UNDER THE DOME

Capitol Update, January 29th through March 7th, 2010

Cynthia Ann Paul

State Employee 3% Pay Raise Elimination - Rep. Moss and Senator Jelinek introduced concurrent resolutions to take away the 3 percent pay raise negotiated by state employees HCR 42 and SCR 35. The Senate took up SCR 35 on March 3rd.  The vote failed 22/15, falling along party lines except for Senator Switalski voted "yes" with the Republicans and Senator Patterson “did not voting”. The Constitution requires a two-thirds majority vote in both the Senate and House to rescind a pay increase for state employees. Here is the record roll call vote on this resolution: Yeas—22 Allen, Garcia, Kahn, Richardville, Birkholz, George, Kuipers, Sanborn, Bishop, Gilbert, McManus, Stamas, Brown, Hardiman, Nofs, Switalski, Cassis, Jansen, Pappageorge, Van Woerkom, Cropsey, Jelinek; Nays—15 Anderson, Cherry, Hunter, Scott, Barcia, Clark-Coleman, Jacobs, Thomas, Basham, Clarke, Olshove, Whitmer, Brater, Gleason, Prusi; Not Voting—1 Patterson

All Public Employees 5% Pay Cut for 3-Years- Senator Pappageorge introduced SJR U that amends the state constitution cutting the pay of all public employees in the state by 5 percent for a three year period.

Public Employees Pay 20% of their Healthcare Costs- Senate Bill 1046 introduced by Senator Jansen will require that public employers pay not more than 80.0% of the premium costs of health insurance plans, or 15% if the plans contain wellness incentives for healthy living. Public employees would have to pay the other 20% or 15% of the health care costs.

Public Employers Purchase into State Health Care Plan- Senate Bill 1047 introduced by Senator Sanborn will allow all public employers in Michigan to purchase employee health care coverage through the health care plan offered to State employees. This is codifying what is currently allowed under the civil service rules and Governor Granholm has issued an Executive Directive to identify barriers for why public employers have not done this, ED 2010-1.

State Legislators Control Public Employee Healthcare Costs- Senate Joint Resolution P introduced by Senator Jansen amends the State Constitution to allow the legislature to require any health benefits offered to State employees, local government employees, and employees of public universities to conform to the cost allocations established by state law, i.e, state legislators. This Constitutional amendment will greatly curtail collective bargaining on health care issues.

Governor’s Executive Directive- In Executive Directive 2010-1, Governor Granholm told the Office of the State Employer and the Department of Management and Budget to identify and remove any barriers to other public workers becoming part of the state’s health insurance system that could help reduce employee costs for both the state and local governments. School districts, as well counties, cities, villages and townships, would be able to enroll their workers in the state plan, including its PPO and health maintenance organizations.

End Legislators Lifetime Healthcare Benefits-The House passed legislation ending the health care benefits lawmakers receive once they reach age 55 HB 4194. But Democrats backed away from earlier statements that the bill would affect those currently serving and passed by a 103-1 vote, a bill that would end the benefits for people starting with the crop of newcomers elected in the November general election. This bill subsequently passed the Senate 28-10 along with SB 132, which passed 27-11. These bills will not affect the 147 current members of the Legislature, nor current Supreme Court justices, Court of Appeals judges, the governor, lieutenant governor, secretary of state, attorney general, auditor general and state court administrator. The Senate also passed a bill that would end the requirement for the state to contribute to the health insurance premium payments of the above officials.

Township Employees Temporary and Seasonal Employees- Rep. Donigan has introduced a bill that exempts seasonal and temporary employees from Public Act 246 of 1965 (a civil service system for certain township employees).

Good Time Credits Taken Up for Testimony- The House Judiciary Committee held a hearing on bills that would retroactively restore good time credits to prisoners. Under HB 4497, HB 4498 and HB 4499 prisoners without any misconduct violations would receive five days for the first two years they serve and up to 15 days for serving more than 20 years. These bills require a three-fourths majority vote in both chambers because they repeal parts of the voter-approved Proposal B of 1978.

“Right to Work” Zone Bill, Vote Taken on House Floor- On House Bill 5808, which allows information technology companies to apply for assistance through the jobs fund (sponsored by Rep. Byrnes), Rep. McMillin offered an amendment on the House floor to tie bar this bill to SB 945. SB 945 allows local units of government to establish right-to-work zones. The amendment failed on a nearly party-line vote, 41-65, with Rep. Rocca being the only Republican joining Democrats in opposition. Reps. Barnett, Bennett and Coulouris were absent.  After the amendment's defeat, HB 5808 passed by a 95-11 vote.

