The MC: The Mackinac Center Blog

Fixing Detroit Schools – Five Principles

The proper approach should benefit students and protect taxpayers

“We’ve got to do something about Detroit Public Schools!”

This sentiment is frequently expressed in education policy discussions in Lansing.

A review of the crisis confirms the need for action: The district teeters on the edge of bankruptcy, with more than $500 million in operating debt and more than $1.5 billion combined capital and bond debt. DPS is nearly $100 million behind in payments to the state pension system. Enrollment has plummeted — the district is one-third the size it was just ten years ago. Since 1992, district enrollment declined from 161,000 children to 46,500. (But to be clear, declining enrollment isn’t necessarily evidence of a crisis.)

The remaining students are poorly served: DPS students lag woefully behind the state proficiency averages for reading, math and science. In fact, based on 2015 national tests, it’s arguably the worst-performing school district in the entire nation, registering the worst scores of the 21 largest urban school systems in the country.

Given these facts, doing “something” is inadequate. Rather, policymakers must do the right thing for children and families in Detroit. Several principles can assist the Legislature as it contemplates action.

The first principle is that any solution for DPS must preserve and even expand the ability of families to select the school that best fits their children’s needs. Intimations that parents can’t make the best choice should be swiftly dismissed. Parental choices are not perfect, but they are better than the alternative — top-down, one-size-fits-all, bureaucratic control that sacrifices educational diversity for efficiency and stability (that is not always so efficient or stable!). Bottom line: Parents are best suited to be the primary decision-makers on whether a student attends a neighborhood public school, a charter school or a school in a different district.

To that end, a system where a central authority makes enrollment determinations is a step backward. There is merit in a common enrollment system with uniform paperwork and admission processes, though this must be coupled with eliminating the current default of assigning students to their local public school based solely on their address.

A second (and related) principle is that a politically appointed board, commission or czar should not determine which schools are allowed to serve children in Detroit. The governing educational bureaucracy in Detroit needs to shrink, not expand. Power needs to be turned over to parents, not political appointees.

The third guiding principle is to maintain a sort of institutional agnosticism. This means that serving students better should be the number one priority — not preserving an existing school district. New Orleans provides an example here: The devastation of Hurricane Katrina necessitated tough decisions on how to best serve the student population in The Big Easy. The old system was essentially replaced by Louisiana’s Recovery School District, which took control over most of the public schools in New Orleans, reopening them as charter schools. Ten years later, researchers can demonstrate that student performance and graduation rates in New Orleans have improved.

Fourth, policy leaders must safeguard taxpayers from repeated rescue missions of DPS. A one-time bailout may be unavoidable, but state taxpayers are rightfully skeptical of an entity that chronically falls into financial mismanagement. Muskegon Heights and Highland Park may serve as models: These districts were each split into two entities, one to manage ongoing educational functions and one to retire debt obligations.

The final principle is that a new system of schools in Detroit should be answerable to a new method of accountability that holds schools to higher standards. Policymakers should not settle for wiping clean the fiscal mess and allowing substandard academic performance to persist. Consider, for example, an A-F letter grading system that measures proficiency and student growth, and, unlike anything that the state has tried before, actually holds schools accountable by closing them down when they don’t meet reasonable performance benchmarks.

Education in Detroit can recover — there are thousands of educators in both charter and traditional public schools dedicated to this mission right now. Policymakers need to free these schools from the burden of past administrative failures and create the structure to allow schools and children to flourish. These five principles are necessary components to that end.


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Stopping Special Union Deals in Michigan

Two important bills have passed the state Senate

Two important bills that would prevent some special union deals have passed the state Senate.

Senate Bill 279 would “prohibit public school districts and unions from adopting ‘release time’ arrangements in which a school employee who goes to work full time for a teachers union remains an employee of the district for purposes of collecting a government pension.” This came to light as a result of Michigan Capitol Confidential breaking several stories about the past three Michigan Education Association presidents entering special deals where they worked for a private union but continued to be officially “employed” and paid by school districts. This scheme allowed them to count their time and earnings with the MEA as credits toward their taxpayer-funded pension, artificially boosting their eventual payout compared to what it would have been based strictly on their time and pay actually working as public school employees.

