The MC: The Mackinac Center Blog

Amendment’s Effects on Higher Ed are Uncertain

Proposal 1 may offer more leeway in funding universities than intended

Most of the focus on Proposal 1 has been directed to its changes in the state’s fiscal policies, rather than a close look at its proposed constitutional changes. One issue demands further attention since its effects are unclear.

The constitutional amendments allow for a higher sales tax, earmark more money to the School Aid Fund and exempt road vehicle fuel from sales taxes. But they also remove “higher education” from the list of acceptable uses of the SAF while adding community colleges and some programs to the acceptable uses of the that fund. Here is this section of the proposed amendment:

There shall be established a state school aid fund which shall be used exclusively for aid to school districts, higher education, PUBLIC COMMUNITY COLLEGES, PUBLIC CAREER AND TECHNICAL EDUCATION PROGRAMS, SCHOLARSHIPS FOR STUDENTS ATTENDING EITHER PUBLIC COMMUNITY COLLEGES OR PUBLIC CAREER AND TECHNICAL EDUCATION PROGRAMS, and school employees’ retirement systems, as provided by law.

As I mentioned in my brief, this has some fiscal consequences. The state has been spending $200 million in school aid fund money in the state higher education budget and this would likely have to stop if the amendment is approved. There are small amounts of general fund money in the state’s school aid budget that may mitigate this new prohibition.

Future policymakers could still devote money from the SAF to the state’s public universities through possible loopholes in the language.

A number of state universities still participate in the school employees’ retirement system, which remains an acceptable place to devote SAF dollars. The state could contribute to these universities by directly paying for the retirement contributions of those participating institutions.

Policymakers could even expand on this practice by allowing university employees to participate in the school employees’ retirement system. Or it could create a new “school employees’ retirement system” with state university participation and provide SAF money for participating employers.

This amendment also changes this section of the constitution from naming the kinds of institutions that can receive SAF money to naming uses for the money. The state’s public universities could receive SAF money for scholarships for students in career and technical education programs, or they could set up career and technical education programs themselves.

Public universities may even make the case that they are fundamentally in the business of providing career and technical education. After all, while most universities remain liberal arts institutions, career preparation remains their primary selling point to both prospective students and to the Legislature when asking for state money.

Judicial interpretation of our state constitution is subject to different standards than those used for regular statutes. The justices would rely more on a normal citizen’s interpretation of the language rather than the often arcane interplay of existing statutes. On that standard, there seems to be more leeway for funding the state’s public universities than policymakers may have intended.

Detroit Coalition Plan Would Lead to More Schools Outside of Detroit

Restricting choice could lead to more students leaving Detroit

The River Rouge School District buses students out of Detroit to attend its schools. This makes financial sense for the district: More than 400 River Rouge students live in Detroit and attend the district through the state's Schools of Choice program. These are families who have chosen to leave their neighborhood school.

An estimated 17,000 Detroit students leave the city to attend public charter schools outside its city limits. Some charter schools bus students out, like River Rouge. Conner Creek Academy, located in Roseville, buses in students from Detroit and Highland Park.

Recently, a coalition of Detroit interest groups released a proposal to severely limit the city’s educational choices for parents. It's not hard to imagine an acceleration of the types of arrangements described above if this proposal is implemented.

Geographically specific restrictions aimed at preventing people from improving their livelihoods often yield unintended consequences:

These behaviors occur because people realize they can get around a costly burden by simply crossing an artificial geographic boundary.

The same can be expected if a Detroit coalition's proposed regulation of educational choice is successful. That's because several of the coalition's proposals will place an undue burden on schools operating in the city of Detroit — a burden schools can avoid by simply locating outside city boundaries.

A likely result will be that fewer schools will open in the city itself, and more schools will open right on the suburban boundary, perhaps offering to bus out Detroit students. For those who might doubt this, consider the broad regulation of Detroit conventional and charter public schools the coalition is proposing.

The coalition suggests creating a powerful commission that can choose whether a new school will be allowed to open within city limits. This commission will even have the power to choose where new schools can be opened.

The coalition reasons that there are too many schools in some parts of Detroit and too few in others. These circumstances, proponents argue, require a commission to determine the best location for new schools. This argument ignores the rigorous work many charter schools undertake to find the best location for a school. Charter schools may even consider whether a nearby school has a track record of failing its students when choosing where to locate.

