FINAL Budget Presentation 2-10-16
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Transcript of FINAL Budget Presentation 2-10-16
![Page 1: FINAL Budget Presentation 2-10-16](https://reader031.fdocuments.us/reader031/viewer/2022020203/586b77b31a28ab6d678bdfee/html5/thumbnails/1.jpg)
February 10, 2016
Governor Rick Snyder
Budget Director John Roberts
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Facing Challenges Head On
2
• Flint water crisis
• Statewide infrastructure prioritization
• Detroit Public Schools
• Specialty medications
Overall Budget Growth• Total budget $54.9B, up 0.8 percent ($438M)
• General Fund $10.2B, up 1.5 percent ($145M)
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Addressing Flint Water
• Clean drinking water is a human necessity
• Residents across Flint, especially children, have been
impacted by lead in the water
• To date, more than $37M in state supplemental funding
• Additional resources will be required in the coming
years to ensure Flint residents receive the necessary
care and services and to strengthen the city overall
3
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Complications of Lead Exposure
• Lead exposure is especially harmful to children
• Effects of lead exposure are lifelong
• Must assume all children exposed
4
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Need for Broad and Early Intervention
• Leverage and enhance existing programs
o Great Start, Pathways to Potential
• Add other critical programs
o Early On, developmental childcare, nutritional
support, crisis support
• Intense monitoring to ensure every child is cared for
• Time is of the essence – we can’t play catch up
5
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Address Water Infrastructure
• Achieve safe drinking water out of the tap
• Complete a system-wide assessment of pipes, etc.
• Prioritize infrastructure replacement needs
• Have a successfully operating utility in place
6
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Strengthen Flint
• Neighborhoods
• Economy and community
• City government
7
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Everyone Focused on Problem Solving
• State: Mission Flint
• City
• Community
• County
• Federal
• Non-governmental organizations
• Foundations
• Other donors8
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• Reconnection to Detroit water
• Bottled water/filters provided to residents
• Corrosion controls in water to coat the pipes
• Fixtures being replaced in schools and childcare
facilities
• Providing education and nutrition assistance
• Expediting funding for nurses
• Water testing
9
Key Actions to Date …
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• October Supplemental, $9.3M gross, including:
o Water sampling
o Lab and testing costs
o Blood screening
o Inspections of fixtures in schools and daycare facilities
10
Flint Action Plan …
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Flint Action Plan …
• January Supplemental, $28M Gross, including:o Replacement of fixtures in schools and daycare
facilities
o Treatment of children with high blood levels, which includes diagnostic testing, nurse visits and environmental assessments
o Epidemiologists to analyze blood lead levels
o Lead abatement in Flint homes
o School nurses
o Lab and testing costs
11
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• Added investment request in FY16 & FY17 = $195.4M
Gross, including:
o Early On and Great Start Readiness funding to ensure 0-4
year olds have access to early education
o Epidemiologists to analyze blood lead levels
o Child and adolescent health centers and additional
support necessary for children’s health care access
o Fixture replacements in schools and daycare facilities
o Lab and testing costs
12
Flint Action Plan …
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• FY16 & FY17 investments continued …o Mobile food bank and additional food bank resources
o Staying connected with Detroit Water through the end of 2016
o Lead abatement in Flint homes
o Specialized therapy for children exhibiting effects of lead
o Food inspections at licensed food establishments through the Genesee County Food Safety Division
o Water bill relief
Bringing Flint investment to more than $230M13
Flint Action Plan …
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Accountability for Results
• Major investments including new programs
• Need to deliver measurable results to the most important
areas
• Invest $50M into a flexible fund related to the lead crisis
• Legislative review mid-fiscal year to allocate properly
• Have monitoring results, studies done, and input from
people
14
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Statewide Infrastructure Prioritization
15
• The situation in Flint signals the need for infrastructure
updates across the state
• Michigan’s infrastructure was given a D grade by the
American Society of Civil Engineers
o Not isolated to Michigan, nationwide grade D+
• Time to focus on Michigan’s infrastructure needs and
replacement of lead pipes
• Forming the Commission on 21st Century Infrastructure
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Statewide Infrastructure Prioritization
16
Michigan Infrastructure Fund, $165M:
• Replace known high-risk lead and copper service lines
• Implement improvements/upgrades while repairing
roads or other utilities – allowing communities to fully
leverage federal, state and local funds
• Develop asset management plans, including:
o Inventory and analysis of current infrastructure
o Prioritization of needs
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Turning Around Detroit’s Schools• Detroit Public Schools are struggling both academically
and financially
