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.

 

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.

 

House passes huge budget bill with revenue sharing, indigent defense dollars

The House worked late into Thursday evening this week to move bipartisan budget bills, in hopes the Senate approves them to meet the Legislature’s statutory July 1 deadline to send a state budget to the governor.

Gov. Gretchen Whitmer expressed support for the House actions, which include “the governor’s proposal to make the largest investment in K-12 public schools in our state’s history to close the gap between the lowest- and highest-funded school districts for the first time since the goal was introduced in 1994.”

House Bill 4410 largely maintains baseline spending from the current fiscal year (2021) for the next one (2022), with a few new investments. If the Senate does concur with the House approach, the state would still retain $3.1 billion in its General Fund, $880 million in the School Aid Fund and the first half of the $6.5 billion in American Rescue Plan (ARP) funds.

The bill includes a 2 percent increase (1% as ongoing and 1% as one-time) for county revenue sharing. MAC had asked legislators to end the County Incentive Program, which forces counties to do unnecessary paperwork to get their full revenue sharing allotment each year, but those requirements would remain in place under HB 4410.

An increase of $29.1 million is designated for the first year of phased-in funding of the Raise the Age program that moves 17-year-old offenders into the juvenile justice system. A nd Michigan Indigent Defense Grants would be fully funded, as the House agreed with the governor’s recommendation for about $149 million in General Fund spending for them.

Other items of note include:

• $26.5 million to establish 14 integrated behavioral and physical health clinics
• $51.4 million for Essential Local Public Health Services
• $13 million for Secondary Road Patrol (plus an additional $2.7 million from an FY21 supplemental budget bill)
• $13 million for Community Corrections plans and services
• $4 million for the County Veteran Service Fund

Not making it through the House, however, was a spend of $5 million of the federal Coronavirus State Fiscal Recovery Funds to reimburse county jails for housing offenders at county jails who otherwise would have been held in state prisons.

For a full breakdown of the House plan, click here. The Michigan Senate’s next schedule session is on Wednesday, June 30.

For more information on state budget matters, contact Deena Bosworth at bosworth@micounties.org.