Consider the new costs, risks, and timeline of opening a school in Detroit under the coalition's plan: Even if a school has been authorized by a public university, community college or school district, it will have to go through another series of approvals with a new Detroit commission, which could stop the school’s already well-developed plans in their tracks.

The school will also have to consider the risk of being told it may not operate in the location it deems best to serve the most students. The new powerful commission, viewing some Detroit neighborhoods as having “too many” schools, could require a new school to operate at a different location — one that is more costly and limits a school’s ability to attract new students. All of these new requirements will take more time, and could delay the opening of a school by months, or even years.

If opening a charter school in Detroit becomes more costly, more risky, and takes more time than opening a charter school just outside the city boundaries, all else equal, schools will opt for a less costly, less risky, and less time-intensive option: They will open outside of Detroit, and may offer transportation to Detroit students.

The coalition's plan may very well have the unintended consequence of increasing the number of families leaving Detroit for better educational options.

April 3, 2015, MichiganVotes Weekly Roll Call

New bills cover marijuana, mandates, police cameras and more

Now with one click you can approve or disapprove of key votes by your legislators using the VoteSpotter smart phone app. Visit votespotter.com and download VoteSpotter today!

The House and Senate are on a two-week spring break. Therefore, this report contains several recently introduced bills of interest.


Senate Bill 80: Decriminalize marijuana

Introduced by Sen. Coleman Young II (D), to eliminate criminal sanctions for possession of one ounce or less of marijuana, and instead authorize civil fines of $25 for a first offense, $50 for a second, and $100 for subsequent offenses. Referred to committee, no further action at this time.


Senate Bill 90: Create African-American Affairs Commission

Introduced by Sen. Rick Jones (R), to create a government African-American Affairs Commission, with the mission of developing “a unified policy and plan of action to serve the needs of African-Americans in this state.” Referred to committee, no further action at this time.


Senate Bill 97: Require agencies disclose federal aid requests to Legislature

Introduced by Sen. Mike Shirkey (R), to require state agencies that apply for any form of federal or other financial assistance to notify the Legislature within 10 days, including any conditions or stipulations associated. Referred to committee, no further action at this time.


Senate Bill 101 and House Bill 4167: Mandate employers provide paid sick leave

Introduced by Sen. Jim Ananich (D) Rep. Stephanie Chang (D), respectively, to mandate that employers must grant employees one hour of paid sick leave for every 30 hours worked, up to 40 hours annually for small businesses, and 72 hours annually for larger employers. Referred to committee, no further action at this time.


Senate Bill 102: Give new school employees 401(k), not pensions

Introduced by Sen. Phil Pavlov (R), to close the current “defined benefit” pension system to new school employees hired starting July 1, 2015, and instead provide 401(k) benefits. Employees could contribute up to 5 percent of salary to their account, and the local school district would have to contribute an amount equal to 80 percent of this. Referred to committee, no further action at this time.


Senate Bill 143 and House Bill 4206: Impose regulations and mandates on for-profit mothers milk banks

Introduced by Sen. David Knezek (D) Rep. Erika Geiss (D), respectively, to impose a range of regulations, restrictions and mandates on “for-profit human breast milk banks, companies, and cooperatives,” but not on non-profit entities that provide a similar service. Among other things the bill would mandate that for-profit service give half the milk they collect to hospitals and non-profit providers of this service. Referred to committee, no further action at this time.


House Bill 4219: Give some Detroit drug crime seizure proceeds to “community organizations”

Introduced by Rep. Harvey Santana (D), to mandate that 5 percent of the proceeds from the sale of property seized in Detroit drug raids and arrests be given to “community organizations” in the city. Referred to committee, no further action at this time.


House Bill 4226: Expand technology business subsidies

Introduced by Rep. Daniela Garcia (R), to increase from three to nine the number of areas in which “certified technology parks” (previously dubbed “smart zones”) are permitted to “capture” school taxes. These entities collect the extra local property tax revenue that (hopefully) results from property value increases generated by their selective subsidies and projects, and use it to repay debt incurred to provide them. Referred to committee, no further action at this time.


House Bill 4229: Mandate police body cameras

Introduced by Rep. Rose Mary Robinson (D), to require uniformed law enforcement officers to wear a continuously-activated body camera while on duty, with various exceptions specified in the bill. The bill also prescribes rules for how long recordings must be kept and for erasing them, prohibits agencies from using facial recognition programs with the captured images, and more. Referred to committee, no further action at this time.


