New Legislature should take up pension spiking, release time in 2017
As the latest legislative session came to a close, Michigan House Republicans failed to put a stop to two union schemes that are ripping off taxpayers. It is bizarre that, despite having a huge majority, the GOP continues to allow unions to misspend tax dollars for the sole purpose of enriching their officials.
Earlier this year, the state Senate passed two bills ending these special union deals. Senate Bill 279 dealt with union pension spiking schemes, in which the state’s largest union teamed up with school districts to pretend its officials are still working for schools when they really are private employees of the union. This enables the union workers to artificially inflate their taxpayer-funded pensions. In at least one instance, this meant turning an approximately $8,000 annual pension into one worth over $100,000. Senate Bill 280 involved union release time, which makes taxpayers pay for the salaries of union officials who are released from their teaching duties to work full time on union business.
The bills made it through the Senate as well as a House committee but died on the floor.
These special deals are an affront to taxpayers, who are on the hook for the cost. The state should not allow the practice of taking money directly out of the classroom and putting it into the bank accounts of unions. It should also not do anything that contributes to Michigan’s $26.7 billion pension liability.
The Michigan Senate was right to pass these bills, and its members will be the same in 2017. The Michigan House will maintain its strong Republican majority with new incoming members. Both chambers should take up these issues early in the new year.
Editor’s Note: Jarrett Skorup testified in front of a House Committee on the union release time bill. That testimony is reprinted below.
When people are paid by taxpayers, they should be doing work for taxpayers. The money given from the state to local school districts is intended to be spent providing educational services to students, with the hope that these services provide benefits to taxpayers.
But too often, that is not the case. In about 70 school districts across Michigan, taxpayers pay union officials for “release time” – an arrangement where the employee explicitly works for a private union, not for the district and not for taxpayers.
Michigan districts spend at least $3 million directly on salaries for these released union officials, and much more if you add in the costs of providing these people with health and pension benefits. Districts pay other costs for these “ghost teachers” as well, including the salaries of their replacements in the classroom.
Here’s one example of things that union officials who are on release time do: When the Legislature was considering right-to-work legislation in 2012, Maryanne Levine, the president of the Chippewa Valley School District local union, was protesting on the capitol lawn and comparing legislators to Adolf Hitler.
“We must close union offices, confiscate their money and put their leaders in prison. We must reduce workers’ salaries and take away their right to strike," Levine quoted Hitler as saying. "Those were the words of Adolf Hitler, May 2, 1933 … These are strong words, but that is exactly what they are doing and the path they seem to be taking (in Lansing)."
She was joined by many other teachers, though it was a school day. And I don’t have a problem with that. Everyone should have the right to protest and as long as they are properly using their days off, that’s fine.
But unlike most public and private sector workers, being there was easy for Levine — she is paid by taxpayers, but works full-time to advance the interests of her union. Protesting on the capitol lawn is just another day at the office for union officials released from their teaching duties.
Levine is an elementary school teacher who is released from her duties as a teacher to work for the union. That's the perk of being union president. According to the district, she make $145,000 in total compensation, with most of it being paid by the district. Chippewa Valley also pays six figures for the union vice president to spend half his time on union business.
Ms. Levine has every right to protest and make these comparisons. But she should do it on her own dime.
Several districts pay over $100,000 a year to provide union officials with this perk. These include Chippewa Valley, Grand Rapids, Lansing, Warren and Wayne-Westland.
Taylor Schools employs four people who spent a significant part of every day working for the local union rather than taxpayers. That district has run significant deficits in recent years.
The vast majority of districts, including most large districts, are able to operate without taxpayers picking up the tab for release time. Detroit, Dearborn, Troy, L’Anse Creuse, Forest Hills, Traverse City, to name just a few.
The purpose of a public education system is to educate students, not fund union operations. These arrangements are unfair to taxpayers and a misuse of public funds. They should be ended.
A prisoner’s chances at parole can no longer be rejected by a random judge
This month saw the passage of an important criminal justice reform: the repeal of the “successor judge veto power.”
In Michigan, judges have the power to step in and deny parole to prisoners whose trials they adjudicated. Until now, this veto power also extended to a “successor judge” — the one who replaced the judge who handed out a prisoner’s original sentence.
