First Look: The Governor’s Budget

As the state stands in the shadow of the recent COVID-19 wave, looking to regain some sense of normalcy, Gov. Gretchen Whitmer has presented her 2023 budget recommendation. Still in the middle of an unpredictable and unprecedented public health crisis, the governor’s budget takes a forward-looking approach working toward an equitable recovery, putting Michigan’s people first and targeting investments to the people and communities most affected by the pandemic and its health, educational and economic impacts. The recommendation focuses investments in the five following areas: Education, Infrastructure, Workforce and Economic Development, Healthy Families and Safe Communities.

The governor’s budget, which was presented to the Legislature on Feb. 9, 2022, contains the details of her plan to allocate the state’s resources for the 2023 budget year, which begins on Oct. 1, 2022, and ends on Sept. 30, 2023. Buoyed by stronger than anticipated state revenues and a significant amount of remaining federal aid, the budget is able to make investments and target tax cuts to families who need it most through the Earned Income Tax Credit.

However, despite the upward adjustments in revenue, much of the surplus remains one-time funding that will not be available for ongoing needs. Additionally, there are risks on the horizon, including the unpredictable nature of the pandemic and its economic recovery and federal aid that will run out. Many important services, like child care and K-12 education, are looking at future cuts without increased state investment. And absent from the governor’s budget is a long-term solution to the state’s revenue problems, which will be necessary to avoid cuts to vital programs when federal aid and one-time surpluses run out.

Legislative committees are now meeting to craft their own versions of the 2023 budget. The state budget is a statement of our values, and unfortunately, lawmakers are already proposing drastic tax cuts that disproportionately benefit profitable corporations and wealthy taxpayers, continuing to perpetuate the long-existing barriers faced by many Michigan families and working people caused by state policy and budget decisions. In fact, the Senate has already passed a bill to reduce the personal income tax (4.25%) and corporate income tax (6%) rates to 3.9%, provide a nonrefundable $500 child tax credit per child dependent, and increase exemptions for retirement income, which will cost the state roughly $2.5 billion a year. These tax cuts  will impact our ability to make long term and long needed investments to improve equity for all Michiganders regardless of race, ethnicity, income or zip code.

The League is advocating for a set of budget priorities that can improve Michigan’s economy by creating equity for the state’s children and families.

TOTAL FUNDING FOR 2023

For 2023, the governor recommends $74.1 billion in total spending from state and federal sources. About $16.6 billion of our School Aid Fund (SAF) dollars are spent across pre-K-12 schools, community colleges, and colleges and universities. Spending from the state’s General Fund—the portion of the budget over which lawmakers have the most control—is expected to be $14.3 billion. Despite the amount suggested in the budget, General Fund revenues have been fairly flat over the last two decades and fall far below the need if increased inflationary costs are considered. 

Michigan’s General Fund has been losing ground because of state tax and budget decisions that have reduced revenues or earmarked funds. In addition to deep cuts in business taxes in 2011, lawmakers have diverted almost $2 billion of the state’s General Fund for other purposes, including $600 million for roads, an anticipated $532 million for business tax credits, and $548 million to reimburse local governments for their losses resulting from personal property taxes no longer levied on businesses. These diversions come at a significant cost to budget priorities, as ultimately more General Fund dollars are needed for federal match requirements and to fund health and human services, higher education, and public safety.

While the governor’s recommendation is an increase over the current year’s enacted budget, it benefits from a significant amount of one-time funding. Of the $14.3 billion in state General Fund spent in the executive’s recommendation, only about $11.9 billion are anticipated to be ongoing; about $2.4 billion in one-time General Fund revenues is spent across state departments, K-12 education, and state colleges and universities. The budget also does not include the more discretionary federal aid provided in the American Rescue Plan Act, for which the governor has already recommended her spending priorities in current budget year supplemental requests but much of which still remains unspent. 

