The MC: The Mackinac Center Blog

Health Care Law Squeezes Public School Budgets

Employer mandate forces schools to privatize services and cut hours

The Affordable Care Act, aka Obamacare, has forced many public schools to cut employee hours or privatize noncore services. At issue is the ACA’s mandate that employers with 50 or more full-time workers provide health insurance to any who work 30 or more hours per week.

The Baraga Area Schools in the western Upper Peninsula is among the many districts in Michigan that are feeling the effects of the law. Superintendent Jennifer Lynn says her district had employed more full-time support staff, but has been forced to cut hours due to the prohibitive cost of the ACA mandate.

Baraga is no outlier. A 2014 survey commissioned by the Association of School Business Officials International found that nearly 50 percent of school districts were concerned about the impact of the ACA’s employer mandate.

An example of the costs involved can be seen in the Parsippany school district in New Jersey, which estimated that providing health insurance for 185 paraprofessionals would cost $4.5 million per year. The school district in Vigo County, Indiana would have to pay $6 million annually to provide coverage for support staff.

These rising costs can have ripple effects. At Michigan’s rural Elkton-Pigeon-Bay Port Laker school district, officials report the health insurance mandate generated cost increases approaching six figures, which forced them to lay off certain staff members. Consequently, classroom sizes rose.

Part-time Employees

School districts can also avoid the mandate’s costs by shifting more employees to part-time status. That’s how Indiana’s Vigo district managed the problem. It avoided layoffs by trimming more than 500 support staff workers to less than 30 hours per week. Michigan’s Cass City school district hired part-time paraprofessionals and bus drivers.

That’s less of an option with instructional staff, though. School officials say that it’s hard for students to adjust to having multiple part-time educators throughout the day. Chris Johnson, an administrator with the Penn Manor school district in Pennsylvania, told a publication there that, “If you start doing a half day with this person and then a half day with that person, those students don't react well.”

Privatization

In schools across the country, outsourcing noninstructional services has been on the rise over the last decade. This cost-cutting tool has become even more attractive since the rollout of the ACA mandate, because it lets school officials shift the burdens of compliance to private contractors.

To minimize teacher layoffs, Michigan’s Elkton-Pigeon-Bay Port Laker district privatized some services. Pennsylvania’s Penn Manor district had about 30 part-time aides who worked with special needs students. Rather than cut those aides’ hours further, school officials have chosen to contract out this function to a private firm that will also fill its need for substitute teachers.

Options Limited

An article posted on the Kansas Health Institute news service suggests that for some districts it would be cheaper to just eliminate employee health insurance and pay the $2,000 to $3,000 per employee penalty the law would impose for doing so. Officials at Michigan’s Cass City district say this is not their preference, and privatizing some functions helps them avoid it. Other school districts have formed co-ops with neighboring districts to spread the brunt of the cost, according to Holly Murphy of the Texas Association of School Boards.

There is no one-size-fits-all solution for school districts trying to cope with the ACA, which like many government programs has had consequences not foreseen by its authors, and costs that, in the eyes of many, far exceed the benefits.

Reitz Letter to the Editor Published in The Detroit News

Responding to allegations made earlier this week

In a letter to the editor titled "Think tank's efforts to discredit union fails" published earlier this week by The Detroit News, MEA President Steve Cook attacked the Mackinac Center's position as an advocate for worker freedom and educational choice in Michigan.

Mackinac Center Executive Vice President Michael Reitz published a rebuttal in The Detroit News on July 31, reminding readers of Cook's pension spiking deal (a story broken earlier this year by Michigan Capitol Confidential) and explaining reasons why teachers might wish to leave the MEA:

…Steve Cook writes that “public school employees have not been treated well by … special interest groups in recent years.”

Thousands of Michigan teachers agree, but the group they feel mistreated by is Cook’s own union. The MEA is ruining the personal credit scores of the very employees he represents by sending them to collection agencies for exercising their right to opt out of their union. For some who exercised their rights, MEA affiliates published their names in an attempt to publicly shame them and pressure them into paying again.

The full letter to the editor is available at The Detroit News.

