LABORAND ECONOMIC GROWTH FY 2008-09 Budget

Summary: House Bill 5809 (H-5) as passed by the House

Analyst: Mark Wolf

		FY 2008-09	FY 2008-09	*Difference: House* *From FY 2007-08 YTD*		*Difference: House* *From Executive*
	FY 2007-08 YTD	Executive	House Subcommittee	*Amount*	%	*Amount*	%
IDG/IDT	$34,472,800	$30,724,200	$30,724,200	($3,748,600)	(10.9)	$0	0.0
Federal	820,712,500	831,637,300	831,637,300	10,924,800	1.3	0	0.0
Local	15,884,700	15,889,200	15,889,200	4,500	0.0	0	0.0
Private	5,314,300	5,314,300	5,314,300	0	0.0	0	0.0
Restricted	378,843,700	384,937,600	385,937,600	7,093,900	1.9	1,000,000	0.3
GF/GP	46,002,700	94,350,100	94,850,100	48,847,400	106.2	500,000	0.5
Gross	$1,301,230,700	$1,362,852,700	$1,364,352,700	*$63,122,000*	*4.9*	*$1,500,000*	*0.1*
FTEs	4,341.0	4,351.0	4,351.0	10.0	0.2	0.0	0.0

Note: FY 2007-08 figures reflect supplementals and Executive Order (EO) actions throughFebruary 7, 2008.

Overview

The Department of Labor and Economic Growth (DLEG) has primary responsibility for the regulatory functions that relate specifically to commercial, business, and workers’ issues. It also includes various employment training-related programs for displaced workers, adults, and youth, and employment services for the disabled as well as welfare recipients.