Now, the veto power will be reserved only for the original sentencing judge. A successor judge is still allowed to weigh in on a parole case but will no longer be able to unilaterally prevent an offender she never met from being paroled.
The bill’s sponsor, Rep. Dave Pagel, R-Berrien Springs, told the Mackinac Center that the bill “will correct an unjust situation,” adding that it will “prevent successor judges from being put in the difficult position of passing judgment on an old case that they never heard.”
The bill does not fast-track offenders for parole; it merely removes a potentially unfair variable from an otherwise straightforward process. While the successor judge’s input will undoubtedly be influential in parole decision, offenders will have more reason to work toward earning a chance at release, knowing that the only people who can directly impact that chance are themselves and their sentencing judge.
Groups from across the political spectrum have supported passing the new law, including Right on Crime and the Citizens Alliance for Prisons and Public Spending. CAPPS released a statement that included a quote from an anonymous prisoner describing how the law will affect his life: “For the first time in decades … I feel as if it’s in my hands to make or break my chances of parole. I have been working so hard to prepare,” he said. He added that the successor-judge veto had been a wild card that had made it difficult to remain positive.
Giving taxpayer dollars to developers is ineffective
Dan Gilbert, a developer and owner of many private companies in Detroit, has been urging the Michigan House of Representatives to approve Senate-passed bills that would give some developers and business owners more taxpayer-funded subsidies.
Gilbert defended his position in the Detroit Free Press:
He noted that some critics oppose the incentives for ideological reasons, or say the government shouldn't try to pick winners and losers.
“That all to me is legitimate and I get that,” Gilbert said, “but there’s a lot more to this than, ‘Hey, rich guys are getting this and neighborhoods are not getting anything.’” That characterization he finds unfair, saying it ignores what he believes is his “mission” to help the city grow.
The city “functions as one organism that has to work together, and to me it’s driven by jobs,” Gilbert said. Neighborhood residents “benefit from the overall healthy city that will have more taxes to drive more services and to drive better education,” he said. “I’m going to just keep pounding on this stuff because it’s just so massive and critical.”
No ideology is required to oppose this: there are solid practical reasons why giving taxpayer dollars to business owners and developers is ineffective and is a waste of money. As a previous article here about the proposal explained, “The record shows they are much better at creating press releases about jobs than actual jobs. They also invite corruption, and they don’t justify their costs.”
Gilbert is Detroit’s biggest cheerleader and has put his money where his mouth is when it comes creating wealth and employment in the city. But business subsidies are not a good idea in principle or in practice.
December 16, 2016 MichiganVotes weekly roll call report
This will be the last roll call report for 2016. Next week this email will feature an annual Missed Vote Report on how many and which votes individual lawmakers missed in 2016.
House Bill 4629, Repeal bond requirement to contest asset forfeiture: Passed 29 to 8 in the Senate
To repeal a requirement that a property owner whose property has been seized by police and is subject to civil forfeiture must provide a cash bond in order to contest the taking, and if the challenge is unsuccessful, must pay all the expenses of the proceedings. Under civil forfeiture laws, police can seize and keep any property that may be associated with a crime and keep the property or proceeds even if the owner is never convicted or even charged with a crime.
House Bill 6075, Require underfunded local government pension disclosures: Passed 37 to 0 in the Senate
To require that if a local government’s pension system has less than 60 percent of the assets it should have to meet current and future benefit promises, it must disclose what steps are being taken to increase the funding level. The bill would also require more online disclosures by the state on these problems.
House Bill 5400, Expand scope of practice for nurses: Passed 36 to 1 in the Senate
To expand the scope of practice allowed for Advanced Practice Registered Nurses (including nurse-midwives, nurse practitioners, or clinical nurse specialists), so they can provide more medical services without being under the direct supervision of a physician, including prescribing drugs and making house calls or "doctor's rounds" in a hospital.
House Bill 5120, Require timely notifications of municipal water system problems: Passed 37 to 0 in the Senate
To require public water supply systems to notify users within 72 hours if the water does not comply with state standards, rather than the current 30 days.
House Bill 5413, Create statewide policy on seclusion and restraint in schools: Passed 37 to 0 in the Senate
To prescribe documentation and reporting provisions in the uniform policy on seclusion and restraint in public schools proposed by House Bills 5409 to 5418. This bill would require schools to notify parents immediately if their child is secluded or restrained, with a written report within a week or less. The full package has now been sent to the Governor for approval.
