The MC: The Mackinac Center Blog

Vernuccio Op-Ed in Washington Times

How Big Labor can solve its membership crisis

Labor Policy Director F. Vincent Vernuccio writes in The Washington Times about the recent announcement by the Bureau of Labor Statistics that union membership is on the decline, including a 7.6 percent drop in Michigan from 2013 to 2014.

Vernuccio draws on his recent study, “Unionization for the 21st Century: Solutions for the Ailing Labor Movement,” to suggest how unions can stem the tide.

Time to Uncork Beer and Wine Reforms?

Office of Regulatory Reinvention seeks input

The Office of Regulatory Reinvention granted permission to the Michigan Liquor Control Commission to open a review of alcohol control rules. The Mackinac Center for Public Policy weighed in on two (beer and wine) of them today.

The Mackinac Center has long had an interest in the state’s beer and wine rules because they, among other things, raise the cost of beer and wine in the state while enriching a handful of crony capitalists. One study indicates that these rules may raise the cost of beer and wine by 6.4 percent to 30 percent, depending on the price.

The rules mandate that beer and wine wholesalers post their prices with the Michigan Liquor Control Commission and then hold them for some length of time, depending on the product. This has the practical impact of state endorsed, legal price collusion. It allows manufacturers and wholesalers to know what their competition is charging and it limits the amount of product-specific price changes.

Both mandates suffocate competition and raise prices. We’re not the first to notice. Former Gov. William Milliken asked that these rules be eliminated in 1979. Last June the Center made its first request to have rules R.436.1625 (1-4) and R.436.1726 (1-2) partially repealed. Our request was rejected for three reasons. One of those was that the MLCC would be taking up a comprehensive review of its rules later and that would be a good time to consider the rules’ efficacy.

The ORR page is inviting recommendations now and their site for doing so reads in part:

Michigan's citizens deserve a regulatory system that fosters business growth and job creation. The Office of Regulatory Reinvention (ORR) is dedicated to working with all citizens to identify obsolete, burdensome and unnecessary regulations that are limiting economic growth.

We need your help. We would appreciate hearing your thoughts regarding which existing regulations could be changed or eliminated in order to make Michigan's regulatory system more simple, fair, efficient and transparent.

I submitted a one sentence recommendation for repeal along with a link to our previous request.

These are archaic rules that reward more than 60 beer and wine wholesale businesses in Michigan at considerable expense to consumers. They should be repealed and the sooner the better.

Difference Between Bridge and Center Report Cards

Both are superior to state's Top-to-Bottom rankings

Bridge Magazine has just announced that it will be releasing its report card grades for Michigan schools next week. Bridge's report card ranks schools in a way that is nearly identical to how the Mackinac Center ranks schools on its annual school report cards. Both report cards take into consideration a school’s poverty level when comparing their performance to other state schools. This should not be surprising, since Bridge credits the Mackinac Center for its methodology.

Despite a very similar approach, curious readers will notice that some schools received markedly different rankings in the two report cards. For example, Ashley Community Schools, a district Bridge labels an “academic champ,” received an F for its high school and C’s for its middle and elementary schools on Mackinac Center report cards.

In the development of our 2013 report card, we noticed that there was no correlation between the percentage of students eligible for reduced-price lunch and a school's test scores. Bridge Magazine uses the percentage of students eligible for both free and reduced-price lunch to control for poverty; however, since 2013, the Mackinac Center has only used the percentage of students eligible for free lunch. We believe this provides a more accurate control for student poverty.

This small difference in methodology likely explains the large difference in grades for Ashley Community Schools. Many Ashley students are eligible for reduced-price lunch. The Mackinac Center does not count those students in its poverty tally — but Bridge does. For example, close to 25 percent of students at Ashley High School were eligible for free lunch in the 2012-13 school year, and another 70 percent were eligible for reduced-price lunch.

For 2012-13, the Mackinac Center report card adjusted for 25 percent of Ashely High School students coming from poverty. In comparison, Bridge would likely have adjusted for 95 percent coming from poverty. Those adjustments can make a big difference in a school's grade.