Major Budget Issues

Major Budget Changes From FY 2007-08 YTD Appropriations	FY 2007-08 YTD	Exec Change From YTD	House Change From YTD
*1. New No Worker Left Behind Program* Adds $40 million GF/GP for No Worker Left Behind Program to provide occupationally-relevant tuition assistance for in-demand fields. Additional GF/GP support made available through refinancing general obligation bond debt. Reflects reduction of funding from one-time federal funds available. See new boilerplate section 432a for distribution of the $40.0 million.	Gross Federal GF/GP	$50,600,000 50,600,000 $0	$26,400,000 (13,600,000) $40,000,000	$26,400,000 (13,600,000) $40,000,000
2. *Michigan* *Nursing Corps Program* Adds $8.5 million for the Michigan Nursing Corps program to rapidly prepare new nursing faculty and recruit displaced workers with bachelor's degreesin scienceto earnan acceleratedone-year nursing certification.	Gross GF/GP	$1,500,000 $1,500,000	$8,500,000 $8,500,000	$8,500,000 $8,500,000
*3. Office of Financial and Insurance Regulation* Adds 53.0 FTEs and $4.7 million in industry-paid fees to improve regulation or maintain statutorily-required regulatory activities related to mortgage lending, payday lending, securities, banking and credit unions, and insurance.	FTEs Gross Federal Restricted	288.0 $45,413,300 50,400 45,362,900	53.0 $4,676,900 0 $4,676,900	53.0 $4,676,900 0 $4,676,900
*4. OFIR IT System Integration* Adds $1.4 million Restricted for the first year of a two-year IT project integrating OFIR's IT systems concerning insurance, banking, and credit union regulatory activities. (Estimated costs in FY 2010 are $1.1 million.)	Gross Restricted	N/A N/A	$1,377,000 1,377,000	$1,377,000 1,377,000
*5. Jobs, Education, and Training (JET) Program* Reduces by 36.0 positions and $4.5 million (IDG-DHS) to more accurately reflect program personnel needs and to reflect lower than anticipated referrals to Michigan Rehabilitation Service.	FTE Gross IDG	93.0 $22,877,800 22,877,800	(36.0) ($4,467,600) (4,467,600)	(36.0) ($4,467,600) (4,467,600)
*6. Trade Adjustment Assistance* Adds $6.4 million Federal for Department of Labor Trade Adjustment Assistance to displaced workers.	Gross Federal	$18,900,000 18,900,000	$6,604,300 6,604,300	$6,604,300 6,604,300
*7. MSHDA Payments on Behalf of Tenants* Adds $5.0 million Federal for payments on behalf of tenants in the low-income housing choice voucher program.	Gross Federal	$140,000,000 140,000,000	$5,000,000 5,000,000	$5,000,000 5,000,000
*8. Remonumentation Grants* Decreases authorization for grants based on estimated revenue.	Gross Restricted	$14,000,000 14,000,000	($3,000,000) (3,000,000)	($3,000,000) (3,000,000)
*9. Occupational Regulation (Commercial Services)* Adds 11.0 FTEs and $1.0 million Restricted to crack down on unlicensed activity within the accounting, real estate, and building construction industries.	FTEs Gross Restricted	156.0 $17,651,200 17,651,200	11.0 $1,050,000 1,050,000	11.0 $1,050,000 1,050,000
*10. LCC: Direct Shipper Enforcement Fund* Adds $120,000 from the Direct Shipper Enforcement Fund related to enforcement of regulations concerning the direct shipment of wine.	Gross Restricted	N/A N/A	$120,000 120,000	$120,000 120,000
*11. Homeowner Construction Lien Fund* Adds $300,000 to reflect an increase (based on prior years) in the number of claims and judgments awarded.	Gross Restricted	$1,537,900 1,537,900	$300,000 300,000	$300,000 300,000
*12. Internal Audit Consolidation* Reduces 5.0 FTEs related to consolidation of internal audit activities within DMB. Funding will remain within DLEG budget, and bill be recorded as anIDG in the DMB budget.	FTE Gross Federal Restricted	5.0 $560,100 68,700 491,400	(5.0) $0 0 0	(5.0) $0 0 0
*13. Human Resources Consolidation* Reduces 22.0 FTEs and $2.4 million related to consolidation of human resources activities within DMB. Also eliminates $259,700 in HR optimization charges	FTE Gross Federal Restricted	22.0 $2,619,800 1,800,400 819,400	(22.0) ($2,619,800) (1,800,400) (819,400)	(22.0) ($2,619,800) (1,800,400) (819,400)
*14. Focus: HOPE* Eliminates $140,000 for a pilot study on improving job placement and retention of welfare recipients.	Gross Restricted	$140,000 140,000	($140,000) (140,000)	($140,000) (140,000)
*15. Liquor Enforcement Grants* Adds $500,000 for liquor law enforcement grants from increased revenue generated from sale of development district and redevelopment project licenses.	Gross Restricted	$6,100,000 6,100,000	$500,000 500,000	$500,000 500,000
*16. SOAHR: DHS Case Referrals* Adds 7.0 FTEs and $640,700 (IDG-DHS) to support the increased volume of administrative hearings concerning DHS benefits	Gross IDG	$3,338,000 3,338,000	$640,700 640,700	$640,700 640,700
*17. Deaf and Hard of Hearing Interpreters* Adds $75,000 to expand availability of interpreters for the deaf and hard of hearing on account of increase revenue from interpreter testing fees.	Gross Restricted	N/A N/A	$75,000 75,000	$75,000 75,000
*18. Fire Protection Grants* Adds $1.0 million from the Liquor Purchasing Revolving Fund for fire protection grants to cities with state-owned property.	Gross Restricted	$10,910,500 10,910,500	$0 0	$1,000,000 1,000,000
*19. Centers for Independent Living* Increases funding for centers for independent living, which provide supportive services to persons with disabilities, by $500,000.	Gross Federal Private GF/GP	$3,079,700 870,200 100,000 2,109,500	$0 0 0 0	$500,000 0 0 $500,000
*20. FY 2008-09 Economic Increases* Includes contractual 1.0% wage increases and adjustments for insurance and retirement.	Gross IDG Federal Local Restricted GF/GP	N/A N/A N/A N/A N/A N/A	$1,9994,900 91,300 935,000 4,500 976,700 (12,600)	$1,9994,900 91,300 935,000 4,500 976,700 (12,600)

Major Budget Changes From FY 2007-08 YTD Appropriations

FY 2007-08 YTD

Exec Change

From YTD

House Change

From YTD

1. New No Worker Left Behind Program

Adds $40 million GF/GP for No Worker Left Behind Program to provide occupationally-relevant tuition assistance for in-demand fields. Additional GF/GP support made available through refinancing general obligation bond debt. Reflects reduction of funding from one-time federal funds available. See new boilerplate section 432a for distribution of the $40.0 million.

