Michigan Department of State presents FY26 budget request, seeks restricted revenue to fill technology and legal positions

The House Appropriations Subcommittee on General Government on the record heard the Michigan Department of State's budget presentation and questions on funding, staffing and service delivery.

Cindy Paradigm, financial services director for the Michigan Department of State, told the committee that MDOS collected about $3,500,000,000 in fiscal 2024 and distributed the receipts to 13 state agencies. "Of the $3,500,000,000 MDOS collected in FY24, $2.6 billion was for roads and education," Paradigm said. She told the panel that MDOS spent about $278,000,000 on its own operations and that the agency's ratio of operating cost to total collections is about 8 percent: "for every dollar collected, only 8 cents was needed to fund MDOS operations."

The governor's FY26 recommended budget for MDOS is $296,597,400, an increase of $4,757,500 over the current FY25 appropriation. Paradigm said the administration's only new restricted-revenue investment is $1,600,000 in authorization to fill four positions in central operations to support technology efforts and eight positions in legal services in response to increased fraud, regulatory noncompliance and audit findings. "This investment does not increase the overall FTE included in the budget," Paradigm said.

Paradigm described other baseline adjustments in the request: roughly $3,600,000 for standard economic adjustments and a technical reduction related to restricted revenue of about $440,000. She told the committee that MDOS receives the largest portion of its funding from restricted sources (described in testimony as the "tech/TAC fund"), with roughly 57.6 percent of MDOS spending going to personnel and 13.1 percent to information technology.

Representative Snyder asked about a reappropriation of $5,720,000 in unspent federal grant funds and whether those dollars are tied to voting-equipment replacement and election security. Paradigm said the funds were federal awards distributed to states for election equipment and security work; MDOS has been offering reimbursements to local jurisdictions and has intentionally paced spending because additional equipment replacement will be required in coming years. "This is a very unique federal program in which the feds actually distributed the money to all the states, and there's no set amount of time in which the money needs to be spent," she said.

Committee members asked about the status of the department's restricted "tech" fund, which was created in 2004 and is funded by fixed fees. Paradigm said authorized balances and encumbrances affect how much is available for appropriation: "Currently the unallotted is $54,000,000, and we're short $16,000,000 just if you compare our collections to our authorization," she said, noting the fund's sunset date of Oct. 1, 2027 will prompt future legislative discussion about indexing fees for inflation.

Tina Anderson, MDOS chief of staff, responded to questions about in-branch service and the agency's appointment system. "There are not masks required in any of our offices," Anderson said. She added that MDOS continues to accept walk-ins but uses an appointment system to reduce wait times and to avoid customers cutting ahead of those with reservations: "Our customer service clerks will work very hard to get that person in the next available appointment, which is usually that day."

Committee members also asked about the department's remote-work and branch staffing policies. Testimony noted 903 appropriated branch positions and that about 840 employees were in the branch operations division as of May 31, 2024; MDOS said most branch employees report on-site five days per week while many non-branch employees work a hybrid schedule.

The committee briefly approved the minutes from its May 8, 2025 meeting by unanimous consent after a motion to approve from Chair Rip Van Werkom.

The Department of State indicated it will continue discussions with the Legislature about the tech fund sunset, potential fee indexing, and the FY26 restricted-revenue request to fill technology and legal positions.