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Moving Michigan Forward:
Continuing Our Comeback
Presented
John E. Nixon, C
State Budget Director, Michig
Michigan Association of CP
May 7, 20
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Where We Started Perpetual $1.5B deficit
Uncapped liabilities
Job-killing tax system
$2M in savings account
depleted rainy day fund
Several accounting gimmicks
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What Weve Done Overcame perpetual $1.5B deficit
Started accounting for one-time versus ongoing money
Implemented multi-year budgeting
Addressed long-term liabilities
Eliminated job-killing tax system
Invested in rainy day fund
Linked policy decisions to funding (capital outlay reform)
School bond loan fund reforms
Retirement reforms
Michigan Public School Employees Retirement System
Michigan State Employee Retirement System
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Accomplishments
Year 3: Looking forward
Maintain structural balance
Protect education and stabilize
state agency budgets
Invest in critical infrastructure,
economic development and
public safety needs Meet the needs of the most
vulnerable among us by investing
in important safety net programs
Save for the future
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Growing more jobs
Personal income is increasing
Home sales and prices are
increasing
Our population is growing again
Turning the Corner
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Michigans Economic Turnaround GDP growth 6th best in nation in 2011; ranked 50th in 2008 and 2009
2012 was second consecutive year of job expansion after 10 straightyears of declines
Payroll employment growth rate was 5th strongest among the states in2011; 46th in 2009
Per capita income growth 7th best in nation in 2011; ranked 42nd in 20
Housing starts increased 22 percent in 2012 and were up 66 percentfrom the 2009 level
State motor vehicle production increased 17 percent in 2012; productwas almost double 2009 production
The state is much stronger than it was in last decade
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Michigans Employment
Expected to Increase in 2013 - 2015
Michigan Wage and Salary Employment Year-Over-Year Change
(In Thousands)Note: U.S. Bureau of Labor Statistics. 2012-2015 estimates are 1/11/13 Consensus Forecast. 1/25/13.
-112.7
-76.8 -71.1
-16.9 -9.3
-63.3 -58.7
-105.6
-291.6
-7.2
72.351.0
36.048.0 53.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consensus Forecast
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Michigans Unemployment RateImproving Faster than the U.S. Rate
Source: U.S. Bureau of Labor Statistics. 2013-2015, 1/11/13 Consensus Forecast. 1/25/13.
0%
3%
6%
9%
12%
15%
2001 2005 2009 2013
2015
United States
7.1%
2015
Michigan 7.6%
Consensus Forecast
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Michigan Personal Income
Continuing Growth in 2013 - 2015
Michigan Personal Income Year-Over-Year Change
Note: U.S. Bureau of Economic Analysis. 2012-2015 estimates are 1/11/13 Consensus Forecast. 1/25/13.
2.5%
1.0%
3.7%
1.6%2.0%
2.8% 2.8%2.0%
-6.3%
3.1%
5.6%
3.4%2.6%
4.3% 4.4%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consensus Forecast
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Sources: U.S. Bureau of the Census & Treasury Forecast. 1/11/13.
Michigan Housing Starts
Are Rebounding
0
10,000
20,000
30,000
40,000
50,000
60,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Treasury Forecast
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Fitch said the upgrade reflects the states solid economic and
fiscal recovery over the last two years.