Gross

Federal

GF/GP

$50,600,000

50,600,000

$26,400,000

(13,600,000)

$40,000,000

$26,400,000

(13,600,000)

$40,000,000

2. Michigan Nursing Corps Program

Adds $8.5 million for the Michigan Nursing Corps program to rapidly prepare new nursing faculty and recruit displaced workers with bachelor's degreesin scienceto earnan acceleratedone-year nursing certification.

Gross

GF/GP

$1,500,000

$1,500,000

$8,500,000

$8,500,000

$8,500,000

$8,500,000

3. Office of Financial and Insurance Regulation

Adds 53.0 FTEs and $4.7 million in industry-paid fees to improve regulation or maintain statutorily-required regulatory activities related to mortgage lending, payday lending, securities, banking and credit unions, and insurance.

FTEs

Gross

Federal

Restricted

288.0

$45,413,300

50,400

45,362,900

53.0

$4,676,900

$4,676,900

53.0

$4,676,900

$4,676,900

4. OFIR IT System Integration

Adds $1.4 million Restricted for the first year of a two-year IT project integrating OFIR's IT systems concerning insurance, banking, and credit union regulatory activities. (Estimated costs in FY 2010 are $1.1 million.)

Gross

Restricted

N/A

N/A

$1,377,000

1,377,000

$1,377,000

1,377,000

5. Jobs, Education, and Training (JET) Program

Reduces by 36.0 positions and $4.5 million (IDG-DHS) to more accurately reflect program personnel needs and to reflect lower than anticipated referrals to Michigan Rehabilitation Service.

FTE

Gross

IDG

93.0

$22,877,800

22,877,800

(36.0)

($4,467,600)

(4,467,600)

(36.0)

($4,467,600)

(4,467,600)

6. Trade Adjustment Assistance

Adds $6.4 million Federal for Department of Labor Trade Adjustment Assistance to displaced workers.

Gross

Federal

$18,900,000

18,900,000

$6,604,300

6,604,300

$6,604,300

6,604,300

7. MSHDA Payments on Behalf of Tenants

Adds $5.0 million Federal for payments on behalf of tenants in the low-income housing choice voucher program.

Gross

Federal

$140,000,000

140,000,000

$5,000,000

5,000,000

$5,000,000

5,000,000

8. Remonumentation Grants

Decreases authorization for grants based on estimated revenue.

Gross

Restricted

$14,000,000

14,000,000

($3,000,000)

(3,000,000)

($3,000,000)

(3,000,000)

9. Occupational Regulation (Commercial Services)

Adds 11.0 FTEs and $1.0 million Restricted to crack down on unlicensed activity within the accounting, real estate, and building construction industries.

FTEs

Gross

Restricted

156.0

$17,651,200

17,651,200

11.0

$1,050,000

1,050,000

11.0

$1,050,000

1,050,000

10. LCC: Direct Shipper Enforcement Fund

Adds $120,000 from the Direct Shipper Enforcement Fund related to enforcement of regulations concerning the direct shipment of wine.

Gross

Restricted

N/A

N/A

$120,000

120,000

$120,000

120,000

11. Homeowner Construction Lien Fund

Adds $300,000 to reflect an increase (based on prior years) in the number of claims and judgments awarded.

Gross

Restricted

$1,537,900

1,537,900

$300,000

300,000

$300,000

300,000

12. Internal Audit Consolidation

Reduces 5.0 FTEs related to consolidation of internal audit activities within DMB. Funding will remain within DLEG budget, and bill be recorded as anIDG in the DMB budget.

FTE

Gross

Federal

Restricted

5.0

$560,100

68,700

491,400

(5.0)

13. Human Resources Consolidation

Reduces 22.0 FTEs and $2.4 million related to consolidation of human resources activities within DMB. Also eliminates $259,700 in HR optimization charges

FTE

Gross

Federal

Restricted

22.0

$2,619,800

1,800,400

819,400

(22.0)

($2,619,800)

(1,800,400)

(819,400)

(22.0)

($2,619,800)

(1,800,400)

(819,400)

14. Focus: HOPE

Eliminates $140,000 for a pilot study on improving job placement and retention of welfare recipients.

