MACKINAC ISLAND – A nearly $ 70 billion state budget fueled by excess tax revenue and federal stimulus funds that took shape on Tuesday contains major investments in the child care sector in an effort to bring more parents back into a workforce disrupted by the pandemic.

The spending plan that the administration of Democratic Gov. Gretchen Whitmer negotiated with the Republican-controlled legislature would invest an additional $ 108.1 million in state child care subsidies, making 105,000 more children eligible for the program.

The budget plan contains $ 158 million for an ongoing 30 percent provider rate hike for day care centers as well as an additional $ 222 for a temporary pay rise for providers.

“This is a pretty big and significant expansion of the state’s child care program,” state budget director Dave Massaron said in an interview with Crain’s on Tuesday.

Massaron said the rate increases for child care providers are “designed to increase the sustainability” of their business model, which was turned upside down during the pandemic as parents chose to keep their children at home. to mitigate their potential exposure to COVID-19.

A Crain’s Forum report in May found Michigan had 671 fewer licensed child care providers compared to May 2019, including 44 fewer providers and 2,792 fewer seats in Wayne County.

As part of the budget plan, child care providers would be eligible for $ 700.7 million in grants to stabilize their business operations and $ 100 million for startups, including technical assistance and l ‘improvement of facilities.

Lawmakers also plan to allocate $ 30 million in one-time funds to give Michigan educators a $ 1,000 bonus in the fiscal year that begins Oct. 1.

“These funds will not only stabilize the child care industry, but will help bring Michigan parents back into the workforce, which in turn will ease the pressures on our economy in general,” Annemarie Valdez, president of First Steps Kent, a large Rapids-based early childhood education organization, said in a statement.

On Tuesday, legislative conference committees were due to push forward the compromise budget plan for fiscal year 2022 in the House and Senate. Lawmakers could vote on the budget deal on Wednesday.

Massaron said the administration and lawmakers agreed to make some of the rates for child care providers permanent after concluding that an increase in tax revenue was not a “one-time accident.”

“Although we have to pay attention to the rate of growth of the government to ensure that it is sustainable in the long term,” he lamented.

As part of the deal, lawmakers and the governor agreed to deposit $ 500 million of excess tax funds into the Fiscal Stabilization Fund, the largest single deposit in state history.

That will leave the state’s rainy day fund with about $ 1.4 billion in the bank, or about 5% of state tax revenue for general and school aid funds, Massaron said.

“We also need to make sure that the state is prepared for the future… if there is an economic contraction,” he said.

The budget plan spends about $ 2.7 billion in federal stimulus funds, but leaves an additional $ 7 billion for lawmakers and Whitmer later this year, Massaron said.

Massaron is leaving the Whitmer administration on October 1 to become Chief Commercial Officer and CFO / Senior Vice President of Finance and Business Operations at Wayne State University.

Other highlights of the budget plan include:

  • An additional wage of $ 2.35 per hour for direct care workers. This continues the current increase of $ 2.25 per hour of pay for home health workers and includes an increase of ten cents per hour.
  • $ 55 million to fund Whitmer’s free Michigan Reconnect community college program for adults over 25.
  • $ 25 million for Whitmer’s Futures for Frontliners scholarship program, which provides a tuition-free community college for frontline pandemic workers to learn new skills.
  • $ 40 million for the state’s Going Pro program which provides grants to employers to pay for training workers for new jobs.
  • $ 8 million for pre-apprenticeship and apprenticeship training programs for skilled trades in the construction industry.

“This budget makes bold investments in Michigan families, in our communities and in our small businesses,” Whitmer said Tuesday at the Mackinac Policy Conference.


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