Senate Bill 437, Centrally plan statewide power grid, require more wind turbines: Passed 33 to 4 in the Senate
To re-write the state law regulating electric utility monopolies. The bill replaces the current market-driven process for new power plant capacity and site decision with a more centralized process inspired by Obama-era regulations expected to be repealed in 2017. The bill also increases from 10 percent to 15 percent the amount of power that utilities must get from renewable sources, which could mean hundreds of additional industrial wind turbine towers in many rural communities. The final version appears to leave in place a small amount of electricity provider competition available to some commercial customers. The bill largely reflects the preferences of the state's regulated electric utility monopolies (who lobbied intensively for it), which will have to build new power plants to replace shuttered coal plants, on which they are guaranteed to make a profit under rate setting rules.
Senate Bill 437, Centrally plan statewide power grid, require more wind turbines: Passed 79 to 28 in the House
The House vote on the bill described above.
Senate Bill 992, Regulate drones: Passed 103 to 5 in the House
To authorize the use of aerial drones for commercial purposes in Michigan, if the operator is authorized or licensed by the Federal Aviation Administration. Recreational use would also be permitted subject to federal rules. The bill would preempt local government restrictions on drone ownership or operation, but allow local regulations on use within their jurisdiction. It would also prohibit improper use of drones, including privacy violations, and authorize misdemeanor penalties. Finally, the bill creates a state commission to develop more detailed rules.
Senate Bill 289, Authorize sanctions for bad faith patent infringement claim: Passed 107 to 0 in the House
To authorize damage awards for the target of a patent infringement claim that is made in bad faith. Actual damages plus exemplary damages of triple the actual loss would be authorized, plus costs. If the target demonstrates a “reasonable likelihood” that the claim is made in bad faith then the court could order the claim seeker to post a bond equal to the target’s likely legal expenses.
Senate Bill 564, Criminalize selling aborted fetuses or body parts: Passed 69 to 37 in the House
To make it a crime for physician or a person associated with a physician to knowingly benefit financially from or receive compensation for transferring or selling an embryo, fetus or neonate, including organs, tissues, or cells, if this was obtained as the result of an elective abortion.
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.
Citizens are no longer required to pay an upfront bond
People trying to get back property seized by the state will now have an easier time with recently passed legislation. State and local law enforcement agencies will no longer be able to require citizens pay a 10 percent bond to challenge a forfeiture case.
House Bill 4629, sponsored by Rep. Peter Lucido, R-Shelby Township, passed the Senate 29-8. It previously passed the House 100-7 and now heads to Gov. Snyder’s desk.
I described this process in an op-ed earlier this year in the Detroit Free Press:
Michigan is one of just a few states in the nation where police can not only take cash and cars from people who have done nothing wrong, but where the owners of this property actually have to pay to get it back.
Thanks to civil forfeiture, law enforcement agencies routinely take property from people without charging them with a crime, much less convicting them of one. Once a property has been seized, the owners then have to pay anywhere from $250 to $5,000 just to begin the procedure to win back what’s rightfully theirs.
Under Michigan law, if your property is seized and valued less than $50,000, you must post a bond worth 10% of the property’s value to start the process of having it returned to you. But if you fail to post that bond within 20 days of the property being seized, it is automatically forfeited to the state.
And if you pay the bond but fail to win the property back in court, you can be ordered to pay the expenses the government incurred during the forfeiture proceedings. These provisions unfairly tilt the scales of justice in favor of the government.
The new law — assuming the governor signs the bill — is a good step, but citizens and legislators need to keep the momentum going. Ten states now require a person to be convicted of a crime before his or her property is transferred to the government through asset forfeiture. Michigan should join them next year. Read more about how forfeiture in Michigan works at www.mackinac.org/forfeiture.
Flexibility in teacher compensation would be good for educators and children
A growing need for more educators equipped to teach subjects such as math and science makes the case for paying teachers based on need and merit.
Currently, most teachers in Michigan are paid based on seniority. Changing the compensation formula to reward teachers when their students do well would create an incentive for high performance. Mackinac Center Director of Research Michael VanBeek spoke with WNEM News about the concept known as merit pay.
