The MC: The Mackinac Center Blog

Communities Consider Risky Municipal Broadband

Local governments should get out of the way of private providers

Home broadband speeds for $85

Several towns in West Michigan are considering subsidizing municipal broadband, a high-risk strategy to provide better internet access for residents. One plan to provide fiber internet in Holland would cost city taxpayers more than $60 million dollars, even if projections are met. And in Laketown Township, outside Holland, residents narrowly rejected a proposal to spend $8.6 million on a similar system.

Township officials argued that the internet is a public good, worthy of being run by the government.

“The internet is a basic,” Laketown trustee Gary Dewey told the Holland Sentinel, “and we have to provide that service.”

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But the evidence shows precisely the opposite. For years, the price of a high-speed internet connection has come down substantially. And there is little evidence that municipal broadband, which has been tried, again and again, is a good idea.

A 2014 paper published by the Mercatus Center at George Mason University examined 80 municipal broadband projects nationwide over several decades, looking at 23 years of Bureau of Labor Statistics data, and found little evidence of economic benefit. The paper examined the number of local businesses, employee wages, and the number of jobs and found negligible benefits. The only noteworthy effect was on the number of new local government jobs — unsurprising when one considers that the federal government has dumped hundreds of millions of dollars into these projects.

The evidence shows that many cities have lost millions on risky public broadband systems from cost overruns, complications and unrealistic economic projections. Another problem is that these government programs often crowd out private investment.

Convincing people to switch to a government-run network is difficult, which is why these projects often fail. People often say they hate their internet providers, but a Rasmussen poll says only five percent of internet users consider their service to be poor. The vast majority rate it good or excellent.

In any case, the real answer to the question of how to make the internet better is to change local, state and federal laws to allow more market competition – not getting the government more involved. Google Fiber wants to expand across the country but is limited by local regulations and requirements. Local governments should repeal regulations blocking private investors and then focus on core services, not risky schemes with taxpayer dollars.

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Pension Costs Are Crowding Out Public Safety

Michigan is losing cops to retiree costs

A report from the state House Fiscal Agency shows that there has been a steady decline in the number of police officers in Michigan, falling 15.4 percent from 1990 to 2015. The report does not go into why this is, but here’s one theory: Pension underfunding is crowding out government spending, including hiring decisions.

Consider that the state police retirement system now costs between 57 percent and 63 percent of the Michigan State Police’s total payroll. It is not because the benefits are lavish. It is because the state is trying to pay for promises that it made in the past but didn’t set money aside for — the state saved only 63 percent of what pensions are expected to cost. And while the state may be able to rescind benefits for retiree health care, it has saved only 12 percent of what its current health insurance policies have cost.

Essentially, the state could increase its trooper workforce by 33 percent if employees had been offered retirement benefits at private sector averages.

Local government pension systems are underfunded as well. Our work in 2014 found counties had average funding levels of only 74 percent. And police unions have resisted the municipal trend toward defined contribution retirement, making them more susceptible to crowd-out. In other words, Michigan is trading pension costs for fewer police officers on the street.

This is a well-documented problem facing governments across the country.

It is a problem which benefits neither the employees that face these payroll constraints, nor those who want more police services, nor the taxpayers that have to pay for them. Policymakers need to seriously consider offering new employees defined contribution retirement benefits that will be paid as they are earned. It might change some of the trends in government employment highlighted by the House report.

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May 6, 2016 MichiganVotes Weekly Roll Call Report

Detroit school bailout, teacher strikes, state spending increases, more

Senate Bill 800, Appropriations: 2016-2017 Omnibus budget: Passed 26 to 11 in the Senate

The Senate version of the non-education portion of the state government budget for the fiscal year that begins on Oct. 1, 2016. This would appropriate $38.673 billion, compared to $38.616 billion authorized the year before. When combined with the education budget (next bill), the Senate proposes to spend $54.779 billion on all of state government next year, vs. $54.530 billion originally approved for the current year. Of this, $22.567 billion is federal money and $32.212 billion comes from state tax and fee collections, a 2.4 percent increase in the state share.

Who Voted “Yes” and Who Voted “No”

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Senate Bill 801, Appropriations: Omnibus education budget: Passed 23 to 13 in the Senate

The Senate version of the K-12 school aid, community college and university budgets for the fiscal year that begins Oct. 1, 2016. The bill would appropriate a total of $16.106 billion, of which $1.919 billion is federal money. Of this total, $14.107 billion would go to K-12 public education, compared to $13.896 billion the prior year. It also appropriates $1.6 billion for state universities, compared to $1.535 billion the prior year. Community colleges would get $399 million, vs. $388 million the prior year.