In 2012-13, for example, Ashley High School students posted an average composite ACT score of 18.5, below the statewide average of 19.7. Approximately 25 percent of Ashley High School students were eligible for free lunch that year, a lower disadvantaged population than the statewide average of 43 percent. As a result, Ashley High School received a low report card grade from the Mackinac Center for 2012-13.

In comparison, Star International Academy, the Mackinac Center's top-ranked high school, posted an average composite ACT score of 19.9 that year, a score slightly above the state average. Close to 82 percent of Star International students are eligible for free lunch, almost twice as many as the statewide average. As a result, Star International received one of the highest report card grades from the Mackinac Center for 2012-13. However, Star International's free and reduced-price lunch percentage is 87 percent — lower than Ashley High School. 

This difference likely explains why Bridge gave Ashley Community Schools a higher grade than Star International Academy.

Despite the differences in report cards, both Bridge's and the Mackinac Center's work highlight one important thing: The state needs to change the way it ranks schools. Michigan's "Top-to-Bottom" school ranking does not adjust for student background. Indeed, the Mackinac Center has shown that the TTB list is largely a proxy for student poverty.

The fact that two independent organizations are now generating annual school report cards, both of which, despite their differences, provide parents with a better understanding of real school performance, shows that there is a great deal of interest in improving the way the state assesses its public schools.

Center Study Featured in WZZM Report

Overcriminalization a growing concern nationwide

WZZM-TV13 in Grand Rapids recently featured a Mackinac Center study on the “overcriminalization” of Michigan and the number of new laws passed each year. Michigan has a far larger penal code than surrounding states.

“Most lawmakers come into office not thinking about the laws they want to delete, but they think about the laws they want to create,” Executive Vice President Michael Reitz, who co-authored the study with the Manhattan Institute, told WZZM.

Also featured in the report was the plight of Alan Taylor, a business owner who spent $500,000 in legal fees over five years after he was accused of violating the state’s wetland law when he expanded the parking lot for his growing company. He ended up being convicted of two misdemeanors and had to pay an $8,500 fine.

The Mackinac Center, in conjunction with the Manhattan Institute and the ACLU of Michigan, is hosting a panel discussion on the findings in the study at noon on Feb. 11 in Lansing.

Michigan Adds, Loses Thousands of Jobs

More proof corporate welfare doesn't work

Michigan has thousands of businesses that are constantly responding to people’s changing wants and needs. This means that the state economy is gaining and losing jobs simultaneously. But it also means that the state’s economic development strategies are unfit to meet their stated goals of improving Michigan’s job picture.

According to the Bureau of Labor Statistics, the state added 226,224 private-sector jobs in the second quarter of 2014 and lost 192,512 private-sector jobs. Both job creation and job loss figures increased from the previous quarter.

Over the same period, the Michigan Economic Development Corp. issued press releases stating that it had offered $16 million in incentives to companies to create 3,053 jobs. These numbers ought to be taken with a grain of salt since the state’s older programs have a poor record at turning announced jobs into actual jobs. And this does not account for the economic costs of the programs.

Even if all the jobs announced were created in the quarter that they were announced, the state incentives cover 1.3 percent of the number of jobs created. The magnitude of the continuous addition and loss of jobs show that the state’s efforts to generate economic growth through select incentives will not work.

A better option would be to eliminate the state’s $300 million a year select incentive programs. The state has other budget priorities and taxpayers could use some relief.

Eight Days, 196 Bills, 12 Constitutional Amendments

Repeal film subsidies, let nurses do more, stalking registry

Since the Jan. 15 opening day, members of the new 98th Legislature have introduced 196 bills and proposed 12 amendments to the state constitution. It will be several weeks before any bills get a vote so this report describes some new bills of interest.

Senate Bill 31: Create new sports official assault crime

Introduced by Sen. Morris Hood, III (D), to authorize penalties of up to three years in prison and a $10,000 fine for assaulting a sports official. Referred to committee, no further action at this time.

Senate Bill 33: Require schools to give parents information on their children

Introduced by Sen. Phil Pavlov (R), to require the state Department of Education and public school districts to disclose to a student’s parent or guardian upon request any educational, personal or other information they collect about the student. Also, whether the information was shared with other persons or entities, including details on what information and to whom. Referred to committee, no further action at this time.