Michigan Denied “Race to the Top” Money- Michigan did not score well enough to be among the finalists for the federal “Race to the Top” grants, but officials said that they would continue work to implement the reforms enacted as part of the effort to apply for the grants. The U.S. Department of Education selected 16 finalists for the first round of the competitive grants, and no more than about half of those will actually see any funding when the grants are announced next month, said U.S. Secretary of Education Arne Duncan. But he said there would still be money available, at least $2.5 billion, for Michigan and other states that try again during the second round of applications in June. And he also said President Barack Obama’s proposed budget includes funding for a third round during the 2010-11 fiscal year.

Governor’s Eighth State of the State Speech- she was critical of the Legislature for the budget process that has plagued the state and demanded that the Legislature complete the 2010-11 budget by July 1. She called on the Legislature to approve funding for the “Pure Michigan” ad campaign. She also called for more revenues to finance transportation and road improvements and to restore the Michigan Promise Scholarship which was cut in the 2009-10 budget and to keep graduates here in Michigan. She also said she would not support any more cuts to education. Governor Granholm introduced a few new proposals that focused on the state doing more to promote entrepreneurial development. Several will be implemented unilaterally by the Michigan Economic Development Corporation and do not require legislative action. They included the following:
• The state expanding training programs for individuals wanting to become entrepreneurs at 12 sites across the state. The program will work in tandem with the Kauffman Foundation of Kansas City which specializes in entrepreneurial education and development to help graduate 1,000 students in a 10-week program that will provide a kind of mini-business degree on the elements of developing markets, getting financing and customer service. MEDC President Greg Main said the state would put $200,000 into the program.
• A program working with the Michigan Credit Union League to help expand lending to small businesses. The credit unions have committed $43 million for loans that would likely average about $20,000 for companies, Mr. Main said. The state will help line up borrowers through the training program it is creating, he said.
• Changes to the state’s angel financing tax credit. As it is now structured, an investor does not get the tax credit until some years after making the investment. Under the change, investors will be able to get some of the credit in the year the investment is made. Legislation will be required to make the changes.
Governor Granholm also said that the state had to take steps to boost funding for transportation. The state has to come up with the necessary money to help meet federal matching funds, which can help spark as many as 10,000 jobs a year. She called for lawmakers to take up the funding proposals outlined in November 2008 by the Transportation Funding Taskforce. That group called for changing the gasoline tax to one based on wholesale prices and to boosting registration fees.
Other policies and proposals offered by the Governor:
• The state would create 10 centers in Detroit through its “No Worker Left Behind” program to help individuals in remedial education and technical training.
• Announced a program called “Project Phoenix” that will focus on redeveloping large abandoned automotive plants in the state. The some 15 sites targeted will all either be more than 80 acres or 500,000 square feet in size, and Mr. Main said the state will make up $100,000 for assistance in cleanup and planning assistance, and
• Creating a new health information system.

Health care Opt-Out Passes Out of Committee- SJR K and SJR R are constitutional amendments that allow Michigan residents, employers and health care providers the right to opt out of any mandated health care program developed by the federal government. SJR K was amended in committee to add language from SJR R and SJR K(S-1) was reported out of committee.

Binding Arbitration- The Senate Reforms and Restructuring Committee approved changes to the binding arbitration process in SB 1072 implementing a tighter timeline for arbitrators to rule, arbitrator training and including authorities under its purview. Under changes made to the bill before the committee reported it to the full Senate, arbitrators could not extend a final decision by more than 90 days. This was passed by the Senate.

Urban Cooperation Act-The Senate Committee on Reforms and Restructuring also approved bills (SB 1085, SB 1086) that would enable local governments interested in merging to provide a shared service to avoid having to pay the highest rate to both communities’ employees. The committee amended the bill to keep employees whole with respect to sonority, wages, benefits for those employees until a new collective bargaining agreement is entered into.
 