Senate Bill 280 would “ban government employee union contracts that pay employees who are union officials for the time they spend on the job conducting union business (which they call ‘release time’).” Another Michigan Capitol Confidential investigation showed that public school districts are spending millions every year on local union officials who are released from their teaching duties in order to work on a full- or part-time basis for their respective union. Taxpayers pay for the costs of their salaries and benefits as well as those of the teacher who must replace these union officials and actually work in the classroom.

Both of these practices are a bad deal for taxpayers and unfair to public school students and employees. The bills were sponsored by Sen. Marty Knollenberg, R-Troy, and co-sponsored by most of the Senate Republican caucus. The bills now head to the state House.


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November 6, 2015 MichiganVotes Weekly Roll Call Report

Gas tax hike, road funding finale, more.

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

House Bill 4738, Increase gas and diesel tax: Passed 20 to 18 in the Senate

To increase the state gasoline tax from 19 cents per gallon to 26.3 cents starting in 2017, and after that index the amount to inflation. Also, to increase the state diesel tax from 15 cents to that same 26.3 cents per gallon level, plus inflationary increases.

Who Voted “Yes” and Who Voted “No”

House Bill 4736, Increase vehicle registration tax: Passed 20 to 18 in the Senate

To increase the annual vehicle registration (license plate) tax by 20 percent. Also, to impose a surtax on electric and alternative fuel vehicles that use the roads but don't pay gas tax.

Who Voted “Yes” and Who Voted “No”

House Bill 4370, Earmark some income tax to roads; increase home property tax credit: Passed 28 to 10 in the Senate

To earmark $600 million in state income tax revenue to road repairs starting in 2020, and smaller amounts starting in 2018. Also, to expand a "homestead property tax credit" that homeowners and renters can claim on their state income tax, by raising property value and household income caps that limit eligibility, and index these dollar amounts to inflation.

Who Voted “Yes” and Who Voted “No”

Senate Bill 414, Authorize potential future income tax reduction: Passed 28 to 10 in the Senate

To potentially roll back future income tax rates if the amount deposited into the state "general fund" in a given year grows more than 1.425 times faster than inflation - but not until 2023. Note that the legislature ultimately controls these deposits, so any future income tax rate reductions would essentially be at the discretion of each legislature, as under current law.

Who Voted “Yes” and Who Voted “No”

Senate Bill 571, Repeal annual union PAC contribution “re-up” requirement: Passed 38 to 0 in the Senate

To repeal a requirement that union members or employees of a corporation who wish to have contributions to a union or corporate Political Action Committee (PAC) automatically deducted from their paycheck must affirmatively give consent on an annual basis by means of signing a permission form. The bill would repeal the annual “re-up” requirement.

Who Voted “Yes” and Who Voted “No”

Senate Bill 510, Restrict commercial use of student data: Passed 38 to 0 in the Senate

To prohibit a website, online service or app designed for K–12 school purposes to sell, share or use for targeted advertising any information in a student’s educational record, including details that would allow contact, discipline records, test results, special education data, juvenile dependency records, grades, evaluations, criminal records, medical records, health records, social security number, biometric information, disabilities, socioeconomic information, food purchases, political affiliations, religious information, text messages, documents, student identifiers, search activity, photos, voice recordings, or geolocation information.

Who Voted “Yes” and Who Voted “No”

House Bill 4390, Allow financial literacy as high school economics credit: Passed 38 to 0 in the Senate

To allow a financial literacy or “personal economics” course to be substituted for the one-half credit economics course required under state high school graduation standards.

Who Voted “Yes” and Who Voted “No”

House Bill 4736, Increase vehicle registration tax: Passed 54 to 53 in the House

To concur with the Senate-passed version of this bill, which increases the annual vehicle registration (license plate) tax by 20 percent per vehicle, and imposes a surtax on electric and alternative fuel vehicles.