Who Voted “Yes” and Who Voted “No”


House Bill 4990, Expand local government energy efficiency financing schemes: Passed 34 to 0 in the Senate

To expand the things cities can spend money on under a scheme that lets them contract with vendors for energy-related facility improvements, and pay for these with money the projects are supposed to save (or from regular tax revenue if savings don’t appear). The bill would allow vendor installment contract durations of up to 20 years, expand the improvements that can be financed under the scheme, and allow the deals to include lease-purchase agreements.

Who Voted “Yes” and Who Voted “No”


House Bill 5078, Authorize paroling medically frail prisoners to a health care facility: Passed 95 to 13 in the House

To allow medically frail prisoners whose condition makes them “a minimal threat to society” to be paroled to a hospital, hospice, nursing home or other suitable accommodation for the balance of their term.

Who Voted “Yes” and Who Voted “No”


House Bill 5387, Give force to illegal teacher strike sanctions: Passed 59 to 49 in the House

To include more rigorous sanctions and more certain procedures for Detroit school teachers who participate in an illegal strike. The bill is part of a House proposal to overhaul the Detroit school district and would essentially cancel the current collective bargaining between unions and the Detroit district as part of the governance changes in House Bill 5384.

Who Voted “Yes” and Who Voted “No”


House Bill 5384, Pay Detroit school debt, require reforms: Passed 57 to 51 in the House

To end the state's emergency management of the insolvent Detroit school district, and give an elected school board control of the district's schools. Among many other changes and reforms, the bill requires a meaningful merit pay system for Detroit teachers, and caps central office overhead costs. The bill does not contain a Senate-passed provision creating a new "Detroit Education Commission" appointed by the Detroit mayor and having the authority to block new charter schools from opening in the city, or an additional $200 million the Senate added for "transition costs." This is part of $500 million Detroit Public Schools bailout and governance package.

Who Voted “Yes” and Who Voted “No”


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.

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Job Churn Shows Why Targeted Tax Favors Do Not Work

There is constant job loss and creation in the state economy

There is an underappreciated level of both job creation and job loss constantly happening in Michigan. This can be seen in the most recent “job churn” figures covering July through September of 2015. During that quarter 195,118 jobs were created in Michigan, and 204,087 jobs disappeared according to the Bureau of Labor Statistics.

That is out of around 3.6 million Michigan jobs included in this particular federal database. Thus, about one out of every 18 Michigan jobs was newly created during this three month span, and another one out of 18 jobs disappeared.

This remarkable “job churn” demonstrates why politicians’ economic development programs repeatedly fail to make much of difference.

Also in the third quarter of 2015, the Michigan Economic Development Corporation announced that companies getting state support would create 1,916 jobs. So even if the programs were costless and all the promised jobs were created (they rarely are), they would represent just 1 percent of the total job creation and destruction that goes on in Michigan every three months. Plus, the awards given to these companies cost taxpayers and this calls into question whether the net effect is positive for the state.

Michigan Job Churn

Nevertheless, the case for keeping these programs is often cast in terms of pragmatism. To paraphrase, boosters say they don’t care about ideology, only about doing things that create jobs.

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Except the programs are not pragmatic. They are unable to produce the effect that they claim. They have no real or measurable practical impact. As the job churn figures illustrate, their scope and magnitude are just a fraction of what would be required to have a meaningful impact on the economy.

Instead, the things that matter to the state’s economic growth are broad-based rules and policies that impact a large number of businesses. The state has improved some of these over the last several years, but ought to consider more — such as lowering the state income tax rate, reducing the state’s regulatory burden and lowering the barrier to entrepreneurship by scaling back occupational licensing requirements.

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Detroit Charters Face All of the Obstacles of Detroit Public Schools – And Overcome Them

Success at Detroit Achievement Academy and Cesar Chavez Academy-East

In recent months, Detroit Public Schools has been rife with turmoil: districtwide teacher sickouts, sensational pictures of widespread deplorable building conditions, an employee kickback scandal, reports of misappropriated federal funds, and now … more sickouts.