DIRECT INVESTMENTS IN MICHIGAN RESIDENTS

Tax Changes

• Significant increase in Michigan’s Earned Income Tax Credit (EITC), restoring it to 20% of the federal credit. The governor proposes increasing the state Earned Income Tax Credit from 6% of the federal credit to 20% of the federal credit, benefitting 738,400 Michigan households with low-to-moderate incomes including 985,300 children. The increase will put $262 million back into the pockets of working families to spend at local businesses in their communities on essentials like groceries, child care, or car repairs. The governor’s proposal is a smaller increase than the 30% rate proposed in Senate Bill 417.
• Changes to the taxation of retirement income. The executive recommendation phases in tax preferences for retirement income, including income tax exemptions for public pensions and restoring deductions for private retirement income. Without any limits on income or the amount that can be exempted, tax breaks are likely to benefit seniors with high net wealth while costing the state $107 million in 2023 alone. Moreover, demographic trends make tax breaks for seniors unsustainable as Michigan’s population is increasing among those age 65+ while falling among working-age residents.

• Providing incentives for drivers to purchase electric vehicles. The governor introduces rebates to incentivize transition to electric vehicles, including a $2,000 rebate for the purchase of an electric vehicle and $500 for the installation of at-home charging equipment. While increased adoption of electric vehicles may help reduce carbon emissions and thereby have positive health impacts in the future, the proposal must also be evaluated with a view toward distributive justice, keeping in mind race, wealth, and geography. 

Supplemental Hero Pay

The governor’s budget includes two current budget year supplemental programs, funded largely through American Rescue Plan State Fiscal Recovery Funds, to provide direct payments for essential workers in recognition of the work they performed to keep the state functioning during the COVID-19 public health emergency:

• Hero Pay: Includes $500 million payments to eligible essential workers as defined by the U.S. Treasury federal rule for the American Rescue Plan Act of 2021. (Treasury)
• First Responder Retention: $50 million ($30 million General Fund) to provide grants of up to $1,000 to eligible first responders, public safety personnel, law enforcement and certain corrections staff who performed hazardous duty or work involving physical hardship due to the COVID-19 pandemic. (Treasury)

ADDRESSING RACIAL AND ETHNIC DISPARITIES

The governor’s budget recommends several investments to help address racial and ethnic disparities, including the following:

• Investments to help address racial and ethnic disparities in accessing healthcare. Includes one-time funding of $20.0 million ($15.0 million General Fund) for new initiatives to reduce health disparities, including $4.2 million (General Fund) to expand access to Centering Pregnancy (group-based prenatal care). The Executive proposal also adds $1.4 million (General Fund) for the Healthy Moms Healthy Babies initiative to support doula care services for families with increased risk of adverse birth outcomes. (Health and Human Services)
• Increasing access to preventative healthcare for kids in school-based settings. Recommends $11.5 million for child and adolescent health centers (local funds) to provide preventative healthcare to youth in clinical and school-based settings. (Health and Human Services)
• Understanding the impact of federal and state removal policies of tribal children. Includes one-time funding of $500,000 (General Fund) to conduct a statewide study of the number of Native American children forced to attend boarding schools in Michigan to better understand the impacts of federal and state removal policy of tribal children. This would be accomplished through the location and preservation of records and interviews with survivors and their families. (Civil Rights)
• Investments to ensure English-language learning Michiganders have the same access to services. Includes $700,000 (General Fund) for a Statewide Language Access Plan Program to ensure limited English proficient residents have reasonable access to the same services as English-speaking residents and bring Michigan into compliance with federal mandates. (Labor and Econ. Opportunity)

