Engler Nearly Completes Budget Work

Gongwer News Service, July 25, 2002

EDUCATION: The budgets approved by the governor include the latest extension of school aid (HB 5881, PA 521), providing for a 3.1 percent increase in 2002-03, and maintaining that level for 2003-04.  The bill boosts the minimum per pupil foundation grant to $6,700 from $6,500 this year.

The budget provides $14.5 billion for school operations in 2002-03 and $14.7 billion in 2003-04, representing about a third of overall state spending.

“In the face of declining state revenues and challenging budget issues, we have demonstrated our mutual commitment to education by protecting funding for K-12 public schools,” Mr. Engler said.

In addition to the foundation grants, the budget also provides $314.2 million for at-risk funding including $3.7 million each fiscal year for school-based teen health centers; $72.8 million for school readiness programs; $95 million for intermediate school districts, a 3.1 percent increase over FY 2002; $40.8 million for vocational education; $22.2 million for career preparation; $77.5 million for adult education funding and $20 million for adult learning programs; and more than $1 billion annually in federal funds to assist low-achieving schools and to meet the new requirements of the No Child Left Behind Act.  The bill also provides $3.5 million for declining enrollment districts in the Upper Peninsula for fiscal year 2003.

The bill was also one of the few that Mr. Engler left intact in applying his signature.

For the Department of Education, the approved budget (SB 1103, PA 522) would provide $214.4 million ($27.9 million general fund), including $946,900 for school breakfast programs, $50,000 for scholarships for teachers to become National Board of Professional Teaching Standards certified and $10 million in federal funds to administer the Elementary and Secondary Education Act programs.

Though Mr. Engler did not strike any funds from the budget, he struck lines providing for a school health services consultant and allowing the department to spend $50,000 on advertising for the Anti-Violence School Hotline.

“The hotline itself has been in existence since 2001 and I cannot support the use of scarce state resources for promotional activities,” Mr. Engler said in his veto letter.  He said the tight budget also made developing a new position in the department unwise.

COMMUNITY HEALTH:  The Department of Community Health is now authorized to spend $9.6 billion ($2.48 million general fund) after vetoes of programs Mr. Engler said were low priority considering the current budget crisis.

The largest part of that budget, $6.3 billion, funds the Medicaid program.  “I commend you for protecting this essential program from major budgetary reductions, even in this constrained economy,” he said in his veto letter.

Mr. Engler pressed Congress to approve a senior citizen prescription drug program (this week, the U.S. Senate failed to muster enough support for plans advanced by either Democrats or Republicans) as he noted Medicaid costs have soared 160 percent since he took office in 1991 and now consume 25 percent of the state’s budget, up from 18 percent in 1990.

“As Congress continues to debate the issue, Michigan will spend $350 million this year alone to provide prescription drug coverage for our 165,000 seniors eligible for both Medicaid and Medicare.  The time for Congress to step up to the plate and deliver on their promise of prescription drug coverage to America's seniors is long past due,” he said.

Another $2 billion covers mental health and substance abuse programs.

But he did cut from the budget plans to create the MIFamily program to provide some additional health care services to low-income families that do not qualify for Medicaid.  “I have directed the Department of Community Health to delay implementation of the MIFamily program—a Medicaid waiver that would expand the health care coverage and mental health services to approximately 200,000 Michigan residents—until we can be certain that we can afford to commit the necessary state resources to this expansion,” he said.

He struck 10 programs, including provisions to allow community mental health providers to carry forward funds and to fund a collaborative between Michigan State University and the Michigan Farm Bureau to study movement of animal diseases to humans, as “low priority initiatives”.

He also struck provisions to provide funds to the Salvation Army for substance abuse services, to six hospitals for bioterrorism preparedness, a Battle Creek diabetes and kidney disease program, and to a consortium of hospitals in Mid-Michigan for transition costs because the provisions specified the recipients of the funding.

F.I.A. :  The state’s welfare and child protection services receive $4.07 billion ($1.17 billion general fund) under the Family Independence Agency budget (HB 5645, PA 529).

Mr. Engler struck language from the bill creating new programs within the Child Support Enforcement System from an expected refund of federal penalties.  “These initiatives expand and create new programs and could require FIA to enter into numerous small contracts that will be difficult and expensive to administer,” he said.

And he cut provisions for day treatment programs that required 50 percent local funding from some communities while providing full state funding for others.  “This inequitable funding arrangement should not continue,” he said.

He also struck a six-month increase for foster care agencies and a community-based child care pilot.

Mr. Engler also welcomed $309 million the state would get under legislation approved Thursday by the U.S. Senate under a national fiscal relief program, saying it could go to the Medicaid Benefits Trust Fund which was tapped to sustain some of the state’s health care programs.  “This would go a long way to resolving the issues in the ’04 budget,” he said.

Budget Director Don Gilmer said estimates by the Senate Fiscal Agency and others of a $1 billion imbalance in the 2003-04 budget are “within range” as a result of revenue implications, but noted he cannot calculate that far in advance the spending side of the equation to come up with a total budget picture.