant program, which provides incentives to communities to consolidate programs and services and has not been funded in two years. This will eliminate payments to 101 communities and decrease payments to others.

COUNTY REVENUE SHARING AND INCENTIVE PROGRAM: The governor recommends $215.2 million to provide full funding to 78 eligible counties, up from 76 in the current year, so long as they meet accountability and transparency requirements.

Corrections

PRISON POPULATION: The governor’s budget for 2017 assumes that the Department of Corrections (DOC) will oversee an average prison population of 44,500 in the upcoming year, at a total state cost of just over $2 billion. Because criminal justice has been largely a state responsibility, about 97% of all spending in the DOC is from state dollars, with corrections spending accounting for nearly 1 in every 5 state General Fund dollars.

Michigan’s prison population rose from just under 18,000 in 1985 to a high of over 51,000 in 2006, dropping slightly in recent years. It costs the state $35,000 a year to house a prisoner, and the budget of the DOC is driven by the number of persons confined. While there have been a number of bipartisan efforts to reform the state’s criminal justice system and reduce the prison population, reform has been elusive. The possible solutions include reducing the number of offenders entering prison and the length of sentences, increasing the number of paroles and reinstituting credits for good behavior.7

HEALTHCARE SERVICES FOR PRISONERS:

  • Hepatitis C drug treatments: The governor recommends $17.3 million in state funds to cover the costs of new drugs for the treatment of prisoners with Hepatitis C—an increase of $3.4 million over current year funding of $13.9 million.
  • Single vendor for managing prisoner physical and mental healthcare, and pharmaceuticals: The governor assumes that a consolidated contract for integrated healthcare, which is expected to be effective in June 2016, will result in savings of $3.8 million in the 2017 budget year, along with $1.6 million in savings in the current budget year.
  • Funds to increase access to mental health services: The governor includes $2 million to address waiting lists for mental health services in prisons. Approximately 1 of every 5 prisoners currently receives some form of mental health treatment, and the number of prisoners diagnosed with mental illness has increased.
  • Substance abuse services for probation violators: The governor recommends $750,000 for a new 30-day program to prevent relapse and serve as an alternative to residential treatment. Approximately 250 offenders will be treated.

PRISON REENTRY AND COMMUNITY SUPPORT: The governor reduced funding for reentry and community support programs by $2 million through the elimination of the Goodwill Flip the Script program, a Wayne County initiative that provided education, job training and mentoring to 800 youths and young adults to keep them out of prison. Also eliminated was a pilot program to prevent parole violations ($500,000).

Endnotes

1. Detroit Public Schools Financial Crisis, Citizens Research Council of Michigan (January 21, 2016).
2. Wild, V.B., HHS: Human Services Background Briefing, House Fiscal Agency (December 2015).
3. Information Packet: Program Specific Overviews of Public Assistance and Other Human Services Program Trends, Michigan Department of Health and Human Services (July 2015).
4. Wicksall, B., and Christensen, S., School Aid Background Briefing, House Fiscal Agency (January 2016). Does not include the foundation allowances of 37 hold harmless districts that are allowed to collect additional local millage revenue to maintain statutory foundation allowances above the State Guaranteed Maximum.
5. Ibid.
6. Summers, K., History of At-Risk Funding in Michigan, Senate Fiscal Agency (Summer 2015).
7. 10,000 fewer Michigan prisoners: Strategies to reach the goal, Citizens Alliance on Prisons & Public Spending (June 2015).

 

 

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.

 

 

Education versus incarceration

What do you visualize when you hear ‘a safe community’?

Let me guess: You see good schools, nice houses, parks, friendly neighbors, and healthy and happy kids running around? Or wait. Is it one where we place more of our community members in prison far away from their families and have more public employees working in prisons rather than schools? If it’s indeed the latter, you’re in luck, because that’s what our state is proposing to make our communities ‘safer.’ (more…)