House Bill 4232: Require police shooting reports

Introduced by Rep. Alberta Tinsley Talabi (D), to require the state Department of Civil Rights to investigate and give a report to the Legislature and the employing agency whenever a law enforcement officer is responsible for the death of an individual who belonged to “a group or had a characteristic that has been the subject of past discriminatory practices.” Referred to committee, no further action at this time.


House Bill 4240: Place 1st and 2nd Amendment plaques on Capitol grounds

Introduced by Rep. Martin Howrylak (R), to require plaques honoring the First and Second Amendments on the state Capitol grounds. Like several previous bills, the right to bear arms plaque would be one created by the “Brass Roots” organization in 1994. This bill adds an invitation for “an organization with a history of advocating for First Amendment rights” to provide a First Amendment plaque, and suggests the American Civil Liberties Union, Michigan Press Association, League of Women Voters, American Libraries Association and some others. Referred to committee, no further action at this time.


House Bill 4261: Ban “open carry” in prohibited concealed pistol carry areas

Introduced by Rep. Andy Schor (D), to ban “open carry” (versus concealed carry) of firearms in “gun free zones” specified in the state concealed pistol license law, which includes schools, day care centers, stadiums, arenas, theaters, bars, churches, college dorms and classrooms, hospitals, casinos, and courts. Also, to add public libraries to this list. 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 visit http://www.MichiganVotes.org.

Read This: FEE Interview With Larry Reed

Former Mackinac Center president shares stories of his world travels

Our friends at the Foundation for Economic Education recently published an interview with their current president, Lawrence W. Reed. Friends of the Mackinac Center will know Larry as the first president of this organization. He currently is president emeritus at the Center and a member of our Board of Scholars.

The interview is fascinating and highly recommended. Larry tells several stories about his travels around the country and world. He's visited 49 states (just North Dakota left!) and an astonishing 81 countries. How he had the time and energy to build one of the nation's premier state-based, free-market think tanks and travel the world is beyond me.

Perhaps my favorite story has Larry and the Mackinac Center's late former senior vice president, Joe Overton, in the middle of a civil war in Mozambique:

In 1991, my late friend and then-senior vice president at the Mackinac Center Joe Overton and I flew at treetop level in broad daylight 150 miles into Mozambique from neighboring Malawi. We were there for a couple of weeks with the anti-communist rebels during the Mozambique civil war. The plane was piloted by a Christian missionary who knew where to go: a makeshift runway the guerrillas quickly camouflaged with small trees and brush. If the regime had known of our plans, it would have put MIGs in the air to shoot us down. A year later, we were back in Mozambique, courtesy of the regime itself, to see things from their perspective. We even had dinner with the president, Joaqhim Chissano, at the presidential palace. I asked him, “How are we to believe you’re no longer Marxist when the streets here in Maputo are named for thugs like Ho Chi Minh, Mao Zedong, Karl Marx, and Vladimir Lenin?” He replied with a smile, “We are going to change the names of the streets.” I don’t know that he ever did.

Well, I have some bad news for Larry. Using Google Maps, I confimed that those streets  can still be found in Maputo. But I'm sure Larry won't be too surprised at being misled by a politician. There's good news too, though, because I also found a supermarket at the corner of Avenida Karl Marx and Avenida Ho Chi Min. Even on streets named for communists, markets at work!

Read the rest of the interview here.

Coalition's Vision for Detroit: More Bureaucracy; Less Innovation

Doubling down on what doesn't work won't fix Detroit schools

A Detroit coalition has released its long-awaited recommendations on education policy for Detroit. Though the coalition characterizes its recommendations as a way to improve the "education landscape" for all Detroit students, the coalition's main apparent goal is preserving the institution of Detroit Public Schools.

DPS Bailout: To that end, the coalition recommends that taxpayers from the rest of the state pay off some of DPS' debt, take on some of DPS' employee retirement costs, increase school funding and remove the district's emergency manager to hand back control to a local school board. The coalition does not mention how much all of this will cost. But with the coalition's recommended $53-million-per-year in debt payments from state taxpayers, combined with a very conservative estimate of retirement costs, these two moves alone could easily cost more than $100 million each year.

While certainly expensive, the policies listed above won't keep students from leaving. Families are seeking a better education for their children and are enrolling them in public charter schools or other nearby school districts. The Detroit News recently reported that thousands of students leave Detroit for other conventional districts. As many as 50,000 Detroit children choose to attend public charter schools instead of DPS.

