Appropriations: Summary and Analysis, FY 2016-17

146 Pages·2016·1.05 MB·English

STATE OF MICHIGAN
FISCAL YEAR 2016-17

Appropriations
Summary and Analysis

Mary Ann Cleary, Director

JULY 2016
HOUSE FISCAL AGENCY
GOVERNING COMMITTEE

Al Pscholka Harvey Santana
Kevin Cotter Tim Greimel
Aric Nesbitt Sam Singh

MICHIGAN HOUSE OF REPRESENTATIVES

APPROPRIATIONS COMMITTEE

Al Pscholka, Chair Phil Potvin
Jon Bumstead, Vice Chair Rob VerHeulen
Chris Afendoulis Roger Victory
John Bizon Harvey Santana, Minority Vice Chair
Edward Canfield Brian Banks
Laura Cox Fred Durhal
Daniela Garcia Pam Faris
Larry Inman Jon Hoadley
Nancy Jenkins Jeff Irwin
Tim Kelly Kristy Pagan
Michael McCready Sarah Roberts
Aaron Miller Sam Singh
Paul Muxlow Henry Yanez
Dave Pagel Adam Zemke
Earl Poleski
STATE OF MICHIGAN

HOUSE OF REPRESENTATIVES

HOUSE FISCAL AGENCY

MARY ANN CLEARY, DIRECTOR GOVERNING COMMITTEE
P.O. BOX 30014  LANSING, MICHIGAN 48909-7514 AL PSCHOLKA, CHAIR HARVEY SANTANA, MVC
PHONE: [phone]  FAX: [phone] KEVIN COTTER, VC TIM GREIMEL
www.house.mi.gov/hfa ARIC NESBITT SAM SINGH

July 2016

TO: Members of the Michigan House of Representatives

FROM: Mary Ann Cleary, Director

This FY 2016-17 Appropriations Summary and Analysis summarizes the enacted FY 2016-17 state
budget. A Glossary, following the table of contents, explains terms used throughout this report to
describe Michigan's budget. The Budget Overview provides information on resources used and major
funding changes in the enacted FY 2016-17 budget; summary tables of appropriated funds and fund
sources are also included. Budget Detail pages note major budget and boilerplate changes for each
budget area.

When analyzing the budget, it is important to note the following:

Adjusted Gross is the amount to use when measuring the total amount of funding included in
the state budget (including spending from federal sources).

State Spending from State Sources (State Restricted plus GF/GP) is the amount to use when
measuring the amount of state resources collected from taxpayers to finance state spending.

General Fund/General Purpose (GF/GP) is the amount to use when measuring unrestricted
state resources available for legislative allocation to various state programs.

Information in the Budget Detail section was provided by HFA Analysts; report production was
coordinated by Kathryn Bateson, Administrative Assistant. House Fiscal Agency staff and their areas
of responsibility are listed on the inside back cover of this publication. Please feel free to contact them,
or me, if you have questions or need further information.

TABLE OF CONTENTS

OVERVIEW

Budget Overview ........................................................................................................................ 2
Consensus Revenue Estimates ................................................................................................. 5
FY 2016-17 Balance Sheets .................................................................................................... 10
Charts:
FY 2016-17 Enacted Adjusted Gross Appropriations ..................................................... 13
FY 2016-17 Enacted General Fund/General Purpose (GF/GP) Appropriations .............. 13
FY 2016-17 Adjusted Gross Sources ............................................................................. 14
FY 2016-17 GF/GP Distribution ...................................................................................... 14
Summary Tables ................................................................................................................. 15-20

BUDGET DETAIL

Capital Outlay .......................................................................................................................... 22

Agriculture and Rural Development ......................................................................................... 27
Community Colleges ................................................................................................................ 31
Corrections .............................................................................................................................. 34
Education (Department) ........................................................................................................... 41
Environmental Quality .............................................................................................................. 46
General Government Totals ..................................................................................................... 50
Attorney General .............................................................................................................. 51
Civil Rights ....................................................................................................................... 54
Executive Office ............................................................................................................... 56
Legislative Auditor General .............................................................................................. 57
Legislature ........................................................................................................................ 58
State (Department) ........................................................................................................... 60
Talent and Economic Development .................................................................................. 62
Technology, Management, and Budget ............................................................................ 66
Treasury ........................................................................................................................... 71
Health and Human Services .................................................................................................... 76
Higher Education ..................................................................................................................... 93
Insurance and Financial Services ............................................................................................ 97
Judiciary ................................................................................................................................. 100
Licensing and Regulatory Affairs ........................................................................................... 103
Military and Veterans Affairs .................................................................................................. 109
Natural Resources ................................................................................................................. 113
School Aid .............................................................................................................................. 117
State Police ............................................................................................................................ 126
Transportation ........................................................................................................................ 131

