MET's redistributive aspects are documented in Table 2. Only 17 percent of MET enrollees are families with an income level of less than $20,000, the group presumably the most in need of assistance to put their children through college. However, 19 percent of MET contracts are held by families earning more than $80,000.

Table 2

Income Distribution Of MET Families

$0 – 20,000

17%

$20,000 – 40,000

18%

$40,000 – 60,000

27%

$60,000 – 80,000

19%

$80,000 – plus

19%


Source: Michigan Department of Treasury (February 1989).


Thirty-eight percent of MET families, nearly one in every four participants, earn more than $60,000 annually. Nearly one in every five participants earn more than $80,000 annually. Most significantly, nearly two-thirds of MET families earn more than $40,000 annually.

Clearly the state needs to be less concerned about the access of families earning more than the Michigan median family income of $40,105, than with the access of families earning more than that amount. Yet state records suggest MET is not addressing the problem it was established to solve: guaranteeing educational access for the middle class. On the other hand if MET was designed to alleviate the concerns of upper-income parents about the rising costs of tuition then the program could be said to have succeeded admirably.

State officials have proposed making MET more accessible to the middle-class by allowing enrollees to purchase contracts on a monthly installment basis. Currently, enrollees must buy MET contracts in a single payment, and many families have been forced to take out loans, including second mortgages on homes, to pay for the cost of enrolling in the program.

Florida's pre-paid tuition plan has developed along similar lines, emerging as a program that is serving the interests of upscale, rather than middle-class families. Miami businessman Stanley Tate, the program's chairman, noted recently that the plan has failed to attract many low-income families or blacks. "It's too bad that a large number of blue-collar or low-income people are not aware enough of the program to take advantage of it," Tate said. "We anticipated a much greater response." Although the program's intent was to offer affordable college rates, fewer than one-fifth of the purchasers who reported their incomes made less than $39,000 annually. A majority of purchasers reported incomes of more than $50,000 per year, Florida records show. [32]

Present value analysis, in fact, shows that prepaid plans like MET make perfect sense for families who intend to send their children to the most expensive public schools in their state. This, in large part, explains the redistributive aspects of programs like MET. Wealthy parents who instill educational values in their children are, in a sense, "betting" that they will have a good chance of getting accepted at schools like LT of M-Ann Arbor or MSU.

Not surprisingly, 72 percent of the first group of MET students attending_ state schools are enrolled at U of M-Ann Arbor and MSU. [33] Eighty-eight college freshmen whose parents or grandparents prepaid all or part of their college tuition through MET in 1988 began school during the fall of 1989. Thirty-six students – 41 percent – are attending U of M, and 27 students – 31 percent – are enrolled at MSU. The other 25 students are enrolled at 16 other state universities. [34]

Given problems with MET, state lawmakers would be in a position to develop a new political constituency. To satisfy MET participants, lawmakers would be likely to raid other state funds, or tax state residents to maintain the plan. That is the political appeal of MET and why the program is so flawed from any view of fairness.

Consider Oakland County, which has the highest per capita income of Michigan's 88 counties, and includes communities like Bloomfield Hills, one of the wealthiest in the entire country. [35] In 1988, 10,224 Oakland County families, 25 percent of MET participants, enrolled in the program. (See Appendix 2) [36] Given current trends, and the state's own assumptions, more than 30,000 Oakland County families will be enrolled in MET by the end of the decade. If problems emerged with MET, one could expect Oakland County lawmakers, whether Democratic or Republican, to seek a political solution.

Economists have long noted this trend within government programs of transferring public funds to the wealthy. Gordon Tullock, one of the most influential figures in the economic theory of politics, has argued that income distribution and social policy in general leads to "welfare for the well-to-do." The evidence suggests that while the least advantaged in society are the targets of government programs they receive only a small fraction of the billions of dollars that go into the program. Instead, the lion's share of public funds are spent on special interest groups that have the political influence necessary to use the government for private gain. [37]