April 21, 2023 | This Week in Government: Gotion Incentives Clear Senate Appropriations; 3 Dems Vote NoApril 21, 2023
Each week, the Detroit Regional Chamber’s Government Relations team, in partnership with Gongwer, provides members with a collection of timely updates from both local and state governments. Stay in the know on the latest legislation, policy priorities, and more.
Gotion Incentives Clear Senate Appropriations; 3 Dems Vote No
State incentives totaling $175 million for a controversial Gotion, Incorporated project in Mecosta County were narrowly approved by a Senate panel Thursday over objections centered on national security concerns from Republicans and several meeting attendees.
A legislative transfer request containing funds through the Strategic Outreach and Attraction Reserve fund for the Gotion battery manufacturing campus was narrowly given final approval by the Senate Appropriations Committee through a 10-9 vote.
Three Democrats sided with all six Republicans on the panel in opposition: Sen. Rosemary Bayer of Keego Harbor, Sen. Jeff Irwin of Ann Arbor, and Sen. Sylvia Santana of Detroit.
A total of $125 million would come through the Critical Industry Program and $50 million through the Michigan Strategic Site Readiness Program.
Pushback by opponents in the audience and Republicans on the panel over the Gotion project is on its being a subsidiary of an EV battery company based in China that has locations in the United States. There have been repeated allegations that the company has ties to the Chinese Communist Party and that providing incentives to Gotion in effect would be providing money to the communist nation’s leaders.
Those allegations were repeatedly raised during Thursday’s meeting.
Michigan Republican Party Chair Kristina Karamo was among the opponents who testified, highlighting environmental concerns along with echoing Chinese Communist Party comments made by others.
Karamo also read excerpts from the Chinese parent company of Gotion’s articles of association that require the company to set up a party organization to carry out Chinese Communist Party activities.
“If you choose to give these funds to Gotion, you are a Benedict Arnold. You are a traitor to this republic,” Karamo said.
Speaking to reporters after the meeting, Karamo repeated her environmental and national security concerns, while adding she did applaud the three Democrats who voted no.
“I’m highly disappointed in the individuals who voted for this project,” Karamo said. “They clearly are not concerned about the best interest of the people of this state.”
Some local leaders and an executive for Gotion were the only people to testify in favor of the project.
Mecosta County Commission Chair Jerrilynn Strong said the county commission is unanimously in support of the project, adding the jobs created will provide a significant economic boost to the region in terms of jobs, growth and tax revenue.
Strong took aim at opponents in her comments, saying her conversations with county residents have been largely in support despite pushback from what she called a vocal minority.
“You have heard from a small but vocal group of opponents, along with a group of people I have called ‘professional picketers,’” Strong said.
Green Charter Township Supervisor Jim Chapman was also supportive.
He said the Michigan Economic Development Corporation has done its due diligence of Gotion and have found no ties to the Chinese Communist Party or its leadership.
“Comparing threats and innuendoes with facts, and the facts have to win, and that’s what we’ve done and that’s why I feel that this is important for our community and a good opportunity for my residents,” Chapman said.
Opponents of the project mentioned in testimony that Chapman is being subjected to a potential recall, with efforts to gather petition signatures underway.
The vote comes eight days after Democrats chose not to take up the Gotion project, citing lingering questions from members, including over wages and benefits. This angered project opponents who came to the hearing, including some from hours away from Lansing, to testify (See Gongwer Michigan Report, April 12, 2023).
Earlier this week, several Republicans called for a pause in the consideration of the Gotion project, urging a federal review for potential national security concerns (See Gongwer Michigan Report, April 18, 2023).
Chuck Thelen, vice president of North American operations for Gotion, said its federal Committee on Foreign Investment in the United States review that was voluntarily submitted received a response recently after a four-week review. The federal U.S. Treasury Department panel reviews certain transactions involving foreign investment to assess potential national security concerns.
“CFIUS determined that our proposed transaction was not subject to further review and we may proceed with the proposed transaction,” Thelen said.
Regarding China, he said the company has locations in several countries and while the parent company was founded by a Chinese entrepreneur, Gotion High-Tech is partially owned by Volkswagen.
