Subcommittee hears request to boost state match for Michigan Rehabilitation Services to draw federal funds

Members of the Michigan House Appropriations Subcommittee on Labor and Economic Opportunity heard a presentation from Michigan Rehabilitation Services about the agency's programs, outcomes and the governor's fiscal year 2026 budget recommendations.

The agency emphasized that its federal vocational rehabilitation (VR) funding is distributed through a formula administered by the U.S. Department of Education and requires a state general‑fund match. "For every dollar we put in in state funding, we can draw down $4 from the federal government," said Stephanie Beckhorn, deputy director of employment and training in the Office of Employment and Training at the Department of Labor and Economic Opportunity (LEO).

The presentation outlined current funding and program details. MRS reported a FY25 total budget of about $130,000,000, of which roughly 79 percent comes from federal formula grants. MRS officials said the state match requirement is approximately a 1:4 ratio (state to federal), and without sufficient state general‑fund match Michigan cannot draw the full federal award assigned by the formula.

Agency officials described program operations and clients. MRS administers individualized vocational rehabilitation services and operates the Michigan Career and Technical Institute in Plainwell, which provides occupational and trade training in 11 trades and served nearly 500 students in the most recent full year. MRS reported it served almost 33,000 individuals in the last year and worked with roughly 6,800 businesses statewide.

Officials described two specific FY26 executive budget recommendations: $8,400,000 in general funds to expand pre‑employment transition services (Pre‑ETS) for students, which they said would draw down an additional roughly $32,000,000 in federal funds; and $2,000,000 in general funds for vocational rehabilitation to draw down roughly $7,000,000 in federal funds. Beckhorn said those two requests together are intended to provide the approximately $10,000,000 in additional state match the agency needs to draw down its full federal award.

Committee members asked for operational details. In response to a question about local presence, Beckhorn said MRS staff are located across the state, often co‑located with Michigan Works! agencies or in county offices, and that vocational rehabilitation counselors and rehab coordinators meet employers and customers in community settings. She described community partners such as Goodwill and said some partners are subcontracted for workforce work.

Committee members also pressed the agency about the scope of the population served. Beckhorn and Sigrid Adams, director of Michigan Rehabilitation Services, said MRS serves people with a wide range of disabilities—physical, cognitive, sensory and others—so long as the condition presents a "substantial impediment to employment" and the individual wants to work. Adams said eligibility decisions rely on medical documentation and information from the individual and noted staff have ongoing training.

The presentation included outcome context: officials noted Michigan has an estimated 1,300,000 people with disabilities (about 1 in 5), an unemployment rate among people with disabilities of about 15 percent versus the state's overall rate of about 5.5 percent, and an employment rate for people with disabilities of roughly 37 percent compared with about 76 percent for the general population. The agency cited a Michigan State University study it said estimated a $2.17 economic return for every dollar invested in vocational rehabilitation services.

No appropriation vote was taken by the subcommittee at the meeting; the presentation served as information for members as budget deliberations continue.

The presentation concluded with an offer to answer follow‑up questions from committee members and a note that the governor's recommendations remain subject to the legislative budget process.