As Michigan legislators debate whether to close the teacher pension fund, a new report on the state’s other major employee pension system — the state employee fund — warns about the need to close the system.
Even though policymakers closed the state employee retirement system to new hires in 1997, thousands of employees still participate in the defined-benefit system and tens of thousands receive benefits. The state has only 61 cents saved for every dollar of benefits earned by members and retirees.
Michigan Information & Research Service News reports that in a legislative battle pitting taxpayers against the prison guards union, the guards have won: There will be no prison privatization in next year’s state budget. This eliminates for now an opportunity to realize hundreds of millions of dollars in savings over the next several years by increasing the incentives of the non-privatized prisons to “sharpen their pencils” and operate more efficiently.
In an article today at Michigan Capitol Confidential, I focus on painting to highlight some of the absurdities in Michigan’s licensing laws. As the article notes, “Michigan law requires painting contractors to pay $235, take 60 hours of state-approved prelicensure education, pass two exams and be over 18 years of age … Michigan is one of only 10 states that licenses painters — and only five states require any education to paint for a living.”
The headline from a recent Reason-Rupe poll of Wisconsin voters is that reformist Gov. Scott Walker is likely to win a June 5 recall election.
Other findings have relevance for debates underway here in Michigan, notably one on government employee pension reforms.
The Service Employees International Union will no longer be able to skim dues from Medicaid subsidies that go to home health aides, according to the Detroit Free Press, Midland Daily News, MIRS Capitol Capsule and The Grand Rapids Press.
The SEIU took more than $30 million in dues over the last six years under the scheme. Michigan Attorney General Bill Schuette issued an opinion Friday saying the collection must end.
Bottom line first — a personal note: I believe Rep. Chuck Moss, R-Birmingham, is sincere, and don't think he has "sold out" to the MEA teachers union. People can agree to disagree on down-in-the-weeds interpretations of GASB rules, etc., and time will tell who is correct. However, even if it involves some relatively minor risks, Michigan will be well served if its leaders enact what would arguably be the most transformational fiscal reform since 1996, closing the school pension system to new employees. That would be a real feather in the cap of this Legislature, whereas failure to realize the oh-so-close opportunity would be a black mark — and a victory for the union.
Y = Yes, N = No, X = Not Voting
Senate Bill 1052, Repeal state “beach grooming” regulations and restrictions: Passed 26 to 11 in the Senate
To essentially repeal state regulations mandating a permit for "beach grooming." The restrictions were passed in 2003 during a period of low Great Lakes water levels, when many lakefront property owners and resorts were unable to access or use beaches because of excessive weed growth.
Senior Economist David L. Littmann today writes in Michigan Capitol Confidential that the state’s competitiveness hinges on school employee pension reform and lays out the case why teachers should be in a defined-contribution system.
More information on the issue can be found here.
Today’s Detroit News editorial cites Center research on the transition costs associated with reforming the Michigan Public School Employees’ Retirement System.
James Hohman, assistant director of fiscal policy, addressed the issue in his recent policy brief titled “Five Options for Addressing ‘Transition Costs’ When Closing the MPSERS Pension Plan.”
Andrew Biggs of the American Enterprise Institute has provided some useful context on the source of bogus arguments being used to oppose a pension reform passed by the Michigan Senate last week. The self-serving mischief has caused tremendous confusion in the House, threatening to derail a potentially transformational reform. Biggs’ subject was new research by University of Arkansas economist Robert Costrell, which was cited here.
According to an article on MLive, a budget plan put forth by Gov. Rick Snyder, Senate Majority Leader Randy Richardville, R-Monroe, and House Majority Speaker Jase Bolger, R-Marshall, would double the amount of money being spent on Michigan’s film subsidy program. Spending taxpayer money on millionaire Hollywood movie producers and stars is a bad idea.
Gov. Rick Snyder and former West Virginia Gov. Bob Wise spoke at an online learning panel discussion in Lansing Wednesday hosted by the Mackinac Center. The Grand Rapids Press, MIRS News and Gongwer News Service all covered the event.
Gov. Wise also spoke about the topic Wednesday evening and was joined by Michael Flanagan, superintendent for public instruction, and Dr. William Skilling, superintended of Oxford Community Schools. The Midland Daily News has coverage of it.
When school boards entertain the idea of contracting out to provide a service, school employee unions often warn of the dangers of such actions. They usually claim districts will ultimately fail to save money (being victimized by predatory pricing schemes), will fill schools with uncaring and dangerous “strangers,” and will end providing poorer services.