Gross

Restricted

$140,000

140,000

($140,000)

(140,000)

($140,000)

(140,000)

15. Liquor Enforcement Grants

Adds $500,000 for liquor law enforcement grants from increased revenue generated from sale of development district and redevelopment project licenses.

Gross

Restricted

$6,100,000

6,100,000

$500,000

500,000

$500,000

500,000

16. SOAHR: DHS Case Referrals

Adds 7.0 FTEs and $640,700 (IDG-DHS) to support the increased volume of administrative hearings concerning DHS benefits

Gross

IDG

$3,338,000

3,338,000

$640,700

640,700

$640,700

640,700

17. Deaf and Hard of Hearing Interpreters

Adds $75,000 to expand availability of interpreters for the deaf and hard of hearing on account of increase revenue from interpreter testing fees.

Gross

Restricted

N/A

N/A

$75,000

75,000

$75,000

75,000

18. Fire Protection Grants

Adds $1.0 million from the Liquor Purchasing Revolving Fund for fire protection grants to cities with state-owned property.

Gross

Restricted

$10,910,500

10,910,500

$1,000,000

1,000,000

19. Centers for Independent Living

Increases funding for centers for independent living, which provide supportive services to persons with disabilities, by $500,000.

Gross

Federal

Private

GF/GP

$3,079,700

870,200

100,000

2,109,500

$500,000

$500,000

20. FY 2008-09 Economic Increases

Includes contractual 1.0% wage increases and adjustments for insurance and retirement.

Gross

IDG

Federal

Local

Restricted

GF/GP

N/A

N/A

$1,9994,900

91,300

935,000

4,500

976,700

(12,600)

$1,9994,900

91,300

935,000

4,500

976,700

(12,600)