Senate Appropriations Committee Chair Sen. Sarah Anthony (D-Lansing) told reporters after the vote she felt the vetting of Gotion by the MEDC and the federal government regarding the company and national security risks was adequate.
“Based on the information that we received as of right now, I’m confident that those checks have been made,” Anthony said.
Reasons for voting against the Gotion incentives varied among committee Democrats.
Santana said for her a concern is that there are many other priorities in Michigan related to business needs, communities and residents, adding she would like to know what is being done to sustain and grow existing businesses.
“Although on the surface it seems like a great opportunity to provide resources to companies that want to come to Michigan, I think we need to look at how to make sure we support the businesses right here,” Santana said.
She added from what she saw in Gotion’s financials, she was concerned about their business model and the long-term strength of the company. Santana said boosting a company using taxpayer dollars to her with that in mind did not seem to her to be a good idea.
Irwin pointed to Republican votes as a key reason for his vote.
“It was frustrating to see every single one of my Republican colleagues vote against something that I’m sure last year they would have voted for, and particularly to see the individual whose district that this investment would be in vote no … that certainly weighed heavily on me,” Irwin said.
Republicans in statements following the vote ripped the decision by Democrats to provide the funding.
Senate Minority Leader Aric Nesbitt (R-Porter Township) said the vote green-lights a bad economic development deal like past large deals that often fail. He said it would return Michigan to the economic decline the state experienced in the 2000s.
“Once again the new Democratic majority is putting big corporations over struggling families by squandering our state’s historic budget surplus on bad business deals,” Nesbitt said. “These tax dollars should be going back into the pockets of the hardworking Michigan taxpayers who need economic relief, not to global corporations in secret back-room crony business deals. At a time when our state is struggling with one of the slowest economic recoveries in the nation, the people of Michigan cannot afford to repeat history.”
Former Republican gubernatorial candidate Tudor Dixon, who spoke against the project while campaigning last fall, focused on the China argument.
“Michigan is officially sending taxpayer dollars to a CCP-linked company. This is a massive slap to local residents who adamantly oppose the project and are starting a recall,” Dixon said. “Who cares about national security as long as Gov. Gretchen Whitmer can pretend to get a ‘W’ in the promised jobs column?”
U.S. Rep. John Moolenaar (R-Midland) also stressed national security concerns, pointing out that Camp Grayling is about 100 miles from the Gotion site.
“To take millions of dollars from Michigan taxpayers and give it to a subsidiary of a company that pledges allegiance to the Chinese Communist Party is a historic mistake by the Michigan Legislature,” Moolenaar said.
Michigan Democratic Party Chair Lavora Barnes in a statement prior to the vote urged members to approve the incentives, saying Gotion would be an economic boon to Mecosta County. She also took aim at arguments from Republican opponents regarding ties to China.
“Extremists in the Michigan GOP have spent weeks promoting baseless conspiracy that only work to block the thousands of good-paying, American jobs Gotion plans to bring to our state,” Barnes said. “These racially motivated attacks on Gotion hurt the same communities that these members claim to represent and advocate for, and Michiganders will see through them.”
IPPSR: Funding Model, High Costs are Roadblocks to Better Infrastructure
Michigan’s infrastructure was rated poorly several years ago, and despite initiatives to bring 90% of its roadways into good condition, less than half of the state’s highway system will be in good or fair condition by 2032.
That was one of several predictions and assumptions laid out Tuesday by several infrastructure experts during a forum hosted by the Michigan State University Institute for Public Policy and Research.
The forum provided a breakdown of Michigan’s crumbling infrastructure and possible policy solutions to fix the problem. Panelists included Maggie Pallone, vice president of Public Sector Consultants, Eric Scorsone, the director of the MSU Extension Center for Local Government and Finance Policy, and Beverly Watts from the Michigan Infrastructure Council.
The dire prediction of Michigan’s highways becoming worse during the next decade put forward by Pallone, who also examined the state’s 21st Century Infrastructure Commission’s policy recommendations for legislators and key stakeholders after Michigan’s roadways were given a D- overall in 2018.