HEALTH

• Recognizing the important work that essential workers in our healthcare facilities provide, the governor’s budget increases wages or provides bonus payments for our healthcare workers: 
  • Improves wages for non-direct care workers in nursing facilities, including food service, custodial and maintenance staff. Includes $31.8 million ($10.0 million General Fund) in the current year and $60.0 million ($21.2 million General Fund) for the 2023 budget year to raise hourly wages by $2.35 for non-clinical staff working in nursing facilities.
  • Provides $135.0 million General Fund in the current budget year to provide a one-time bonus payment of $2,500 to behavioral health workers and state psychiatric hospital direct care staff.
• Significant reorganization of dental benefits for adults enrolled in Medicaid and Healthy Michigan. The governor adds $247.6 million ($69.8 million General Fund) to reorganize dental benefits for adults enrolled in Medicaid and Healthy Michigan. The governor’s budget recommends consolidating the fee‐for‐service dental services, Healthy Michigan Plan dental services, and Healthy Kids Dental program under one managed care contract and aligning rates. Funding will also support an increase in reimbursement rates for dental care received at outpatient hospitals.
• Increasing access to inpatient community mental and behavioral health services. The governor’s proposal provides a one-time investment of $325.0 million (General Fund) to build a new state-run psychiatric hospital. To address more immediate inpatient needs, the Executive proposal includes $69.3 million ($55.0 million General Fund) for budget year 2022-23 and authorizes 169.0 positions to add 116 adult and youth beds.
• Student loan repayment support for behavioral health providers in areas experiencing shortages. The proposal includes $25.0 million General Fund in one-time funding to expand the Michigan Essential Health Provider Program for Behavioral Health Professionals, which supports the repayment of student loans in exchange for service in areas with a shortage of providers.
• Investments to help strengthen connections between fathers and their newborn children. The governor recommends adding $13.7 million ($4.9 million General Fund) to end birth cost recovery, the practice of the state collecting money from unmarried fathers to pay for a portion of Medicaid-paid birth expenses. 

PUBLIC HEALTH

Public Health Services

• One-time investment in gun violence prevention and reduction. The governor’s budget includes a one-time $10 million investment (General Fund) in gun violence prevention, allocated to the University of Michigan Institute for Firearm Injury Prevention to fund technical assistance and evaluations. $5 million is set to go toward an evaluation of school violence prevention strategies and the other $5 million is slated to support technical assistance training to local communities and law enforcement, and to conduct evaluations on evidence-based programs addressing firearm injury prevention.
• Help improve immunization rates for Michiganders enrolled in Medicaid. The executive budget uses $14.1 million ($4.5 million General Fund) to increase the vaccine administration fees paid to Medicaid providers. States reimburse Medicaid providers for administering vaccines, and reimbursement rates can vary across states. A lower reimbursement rate for providing vaccination may be a disincentive for some providers to administer them, which limits access to vaccination for those with Medicaid coverage. The intent of the proposed rate increase is to ultimately help improve immunization rates among Michiganders with Medicaid coverage.
• Supports for our community public health services. The governor’s recommendation:
  • Provides $409.2 million ($117.3 million General Fund) for community public health, which includes local health programs and administrative services in addition to a variety of services such as epidemiology, emergency preparedness, laboratory services and PFAS (Per- and Polyfluoroalkyl Substances) and environmental contamination response. In particular, programs targeting AIDS prevention, testing and care and other sexually transmitted disease control receive a $1.4 million and $2.1 million increase, respectively.
  • Maintains current-year funding for essential local public health services at $51.4 million ($46.3 million General Fund). All 45 of the Michigan’s local health departments are mandated to provide seven essential services, which include: infectious disease control, sexually transmitted disease control and prevention, immunization, hearing screening and vision services, public water supply/private ground water supply, onsite sewage management and food protection.

Environmental Health and Safe Drinking Water

• Ensures clean, safe water. The governor’s proposal helps improve access to safe drinking water through two initiatives:
  • $48.0 million General Fund in community grants for technical, managerial and financial support in lead line replacement and water treatment system upgrades, with a priority on the most affected and under-resourced communities. (Environment, Great Lakes, and Energy)
  • $9.2 million to strengthen oversight of water resources through accelerated issuance of water use permits and improved enforcement of safe water regulations.The funding will support 19 new positions to enable faster water permit issuance, improved oversight of water resources and continued enforcement of safe drinking water regulations. (Environment, Great Lakes, and Energy)