Richard Antonini, former chairman of the Mackinac Center for Public Policy’s Board of Directors, was inducted into the Junior Achievement West Michigan Business Hall of Fame last night, according to the Michigan Business Review.
Antonini, of Grand Rapids, retired in 2000 as chairman and CEO of Foremost Corporation of America, which merged with Farmers Insurance under his direction. He has served on the Junior Achievement Leadership Circle and the boards of Cornerstone University, Old Kent Financial Corp. and Spectrum Health Foundation.
Thanks to House Republicans, a major school pension reform passed by the state Senate last week could be undone. As reported by CapCon, Senators defied government employee unions by voting to close the chronically underfunded “defined benefit” school pension system to new employees, starting in 2013.
Some Republicans in the Michigan House, among them Appropriations Committee Chairman Rep. Chuck Moss, R-Birmingham, are urging their colleagues to pass legislation that would “prefund” optional health insurance benefits currently provided to retired school employees, who can start collecting these as early as age 46 in some cases.
There is no doubt that Michigan Gov. Rick Snyder has presided over a major expansion of school choice in this state: An artificial cap on the number of brick-and-mortar charter public schools is on a path toward elimination in 2015, and a similar limit on the number of parents who can choose online charter schools for their children is also going up. At the same time, however, these advances look almost modest compared to a nationwide trend of states taking school choice to the next level. The school choice bar is moving rapidly higher.
Former West Virginia Gov. Bob Wise in a Detroit Free Press Op-Ed Sunday extolls the benefits of online learning.
Wise, a Democrat who also served in Congress, will be speaking at an online learning discussion sponsored by the Mackinac Center that starts at 6 p.m. Wednesday at The Lansing Center. He and Gov. Rick Snyder also will participate in a panel discussion on the same topic at noon Wednesday.
A Viewpoint commentary by Michael Van Beek, director of education policy, on “flipped” classrooms appears today as an Op-Ed in the Shelby Township Source. A flipped classroom is one in which students watch or listen to pre-recorded lectures outside of class time, and then classroom time is used by the teacher to mentor students as they do homework or projects.
Y = Yes, N = No, X = Not Voting
Senate Bill 1040, Adopt school employee pension reforms: Passed 20 to 18 in the Senate
To close the current "defined benefit" public school pension system to new employees hired starting in 2013, and instead give them 401(k) accounts with employer contributions equal to 4 percent of salary. New hires also would no longer be eligible for retirement health insurance benefits, but instead would get extra contributions into their 401(k) accounts. Current retirees would have to pay 20 percent of the cost for their health benefits, up from 10 percent now. Current school employees would have to contribute more toward their pensions, or else receive benefits calculated under a less generous formula.
Mackinac Center analysts have been pretty tough on Senate Republicans who in recent days progressively watered down proposed school employee pension reform.
However, when the time came to stop talking and start voting, the Senate made a respectable down payment on desperately needed reforms. Referring to one major reform provision added late in the process, Senate Majority Leader Randy Richardville, R-Monroe, said to reporters, “Tell the Mackinac Center that, OK?”
The Michigan Senate today approved an amendment that would offer school employees hired after Jan. 1, 2013, a defined-contribution retirement system instead of a defined-benefit plan. If enacted, this will limit Lansing’s ability to defer the costs of pension benefits to future generations.
Jack Spencer, capitol affairs specialist for Michigan Capitol Confidential, was a guest on “The Frank Beckmann Show” on WJR AM760 this morning. Spencer discussed his latest story, which outlines how the SEIU is paying for a shell corporation to remain open after it was defunded by the Legislature. The Michigan Quality Community Care Council that was set up as the dummy employer in a scheme to skim millions of dollars from Michigan’s most vulnerable families operates three hours a month. In short, the union is paying the employer of the people it is supposed to represent so it can continue to operate and funnel dues money back to the union.
Senate Majority Leader Randy Richardville, R-Monroe, told reporters “Tell the Mackinac Center that, OK?” on Wednesday in announcing his support for legislation that would put public school teachers in Michigan hired after Jan. 1, 2013, into a defined-contribution 401(k)-style plan, according to The Detroit News.
Senior Economist David Littmann is heavily cited in a Detroit News story today about Michigan’s declining unemployment rate.
“Signs are trending upward at this point at a relatively slower pace than in the first quarter,” Littmann said of the announcement that unemployment in the state fell in April from 8.5 percent to 8.3 percent. “We’ll get some improvement with some of the reductions in gasoline prices to restore a little bit of purchasing power, but the great uncertainties are still out there getting worse.”
