Let’s play Jeopardy!

The answer: good roads, clean water, services for our seniors, strong schools and safe communities.

The question: What do our taxes fund? Tuesday was Tax Day, a day often filled with grumbling about having to pay taxes. But let’s remember the upside of taxes (pdf) in the Mitten. It’s easy to take for granted much of what our taxes fund (pdf).

But imagine what a day might look like without those tax-funded services. What if you didn’t have clean water to shower and brush your teeth in the morning? What if there were no traffic lights on the way to work? What if there were no sidewalks for your kids to walk on to school? What if you couldn’t be sure your food was properly prepared at lunch? What if you had to call 9-1-1 and no one came? Those are just some of the ways taxes fund health and safety protections.

What about our kids? They need good schools, licensed child care, programs for young children, community libraries and strong colleges and universities. Our taxes help make all of these possible. And then there are those nice “extras” that improve our neighborhoods and communities and enhance our daily lives: parks, bike paths, clean beaches, nature trails, dog parks. They, too, rely on our taxes.

Taxes are an investment. An investment in our people, in our communities and in our economic growth. Thank you for your investment!

 – Karen Holcomb-Merrill

The governor’s office has released its Executive Budget for Higher Education. This budget is for four-year universities and does not include community colleges. This year it contains something new: performance funding.

There is an infusion of $36.2 million in new money (equal to 3 percent of the university operations budget) for funding based on four performance metrics:

• Degree completion (three-year average growth FY 09-11)
• Number of critical skills area degree completions (three-year average number FY 09-11)
• Pell Grant students (three-year average number FY 08-10)
• Tuition restraint (increase FY 12-13).

The League is primarily interested in the third and fourth metric, which address educational accessibility for low-income individuals. Too often, college costs are prohibitive for low-wage and underemployed workers needing to acquire skills to succeed in the job market.

A business group, Business Leaders for Michigan, which is composed of CEOs of 80 companies in Michigan, has responded with its own recommendations for performance metrics.  It recommends doing the following, in addition to the governor’s recommendations:

• Benchmark Michigan’s universities against national peers
• Measure and reward a university’s absolute level of achievement as well as progress
• Add metrics that further encourage quality outcomes, such as graduation rate and retention rate
• Weight the degrees and completions metric for advanced degrees
• Add a metric that incentivizes increasing economic impact (i.e. total research and development expenditures)
• Address affordability and tuition in a manner that does not risk driving down quality and outcomes, for example by:
  -Adding a metric that motivates universities to control administrative overhead
  -Changing the metric from an absolute tuition increase benchmark to one that compares Michigan universities to their most affordable peer institutions in other states

Many of the recommendations from the governor and business leaders point in a positive direction in regard to low-income students. Keeping tuition costs down is, of course, a very important component of accessibility; the Pell Grant metric is a good way to ensure that low-income students are recruited and helped to succeed; and the retention rate metric encourages intervention with students who are having difficulty with coursework.

The proposed measures, however, do not specifically address one group of students that is becoming more prominent: low-skill individuals already in the workforce, many of whom are supporting families. Encouraging postsecondary institutions to help such workers get marketable credentials makes good economic sense. When they become economically self-sufficient, they spend more of their money at local businesses, pay more in Michigan taxes and are less likely to need public assistance.

These performance metrics have been recommended for the four-year universities; none of them except the critical skills degree completion metric have been recommended in the community college budget. This is odd, since community colleges tend to have a higher percentage of both low-income students and older low-skill workers.

Overall, performance funding proposals are a good start to the conversation. Now the conversation needs to expand to include metrics for both four-year and community colleges that help low-income workers and students.

 – Peter Ruark

March 1st, 2012 Posted to Blog: Factually Speaking,State Budget,Workforce Development | Comments (3)

Wednesday evening I had the chance to talk with a group of college students. We were discussing recent state policy changes affecting safety net programs and the topic of college students and food assistance came up. The rules regarding college students and food assistance were changed by the Department of Human Services in April. Those changes knocked about 30,000 students off of food assistance. 

The department indicated the changes were needed to ensure that only students with a true need get assistance. I think we would all agree with that, however, it seems there are students who truly need the assistance, but are not getting it. I heard last night that the food pantry on this college’s campus can no longer keep up with the demand for food.

Once the new food assistance rules were put into place, the need for food by college students increased tremendously. Without food assistance, students were turning to the food pantry, which cannot fill the gap.