NERES Lose 3% Pay Increase- The Office of State Employer recommended that non-union state employees not get their pay increase (i.e. pay freeze) for the next fiscal year, this was approved by the Civil Service Commission at their meeting in February. The commission more quickly, and unanimously, adopted a recommendation that unclassified employees (department directors and their immediate reports generally) also see a pay freeze for the coming fiscal year. The panel also recommended, and the commission approved, 28 hours of banked leave time for NEREs before the end of the fiscal year and a new study of the pay for performance program to find a way to better implement, and pay for, it.

Budgets-
The Governor’s Recommendations. Figures are in thousands.

Spending Area	General Fund			All Funds
	2009-10	2010-11	Change	2009-10	2010-11	Change
Agriculture	$30.05	$28.83	-4.1%	$80.37	$77.68	-3.3%
Attorney General	$28.785	$29.168	1.3%	$73.874	$74.877	1.4%
Auditor General	$11.6	$11.2	-4%	$14.96	$14.5	-3.1%
Civil Rights	$11.7	$11.28	-3.7%	$13.76	$13.08	-5%
Community Colleges	$299.36	$299.36	0%	$299.1	$299.1	-0.1%
Community Health	$2,304.6	$2,016.5	-12.5%	$13,073.1	$14.396.9	10.1%
Corrections	$1,903.6	$1,875.9	-1.5%	$1,956.1	$1,967.2	0.6%
Education	$19.43	$20.01	3%	$113.36	$131.27	15.8%
DELEG	$54.78	$45.43	-17.1%	$1,462.9	$1,496.9	2.3%
Executive Office	$4.8	$4.6	-4%	$4.8	$4.6	-4%
Higher Education	$1,507.7	$1,543.4	2.4%	$1,612.2	$1,578.3	-2.1%
Human Services	$852.3	$959.2	12.5%	$5,916.9	$7,004.4	18.4%
Judiciary	$153.1	$152.7	-0.3%	$258.76	$258.8	-0.0%
Legislature	$104.76	$100.57	-4%	$106.27	$102.08	-3.9%
Tech, Mgmt, Budget	$58.2	$57.48	-1.3%	$728.3	$736.2	1.1%
Military/Veterans	$36.43	$36.95	1.4%	$146.15	$151.05	3.3%
DNRE	$43.95	$42.1	-4.2%	$711.93	$720.65	1.2%
Revenue Sharing	$0	$0	0%	$1,032.1	$1,032.1	0%
School Aid	$30.2	$30.2	0%	$12,826.3	$12,863.3	0.3%
State	$17.96	$14.18	-21%	$209.13	$212.57	1.6%
State Police	$267.3	$258.9	-3.1%	$535.8	$533.7	-0.4%
Transportation	$0	$0	0%	$3,259.6	$2,760.9	-15.3%
Treasury	$151.96	$202.13	33%	$582.6	$718.7	23.4%
Totals	$8,128	$7,870	-3.2%	$45,254	$47,099	4.1%

Tax on Services and the MBT- Governor Granholm proposed reducing the sales tax rate from its current 6 percent to 5.5 percent and extending that to most services. In total, about 150 of the 168 services tax officials identified would be subject to tax under the proposal. Not taxed would be health care, education services, business-to-business services, new construction, real estate and insurance commissions. In exchange, the now-hated MBT surcharge would be phased out over two years. In addition, the gross receipts rate in the MBT would be cut from the current 0.8 percent to 0.6 percent over two years. The sales tax change, if enacted, would go into effect on December 1. The cut in the MBT surcharge would begin in 2011 and be completed in 2012, while the cut in the MBT gross receipts rate would begin in 2012 and be completed in 2013. Should the proposal be enacted, officials estimate the change would raise $554.3 million in 2010-11 fiscal year. That's the net after extending the tax to services to raise $1.2 billion, and then cutting the current sales and use tax rates from 6 percent to 5.5 percent and killing the MBT surcharge. In the 2012 fiscal year, when the cuts to the MBT gross receipts reductions, the tax changes would raise $327.3 million. By the 2012-13 fiscal year, when the MBT reductions are fully implemented, the changes would raise an estimated $48.6 million and in the 2013-14 fiscal year, the changes would raise $10.2 million.

Physician Tax-Governor Granholm in her 2010-11 fiscal year budget recommendation proposed physician tax to raise some $500 million for the Department of Community Health budget. If the Legislature decides against the physician tax, it will instead have to cut the Community Health budget by 11 percent or find another revenue source to fill the hole. HB 5386 institutes a 3 percent tax on physicians (QAAP) that will allow the state to leverage $525 million in federal Medicaid dollars. Because the Senate defeated the House-passed plan in the preceding year of the term and no motion to reconsider pending, the Senate cannot again take up this bill.