While unions and bureaucrats in the debt-ridden district wrangle over adult issues, costing DPS students thousands of hours in learning time, the city’s 100 charter campuses have pressed ahead uninterrupted with the business of educating students. They represent a broad range of quality, but on average provide students with an additional two to three months of important learning gains, according to the best research.

National Charter Schools Week is a fitting time to recognize some of the options many parents have pursued to escape from a dismally performing urban school district. Two third-year Detroit charters recently allowed me the opportunity to visit. Nearly every one of the students enrolled in these two small schools is poor and black. Each school is offering families an attractive alternative to their otherwise limited options.

Three years in operation with a building track record provides a fair picture of a school’s effectiveness and trajectory. Detroit Achievement Academy on the city’s northwest side opened its doors in fall 2013 to serve kindergarten and first grade, and today serves about 100 students. The school uniquely has attracted national attention from The Ellen DeGeneres Show and from the Public Broadcasting Service.

Detroit Achievement Academy

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Detroit Achievement Academy boasts academic growth in the 99th percentile, as measured by the widely used NWEA MAP assessment. Within the past couple weeks, its inaugural class of third-graders has taken the school’s first state standardized tests.

Founder Kyle Smitley is confident that M-STEP results will continue to demonstrate the school’s success. The academic calendar is longer than in district schools, extending from Labor Day to the end of June. Every student also gets a daily dose of visual arts and a weekly wellness class. The school provides more than enough reason for optimism — not just its Expeditionary Learning curriculum, but also its ability to attract top-flight teaching talent and instill a culture of high expectations.

“We believe kids in poverty in Detroit can succeed at high levels if given the resources,” Smitley told me during my April 28 visit. “It’s not rocket science if you put kids at the front of the dialogue.”

Overcoming the obstacles associated with student poverty could enable Detroit Achievement Academy to earn high marks on a future edition of our Context and Achievement Report Card.

Smitley, a young entrepreneur believes transformation will come to Detroit education locally and organically through small schools like hers. A second Detroit Achievement Academy campus is slated to open this fall.

On the other side of town, Cesar Chavez Academy Elementary East occupies a renovated former Catholic parish school in a blighted neighborhood.

“There’s so much dark on the outside,” said principal Adasina Philyaw, who grew up on Detroit’s west side in a middle-class family, and whose mother taught in DPS. “But it’s not like that in here. This is a place of light.”

She said impoverished parents, many of them single, felt judged in their children’s previous schools. With extra time and care, they let their guard down and get involved at the school. “Parents choose us because they feel safe,” Philyaw said.

Cesar Chavez Academy East

Enrolling students up through fifth grade, CCA-East is the newest of five schools in the Cesar Chavez Academy charter district, which spends about $6,000 less per pupil than DPS.

The poverty rate of the school, as measured by the federal lunch program, is nearly 100 percent. That is significantly higher than the rate of nearby DPS schools. The kids who arrive at the Maxwell Street campus require lessons from the kindergarten teacher on basic hygiene and how to hold a pencil.

The school provides students with two uniforms and other articles of clothing. Besides receiving breakfast and lunch on campus, students gets bags of food every Friday to help sustain them over the weekend. A disproportionate number of these students bring emotional and behavioral issues with them that require additional support.

Despite the challenges, CCA-East is achieving equivalent or better results than its neighbors on comparable M-STEP measures. Philyaw was proud to highlight the fact that 50 percent of her third-graders last year rated proficient in English language arts — a feat matched or surpassed by only one of 63 DPS schools. At the same time, she pointed out the need to improve results in science.

Both schools are accountable to parents and to standards in the contracts set by their university authorizers. Cesar Chavez Academy also works directly with an involved management company, the Leona Group.

Parents around the country continue to embrace more educational choice and the opportunity to access autonomous charters in their own communities. A new poll commissioned by the National Alliance for Public Charter Schools found 78 percent of parents favor broad public school choice, with more support coming from black and low-income parents. Once a charter school has operated in their area, parents are much more likely to support more charters to open around them.

Though Detroit Achievement Academy and CCA-East operate in different parts of Detroit and have somewhat different approaches, they portend more promising chosen paths of educational hope for families looking to break free. As the Michigan Legislature considers bills to deal with the problems in Detroit Public Schools, it shouldn’t put up obstacles to new urban charter success stories.

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Vernuccio: Teacher Sickouts Hurt Kids

Mackinac labor policy director interviewed by Fox Business

Mackinac Center’s Director of Labor Policy F. Vincent Vernuccio joined Fox Business this week to discuss the widespread closures of Detroit schools caused by teachers calling in sick to protest potential funding cuts.