One of the new rules is that a student must be working at least 20 hours a week to get food assistance. A student last night pointed out that most of the students working on campus work in food service and that in most cases they are only allowed to work 18 hours. That leaves them ineligible for food assistance.

In the past there has been criticism that some students were receiving help from their parents and also getting food assistance. One student shared his story. He does get help from his parents, but only because they have taken out loans. He has also taken out loans and he works, but not enough hours. He lost his food assistance and is struggling to get through college so that he can support himself.

Behind the many policy changes that are being made in Michigan under the pretense of ensuring that only the needy get help, are the faces and stories of many that do need help and are no longer getting it. Sweeping policy changes are shredding the safety net in Michigan. We can do better.

– Karen Holcomb-Merrill

November 10th, 2011 Posted to Blog: Factually Speaking,Human Services,State Budget | Comments (1)

Information is power, and Michigan needs all the empowerment it can get in order to prepare our workforce for the 21st century economy.

Helping adult learners—low-skill individuals age 25 and older—acquire occupational skills is important to Michigan’s economic development as well as to the individuals themselves. However, our state has a lot of unanswered questions regarding the effectiveness of programs that bring their skills up to speed.

Community colleges, for example, have many adult students in developmental (remedial) education classes because they have not mastered one or more basic skill areas necessary for postsecondary work. Yet we do not have a statewide data system that tells us the success rate of such students in completing their studies and obtaining an occupational credential (i.e. an associate degree or vocational certificate).

We also don’t have a way to track the success rate of adults who go through the adult education system and then go on to postsecondary training. Nor can we track the wage levels of such students after they graduate and find jobs in the workforce. Knowing the answer to these and other questions would help state agencies know how to improve educational services for adult learners—a population the state cannot afford to ignore.

Michigan is able to track individual progress of students as they go through the K-12 system and as such is able to measure and improve the effectiveness of educational services for that population. The K-12 data collection system is not yet formally linked to postsecondary or workforce systems, however.

Having a longitudinal data system that follows each individual through K-12, adult education, postsecondary education, and the Michigan Works! Agencies, and matches this information with wage and employment information, can provide important information about state system effectiveness. Importantly, it can do this without jeopardizing individual privacy.

Gov. Rick Snyder is planning to give a speech this fall on his workforce development plan. It is hoped that his plan will address not only high-skill jobs and workers, but raising the skills of low-skill workers as well. It is also hoped that a comprehensive data collection system will be a key ingredient of this plan.

(More information on this topic can be found in a recent paper by the Michigan League for Human Services, The Key Ingredient: Better Data is Crucial to Building Michigan’s Workforce System.)

– Peter Ruark

There is a proposal in the Michigan Senate to eliminate all state funding for adult education. This is misguided. If Michigan wants to be economically competitive, it needs to build the skills of its workforce and adult education is an essential part of doing that.

The days when a person could get go directly from high school into a well-paying manufacturing job in the automobile industry with only a high school diploma are over. Some kind of postsecondary occupational credential is now needed to succeed in the job market. However, many workers lack certain basic skills (in reading, writing or mathematics) that are needed in order to participate in occupational training.

That is where adult education fits in. It helps workers become marketable and it helps Michigan attract and keep employers. Businesses tend not to locate in places where large numbers of adults lack basic reading and mathematics skills.

Adult education funding needs to be increased to meet the need. The governor’s proposed budget, however, keeps funding at $22 million per year for the next two years—no increase.

Worse, Sen. Howard Walker, the chair of the Senate Appropriations Subcommittee on K-12, School Aid and Education, has proposed that Michigan eliminate state adult education funding entirely.

Eliminating this funding would gut the total amount of available adult education funds by approximately 60 percent, as Michigan received only $14.6 million in federal adult education funding last year. This would result in even fewer workers being able to enroll in and complete basic skills training. 

The Michigan League for Human Services published an analysis on the need for more state funding for adult education. (You may have read about it a previous blog post.) The paper showed a correlation between the decrease in funding over the past decade and the 63 percent decrease in enrollment during that time, as fewer individuals had access to adult education programs in their communities.

Fortunately, elimination of state investment in adult education is not a done deal. The subcommittee has not yet passed an appropriations bill. But at a time when it is crucial to build Michigan’s economy and workforce, the conversation on adult education funding is going in the wrong direction.