Major Boilerplate Changes From FY 2007-08
**Sec. 205. Hiring Freeze -REVISED Imposes a hiring freeze on the department, and permits the state budget director to grant exceptions to the hiring freeze in certain limited circumstances. The House** adds an exception to the hiring freeze for the Public Service Commission for House Bill 5524 (the re-write of P.A. 141).
*Sec. 335. MPSC Report on Low Income and Energy Efficiency Fund Grant Awards -* RETAINED Requires the Public Service Commission to issue a report on grant awards from the Low Income and Energy Efficiency Fund. The Executive deleted this section. The House retains this section.
*Sec. 336. Office of Financial and Insurance Regulation Expenditure Report* - RETAINED Requires OFIR to issue a report on expenditures of each OFIR division in the preceding fiscal year. The Executive deletes this section. The House retains this section.
**Sec. 337. Credit Scoring in Insurance Rate Setting -DELETED Prohibits using appropriations for implementing prohibitions on the use of credit scoring in insurance rate setting. The Executive and House** delete this section.
**Sec. 340. Health Maintenance Organization Quarterly and Annual Reports -RETAINED Requires OFIR to provide the fiscal agencies with copies of quarterly and annual reports of health maintenance organizations (HMOs). The Executive deletes this section. The House** retains this section.
**Sec. 355. Ergonomic Rules -DELETED Prohibits using funds for promulgation of ergonomic rules that are more stringent than voluntary federal standards. The Executive and House** delete this section.
**Sec. 357. Real Estate Law and Rules Book -REVISED Allocates up to $50,000 for printing the Real Estate Law and Rules Book (Red Book), and requires the department to make printed copies of the book available at cost. The Executive and House** delete the allocation of funds for this purpose.
**Sec. 370(2). Cities of Promise Allocation -DELETED The Executive and House** delete the statement of legislative intent to allocate at least $750,000 from the cities of promise blight elimination program toSaginaw andFlint.
**Sec. 375. MPSC Low Income and Energy Efficiency Grant Awards Process -RETAINED Requires the MPSC to set an application deadline of May 1st and award deadline of October 1st for issuing LIEEF grant awards. The Executive deletes this section. The House** incorporates this section into Section 335.
**Sec. 376. LCC Report on Revenue Losses -DELETED Requires the Liquor Control Commission to issue a report byJanuary 15, 2008 on the amount of revenue lost due to out of state liquor purchases for individual consumption or illegal resale. The Executive and House** delete this provision.
**Sec. 377(2). Workforce Investment Act Funds Expenditures -RETAINED Requires the department to report the amount of workforce investment act funds appropriated in the fiscal year. The Executive deletes this provision. The House** retains this provision.
**Sec. 403. Local Match of Vocational Rehabilitation Facilities Establishment Grants -DELETED Sets a maximum local match requirement for vocational rehabilitation facilities establishment grants at 21.3%. The Executive deletes this provision. The House** retains this provision.
**Sec. 404. Vocational Rehabilitation Independent Living -REVISED The Executive adds that funds appropriated for vocational rehabilitation independent living not used to match federal funding to be used for the development of new independent living centers in areas currently unserved or underserved. The House** provides that the $500,000 increase for this line item may be used for the development of new independent living centers in areas currently unserved or underserved.
**Sec. 407. Workforce Development Boards -REVISED Requires local workforce boards to establish education advisory groups consisting of school administrators, workforce board members, employers, labor interests, educators, and parents of school children. The House** permits local boards to add to the education advisory group representatives of organizations that provide school-based curriculum and youth programs on entrepreneurship, work-readiness skills, and financial literacy.
**Sec. 408. Enhance Local Access to Baccalaureate Degree Opportunities -DELETED Statement of legislative intent to identify ways of enhancing local access to baccalaureate programs in applied science and technology through the community college system. Permits funds to be used for a study such programs would be useful and could be developed quickly. The Executive and House** delete this section.
**Sec. 432a. No Worker Left Behind -NEW The House** adds boilerplate concerning the $40.0 million increase in funding for NWLB. The section allocates $30.0 million for worker training in in-demand fields, $5.0 million for adult basic education, remedial education, and other training for individuals not ready for post-secondary training; and $5.0 million for capacity building at community colleges and other public, associates-degree granting institutions. The House also requires funds to be used to provide training to food stamp recipients and distributed in a manner that leverages federal, local, and private funds. The House Committee also adds intent language requiring the department to work with local workforce development partners and the Lewis College of Business to assist the college in participating in the program, and adds language permitting a portion of the $30.0 million allocated for training to be utilized by libraries to assist in providing training in in-demand occupations, based on demonstrated need.
**Sec. 437. Welfare to Work Pilot Program– DELETED Allocates $140,000 to Focus: Hope to design a pilot program to improve job placement and retention of welfare recipients. Directs Focus: Hope to work collaboratively with Department of Human Services Jobs, Employment, Training Program andMichigan community colleges and universities. The Executive and House** delete this section.
**Sec. 439. Land Bank Fast Track Authority -REVISED Allocates $400,000 from LBFTA funds appropriated in part 1 to be used for additional maintenance or demolition of tax reverted property. The Executive deletes this section. The House** retains this section, but reduces the allocation from $400,000 to a $100 placeholder.

Major Boilerplate Changes From FY 2007-08

Sec. 205. Hiring Freeze -REVISED

Imposes a hiring freeze on the department, and permits the state budget director to grant exceptions to the hiring freeze in certain limited circumstances. The House adds an exception to the hiring freeze for the Public Service Commission for House Bill 5524 (the re-write of P.A. 141).

Sec. 335. MPSC Report on Low Income and Energy Efficiency Fund Grant Awards - RETAINED

Requires the Public Service Commission to issue a report on grant awards from the Low Income and Energy Efficiency Fund. The Executive deleted this section. The House retains this section.

Sec. 336. Office of Financial and Insurance Regulation Expenditure Report - RETAINED

Requires OFIR to issue a report on expenditures of each OFIR division in the preceding fiscal year. The Executive deletes this section. The House retains this section.

Sec. 337. Credit Scoring in Insurance Rate Setting -DELETED

Prohibits using appropriations for implementing prohibitions on the use of credit scoring in insurance rate setting. The Executive and House delete this section.

