Moving Michigan Forward: Continuing Our Comeback February 7, 2013 Governor Rick Snyder, CPA Lt Governor Brian Calley Director John Nixon, CPA
Turning the Corner Growing more jobs Personal income is increasing Home sales and prices are increasing Our population is growing again 2
Michigan s Employment Expected to Increase in 2013-2015 72.3 51.0 36.0 48.0 53.0-16.9-9.3-63.3-58.7-7.2-76.8-71.1-112.7-105.6-291.6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Michigan Wage and Salary Employment Year-Over-Year Change (In Thousands) Consensus Forecast 3 Note: U.S. Bureau of Labor Statistics. 2012-2015 estimates are 1/11/13 Consensus Forecast. 1/25/13.
Michigan s Unemployment Rate Improving Faster Than the U.S. Rate 15% 12% 9% 6% 2015 Michigan 7.6% 2015 United States 7.1% 3% 0% 2001 2005 2009 2013 Source: U.S. Bureau of Labor Statistics. 2013-2015, 1/11/13 Consensus Forecast. 1/25/13 Consensus Forecast 4
Michigan Personal Income Continuing Growth in 2013-2015 5.6% 4.3% 4.4% 3.7% 2.5% 1.6% 2.0% 2.8% 2.8% 3.1% 3.4% 2.6% 2.0% 1.0% -6.3% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Michigan Personal Income Year-Over-Year Change Consensus Forecast Note: U.S. Bureau of Economic Analysis. 2012-2015 estimates are 1/11/13 Consensus Forecast. 1/25/13. 5
Michigan Housing Starts are Rebounding 60,000 50,000 40,000 30,000 20,000 10,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Treasury Forecast Sources: U.S. Bureau of the Census & Treasury Forecast 1/11/13 6
Recognizing Risks Federal fiscal management Global issues, particularly Europe Challenged local entities Ensuring long term solutions Returning to old bad habits 7
Nearly 75 Percent of Total Spending is Dedicated to Education and Health and Human Services Health and Human Services Education $22.6 Billion $15.3 Billion Jobs $6.1 Billion Public Safety $3.1 Billion Government Services $2.7 Billion Environment $922 Million Budget Stabilization / Health Savings Fund $178 Million FY 2014 Total $50.9 Billion 8
9 Over 60 Percent of General Fund and School Aid Fund Resources are Devoted to Public Education Education Health and Human Services Public Safety $13.2 Billion $3.7 Billion $2.6 Billion Government Services $830 Million Jobs $249 Million Budget Stabilization / Health Savings Fund $178 Million Environment $94 Million FY 2014 Total $20.9 Billion
Education Programs Receive Almost Half of Ongoing Investment Funding Health and Human Services $17.4M 10% Jobs $15M 8% Education $87.1M 48% Public Safety $24.5M 13% Environment $10.7M 6% Government Services $28.1M 15% Total FY 2014 Ongoing Investments: $182.8 Million 10
Over $275M in One-time Funding is Dedicated for Savings Accounts and Education Programs Health and Human Services $9.7M 2% Public Safety $28.1M 7% Budget Stabilization/ Health Savings Fund $178M 43% Environment $4.2M 1% Government Services $23.2M 6% Education $100.6M 24% Jobs $69.5M 17% Total FY 2014 One-Time Investments: $413.3 Million 11
61 Percent of Total Investments are Designated for Savings Accounts and Education Programs 12
Supplemental for 2013 Emergency harbor dredging Veterans service delivery model Health Care Exchange 13
Budgeting Responsibly Invest and save wisely Live within our means Prioritize to make a difference Ask for, measure and reward real results Invest and save Short term and urgent Long term and important 14
Paying and Lowering Our Bills Retirement Michigan Public School Employees Retirement System Michigan State Employee Retirement System Bond Obligations Clean water Updating old, outdated and worn assets 15
$ in Billions $ in Billions Retirement Reforms Long-term results: savings of $2,200 per citizen and more than $10,000 per student $50 Total Estimated Liabilities for MPSERS Both Pension and Healthcare $50 Total Estimated Liabilities for SERS Both Pension and Healthcare $40 $40 $30 $30 $20 $10 $46.7 B $31.1 B $20 $10 $18.8 B $13.1 B $- Before Reform After Reform $- Before Reform After Reform 16
Investing in the Future Infrastructure Education Medicaid expansion Health improvements Jobs People Public safety Quality of life 17
Driving the Economy Forward Invest $1.2B more per year in infrastructure Four layers to a common sense outcome Make regular payments to avoid huge bill Save on vehicle repair costs Grow the economy by creating jobs Save nearly 100 lives per year Roads, bridges, public transit, rail, harbors 18
Investing in Our Roads $25B Gap Source: OEI, RMF 07/27/12 19
Creating a P-20 Educational System More seamless system Student growth Careers or self enrichment Three tiers Early childhood K-12 Higher education Total $15B investment ($13.1B from State) 20
Early Childhood Major New Investment $130M investment over the next two years More than double the 2011 investment 2014 Investment - $65M total Creating 16,000 new placements Increased funding per slot from $3,400 to $3,625 2015 Investment adding another $65M more Creating an additional 18,000 placements Value add to all 21
Appropriations (in thousands) Investing in Our Children Early $250,000 Preschool Funding Will Double by FY 2015 With $130M Investment Over Two Years 66,000 Placements $200,000 48,100 Placements $239.3 M $150,000 $100,000 28,100 Placements 28,900 Placements 30,700 Placements 32,100 Placements $174.3 M $50,000 $95.7 M $98.3 M $104.3 M $109.3 M $0 FY10 FY11 FY12 FY13 FY14 Rec FY15 Rec Reflects State Appropriations and Number of Half-Day Preschool Placements 22
