If timing is everything, then this is the worst of times for Kent County — at least in recent years.
The county’s general fund, which covers most of the services the county offers, is facing a $5 million deficit for the current fiscal year and a $15 million shortfall for the next one. And both deficits may grow by another $4 million, and for every fiscal year beyond next year — possibly by more than the projected $4 million.
“There is evidence there will be additional costs to Kent and all counties; however, these costs are not yet calculable,” said Daryl Delabbio, county administrator and controller.
The potential source of financial woe for Kent and the state’s other 82 counties comes from the settlement of a class-action lawsuit the state’s Department of Human Services made with Children’s Rights, a children’s advocacy group in New York, last July.
The group investigated the foster care and adoptive services programs offered by DHS and found both to be in disarray. Children’s Rights then sued the state on behalf of about 19,000 children in the state’s welfare system. The state settled the case, but without consulting the counties.
Counties, like Kent, split the cost of foster care and juvenile services with the state through DHS. The county has already designated $6 million from the general fund to the DHS Childcare Fund for this fiscal year, an amount that is half of the fund’s total budget.
The settlement that Michigan reached with Children’s Rights will cost the state $200 million over at least the next four years and possibly longer. All the state’s counties are on the line for $32 million; Kent’s share of that settlement has been estimated at $4 million, a number that may turn out to be conservative once all the costs are tallied. Those dollars would have to come from the county’s general fund and then be transferred into the DHS fund.
“The $32 million is the amount we anticipate the counties will have to pay,” said Wayman Britt, assistant county administrator. “Some of those costs will be implemented this year.”
Britt told the Business Journal that the county expects the settlement payout to go on for more than four years because the current payment plan only runs through 2011.
“It’s more than four years. Those figures are implemented through 2011,” he said.
County commissioners are expected to approve a resolution next week that will ask state lawmakers to hold all counties harmless from the settlement because the local governments weren’t consulted and had no input into the agreement. Britt said the Michigan Association of Counties is putting together a similar request to send to Lansing.
“They are pursuing this with other counties,” he said, while adding he hopes that all the state’s counties will do the same. “We hope that’s the case, but there’s no guarantee.”
But whether state legislators will agree to hold counties harmless from the settlement payment is another matter, considering the massive deficit Michigan’s general fund is facing this year.
“The state is finding itself over $785 million in the hole,” said Becky Bechler, an associate with the county’s Lansing-based lobbyist Public Affairs Associates.
Bechler said the shortfall could mean that lawmakers don’t have the revenue to exempt counties from the settlement payment. She said the House has prepared $230 million worth of cuts to the current budget, while the Senate is looking to cut $270 million. Both chambers would make those reductions across the board, which could result in less funding for DHS.
“They’ve made it clear that everything is on the table,” said Bechler.
Bechler said State Sen. Bill Hardiman, R-Kentwood, is looking into ways to exempt counties. She also said the $3.7 billion the state will get from the federal stimulus package over the next two years has pretty much been allocated to this year’s and next year’s deficits.
“That looks to be upwards of $1 billion short,” she said of the state general fund for the next fiscal year. “The stimulus money is going to be used to fill those gaps.”