Fitch Ratings upgradedMichigans
general obligation credit rating to AA
Standard and Poors upgraded
Michigans credit outlook to
positive
Moodys upgraded Michigans bond
rating from stable to positive
April 2, 2013:
People Are Taking Note
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Total FY 2014 Budget
Recommendation
Budget
Stabilization/Health Savings
Fund
$178 Million
Jobs
$6.1 BillionEducation
$15.3 Billion
Government
Services
$2.7 Billion
Environment
$922 Million
Public Safety
$3.1 Billion
Health andHuman Services
$22.6 Billion
Total Gross: $50.9 Billion
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Total New GF/SAF Investments
n FY 2014 BudgetBudget Stabilization/
Health Savings Fund
$178M
30%
Jobs
$84.5M
14%
Education
$187.7M
31%
Government Services
$51.4M
9%
Environment
$14.9M
2%
Public Safety
$52.6M
9%
Health and Human
Services
$27M
5%
Total: $596.1 Million
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Budgeting Responsibly Invest and save wisely
Live within our means
Prioritize to make a difference
Ask for, measure and reward real results
Invest and save
Short term and urgent
Long term and important
Paying and lowering our bills
Retirement
Michigan Public School Employees Retirement System
Michigan State Employee Retirement System
Updating old, outdated and worn assets
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Investing in the Future Infrastructure
Education
Medicaid expansion
Health improvements
Jobs
People
Public safety
Quality of life
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Driving the Economy Forward Invest $1.2B more per year in our road infrastructure
Four layers to a common-sense outcome
Make regular payments to avoid huge bill
Save on vehicle repair costs
Grow the economy by creating jobs Save nearly 100 lives per year
Roads, bridges, public transit, rail, harbors
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urce: OEI, RMF 07/27/12
Investing in Our Roads
$25
Gap
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Creating a P-20 Educational System More seamless system
Student growth
Careers or self-enrichment
Three tiers
Early childhood
K-12
Higher education
Total $15B investment ($13.1B from state)
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Early Childhood Major New Investment $130M investment over the next two years
More than double the 2011 investment
2014 investment - $65M total
Creating 16,000 new placements
Increased funding per slot from $3,400 to $3,625
2015 investment adding $65M more
Creating an additional 18,000 placements
Value added to all
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nvesting in Our Children Early
28,100Placements
28,900Placements
30,700Placements
32,100
Placements
48,100
Placements
66,000
Placements
$0
$50,000
$100,000
$150,000
$200,000
$250,000
FY10 FY11 FY12 FY13 FY14 Rec FY15 Rec
Approp
riations
(inthousands)
Preschool Funding Will Double by FY 2015with $130M Investment over Two Years
Reflects State Appropriations and Number of Half-Day Preschool Placements
$95.7 M$98.3 M
$104.3 M $109.3 M
$174.3 M
$239.3 M
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K-12: Continuing Focus on Student Growth $13.2B for K-12, including $11.5B of state funds, an
increase of $227M
Includes an equity payment to further close the foundation
allowance funding gap ($24M to raise the lowest funded
districts to $7,000 per pupil)
Continues performance and best practices funding, as well
as technology grants
Supports online courses
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$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Michigan Public
School Employees'
Retirement SystemBest Practices/
Performance Funding
All Other Categorical
Funding
Special Education
Basic Operations
NOTE: Does not includ
federal funding, adult
education funding,
preschool funding, or
deposits made into the
MPSERS reserve fund
$7,357$6,971
$7,208$6,818$6,622
K-12 Per-pupil School Aid
Appropriations - FY 2010 to FY 2014
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Retirement Reforms Long-term results: savings of$2,200 per resident and more
than $10,000 per student
$46.7 B
$31.1 B
-
0
0
0
0
0
Before Reform After Reform
$inBillions
Total Estimated Liabilities for MPSERSBoth Pension and Healthcare
$18.8 B$13.1 B
$-
$10
$20
$30
$40
$50
Before Reform After Reform
$inBillions
Total Estimated Liabilities for SERSBoth Pension and Healthcare
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Savings from reformequal $482M or $3
per K-12 student in
FY14
FY14 funding
recommendation is
increase of$436M
$250 per K-12 stud
These two actions
translate into $918
or $565 per studen
FY14