It's a good idea because merit pay is simply rewarding great teachers for the great work that they do in the classroom. We spend a lot of money on it as taxpayers and we think there's room for improvement. Performance pay and merit pay is one way that we think we can do that.
Also, allowing teachers to be paid more based on merit and demand would encourage more of them to specialize in subjects with a shortage of quality teachers.
Watch the full report at WNEM here.
Bills considered in Lansing would have favored select businesses
Publicly funded economic development incentives rarely deliver on promises made to taxpayers, according to Mackinac Center’s Assistant Director of Fiscal Policy James Hohman.
Lawmakers in Lansing considered a number of bills that would have offered select businesses incentives on the promise that those companies would create jobs. As Hohman explained to CMU Public Radio, such promises often fail to materialize.
A couple of studies have looked at that in cities that have passed these programs in trying to see if the programs are able to justify their cost. That’s where we find that these programs just do not fit their promise of creating jobs, attracting talented people and supporting the tax base. In fact, they cost taxpayer dollars.
Two of the proposals – one that would have offered $250 million in tax abatements to companies promising to create at least 250 jobs, and one that would have redirected up to $50 million annually in state tax revenues to mixed-use projects that develop “brownfield” sites – could have followed in the footsteps of Michigan’s MEGA tax credit program, Hohman told The Detroit News. Those incentives are expected to cost Michigan $6 billion through 2032.
I’m disappointed lawmakers are going to authorize new business tax credits when they’re still not done paying for the old ones.
Hohman told the Associated Press that targeted subsidies enable lawmakers to give favors to businesses of their choosing without holding them accountable to the promises made. He suggested ending existing programs like this, not creating more.
An editorial published by the Iron Mountain Daily News agreed that lawmakers should be skeptical of such proposals.
At a time when the state regularly pleads poverty, we join Hohman in questioning how effective this initiative really would be. …
Giving away big chunks of taxpayer money to develop or keep jobs is dicey on its best day. We trust Lansing decision makers are aware of that fact.
Thanks to the leadership of House Speaker Kevin Cotter, R-Mount Pleasant, and House Local Government Committee Chair Lee Chatfield, R-Levering, plans for these giveaways were halted.
Read the Associated Press article here.
Listen to the interview with CMU Public Radio here.
Unfunded liabilities will grow so long as lawmakers let them
Michigan’s school pension system has $26.7 billion less than what it needs to fulfill the payments promised to current and future retirees, jeopardizing the futures of children, taxpayers and members of the pension plan.
So was the message of analysts from the Mackinac Center for Public Policy as they spoke with reporters and lawmakers this month. The Legislature has been considering Senate Bills 102, 1177 and 1178 to address the growing unfunded pension liability by moving future hires to a defined contribution – versus a defined benefit – plan like those most people in the private sector enjoy. Current teachers and those who are already retired would not be affected by the change.
“We need to do something to close the system so that we're not going to continue to rack up these unfunded liabilities,” James Hohman, assistant director of fiscal policy, told MLive.
The problem is a simple one, Hohman told Interlochen Public Radio.
“The state’s defined-benefit pension plan has been mismanaged for a generation. They continue to promise benefits now and have future taxpayers pay for it.”
Unfortunately, lawmakers heard a misleading analysis by the state’s Office of Retirement Services, which incorrectly claimed it would cost hundreds of millions of extra dollars to pay down the existing unfunded liabilities and move future hires to defined contribution plans. Hohman explained the issue in an op-ed published by The Detroit News.
But such funding decisions are fundamentally up to policymakers. And one of the costs raised by the state were explicitly avoided in the legislation they were considering.
Moreover, there is a bit of irony in getting lecture on fiscal prudence from the people that accidentally made school employees the state’s largest creditors.
Lawmakers shouldn’t let such claims stop them from approving this plan. Governments can help employees save for retirement by providing matching contributions to retirement accounts owned by the workers themselves. It’s better for both employees and taxpayers when retirement benefits are paid when they are earned. This reform will finally contain Michigan politicians and pension fund managers from continuing to dig a deeper fiscal hole that taxpayers will eventually have to fill.
Taking action to control the growing debt of the MPSERS will deliver huge dividends in the long run, Hohman told MLive in another article.