This is all about politics. They’re putting politics in front of the education of kids. … The union would rather keep their monopoly and keep these kids in failing schools instead of giving them choice and the opportunity to succeed.

As Lansing debates how best to correct the financial mismanagement and failure of of Detroit Public Schools, Vernuccio stressed it is important to maintain school choice options, such as charter schools, so children have the best chance at succeeding.

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Vernuccio was also asked to comment on recent anti-Trump protests by union members.

Watch the full interview at Fox Business.

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Detroit Public Schools Debt Largely Not Supported By Additional Taxpayer Dollars

The state isn't on the hook for most of what DPS owes

As Michigan legislators discuss a bailout of the Detroit Public Schools, some have argued that this makes obvious fiscal sense for the state since state taxpayers are ultimately responsible for DPS debt. Yet a look at the composition of the district’s debt shows very little taxpayer exposure.

According to the Department of Treasury’s report, the district carries $3.4 billion in debt, most of which contains some state involvement. Yet this involvement rarely comes in the form of a direct obligation to cover the district’s debt.

Consider what is listed as $1.3 billion in DPS’s share of the pension system’s unfunded liabilities. Since the school retirement system is a multiple-employer, cost-sharing plan, these liabilities are the direct responsibility of the other school districts in the state. This means that policymakers could remove this debt obligation from DPS altogether and spread its costs over the rest of the school districts in the state. Indeed, because contribution rates are assessed as a percentage of payroll and because DPS is smaller than it used to be, DPS has already offloaded much of its retirement liabilities onto other districts.

In other words, DPS’s share of the unfunded pension liabilities is not really debt that DPS owes the state; it’s debt that the state owes future pensioners. Bailing out or not bailing out DPS will change none of this. In fact, one thing policymakers might consider is allowing DPS to completely exit the state-run pension system and shed the enormous burden it levies on the district. State policymakers have full control over the pension system and how these payments are made.

The district also secures some of its bonds and notes with revenue from the state. Yet these state contributions do not require that the state make additional payments to bondholders if the district does not make its payments. Instead, it gives bondholders the right to take money directly from the state’s general aid to the district. This would give the district less money to operate, but it would not necessarily require additional state dollars.

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There is one debt that may be the state’s responsibility — the money DPS borrowed through the state’s School Loan Revolving Fund. DPS has borrowed $196 million from the state through this fund, but the district is not likely to pay back the full amount. The state’s School Revolving Loan Fund has debtors of its own and any deficit it holds to those creditors due to DPS nonpayment may be an obligation of the state taxpayer.

If DPS creditors tap state payments to cover what DPS owes them, the district may not have enough money to operate. This is a serious concern, because it will limit the educational opportunities the district can offer current and future students. This may be something that lawmakers want to influence, but this is different from making the case to bailout DPS because the state is ultimately on the hook for the debt anyway.

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What’s Your Bubble? A Think Tank Checks Its Privilege

The ‘bubble score’ of Mackinac Center staff

In his 2012 book, “Coming Apart,” the social scientist Charles Murray discusses an increasing economic and moral divide among Americans.

Decades ago, Murray argues, the typical American was more likely to regularly interact with people from a different social class. People were more likely to marry across classes, attend churches with those of different backgrounds and participate in civic programs together. But today, Americans are increasingly stratified across social classes and distinctly different groupings on issues like religiosity, work ethic, education, family structure and more.

To demonstrate this phenomenon, Murray developed a “bubble quiz,” which is meant to measure how isolated a relatively well-off American is today from his not-so-well-off compatriots. It asks questions about religiosity, family situations, work, housing, entertainment choices and more. The higher the score, the smaller one’s bubble (the less isolated from members of different social classes). Murray says the average bubble score in “elite enclaves” like Manhattan, Silicon Valley, Washington, D.C. and parts of Los Angeles is between 12.5 and 24.5 while the national average is 44.2.

Murray’s main point is that we are increasingly isolated from people outside of our bubble, which makes understanding other mindsets more difficult. To mitigate this limitation, Mackinac Center experts try to practice the presumption of good will. We recognize that we may not be able to completely understand the rationale for someone’s argument on a particular policy issue, so we default to assuming that these arguments are made honestly and in earnest.

