EXECUTIVE DIRECTIVE No. 2007-11

TO:  Department Directors and Autonomous Agency Heads
FROM:  Governor Jennifer M. Granholm
DATE:  March 29, 2007
SUBJECT: Moratorium on State Grant Expenditures

As you are well aware, the economic conditions facing the citizens and government of this state have caused serious and immediate fiscal difficulties for our state budget.  As a result of these economic conditions, the repeal of the Single Business Tax, and inaction by the Michigan Legislature, the State of Michigan continues to face a combined projected budget deficit of nearly $3 billion.

Given the severity of the budget deficit, state departments and agencies must continue aggressive efforts to identify and implement administrative efficiencies and economies to generate budgetary savings.  While I recognize that resources are scarce, and that greater efficiencies in the operation of state departments and agencies have been achieved, additional cost-containment measures must be implemented.  Accordingly, I direct:

I. MORATORIUM ON STATE GRANT EXPENDITURES

A. For the remainder of the fiscal year ending September 30, 2007, a moratorium is imposed on the expenditure of funds in the form of grants to persons or entities.  Grant expenditures shall be deferred and limited only to the most essential requirements.  A grant expenditure meets essential requirements only if a department or agency can demonstrate that one or more of the following applies:

1. A grant expenditure is required by legal mandate, federal mandate, or court order.

2. A grant expenditure is necessary to protect the health, safety, or welfare of Michigan citizens or visitors.

3. A grant expenditure is necessary to produce budgetary savings or to protect existing state revenue or secure additional state revenue.

4. A grant expenditure will provide a financial incentive for the retention or creation of jobs in this state.

B. In complying with this Directive, department directors and heads of autonomous agencies should regularly review expenditures and implement measures to restrict grant expenditures unless authorized by this Directive.

C. The restrictions established under this Directive apply both to new grants, grants previously authorized but not fully expended, and to the renewal, extension, or reauthorization of existing grants.

II. ENFORCEMENT

A. State department directors and autonomous agency heads are directed to closely and regularly monitor and review state grant expenditures to ensure compliance with the requirements and spirit of this Directive and the efficient expenditure of tax dollars.

B. The State Budget Office shall review department and agency expenditures on a regular basis and shall make every effort to ensure compliance with this Directive, including, but not limited to, implementing limits on grant expenditures and restrictions on the release of grant funds.  Other departments and agencies shall cooperate fully with the State Budget Office in this effort.

C. In exercising general supervisory control over the functions and activities of all administrative departments, boards, commissioners, and officers of the state, and of all state institutions, as required under Section 3 of 1921 PA 2, MCL 17.3, the State Administrative Board shall monitor compliance with the requirements of this Directive.

D. Violations of the requirements of this Directive shall be reported to the State Budget Director and to the Chairperson of the State Administrative Board.

E. The State Administrative Board may take action to enforce the requirements of this Directive as authorized under 1921 PA 2, MCL 17.1 to 17.3.

III. MISCELLANEOUS

A. The restrictions established under this Directive apply regardless of the fund source financing a grant expenditure.

B. This Directive is effective beginning on April 4, 2007 and remains in effect through September 30, 2007.

I extend my sincere appreciation for your assistance and the continued hard work of state employees as we respond to the state's difficult fiscal condition.
______________________________
JENNIFER M. GRANHOLM
GOVERNOR