The MC: The Mackinac Center Blog

July 15, 2016 MichiganVotes Weekly Roll Call Report

More government energy debt; more subsidies for college, grocery stores and water; pension reform and more

The House and Senate held pro-forma sessions this week with no votes. Therefore, this report continues its series of describing some of the interesting bills that have been introduced in the current Legislature.

Senate Bill 642: Allow more municipal debt for home efficiency loans

Introduced by Sen. Rebekah Warren (D), to allow local governments to take on general obligation debt to pay for a program authorized by a 2010 law that allows them to lend money to a property owner for energy efficiency improvements or a renewable energy system. The bill would also remove a requirement that a homeowner’s mortgage lender must agree to the taking on the additional burden. Referred to committee, no further action at this time.

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Senate Bill 645: Ban misclassifying employees

Introduced by Sen. Mike Kowall (R), to prohibit an employer from “misclassifying” an employee as an independent contractor, as defined by a 20-factor test announced by the Internal Revenue Service. Referred to committee, no further action at this time.


Senate Bill 662: Require Detroit school district forensic audit

Introduced by Sen. Coleman Young, II (D), to require a forensic audit of the Detroit school district's financial operations and records. A "forensic audit" means an audit designed to determine whether there has been any violation of law or generally accepted accounting principles. Referred to committee, no further action at this time.


Senate Bill 664: Authorize more college subsidies

Introduced by Sen. Coleman Young, II (D), to authorize a pilot program that would have the state pay a student’s tuition at a state college or university if the student signs a contract to repay this by turning over a percentage of his or her gross income for a specified number of years after graduation. The colleges and universities would get the full tuition and fee payments from the state up front, but would be at risk if the student fails to graduate or make a decent living afterwards. Referred to committee, no further action at this time.


Senate Bill 678: Let Detroit water system "cross subsidize" residential customers

Introduced by Sen. Coleman Young, II (D), to allow the Detroit water and sewer water authority to charge higher rates on customers who use higher volumes of water. This would be a method of subsidizing residential customers by charging business and industry more per gallon. Referred to committee, no further action at this time.


Senate Bill 703: Repeal new restrictions on taxpayer-funded tax hike electioneering

Introduced by Sen. Dale W. Zorn (R), to repeal a provision of a law passed in 2015 that prohibits taxpayer-funded communications from local governments and school districts that reference their own property tax hike or other ballot measures during the 60 days before the election. Referred to committee, no further action at this time.


House Bill 5171: Require drivers over 75 to renew license at SOS office

Introduced by Rep. Ben Glardon (R), to require drivers age 75 or older to renew their license in person at a Secretary of State office. Referred to committee, no further action at this time.


House Bill 5180: Give subsidies to some grocery stores

Introduced by Rep. David Pagel (R), to authorize selective state subsidies for grocery stores in “underserved” communities. Referred to committee, no further action at this time.


House Bill 5200: Repeal concealed pistol “gun-free zone” provision

Introduced by Rep. Lee Chatfield (R), to repeal the “gun-free zone” provision of the concealed pistol permit law, which prohibits those who have received a permit after meeting the background check and training requirements, from carrying a pistol in schools, day care facilities, sports stadiums or arenas, bars, restaurants, places of worship, colleges, hospitals, casinos, entertainment facilities and courts. Referred to committee, no further action at this time.


House Bill 5209: Exclude emergency managers from liability waiver

Introduced by Rep. Peter Lucido (R), to require emergency managers appointed to run fiscally failed municipalities or school districts to post a performance bond, and to not include them in the immunity from personal lawsuits that generally apply to other school and local government officials acting in their official capacity. Referred to committee, no further action at this time.


House Bill 5218: Give new school employees 401(k), not pensions

Introduced by Rep. Tim Kelly (R) to close the current "defined benefit" pension system to new school employees, 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.


House Bill 5234: Exempt feminine hygiene products from sales tax

Introduced by Rep. Sarah Roberts (D), to exempt feminine hygiene products from sales tax. 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.

