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$76B budget heads to Whitmer with a focus on education, infrastructure

Lawmakers are sending the largest budget in state history, $75.7 billion, to Governor Gretchen Whitmer for her signature after a near 19-hour workday in the legislature.

That still leaves about $7 billion left on the table which is being eyed as part of the ongoing conversation on potential tax cuts for Michiganders, though taxes were not part of the discussion on Thursday night into Friday morning as legislators plugged away at finalizing the state’s budget.

Of the overall final budget figure, $19.6 billion will go into the School Aid fund which covers a plethora of things including per-pupil foundation allowance, special education, at-risk programs, early childhood education and adult education. Through this dollar amount, students will be receiving the largest per-pupil foundation allowance ever at $9,150 per student.

It’s a $450 increase per child, equaling a total cost increase of $630.5 million from the year prior.

Other high dollar figures touted in the budget includes $130 million for investing in public safety and community policing resources; $6 billion toward rebuilding local roads, repairing bridges and improving airport/transit systems; $2.65 billion to pay down public employee pension systems; and $300 million for economic and community development.

Governor Gretchen Whitmer touted the final product as a win for Michigan families in a statement, calling it a “balanced, bipartisan budget ... that does not raise taxes by a dime and is delivered on time.”

“This is our fourth collaboration on a fiscally-responsible budget delivers on the kitchen-table issues that matter and lowers costs for families struggling with inflation,” she said. “I am proud that the budget will grow Michigan’s economy and workforce, make record investments in every student and classroom, protect public health and public safety, expand mental health resources, and empower working families and communities.”

Estimates out of the Senate put the budget closer to $76.7 billion due to the way each chamber’s fiscal agency counts intradepartmental grants; the House is not counting that money, believing it to be double counting funds, while the Senate is counting it. That still puts the state at 8 percent more in spending than the year prior, with the surplus of funds is being credited to a mass infusion of federal aid over the course of the COVID-19 pandemic.

State Budget Director Chris Harkins, like Whitmer, praised the deal as being a “financially sound budget that responsibly invests our one-time funds.”

“In addition to prioritizing funding for our students, schools, public health, natural resources, and communities, we are paying down debt, shoring up pensions and setting money aside for a rainy day,” he said. “I am proud to have a budget that invests in both our current needs and looks toward our future as we continue to move Michigan forward.”

The budget bills – SB 845, an omnibus bill dealing with education spending, and HB 5783, which deals with funding the rest of state government – passed both chambers just after 2:30 a.m. Friday. Each will now go to the governor where they await her signature.

Additional school funding outlined in the budget includes $336 million in increased spending for special education funding, $52 million in grants for pandemic-induced learning loss, $500 million for school consolidation projects and studies for infrastructure projects and $175 million for a grow-your-own program to support current school employees in earning a teaching certificate.

There’s also $50 million for stipends for student teachers to help pay for tuition or other costs while student teaching, $305 million in scholarship funding for students in public and private teacher preparation programs to earn teaching certificates, $25 million for before and after school programs, $210 million for school safety initiative and $300 million for mental health programs for schools.

Notably absent from the finalized budget was a ban in the initial House budget which required a district or intermediate school district to prohibit boys from competing in girls’ athletic activities. However, $50,000 in funding for reminding agencies that state funds cannot be spent on Medicaid funded abortions did survive the negotiating process.

The move to keep transgender girls from participating in sports alongside cisgender girls, or girls who identify with the gender they were assigned at birth, was one of the few sticking points, along with the state fund abortion band, in the run up to Thursday’s which kept lawmakers from reaching a resolution on the budget process sooner.

There is also a slew of funding for community colleges and higher education institutions, including a 5 percent ongoing funding increase for community college operations. There is another 5 percent in ongoing funding for higher education operations for additional funding for each state university to get up to a minimum of $4,500 per student.

Also under this part of the budget is $56 million for a baccalaureate nursing agreement between community colleges and universities. That program would give community college students the ability to more readily move from an Associate degree in nursing to a four-year university degree in nursing.

Universities would partner with community colleges to make it more convenient for participating students to pursue their degrees at the community college location of their choice.

Altogether, the budget allots $530 million for community colleges and $2 billion for higher education.

“This is a big deal,” Rep. Thomas Albert, R-Lowell, chair of the House Appropriations Committee said early Friday morning. “This is a big day for the state of Michigan and I’m very proud of all the work that went into this.”

