#FactsMatter, the Citizens Research Council of Michigan podcast

Citizens Research Council health policy analyst Karley Abramson is interviewed by guest host Andrew Minegar, a reporter with MIRS News. Last year, Abramson wondered why there was a stark rise in healthcare spending by the Michigan Department of Corrections, one of state government's largest general fund budgets. In subsequently published research, she discovered that there was no data to review.

Minegar/MIRS News recently uncovered and reported that the state's former prisoners' healthcare contractor owes providers $35 million in unpaid medical bills, prompting the state to drop the contract before it ended and to go to court to recover damages.

Grand Prairie Healthcare Services, based in Tennessee, was awarded a nearly $600 million five-year contract in April 2021 to provide the Michigan Department of Correction (MDOC) with health care and pharmacy services for prisoners at 27 state prisons.

Listen to Abramson and Minegar as they compare notes and discuss what they believe should be done by the Legislature and Administration.

Gongwer News administration reporter Lily Guiney speaks with Senior Research Director Craig Thiel about his recently published, novel analysis of school-level spending patterns across the largest districts in the state, showing many schools are not being funded equitably. Approximately 55 percent of schools in the state's largest districts do not receive equitable per-pupil funding at the state, local and federal levels. This is at odds with the current school funding policy priorities of Lansing officials.

The study found that among the 25 largest school districts in the state, several of which also include some of the largest populations of low-income students, a significant number of them did not disperse per-school funding proportionate to their students' socioeconomic status and needs.

“As Michigan policymakers look to continue providing additional state “at-risk” funds to those districts with greater proportions of high-need students, they may have to consider additional policy directives to ensure dollars targeted to high-need “at-risk” students are reaching those students and the schools they attend. To this end, Michigan may have to increase the financial transparency and accountability provisions that go along with the additional state “at-risk” dollars or other funding streams intended to serve students with added needs. Those provisions, combined with appropriate state oversight and monitoring, will help ensure that the state’s K-12 funding priorities are being implemented with fidelity at the local district level.”

State budget officials met on May 17, 2024, to finalize state revenue estimates that will be used as guideposts for ongoing FY2025 budget deliberations. The Research Council's Bob Schneider and Craig Thiel provide insights into what the new estimates mean as lawmakers wrap up the budget as well as the budget outlook for Fiscal Year 2026.

Scheider said the conference experts delivered a positive outlook, stating that the forecast for the national and state economy was generally good: real GDP, the key metric to monitor the health of the national economy, is expected to continue to grow through the next few years at a normal, healthy rate. Inflation is falling back, though not quite as fast in Michigan as it is nationally; incomes are growing, and Michigan's unemployment rate remains low.

The revenue conference, held in January and May each year, brings together the State Treasurer, the Michigan Legislature's top budget advisors and economists who present information on the state and national economy, workforce, wages, the auto industry, and spending patterns by businesses and the public in the aftermath of the COVID-19 pandemic. The May Revenue Estimating Conference is a key step for state lawmakers in finalizing the state budget for the upcoming fiscal year, which begins October 1.

Economists and state officials determined that revenue estimates in May showed a slight increase for the state's General Fund and a slight decrease for the School Aid Fund from January estimates.

Schneider says the most important takeaway is that revenues continue to grow.

Revenues for the state General Fund is expected to grow about 1.5 percent, or just over $200 million.

School Aid Fund revenues were adjusted down to about $160 million, or about 1 percent, from January, and that largely reflects slightly slower sales tax growth.

"During COVID, people shifted their spending patterns towards goods and 'stuff.' People were buying stuff rather than services. So now, maybe we're seeing a sort of return to normal on that front, which is slowing sales tax growth."

Lauren Gibbons of Bridge Michigan chats with Eric Paul Dennis, research analyst specializing in infrastructure policy. While Michigan is working to ‘fix the damn roads,’ with historic levels of state and federal road funding, this effort has been undermined by unprecedented inflation in the cost of construction. And road construction inflation is not uniform: using 2015 as a baseline year, cost increases range from 34 percent in the Upper Peninsula to 63 percent in the Detroit Metro region.

Michigan’s highway construction costs have increased 12 percent above expected historical rates, resulting in the purchasing power of Michigan’s road agencies dropping by over $700 million in 2023 alone.

Following the enactment of a 2015 road funding package to increase Michigan’s annual transportation revenue by an estimated $1.2 billion by 2021, subsequent gains in state and federal funding increased Michigan’s transportation budget from $3.7 billion in 2015 to $6.1 billion in 2023. Expenditures on road and bridge programs, specifically, increased from $2.9 billion in 2015 to $5.7 billion in 2023. In nominal dollars, this represents a healthy 99 percent increase over these eight years. But when adjusting for inflation, the purchasing power of this funding is much lower.

Michigan’s road agencies generally have significantly more funding than any time in the past. However, this funding is not going as far as would have been expected only a few years ago. Agencies remain challenged to utilize existing funding levels to catch up with historical maintenance backlogs and bring Michigan’s roads and bridges into a state of good repair.

WWJ-Detroit anchor and reporter Ryan Wrecker chats with Citizens Research Council President Eric Lupher about Detroit’s four-year financial plan to send $10 million in supplementary payments to city pensioners.