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Reforming No-Fault Insurance Would Lower Costs, Reduce Uninsured Cars

Van Beek discusses reforms in Fox UP interview

Michigan drivers pay the highest auto insurance rates in the country on average and will soon be paying more to drive in the state, but lawmakers can bring down the cost by reforming the system.

Mackinac Center for Public Policy’s Director of Research Michael Van Beek spoke with TV 6 and Fox UP about changes that should be made to Michigan’s insurance mandates to lower costs to drivers as drivers brace for higher fuel taxes and registration fees in 2017.

One simple reform, I think, would be to look at the unlimited personal injury protection and get that in line with what's more common throughout the country, which is to have a limited personal injury protection.

Michigan’s requirement that every driver purchase unlimited Personal Injury Protection means there’s no limit to what medical facilities can charge individuals seeking treatment from auto collisions. TV 6 and Fox UP cited a study by AAA Michigan that found a neck MRI costs $483 when paid by Medicare but $3,258 when paid through insurance.

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"That's because hospitals know that they can charge more because auto insurance companies are required to pay an unlimited amount for medical benefits for people who are injured in automobile accidents," Van Beek told the station.

In addition to letting Michiganders keep more money in their pockets, reducing the cost of insurance would also lower the number of uninsured drivers in the state, as Van Beek explained in a recent Viewpoint on the topic.

View the full report at TV 6 and Fox UP here.

Read more about Michigan’s no-fault insurance and reforms here.

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Vet Saves Dog's Life, Family is Happy – State Sanctions Him

The problem with occupational licensing

Dr. Jan Pol (photo via NatGeo Channel)

A vet safely saves a dog’s life and the owners are happy, but he is punished with a fine and probation and could have lost his state license. Why? Because a state board — filled with his competitors — and a state department have that authority.

This case involved Dr. Jan Pol, a veterinarian near Mt. Pleasant. As Michigan Capitol Confidential reports, five years ago, Pol performed an operation that was shown on his program on the Nat Geo Channel. The dog, Mr. Pigglesworth, was saved from being euthanized for under $300. But an out-of-state vet complained to the Michigan Department of Licensing and Regulatory Affairs, which punished him, “cit[ing] his failure to wear surgical gear (mask, gown, gloves) and to provide the patient with IV therapy. The bureau also faulted Pol for not placing a warming pad or blanket in the dog’s kennel during his recovery.”

The Michigan Court of Appeals overruled the decision. “As we said in the beginning, this case is curious. A dog’s life is saved, yet the veterinarian faces sanctions,” the court said.

What if we applied that same standard to all licensed professions? A building was painted, yet the painter faces sanctions. Hair was cut, yet the barber gets fined. Gutters were installed, yet the workers have their livelihood taken away.

This can only happen because each of the areas above, and hundreds more in Michigan, are subject to state licensing. This means workers have to meet certain educational requirements, pass certain tests, and pay extra fees to work. Most of the time, there is little reason for it.

Note that even without government licensing, the state can set health and safety rules. We require our restaurants to be clean and provide safe food – but Michigan does not mandate every cook to have a license. This is how it should be for most occupations.

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What matters are the actual results of an action – not arbitrary state-mandated rules and requirements. If workers can safely and effectively provide a service and customers are happy, why should a licensing board or state department get in the way?

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No Easy Answers in Highland Park

Students continue to flee troubled district

Educational challenges linger in Highland Park, nearly four years after the distressed school district was taken over by the Leona Group, a charter management company. A year after being forced to close the district’s only high school, the newly named Highland Park Public School Academy System struggles to retain students.

New management literally cleaned up the school facility’s filthy mess, which included a swimming pool full of garbage and rodents in the buildings. The first round of reading and math tests showed improved test scores, but early indicators of success highlighted by the Mackinac Center have not yet led to a remarkable breakthrough.

Detroit Metro Times columnist Curt Guyette recently homed in on the problems, pointing to tardy financial reporting from the original Highland Park district, which remains only to pay back funds borrowed by the old regime.