• Test scores of Detroit high schoolers underscore the
urgent need for action:
o Just 6 percent are proficient in math
o Only 4 percent are proficient in science
o Two-thirds are not proficient in reading
• District debt to accumulate to $515M by summer
• More than $1,100 per student to pay down DPS debt17
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Detroit Public Schools Action Plan
18
• Working with the Legislature to develop an approach
that ensures Detroit’s children receive a high-quality
education
• General fund dollars to hold School Aid Fund harmless
• Invest in Detroit’s public schools, $72M a year for 10
years from Michigan’s tobacco settlement proceeds
• $50M FY16 supplemental for current year DPS debt
• Critical and urgent
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High Cost of Medications
19
• New specialty medications save lives and improve health, but cost
is high
• Medicines to treat patients with hepatitis C and cystic fibrosis
recently recommended by Pharmacy and Therapeutics Committee
• Additional specialty medications to treat other conditions may be
approved in the future
• Specialty medications driving the pharmacy cost increase in
Medicaid for FY17
• DHHS budget includes specialty medications prescription reserve,
$30M general fund to address more medications in the pipeline
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Specialty Medications Action Plan
20
• Coverage recommended for individuals with:
o Hepatitis C:
� Assumed full year cost: $91.5M GF, nearly 7,000 patients
treated
� Includes an additional $17.3M GF to expand treatment to
approximately 340 prisoners
o Cystic fibrosis:
� Assumed full year cost: $43.7M GF, approximately 320
children impacted
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21
Even with these challenges,
Michigan’s future is brighter for
all Michiganders
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Michigan Economy Continues to Thrive• More than 440,000 new private
sector jobs since December 2010
• Michigan recorded fourth largest
drop in jobless rate of any state
over past year
• From December 2010 to now,
Michigan’s unemployment rate has
fallen from 11.2 percent to 5.1
percent, lowest since 200122
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Creating More and Better Jobs
23
Change in Michigan Wage and Salary Employment from Previous Year
(thousands of jobs)
Note: U.S. Bureau of Labor Statistics. 2015-2018 estimates are 1/14/16 Consensus Forecast. 1/26/16.
Consensus
Forecast
-112.7
-76.8-71.0
-16.9 -9.3
-63.2-58.7
-105.7
-291.6
-7.2
88.5 81.5 76.0 70.490.2
52.0 56.0 44.0
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Dropping Unemployment Rate
24
0%
4%
8%
12%
16%
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
5.0% Dec 15
5.1% Dec 15
Source: MI Bureau of Labor Market Information and U.S. Bureau of Labor Statistics. (12/16/2015)
14.9%June 09
10.0%Oct 09
Michigan
U.S.
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25
Rising Personal Incomes
Michigan Personal Income Year-Over-Year % Change
Note: U.S. Bureau of Economic Analysis. 2015-2018 estimates are 1/14/16 Consensus Forecast. 1/15/16.
Consensus Forecast
1.1%0.5%
2.7%3.5%
2.5% 2.7% 2.6% 2.2%
-5.1%
2.8%
6.1%
3.6%
1.5%
4.1% 4.1% 4.4% 4.2% 4.3%
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Michigan: #1 for Budget Process• Nationally recognized for best budget process in the
country*
• We’re focused on reducing the debt facing our children
Compared to …
• Washington, D.C., which routinely kicks the can down the
road and doesn’t operate on a balanced budget
• Two states that are more than six months into their fiscal
years without an enacted budget
26
*Michigan was ranked first in the nation on the Federal Funds Information for States 2015
“budget process quality index”
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27
• Identify special challenges
• Pay our debts
• Manage our expenses
o Tightening our belt
o Regular expenses
o Proper maintenance
o Needed
improvements
• Save for the future
Budget Responsibly Like a Family
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$14.62 $13.75 $13.90 $19.64
Reduced through
PA 264/265
reforms: $5
billion
Reduced through
PA 264/265
reforms: $5
billion
Reduced through
PA 264/265
reforms:$5
billion
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2011 2012 2013 2014
$ i
n B
illi
on
s
SERSCombined Pension and Retiree Healthcare
$37.71 $38.29 37.66
$48.28
Reduced
through PA 300
reforms: $15.6
billion
Reduced
through PA 300
reforms: $15.6
billion
Reduced
through PA 300
reforms:$15.6
billion
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2011 2012 2013 2014
$ i
n B
illi
on
s
MPSERSCombined Pension and Retiree Healthcare
28
Total Unfunded Liabilities
More than $20B reduction in liabilities
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29
FY17 Budget Recommendations
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30
FY17 Budget Plan:
Bird’s-eye View
ReservesLess than 1%
Jobs10%
Education30%
Government Services7%
Environment2%
Public Safety6%
Health and Human Services45%
75% of Total Spending is Dedicated to Education and Health and Human Services
Total FY 2017 Gross Spending: $54.9 Billion
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31
2017 Strategic Investments
• Education
o K-12 schools
o Restoring higher education funding
o Upgrade of capital assets
• Public safety
• Health and human services
• Transportation
• Economic growth
• State infrastructure
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Continuing Education as a Priority
32
$10.7B
+ $1.4B
$12.1B
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Education: Focus on Student Academic Growth
• Foundation allowance, $150M ($60-$120 per-pupil)