Senate Bill 68: Expand scope of practice for nurses

Introduced by Sen. Mike Shirkey (R), to revise the “scope of practice” allowed for Advanced Practice Registered Nurses, making it possible for them to provide more medical services without being under the direct supervision of a physician. Similar bills in the past have struggled due to opposition from the physician’s lobby. The bill would also authorize subsidies to APRNs who practice in “underserved” areas. Referred to committee, no further action at this time.

Senate Bill 70: Extend, expand college job training subsidies to some employers

Introduced by Sen. Peter MacGregor (R), to make permanent a program authorized by a 2008 law that allows community colleges statewide to borrow up to $50 million to provide job training subsidies to particular employers and earmark certain future state income tax collections to repay the debt. Senate Bill 71 would eliminate the $50 million cap on these subsidies. Referred to committee, no further action at this time.

House Bills 4027 & 4086; Senate Bills 23 & 30: Exempt some pension income from income tax

Introduced by various Republican and Democratic sponsors, to exempt certain pension income from state income tax. None of the bills specify spending cuts or replacement taxes to offset the roughly $343 million the exemption would reduce state tax revenue. Referred to committee, no further action at this time.

House Bill 4081: Create new online “stalking” offender registry

Introduced by Rep. Fred Durhal, III (D), to create an online public registry of individuals convicted of “stalking” crimes, similar to the existing sex offenders registry. The bill prescribes registration requirements, procedures, fees, penalties and more. Referred to committee, no further action at this time.

House Bill 4083: Revise youth gang offense criteria

Introduced by Rep. Klint Kesto (R), to revise the penalties and the criteria in a 2008 law that authorizes enhanced sentences for a felony that is committed by a youth gang member. Under current law the criteria for determining gang association is whether the gang provides the “motive, means or opportunity” to commit the crime. The bill would change this to the presence of much more specific factors and would change the maximum penalty to 10 years and $10,000, in addition to the penalty for the underlying or “predicate” crime. Referred to committee, no further action at this time.

House Bill 4122: Repeal film producer subsidies

Introduced by Rep. Dan Lauwers (R), to repeal the program that gives Michigan tax dollars to film producers, as of Oct. 1. In the current fiscal year, $50 million in subsidies to film producers have been authorized. Since 2008, some $500 million in taxes collected by the state have been distributed to producers. The bill is cosponsored by Reps. Johnson, Somerville, Leutheuser, Rendon, Kelly, Bumstead, Chatfield, Barrett, Howrylak, Glenn and Victory. Referred to committee, no further action at this time.

House Bill 4118: Authorize student loan tax credits

Introduced by Rep. Andy Schor (D), to authorize an income tax credit equal to 50 percent of the amount of student loan debt payments made by a resident (subject to some caps) who got a degree from a college or university in Michigan and is employed in this state. The credit would not be “refundable,” but would reduce an individual’s tax liability on a dollar-for-dollar basis. Also, to give a tax credit to an employer who pays up to half of an employee’s student debt, subject to the same provisions. Referred to committee, no further action at this time.

House Joint Resolution F: Equalize school funding

Introduced by Rep. Tom Barrett (R), to place before voters in the next general election a constitutional amendment to require that all school districts get the same amount of state and local tax revenue for school operating purposes. Current funding levels are the product of a complex formula enacted by the 1994 Proposal A tax limitation and school finance measure, and are based in part on the ability of richer or poorer communities to pay higher or lower property taxes and the level of local school taxes before 1994. (Proposal A essentially established a minimum per student funding level statewide.) The measure does not specify whether equalization would come from lowering high-spending districts’ revenue or increasing it for low-spending districts, and if the latter, where the new money would come from. 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.

The End of Hollywood Corporate Welfare?

Legislators look to fix budget overspending

Some legislators have introduced fiscally sound ideas to fix Michigan’s projected deficit. The budget hole was created by select tax credits largely approved by a previous Legislature with Gov. Jennifer Granholm.