Guyette also highlighted the district’s enrollment, which has shrunk by two-thirds over the past four years. A closer look at state data raises more questions than answers. Most of the loss in students comes from Detroit residents who had once opted into Highland Park through the Schools of Choice program. Not surprisingly, most students lost have been at the high school level.

The enrollment trend is not heartening, and warrants further investigation. By the Leona Group’s internal count, the district gained 12 students between last fall and the 2016 spring semester, somewhat stemming the loss.

In seeking to explain the origin of the district’s woes that led to emergency management, Guyette’s column ultimately misses the mark. He falls back on questionable research in an attempt to exonerate previous management. He quotes and then attempts to rebut an observation made in a June 2015 Michigan Capitol Confidential story about the high school’s closure:

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“The collapse of Highland Park schools isn’t a tale of a poor district in financial distress due to a lack of money. It’s about financial incompetence and corruption of the school district’s administrators.”

To rebut the quote, Guyette turned to a 2015 report by Michigan State University professor David Arsen. The report blamed Michigan school districts’ shrinking fund balances on three factors: a Schools of Choice policy that empowers students to enroll in different districts; a funding formula that doesn’t provide enough money to compensate districts with declining enrollment; and insufficient reimbursements for special education services.

But the report omits from its calculations a significant portion of the money the district receives for special education, incorrectly claiming Michigan education funding has declined. Further, it is true that more parents exercise choice across school district lines and the state’s enrollment formula has remained static. But the number of districts in financial distress has actually dropped significantly, suggesting that it is possible to adjust to changing student preferences.

Why hasn’t Highland Park been able to respond? Guyette doesn’t provide any clear answers.

While downplaying the theft conviction of former school board member Robert Davis, the author also omitted altogether that the old district guard collected and spent more than $18,000 per pupil in 2011-12, its last year in charge. The charter-managed district today receives and spends less than $11,000 per student.

Publicly reported academic achievement data highlights ongoing challenges for the privately managed district. The Highland Park Public School Academy’s sole remaining school registered an F on the Mackinac Center’s latest Context and Performance Report Card, and its scores on the new M-STEP test represent a mixed bag in comparison with neighboring peers.

According to data shared by the Leona Group, Highland Park students register an average mark on Michigan’s new measure of year-to-year academic growth, and the school maintained “on target” accountability status from the state in 2014-15. The management company also reports that internal tests this past year show slightly more progress in reading and substantially more progress in math.

Highland Park still has a long way to go to put significant numbers of students on track to success. Plenty of unanswered questions about falling enrollment remain. There are no easy solutions, but it isn’t true that students are worse off in the new district than the old.

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Blown Away By Flawed Research on Jobs Program

Michigan spent millions with little to show for it

The Michigan Economic Development Corporation released a study on its 21st Century Jobs Fund, alleging that it helped create jobs in Michigan. Yet the study did not offer substantial proof. The MEDC needs to be more transparent about the shortcomings of Gov. Granholm’s “Blown Away” program.

The study, written by TEConomy Partners, was a trove of unjustified assertions. It contains such models of terrible prose as, “Now is the time for Michigan to reinvest in its commitment to transition the state’s economy into a 21st century knowledge economy driven by innovation.” Yet the study did nothing to show why putting more taxpayer dollars in the fund was a good idea. It also failed to show whether (or how) such spending could have brought about a large change in Michigan’s economy.

It did not inspect most of the programs financed by the 21st Century Jobs Fund. By my count, it covered only eight of the 16 programs the fund supported, and only a fraction of its total spending. It is tough to justify the existence of this fund’s activities if you don’t look at everything it did.

The study used a multiplier assessment as it tried to show the impact of the jobs fund. Yet it did not justify the MEDC’s claims: It did not prove that jobs were created.

Multiplier analyses only show the economic impacts of a given spending project, but they are not meant to justify the spending in the first place. They can tell whether spending on ice cream or pop would have a larger economic impact. What they can’t do is tell you whether it’s a good idea to get either ice cream or pop. And no multiplier analysis can justify the claim that government programs “led to stronger economy, increased jobs,” as a headline in a state press release read.