Who Voted “Yes” and Who Voted “No”

House Bill 4738, Increase gas and diesel tax: Passed 55 to 52 in the House

To concur with the Senate-passed version of this bill, which increases the current 19 cent per gallon state gasoline tax and 15 cent diesel tax to 26.3 cents per gallon starting in 2017. Note: The House previously approved a $200 million fuel tax hike and a $400 million vehicle registration tax hike. The Senate "flipped" those numbers, a change the House accepted with these concurrence votes. These votes also send the final road-funding package to the Governor, who has indicated he will sign the bills.

Who Voted “Yes” and Who Voted “No”

SOURCE:, 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


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A Lesson from the Land of Lincoln: Electricity Competition Works

Michiganders could have saved $10.6 billion in energy costs

If you think the rule of law and fiscal responsibility are key components to growing economic prosperity in Michigan, you probably don’t often look to Illinois for new policy ideas. But there’s at least one lesson Michigan could borrow from the Land of Lincoln: full electricity choice. A recent study from the Compete Coalition estimates that electricity consumers in Illinois saved $41.3 billion from 1999 to 2014 as a result of the state opening up its electricity markets. The state now features the lowest electricity prices in the Midwest.

But things weren’t always so peachy in the Prairie State. As recently as 1997, Illinois had the highest electricity prices in the region. But shortly thereafter, the state embraced electricity choice and forced the regulated public utilities to compete with alternative energy suppliers. The result was Illinois outcompeted every other Midwest state on electricity prices over the next decade and a half.

Illinois electricity prices increased by just 15 percent from 1997 to 2014, moving from about 12 percent above the national average to 9 percent below it. Meanwhile in Michigan, electricity prices increased by 58 percent over the same period. And in Wisconsin, a state that allows for no energy competition, prices rose by a whopping 106 percent.

At the time when Illinois opened up its electricity market, its prices were very similar to Michigan’s and higher than those in Wisconsin. Tracking the difference between these prices over time allows one to estimate how much customers in Michigan and Wisconsin could have saved in electricity costs if they would have paid the Illinois price.

The results are eye-opening. Michigan residents paid $2.3 billion more in electricity costs in 2014 than they would have if prices here matched those in Illinois. Wisconsinites paid $1.3 billion more. But that’s just one year: The total amount Michiganders could have saved from 1999 to 2014 if prices here matched those in Illinois is an incredible $10.6 billion. Wisconsin residents would have saved about half that — $5.6 billion.

The Michigan Legislature is currently considering bills (Senate Bill 437 and House Bill 4298) that would all but choke out the little bit of electricity competition that exists in this state. Based on Illinois’ remarkable success, this seems like a very shortsighted move. Instead of cutting off cost-containing competition, Michigan lawmakers should follow Illinois’ lead and open up our electricity markets.


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MLive quotes James Hohman on House roads funding package

Promised tax cuts don't always materialize

Lawmakers in Lansing have been debating a series of bills aimed at increasing the amount of money available to repair Michigan roads. The House plan, which passed in late October, would provide $1.2 billion to repair roads by raising fuel and vehicle registration taxes to the tune of $600 million over time, and dedicating $600 million over time from increasing income tax collections.

The Senate version of the plan, passed November 3, also allocates $1.2 billion for roads with a $600 million tax increase, though it relies more heavily on a gas tax increase (as compared to a registration fee hike) than does the House plan.

Under the House plan, tax hikes would be accompanied by possible personal income tax cut, if revenue growth in the general fund surpasses inflation in a given year. Additionally, the plan would expand the homestead property tax credit by raising the household income cap from $50,000 to $60,000, while raising the maximum value of the credit to $1,500.

The Mackinac Center has been vocal about the fact that just because lawmakers promise tax cuts in the future does not mean those cuts will actually materialize. James Hohman, the assistant director of fiscal policy for the center, was quoted by MLive in an article about the tax-relief components of the bills.

"The most important thing is to reduce the rate, because what matters to (economic) growth is the marginal rate of taxation, whether people are going to invest or spend or do something else to employ others," Hohman said.

The Mackinac Center, however, is skeptical of the income tax rollback component of the House road funding plan because it would not bind future legislators, who could simply undo the trigger before it was ever pulled.

Michigan's income tax rose from 3.9 percent to 4.35 percent in 2007 as part of a last-minute budget deal under then-Gov. Jennifer Granholm. The rate was scheduled to rollback to 3.9 percent by 2015 but was frozen at 4.25 percent in 2011 under current Gov. Rick Snyder.