Rental Car Fee- Governor Granholm officially called on the Legislature to pass new rental car fees to pay for the state's "Pure Michigan" campaign. The $2.50 fee that would be assessed on cars rented near airports would generate $13 million, which is short of the $40 million sought by the tourism industry. But the proposal does incorporate one of the industry's recommendations (HB 5017).

The Governor’s Recommendations for the following Budgets:

The School Aid- Would see a marginal 0.3 percent overall increase to $12.85 billion, partly covered by $554.3 million in additional sales taxes generated by the imposition of taxes on services. Changes to the Michigan Public School Employees Retirement System that require additional contributions and a partial defined contribution system would save $660 million for schools over the fiscal year to help offset the lack of an increase. The proposal includes $100 million for the Great Start Readiness Program, which would cover the service for 28,000 children. The budget also anticipates loss of federal stimulus funds in the 2011-12 fiscal year, setting aside $150 million for the 2011-12 fiscal year to smooth that loss.

The Department of Education-Would see $131.29 million, a 15.8 percent increase. The general fund, $20.01 million, would be a 3 percent increase. Much of the increase, $18.7 million, is targeted to implementing the education reforms enacted last year. The new laws require the department to hire a school reform/redesign officer as well as to oversee some new charter schools and the lowest-performing schools in the state. And the largest portion of the overall funding, $49.26 million, goes to support services for schools. The largest share of the department's funding, though, continues to be federal grants to operate those specific federal programs. Almost half of the general fund, $9.58 million, goes to library programs including the Library of Michigan that moved to the department last year after the dissolution of the Department of History, Arts and Libraries.

Department of Corrections- More eligible prisoners, and some not currently eligible, will be paroled. More of the facilities that had been housing them would close. The Governor 's proposes to cut $139 million from the Department in the coming fiscal year. The budget provides $1.97 billion gross for the department, a 0.6 percent increase from current year. But general fund contributions, $1.88 billion, constitute a 1.5 percent cut. A key element of the proposal is reducing the state's prison population to about 35,500 in the coming fiscal year from the current population of 45,200. In addition to expanded use of the Michigan Prisoner Re-Entry Program to handle more parolees who have served their minimum term, Governor Granholm is pushing the passage of legislation (HB 4497, HB 4498and HB 4499) that would re-establish good-time credits for inmates. She is also calling for reinstatement of the Community Residential Program to allow certain inmates to serve some of their time on electronic tether in the community rather than in prison. The proposals together would cut the inmate population an estimated 7,500 within six months. The plan also calls for closing as many as five prisons by the end of the fiscal year. And combined, the inmate population changes would save $700 million over the next five years. But the community and parole changes mean $1.2 million more for community corrections programs and $3.2 million more for parole oversight specifically for sex offender parolees. Another $4 million in cuts would come from changes in purchasing for the department. Other efficiencies are set to save $1.4 million.

Department of Human Services- Adds another 850 workers to provide children's services, eligibility functions and disability determinations under the Governor's 2010-11 budget recommendation. Reports of workers stretched beyond capacity and toiling in bad conditions probably are the most rampant in Human Services. Those new workers account for the bulk of substantial funding increases to DHS with a proposal of $7 billion ($959.2 million general fund). That's an 18.4 percent increase from 2009-10 (12.5 percent increase general fund).

Community Colleges and Higher Education- The Promise Grant restored, but instead of getting $4,000 in financial aid to pay for college, students would receive an income tax credit worth that much if they graduate and stick around Michigan to work for a year under the 2010-11. Meanwhile the state's 15 public universities and 28 community colleges would be spared from cuts and held to their 2010 funding levels. Highlights of the governor's higher education and community college budget include funding the Agriculture Experiment Station and Cooperative Extension Service at the 2010 levels, $34.2 million and $29.5 million, as well as funding the loss of federal stimulus for higher education with general funds. The budget also would cap the Tuition Incentive Program and target funds to students getting their associate's degree. Overall, the budget contains $1.578 billion ($1.543 billion general fund). That's a 2.1 percent decrease from the current 2009-10 fiscal year (2.4 percent increase general fund).