He later told reporters he was most proud of the $2.6 billion in debt reduction and investments in K-12 education, particularly the strides made in special education and increasing per-pupil spending.

He called the budget as passed a “good foundation going forward” and continued to stress that while there are billions still left on the table – a portion of which will most likely be used toward tax cuts – “we’ll have plenty of opportunities in the future” to spend those dollars.

The budget also earmarks $750 million for a grant program to award funding to qualified units of government to deposit into their qualified retirement systems, with the intended goal of bringing all local systems to a 60 percent funded rate.

Another $100 million would go toward the Department of State Police’s retirement system. There is also an $180 million deposit into the state’s budget stabilization fund within the final document as well.

Outside of schools, the budget also allots the Department of Transportation (MDOT) a total of $6.1 billion for rebuilding local roads, repairing bridges and improving airport and transit systems with across the board increases on project funding in these areas.

This includes an increase of $333 million for additional trunkline maintenance (upping the overall trunkline capital construction program to just under $1.7 billion), $27 million for a local bridge program and $135.9 million for capital and operating supports for state rail programs. It also estimates $1.9 billion in estimated transportation fund distribution to local road agencies – such as county road commissions, as well as cities and villages) which is $87.6 million more than in the current year.

Approximately $385 million in local federal aid and road and bridge construction is also featured in MDOT’s budget, a $94.4 million increase from the current fiscal year.

There was also, however, roughly $1 billion in spending projects that were considered to be pork barrel. But Senate Appropriations Committee Chair Jim Stamas, R-Midland, defended those projects as being a part of long term investments in infrastructure.

“Our largest industries, they all pull a substantial amount of water, so we tried to continue a focus on that, along with the roads and other actual, structural improvements across the state,” he said.

The hardest part of working with this budget, Stamas added, was due to its sheer scope and size, estimating that appropriators received more than $150 billion worth of requests.

“It was crazy to just look at how much demand is out there,” he said. “Trying to go through all of those and look at how do we best evaluate where we’re going in Michigan’s future? That was probably one of the largest challenges.”

Within the Department of Health and Human Services (DHHS) budget, to which the budget allots $33.4 billion, one of the largest spending pots goes toward cost adjustments for traditional Medicaid, which is funded at $16.5 billion. That’s despite a more than $565.8 million reduction in funding to the item due to caseloads, utilization and inflation adjustments.

It also earmarks just under $5.8 billion for cost adjustments to the Health Michigan Plan, which, similar to the Medicaid cost adjustment, sees a reduction in funding in the amount of $421.2 million.

Other items funded in the DHHS budget includes $36 million in funding for regular maintenance payments to foster parents, adoptive families and juvenile guardians; a $1.7 million general rate increase to direct care workers in private residential facilities by way of federal funds; and $10 million to fund marketing programs which promote the adoption of infants and develop educational materials to promote adoption as an alternative to abortion.

There is also $223.1 million in one-time funding to fund a variety of mental health facilities across the state including Pine Rest Christian Mental Health Services, War Memorial Hospital and University of Michigan Medicine’s children’s emergency psychiatry and day program for children and adults.

That funding breaks down into $165.6 million to fund psychiatric health facilities, $50 million for competitive pediatric psychiatric infrastructure grants, $5 million for Detroit Children’s Hospital psychiatric and $2.5 million for Insight Behavioral Health in Flint.

An additional $34.5 million, also in one-time funds, is slated toward further behavioral health initiatives including $10 million of those monies toward the Jail Diversion Fund.

Other departments or entities funded under the budget include Department of Agriculture and Rural Development ($187.7 million), Department of Corrections ($2.1 billion), Department of Education ($420.6 million), Department of Environment, Great Lakes and Energy ($728.7 million), Department of Insurance and Financial Services ($74.3 million), Department of Licensing and Regulatory Affairs ($539.8 million), Department of Military and Veterans Affairs ($347.4 million), Department of State Police ($823.7 million) and for the state’s judiciary branch ($483.5 million).

There is also a carve out for capital outlay, which the budget funds to the tune of $487.4 million for four projects. These include a new state psychiatric hospital complex ($315 million), a new veterans home in Marquette ($97.6 million) and facility renovations at both Michigan State and Saginaw Valley State universities (a cumulative $74.8 million).

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