ASSISTANCE TO MICHIGAN WORKERS, FAMILIES, and VULNERABLE CHILDREN

Basic Income Assistance for Families and Children

• First meaningful improvement to Michigan’s basic cash assistance program in over a decade. 
  • The governor’s budget provides $8.3 million (federal) to provide families receiving cash assistance a supplemental payment of $100 per child aged five and younger per month. This recognizes the increased costs families with young children face and helps them better afford necessities such as diapers, groceries or clothing. Stringent eligibility policies continue to keep our caseloads low, and children represent about 80% of recipients of income assistance in Michigan. This will be the first meaningful improvement in Michigan’s cash assistance program since the last time the maximum benefit was changed in 2008. 
  • The executive also recommends $1.1 million (General Fund) to allow additional child support payments to “pass through” to families receiving cash assistance. Prior to 2020, the state retained the child support payment of a family receiving cash assistance to essentially help fund the cost of administering the program. This ultimately meant that children receiving cash assistance did not benefit from child support paid by noncustodial parents. The 2020 budget allowed the state to pass through up to $100 (for one child) or $200 (for two or more children) of this funding on to families receiving assistance. In budget year 2021, about 2,250 cash assistance cases received a monthly average child support payment of $98. The governor’s 2023 budget would pass through the remaining state share of retained child-support collections, which would provide families an additional $40 per month on average.

Healthy Food Access

• Adjustments accounting for food assistance needs. While the number of Michigan residents receiving food assistance has leveled out, need still remains higher than pre-pandemic levels. Between January and May of 2020 the number of people in Michigan receiving food assistance rose by over 30% as thousands lost work as a result of the pandemic. Since that time, the number of food assistance recipients has dropped, but is still 10% higher than it was pre-pandemic. While the budget makes no new policy changes to Michigan’s Supplemental Nutrition Assistance Program (SNAP), it makes caseload adjustments recognizing a $1.2 billion increase ($1.9 million General Fund net reduction), with the anticipated increase coming in food assistance revenues.

• Improves healthy food access. The governor’s budget includes two initiatives:
  • $50.0 million (General Fund) for the development of innovative food access methods, grants to the Food Bank Council of Michigan for food banks and emergency supply, construction of a new food distribution center in northern Michigan (where food insecurity rates are highest), and pilots to better integrate nutritional support into primary care services. 
  • $500,000 (General Fund) for a community supported agriculture (CSA) program to coordinate with the Supplemental Nutrition Assistance Program to bring Michigan-grown fruits and vegetables to food-insecure households. (Agriculture and Rural Development)
• More is still needed to help Michigan families and kids get access to healthy fruits and vegetables. The governor’s budget does not increase funding for or expand the 10 Cents a Meal program, which provides matching grants for schools that purchase Michigan-grown produce (K-12/School Aid budget), and reduces the Double-Up Food Bucks program, which allows persons using food assistance to purchase more healthy fruits and vegetables at grocery stores and farmer’s markets, by removing $1.1 million in one-time funds appropriated in the current year budget. (Agriculture and Rural Development)

Affordable and Safe Housing Access

The governor’s budget supports affordable and safe housing access through the following:

• Supports increased supply of attainable housing and workforce development with $11.0 million (General Fund) to support acquisition, renovation and resale of land bank properties, with a requirement that paid apprenticeship training opportunities be offered at each renovation site. (Labor and Economic Opportunity)
• Funds minor home repairs and critical plumbing repairs that will make homes safer, healthier and more energy and water efficient with $40.0 million (General Fund) in Community Action Agency grants to assist families earning up to 200% of the federal poverty level ($55,500 for a family of four). (Health and Human Services)