State Rep. Sam Singh, D-East Lansing, told MIRS News (subscription required) that the Legislature may want to scale back funding for the Michigan Economic Development Corp. to deal with the problem.

"I think it's time this Legislature really takes a look at the MEDC budget and reign it in because it's creating significant problems and deficits for the state of Michigan," Rep. Singh told MIRS.

State Rep. Dan Lauwers, R-Brockway, just introduced legislation that would end film production subsidies in Michigan to help make up the deficit.

Rep. Lauwers told MIRS that he introduced House Bill 4122 because, "If it requires us to pay them in order to have that industry, how are we going to be able to build a successful industry? My business had to survive on the merits of the business."

The bill is referred to the Tax Policy Committee chaired by Rep. Jeff Farrington, R-Utica. Rep. Farrington has previously referred to the program as a “boondoggle” and told MIRS he is favorable to the proposed legislation.

A former state tax credit program, the Michigan Economic Growth Authority, had only 2.3 percent of its projects meet job projections. The MEDC as a whole has has fewer film jobs today than it did when the program began in 2008. Film incentives are widely panned by independent researchers of all political stripes.

'Free' Community College

Not a very sound idea

President Obama recently announced his goal to provide two years of “free” community college for American workers. This has been met with cheers from community college leaders, high school administrators, and plenty of Americans.

Such cheers, however, are not such a clear sign that President Obama would have us believe in the wisdom of providing free community college education. First, let’s not pretend that this is going to result in saving the country money on education — it merely changes who foots the bill. Instead of people attending community colleges paying for their own education, the American taxpayer will be tasked with doing this. Second, there is no reason to suspect that this policy will actually help anyone.

Using data from the Michigan Community College NETwork, we can clearly see that while tuition rates at community colleges have remained relatively steady, community college enrollment in Michigan has actually declined over the last three years. This suggests that fewer people are finding community college to be a worthwhile endeavor.

According to data from the Michigan Community College Association, the current community college completion/graduation/transfer rate is an abysmal 52 percent (up from 44 percent in 2008). This means almost half of all students who enroll in a community college program fail to complete, graduate or transfer to a four-year institution. Put another way, almost half of all people who enroll in community college pay tuition but fail to obtain any type of degree, effectively throwing their money away. President Obama’s proposed plan will do nothing to address this and instead will likely set more people up for failure.

The problem with community college, and college in general for that matter, is not the cost, as every year millions of people around the country choose to enroll in some type of post-secondary education program. The problem is that these institutions are failing to provide students with an adequate education in a dynamic and increasingly global economy. While some may point to a recent study by the Federal Reserve Bank of New York as evidence that college is still worthwhile, these statistics are based on averages which may hide underlying characteristics of great importance.

For example, after John Elway graduated from Stanford University in 1983 with a degree in economics, the average salary of students graduating from Stanford with an economics degree was several hundred thousand dollars per year, which was significantly higher than the average salary of economics majors from other institutions. Obviously, this statistical quirk was not because the Stanford economics program was somehow special; it was because they had John Elway, who was earning millions of dollars in the NFL. By the same token, college may be worth it on average, but the millions of unemployed and underemployed college graduates in society today certainly don’t feel that way and rightfully so. Instead of trying to lower the cost, we should instead find ways to increase the benefit of furthering one’s education beyond the high school level.

One way to do this would be to instead provide students who prefer it with a voucher or tax credit for job training rather than encouraging them to enroll in a system that fails to meet their needs. Under this system, the federal government would not be telling students to enroll in a broken system, but would instead free them to attend a program that they actually want to attend and where they are more likely to succeed.

Michigan Turns 178

A look back at the early days

Spalding Discusses School Choice

Joined on WKAR by Democratic lawmaker

Education Policy Director Audrey Spalding was a guest on “Current State” on WKAR-AM90.5 this morning, discussing school choice ahead of Tuesday’s celebration of National School Choice Week at the Michigan Capitol. The discussion included charter public school performance and why families utilize the Schools of Choice program. Also on the show was Rep. Sarah Roberts, D-St. Clair Shores, who introduced anti-school choice legislation last year.