There are too many families benefiting from educational choice for any group to reasonably suggest taking those choices away. Instead, the coalition suggests creating a powerful commission, effectively giving an education czar broad power over all Detroit schools.

Bureaucratic Limitations: The coalition's plan would create a "Detroit Education Commission." The DEC would be more powerful than any other education bureaucracy in the state when it comes to controlling parents’ educational choices: The DEC would have the power to close DPS schools and Detroit-area charter schools, determine which new schools are allowed to open, and where those new schools are physically located. The coalition envisions a future where this super commission would even have power over shared city services, including transportation and special education services.

The DEC might even have the authority to override parent preferences when it comes to picking the best school for their child. According to the coalition's report, parents will get their first choice "when available." What that will look like in practice is unclear.

In a potential organizational chart, the coalition envisions the DEC overseeing an office that would cost $4.6 million per year to operate. The bill is a tough one to swallow, since the DEC will be a bureaucratic entity charged with, essentially, slowing the growth of educational options in Detroit.

Many of the DEC's powers, such as deciding whether a new school can open, are a duplication of existing processes. Charter schools already have to be approved by a public authorizer. Further, the DEC's ability to close schools is a duplication of powers already in state law and ignores the fact that charter schools are already routinely closed for poor performance.

The coalition is proposing limiting the growth of educational choice in Detroit, less than two weeks after Stanford University highlighted Detroit's system of charter schools as a "model" for other communities to follow. If policy makers decide to restrict choice, Detroit parents will have every right to question that move.

Detroit public charter school students post higher learning gains than their DPS counterparts. And yet, the coalition’s recommendations strive to preserve the institution that has a long history of failing its students, while limiting new options that hold promise for Detroit families.

Spalding Quoted in The Detroit News

Article highlights school choice in Detroit

The Detroit News quotes Audrey Spalding, director of education policy, on school choice in Detroit.

According to the article, 25,000 Detroit students have chosen to use school choice to attend schools in the suburban areas, with 17,000 of those students attending charters.

“The point of our public education system is to serve the kids. There are reasons kids and families are traveling so far away to go to another school,” Spalding said.

The Detroit Public Schools district seems to agree. A Detroit Public Schools spokesman said the district is working to improve its system in order to attract students and keep current students from leaving.

The many friends and admirers of Robert P. (“Bob”) Crowner mourn his passing, which occurred this week at the age of 87, after a long bout with cancer.

Bob was an exemplar of the balanced life. He was successful in business before he taught the subject at the university level. He believed in the education of youth, devoting his attentions to enhancing it in both the public and private sectors. He knew a lot about a lot of things but never felt he knew enough that he could crow about it. He was an engineer who knew there was another engineer who towered over all others, the Creator who made us all. He worked hard at every job he held, but still found time to work a lot more as a volunteer for worthy causes. As a long-time member of the Mackinac Center’s Board of Scholars, his bio spells out some of the details:

Prior to teaching, Crowner worked for four companies in engineering and manufacturing management, culminating in a role as vice president of manufacturing. He also consulted for private companies, a public school district, and city and provincial governments.

Crowner was a Registered Professional Engineer in Indiana, Michigan and Ohio. He held a Bachelor of Mechanical Engineering from Purdue University, a Master of Science in Business Administration from Butler University and a Certificate for the Middle Management Program from Harvard Business School.

He did extensive volunteer work, including 34 years on the Lodi Township Planning Commission and 12 years on the Lodi Township Board of Trustees. He served as the director of the Center for Entrepreneurial Stewardship for the Acton Institute. He served on two private Christian school boards and a charter high school board. He also did volunteer counseling for SCORE, an organization which provides free consulting for small businesses.

Bob was an early friend of the Mackinac Center. In the very early 1990s, I met both Bob and his delightful English wife, Christine, and became instant friends. My assistant at the time, Kendra Shrode (now assistant to my successor Joe Lehman), and I enjoyed the many opportunities we had for lunch or dinner with the Crowners. The conversation, graced by Christine’s English accent, was always lively and uplifting. Bob’s broad smile, twinkling eyes and generous wisdom left a memorable impression every time.

I share with my former Mackinac colleagues a sadness at the news of Bob’s passing, but with the knowledge that he left the world a better place and left it for a better place. We extend our heartfelt condolences to his widow and our friend, Christine.

The Proposal 1 road funding initiative on Michigan’s May 5 ballot has excited strong feelings on both sides, but one provision has raised more quizzical eyebrows than passions. This is to initially use most of the new transportation revenue to repay past road repair debt, rather than immediately start pouring concrete and laying asphalt.

