On May 5, 2009, Governor Granholm issued Executive Order 2009-22 (E.O.), which requires significant reductions to funds appropriated for the operation of state government. The Michigan Constitution requires that the Governor, with the approval of state House and Senate appropriation committees, reduce expenditures when it appears that actual revenues for a fiscal period will fall below the revenue estimates upon which appropriations for that period are based. According to a press release issued with the E.O., the Governor’s office reports that state general fund revenues are projected to be down 21% (23.5% when adjusted for inflation) from actual FY 2008 collections. Due to this discrepancy between what has been appropriated and what the state projects it will collect, state government must make reductions in appropriations. According to the Governor’s press release, the E.O. reduces state spending by nearly $350 million, with $304 million savings in general fund/general purpose (GF/GP) expenditures.
The Michigan Department of Community Health (MDCH) and the Michigan Department of Human Services (DHS) are among those state agencies facing reductions and elimination of appropriations. However, in her press release, the Governor states that these reductions preserve “critical safety net services for Michigan families, including Medicaid eligibility and child welfare programs along with funding for higher education, community colleges and school aid.” Under the E.O., MDCH will experience a reduction in its GF/GP appropriations of $53,095,500 (1.74%). Temporary layoffs of MDCH personnel will account for $2,310,700 of total GF/GP reductions. A 4% reduction in Medicaid rates for many types of providers, including hospitals, health plans, physicians, ambulances, labs, DMEPOS and long term care providers, will account for another $13,010,100 of total GF/GP reductions. Similarly, DHS will experience a reduction of $97,484,800 in GF/GP appropriations (8%), $5,055,600 of which will be due to temporary layoffs of DHS personnel.
The E.O. assigns specific appropriation reduction amounts to many MDCH and DHS programs. Within MDCH, the E.O. achieves administrative economies and efficiencies by reductions to the following, among other, administrative programs: the Personal Care Supplement, the Office of Long- Term Care Supports and Services, Mental Health/Substance Abuse Program Administration, the Center for Forensic Psychiatry and Methamphetamine Cleanup. In addition to the 4% Medicaid provider rate reduction, the E.O. provides for the following, among other, MDCH program and policy changes and reductions: elimination of the FY09 pharmacy dispensing fee increase and the FY09 ambulance provider rate increase; elimination of the Single Points of Entry Program by 6/01/09; elimination of select optional Medicaid services for adults; reduction in Michigan Department of Mental Health non-Medicaid funding; reduction in funding for local substance abuse treatment agencies, for local public health operations, for asthma prevention and control programs, for the African American Male Health Initiative, for certain pilot traumatic brain injury programs, and reduction in the community services, nutrition services, volunteer services, respite care and senior Olympics programs provided by the Office of Services to the Aging.
These are just some of the reductions in funding mandated within MDCH by the E.O. For a complete listing of reductions in spending within MDCH and other state agencies, go to www.michigan.gov/budget for a copy of E.O. 2009-22 and related documents.