Those recommendations, which included creating the council that Watts now serves on, have been grappled with by the Legislature, approved or have yet to be acted upon, Pallone said.
Although some work has been done in local communities to create asset management plans, which was one of the recommendations, much more needs to be done. In terms of funding, it was determined in 2016 that another option to address the state’s aging roadways was to increase transportation investments by $2.2 billion annually.
The need for increased funding was apparent in 2016, with figures that amounted to a nearly $2.7 billion annual investment gap in transportation, a $1 billion investment gap for water systems across the state, and nearly $70 million for communications infrastructure. The forecast then was that those gaps would reach $40 billion over the next 20 years for transportation, $19 billion for water systems, and nearly $600 million for communications.
Pallone said her company put out a more recent report last month commissioned by the Michigan Infrastructure and Transportation Association that looked at finding ways to extend pavement life from 25 years to 50 years by doing a right mix of fixes at the right time instead of deferring work on roads, which has been the case in Michigan aside from underfunding road repairs.
“You can see that the cost over the life of the road for those 50 years is about $4 million for a federal aid route is around $500,000, and for non-federal aid road,” she said. “We maintain about 83,000 federal aid lane miles and 169 non-federal aid lighting. And that adds up to a cost of $9 billion a year … which gives us a deficit of $3.9 billion annually, even with additional money coming into the state. Remember, I told you just eight years ago, we said that number was $2.2 billion. That’s a pretty significant change just over eight years.”
That deficit, she added, equates to a cost of $535 from each adult living in Michigan.
Pallone’s group floated several solutions to stakeholders and legislators including an increase to the gas tax by 74 cents (which has been dead on arrival in previous legislative sessions when Republicans controlled both chambers and Democrats refused to introduce a proposal from Gov. Gretchen Whitmer for a 45 cent per gallon increase), a change to how taxes are assessed on gas to per dollar instead of per gallon and an increase to the state’s sales tax by 3 percentage points dedicated to roads.
Pallone also said other solutions included allowing local communities to pursue a local sales tax dedicated to local roads, potential assessments of 5 cents per mile traveled for vehicles, known as a VMT in the infrastructure domain, and the conversion or build out of some highways for toll collections, which has also been a hard sell in the Legislature.
At present, only 16 states have VMT pilot programs, but Ohio appears to be the only one in the Midwest grappling with the concept or starting that process. Ohio also has a robust tolled highway system with funds that go toward maintaining those roadways.
Another major roadblock is inflation on construction materials, which have risen sharply in the past two years following the coronavirus pandemic.
Scorsone later spoke of inflation affecting infrastructure projects across the spectrum, not just roads, and the fact that local governments have struggled to keep up due to two decades of divestment and significant limitations on property taxes. Many of those local governments adapted by deferring or cutting expenses to infrastructure investments and funding for employee pension or health care programs.
The pandemic and its fallout have created a double-edged sword for local governments grappling with funding for infrastructure, he added.
The good news, Scorsone said, is that local governments are temporarily flush with federal and state aid. There are serious capacity constraints on spending, though, like workforce woes and, in some cases, supplies issues have made things complicated for local governments. Add inflation driving up costs much higher for projects and the situation becomes even more cumbersome.
“We’ve had to defer infrastructure for a long time, so we have to catch up a lot, and even keeping up with what the advancements are going to be,” he said. “These legacy costs hit local governments in both the pensioner area and the infrastructure area. The pensioner we’ve tried to address, the state is doing more in fact. Right now, the state is putting out more money for pensions to hopefully address more of that problem. The infrastructure problem’s going to be harder because honestly, we don’t even know the full scale of the problem. I think with roads we have a good handle. I would argue with underground infrastructure, we have much less of a good handle on what the real problem is actually.”
Scorsone, who works as an advisor to Flint Mayor Sheldon Neeley, said that the Flint water crisis was just one story in a sea of stories of poor water infrastructure throughout the state. But he did say that Flint’s water system, particularly its sewer system, was no longer keeping up as it was built in the 1950s to serve far fewer residents than it does now.