But on a personal level, following in the footsteps of our friends at the Texas Public Policy Foundation, we were curious about the size of the bubbles of our staff. So we took the test collectively and averaged a 49, suggesting that the average staffer at the Mackinac Center is less isolated by social class than the average American.

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So what’s your bubble score? Take the quiz here.

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Michigan Needs To Stop Charging Residents To Get Their Property Back

Mackinac Center analyst authors op-ed in Detroit Free Press

An op-ed published in the Detroit Free Press that is co-authored by a Mackinac Center analyst highlights the need for civil asset forfeiture reform in Michigan.

Michigan is one of the few states in the country that not only allows law enforcement to seize property from people who have not been charged with a crime, but requires the owner to pay between $250 and $5,000 to try to get it back. Such is the focus of the op-ed written by Mackinac Center Policy Analyst Jarrett Skorup and Nick Sibilla, a communications associate at the Institute for Justice.

As the authors explain:

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Under Michigan law, if your property is seized and valued less than $50,000, you must post a bond worth 10% of the property’s value to start the process of having it returned to you. But if you fail to post that bond within 20 days of the property being seized, it is automatically forfeited to the state.

House Bill 4629 — which passed a vote in the House and is awaiting hearing in Senate Judiciary Committee — would eliminate the bonding requirement for drug-related forfeiture cases and put an end to charging people who are unsuccessful in retrieving their property. Skorup and Sibilla noted Michigan is taking positive steps to reform its civil asset forfeiture laws on the books, but said more work remains:

Michiganders can still lose their property even if they have never been convicted in criminal court. Meanwhile, state law provides a perverse incentive to seize property and “police for profit.” After a property has been forfeited, police and prosecutors can keep up to 100% of the proceeds. According to a recent report by the Institute for Justice and data from the Michigan State Police, from 2001 to 2014, Michigan agencies collected more than $258 million in forfeiture proceeds under state law.

The bill was introduced by Rep. Peter Lucido, R-Shelby Township, and has been supported by both the Mackinac Center and the ACLU.

Read the full op-ed in the Detroit Free Press

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April 29, 2015 MichiganVotes Weekly Roll Call Report

Crime and Punishment: juveniles, sign breakers, fetus merchants, more

Senate Bill 564, Criminalize selling aborted fetuses or body parts: Passed 26 to 10 in the Senate

To make it a crime to receive a financial benefit or any type of compensation for transferring or selling an embryo, fetus or neonate, including organs, tissues or cells, if this was obtained as the result of an elective abortion.

Who Voted “Yes” and Who Voted “No”


House Bill 4187, Authorize jail for vandalizing road signs, lights, etc.: Passed 36 to 0 in the Senate

To authorize criminal penalties of up to 93 days in jail and a $500 fine for vandalizing or removing a traffic control device, light post, sign, etc. on a road or highway. For a third or subsequent offense the penalty would be one year in prison and a $10,000 fine.

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Who Voted “Yes” and Who Voted “No”


Senate Bill 761, Remove obsolete provisions from state school code: Passed 30 to 6 in the Senate

To repeal an obsolete 1974 law dealing with education for gifted and academically talented students. This one of a number of bills repealing obsolete laws or reporting requirements, most of which passed unanimously. This one was opposed by six Democratic senators.

Who Voted “Yes” and Who Voted “No”


House Bill 5024, Study vehicle driver marijuana intoxication threshold standards: Passed 107 to 1 in the House

To create a new government commission to review and analyze research and state laws relating to THC (marijuana) bodily content levels for purposes of establishing levels that indicate impaired driving, and then make policy recommendations.

Who Voted “Yes” and Who Voted “No”


House Bill 4965, Create juvenile justice family advisory board: Passed 96 to 13 in the House

To create a family advisory board in the Department of Corrections to give advice on ways to support family reunification when a minor is incarcerated for committing a serious crime, and other steps intended to assist re-entry into the community and reduce recidivism.

Who Voted “Yes” and Who Voted “No”


House Bill 4966, Require out-of-cell exercise for young prisoners: Passed 93 to 16 in the House

To require the Department of Corrections to provide “age-appropriate out-of-cell programming and outdoor exercise” at least five days a week for prisoners who are less than 21 years old.

Who Voted “Yes” and Who Voted “No”


House Bill 4962, End "tried as an adult" for some serious juvenile offenses: Passed 90 to 19 in the House

To no longer automatically prosecute and sentence 17 year olds charged with serious crimes as if they were an adult.

Who Voted “Yes” and Who Voted “No”


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.

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