In October our new state budget will go into effect. What does that mean for our state’s most urgent issues? The $54.9 billion state spending plan is getting attention from the social sector as we all work to help the people of Flint and the children in Detroit Public Schools.
Flint Water Crisis
We know $165 million more in aid will support the Flint water crisis but there’s still a long road of recovery ahead. State spending on Flint’s emergency rises to about $235 million under the legislation, which includes $114 million in immediate aid. About $25 million is slated for the installation of new service lines to connect the city’s water mains with homes and other buildings. Flint’s mayor Karen Weaver has said that the money for the pipe replacement is less than half of what is needed. So far, state funding for Flint has gone toward the criminal investigation, child care, emergency needs, and credits on water bills for affected residents. The Governor’s Commission for a 21st Century Infrastructure will spend the coming months looking for new and more sustainable ways to update the state’s aging infrastructure, including water infrastructure. Meanwhile, foundation, nonprofit and business leaders continue to step in to determine the best way to help the families of Flint. Tomorrow foundation and nonprofit leaders will speak to visiting business executives from around the state, as they gauge how the business community can help the city recover.
Detroit Public Schools
The education budget includes $72 million for Detroit Public Schools. Meanwhile, a $617 million bailout plan for the district narrowly passed. Lawmakers in support of the plan said it will pay off the district’s debt and provide transition costs when the district splits into two districts. A Detroit Education Commission to regulate charter schools in Detroit, which was highly contested, did not make it into the final bill package, and the district will return to an elected schoolboard, rather than state appointed, in January.
The Coalition for the Future of Detroit Schoolchildren, formed in late 2014, has led the way in seeking solutions for Detroit children. After the plan was announced, coalition leaders expressed disappointment with the legislation, maintaining it only provides “partial relief to a troubled Detroit schools landscape, and does little to correct the conditions that have led to the financial and academic crisis of Detroit Public Schools.” Tonya Allen, president and CEO of the Skillman Foundation and co-chair of the Coalition, expressed similar sentiment. “We’re tired and disappointed, but we also know the real work ahead requires us to stand up and pull together to get Detroit schoolchildren the education they need. We knew that coming in," Allen said. "That’s why the Coalition formed in the first place. We wish Lansing could’ve helped create a better and more comprehensive solution, but nonetheless, we’re going to make sure Detroit kids get the education they deserve.”
What else is in the budget?
- A 1.9 percent funding boost for K-12 education
- Expansion of dental coverage to 131,000 teens and young adults in Wayne, Oakland and Kent counties
- Increased funding for Community Mental Health
We are hearing from the Michigan League for Public Policy (MLPP) on several aspects of the state budget. Gilda Jacobs, president and CEO of MLPP, expressed concern that funds intended to fix the Heat and Eat policy that reduced food assistance were not included in the approved budget. She also wrote “there was some good news in the final budget bills, including the expansion of Healthy Kids Dental, much-needed funding for Flint to address the ongoing water crisis and an expansion of the state’s child care eligibility from 121 percent of the federal poverty level to 125 percent of the federal poverty level.” Read more from the Michigan League for Public Policy.
CMF will continue tracking these major social issues as we move forward into the state’s 2017 fiscal year. Again, the budget goes into effect in October.
Congress Questions Endowments
Endowment spending at colleges and universities is under scrutiny, as data is being analyzed on Capitol Hill. In February, Congress asked 56 private universities and colleges to submit details of their endowments by April 1, that information is currently under review. It’s not the first time the institutions’ endowments have been challenged, as lawmakers question rising tuition rates while the schools benefit from charitable tax breaks.
Endowments Under Scrutiny
Private colleges are usually considered nonprofits, making their endowments tax-exempt. Unlike private foundations, there is no requirement to spend a minimum amount of their endowments each year.
At this time, we don’t know what the outcome of this review of private college and university endowments will be, but there is concern about the enhanced scrutiny and challenges to their use as charitable assets.
The Chronicle of Philanthropy shared an editorial piece about the enhanced scrutiny claiming, "requiring colleges to spend more from their endowments would be bad for all nonprofits." A dissection of endowments may continue, putting more under the microscope, and experts say it’s only the beginning. If close scrutiny of foundation investments becomes the new normal, transparency and growing our impact through socially responsible investments holds more weight than ever before. A recent editorial highlighted key issues foundations must confront to stay relevant, writing, "endowments are no longer just about investing, they're about social change."