• Keeping children safe in school, $4M for school safety grants
• STEM programs to encourage math and sciences, $2.5M
• Career and Technical Education Middle College program and
equipment increase, $15M
• Adjust school funding formula to 50/50 to help schools with
declining enrollment
• School consolidation grants, $5M
• Water testing in schools, $9M
33
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Higher Education Funding Fully Restored
34
• Universities
o Operations, $61.2M, 4.3 percent increase
o MPSERS, $730,000 increase
o Tuition restraint at 4.8 percent (twice inflation)
• Community colleges
o Operations, $7.5M, 2.4 percent increase
o MPSERS, $3.7M increase
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35Note: University and community college projects
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Making Michigan Safer
36
• Funding trooper recruit school with 85 graduates, $9.5M
o Number of troopers hired since December 2010 will make up
48 percent of total troopers
• Implement recommendations of Michigan Prescription Drug and
Opioid Abuse Task Force, $1.3M
• Expand Secure Cities to Muskegon Heights, Inkster, Hamtramck,
Harper Woods, Highland Park and Benton Harbor, $1.5M
• Expand cyber crimes enforcement, $2.2M
• Corrections officer academy, train 350 graduates, $8.5M
• Ensure safety of MDOC agents in the field across the state,
$981,300 for ballistic vests
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We Are One Michigan:
Health and Human Services Investments
37
• Increase FIP clothing allowance for children, $6.1M
• Expand the Center for Forensic Psychiatry to help ensure persons
ruled incompetent to stand trial or not guilty by reason of insanity
receive mental health services, $7.6M
• Improve IT to better monitor child protective service, foster care,
and adoption cases, $7.7M
• Continued support of Mental Health and Wellness Commission
and Medicaid mental health services
• HICA sunset extensions still needed
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38
• Michigan children
covered by
Healthy Kids
Dental in FY11:
285,000
• Coverage in just
61 counties
Healthy Kids Dental FY11
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• Program now fully covers
all 83 counties
• Complete expansion of
Healthy Kids Dental to
Wayne, Kent and Oakland
counties, $25.6M ongoing
• Michigan children
covered by Healthy Kids
Dental in FY17: 826,800
39
Healthy Kids Dental:
Full Coverage in FY17
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Future Transportation Funding
Picture Now Stabilized
40
• New State Transportation package results in $1.2B in support
for transportation when fully implemented in FY21
• In FY17, $533.3M in increased transportation revenues
o $189M for State Trunkline Fund
o $283M for local road agencies
o $61.4M for rail and public transit
• $57.5M in new federal FAST Act transportation funding
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Supporting Our Veterans
41
• Medicaid/Medicare
certification for DJ Jacobetti
home and a floor of the
Grand Rapids home to
maximize benefits, $6.1M
• Veteran Health System
Modernization Committee
to develop a long-term
vision to care for veterans
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42
Investing in Our Communities• Constitutional revenue sharing, $781.5M, an increase of 3.9
percent
• Ongoing incentive-based funding for eligible municipalities
meeting accountability/transparency requirements, $243M
• County revenue sharing and incentive programs, added two
counties, $467,500 increase
• Competitive grant funding to encourage more efficient local
government, $11M
• Grant assistance for financially-distressed communities, $5M
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43
Focusing on Michigan’s Future
• Growing Michigan’s economy through business attraction and
community revitalization, $1.5M increase, $115.5M total
• Skilled Trades Training Program, $10M increase, $35.6M total
to match talent needs of employers with skilled workers for
in-demand jobs
• Community Ventures – challenge grant of $2M to further
expand successful program
• XPrize style competition to address invasive species, $1M
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44
• New technology investments – total $133M
o Cybersecurity improvements, $5M
• State infrastructure
o Maintenance, armories and space consolidation
into state-owned assets, $16.5M
Saving Taxpayer Dollars by
Keeping Up State Infrastructure
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Saving for a Rainy Day
45
$1,264
$994
$145$0
$81$2 $2 $2 $2 $2 $2 $2
$365$506
$386$498
$611
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Mil
lio
ns
Fiscal Year
The Budget Stabilization Fund (BSF) peaked at $1.3 billion in FY 2000, but was
quickly depleted. Michigan started to rebuild the BSF balance in FY 2012. At the
end of FY 2016 the balance will be approximately $611M.
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Accelerating the Comeback
46
• Ongoing
o Transportation
o Healthy Kids Dental
o Education
� K-12: School retirement system
� Universities/Community Colleges
o Public safety
o Local government funding
• One-time
o Grow reserves
� Comprehensive funding solution
� All counties now fully implemented
� Funding retirement obligations
� Prior funding levels restored
� Competitive grants and full funding
for counties
� Rainy Day Fund $611M
� Expanding Safe Cities Initiative
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Future Priorities
• Flint and statewide infrastructure prioritization
• DPS and P-20 Education
• Economic growth
• Public safety
• Long-term debt and savings
47
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Questions?
Thank you.
48