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Presented by: John E. Nixon, CPA State Budget Director, Michigan Michigan Association of CPAs May 7, 2013
Where We Started
Perpetual $1.5B deficit Uncapped liabilities Job-killing tax system $2M in savings account depleted rainy day fund Several accounting gimmicks
Accomplishments
Year 3: Looking forward
Maintain structural balance Protect education and stabilize state agency budgets Invest in critical infrastructure, economic development and public safety needs Meet the needs of the most vulnerable among us by investing in important safety net programs Save for the future
4
-291.6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Michigan Wage and Salary Employment Year-Over-Year Change Consensus Forecast (In Thousands)
Note: U.S. Bureau of Labor Statistics. 2012-2015 estimates are 1/11/13 Consensus Forecast. 1/25/13.
-6.3% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Treasury Forecast
10
Budget Stabilization/ Health Savings Fund $178 Million Jobs $6.1 Billion
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Budgeting Responsibly
Invest and save wisely Live within our means Prioritize to make a difference Ask for, measure and reward real results Invest and save Short term and urgent Long term and important Paying and lowering our bills Retirement Michigan Public School Employees Retirement System Michigan State Employee Retirement System Updating old, outdated and worn assets
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$25B Gap
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Source: OEI, RMF 07/27/12
66,000 Placements
$200,000
48,100 Placements
$239.3 M
$150,000
$100,000
28,100 Placements
28,900 Placements
30,700 Placements
32,100 Placements
$174.3 M
$50,000 $95.7 M
$98.3 M
$104.3 M
$109.3 M
$0
FY10
FY11
FY12
FY13
FY14 Rec
FY15 Rec
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$6,622
$6,818
$6,971
$7,208
$7,357
$6,000
Michigan Public School Employees' Retirement System Best Practices/ Performance Funding All Other Categorical Funding Special Education Basic Operations NOTE: Does not include federal funding, adult education funding, preschool funding, or deposits made into the MPSERS reserve fund
$5,000
$4,000
$3,000
$2,000
$1,000
22
Retirement Reforms
Long-term results: savings of $2,200 per resident and more than $10,000 per student
Total Estimated Liabilities for MPSERS
Both Pension and Healthcare
$50 $40
$ in Billions
$46.7 B $31.1 B
$20 $10 $-
$18.8 B
Before Reform
$13.1 B
After Reform
Before Reform
After Reform
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Savings from reforms equal $482M or $315 per K-12 student in FY14 FY14 funding recommendation is an increase of $436M or $250 per K-12 student These two actions translate into $918M or $565 per student in FY14
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Higher Education
Total funding of $1.4B for universities, a $31.4M increase An increase of $24.9M for performance formula funding $1.1M increase for MSUs Ag Bio Research and Extension Total funding of nearly $336M for community colleges $5.8M increase for performance formula funding $31.4M for retirement costs $1.1M for the Virtual Learning Collaborative Capital investment challenges for FY 2015
25
Expanding Medicaid
Work toward better care at lower cost to society Critical issue is having patient-centered medical home vs. more ER visits Simpler and better for families, providers and small business Reserve one-half of short-term savings to cover future costs and reduce federal risks
26
Cumulative Deposits into the Health Savings Fund Will Finance Medicaid Expansion for the Next 21 Years
$700 $600 $500 $400 $300 $200 $100 $0 -$100 FY 2014
*in millions
FY 2016
FY 2018
FY 2020
FY 2022
FY 2024
FY 2026
FY 2028
FY 2030
FY 2032
FY 2034
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$120.0 $100.0
80 counties
* In millions
78 counties
75 counties 65 counties
$20.0
$FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Exec Exec 59 counties 61 counties 37 counties Rec Rec
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30
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Long-term Savings
One-time surplus funds Important for Michigans ratings Rainy Day Fund Michigan Health Savings Fund Disaster and Emergency Contingency Fund
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$1,000 Millions
$600
$400
$200
$145.2 $81.3 $0.0 $2.0 2004 2005 $2.0 2006 $2.1 2007 Fiscal Year $2.2 2008 $2.2 2009 $2.2 2010 $2.2 2011 2012 2013 2014 Projected Projected
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John Nixon serves as the State Budget Director and Director of the Michigan Department of Technology, Management and Budget (DTMB). Reporting directly to Governor Snyder, he is responsible for overseeing the state budget, government technology, and the administrative functions of state government. Nixon heads an agency of 2,700 employees, leading the departments mission of providing vital administrative and technology services to enable Michigans reinvention, with the vision of making the State of Michigan one of the most innovative and responsive governments in the world. Nixon is a Certified Public Accountant, having previously served as Utahs budget director for Governors Jon Huntsman and Gary Herbert. He was named Public Official of the Year by Governing Magazine in 2012. He was also one of Government Technology Magazines Top 25 Doers, Dreamers and Drivers in 2012. He served as President of the National Association of State Budget Officers (NASBO) in 2010. Nixon holds a BS degree in Corporate Finance from Brigham Young University and an MBA with an emphasis in Information Technology from the University of Utah, where he graduated as a member of the Phi Kappa Phi and Beta Sigma Honors Societies. Nixon and his wife DeAnn have six children, three boys and three girls.