Child Welfare

• Child Welfare Rate Increases. The governor’s budget:
  • Invests an additional $33.7 million ($13.3 million General Fund) to provide an 18 % increase in regular maintenance payments for foster parents, adoptive families or juvenile guardians, which provide financial support to families who take in children removed from their parents’ care. This rate, which has not been raised since 2012, is intended to cover the regular costs of raising a child.
  • Includes $10.5 million ($9.0 million General Fund) to increase administrative payments to residential facilities that provide critical services to children who need more intensive care than can be provided in a family setting, including residential care facilities caring for children connected to the juvenile justice system. This will provide a 5% increase in reimbursement rates for foster care facilities and a 12% increase in reimbursement rates for private residential juvenile justice providers. 
• Child behavioral health day treatment pilot program. The executive includes $2.5 million (General Fund) for a day treatment pilot program designed for children who need more support than what can be provided through conventional outpatient behavioral healthcare but for whom residential care is not appropriate, including kids who have been expelled or who are at risk of being expelled from school. 
• One-time relief for COVID-19 impacts. The governor provides $15 million (General Fund) in one-time relief to support residential child welfare facilities that  have been financially affected by the COVID-19 pandemic.
• Adjusts for Raise the Age cost. The executive budget recommendation includes a $7.7 million (General Fund) adjustment for counties associated with implementation of legislation to raise the age of juvenile jurisdiction. The adjustments are based on information provided by the counties to Health and Human Services. 

CRADLE TO CAREER EDUCATION

Child Care and Early Education

• No new funding or policy improvements for child care assistance. As part of the current year (2022) budget, available federal aid from the American Rescue Plan Act was appropriated for both the 2022 budget and the 2023 budget. Historic improvements in the child care assistance program are anticipated to continue through the 2023 budget, including entrance eligibility set at 185% of the federal poverty level; increased rates for payments made to providers; and paying providers based on enrollment rather than attendance. No new funding for child care is expected in the current budget cycle, but policymakers should start looking at ways to sustain the improvements for the 2024 budget year and beyond.
• Continuation of the Tri-Share Child Care Program. The governor provides continuation funding at $2.5 million (General Fund) of the Tri-Share Child Care Program to increase access to high-quality child care for working parents by leveraging both state and business support to help cover the costs of care. 
• Great Start Readiness Program Expansions. The governor’s budget builds on the goal of serving all eligible 4-year-old children in the Great Start Readiness Program (GSRP), a program providing pre-K education to children living in families with low incomes. An additional $21 million (School Aid Fund (SAF)) to increase the full-day slot payment from $8,700 to $9,135, which aligns with the governor’s recommendation for the K-12 per-pupil foundation allowance payment; $30 million (SAF) to create and provide start-up grants for new or expanding programs; and $5 million (SAF) for a new home-based pilot program.
• Supporting interventions for our earliest learners. The governor’s recommendation:
  • Increases funding for early identification and intervention for younger children through Early On by $7.1 million (SAF), from $14.1 million to $21.2 million.
  • Recommends at least $4.5 million (SAF) for evidence-based home visiting programs that encourage strong family relationships and provide support to those with young children.

K-12 Per-Pupil Spending

• Provides a significant increase to our base K-12 payment.  The governor proposes $580 million (SAF) to increase per-pupil payment by $435 per student. The current year’s budget effectively closed the gap between schools receiving the minimum foundation allowance and those districts at the top. The governor’s budget would provide a $435 per student increase to all schools, keeping the equal payments in the budget. Despite this significant increase–which is among the largest increases in recent history, base per-student payments still remain below the amount recommended in 2018 by the bipartisan Michigan School Finance Research Collaborative and do not adequately ensure access to a high-quality education. 
• Moves closer to a weighted school funding formula. The governor’s budget proposes increasing payments for kids living in poverty ($222 million increase) or who are English-language learners ($1.3 million increase), students with disabilities ($150 million increase), and for rural and isolated districts ($421,000 increase). These additional payments recognize that some students require additional support to access a high-quality, equitable education.
  • The governor’s budget would fully fund the At Risk School Aid Program at 11.5% of the base per pupil payment, which has been–and continues to be–regularly prorated. Despite increases in recent years, the At-Risk program is currently still not fully funded and payments are prorated at approximately 77%.This would increase the payment for students living in poverty from a prorated payment of $768 in the current year to a fully-funded payment of $1,051. 
  • It will also increase reimbursements for special education services by 5 percentage points (from 3% of approved costs to 8%) and increase payments for rural and isolated districts and English-language learning students by 5 %. 