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Higher Education Total funding of $1.4B for universities, a $31.4M increase
An increase of $24.9M for performance formula funding
$1.1M increase for MSUs Ag Bio Research and Extension
Total funding of nearly $336M for community colleges
$5.8M increase for performance formula funding
$31.4M for retirement costs
$1.1M for the Virtual Learning Collaborative
Capital investment challenges for FY 2015
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Expanding Medicaid
Work toward better care at lower cost to society
Critical issue is having patient-centered medical
home vs. more ER visits
Simpler and better for families, providers and
small business
Reserve one-half of short-term savings to coverfuture costs and reduce federal risks
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Cumulative Deposits into the Health
Savings Fund Will Finance Medicaid
Expansion for the Next 21 Years
-$100
$0
$100
$200
$300
$400
$500
$600
$700
FY
2014
FY
2016
FY
2018
FY
2020
FY
2022
FY
2024
FY
2026
FY
2028
FY
2030
FY
2032
FY
2034
Cumulative Deposit into HSF General fund cost
*in millions
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$11.6M to
expand Healthy
Kids Dental to
reach 70,500
more children Additional
100,000
children in
FY 2015
Making Dental Health a Priority
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Exec
Rec
F
E
Healthy Kids Dental Program Has Increased Access to
Dental Care for Michigan Children
285,000 kids
186,000 kids
117,000 kids
59 counties37 counties 61 counties
440,000 kids
336,000 kids
510,000 kids
610,0
65
counties
75
counties
78
counties
co
*Inmillions
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Improved Services to People Paving the path to independence
$6.2M to continue and expand
Pathways to Potential
Currently in 124 public schools
Detroit Flint
Pontiac
Saginaw
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Honoring Our Veterans
$8.6M for a new innovative Veterans Service Delivery Initiativ
Create a new agency to focus directly on veterans service
600,000 to add an additional five qualified service officers to
connect veterans with services
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Making Michigan Safer
Increase strength of Michigan State Police ranks
Trained 78 troopers in FY 2012
Anticipate training 152 troopers during FY 2013
$15.2M to train 107 troopers in FY 2014
$2M for mental health courts
$3M for treatment courts
$9.5M for blight elimination and $4M for Good Neighbor
property maintenance
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Long-term Savings
One-time surplus funds
Important for Michigans ratings
Rainy Day Fund
Michigan Health Savings Fund
Disaster and Emergency Contingency Fund
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$1,264.4
$994.2
$145.2
$0.0
$81.3
$2.0 $2.0 $2.1 $2.2 $2.2 $2.2 $2.2
$365.1
$505.1
$580.1
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Projected
2014
Projected
Millions
Fiscal Year
The Budget Stabilization Fund (BSF) peaked at $1.3 billion in FY 2000 but was quickly
depleted. Michigan has started to rebuild the BSF balance in FY 2012 and projects that thebalance will be approximately $580 million by the end of FY 2014.
History of the BSF
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Thank you.
Questions?
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John E. Nixon, CPAState Budget DirectorDirector, Michigan Department of Technology, Management and Budget
John Nixon serves as the State Budget Director and Director of the Michigan Department of
Technology, Management and Budget (DTMB). Reporting directly to Governor Snyder, he is
responsible for overseeing the state budget, government technology, and the administrative
functions of state government.
Nixon heads an agency of 2,700 employees, leading the departments mission of providing vital
administrative and technology services to enable Michigans reinvention, with the vision of
making the State of Michigan one of the most innovative and responsive governments in the
world.
Nixon is a Certified Public Accountant, having previously served as Utahs budget director forGovernors Jon Huntsman and Gary Herbert. He was named Public Official of the Year by
Governing Magazine in 2012. He was also one ofGovernment Technology Magazines Top 25
Doers, Dreamers and Drivers in 2012. He served as President of the National Association of
State Budget Officers (NASBO) in 2010.
Nixon holds a BS degree in Corporate Finance from Brigham Young University and an MBA with
an emphasis in Information Technology from the University of Utah, where he graduated as a
member of the Phi Kappa Phi and Beta Sigma Honors Societies.
Nixon and his wife DeAnn have six children, three boys and three girls.