Detroit cut benefits to pensioners as part of its bankruptcy settlement 10 years ago. Pension benefits, already modest pre-bankruptcy, have become meager in recent years due to inflation, and that has made life harder for pensioners.

Now that the city is a decade removed from bankruptcy and in much better financial condition, it plans to make up for some of what was done in bankruptcy.

Lupher explained that it was critical that this one-time appropriation for supplementary payments to pensioners, while warranted, should indeed remain one-time, and should not mark a return to “13th checks” that previously drained the city’s pension funds.

He cautioned that attempts to expand or restore benefits to pensioners would sacrifice the present and the future for the past, a choice Detroit can ill afford.

There are many tough decisions on the horizon for Michigan school districts.

Schools are facing massive sums of federal pandemic relief funds ending at the same time that many they are facing declining enrollment, partially also due to the pandemic.

Approximately 50% of K-12 budgets are allocated on staff salaries, with another 20% to 30% allocated for benefits. Added together, salaries and benefits – people -- account for about $4 out of every $5 dollars in school budgets, spread across a variety of programs.

Not surprisingly, many, many districts used the additional resources to grow their staffing, leading to what will now be exceedingly tough decisions on staffing levels.

Bridge Michigan education speaks with Council Research Director Craig Thiel about his recent papers on this imminent, critical issue and what we can expect from school district budgets for the coming year. They discuss how districts programmed federal (and state) pandemic resources over the last three years as they crafted their budgets. They speculate about the number of districts who accounted for the limitations of the one-time federal funding and that the federal deadline for allocating it all is this September.

They also discuss how parents and members of school communities can get involved and get engaged in the process. This includes everything from reviewing and looking for spending red flags in public documents online, such as schools’ budgets past and present, as well as financial statements, to attending their local school board meetings where budgets get adopted. Even better: attending their local school or district finance committee or budget committee meeting, where budget proposals are crafted.

Other “red flag” warnings in budgets include a reliance on Rainy Day funds to support operations. While this is justifiable when needed – to transition to a new budget norm – Rainy Day funds are not designed to support ongoing programming in a district because those one-time resources will run out too.

Districts with stronger Rainy Day fund balances will not have as many, if any, painful cuts. Those that don’t have a robust Rainy Day fund and used federal pandemic resources for ongoing costs are going to be challenged.

For example: districts that allocated pandemic funds to one-time programming or services – facility upgrades, equipment and curricula purchases – will not face as many, if any, painful cuts.

Bridge Michigan data reporter Mike Wilkinson talks with Research Council infrastructure analyst Eric Paul Dennis, who recently published a report showing that Michigan's road pavement quality ranks 40th nationally and 10th out of 11 among peer states.

While Michigan's roads still lag those of other states, they are improving, thanks to more funding in the system. However, challenges remain, as future funding to maintain the new construction, critical to upkeep, will also be needed to make payments on current road bonding.

Annalise Frank of Axios Detroit chats with Citizens Research Council President Eric Lupher about the recent announcement by District Detroit developers that construction on their 17-story office building would be delayed. The codevelopers, New York-based The Related Cos. and the Ilitch organization's Olympia Development of Michigan, are instead changing the order of their 10 proposed District Detroit projects, moving up one of the planned new hotels as well as one of the residential buildings. Lupher has noted that, given the Ilitches' reputation for overpromising and underdelivering, some public skepticism is expected, but that the “resequencing” of the order makes sense, given the very difficult environment for financing office space. As Frank has reported: the city is banking on the $1.5 billion megadevelopment from the Ilitches' Olympia Development and billionaire Stephen Ross' Related Cos. to help downtown grow and attract new businesses, which includes three new office building projects.

Under the new timeline, one of the first District Detroit projects will now be a new 18-story, 261-unit residential building with ground-floor retail at 2205 Cass, near the forthcoming University of Michigan Center for Innovation (UMCI). The apartments, expected to open in 2027, would provide housing for some students attending the UMCI, and 20% of the units would be offered as "affordable" at below-market rents.

Frank and Lupher discussed the many potential opportunities that the residential building project could have on Detroit, providing much-needed affordable housing to Detroiters and facilitating housing for an additional student population that would likely seek out local shops, restaurants, bars, walking/running paths and all the benefits of living in an urban community.

Gongwer News Service reporter Lily Guiney sat down with Research Council health analyst Karley Abramson to discuss Michigan’s shortage of primary care providers (PCP) and how expanding the scope of practice for nurse practitioners would help address the shortage, which is projected to get worse in the coming years.

On March 20, medical professionals from around the state gathered in a Senate committee room to testify on both sides of legislation that would expand the scope of Nurse Practitioner services, allowing greater independence for NPs to treat patients and address healthcare needs. Michigan has among the most restrictive scope of services for nurse practitioners.

Michigan can and should encourage healthier, more livable communities, sustainable development, desirable affordable housing, and public transit by getting rid of parking mandates.

Governor Whitmer’s Growing Michigan Together Council established a need to 'create thriving, resilient communities' as part of a strategy to grow Michigan’s population and improve our economic prospects.

Municipal parking mandates stand directly in the way of this goal. 👎