“I want to get away from just that Flint story, because I think it’s a bigger problem than just Flint. It’s easy to focus on, oh that was one place and that’s all we have to worry about, and it isn’t really. These problems are occurring more and more. You look around the country and water systems in particular are under a lot of stress,” he said. “A lot of states are having to take over water systems … it’s becoming more and more widespread a problem and how we pay for this stuff is primarily debt-based or government grants. Obviously, there’s been a lot of money put out, but again, those workforce constraints make it very hard for governments to get the work done, especially in the timeframes they propose.”
The issue of paying for these projects is complicated by inflation, as the buying power of money on infrastructure projects is shrinking rapidly, Scorsone added.
He suggested that legacy cost solutions would have to be forged through bipartisan policies in the Legislature, while also suggesting that the lack of investment was a national issue. That said, Scorsone said that Michigan’s story was potentially worse than the national story surrounding infrastructure.
Watts spoke of the council’s work to bring governments, stakeholders and the utilities together at the table to solve some of these issues, and she said that collaboration was the key to ratcheting out solutions that stick.
That said, Watts surmised that not enough collaboration was happening between agencies on infrastructure, and she advocated for more effort on that front. She also noted that few communities had asset management plans, and that was one of the first steps in identifying aging infrastructure, which areas were in critical condition and which among them could benefit from small fixes now as opposed to placing them on deferred maintenance lists that continue to grow.
“I know everyone doesn’t want to see those orange barrels, but we all have to work together for a plan, a strategic plan,” she said. “I know we can get there, because we are Michigan. We’re the best state in this country, so I believe that we will get there, but we will not get there without working together.”
House Panel Sends Distracted Driving Bills to Floor
A package of three bills making it illegal for people to drive in Michigan while on their phones was reported to the House floor on Wednesday afternoon, drawing bipartisan and near unanimous support from members present at the House Transportation, Mobility, and Infrastructure Committee meeting.
After taking testimony last week, 12 of 13 committee members voted to report HB 4250, HB 4251 , and HB 4252 with adopted substitutes. Rep. William Bruck (R-Erie) was not at the meeting in person but attended remotely via Zoom and did not vote on the bills.
An H-3 substitute for HB 4250, sponsored by Rep. Matt Koleszar (D-Plymouth), would exempt violations for using an electronic device placed in a mount, clarifies language regarding commercial vehicles and drivers, increases fines to $200 for a first offense and $500 for a second offense, and adds a five-year sunset into the bill.
The committee adopted an H-2 substitute to HB 4251, sponsored by Rep. Tyrone Carter (D-Detroit), which removed a 180-day enactment timeframe.
An H-2 substitute for HB 4252, sponsored by Rep. Mike Mueller (R-Linden), clarifies that an enhanced civil penalty was to be applied if the driver of a vehicle cited for being on their phone while driving was also involved in a crash.
The bills were reported after a round of testimony at the committee’s April 11 meeting, in which the sponsors appealed for the committee’s nod to move the bills forward. The meeting last week also featured a change of heart, so to speak, from Rep. Pat Outman (R-Six Lakes) who said he would vote for the bills after hearing testimony on how it could save lives. He said then that he had previous philosophical objections to distracted driving legislation, calling it a sort of “big hand government approach,” but was supportive after being moved by the testimony of the day (See Gongwer Michigan Report, April 11, 2023).
Outman was among the Republican members of the committee voting in favor of reporting the bills Wednesday.
Also supporting the bills but not wishing to speak were representatives from the County Road Association of Michigan, the Brain Injury Association of Michigan, and the Michigan Brain Injury Provider Council.
Erin McDonough, executive director of the Insurance Alliance of Michigan, in a statement also thanked the committee for moving the bills that could prevent danger arising from distracted driving – especially considering that April was also Distracted Driving Awareness Month.
“Reducing the number of people who are distracted while driving on Michigan roadways can in turn help prevent automotive crashes and injuries,” McDonough said. “Data from the Michigan State Police clearly shows that thousands of crashes each year are a result of distracted driving. We commend lawmakers for moving these important consumer safety bills forward and hope to see the full Michigan House pass the bills soon.”
