Moving Michigan forward: The FY 2014-2015 budget

Michigan Governor Rick Snyder is utilizing his fiscal year 2014-2015 budget to highlight Michigan as the nation’s “comeback state,” calling for both fiscally responsible and innovative spending to ensure a bright future. With no big surprises, education, health care reform, and transportation are among the state’s top investment priorities. More than 75 percent of the budget is dedicated to education and health and human services, and state spending will go hand in hand with outcome measures and performance metrics.

The FY 2014 budget totals $51.8 billion, a 7 percent increase from FY 2013. The FY 2015 proposed budget tops $53 billion. Table 1 below represents the total budget starting in FY 2010.

The Michigan Department of Community Health increased its budget by nearly $1.6 billion from FY 2013-2014, and will see an increase by another $840 million for FY 2015. The governor has recommended expanding Medicaid to cover individuals up to 133 percent of the federal poverty limit. This is estimated to increase health insurance coverage to 470,000 more Michigan citizens, while decreasing the uninsured population by 46 percent.

 

Rounding out the top three budget increases are the Department of Transportation, which increased by $1.2 billion, and the Office of State Aid and Finance’s $720 million funding boost. The state is increasing motor fuel taxes to a flat rate of 33 cents per gallon and increasing vehicle registration fees to pay for increased transportation funding.

 

Decreases in spending for FY 2014 included the Department of Human Services ($530 million) and the Department of Licensing and Regulatory Affairs ($254 million).

The budget dedicated to IT expenses increased $44 million from FY 2013 to 2014, bringing the total to just more than $1 billion. The Department of Corrections saw a drop in IT spending, while the Department of Technology, Management, and Budget increased its domain by nearly $41 million. Table 3 below depicts the changes in IT line items by vertical classification.

Health care IT remains rather constant after an initial uptick in FY 2013. Two large projects that Deltek is tracking involve major hot topics of the past few years – Michigan’s health insurance exchange (HIX) and the state’s Medicaid management information system (MMIS). In March 2013, the United States Department of Health and Human services tentatively approved Michigan to run a state marketplace partnership exchange, assuming that the governor procures legal authority and spending authority for exchange activities and operations. Michigan uses CNSI to operate CHAMPS (MMIS), but is still weighing its options in extending the contract or opening it up for rebid as it implements its ICD-10 changes and other Affordable Care Act (ACA) mandates.

 

On the justice and public safety side of Deltek’s database is Michigan’s next generation 911 (NG911) system, which Governor Snyder is calling for new legislation to improve public safety. The state received a grant in FY 2012 to build out a geographic information system (GIS) data repository to enable participating public safety answering points (PSAPs) to share GIS data. The system will serve as a database repository to provide integrated 911 GIS datasets for call routing when the state moves forward with NG911.

 

Analyst’s Take and Recommendations

 

Michigan’s FY2014-2015 budget is spot on with Governor Snyder’s goals to increase better health outcomes, education, and transportation for Michigan citizens. Touted as the “comeback state,” Michigan is turning a corner as employment rates and personal income rise. The unemployment rate is decreasing faster than the national average, and the housing market is starting to gain momentum. Further, the governor has called for a focus on long-term solutions and assistance for struggling local entities.

 

Although 75 percent of the budget is dedicated to health care and education, more than 60 percent of general fund and school aid resources are devoted to improving public education. Investments for the future include infrastructure, education, Medicaid expansion, health improvements, jobs, public safety, and an overall better quality of life.

 

Vendors should:

·         Look for continued spending and IT investment in Michigan

·         Be knowledgeable in the short and long-term capabilities of their solutions

·         Ensure solutions do not exist in a program vacuum

·         Align themselves with identified initiatives, including health care, education, and transportation infrastructure

 

Deltek is currently tracking more than 30 core-IT opportunities in the state of Michigan, valued at an estimated $3.3 billion. Vendors interested in forming a partnership with the “comeback state” should visit our Michigan state profile to access procurement information, budget documents, and key contacts.

 

Vendors with solutions in the key priority investments of Michigan – health care, education, and transportation– should not only be capable of short-term solutions to emergency problems, but also promise long-term answers for a state looking to improve its image and efficiency. The FY 2015 IT forecast and overall budget forecast remains constant with FY 2014 numbers, which could signify a strong recovery for the underdog state.