July 31 MichiganVotes Weekly Roll Call Report

Bills on school “adequacy,” secret corporate welfare, police shootings and more

The House and Senate are out for several weeks. Therefore, this report contains several recently introduced bills of interest.


Senate Bill 291: Authorize wrongful imprisonment compensation

Introduced by Sen. Steve Bieda (D), to authorize payment by the state of civil damages to a person wrongfully imprisoned for a crime he or she did not commit. The damages would be $60,000 for each year of wrongful imprisonment, plus “economic damages” including lost wages, plus reasonable attorney fees. Versions of this bill have been introduced in every legislature since at least 2005. Referred to committee, no further action at this time.


Senate Bill 292: Disclose unfunded liabilities in state budget

Introduced by Sen. John Proos (R), to require the constitutionally required executive budget the governor must submit each year to include an accounting by department of the unfunded liabilities incurred to pay future pension and post-retirement health benefits promised to retired employees (legacy costs). Referred to committee, no further action at this time.


Senate Bill 308: Authorize black "Greek letter organizations” specialty plate

Introduced by Sen. Coleman Young, II (D), to authorize a specialty license plate honoring several African American fraternities and sororities specified in the bill, with the premium revenue going to the United Negro College Fund. Referred to committee, no further action at this time.


Senate Bill 311: Ban new charter schools without “certificate of need”

Introduced by Sen. Hoon-Yung Hopgood (D), to prohibit any new charter schools from opening unless the state Board of Education grants a “certificate of need” as defined in the bill. Among other things this would require consideration of a new charter’s “impact on existing public schools” nearby, and impose more rigorous performance and oversight regulations on charter schools and their authorizers (usually state universities). Referred to committee, no further action at this time.


Senate Bill 319: Repeal school “adequacy study” mandate

Introduced by Sen. Mike Shirkey (R), to repeal a law passed as part of the “log-rolling” to get Democratic votes on the since-defeated Proposal 1 tax increase initiative, that requires the state to pay a contractor to study and report on how much money per student is needed to teach public school students sufficiently well to meet state graduation requirements. Referred to committee, no further action at this time.


House Bill 4419: Repeal mandatory minimum sentence for firearms felonies

Introduced by Rep. Kurt Heise (R), to repeal a law that mandates a minimum sentence of two years in prison for a felony firearms conviction, with no chance for parole or probation. Reported from committee, pending on the House floor.


House Bill 4422: Authorize Woodward streetcar property owner subsidies

Introduced by Rep. Andy Schor (D), to authorize “business improvement zone district” subsidies financed by a tax increment financing scheme for property owners near a proposed Woodward Avenue streetcar line in Detroit. This would “capture” from local governments the extra local property tax revenue that (supposedly) results from property value increases generated by the scheme’s selective subsidies and other spending, and use the money to repay the debt incurred by spending. Referred to committee, no further action at this time.


House Bill 4428: Require biannual recertification for government employee unions

Introduced by Rep. Gary Glenn (R), to require government employee unions to be recertified by a majority of the employees in a workplace bargaining unit at least once every two years, as determined by a vote with a secret ballot. Referred to committee, no further action at this time.


House Bill 4429: Exempt schools from "prevailing wage" mandate

Introduced by Rep. Gary Glenn (R), to exempt school construction projects from the state “prevailing wage” law, which prohibits awarding contracts to contractors who submit the lowest bid unless the contractor pays "prevailing wages," which are based on union pay scale reports in a particular geographic region. Referred to committee, no further action at this time.


House Bill 4435: Mandate restaurant allergy notices

Introduced by Rep. Peter Lucido (R), to require restaurants to post a notice that is visible to the public and says, "Before placing your order, please inform your server if a person in your party has a food allergy”. Referred to committee, no further action at this time.


House Bill 4466: Require detailed police shooting and use-of-force reports

Introduced by Rep. Stephanie Chang (D), to revise the monthly crime reports local police agencies are required to submit to the state police so that they include the number and type of use of force complaints made against officers; the number of shooting incidents involving officers; the disposition of use of force and shooting incident investigations; the racial, ethnic, and gender demographic data of individuals who made use of force complaints and individuals involved in police shooting incidents. Referred to committee, no further action at this time.