Senate Panel Hears Testimony on Air Quality Fund Bill
A bill to create an Air Quality Enforcement and Mitigation Fund within the Department of Treasury to collect and disburse polluting violation fines to affected communities was heard for testimony only on Thursday before the Senate Energy and Environment Committee.
Sponsored by Sen. Stephanie Chang (D-Detroit), SB 26 would mandate that 30% of the funds collected as fines would go to the Department of Environment, Great Lakes and Energy for increased enforcement activities while the other 70% would go to various environmental protection communities, defined in the bill as areas affected by companies fined by EGLE.
It would also require EGLE to develop a process for identifying those communities, to create an Air Quality Community Impact grant program with rules and identification of potential recipients, and to develop rules in consultation with an advisory committee made up of public health experts and local residents in affected areas.
For EGLE’s part, the 30% it would receive from new fund would have to be spent on staffing and other functions that would solely benefit protections for the identified communities, such as mitigation of air pollution – buffering with vegetation, optional residential buyouts, air filters in homes and schools, and diesel engine retrofit or replacement programs. The money could also be used by EGLE for increased air monitoring and improved compliance from companies or businesspeople with a history of NREPA violations, permits issued and promulgated rules. Training for environmental regulators and attorneys would also be a permitted use of the funds under the bill.
The other 70% would be spent as grants for nonprofit organizations or other community organizations seeking to improve mitigation efforts, increase monitoring activities, conduct health impact assessments, and to provide education and training for residents and local regulators.
Training would aim to increase the effectiveness of enforcement programs for promulgated rules and orders issued under Part 55 and deterring future violations.
Chang said the bill was inspired by EGLE air quality violation hearings that were previously held and the struggles her constituents shared in dealing with negative commercial activities in Detroit, and the health effects that come along with that activity.
“And after every one of those hearings, residents there talked about how the fines being paid to the state wouldn’t be coming back to their neighborhoods, even though they are the ones who experienced the air pollution as a result of the violation,” she said. “Because the law does not say where the fines go, they go into the General Fund. After hearing this so many times and talking one-on-one with residents after each of these hearings, I said to myself, ‘you need to do something about this.’ Together a few groups and community residents worked with me and my office to try and figure out how we could change where the money goes.”
The committee’s Democrats appeared to support the bill, with Sen. Dayna Polehanki (D-Livonia) stating that she wishes she had come up with the bill, calling it an important and fair way to reinvest violation fines back into the communities affected by polluters.
Sen. Kristen McDonald Rivet (D-Bay City) also touted the potential positive impact of the bill, noting that chronic asthma among children in urban areas was one of the main reasons for chronic absenteeism in schools. She asked how well Treasury would be able to deploy those dollars in the community so that they make an impact.
Chang replied by saying that her interactions with EGLE that they have a wealth of expertise, calling its staff talented and professional and knowledgeable on what potential mitigation efforts and health assessments would be best for specific affected communities.
While it would be a new task for the department, she said that the advisory group would also help in making those determinations at the local level, especially as it concerns their funding through the proposed grants.
Travis Boeskool, legislative liaison with EGLE, said that the bill would ensure that the money collected from penalties goes back to the communities where those violations took place. And while the process would be new to EGLE, he said it would work with Chang and legislators to make the program as effective as it possibly can be, and that he has every confidence in the department that it can do so.
Speaking in support of the bills were representatives from the Great Lakes Environmental Law Center and the Sierra Club Michigan Chapter.
Those not wishing to speak but supporting the bill were representatives from Clean Water Action, the Michigan Environmental Council, and the Southeast Michigan Council of Governments.
Neutral on the bill but not wishing to speak was a representative from the Michigan Chamber of Commerce.
No Stricter Than Federal Repeal Moves: The committee also reported SB 14 to the Senate floor, sponsored by Committee Chair Sen. Sean McCann (D-Kalamazoo). The bill would repeal the state’s ban on creating laws or regulations that were “no stricter than the federal” laws already in place.
It was the subject of testimony at the committee’s April 13 meeting.
The Michigan League of Conservation Voters applauded the move in a statement following the committee.