The League is testifying about these proposed cuts. Your Senator and the Senators on this subcommittee (Sens. Walker, Caswell, Pappageorge and Hopgood) need to hear from you that adult education funding needs to be preserved, and better yet, increased. Let’s hope the key players crafting the budget will recognize the importance of adult education, and refrain from making decisions that will render it inaccessible to large numbers of workers that need it.

– Peter Ruark

April 12th, 2011 Posted to Blog: Factually Speaking,State Budget,Workforce Development | Comments (1)

Whether you love it or hate it, the new tax cut deal reached in Washington does offer some important benefits for low- and moderate-income families in Michigan.

While the debate has raged over tax breaks for the very rich, perhaps lost in the headlines is the inclusion of tax credits for families that were originally enhanced by the American Recovery and Reinvestment Act  of 2009 (also known as the stimulus package).

These credits, originally passed as one-year credits, target people who do important work for low pay, such as nursing home workers, child care workers, janitors and waitresses. As part of the newly inked deal, expansions in the Child Tax Credit and the Earned Income Tax Credit will be extended for two years.

The Child Tax Credit lowered the minimum income amount ($3,000 in tax year 2009 as opposed to $8,500 in tax year 2010) and made other changes. 

Here’s why this is so critical: If the Child Tax Credit had been allowed to expire, it would mean a $1,432.50 tax increase for a single working mom of two in Michigan who is earning minimum wage.  Under the deal, that family will receive a credit of $1,770 (rather than $337.50). That’s a critical boost for those families struggling to make it. That’s also money that is most likely to be spent and spent quickly, giving a needed jolt to the local economy.

The policy group Citizens for Tax Justice (CTJ) estimates that extending the Child Tax Credit expansions will help families of 514,000 children in Michigan.

Likewise, expansions in the Earned Income Tax Credit will help families of a half-million children in Michigan, CTJ estimates. Those changes provided a larger credit for families with three or more children ($629 more than families with two children). The Recovery Act also addressed a “marriage penalty” and allowed a married couple to claim the EITC with incomes $5,000 higher than single taxpayers, rather than $3,000.

In addition, the deal extends tax credits offering help for families struggling to cover the costs of higher education. Of course, there’s also a vital part of the compromise that is extremely important to Michigan and that is the extension through 2011 for emergency unemployment benefits.

With tens of thousands in Michigan losing their benefits each month, it’s important to our state to get that income restored for families as breadwinners look for jobs in a very tough market.

December 17th, 2010 Posted to Blog: Factually Speaking,Federal Stimulus,Tax Policy | Comments (1)

Gary Olson, retiring director of the Senate Fiscal Agency, pegs the state General Fund deficit at $1.7 billion for FY 2012. But it could be even worse, or an additional $1.5 billion, under Gov.-elect Snyder’s proposal to eliminate the Michigan Business Tax and replace it with a corporate business tax.

That’s a total budget gap of $3 billion or more.

Olson told a crowd of more than 150 at the League’s policy forum Friday about several economic factors contributing to our state’s struggling budget. General Fund revenues, adjusted for inflation, show that the fund stayed about $10 billion to $12 billion annually in the 1960s thru the 1970s. 

Starting in 2001, Michigan revenues began to fall significantly to about $7 billion in FY2011. After adjusting for inflation, state revenues are about 5 percent less than they were in FY1968, according to the Senate Fiscal Agency. The essential cause of the budget gap is the significant drop in state revenue over the last decade.

Olson said that state revenue as a percent of personal income has fallen from 9.55 percent in FY2000 to 6.93 percent in FY 2010. 

One of the main themes from the League’s forum speakers was that it’s not possible to cut our way out of next year’s deficit and keep any resemblance of the state and local services that our state residents need. With state General Fund revenues of about $7 billion, a potential budget gap of $3 billion looms large.

Olson also reported that the auto industry is looking for a skilled workforce. Continued funding of education and training is needed to provide those skilled workers. 

Rep. Joan Bauer, D-Lansing, mentioned that a proposal to reduce state employee pay by 10 percent — a significant cut – would only contribute about $98 million.     

There is a need to stop the drain from the growing revenue loss resulting from tax code spending, which includes tax credits, deductions and exemptions. Much of the decline in tax revenue may be explained by the growth of tax code spending, which has nearly doubled from an estimated $14.1 billion in FY 2000 to $26.2 billion in FY 2010. 