Investments in Schools and Staff

• • Teacher Recruitment and Retention. The governor recommends $2.3 billion (SAF) over three years to help support, retain, and recruit educators with the following:
    • $1.5 billion for teacher retention bonuses, which would be funded in a current budget year supplemental;
    • $50 million annually for teacher onboarding and mentoring programs;
    • $600 million for educator recruitment programs such as scholarships to help offset a college student’s costs associated with earning their initial teaching certification, stipends for student teachers, training opportunities, and Grow Your Own Programs, which allow pathways for support staff to become certified teachers. Of this, $500 million would be appropriated for the current budget year, and funding is intended to support these programs for at least 3 years. 

• School Infrastructure Projects. The executive recommendation creates a school infrastructure fund in the current budget year with a $1 billion one-time deposit (SAF). The fund will provide $170 million annually until the 2027-28 budget year to districts for significant infrastructure projects. The funding is meant to offset a portion of costs for the districts, especially those with lower local taxable property values. This funding would be provided in a current budget year supplemental.

Student Health, Safety and Support

• • Significant investments in student mental health supports. The governor’s recommendation:
    • Includes $150.0 million (SAF) for grants to implement TRAILS, a training on effective practices for school mental health professionals. 
    • Building on the investment included in the current year budget, provides $120.0 million (SAF) for districts and ISDs to increase the number of school psychologists, school social workers, school counselors, and school nurses. 
    • Adds $50.0 million (SAF) for a total of $87.8 million (SAF) to Intermediate School Districts (ISDs) for mental health and support services. 
    • The governor also recommends $25.0 million (SAF) for districts and ISDs to introduce mental health screenings, implement care coordination procedures, and report outcomes. 
    • Provides an additional $11 million (SAF), from $8 million in the current year to $19 million in the governor’s recommendation, to expand school-based health centers. The funding would open an estimated 40 new school-based health centers and serve about 20,000 5-21 year old students.

• School Safety Programs. The executive recommendation expands on school safety techniques by:

• Increasing school safety grants by $41 million to allow public schools to receive up to $250,000 grants (up from $50,000 in the current year) or school districts or intermediate school districts (ISDs) to receive up to $1.25 million grants (up from $250,000 in the current year). Grants could be used by the schools and districts to do the following to improve school safety: purchase technology equipment, upgrade hardening measures, or hire school resource officers. 

• Using $15 million for Cross-System Interventions. This would implement cross-sector approaches to prevent mass violence through partnerships between schools, public safety, mental health professionals and communities by identifying and supporting middle school and high school students who are at risk for violence.

• Increase investments in our out-of-school learning opportunities through Before and After Care Programs. The executive recommends investing $50 million ($25 million on-going, $25 million one-time; General Fund) in a competitive grant program to support community-based before and after school programs. Before and after school programs help provide high-quality out-of-school time learning opportunities and provide extra-curricular activities. 

Postsecondary Education Operations Funding

The governor’s budget includes increasing operations funding for Michigan’s 28 community colleges and 15 public colleges and universities:

• Increases community college operations by $32.4 million, including a 5% increase ($16.2 million) in ongoing funding and an equivalent amount in one-time funding.
• Increases public university operations by $152.6 million, including a 5% increase ($76.3 million) in ongoing funding and an equivalent amount in one-time funding.
• Uses $12.7 million to introduce a 4-year implementation of per-student floor funding of $4,500. The total phased-in cost is estimated at $51 million.

Postsecondary Education and Training: Financial Aid

The executive budget recommends supporting our postsecondary education bound students through financial aid programs:

• Funds $55 million for Michigan Reconnect, similar to the current year. This program provides non-traditional students with free tuition for degree and certificate programs. (Labor and Economic Opportunity)
• Of the state’s three need-based financial aid grants, the Michigan Competitive Scholarship remains at the current level of $29.9 million, but the award increases from $1,000 to $1,200. The Michigan Tuition Grant remains at $42.0 million, but the award increases from $2,800 to $2,900. These increases are welcome, but not enough to make a significant difference in student budgets.
• The Tuition Incentive Program (TIP), which covers two years of college tuition for students from Medicaid-eligible families and part of the third and fourth year of tuition for students going to a public university, is reduced from $71.3 million to $65.2 million. This reduction reflects a tuition cap of 2.5 times the per-credit in-district community college tuition rate for students using TIP to attend a public four-year university.
• The budget continues to fund the three need-based grants mostly from TANF even though a large number of students who receive them do not come from families with low incomes. Overall, the three programs receive $119.2 million in TANF dollars and only $19.3 in General Fund dollars.  While it is in line with the general purpose of TANF to continue funding the TIP entirely with TANF funds, the two other grants are funded 75% with TANF funds even though the percentage of those funds going to students from income-constrained households is likely much lower.
• The budget funds the Going Pro training program entirely from the General Fund, and even shifts funds in the current year to fund the program entirely from the General Fund, rather than drawing from the Unemployment Insurance Penalty and Interest Account (PIA) as had been done in six of the seven most recent budget years. This is important, because the ability to draw funds from the PIA incentivizes the state to charge higher penalties and interest. The wrongful charging of penalties and interest in recent years has made the supplantation of General Fund dollars with PIA dollars especially egregious. (Labor and Economic Opportunity)

Use of School Aid Fund for Postsecondary Education

• The governor’s budget continues the troublesome trend of using School Aid Fund dollars to fund community colleges and public colleges and universities. In her budget recommendation, the governor uses the School Aid Fund, which is primarily meant for K-12 education, to fund 100% of the community colleges budget ($470 million) and 19% of the universities budget ($347.8 million), diverting a total of $817.9 million in School Aid Fund dollars from K-12 education to postsecondary education. If approved by the Legislature, this would be the second-highest diversion of School Aid Fund dollars since the practice was begun in 2010.

CORRECTIONS

• Alignment of budget costs as the number of incarcerated individuals and parolees and probationers continue to decline. The governor’s recommendation maintains funding at $1.13 billion ($1.12 billion General Fund) to fund 28 correctional facilities, which includes a $25.3 million increase spread across the facilities. The population of Michiganders under the Department of Corrections’ supervision continues to decline, with the number of prisoners (32,200) and parolees and probationers (42,000) at historic 30-year lows.
• Support for needed information technology projects. The governor’s budget invests $41.2 million (General Fund) into development and support for department IT projects, including:
  •  $30 million (one-time funding) for an Electronic Prisoner-Staff Communications System, which would streamline prisoner-staff communications for personal needs such as banking transactions, grievances and prescription refills. This system will also automatically document communications between prisoners and the Department of Corrections and reduce the number of paper transactions between prisoners and custody staff. $5 million will be used to outfit the prisoner population with tablets (used to read and write electronic requests) and $25 million will be used to deploy a secure Wi‐Fi network at each of the 28 correctional facilities.
  • $10 million (one-time funding) to establish a Prisoner Live Tracking System, which would electronically track prisoners’ movements within each prison using tamper-proof wristbands embedded with a radio frequency identification device (RFID).
  • $1.2 million is provided for ongoing maintenance of new Information Management Systems, which would replace existing systems and support key day-to-day operations and departmental functions.
• Replaces telephone charges with $14.8 million of state dollars as a source of funding for prison programming. Currently, telephone calls cost $0.14 per minute for prisoners or their friends and family and the revenue generated through these charges help fund programming within Michigan prisons through the Program and Special Equipment Fund (PSEF). The Department of Corrections receives $11 million annually from telephone charges and spends $14.8 million on programming through the PSEF (due to an accumulated fund balance). The governor recommends replacing this revenue, collected through telephone calls, with $14.8 million (General Fund) to offset this funding stream and ultimately reduce the rates that prisoners or their support networks must pay for telephone calls. Since the start of the COVID-19 pandemic, prisoners’ telephone usage has increased overall. For lower-income families in particular, regular phone calls can be costly yet are often balanced with the benefit of preserving familial and social support systems, which promotes successful reentry upon release.
• Vocational education and training to help support returning citizens. The governor’s budget provides $124.7 million ($122.3 million General Fund) for prison programming that helps prepare prisoners with vocational and educational skills prior to release, reducing the likelihood of recidivism and helping them to lead stable and fulfilling lives. Total funding includes $39.1 million in ongoing funding for education, skilled trades and career readiness programs and $1.25 million to maintain current-year funding for the Goodwill Flip the Script program, which focuses on education, job placement and life skills for justice-involved individuals while providing wrap-around services to overcome barriers to employment.
• Healthcare for incarcerated individuals. The executive recommendation funds prisoner healthcare at $316.7 million ($316 million General Fund), which includes a $7.2 million boost from current-year spending. This includes $3.7 million (General Fund) to invest in rate increases to help attract and retain temporary contracted nursing staff who provide necessary medical care to prisoners. The governor maintains funding for Hepatitis C treatment and prisoner healthcare services at $8.8 million and $94.8 million, respectively.

