There has been a suggestion that lawmakers may try to run the DHS budget, SB 232*, without Ms. Granholm's signoff on the final structure.   Others close to the process said a continuation budget may be needed for that department alone.

But because the budget may represent a line in the sand (or for a more seasonal metaphor: a broomstick in the graveyard) for Republicans on winning more government reforms, voting on the other conference committee reports waited until Sen. Bill Hardiman (R-Kentwood), chair of the DHS conference committee, said there was no reason to hold the bills up.

Mr. Hardiman told reporters that the House and Senate were close to an agreement on privatizing some functions in the DHS, though he would not say whether the privatization would come in foster care, adoptions or juvenile justice, or all of the units.

Privatization had to be looked on as part of the reforms Ms. Granholm said she would adopt in the entire budget scheme, Mr. Hardiman said.   There was absolutely no question that privatization would both save the state money while also allowing the state to hire back some of the workers who might be laid off into other areas, he said.

But Leslee Fritz, spokesperson for the State Budget Office, said, "It is fair to say the view of the Senate Republicans and the administration do not match."

But she was also comfortable that agreement could be reached on the budget.

House Speaker Andy Dillon (D-Redford Twp.) said he didn't view the debate as being about public versus private services, but he added that making changes too aggressively could hurt the state in the long run. He said he believed agreement could be found and that he was encouraged by talks Monday.

"Today was clearly a day of progress," said Ms. Fritz.   There was still a lot of work to finish before the entire budget is done, but "we're happy" that budgets have started to move.

The DHS conference committee is scheduled to meet at 9 a.m. Tuesday.

COMMUNITY HEALTH: The Department of Community Health budget (HB 4344), which was approved by the House on an 81-28 vote with all dissenting votes coming from Republicans, totals $12 billion ($3.1 billion in general funds). The gross spending is 7.6 percent, or $852 million above current year spending, while the general fund portion will see a 6.3 percent increase, or $185 million.

Community mental health direct care workers will see a 2 percent wage increase, costing $3.7 million in general funds.

Medicaid coverage for 19- and 20-year-olds and caretaker relatives was left intact, while the Healthy Michigan Fund is reduced by $1.8 million, $900,000 of which comes from pregnancy prevention, family planning, early hearing detection and screening and informed consent materials reimbursement.

MIChoice will be expanded by $5 million ($2 million general fund) under the budget as will the Healthy Kids Dental program by $2.6 million ($1.1 million general fund).

The bill assumes a $10.1 million savings from establishing a Medicaid Estate Recovery Program, as well as $33 million gross for Medicaid citizenship verification requirements.  

The budget contains provisions increasing capitation payment rates for Health Plan Services by 4.2 percent and Medicaid Mental Health and Substance Abuse Services by 2.5 percent to make rates actuarially sound and $243 million was added to spending to reflect expected increases in inflation, caseload and utilization.

Medicaid hospital Quality Assurance Assessment Program payments are increased under the budget to total $8.8 million, and with Medicaid matching funds, the spending authorization totals $20.9 million. And $21.4 million was added in general funds to offset QAAP fee revenue lowered by the federal government.   The assessment for QAAP will be raised to generate $60 million, of which $17.5 million will be used to offset general funds. The rest will be used to get matching federal monies and the gross funding of $102 million will go back to hospitals.

The budget spends $1 million for free health clinics throughout Michigan, while $350,000 proposed by the House for a community health center serving low-income and uninsured people was cut from the conference report.

A regional jail diversion program the House proposed at $500,000 was not included in the budget. But there was $1 million set aside for two added mental health outpatient teams for the DOC.

Foster care children will also be put in a Medicaid HMO on or before July 1, 2008, saving $1.7 million ($733,000 general fund). Those children are currently on a fee-for-service system.

The budget also calls for privatizing food and custodial services at the state's hospitals and centers.

Rep. Bruce Caswell (R-Hillsdale) urged his colleagues to support the bill, but he did express concern more changes weren't being made to the Detroit-Wayne Community Mental Health to better help people in that area with mental issues.

But Rep. Gary McDowell (D-Rudyard), the conference committee chair, focused on the fact the budget retains Medicaid coverage for vulnerable residents in Michigan and that the Healthy Michigan Fund was left mostly unchanged.