It is one thing for people who are benefiting from the state’s spending to try to keep the money flowing to them. As one legislator stated, “everyone loves free money.” But it is another thing for public administrators to use taxpayer dollars to try to justify that spending, and offensive that they would do so with a flawed study.

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A better assessment of the 21st Century Jobs Fund would look at what lawmakers tried to do and what they achieved. The promises got extreme — the governor even said that the fund might make “these United States independent of foreign oil.” But ten years later, the state has spent hundreds of millions with little to show for it.

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Mackinac Center Defends Resort Owner’s Free Speech Right

State media covers tourism bureau lawsuit

No one should tell individuals how to run their businesses or their advertising, but that is what is happening to resort and hotel owners in Northern Michigan.

The Indian River Area Tourist Bureau levies a 5 percent tax on each rented room in its region, violating the free speech rights of property owners like George Galbraith, who disagree with the forced speech. Last week, the Mackinac Center Legal Foundation filed a lawsuit on Galbraith’s behalf, arguing such regional taxes and the Michigan law authorizing the Indian River bureau are unconstitutional.

“The government can’t compel you to pay for speech which you don’t agree with,” Mackinac Center Senior Attorney Derk Wilcox told Michigan Public Radio.

Galbraith owns The Landings on Indian River and said he shouldn’t be forced to pay for tourism promotion that he neither wants nor needs.

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"They don't have meetings," Galbraith said in an interview with UpNorthLive/ WPBN. "They're just not accountable. I call them the tourist mafia because you have to join. They take your money and you don't get anything for it."

Reporters have noted that even they have had difficulty tracking down bureau manager Al Thompson. Mackinac’s Senior Investigative Analyst Anne Schieber told WPBN that the inaccessibility of the bureau is a problem for the resort owners who fund it.

It becomes a huge problem when one person is in charge of this and no information at all is being given back to these business owners. …We're prepared for a very big fight because there are a lot of special interests involved.

Wilcox said tourism bureaus may have made sense before social media and the internet, but now, Galbraith and other hotel operators are able to manage their own advertising, usually for a fraction of the cost. Galbraith should be free to make that decision on his own, Wilcox told the Petoskey News-Review.

It would be like if a chamber of commerce became mandatory and you had to pay. You may argue that that is great but some people want to do it on their own and not have to be forced to pay for the advertising.

Read the Petoskey News-Review’s report here.

Listen to Michigan Public Radio’s coverage of the case here.

Read the Interlochen Public Radio report here.

Watch UpNorthLive’s coverage here.

Watch 9&10 News’ coverage here.

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Workers Could Feel Pinch of Obama’s Overtime Rule

Vernuccio op-ed published in The Detroit News

President Barack Obama’s new overtime rules are likely to have unintended consequences, some of which could actually lead to less take-home pay for workers.

The president recently enacted new overtime rules that will make anyone earning up to $47,476 a year eligible for overtime pay, up from the current threshold of $23,660 a year. While the new rule is being advertised as a way to increase wages, Mackinac Center Director of Labor Policy F. Vincent Vernuccio and adjunct scholar Jeremy Lott write in a Saturday op-ed for The Detroit News that the new rules may reduce workers’ flexibility on the job and could even lead to pay cuts.

Rather than pay workers time-and-a-half, analysts and experts predict companies will reduce salaried workers’ hours and hire more part-time employees. Vernuccio and Lott explain:

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Obama may be touting the raises he hopes his rule will create, but the text of the regulations fail to mention giving workers a raise, notes Trey Kovacs, labor policy analyst for the Competitive Enterprise Institute. Rather, the two main objectives are to “spread employment ... by incentivizing employers to hire more employees rather than requiring existing employees to work longer hours,” and to “reduce overwork and its detrimental effect on the health and well-being of workers.”

Salaried workers should also expect their hours to be watched and regulated more closely, which could lead to a loss of flexibility.

Read the full op-ed in The Detroit News

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July 1, 2016 MichiganVotes Weekly Roll Call Report

Repeal 'stand your ground,' assert 'right to drinking water,' make policy body camera images secret, more

The House and Senate are on a summer and primary election season break. Therefore, this report contains several recently introduced bills of interest.