Containing the ability to rack up this unfunded liability is going to be huge. This is the biggest debt the state has. This will have a huge financial consequence over the long term.
In an editorial, The Detroit News noted, “The Mackinac Center for Public Policy has also taken the lead on teacher pensions, and has offered detailed reports and research to help lawmakers.” It said pension reform must be a legislative priority in the coming year and urged teachers to join the effort to create a more sustainable model.
Read the first MLive article here.
Read the second MLive article here.
Read the op-ed in The Detroit News here.
Listen to the interview with Interlochen Public Radio here.
Read the editorial in The Detroit News here.
Lawmakers should pause plans to end electricity choice
The election of Donald Trump has suspended the need to pass legislation that would effectively eliminate the limited electricity choice Michiganders enjoy.
Supporters of Senate Bill 437 cited the need to comply with the Clean Power Plan, but the election of Donald Trump could change existing mandates. As explained in the Grand Haven Tribune by Jason Hayes, director of environmental policy at the Mackinac Center, lawmakers in Lansing may now pause.
With the presidential election now decided, the regulatory mandates to close (coal-fired) plants will likely die, or at the very least significantly change. Given these changes, we should recognize there is now no pressing need to impose bills like SB 437 onto the population of Michigan.
Hayes explained in a recent op-ed published by Bridge magazine that passage of SB 437 would eliminate electricity choice in Michigan. This is despite public support for more choice, not less.
So the big utilities stand to make a substantial profit if choice “withers.” But Michigan energy users have repeatedly stated in public polling that they value electricity choice and would like to see it expanded. In one 2013 poll, 82 percent of Michigan residents supported electricity choice. A 2016 poll showed that 66 percent supported expanding electricity choice beyond the current 10 percent limit.
The prospect of more energy freedom that could exist in years to come would be good for energy customers, Hayes told The Detroit News.
A Trump administration that turns away from focusing on renewable energy gives states like Michigan an easier transition for changing their energy laws and meeting the needs of consumers, who still get 30 percent of their electricity from coal-fired plants, Hayes said.
Read the op-ed in Bridge magazine.
Read the article in the Grand Haven Tribune.
Read the article in The Detroit News.
Florida fight shows how ridiculous many regulations are
Florida is one of just a handful of states that require a state license to become an interior designer. The law requires six years of education and hundreds of dollars being paid to the state.
But the law provides no public benefit and lawmakers are trying to repeal it. However, the people who benefit from teaching those mandated classes and the practitioners who benefit from locking out their competition are not happy. In fact, 90 people showed up to argue the state should keep the regulations.
Amazingly, supporters of this anticompetitive regulation argue that eliminating the license will lead to more fires and even deaths. Yes, seriously. The Tampa Bay Times reports:
"Buildings do not burn. Interiors do," Gail Griffin, a professor at Miami Dade College's School of Architecture and Interior Design, told the House Appropriations Committee on Wednesday.
She scolded the panel for their ignorance.
"Do you know the color schemes that affect your salivation, your autonomic nervous system?" she said. "You don't even have correct seating. And somebody chose that for you."
Others highlighted the potential for bad design to result in materials being used for weapons in prisons, flooring that causes falls and fabrics that lead to death.
"Part of my job is to ensure the finishes that I select cannot be made into weapons," Terra Sherlock, a licensed interior designer from Tallahassee, told lawmakers. "We do that in jails, and we do that in schools."
A couple of weeks ago, Tampa interior designer Michelle Earley told the House Business and Consumer Affairs Subcommittee that her expertise means she knows to avoid fabrics that contribute to the spread of hospital-acquired infections.
"By not allowing interior designers to be specialists and focus on the things they do, what you're basically doing is contributing to 88,000 deaths every year," she said.
Like many arguments against repealing licensing laws for occupations that do not have a clear connection to public health, these arguments, on their face, seem absurd. If consumers want to hire an interior designer who has endured six years of training and paid some agency to certify his or her skills, they are free to do so. But if they don’t want to, they shouldn’t have to. There’s no empirical evidence that there are more interior design-related fires or deaths in states that choose not to artificially protect this occupation from competition (which is most states).
Michigan beat back a 2009 law that would have mandated an interior design license and repealed its registry in 2013. There’s no evidence that Michiganders are more at risk of fires and death despite there being no mandated interior design license here as there is in Florida.