Revenue Sharing-After an 11 percent cut in the current fiscal year budget, Governor Granholm's budget recommendation would spare them from further cuts in the 2010-11 budget, but officials questioned what a reduced sales tax rate would mean for them. Cities, villages and townships will be held to their 2010 funding levels while the 38 counties expected to qualify for revenue sharing payments once again would indeed see that money. The county program alone will cost $114.7 million. While constitutional revenue sharing payments are in flux with the amount of sales tax collected by the state, Governor Granholm will hold locals harmless by increasing their share of statutory payments.

Department of Energy Labor and Economic Growth- Governor Granholm's 2010-11 budget relies more on federal dollars for worker education and skills training. The 2010-11 department budget will see 17.1 percent of its general fund support gutted under the plan, while other funding for DELEG will increase 2.3 percent. Nearly $650 million of the department's $1.5 billion budget goes toward worker training and education, but less than $29 million of that is paid for with general funds. However, the budget for this area represents a $34.6 million increase above current year funding. General fund support for No Worker Left Behind and the Michigan Nursing Corps would be eliminated under the governor's budget, but more federal dollars would be shifted to those programs. The general fund will save $300,000 by redirecting $5 million of the federal Workforce Investment Act into the nursing program. The governor's budget also includes a call for the Legislature to pass HB 4026, which would replace $2.6 million in general fund dollars for the Bureau of Fire Services with a fee program. The legislation hasn't seen any action in the Senate since passing the House in April 2009. Among other highlights of the department budget is $125 million for energy efficiency and utility regulatory programs, including $90 million in Low-Income Energy Efficiency grants. Another $219.1 million will be used for housing and community development projects.

Department of Transportation-Unless the state can raise the additional money necessary to secure $475 million in available federal matching funds, the Department of Transportation budget will see severe cuts under Governor Granholm's proposed in her 2010-11 budget recommendation. The MDOT budget contains $2.76 billion (all restricted funds). That would be a 15.3 percent decrease from the 2009-10 fiscal year.

Department of Natural Resources and Environment- Governor Granholm's 2010-11 budget predicts a savings of $356,000. But that was not enough to save the department from another round of general fund cuts, which total 4.2 percent. Overall, the budget totals $720 million ($42 million in general funds). About $140 million of the department's budget will go toward wildlife, fisheries and water protection, including criminal investigations of environmental polluters. Another $146 million will be used for air quality, groundwater and environmental cleanup services. Forest management, state park maintenance and recreational boating would see more than $100 million under the budget. And the state will see $65 million in federal dollars for restoration activities related to the Great Lakes. Another $12 million will be used for improving boat access to waterways. It also assumes clean air fees will be enacted, but that legislation has stalled in conference committee.

Department of Agriculture- Spending declines in Governor Granholm's 2010-2011 budget. The governor proposed a 4.1 percent general fund cut, with a 3.3 percent reduction in all funding sources. Overall, the budget totals $77.7 million ($28.8 million general fund). The governor's recommendation also includes migrant labor housing inspection fees (which recently passed the House), saying they contribute more than $2 million to the economy each summer and deserve to have safe housing. Governor Granholm's budget also relies on a new dairy inspection fee program. The governor cut to the Right-to-Farm program. The governor's budget also transfers the Office of Racing Commissioner to the Gaming Control Board.

The Department of State Police- would see its funding cut by 0.4 percent overall, but none of that would be at the expense of troopers under Governor Granholm's budget proposal. She avoided laying off state troopers in her budget recommendation through cuts in other areas of the Michigan State Police budget, notably a $2.2 million transfer from secondary road patrols. The proposal provides $533.69 million gross for the department. The $258.93 million general fund contribution is a 3.1 percent cut from current-year spending. In addition to maintaining current trooper levels, the proposal would also maintain current funding for crime labs, and calls for a $2.5 million supplemental for the current fiscal year to help reduce backlogs at the facilities. Some of the general fund cuts are offset by an increase to the fee for processing fingerprints. The budget also would eliminate the State Police’s Capitol post and provide partial funding for school bus inspections. The budget also would means layoffs for five administrative support staffers, a 20 percent cut for the Michigan Commission on Law Enforcement Standards and a fee increase for fingerprinting and the state’s criminal record look-up system. Since the Department of State Police took over the Detroit Police Department’s crime lab in 2008, it has uncovered at least 12,000 rape kits taken from victims were put on a shelf and never analyzed.