Specifically, if voters approve Proposal 1’s $2 billion tax increase (and if as expected legislators pass a necessary “clean up” bill), then most of the revenue from the measure’s $1.2 billion fuel tax will initially go to repay debt on past road repairs. In the first year $815 million will be used to repay debt. In the second year, this falls to $456 million. Only in the third year will the full gas tax amount go to current transportation funding, rather than paying for road repairs that politicians put on the state’s credit card years ago.

This actually makes a lot of sense. It gives time to allocate new road tax dollars effectively and rationally, and would remove the drain on current road funding caused by past politicians’ desire to spend now and let their successors pay for it later. The result of those choices has been persistent erosion of current Michigan road funding revenues.

The drain began in the 1990s and early 2000s, when Governors John Engler and Jennifer Granholm both chose to increase the amount of state borrowing for routine road maintenance projects. The political goal was to get a lot of orange barrels out and road repairs underway in a hurry. Various rationales were promoted for why borrowing made sense, but when the cement dust had settled it left a debt service overhang that persists.

In essence, Michigan is still paying today for routine road repairs done 10 years ago and more, which means less money is available to fix today’s roads.

A 2013 House Fiscal Agency report quantified the ongoing debt service drain on the annual transportation budget. The borrowing came in several installments. In the 2000-2001 fiscal year, debt incurred for road repairs increased from $633 million to $1.328 billion. Between 2002 and 2011 additional money was borrowed, and by the close of the 2012 fiscal year the state owed $2.046 billion for past road work.

Principal and interest payments increased apace, taking an ever larger bite out of annual road funding budgets. The House Fiscal Agency reports that annual debt service rose from $47.2 million in 2001 to $187.6 million by 2006. Between September 2009 and October of 2011 this debt consumed around $215 million each year, and it is expected to stay at that level until 2020, when presumably the amount will begin to fall off.

Love Proposal 1 or hate it, clearing away the burden of debt that continues to eat away Michigan’s annual state road budget would be a good thing. Taxpayers and motorists can only hope that a future crop of politicians won’t have to be taught the same lesson.

Gov. Snyder recently sent a letter to Michigan House Speaker Kevin Cotter and Senate Majority Leader Arlan Meekhof explaining some of the problems of occupational licensure.

The governor summarizes some of the good work the Legislature has done, and outlines the principles he'll use in "determining whether to support any legislation providing for additional occupation regulation.” Below are these principles:

  1. There must be a substantial harm or danger to the public health, safety, or welfare as a result of unregulated practice, which will be abated through licensure.
  2. The practice of the occupation must require highly specialized education or training.
  3. The cost to state government of regulating the occupation must be revenue neutral.
  4. There must be no alternatives to state regulation of the occupation (such as national or third-party accreditation) which adequately protect the public.
  5. The scope of practice must be clearly distinguishable from other licensed, certified, and registered occupations.
  6. Regulation through registration or listing (as opposed to licensure) does little to protect public health and welfare, and is not an appropriate use of government resources.

Occupational licensure laws require people to pay a fee and complete state-approved training before they are legally allowed to practice a trade. The public benefits of these laws are dubious, and when they are proposed, the Legislature almost never requires evidence of how licensing laws will actually protect public health and safety. Usually, these mandates are initiated and supported by special interest groups who benefit directly when their competition is limited.

Gov. Snyder recognizes that licensing serves to protect groups from competition, which drives up prices for consumers and harms the poor the most. He should be applauded for his efforts and the Legislature should move forward with eliminating these barriers to, as Gov. Snyder put it, the "pursuit of happiness."

Mackinac Analyst on Frank Beckman Show

James Hohman talks about Proposal 1 study findings

Assistant Director of Fiscal Policy James Hohman discusses his Proposal 1 study on "The Frank Beckman Show" on WJR AM760.

The May 5 ballot proposal raises revenue to fix the roads by increasing the sales tax from 6 percent to 7 percent and changing the way gas is taxed. The study shows the proposal will cost taxpayers $2 billion and the average household approximately $500 more per year. At the Energy Information Administration’s estimate average gas price for 2015 of $2.39, Proposal 1 would increase the price per gallon by 10 cents.

Most of the revenue raised under this proposal goes to road construction and maintenance, however, the proposal does include additional spending such as increased funding for public schools and increased earned income tax credits.