"Michigan's history indicates that a lot of times these phaseouts just don't happen," said Hohman. "The Small Business Tax, the personal income tax phaseout under Granholm. Future Legislatures rarely feel like these are strong promises to taxpayers."

The full article is available at MLive.


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China’s One-Child Policy and the ‘Ultimate Resource’

The costs of China's recently lifted reproductive restrictions

Image from Wikipedia.

There was welcome news recently as the Communist ruling party in China announced that it would loosen restrictions on the number of children couples are allowed to have. For 35 years, most people were limited to having only one child.

China instituted the policy in 1979 as a “temporary measure” to curb its population and, according to the Associated Press, to “limit the demands for water and other resources.” The AP adds, “The government credits the one-child policy with preventing 400 million births and helping lift countless families out of poverty by easing the strain on the country's limited resources.”

Like many government policies, this one created misaligned incentives. Most notably, couples showed a preference for having sons, hugely skewing the gender ratio in China. The workforce rapidly aged, there were increased problems with women trafficked as brides, as well as forced sterilizations and abortions.

And the reported benefits of the one-child policy were probably illusionary. Rather than lifting people out of poverty, it likely did more to keep the Chinese impoverished. It robbed the world of 400 million people, and despite what the Communist rulers in China believed, people are not resource-draining automatons, but rather the “ultimate resource.”

In his 1981 book, “The Ultimate Resource,” economist Julian Simon disputed the notion that humanity was running out of finite resources. He provided examples of resources that were once thought to be in “crisis,” but ended up rebounding as mankind began using these goods more efficiently or found steady substitutes. One example is the size of forests in America: Doomsayers have warned of the U.S. running out of forests to produce wood-based products (and absorb carbon dioxide) for decades. But according to the Food and Agriculture Organization, forest growth has outpaced the amount of forests harvested since the 1940s. Forest growth was 380 percent greater in 1997 than it was in 1920. The reason for this is that humans have found substitutes (which are almost always more affordable and efficient) for wood-based products, and the demand for harvesting forests has been dramatically reduced. Meanwhile, companies are better at logging and replanting trees.

Humanity is very adept at innovating and raising living standards while using fewer resources. That’s one reason why Japan, which has twice the population density of China and far fewer natural resources, managed to create a much higher standard of living than China. Sadly, through its one-child policy, China was limiting the freedom of its people for decades while simultaneously robbing them (and to an extent the rest of the world) of economic growth.


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Hillary Has It Wrong: Low Income City Doesn't Mean Low Income Schools

With the right tools and the right people, sound government can be an achievable goal. Consider the case of the Traverse Area District Library. About 10 years ago, during the housing boom, the library was flush with cash. That sounds like a desirable problem, but it was not.

“You get mission creep. It was no longer about books,” said resident George Galic, a retired business consultant who was so alarmed by the spending that he sought and received an appointment on the library board.

For example, the library was considering a 10-year lease on a building to create a studio for public access TV and an Internet cafe.

“Neither of those are part of the business of running a public library, and the 1996 operating millage ballot language restricts use of this general fund money to solely be used for a public library,” said Galic.

The lease was defeated, but Galic thought it was time the board took a close look at operations and spending in general. The board hired Hartzell-Mika, a Michigan-based consultancy that specializes in library management, to interview staff and review the library’s organizational structure.

The board and the consultants also took advantage of a public database maintained by the Library of Michigan on some 380 public libraries operating in the state. Libraries are required to submit data annually as a condition of receiving state aid money. Anyone can view the data to see how a particular library’s use and budget stacks up with others.

The Traverse City library, for example, had 23 percent more full-time staff than comparably sized library systems, yet it employed fewer professional librarians with graduate degrees (12 percent of total staff versus an average of 32 percent). As a result, its salary and benefits were higher than others.

Interviews with employees determined problems with organizational efficiency. Many workers were uncertain who their real supervisor was. It seemed one person made key decisions even though that was not part of that individual’s job description.