Military Affairs-The Michigan National Guard and veterans' program will see a 3.3 percent overall increase to $151.05 million. General fund increases 1.4 percent to $37 million. The largest portion of that funding goes to military preparedness ($53.7 million gross, $13.3 million general fund) and the Grand Rapids Veterans' Home ($52.6 million gross, $15.6 million general fund). The state's other veterans' facility, the Jacobetti Veterans' Home in the Upper Peninsula, would see $17 million gross and $5 million general fund. Veterans' service organizations funding, which convert during the current year to a competitive grant program, is proposed at $3.03 million. The budget retains funding, $4.14 million, for the Michigan Youth Challenge program, which had been briefly cut from the current year budget, and only saw about half of its funding restored. The program provides leadership training for at-risk youth.

Judiciary-The budget for the state's courts is held relatively steady under the proposal. Overall funding would increase less than 0.1 percent to $258.8 million, but general fund spending would fall 0.3 percent to $152.7 million. As usual, much of the funding ($95.3 million gross, $88.2 million general fund) is designated for judicial salaries. Another $81.6 million ($12.5 million general fund) is for trial court programs. The budget would also set aside $5.1 million ($582,600 GF) for drug court operations.

Department of Management Budget and Information Technology- Yes, they will be merged. The total appropriation for what will become the Department of Technology, Management and Budget (later this year) will be $983 million, $304 million of that in general funds. The department's general fund portion of the budget is the only portion, however, that sees a decrease from the current year. General funds allocated the State Building Authority would be jumped up to $245.4 million. All funds going to the combined department would be boosted by $8 million to $736 million.

The Department of Treasury- The largest single budget in the state's general government budget, will also see a significant increase, but that comes mostly because it will now house Casino Gaming Oversight and the state's Lottery operations. Those two agencies account for a $51 million increase. The department's budget will total $1.75 billion, more than $1 billion of that in revenue sharing funds. The general fund portion of the budget totals $202.1 million.

The Department of State- will also see a slight overall increase in funding, by 3 percent to a total of $212.6 million. But the general fund portion of the budget was cut by 21 percent to $14.2 million.
Attorney General- Attorney General Mike Cox announced he was proposing salary cuts for his department's employees, but the budget proposal calls for a slight increase in both general funds and overall funds. The budget calls for the department to receive $74.9 million, up $1 million. The general fund portion would total $29.2 million, up some $400,000.
The Department of Civil Rights- would see a cut, however, to $13.1 million from the current $13.8 million. The general fund portion would fall to $11.3 million.
The Executive Office- Ms. Granholm proposed a 4 percent cut to the governor's office with a recommendation of $4.63 million (all general fund).
The Legislature- Would face a 3.9 percent cut in its operations under the governor's budget recommendation for the House, Senate, Legislative Council, Legislative Retirement System and House and Senate fiscal agencies. The budget contains $102.1 million ($100.6 million general fund). That's a 3.9 percent cut from the 2009-10 fiscal year (4 percent cut general fund).
Auditor General- Ms. Granholm's budget contains $14.5 million for the auditor general ($11.16 million general fund). That's a 3.1 percent cut from the 2009-10 fiscal year (4 percent cut general fund).

Department of Community Health-Governor Granholm’s proposal to tax physicians as a way to generate more federal Medicaid funding for Michigan has generated most of the attention in the proposed budget for the 2010-11 fiscal year. Among the most notable changes: an enrollment freeze in a health care program for the poor, elimination of health care coverage for the 950 parents transitioning off of Medicaid, reducing enrollment by 300 in a program that provides support for those on Medicaid with developmental disabilities, a 7.7 percent cut to local public health departments and the closure of the Upper Peninsula’s public health testing lab. The cuts would expand substantially if the Legislature refuses to approve Ms. Granholm’s proposal for a 3 percent tax on physicians. Medicaid funding to providers would fall by 11 percent without the tax. Of the proposal to eliminate health care coverage for those transitioning off Medicaid with incomes up to 185 percent of the poverty level who have dependent children. Particular alarm was raised on a proposed 7.7 percent cut to the state’s 45 local public health departments. Officials also voiced concern about the proposed closure of the department’s lone laboratory in the Upper Peninsula. The Houghton facility provides testing of drinking water, bioterrorism agents, rabies, sexually transmitted diseases and other results. A key move to funding the budget came with the use of $126 million in money from the Merit Award Trust Fund – which funded the now abolished Michigan Promise Scholarship – to pay for programming. There’s also the tapping of $160 million in one-time money from the Medicaid Benefits Trust Fund as the result of the resolution of an issue with General Motors involving its pension fund. The budget does contain some increases. There is a 3 percent increase to the state’s Medicaid health maintenance organizations and a 3 percent increase to Prepaid Inpatient Health Plans with those boosts totaling $133.2 million ($45.5 million general fund).

