Governor, legislators set key parameter for FY22 budget totals

In a welcome move, Gov. Gretchen Whitmer and legislative leaders resumed negotiations this week and agreed upon target numbers for each departmental budget bill for fiscal year 2022, which begins Oct. 1. Although many details still have to be worked out, the overall spending amount and the most important priorities for funds have been hashed out.

Not included in the unspecified amount are the $6 billion in federal American Rescue Plan funds allocated to the state or the $1 billion surplus identified in the May Revenue Estimating Conference. These funds will be part of supplemental bills passed throughout the rest of calendar 2021, after all sides have had time to negotiate for the inclusion of their priorities.

The spending of the COVID-19 relief funds will be moved through a series of supplemental bills this fall. Senate Appropriations Committee Chair Jim Stamas (R-Midland) and Vice Chair Curtis Hertel (D-Ingham) are optimistic the budget will be completed and signed by the governor before the Oct. 1 start of the fiscal year.

MAC will continue to monitor the FY22 budget and supplemental bills as they move through the Legislature.

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

 

MIDC survey participants warn against premature funding changes

The Michigan Indigent Defense Commission (MIDC) has approved a local share study, required by statute to be submitted to the Legislature by October. The MIDC contracted with Public Sector Consultants to review the current local share formula and conduct stakeholder interviews.

Study participants largely fell into two categories when asked about types of funding systems: support for full state funding or maintaining the current funding structure, in which funding is a combined effort between the State and local systems. MAC and county stakeholders were part of a focus group that reminded evaluators that the 1978 Headlee Amendment was the impetus behind the current formula, and it would be nearly impossible to identify any other funding structure that does not violate the Michigan Constitution.

The report makes note of the Headlee issue and, in large part, suggests any changes to the formula would be premature as implementation of the MIDC process and standards are only a few years old. The report states, “Other participants used stronger language, labeling a reevaluation and potential formula amendment as a ‘reckless’ undertaking that could ‘collapse’ the current system.”

Overall, the report recommendations were to delay formula amendments, which MAC supports. Also made were recommendations to explore further regionalization efforts, require reimbursement collection reporting and establish a reevaluation timeline. In conclusion, the report states, “Participants during all phases of this project have conceded that while the funding formula may not be perfect or final, altering it now would be a disservice to local jurisdictions and the defendants they serve.”

The full report can be found here, beginning on page 63.

For more information on this issue, contact Meghann Keit-Corrion at keit@micounties.org.

 

Deadline is Aug. 31 for interim ARP spending reports

The U.S. Treasury is reminding counties that the deadline to submit both an Interim Report (all counties) and Recovery Plan Performance Report (counties with populations 250,000 and above) is Aug. 31. Below are some other important updates regarding ARP funding:

• Recovery Plan Performance Report Resources: U.S. Treasury has released a template for the Recovery Plan Performance Report, which is required ONLY for counties above 250,000 population.
• U.S. Treasury User Guide: U.S. Treasury released a user guide on State and Local Fiscal Recovery Fund recipient reporting portal. The guide contains step-by-step guidance for submitting the required Recovery Fund reports using Treasury’s portal, and should be used in conjunction with Treasury’s Compliance and Reporting Guidance for satisfying reporting and compliance requirements.
• Interim Report: Due by Aug. 31, 2021, the Interim Report requires all counties to report programmatic data for spending between March 3 and July 31, 2021. (This is a one-time report.) A county must submit an Interim Report even if it hasn’t obligated or spent any Recovery Funds. The county should submit a report showing no ($0) obligations or expenditures have yet been incurred. If the county received Recovery Funds AFTER July 15, 2021, the county must submit an Interim Report within 60 days of receiving funding.
• Project and Expenditure Report:  These reports are also required for all counties (with two tiers, see below) and require project and expenditure data for awards and sub-awards, demographic information for each project and other programmatic data. Initial Project and Expenditure Report is due Oct. 31, 2021. For counties with awards above $5 million, project and expenditure reports are due quarterly For counties with awards under $5 million, project and expenditure reports are due annually

For any updates on ARP news and compliance, visit MAC’s ARP Resources page. 

 

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.