Uncertainty about federal money has continued to be a complicating factor in creating a new state budget as Michigan lawmakers start examining Governor Gretchen Whitmer’s executive budget for Fiscal Year 2026.
The director of the Michigan Department of Health and Human Services (DHHS), Elizabeth Hertel, told the Senate Appropriations Subcommittee on the Department on Wednesday that federal financing accounts for 70% of the $39.1 billion Whitmer has set aside for the Department in FY 2026.
We have over 15,000 employees across the state. During the opening of her presentation, Hertel stated, “We serve all 83 counties and work with local health departments, courts, hospitals and other health care providers, county and local governments, schools, farms, businesses, churches, and a variety of other community service organizations and nonprofits.”
More than 1.5 million people rely on our state and federal programs to pay for child care, keep utilities running, put food on the table, and more, according to Hertel.
According to Hertel, the federal government is DHHS’s biggest source of money, even though Whitmer’s budget allots $7.4 billion from the general fund to operate the agency. According to her, the majority of its general fund funds are used to withdraw federal revenue, with the remaining portion going to DHHS labs and the state’s psychiatric facilities.
The presentation claims that DHHS collaborates with federal agencies on over 130 programs, such as foster care, medical help, food assistance, energy assistance, and more.
Additionally, according to Hertel, 74% of the 70% of spending included in the governor’s budget would come from federal dollars and would support healthcare, aging programs, and public assistance offered to inhabitants throughout the state.
Therefore, substantial program cuts at the state level would follow any federal reductions. Hertel stated, “As you can see, it is obvious that the state would not be able to make up that difference in general fund.”
At the end of the discussion, DHHS Appropriations Subcommittee Chair Sylvia Santana (D-Detroit) pointed out that financing for the department accounts for about half of the state budget, indicating that the DHHS budget accounts for a significant amount of the state’s annual spending.
Whitmer’s proposed budget includes $21.2 billion for schools, for a total of $83.5 billion.
President Donald Trump and his administration have taken a number of actions to reduce federal spending since taking office on January 20. One of these actions was to halt federal grant and loan expenditure, which caused a stir and anxiety as recipients of these funds expressed concerns about how they could be impacted. Two federal judges have now blocked the pause, with one stating that a broad, all-encompassing suspension on government funds is probably illegal.
One of these orders, which prevented the funding freeze from going into effect, has now been upheld by the U.S. 1st Circuit Court of Appeals.
Republicans in Congress, meanwhile, have been considering plans to cut federal spending in order to raise the federal debt limit by $4 trillion and provide up to $4.5 trillion in tax cuts. One such proposal is to cut Medicaid, which offers health care services to low-income adults and children.
John Cherry (D-Flint), the majority vice chair of the subcommittee, questioned how state funding would be affected by a proposal to reverse the 90% match rate for states that have expanded Medicaid coverage, which covers almost all people with incomes up to 138% of the Federal Poverty Level.According to Amy Epkey, senior deputy director of the DHHS Financial Operations Administration, the state would have to reimburse $225 million for each 5% of the federal match that was rolled back.
State Budget Director Jen Flood, who presented the governor’s FY 2026 budget recommendations, pointed out that 42% of the state budget is funded by federal grants, which support important initiatives like Head Start and Meals on Wheels as well as initiatives to guarantee that people have access to safe drinking water and are safe in their homes.
Even though the budget proposal was predicated on existing legislation, Flood stated that if that changes, lawmakers and the State Budget Office will need to collaborate.
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Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.