House Bill 4475: Require disclosure of corporate “economic development” subsidy recipients

Introduced by Rep. Bill LaVoy (D), to require the Department of Treasury to disclose the names of particular businesses and developers granted subsidies and tax breaks under the Michigan Economic Growth Authority law repealed in 2011, and how much they’re getting.

The bill was introduced after it was revealed that these deals have generated $9 billion in unfunded taxpayer liabilities, payable over the next 20 years. Under current law, the identity of these corporate subsidy recipients is kept secret. Referred to committee, no further action at this time.


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visithttp://www.MichiganVotes.org.

Wright Discusses Right-to-Work Decision with State Media

Michigan Supreme Court extends right-to-work to state employees

On July 29, the Michigan Supreme Court upheld right-to-work for state employees, ruling that the Michigan Constitution prohibits agency fees for state workers. The Mackinac Center filed an amicus brief in the case, which the court eventually used to come to its decision.

Patrick Wright, vice president for legal affairs at the Mackinac Center, discussed the decision with multiple news outlets in the hours that followed.

"Voluntary unionism is the best idea," said Patrick Wright with the Mackinac Center for Public Policy. "That people should not be forced to pay fees in order to have a job, and so we think this was a right decision."

His interpretation of the ruling is that unions have been collecting dues illegally since 1963.

"We're gonna look into the question of whether or not there's a way to retrieve some of these fees that have been illegally collected over decades."

The full segment is available at the WILX 10 website. Wright also discussed the issue for a segment on Michael Cohen's Capital City Recap on 1320 WILS, available here, and with the Michigan Chronicle.

Additionally, the Washington Examiner quoted Wright on the decision:

"This was an attempt by the UAW to take away the rights of certain workers and force union payments from them, going directly against Michigan law," said Patrick Wright, vice president for legal affairs at the Mackinac Center. "The majority correctly noted that state employees unions have illegally been receiving agency fees from state employees for decades."

The full article is available at the Washington Examiner's website.

Policy Analyst Jarrett Skorup took part in a Google Hangout with Congressman Tim Walberg on the issue of civil asset forfeiture. The event was sponsored by Generation Opportunity, a national network that connects young people “promoting economic opportunity and prosperity.”

At the federal level, Walberg has introduced with Sen. Rand Paul and a bipartisan groups of co-sponsors the “Civil Asset Forfeiture Reform Act.” The proposed bill would require a higher burden of proof before property can be forfeited while also changing the “innocent owner defense” away from the government to the property owner. Skorup has an upcoming policy brief about civil forfeiture laws in Michigan and the need for changes. He has testified and written about some reform bills currently going through the legislature.

New White House Report Highlights Occupational Licensing Problems

Unnecessary regulations reduce employment and raise prices

The White House Council of Economic Advisers has released a new report about occupational licensing. It outlines the growth in licensing over the past few decades and argues that this reduces employment, raises prices and lowers wages overall.

The report recommends that states lower or eliminate this barrier to entry by establishing some “best practices.”

The executive summary states:

There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across state lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as State certification, may offer a better balance between consumer protections and flexibility for workers.

...

By one estimate, licensing restrictions cost millions of jobs nationwide and raise consumer expenses by over one hundred billion dollars. The stakes involved are high, and to help our economy grow to its full potential we need to create a 21st century regulatory system — one that protects public health and welfare while promoting economic growth, innovation, competition, and job creation.

The authors recommend that licensing regimes directly and measurable protect "legitimate public health and safety concerns," use more voluntary certification, minimize fees and lowering regulatory hurdles. It also suggests setting up an independent state commission that would conduct cost-benefit analyses of proposed new rules and reduce the number of "unnecessary and overly-restrictive licenses."

In Michigan, fortunately, Gov. Rick Snyder has said he won’t support any new licensing laws that don’t pass similar standards as those listed in this new study. But there are hundreds of mandates currently on the book that burden workers and consumers in Michigan that legislators or an independent commission should look at.

