Supreme Court hands state a win over locals in Headlee case

In a blow to local governments, the Michigan Supreme Court sided with the state in a constitutional argument over what dollars should count toward the state’s mandated share of revenue spent on local governments. The ruling, in the case of Taxpayers for Michigan Constitutional Government v State of Michigan, found that post-Proposal A school funding from the state can be counted toward the state’s minimum Headlee Amendment payment to local governments.

This refers to Section 30 of the Headlee Amendment adopted by the voters in 1978:

“Section 30 provides that the proportion of state spending devoted to local governments shall not be less than the proportion in effect in FY 1978-79, the year in which the Headlee amendment passed,” explains this 2017 report from Public Sector Consultants. “That year, local aid as a share of state spending was 41.6 percent; some years later, in the aftermath of a suit brought by Oakland County, the local share was recalculated and set at 48.97 percent.”

Plaintiffs in the case had argued the state has miscalculated the payments owed by including the amount it pays school districts, which were primarily locally funded prior to Proposal A. This shift to state payments altered the formula and therefore lessened the required payments to local governments. However, the court rejected that argument.

The decision did leave one small portion of the case still open: the amount of money that is sent to public school academies. This issue has been sent back to the Michigan Court of Appeals for consideration.

For more information on this issue, contact Deena Bosworth at bosworth@micounties.org.

 

State reviewing $26 billion settlement offer on opioids

A bipartisan group of state attorneys general revealed a $26 billion national settlement this week with drugmaker Johnson & Johnson and three companies that distributed opioid painkillers. Michigan Attorney General Dana Nessel announced Michigan could see up to $800 million of the grand total. Nessel has 30 days to review the documents and decide to sign on to the settlement. After that, local units of government will have 150 days to do the same.

Details released at this point are as follows:

Funding overview

• The three distributors collectively will pay up to $21 billion over 18 years.  
• Johnson & Johnson will pay up to $5 billion over nine years with up to $3.7 billion paid during the first three years.   
• The total funding distributed will be determined by the overall degree of participation by both litigating and non-litigating state and local governments.  
• The substantial majority of the money is to be spent on opioid treatment and prevention.  
• Each state’s share of the funding has been determined by agreement among the states using a formula that takes into account the population of the state along with the impact of the crisis on the state – the number of overdose deaths, the number of residents with substance use disorder, and the number of opioids prescribed.  

Injunctive relief overview

Requires Cardinal, McKesson and AmerisourceBergen, through court orders, to: 

• Establish a centralized independent clearinghouse to provide all three distributors and state regulators with aggregated data and analytics about where drugs are going and how often, eliminating blind spots in the current systems used by distributors.  
• Use data-driven systems to detect suspicious opioid orders from customer pharmacies. 
• Terminate customer pharmacies’ ability to receive shipments, and report those companies to state regulators, when they show certain signs of diversion. 
• Prohibit shipping of and report suspicious opioid orders.  
• Prohibit sales staff from influencing decisions related to identifying suspicious opioid orders. 
• Require senior corporate officials to engage in regular oversight of anti-diversion efforts. 

Requires Johnson & Johnson, through court orders, to:  

• Stop selling opioids.   
• Not fund or provide grants to third parties for promoting opioids.  
• Not lobby on activities related to opioids.  
• Share clinical trial data under the Yale University Open Data Access Project. 

While this has been a long-awaited settlement, there is still much in the process to come. MAC will continue to be a resource for counties as needed regarding this matter. Please reach out to Meghann Keit-Corrion at keit@micounties.org with any questions.

 

MAC urges counties to announce support for ARP match program

MAC is working with the state of Michigan and local government groups on a match program to earmark close to $4 billion in state American Rescue Plan (ARP) funds to invest, amplify and leverage the influx of federal funding to local governments.

Michigan will receive more than $10 billion in fiscal recovery aid, with all 83 counties slated to get $1.9 billion in direct ARP funds. Cities and larger townships will receive $1.8 billion and non-entitlement communities (smaller units) will receive approximately $644 million. Michigan has a chance to leverage all levels of government to strategically invest in areas of the greatest need of improvement. By creating multi-sector partnerships, we can accelerate the impact of the one-time ARP funds.

MAC sees great potential in this situation to invest in Michigan’s future in five key areas: water infrastructure and broadband, local capacity and fiscal stability, housing and community development, comprehensive economic development, and public health and safety.

MAC asks counties to add their voices to this effort by passing resolutions of support. Please see a sample resolution here. If you pass such a resolution, please send a copy to Hannah Sweeney at sweeney@micounties.org.

For more information on this issue, contact Deena Bosworth at bosworth@micounties.org.

 

Legislature leaves unsettled FY22 budget as summer begins

The Michigan House and Senate came together on a small piece of the budget this week — unfortunately not one that includes revenue sharing payments for counties or an additional $110 million for nursing facilities. All that the Senate and House could agree on prior to a July 1 deadline for delivering an FY22 state budget, was a bipartisan deal to close per pupil foundational allowance gap so each school will see a $8,700 per pupil base amount.

That leaves the bulk of the FY22 budget bills for all state departments and agencies, higher education and community colleges still to come. Still to be addressed are billions in federal coronavirus relief dollars for the current and upcoming fiscal years, as legislators head back to their districts, with only a handful of legislative session days scheduled between now and Labor Day.

The School Aid Fund budget cleared the Senate 33-1 and the House 106-3. The governor commended the Legislature on this action.

Due to the delay on the rest of the budget agreements, the Legislature formally missed the new statutory deadline to present a budget to the governor on or before that date; however, there is no real penalty in the statute for missing it. That means the traditional deadline is in play, which is on the start of the fiscal year on Oct. 1.

Senate Majority Leader Mike Shirkey (R-Jackson) told the Gongwer News Service that work to complete the new fiscal year budget will likely take until late summer and he plans on the Senate returning to the Capitol in August.

For more information on this issue, contact Deena Bosworth at bosworth@micounties.org.