LANSING — The Michigan House Oversight Subcommittee on Corporate Subsidies and State Investments heard testimony on legislatively directed enhancement grants to the National Association of Yemeni Americans (NIA) on Nov. 18, focusing on how the Michigan Economic Development Corporation administers those awards and gaps in oversight.

Kristen Armstrong of the MEDC told the panel the agency administers packets that arrive from legislative offices and applies a grant template based on the budget boilerplate to create agreements, but does not originate the grants. "We absorb this work into our normal operations," she said, noting MEDC received nearly 350 legislatively directed spending grants in fiscal years 2022 and 2023.

The committee pressed Armstrong on verification and compliance. Under the boilerplate, "50% goes out the door," Armstrong said, calling the upfront disbursement a challenge for post-award oversight and adding that subsequent payments require documentation and that MEDC can withhold further disbursements or pursue clawbacks if expenditures are ineligible. She described the verification process as review of ledgers, payroll records, receipts and invoices and said MEDC generally did not conduct site visits for these awards because of the volume and lack of administrative funding.

Members raised whether NIA had been current with required IRS filings. Armstrong said MEDC believed the organization was compliant during the term of the agreements it administered but acknowledged more recent administration had been handled by other departments; she confirmed the MEDC-held agreements had expired (one on Sept. 30, 2022, the other on Sept. 30, 2023). "When we did our looking back through as we were prepping for this, I think you saw the same thing. They missed a filing, corrected a filing," she said.

Committee members and the witness recommended tightening boilerplate requirements so grantees must be in good standing with Michigan and current on federal filings such as IRS Form 990. Armstrong supported adding compliance conditions but warned that giving MEDC explicit authority to deny disbursements would require legislative clarity and comes with administrative costs.

Panelists also noted recent statutory changes. A witness pointed to Public Act 33, signed Nov. 18, as increasing transparency for legislatively directed spending and requiring sponsors to be identified on forms beginning in FY22 and FY23; the state budget office maintains those sponsor records, the witness said.

Other questions touched on potential ethics concerns after press reporting: a member asked whether it is appropriate for legislators to have office space in buildings that receive taxpayer-funded grants; Armstrong declined to offer an opinion, describing it as a legislative ethics matter. The MEDC said it had no live grant with NIA and therefore no updates on an independent audit mentioned in news reports.

The committee approved a procedural motion to approve the record of a prior meeting and later moved to excuse absent members; both motions prevailed without objection. With no further business, the committee adjourned.

What’s next: Members asked the MEDC to provide fuller documentation (beyond the final two quarters included in the packet) and to follow up with itemized payroll and expenditure lines where available; committee staff also asked the agency to outline recommended boilerplate changes to require tax and state good-standing checks.