Action needs to be taken to set up an annual review process to determine if the tax spending is serving its purpose, including a detailed analysis to determine if it’s meeting its goal, who benefits, and the source of financing.  If tax expenditures are out of date, have little impact on job creation, or don’t serve a useful public purpose they could be  reduced, not only as a way to help balance the budget, but to create sound tax policy. 

What’s the hold up?  The time to act is now.

The August 3 primary election said a great deal about what voters care about, in addition to their preferred candidates for office. The election results sent a clear message that voters value public services, and they are willing to pay for those services.

While this shouldn’t come as a surprise to some of us optimists, an analysis by The Center for Michigan shows that voters overwhelmingly stepped up to the plate to pay for good roads, fire and police protection, services for seniors and libraries.

According to one analyst, “People are finally starting to really feel the effect of government cutbacks.”

The Center for Michigan’s analysis showed the following:

• Voters approved 86 percent of the 623 ballot proposals affecting how much they would pay in taxes or fees.
• Voters approved 96 percent of the requests to either renew taxes or restore rates that had previously been reduced.
• Voters supported 69 percent of the proposals that were flat-out tax increases.

These election results counter the noise from the Tea Party folks that the electorate is fed up, doesn’t value government, and is not willing to pay a dime more for government services.

Our citizens aren’t stupid. They know what they need; they know what they value.  By in large, they want essential services continued in their communities even though the state will no longer pick up the tab.

There are other services, equally important, which have been cut and are likely to be cut further. The General Fund budget, with a deficit of at least a half-billion dollars or more, depending on whose numbers are used, is not yet resolved. Many more services are likely to be cut if the Legislature can’t agree on revenue solutions.

At that point, voters will be looking at cuts in higher education as they attempt to send kids to college, and cuts in Medicaid as they attempt to deal with their own medical issues or those of parents or grandparents.

There’s more — the state licenses and inspects day care facilities where our children and grandchildren spend time each week; they also license and inspect nursing homes where many of our family members reside. Those of us who eat out occasionally or often should take comfort in the fact that restaurants are also inspected. The parks and forests that we all enjoy are maintained at government expense — taxpayer dollars.

Considering The Center for Michigan’s analysis, candidates should welcome the opportunity to talk taxes with voters. Let the voters know what’s at stake and ask whether they want to go without the services they are used to having. The answers may surprise more than a few hopeful candidates for state office.

– Sharon Parks

Going to college is expensive. It’s also one of the keys to getting out of or staying out of poverty, reducing your chances of unemployment, and attaining higher income.

Unfortunately, with tuition at both two-year and four-year institutions rising faster than the rate of inflation and median household income falling, many students are finding it harder and harder to go to college. (See our new report Pulling the Plug on Michigan’s Future: Why Draining Resources Hurts Tomorrow’s Workforce.)

What’s to blame for the increase in tuition? There are several factors, such as expenses relating to health care, fuel costs and some courses being more expensive to teach than others. However, a lot of it has to do with the state, over a period of years, cutting aid to higher ed.

Over the last eight years (2002-2010) the state’s general fund has shrunk by 12.6 percent, but state funding to community colleges, public-four year schools, and state-funded financial aid programs has dropped by 15 percent. This lack of state support, coupled with the factors listed above has caused tuition at Michigan’s four-year public institutions to skyrocket. Over the same eight-year period, tuition and fees increased 88 percent at Michigan’s four-year public colleges and 40 percent at two-year institutions.

Overall, Michigan’s investment in higher ed ranked fifth from the bottom in the nation between 2005 and 2009 and our tuition increases rank seventh-highest over the same time period.

Because of these cuts in state support, causing tuition to soar, tuition is representing an ever-increasing share of household income for families at all levels. This especially hurts families at or below the poverty level (which is $17,285 for a family of three) who have the most to gain by going to college.

However, even as tuition rises and aid programs (including many need-based aid programs offered by the state) have been cut or drastically reduced, enrollment has not dropped as more families and individuals understand the need for education beyond high school.

This is causing more students to finance their college education through student loans. In 2008, over half of all four-year graduates had student loan debt, which averaged just over $22,000, and half of all full-time freshmen took out student loans, up from just 40 percent in 2001.

Michigan cannot afford to have its young people graduating with tens of thousands of dollars in educational  debt due to our cutting aid to the institutions that will ensure Michigan stays competitive in a changing economy.  At a time where jobs are shifting from skills-based to knowledge-based, is it worth cutting off aid to the institutions that invest in our future?

– Jacqui Broughton