K-12: Continuing Focus on Student Growth $13.2B for K-12, including $11.5B of state funds, an increase of $227M Includes an equity payment to further close the foundation allowance funding gap ($24M to raise the lowest funded districts to $7,000 per pupil) Continue performance and best practices funding, as well as technology grants Supports online courses 23
K-12 Per Pupil School Aid Appropriations - FY 2010 to FY 2014 $8,000 $7,000 $6,000 $6,622 $6,818 $6,971 $7,208 $7,357 Michigan Public School Employees' Retirement System Best Practices/ Performance Funding $5,000 $4,000 All Other Categorical Funding Special Education $3,000 Basic Operations $2,000 $1,000 $0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 NOTE: Does not include federal funding, adult education funding, preschool funding, or deposits made into the MPSERS reserve fund 24
Savings from reforms equals $482M or $315 per K-12 student in FY 14 FY 14 funding recommendation is an increase of $436M or $250 per K-12 student These two actions translate into $918M or $565 per student in FY 14 25
Higher Education Total funding of $1.4B for universities, a $31.4M increase An increase of $24.9M for performance formula funding $1.1M increase for MSU s Ag Bio Research and Extension Total funding of nearly $336M for community colleges $5.8M increase for performance formula funding $31.4M for retirement costs $1.1M for the Virtual Learning Collaborative Capital investment challenges for FY 2015 26
Expanding Medicaid Work toward better care at lower cost to society Critical issue is having patient centered medical home vs. more ER visits Simpler and better for families, providers and small business Reserve one half of short term savings to cover future costs and reduce federal risks 27
Provider Capacity Exists in MI Center of Healthcare and Transformation Policy Brief, 1/28/130 28
% of federal poverty level Medicaid Expansion 400% Medicaid expansion fills the gap between current coverage and private health insurance coverage offered on the Exchange 350% 300% 250% 200% 150% Medicare Exchange Expansion Current 100% 50% 0% Children 0-6 Children 7-18 Parents Caretaker Relatives 19-20 year olds Elderly Disabled Childless Adults 29
Medicaid Expansion Would Dramatically Reduce the Number of Uninsured A recent national report concluded that Medicaid expansion in Michigan would result in a 46 percent reduction in the uninsured* If Michigan does not expand, many individuals under 100 percent of poverty would not be eligible for insurance either through Medicaid or the Exchange *Kaiser Commission on Medicaid and the Uninsured, November 2012 30
Cumulative Deposits into the Health Savings Fund will Finance Medicaid Expansion for the Next 21 Years $700 $600 $500 $400 $300 $200 $100 $0 -$100 FY 2014 *in millions FY 2016 FY 2018 FY 2020 FY 2022 FY 2024 Cumulative Deposit into HSF FY FY 2026 2028 General fund cost FY 2030 FY 2032 FY 2034 31
Making Dental Health a Priority $11.6M to expand Healthy Kids Dental to reach 70,500 more children Additional 100,000 children in FY 2015 * In millions $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $- Healthy Kids Dental program has increased access to dental care for Michigan children 117,000 kids 186,000 kids 285,000 kids 510,000 kids 80 counties 440,000 kids 336,000 kids 65 counties 75 counties 78 counties FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Exec 37 counties 59 counties 61 counties Rec 610,000 kids FY15 Exec Rec 32
Making Michigan Healthier Fostering innovation $3M for Health Innovation Grants to improve the provision of health care $5M for mental health innovations to expand and improve mental health services Additional $2.5M to reduce infant mortality $8.7M for health and wellness to support prevention and promote healthy behaviors 33
Supporting Job Creation $10M for a new skilled trades program $20M to assist banks in extending capital to undeserved communities $3M for a new food and agriculture growth initiative $4M increase for Pure Michigan 34
* number of schools Improved Services to People Paving the path to independence $6.2M to continue and expand Pathways to Potential 35
Honoring Our Veterans $8.6M for a new innovative Veterans Service Delivery Initiative Create a new agency to focus directly on veteran services $600,000 to add an additional five qualified service officers to connect veterans with services 36
Making Michigan Safer Increase strength of Michigan State Police ranks Trained 78 troopers in FY 2012 Anticipate training 152 troopers during FY 2013 $15.2M to train 107 troopers in FY 2014 $2M for mental health courts $3M for treatment courts $9.5M for blight elimination and $4M for Good Neighbor property maintenance 37
Protecting Our Natural Resources Safeguarding Michigan s water $2.5M gross for underground storage tank cleanup $2M to replace the Great Lakes Research Vessel $97M bond for grants and loans to improve sewage collection and treatment systems $3M bond for wetland mitigation bank program $2.7M gross for off-road vehicle trail network $5.9M to train 41 new conservation officers 38
Saving for the Future Rainy Day Fund Michigan Health Savings Fund Disaster and Emergency Contingency Fund 39
Long-term Savings 40
Questions? Thank you. 41