“In many cases, the environmental challenges facing Michigan are unique to our state and we should be able to set best fit standards that protect our land, air, water and health,” said Nick Occhipinti, government affairs director of the Michigan League of Conservation Voters. “Under current state law we have tied our own hands; Senate Bill 14 frees Michigan again to be a leader in protecting our health, our children and our quality of life.”
House Approps Higher Ed Budget Includes Operating, Scholarship Boost
A House subcommittee on Thursday went above Gov. Gretchen Whitmer‘s recommendation for university operations funding, but slightly lower than the executive when it came to funding for the Michigan Achievement Scholarship
The subcommittee recommended university operations to be increased by $99.5 million General Fund, a 6.4% increase. The executive recommendation included a 4.5% increase.
The recommended boost for the scholarship program from the subcommittee was an additional $50 million General Fund compared to the previous fiscal year, for a total of $300 million, which was $50 million under what Gov. Gretchen Whitmer proposed in her recommendations.
Overall university funding in the subcommittee’s 2023-24 fiscal year recommendation (HB 4304) was $2.198 billion ($1.69 billion General Fund), up $181.4 million ($157 million General Fund) from the 2022-23 fiscal year appropriation, or a 9% increase (10.2 percent General Fund). This is slightly higher than what the governor had recommended.
Under the operations increase, all universities would see a 4% increase, costing $62.1 million. $15.5 million would go toward one-time increases and $21.4 million to get universities to a $4,500 per student funding floor, meaning a big boost to a trio of universities. The budget also limits tuition increases to 4.5%, or $676.
Another deviation from the governor’s budget recommendations was a House recommended net increase of $8.3 million General Fund for Michigan State University’s AgBioResearch and Extension program, which would include $3.4 million General Fund ongoing for operations, with the addition of $1.9 million General Fund for a new “solving emerging environmental developments and securing sustainability initiative.” The funding for operations and the new initiative represents a 9.3% increase.
The House recommended pot of money for MSU AgBioResearch also includes an increase of $3.3 million General Fund one-time money for operations, with the addition of $2.9 million for the aforementioned initiative; an increase of $1.3 million General Fund in ongoing operations funding for the Extension program, a 4% increase; and $316,400 General Fund one-time funding for operations of the Extension program.
Total funding for the program under the House recommendation would be $76.6 million General Fund.
The governor had earlier proposed to increase the funding for the programs by $2.7 million, including an increase of $1.5 million General Fund ongoing for the AgBioResearch program and an increase of $1.3 million General Fund ongoing for the Extension program. Under Whitmer’s recommendation, the total funding for the two programs would be $71.1 million General Fund.
New programs added by the House subcommittee include one for student mental health supports ($5.6 million from federal COVID relief dollars), public university academic catch-up (another $5.6 million from federal relief dollars), a Michigan State University mental health support, counseling, and psychiatric services supplemental payment ($3 million in COVID funds), and a Wayne State University perinatology research branch for studies and storage ($3 million federal funding).
It also recommended $2.3 million General Fund in one-time funding for operational support to the Michigan Small Business Development Center’s regional branches hosted at universities, $1 million in COVID dollars to create a Bachelor of Science in nursing program at Michigan Technological University, and $900,000 in COVID dollars to Eastern Michigan University’s special education certification expansion program.
EMU would also receive $440,000 in federal COVID money for an autism college sports program, while Michigan Technological University would receive $400,000 in COVID dollars for an advanced life support ambulance facility. For Northern Michigan University a $100 placeholder for a “commitment to student success” program was included, as well as a $100 placeholder for campus security and safety upgrades.
The subcommittee also concurred with Ms. Whitmer’s deletion of boilerplate language that would require universities conducting stem cell research using human embryonic stem cells to report to the Department of Health and Human Services on compliance with federal guidelines and stem cell lines derived by the university.
The subcommittee also gave big bumps to several universities to get them to the floor student-funding level, with universities overall getting a 6.4% bump in operating funding. The largest individual increases for universities were $16.11 million for Grand Valley State University, a 19.8% increase; $11.52 million for Oakland University, a 19% increase; $1.62 million for Saginaw Valley State University, a 5% increase; and an additional $3.11 million for the University of Michigan-Dearborn, an 11.1% increase.