To Galic and some members of the board, this indicated a problem with cronyism and may have explained why the administration had such a large full-time staff and why the library had failed to update its technology. Galic said the system was so antiquated it was hard to find someone willing to run it. There was also a problem with new material not being cataloged and circulated.

“So, it might be six months before you could get what you wanted,” says Galic, who believed the new material was being distributed to acquaintances of library staff.

Nearly 8 years later, the library has greatly improved. The state's public library database provides a number of variables for determining how much a community values its library system. One measure is circulation. The Traverse City library circulates 12.61 pieces of material per capita versus the average of 9.66. Per capita visits are also higher, 6.58 versus 5.08.

The $45.22 per capita operating income increased slightly in 2014 to $47.60, but Galic says thanks to the board’s analysis, more of that money is being spent on material and technology, not staffing. Additionally, the library spends far less than libraries of a similar size. For example, per capita income in Kalamazoo is $97.24 and in Ann Arbor, it’s $76.73.

“In the case of Ann Arbor, basically, we cost at least 62 percent of what they do, even though we’re about two-thirds the size, with much lower property valuation,” said Galic. The library millage in Ann Arbor is 2.0 compared to 1.1 for the Traverse City library.

Additional information in the database includes details on branches; hours; square footage; collections; services; programs; Internet connectivity; technology; millages; operating income and expenditures; capital income and expenditures; nonresident fees; and staffing and salary information.

It is not enough, however, to have comparable data to run a sound government system. Galic says boards need to be filled with knowledgeable and dedicated people.

“You need a least one person who is going to be a lightning rod, to ask the tough questions, to challenge the vote,” said Galic. He describes himself in that role because he is retired, financially independent and not seeking political office.

He said it also helped to have a forensic accountant on the board as well as other civic-minded professionals.

“We improved the range of product and selection. We improved the use of the library, but most importantly, the value for the taxpayer,” said Galic, who is hopeful that with improving technology, similar data will become more available for other government boards.


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October 30, 2015 MichiganVotes Weekly Roll Call Report

Warrantless searches, guns, poachers, government “venture capital,” more

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

House Bill 4195, Limit some government “venture capital investment” spending: Passed 36 to 0 in the Senate

To prohibit the state from pledging any more future tax revenue to guarantee investor returns under an "early stage venture capital investment" program authorized by a 2003 law. The bill would not affect several other government "venture capital" schemes however, including a "Venture Capital Development" program under the Granholm-era "21st Century Jobs Fund" rubric, a "Venture Match Fund," a "Venture Development Fund," an “Accelerator Fund,” past grants to a "Venture Capital Association" and more.

Who Voted “Yes” and Who Voted “No”

Senate Bill 539, Expand “promise zone” tax increment financing authorities: Passed 36 to 0 in the Senate

To expand from 10 to 15 the number of “promise zone” tax increment financing authorities (TIFA) located in low income and “low educational attainment” areas. These entities “capture" a portion of any increases in the state portion of school property tax revenue in the area, and use the money to partially subsidize college tuition for local students.

Who Voted “Yes” and Who Voted “No”

Senate Bill 244, Increase fine for illegally shooting game animals: Passed 76 to 29 in the House

To increase the amount of restitution a person must pay for illegally shooting certain game or protected animals. Among others the bill would impose a $5,000 fine for illegally killing an elk or moose, $3,500 for a bear, $1,500 for an eagle, etc.

Who Voted “Yes” and Who Voted “No”

Senate Bill 225, Revise procedure for taking ownership of inherited pistol: Passed 99 to 6 in the House

To revise the law that requires an individual who obtains a pistol from a private person to first get a government permit. (This does not apply to purchases from a licensed firearms dealer.) The bill would clarify that a person who inherits a pistol would have 30 days to get this government license after taking physical possession of the pistol.

Who Voted “Yes” and Who Voted “No”

House Bill 4321, Restrict warrantless residence searches: Passed 83 to 22 in the House

To establish that a law enforcement officer may not search a residence without a search warrant if a resident expressly objects, even if another resident consents after the objector is no longer physically present. This would not apply if one resident is the victim of a crime committed by another resident, or if there is imminent danger to people, a suspect may escape or evidence may be destroyed.