We’ve seen more colleges stepping into impact investing, as the public, especially millennials, has a growing interest in organizations focused on socially responsible investments. We are seeing foundations make the commitments for impact investing, such as the Kresge Foundation. The foundation announced last fall that it would utilize 10 percent of its endowment, or $350-million, for impact investing by 2020. Since then, we have seen the IRS remove potential obstacles by sharing new guidelines for both mission-related investments (MRIs) and program-related investments (PRIs), in hopes that foundations and organizations are given more clarity in their investment options.
The momentum for impact investing is growing. Many investment firms say the time to consider impact investing is now, as socially responsible investments continue to become more important to people.
Recently, Community Capital Management, Inc. (CCM), a leading impact investing manager, released a video showcasing impact investing success we’re seeing right here in Michigan. The video highlights the transformation of Newberry Hall from a rundown property in downtown Detroit to a revitalized, historic residential housing property. CCM explains their role in impact investing and the multiple positive outcomes that can emerge. Check out the video.
- Learn about the CMF Impact Investing Committee and how we support our members.
- Check out the Mission Investors Exchange's resources for impact investing.
Enbridge Line 5
In recent weeks we have seen several new developments in the ongoing saga with Enbridge’s Line 5; the PIPES Act was passed, county resolutions are in the works, a major environmental group filed a federal lawsuit and today the Michigan Pipeline Safety Advisory Board will meet for the first time since March. The 645-mile-long Line 5 has become a top environmental issue in our state, as environmental groups, business leaders and nonprofit organizations have spoken out against the use of Line 5 for fear of an underwater oil spill in our Great Lakes. The hotly contested pair of 63-year-old pipelines, known as Line 5, carry more than a half million barrels of light crude oil, light synthetic crude oil and natural gas liquids every day.
Today the Otsego County commissioners are expected to make a decision on whether to accept or reject a resolution dealing with Line 5. The group sponsoring the resolution wants Line 5 safety data given to a third party for review. We are seeing action taken in the nation’s capital, just last week Congress passed the PIPES Act, a piece of legislation that would require increased inspections for some underwater pipelines, including Line 5. Congressman Fred Upton said the standards in the PIPES Act were motivated by concerns of a possible break in the pipeline. President Obama is expected to sign off on the PIPES Act.
Many of CMF's members have been working to learn more about Line 5. The Mackinac Island Community Foundation has sponsored informational events for the community, relating to the findings of the state's task force report.
Meanwhile, there are ongoing efforts to shut down the pipeline. The Groundwork Center for Resilient Communities launched the Oil & Water Don’t Mix initiative, focused on shutting down Line 5. A host of nonprofits and organizations have signed on as partners and supporters of the campaign. A lawsuit is pending in federal court as the National Wildlife Federation has asked the court to stop the transport of oil through Line 5 until changes are made with the Pipeline and Hazardous Materials Safety Administration.
Beyond the environmental risks, there are real concerns about the potentially devastating effects an oil spill could have on Michigan's booming tourism industry, which is a lifeline for the state's economy.
Line 5 did not make the agenda for the recent Mackinac Policy Conference, but that didn’t stop opponents and groups from making their voices heard, handing out literature and holding signs asking for Line 5 to be shut down.
Enbridge disputes the concerns surrounding Line 5 on the company’s website, calling it their most robust pipeline, with virtually no stress on the line and possesses minimal corrosion. The company says Line 5 is the most closely inspected pipeline in the Enbridge system. Michigan remains home to the largest inland oil spill in U.S. history, the 2010 Enbridge spill in the Kalamazoo River cost about $1.2 billion in remediation efforts. Nonprofit organizations, business leaders, environmental groups and many politicians are demanding changes to make sure what happened in 2010 doesn't happen in the Straits of Mackinac.
Max M. and Marjorie S. Fisher Foundation Showcased in Impact Investing Guide
A resource guide, “The Essentials of Impact Investing: A Guide for Small-Staffed Foundations,” highlights the Max M. and Marjorie S. Fisher Foundation for its approach to impact investing. The foundation is noted as a strong advocate for attracting investment to local Detroit businesses. The Fisher Foundation invested in Artesian Farms, a produce growing facility in the Brightmoor neighborhood of northwest Detroit. Located in a previously abandoned warehouse, its purpose is not only to sell sustainably-grown, pesticide-free, non-GMO, produce but also to transform the lives of its employees. Their team consists of neighbors who live in Brightmoor. In the guide, the foundation’s executive director, Doug Bitonti Stewart, notes their work with larger-staffed foundations as well as co-investing. “Ultimately, we were hungry to learn alongside mission-aligned, like-minded people doing the actual work in the field,” Stewart wrote. See the full guide.