The Institute for Justice, a public interest law firm which has done studies on licensing, has model legislation that would incorporate the suggestions in this study. The bill would eliminate barriers for potential practicioners while still keeping safeguards in place to protect the public when necessary and cost-effective. 

Repressive Ride-sharing Regulations Beaten Back in the Big Apple

Similar regulations proposed in Michigan

Until last week New York City Mayor Bill de Blasio and city regulators were poised to severely limit New Yorkers’ access to ride-sharing services like Uber. Spurred on by lucrative taxi-cartel oligarchs, the regulations would have restricted the number of new Uber drivers to just one percent of the current fleet.

Fortunately, public outcry pressured Mayor de Blasio to abandon the scheme, so for now Uber can continue to meet growing consumer demand in the nation’s largest metropolis.

Michigan cities have their own taxi cartels that are also insulated from competition by protectionist rationing schemes. We also have our own local and state politicians willing help the incumbent cartel owners keep their lucrative oligopolies. As in New York, those owners are lobbying for state and local restrictions that would limit Uber here, or shut it out altogether.

But as in Gotham, upstart ride-sharing companies are already operating in several Michigan cities, providing jobs for drivers and lower fares for passengers. Enthusiastic grass-roots supporters have so far beaten back most efforts to restrict this innovative taxi alternative. But without a state law preempting local regulations the future of ride-sharing in Michigan remains up in the air.

The good news is, by a 71 to 39 bipartisan vote, the Michigan House recently passed legislation to do just that: prohibit local protectionists from shutting down ride sharing services (see who voted "yes" and who voted "no"). The bills would also establish a statewide ride-sharing regulatory regime requiring driver background checks, vehicle inspections, specific company disclosures, minimum insurance levels and more. Rep. Tim Kelly (R-Saginaw Township) is leading this charge.

The news from the other side of the state Capitol is less encouraging. Like “progressive” Mayor de Blasio in New York, Republican Senators Rick Jones of Grand Ledge and Dale Zorn of Ida have proposed legislation that could severely restrict ride-sharing. It would impose additional fees and requirements on ride-sharing companies and drivers and explicitly allow local governments to pile on their own regulations. This could easily put the brakes on ride-sharing in Michigan and substantially limit its potential growth.

Ride-sharing technologies are disrupting the car-for-hire industry with their convenience, lower fares and flexible, work-on-your-own-terms opportunities for drivers. If the Senate proposal passes, the public outcry in Michigan might not be as loud as it was in the Big Apple, but legislators should still heed the message: Consumers like ride-sharing and want more of it.

Washington Examiner Quotes Vernuccio on Proposed Labor Reform

Employee Rights Act would increase worker freedom

Bills recently introduced in the U.S. Congress would greatly increase the rights of unionized workers nationally. Known as the Employee Rights Act, the proposed legislation would amend the National Labor Relations Act, ensuring that workers have more opportunities to voice support for or opposition to the union, as well as providing more protections for workers who do not want to contribute to their union's political activity.

The Washington Examiner quoted Mackinac Center Labor Policy Director F. Vincent Vernuccio in an article on the bills:

These would be sweeping protections, said Vincent Vernuccio, a labor lawyer with the conservative Michigan-based Mackinac Center. He compared it to the 1947 Taft-Hartley Act, the last major reform of the National Labor Relations Act, the main federal labor law.

"The Employee Right Act is the modern version of Taft-Hartley, a great advancement in rooting out union corruption and protecting worker's rights," Vernuccio said.

The full article is available at the Washington Examiner.

The Fight Over Energy Mandates

Detroit News cites Mackinac Center while covering debate

The Detroit News analyzes the current debate over renewable energy mandates in Michigan. A 2008 energy law eliminated most electricity choice and required 10 percent of the state’s energy to come from renewable sources – which in practical terms means windmills. Since the law went into effect, Michigan energy prices have steadily increased and are the highest in the Midwest.