Who Voted “Yes” and Who Voted “No”

SOURCE:, 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


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Legislature Examines Overcriminalization

Two bills propose solutions to criminal intent problem

On Oct. 27, the Michigan Senate Judiciary Committee met in Lansing for a hearing on two bills that address an aspect of overcriminalization that has been the subject of many Mackinac Center studies and commentaries, namely, the failure of criminal statutes to specify a culpable mental state for the commission of a crime. The bills were Senate Bill 20, sponsored by Sen. Mike Shirkey, R-Clarklake, and House Bill 4713, sponsored by Rep. Ed McBroom, R-Vulcan.

In their current versions, SB 20 and HB 4713 take different tacks in reversing the trend of passing criminal laws that remain silent as to a defendant’s state of mind. (The committee is considering substitute language but has not taken action yet.) HB 4713 would apply one of three default intent standards (“purposely,” “knowingly” or “recklessly”) to existing and future laws, working retroactively to immediately change the way alleged criminals are prosecuted. This bill exempts several sections of Michigan law from being subject to this default standard, including the health code, the vehicle code and the penal code.

SB 20 calls for the enactment of a default “knowingly” intent standard. It would apply to legislation enacted after Jan. 1, 2016, and does not exempt any portion of Michigan law from modification under this new rule. This means the state would need to demonstrate that a person knowingly violated the law in order to convict them of a crime, unless the Legislature specified a stricter intent standard for that particular crime.

Both bills represent an improvement to a disturbing trend that the Mackinac Center has highlighted since 2013, and each contains provisions worthy of support. While HB 4713 boasts more immediate impact than SB 20 due to its retroactive operation, SB 20 specifies a single mental state — “knowingly” — that would not require the courts to determine an appropriate standard. (Both bills correctly fix the standard at something higher than mere “negligence.”)

It should be noted that the large exemptions that HB 4713 carves out do not necessarily render it meaningless. The exempted sections of Michigan law are ones that, according to our assessment, tend to contain fewer provisions that fail to specify criminal intent. The default would amend true problem areas, such as Michigan’s large volume of often highly technical administrative rules and regulations. Mackinac Center Executive Vice President Michael Reitz offered a complete commentary on HB 4713 during legislative testimony last month.

The bills under consideration represent important action on the problem of overcriminalization in Michigan. A default intent standard would reduce the chance that individuals could be prosecuted for crimes they unknowingly commit, allowing law enforcement to focus limited resources on violent and property crimes. Given the crime levels and fiscal constraints in many of our urban areas, this clarified law and renewed focus can’t come too soon.


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Pension Predictions Fall Short

Defined-benefit plans don't get funded, they get underfunded

The school pension system is in dire need of reform. It owes school employees and retirees $26.5 billion — 13 times more than the state owes its general obligation bondholders. Yet some policymakers think that they have already solved the problem with changes to the system made in 2010 and 2012. What has happened since shows why the state needs to get out of the defined-benefit pension business entirely.

Back in 2012, legislative fiscal agencies modeled what would happen to contribution rates  — the percentage of schools’ payroll required to meet the costs of the system — with and without the reforms. They predicted that contribution rates would be 30.5 percent of payroll this year after the reforms.

Current rates are 36.3 percent of payroll, 19 percent higher than projected. And higher than fiscal agencies predicted they would be even without the 2012 reforms.

These projections for the Michigan Public School Employees Retirement System went off the rails quickly and have underestimated real contribution rates since 2014.

pension rates

The difference is caused by what we told them at the time: defined-benefit pension plans don’t get funded, they get underfunded.

The projections used by the legislative fiscal agencies assumed that the system would not develop any further unfunded liabilities. This was inaccurate. The system developed another $2.2 billion to the difference between what it has saved and what it has promised to pay out.

Underfunding the school employee pension system does a disservice to teachers, school boards and taxpayers alike. The state has failed to demonstrate that it can capably manage a large defined-benefit system, failing time and again to accurately project the real costs and to adequately pay those costs. That is why Michigan politicians ought to convert the system to a defined-contribution plan one where teachers are paid with real money rather than promises, and the costs to taxpayers are clear, transparent and controlled.

You can read more about how to reform Michigan’s school employee retirement system at


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