Coalition: Governor’s Budget Recognizes Workforce Needs, but Funding Falls Short of Mandated Costs
[LANSING, MI] – The Direct Care Worker Wage Coalition today responded to the Governor’s proposed budget, which acknowledges the importance of Michigan’s direct care workforce but does not provide sufficient funding to cover the wage increases being required of providers.
More than 50,000 direct care workers (DCWs) provide daily assistance that allows Michiganders with intellectual, developmental, and behavioral health needs to live safely and independently in their homes and communities. Stabilizing this workforce requires funding that matches the true cost of mandated wage increases.
The executive budget includes $69.5 million intended to support direct care workforce investments. However, coalition members say the amount falls significantly short of covering the provider's actual cost of a $1.27-per-hour wage increase effective January 1, 2027.
“We appreciate the Whitmer Administration’s focus on workforce challenges in the behavioral health system,” said Robert Stein, general counsel for the Michigan Assisted Living Association. “However, based upon data from providers throughout the state, the recommended $69.5 million for a $1.27 per hour wage increase is woefully inadequate.”
Coalition members note that the $69.5 million estimate appears to rely on annual survey data submitted by behavioral health providers but does not reflect the full cost impact across the system.
The same structural issue exists in the current fiscal year. For both the current and upcoming fiscal years, the Department is mandating wage increases without fully funding them. Without clear pass-through requirements and adequate appropriations, mandated wage increases become financially unsustainable for providers.
“All in all, it is a recipe for instability,” said Todd Culver, president & CEO of Incompass Michigan. “We support higher wages for direct care workers. But wage mandates without adequate funding create service disruptions, provider closures, and workforce uncertainty — the very outcomes policymakers are trying to prevent.”
The coalition also expressed concern that similar underfunding may exist for costs associated with the Earned Sick Time Act.
The annual DCW turnover rate for behavioral health services is approximately 40 percent. Replacing expiring federal stabilization funds and strengthening Medicaid reimbursement rates remain critical to maintaining this essential workforce.
“As the budget process moves forward, policymakers must ensure that wage commitments are fully funded and transparently implemented,” said Sherri Boyd, executive director of The Arc Michigan. “Direct care workers deserve higher wages — and providers and people with disabilities and their families deserve the resources necessary to pay them.”
The coalition will be sharing additional fiscal analysis with lawmakers in the coming weeks and urges the Legislature to align mandated wage increases with sufficient appropriations, transparent pass-through requirements, and sustainable reimbursement structures.
To learn more, view the latest data, and/or get involved in the fight for fair DCW compensation, please visit DCWMichigan.org.
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