Note: There will be no Roll Roll Report on July 8. The next report will be July 15.


Senate Bill 563: Ban “sky lanterns”

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Introduced by Sen. Dale W. Zorn (R), to ban the use or sale of “sky lanterns,” which are miniature, candle-fired hot air balloons made of paper and sold as a novelty item. Referred to committee, no further action at this time.


Senate Bill 574: Mandate specified nurse-patient ratios

Introduced by Sen. Rebekah Warren (D), to mandate that hospitals maintain detailed staff-to-patient ratios specified in the bill. Referred to committee, no further action at this time.


Senate Bill 584: Let assisted living facilities sell drinks to residents

Introduced by Sen. Peter MacGregor (R), to allow up to 20 “homes for the aged” (assisted living facilities for seniors) around the state to get a liquor license that lets them sell drinks to residents and “bona fide guests.” Referred to committee, no further action at this time.


Senate Bill 611: Repeal 2006 “stand your ground” law

Introduced by Sen. Rebekah Warren (D), to repeal the 2006 law signed into law by Gov. Jennifer Granholm establishing a “home is my castle” and “stand your ground” self defense doctrine, under which an individual need not first flee from a threatening attacker before resorting to deadly force. Referred to committee, no further action at this time.


Senate Bill 634: Exempt police body camera recordings from disclosure

Introduced by Sen. Rick Jones (R), to exempt police body camera recordings from disclosure under the Freedom of Information Act. Note: House Bill 4229 would mandate these cameras for Michigan police. Referred to committee, no further action at this time.


House Bill 5101: Assert “right” to drinking water

Introduced by Rep. Julie Plawecki (D), to assert in statute that each person has a right to “safe, clean, affordable, and accessible water” for cleaning, cooking and drinking. The bill does not specify upon whom would fall the duty to pay the water bills if a person can’t or won’t do so. Referred to committee, no further action at this time.


House Bill 5103: Prohibit and define “aggressive solicitation” (begging)

Introduced by Rep. Michael McCready (R), to prohibit various actions and behaviors by people who are begging for money or other things of value, as specified in the bill, subject to a $100 civil fine. This would replace the current criminal sanctions, which House Bill 5104 would repeal. Referred to committee, no further action at this time.


House Bill 5114: Make election days a government holiday

Introduced by Rep. Adam Zemke (D), to establish that the three regular state dates for all elections in May, August, and November are state holidays, which among other things would probably result in most government employees getting the day off. Referred to committee, no further action at this time.


House Bill 5154: Require schools provide suicide warning sign training

Introduced by Rep. Peter Lucido (R), to require that public schools provide student instruction and staff training in warning signs for suicide and depression. Referred to committee, no further action at this time.


House Bill 5160: Require high schools to provide CPR and defibrillation classes

Introduced by Rep. Thomas Hooker (R), to mandate that public and private middle and high schools provide instruction in cardiopulmonary resuscitation and awareness of automated external defibrillation, and prohibit a student from graduating unless he or she has successfully completed this instruction. Reported from committee, pending before the full House.


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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This week the state released the long-awaited Michigan Education Finance Study, better known as an “adequacy study.” Twice delayed from its original March 31 deadline due to errors by different parties, the report authorized by December 2014 state legislation has been greeted with an underwhelming reaction.

Colorado-based Augenblick, Palaich, & Associates secured a $399,000 taxpayer-funded contract to produce the report. The company’s 13 studies of different states’ school finance systems all concluded with a call for more money, typically, a large dollar figure clearly stated in the report.

Poring through the Michigan adequacy study’s 224 pages, one thing readers won’t find is the overall recommended price tag. For the biggest backers of spending more on schools, reading the report must have been like waiting until spring break to open a shiny wrapped Christmas present, only to find an elaborate disassembled puzzle and a thick stack of detailed instructions.

Some people have latched on to the recommended $8,667 per pupil base expenditure, without a clear understanding of what the number represents. It’s the average amount spent by 54 school districts deemed to be “notably successful,” but only after factoring out expenses and applying a series of “efficiency screens” loosely explained in the report.