Sec. 340. Health Maintenance Organization Quarterly and Annual Reports -RETAINED

Requires OFIR to provide the fiscal agencies with copies of quarterly and annual reports of health maintenance organizations (HMOs). The Executive deletes this section. The House retains this section.

Sec. 355. Ergonomic Rules -DELETED

Prohibits using funds for promulgation of ergonomic rules that are more stringent than voluntary federal standards. The Executive and House delete this section.

Sec. 357. Real Estate Law and Rules Book -REVISED

Allocates up to $50,000 for printing the Real Estate Law and Rules Book (Red Book), and requires the department to make printed copies of the book available at cost. The Executive and House delete the allocation of funds for this purpose.

Sec. 370(2). Cities of Promise Allocation -DELETED

The Executive and House delete the statement of legislative intent to allocate at least $750,000 from the cities of promise blight elimination program toSaginaw andFlint.

Sec. 375. MPSC Low Income and Energy Efficiency Grant Awards Process -RETAINED

Requires the MPSC to set an application deadline of May 1st and award deadline of October 1st for issuing LIEEF grant awards. The Executive deletes this section. The House incorporates this section into Section 335.

Sec. 376. LCC Report on Revenue Losses -DELETED

Requires the Liquor Control Commission to issue a report byJanuary 15, 2008 on the amount of revenue lost due to out of state liquor purchases for individual consumption or illegal resale. The Executive and House delete this provision.

Sec. 377(2). Workforce Investment Act Funds Expenditures -RETAINED

Requires the department to report the amount of workforce investment act funds appropriated in the fiscal year. The Executive deletes this provision. The House retains this provision.

Sec. 403. Local Match of Vocational Rehabilitation Facilities Establishment Grants -DELETED

Sets a maximum local match requirement for vocational rehabilitation facilities establishment grants at 21.3%. The Executive deletes this provision. The House retains this provision.

Sec. 404. Vocational Rehabilitation Independent Living -REVISED

The Executive adds that funds appropriated for vocational rehabilitation independent living not used to match federal funding to be used for the development of new independent living centers in areas currently unserved or underserved. The House provides that the $500,000 increase for this line item may be used for the development of new independent living centers in areas currently unserved or underserved.

Sec. 407. Workforce Development Boards -REVISED

Requires local workforce boards to establish education advisory groups consisting of school administrators, workforce board members, employers, labor interests, educators, and parents of school children. The House permits local boards to add to the education advisory group representatives of organizations that provide school-based curriculum and youth programs on entrepreneurship, work-readiness skills, and financial literacy.

Sec. 408. Enhance Local Access to Baccalaureate Degree Opportunities -DELETED

Statement of legislative intent to identify ways of enhancing local access to baccalaureate programs in applied science and technology through the community college system. Permits funds to be used for a study such programs would be useful and could be developed quickly. The Executive and House delete this section.

Sec. 432a. No Worker Left Behind -NEW

The House adds boilerplate concerning the $40.0 million increase in funding for NWLB. The section allocates $30.0 million for worker training in in-demand fields, $5.0 million for adult basic education, remedial education, and other training for individuals not ready for post-secondary training; and $5.0 million for capacity building at community colleges and other public, associates-degree granting institutions. The House also requires funds to be used to provide training to food stamp recipients and distributed in a manner that leverages federal, local, and private funds. The House Committee also adds intent language requiring the department to work with local workforce development partners and the Lewis College of Business to assist the college in participating in the program, and adds language permitting a portion of the $30.0 million allocated for training to be utilized by libraries to assist in providing training in in-demand occupations, based on demonstrated need.

Sec. 437. Welfare to Work Pilot Program– DELETED

Allocates $140,000 to Focus: Hope to design a pilot program to improve job placement and retention of welfare recipients. Directs Focus: Hope to work collaboratively with Department of Human Services Jobs, Employment, Training Program andMichigan community colleges and universities. The Executive and House delete this section.

Sec. 439. Land Bank Fast Track Authority -REVISED

Allocates $400,000 from LBFTA funds appropriated in part 1 to be used for additional maintenance or demolition of tax reverted property. The Executive deletes this section. The House retains this section, but reduces the allocation from $400,000 to a $100 placeholder.