Dillon Healthcare Pooling Plan-Workgroup Recommendations- The workgroup looking at administrative cost efficiencies chaired by Rep. Melton, said if the state hired an outside firm to do eligibility and reconciliation audits, it could save 3 percent to 5 percent. Those audits would look at whether college-age dependents are in fact still in school or whether a couple working in two governmental units are both carrying their employer as the primary health care provider. Administrative costs for health care plans range from 6 percent to 30 percent of the premium, Mr. Melton said, and the workgroup did conclude that a larger pool would equal larger savings on administration to a point. But that threshold is significantly higher than the 20,000 figure several union groups have used as a tipping point for savings. Melton also said there could be additional savings of 3 percent if some of the governments if the pool were switching from a fully insured to self-insured model, but that would depend on how much reserve funding is needed for a self-insured pool. He said the workgroup was still compiling data from insurance companies to see how much government in Michigan is paying for administration of health care benefits. He said legislation is being drafted to deal with the two audits, which could be free of upfront costs to the state if the contract said the independent auditor was paid based on how much savings he or she found.
Rep. Lahti -also plans on introducing legislation separating prescription drugs into its own pool. While his workgroup didn't come up with a cost savings estimate, the assumption is the larger the pool the more the savings and locals would have the option to enter the program.
Rep.Scripps -Who was heading the board structure workgroup, recommended expanding it to 29 members from 13 members, with significantly more retiree representation and representation from various government levels and unions. The state budget director would also have a non-voting role on the board. He also recommended having the various interest groups create a list of people for the board from which the governor would pick appointments to make the process less politicized. And the terms of board members would increase from four to eight years, ensuring no one governor would appoint the entire board. Rep. Pam Byrnes said Mr. Scripps' workgroup should look into how many members would have to vote to make a decision final. Mr. Scripps emphasized that although union groups helped come up with the recommendations, this in no way was an endorsement of Mr. Dillon's pooling bill (HB 5345).
Rep. Haugh - Who was heading up the retiree plan workgroup, said while the workgroup analyzed several legal opinions, any legislation would likely be challenged in court if it becomes law because of the questions surrounding its treatment of retiree health care benefits.

Governor’s Executive Order 2010-2 Creates the Michigan Finance Authority- Governor Granholm eliminated 10 state finance authorities and combined all of their functions into one agency. The new Michigan Finance Authority will be an autonomous agency within the Department of Treasury. Eliminated in the order: The Michigan Forest Finance Authority, The Michigan Higher Education Facilities Authority, The Michigan Higher Education Assistance Authority, The Michigan Higher Education Student Loan Authority, The Michigan Municipal Bond Authority, The Michigan Public Educational Facilities Authority, The Michigan Tobacco Settlement Finance Authority, The Michigan Underground Storage Tank Financial Assurance Authority, The State Higher Education Facilities Commission, The State Hospital Finance Authority. The new finance authority will also have oversight for the financial arm of the Michigan Strategic Fund, as well as for the State Land Bank Fast Track Authority. Combined, these agencies have issued bonds for millions of dollars over the years (and decades) to help finance construction of hospitals, college buildings, and civic buildings and projects. Creating the new authority will have no effect on the bonds already issued. The executive order also moves the Michigan State Housing Development Authority from the Department of Energy, Labor and Economic Growth to the Department of Treasury. The authority will be overseen by the state’s treasurer and a six-member board, all of whom will be named by the governor and confirmed by the Senate. Each member of the board will have to have expertise in different areas of public finance. The new authority will take effect on May 30.

Coularis is Leaving- He is stepping down from office in May to take a job in Washington, D.C., as the public affairs manager for Dow Corning. His resignation is effective April 30 and he begins working for Dow on May 3.