INVESTMENT IN DATA SYSTEMS

The governor’s budget invests in state information technology systems to help improve access to data and information, which is needed to ensure state budgets and policies are effective in producing desired outcomes. The budget makes the following recommendations:

• Investing $28.6 million ($14.3 General Fund) in the next phase of the state’s Comprehensive Child Welfare Information System (CCWIS) to improve data and case management for children in the child welfare and juvenile justice systems. (Health and Human Services)
• Including a $175 million (General Fund) one-time investment in a Statewide Judicial Case Management System that will create a single, state-funded system, improving data management, reducing costs and streamlining court operations. (Judiciary)
• Restoring $1 million (General Fund)for the state Supreme Court to improve data, expand access and modernize the judicial branch. (Judiciary)

INFRASTRUCTURE AND LOCAL GOVERNMENT INVESTMENT

• Includes the first significant investment in county and city, village and township (CVT) revenue sharing in over a decade. While a substantial increase, it still will not make up for 20 years of underfunding. The executive budget recommendation on community revenue sharing includes the following:
  • Constitutional revenue sharing is an automatic per capita payment to all 1,782 cities, villages, and townships based on a percentage of the sales tax revenue. The governor’s budget contains a recommendation based on the anticipated sales tax revenues established at the January 2022 Consensus Revenue Estimating Conference. This payment does not depend on a budget appropriation.
  • Increases CVT revenue sharing by $26.6 million to total $292.9 million (restricted funds) to provide a 5% one-time payment as well as a 5% ongoing increase in revenue sharing to be distributed to about 587 eligible cities, villages and townships. (Treasury)
  • Increases county revenue sharing by $23.6 million to total $255.1 million (restricted funds), which includes the first partial payment to Emmet County, the last county to re-enter the revenue sharing program. This includes both a 5% one time payment as well as a 5% ongoing increase in county revenue sharing. (Treasury)
  • Provides a $50 million (General Fund) current year supplemental hold harmless payment to cities, villages and townships that lost population based on the most recent census. The 2020 census figures are retroactively applied to all revenue sharing payments made since October 1, 2021. Because of the reporting delay, populations will not be updated until before the April 2022 payment, which would have otherwise resulted in negative adjustments associated with overpayments for communities who lost population. (Treasury)
• Support for our rural communities. The governor’s budget promotes thriving rural communities with $10 million General Fund for the Office of Rural Development to provide grants related to economic and workforce development, affordable housing, infrastructure, education and high-speed internet access. (Agriculture and Rural Dev.)
• Maintenance and Repair or Critical Infrastructure. The governor’s budget:
  • Recommends a one-time investment of $150 million (General Fund) for road and bridge projects that are critical to the economy or that carry high traffic volumes. (Transportation)
  • Provides $66 million in one-time General Funds to add generator backup power to 164 state-owned pumping stations to make the state infrastructure more resilient against future flooding. (Transportation)
  • Includes an additional one-time investment of $20 million (General Fund) for High Water Infrastructure grants to local units of government to address the effects of high water and climate changes on infrastructure. (Environ., Great Lakes, and Energy)