Approval and use of stimulus funds increasing in Michigan

In April, Michigan Messenger reported that only 13.1 percent of the $847 million in transportation project funds allocated to Michigan by the American Recovery and Reinvestment Act had actually been approved for specific projects. Ten weeks later it appears that the federal stimulus backlog is lessening and the situation has improved. A new Government Accountability Office report (PDF) shows that $421 million of those funds are now obligated and approved for specific projects, 49.7 percent of the total allocated funds.

The study also notes that some projects in Michigan were chosen in order to get the money allocated and spent, and thus creating jobs, as quickly as possible:

Many state officials told us they selected a large percentage of resurfacing and other pavement improvement projects because they did not require extensive environmental clearances, were quick to design, could be quickly obligated and bid, could employ people quickly, and could be completed within 3 years. For example, Michigan began a $22 million project on Interstate 196 in Allegan County that involves resurfacing about seven miles of road. Michigan Department of Transportation officials told us they focused primarily on pavement improvements for Recovery Act projects because they could be obligated quickly and could be under construction quickly, thereby employing people this calendar year. Since many of the environmental clearances had been completed, Michigan could accelerate the construction of these projects when Recovery Act funds became available.

The study also looks at other types of funding allocated to states by the Recovery Act, including grants to states to help them maintain their Medicaid funds in the face of increased demand due to rising unemployment — called FMAP grants — and grants to help state and local governments maintain their budgets during a time of declining revenue and increased expenditures — called SFSF grants.

As of the end of June, Michigan had received $715,843 in FMAP grants, which is 98 percent of the total allocated to the state by the Recovery Act. The report notes that those funds have been important in maintaining Medicaid services in the state during a time of economic decline:

Several states noted that given the poor economic climate in their respective states, these funds were critical in their efforts to maintain Medicaid coverage at current levels. For example, officials from Georgia, Michigan, and Pennsylvania reported that the increased FMAP funds have allowed their respective states to maintain their Medicaid programs, which could have been subject to cuts in eligibility or services without the increased funds.

SFSF grants were earmarked for two purposes primarily. Nearly 82 percent of the total grants were available to state to help maintain their education budgets, especially state aid to local school districts and public universities, and 18.2 percent available for public safety and other government services.

SFSF grants come with strings attached, however. In order to qualify for them, a state must promise to maintain state education funding at at least fiscal 2006 levels and meet a variety of federally mandated education goals in regard to teacher training and student performance.

Michigan has applied for and been approved for approximately $1.6 billion in SFSF grants under the Recovery Act, with just under $1.1 billion made available to the state as of June 30, but as of that date the state has not yet drawn any funds from the grant. That is not unusual: Of the 16 states tracked in the report, only five had drawn down the money.

This may be because it is now summer time and public schools are not in session. Those funds can be drawn down through 2011 to help restore cuts or maintain current levels in state education aid to local school districts. The report indicates that Michigan has applied to use approximately $829 million for local school aid and $44 million for aid to public universities in the state.

The report notes how those funds will be used by the Flint Public Schools:

In Flint, Michigan, officials reported that SFSF funds will be used to cope with budget deficits rather than to advance programs, such as early childhood education or repairing public school facilities. According to the Superintendent of Flint Community Schools, the infrastructure in Flint is deteriorating, and no new school buildings have been built in over 30 years. Flint officials said they would like to use SFSF funds for renovating buildings and other programs, but the SFSF funds are needed to maintain current education programs.

Michigan has also been approved for an additional $389 million in Title I Recovery Act grants for education, which has also not been drawn by the state for use as of the end of June. The report notes that the state has indicated that it will draw down those funds and release them to local school districts sometime in July.

In addition, Michigan is also eligible to receive about $426 million in Individuals with Disabilities Education Act (IDEA) funds. As with the other education grants, the state had not yet drawn down the money available as of the end of June.