Committee Chair Rep. Samantha Steckloff (D-Farmington Hills) said the three universities had yet to hit that floor funding, so she decided to add additional dollars for them to make the spread fairer and more equitable for each of the universities moving forward.
On the Michigan Achievement Scholarship, Steckloff said the way the language of the statute was written, the Legislature was putting in an additional $50 million as the goal was to create a sustainable fund, but more work was to be done in that regard.
“We are working on revisions for a few other things, you will not see that in this syllabus, but this is to really boost up that program … so students across the state of Michigan actually have an opportunity to finally go to school with tuition and fees at the cost of the state,” she said.
The subcommittee moved its recommendations to the full House Appropriations Committee on a 6-1 vote along party lines, with Rep. Thomas Kuhn (R-Troy) voting no and Rep. Nancy De Boer (R-Holland) abstaining.
Rep. Jason Morgan (D-Ann Arbor) was among subcommittee members who said they were happy to support the recommendations.
“As someone who started my involvement in government advocating for student funding back in college 15 years ago, I’m thrilled with this budget and this recommendation,” he said. “I applaud Governor Whitmer with her initial proposal being a significant improvement compared to spending decisions made by previous governors and previous legislatures. And I especially applaud Chairwoman Steckloff for the package that we’re voting on today, which takes the governor’s proposal even further and adds to it.”
Following the meeting, Dan Hurley, CEO of the Michigan Association of State Universities, told Gongwer News Service that he and the association were “overarchingly pleased” to see the increase in operations funding.
“That is very important, and certainly that increase in operating support will mitigate the need to increase tuition rates like you’ve seen those increased over the last couple of decades. It will improve college affordability moving forward,” Hurley said. “And it does signal – for the second consecutive year – a significant increase in operating support. Hopefully it symbolizes a period of sustained reinvestment. We have seen more than $1 billion disinvestment in our public universities since the turn of the century, with occasional modest increases. We are hoping that this is a period of serious and substantial reinvestment in our public universities and, of course, in college affordability.”
Hurley was also happy to see continued, significant seed funding for the building out the Michigan Achievement Scholarship program, which was approved by the Legislature and signed into law by Whitmer late last year (See Gongwer Michigan Report, September 29, 2022). He said it sends a message to high school students, their parents, their families, and employers across the state who have “really rallied around this program.”
“Every signal we are receiving is one of very strong support from every direction for the build out of the scholarship program. It symbolizes a giant leap forward in the state’s investment in our future talent pipeline,” Hurley said. “It sends a message of confidence to our youth, and their educational and career ambitions, but also should very much excite the state’s employer community. We’re very excited (about) what is going to happen with not just college affordability moving forward, but the state’s talent pipeline when they start to see the benefits of this and a few years out.”
The affordability piece was key, as university tuition in Michigan has seen vast increases over the past decade to compensate for the underfunding of universities from the Legislature, which was previously controlled by the Republicans but is this year controlled by the first Democratic majority in several decades.
A provision adopted in the recommendation allows the Department of Treasury to spend up to $10 million to market the scholarship program, and the governor also proposed $15 million. Hurley said he hopes that a combination of those two recommendations.
“We need to get the message out. It is clearly not out strong enough in terms of this new scholarship program. The only thing, really, that students need to do to apply is to fill out the free application for Federal Student Aid or FAFSA, and as of right now, we’re still actually down in FAFSA completion among high school seniors year over year,” he said. “That just should not be the case. So, when you look at those students graduating this spring from high school, that enter a public university this fall, (they) could benefit up to $5,500 for up to five years. The forecast suggests that a full, remarkably, three fourths of the high school graduating class will be eligible for that scholarship program.”
Hurley noted that figure was essentially the equivalent of one-third, and even at some of our smaller schools one-half, of the cost of tuition. Factoring in a planned $500 increase for the Pell Grant program, the budget that was recommended, if adopted, could mean minimal or at least lower increases in tuition, he said, with already more than a billion dollars of institutional financial aid that universities have been floating to students.
He added that could mean the net cost of attending a university, with the House recommendations, could remain flat or even go down in comparison to what students might be seeing in the currently published price.
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