GLOSSARY
Frequently Used State Budget Terms

APPROPRIATIONS AND FUND SOURCES MAJOR STATE FUNDS

Appropriation General Fund
Authority to expend funds. An appropriation is not a The state's primary operating fund; receives state
mandate to spend. Constitutionally, state funds cannot revenue not dedicated to another state fund.
be expended without an appropriation by the
Legislature. School Aid Fund (SAF)
A restricted fund that serves as the primary state funding
Gross Appropriations source for K-12 schools and Intermediate School
Total spending authority from all revenue sources. Districts. Constitutionally, SAF revenue may also be
used for postsecondary education.
Interdepartmental Grant (IDG) Revenue
Funds received by one state department from another Budget Stabilization Fund
state department—usually for service(s) provided. The Countercyclical Economic and Budget Stabilization
Fund (also known as the "rainy day fund"); the
Adjusted Gross Appropriations Management and Budget Act provides guidelines for
Gross appropriations excluding IDGs; avoids double making deposits into and withdrawals from the fund.
counting when adding appropriation amounts across
budget areas.
STATE BUDGET TERMS
Federal Revenue
Federal grant or match revenue; generally dedicated to Fiscal Year
specific programs or purposes. The state's fiscal year (FY) runs from October to
September. FY 2016-17 is October 1, 2016 through
Local Revenue September 30, 2017.
Revenue received from local units of government for
state services. Line Item
Specific appropriation amount in a budget bill which
Private Revenue establishes spending authorization for a particular
Revenue from individuals and private entities, including program or function.
payments for services, grants, and other contributions.
Boilerplate
State Restricted Revenue Specific language sections in an appropriation bill which
State revenue restricted by the State Constitution, state direct, limit, or restrict line-item expenditures, express
statute, or outside restriction that is available only for legislative intent, and/or require reports.
specified purposes; includes most fee revenue.
Lapse
General Fund/General Purpose (GF/GP) Revenue Appropriated amounts that are unspent or unobligated
Unrestricted general fund revenue available to fund at the end of a fiscal year. Appropriations are
basic state programs and other purposes determined by automatically terminated at the end of a fiscal year
the Legislature. unless designated as a work project. Lapsed funds are
available for expenditure in the subsequent fiscal year.

Work Project
Account authorized through statutory process which
allows appropriated spending authorization from one
fiscal year to be utilized for expenditures in a succeeding
fiscal year or years for a specific project or purpose.

FY 2016-17
Budget Detail

OVERVIEW

Budget Overview
Consensus Revenue Estimates
FY 2016-17 Balance Sheets
Summary Tables
OVERVIEW

FY 2016-17
BUDGET OVERVIEW
Mary Ann Cleary, Director, and Kyle I. Jen, Deputy Director

The enacted state budget for Fiscal Year (FY) 2016-17 incorporates the May 2016 Consensus Revenue Estimating
Conference (CREC) revenue estimates. In addition to those estimates, the recommendation assumes the following major
funding sources for the General Fund/General Purpose (GF/GP) and School Aid Fund (SAF) budgets:

 Beginning balances of $135.3 million GF/GP and $104.2 million SAF.
 Collection of the Use Tax on Medicaid managed care providers for one quarter before discontinuation on
January 1, 2017 ($105.8 million GF/GP and $52.9 million SAF).
 Increased revenue ($80.0 million GF/GP) from enactment of legislation reducing the amount of tax credits that
can be claimed by auto insurers starting in FY 2017-18 (enrolled House Bills 5457 and 5458).
 A decrease in revenue from Michigan Venture Fund tax vouchers ($30.5 million GF/GP and $9.5 million SAF).
 Tobacco settlement revenue of $72.0 million from the new Community District Education Trust Fund (HB 5383).

The FY 2016-17 budget includes $54,048.3 million in adjusted gross appropriations. This includes:

 $22,661.4 million in federal funds.
 $388.6 million in local and private funds.
 $21,023.0 million in state restricted funds.
 $9,975.3 million in GF/GP funds.

Of the $30,998.3 million in state resources (restricted plus GF/GP) appropriated for FY 2016-17, $17,245.5 million (55.6%
of the total) is designated for payments to local units of government. Article IX, Section 30 of Michigan's Constitution
requires that at least 48.97% of spending from state resources must be paid to local governments.

Prior to enactment of the FY 2016-17 budget, total year-to-date adjusted gross appropriations for FY 2015-16 were
$53,808.7 million, of which $9,939.1 million were GF/GP appropriations. Compared to those amounts, the FY 2016-17
budget represents an increase of 0.4% in both adjusted gross appropriations and GF/GP appropriations.

The FY 2016-17 enacted budget bills also includes FY 2015-16 supplemental adjustments. These adjustments include:

 General appropriation adjustments (non-Flint) totaling a negative $418.2 million Gross, which includes reductions
of $376.7 million in federal funds and $173.5 million in SAF funds, with an increase of $113.4 million in GF/GP
appropriations. The bulk of these adjustments are for caseload and other related adjustments for the Medicaid
program (including the Healthy Michigan Plan) and foundation allowance cost adjustments in the School Aid
budget.
 Flint water emergency supplemental appropriations of $123.5 million Gross ($96.5 million GF/GP). Major
appropriation items include:
o $25.0 million GF/GP for replacement of lead service lines for high risk, high hazard homes in Flint (DEQ).
o $12.8 million GF/GP to the City of Flint to provide water bill relief for residential customers (Treasury).
o $9.2 million GF/GP for Early On services (School Aid).
o $18.9 million GF/GP into a Flint Emergency Reserve Fund (DTMB).
 Capital Outlay supplemental appropriations of $501,600 GF/GP for 16 planning authorizations and one
construction authorization.

Accounting for those supplemental adjustments in the FY 2015-16 totals, the FY 2016-17 budget represents an increase
of 1.0% in adjusted gross appropriations and a reduction of 1.7% in GF/GP appropriations. Specific FY 2015-16
supplemental adjustments are described at the end of the section for each applicable individual budget area beginning
on page 22.

The FY 2016-17 budget includes both program reductions and increases compared to the FY 2015-16 budget, as well as
funding allocations designated as one-time in nature.

FY 2016-17 APPROPRIATIONS SUMMARY AND ANALYSIS
PAGE 2: OVERVIEW HOUSE FISCAL AGENCY: JULY 2016