The legislature is debating changes to the law. A plan in the state House would totally eliminate electricity competition while maintaining the 10 percent mandate. A plan in the state Senate would maintain some electricity choice while eliminating the renewable energy mandates.

The News reports:

[R]enewable critics such as the free-market-oriented Mackinac Center for Public Policy argue mandates are effectively subsidies for wind and solar power. If renewable energy costs are decreasing, their producers don’t require state quotas to compete, they say.

To read more about the House plan, click here. To read more about the Senate plan, click here.

Excess of Laws Entangle Law-respecting People

A lack of knowledge traps ordinary citizens

In Chicago, the city calls cameras that track speed for the purpose of issuing tickets "automated safety cameras."

Nobody wants to feel like a criminal. In fact, most people want to respect the law, but the bigger government gets, the more laws it writes, and the harder it becomes to not break the law. The Wall Street Journal reports that 1 in 3 Americans is in the FBI’s criminal database, which makes it likely that someone you know could be defined as a criminal. You may not feel they are a threat, but the government does. Perhaps your government even considers you to be a criminal.

In Michigan, a lot of things will get you into trouble with the law, such as expanding a parking lot into an area the state deems a wetland or drinking alcohol and being under the age of 21. People in Michigan have been prosecuted for such offenses.

If you are arrested, judges can make it difficult to plead “not guilty.” For example, a district judge in Ottawa County insisted on random drug tests and banned out-of-state travel for college students charged with possessing alcohol while under 21. Hundreds of these students have decided it would be easier to pay the $200 fine and plead guilty, not realizing they would now have a criminal record, something they may have to divulge on a school, loan or job application.

Once a person has a criminal record, expunging it is not easy. It requires a separate court action and even that is no guarantee the public won’t learn of the arrest. County and other jails post mug shots on the Internet, before the detained person is even charged with a crime. Private companies copy these photos and post them on websites until the individual pays a fee to remove them.

Most of us drive, and when it comes to the traffic code, there is no shortage of laws that can trip up motorists. Many states have installed cameras at traffic lights and on highways, ready to nab drivers for violations, including a rolling right turn at a red light. Michigan has banned the use of cameras for traffic-law enforcement but the Michigan secretary of state will add points to your license if a camera in a state where they are legal charges you with a violation. (How would the secretary of state in Michigan know about your speeding ticket in Florida? States talk with each other, of course.)

Speed limit enforcement and traffic cameras have been little more than a money grab for government and have questionable impact on traffic safety. For example, the safest speed limit, according to traffic engineers, is the speed not exceeded by 85 percent of cars driving under normal traffic conditions. Many speed limits, however, are far lower than that, making it easier for police to pull someone over at any time. Enforcement becomes selective.

Police may want to search a car without a warrant. A surprising number of drivers agree to this, feeling they have nothing to hide. But if more people understood civil asset forfeiture laws, fewer would surrender their rights. If police find cash on you or in your vehicle and suspect it has anything to do with illegal drugs, they can seize it until you prove in court you earned it legitimately. That’s right — police can seize your cash and force you to beg for it back, based only on a slight suspicion that you might be involved in some wrongdoing. And you have to prove a negative (“I didn’t do anything wrong.”)

Civil asset forfeiture laws allow government to seize not just cash, but any property. This can happen before you’re ever charged with a crime, or even if you’re not charged. Police can freeze bank accounts if they like, and put the burden on citizens to get it back.

Most people give up when confronted with police power, even if it has been used in a questionable manner. Police suspected Tom Williams was running a marijuana dispensary. He was never charged with a crime, but police raided his rural home in the dead of winter and took pretty much everything of value. Police told him if he wanted his property back, he had to come up with $5,000 and take his case to court. He never got his belongings back, nor did he get the chance to defend himself in court, because early this summer, he died.

Few people would describe Williams as a threat to public safety. He was interested in ways to alleviate his pain, and he lived in a state, Michigan, where voters had approved medical marijuana. Because Michigan’s broad civil asset forfeiture laws operate with little oversight, his last days were spent fighting government. Unless the public keeps better tabs on those it entrusts with the power of government, more people could end up like Williams, entangled with the law.