Federal government data actually shows the 54 districts spent a combined $11,285 per student on operations in 2014-15. By comparison and after excluding the report’s high-spending outliers, the per pupil expenditure for districts not deemed successful was only $60 less: $11,225. Add in intermediate school districts, and the total statewide figure surpasses $12,000 per pupil.

When the highly touted adequacy report leaves attuned observers wondering what the actual figures for K-12 spending are, it’s no wonder that the average Michigander struggles to give a well-informed answer:

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(The $13,000 per student figure mentioned in the video includes all education-related spending, both operational costs and capital projects.)

The $8,667 figure doesn’t capture the total of the adequacy study’s recommended increases. APA also proposes an additional 30 percent for each low-income student and 40 percent for each student who is not a native English speaker.

Such a plan might make funding more equitable, but the recommended spending amounts offer no real hope of improved outcomes for students. Following the state’s legal guidelines for the study, APA noted that base expenditures for 19 of the 54 top-performing districts were on average 10 percent less than the recommended amount. And many unsuccessful districts already spend more.

Using a regression analysis, APA estimates that each extra $1,000 spent per student increases high school math and reading proficiency rates by 1 percent. This finding differs somewhat from the Mackinac Center’s more rigorous, multiyear, building-level analysis that found no relationship between increased spending and 27 of 28 academic indicators.

Yet even granting that APA’s estimate is true, Michigan school districts would have to more than double their spending just to ensure one-third of 11th-graders meet the math standard on the state’s new test called M-STEP.

Even if our eager gift-opener could follow the dense instructions and successfully assemble the new puzzle, a huge letdown would be all but assured. The state should shelve the adequacy study and undertake the hard work of changing the education system’s incentives to maximize results.

Reforms that engage and empower parents offer one very promising path. Most gold standard research shows that robust school choice programs tend to produce better results — not only for participating students but also for those who remain enrolled in traditional public schools. And good news for lawmakers who recently had the adequacy study cross their desks: These programs almost always save money.

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State media covers school funding study

The state has released its long-awaited, twice-delayed education funding adequacy study, which claimed the state’s average school district operating expenditure of $12,000 per pupil is not enough.

Augenblick, Palaich & Associates, the Denver-based firm paid $399,000 to produce the report, also suggested increasing education funding in the District of Columbia — which spends over $29,000 a year per student — so its findings about Michigan were not surprising. Ben DeGrow, education policy director at the Mackinac Center for Public Policy, spoke with the Detroit News this week to offer his perspective on the state-commissioned study:

“Even given the information presented in this report, it doesn’t lead us to the conclusion that money alone is going to improve Michigan’s weak educational performance,” said Mackinac Center Director of Education Policy Ben DeGrow.

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DeGrow pointed to a study he co-authored earlier this year that found no relationship between increased spending and student performance. What seemingly matters more than how much is spent is how education funds are used. Though the state’s study found a number of districts that spend less are seeing greater student achievement, it failed to explain how they are achieving such success, DeGrow told Gongwer News Service.

He also argued that the formula the study used ignores the districts that are doing more with less. “Of the 54 districts they’re looking at, they also point out that 19 of those districts spend an average of 10 percent less than that $8,667,” he said. “What they don’t answer is how some districts are able to get the higher quality results with less money.”

The study also failed to explain how it determined a $1,000 increase in per-student spending would lead to a one percent increase in math and reading proficiency. In speaking with the Detroit Free Press, DeGrow explained it seems like a high sum to pay for comparatively small results, and that lawmakers should not accept the study as a carte blanche justification to spend more.

DeGrow said Michigan residents shouldn't jump to the conclusion that increased spending equals better outcomes. He said he found the opposite in a study he released earlier this year.

Whether lawmakers in Michigan do anything about the findings remains to be seen. The 2015 state law that required the study doesn't require the state to take action on its findings.

Read the full Detroit News article here.

Read the full Gongwer article here.

Read the full Detroit Free Press article here.

Listen to Michigan Radio’s report here.

Read the Mackinac Center press release on the adequacy study here.

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