The MC: The Mackinac Center Blog

Putting the Pieces in Place for School Choice

Big picture points to more hopeful action

The seventh edition of National School Choice Week has arrived. This year brings the largest organized effort yet to shine “a positive spotlight on effective education options for every child.” Nationally, there are more than 21,000 events planned — 730 of them in Michigan alone, including a major Detroit celebration on Friday featuring the passionate, charismatic educator, Dr. Steve Perry.

The week is a time to reflect on the big picture of educational choice, including some key facets that have been highlighted within this past year:

  • The evidence that school choice works continues to mount. Last May, the advocacy group EdChoice updated the tally of gold-standard research on private school choice. The vast majority of 100 published studies shows that choice programs benefit their participants, public schools, state treasuries and society at large. Here in Michigan, where public funding of private school choice is banned, the best available research shows charter public schools help students learn more than traditional public schools, especially in Detroit. Work being done by  the University of Michigan’s long-standing Charter School Research Project will provide us with more information.
  • School choice remains popular with Michigan voters, and even more so nationally. The Mackinac Center released survey results in August showing strong majorities of Michigan voters in favor of nearly all forms of choice and rejecting the argument that choice hurts public schools. Half the Detroiters polled say the city’s students need more educational options. More recently, a poll sponsored by the American Federation for Children finds a consistently strong and diverse majority of American voters back school choice. In both the state and national measures of public opinion, the idea of tax-credit scholarships registered the strongest positive numbers.
  • Michigan families are seeking out education alternatives in record numbers. MLive’s 2016 reporting of state data found that nearly one in four Michigan public school students had enrolled in a school other than the one assigned to them based on where they live. Meanwhile, parents of 113,000 other students have found the means to pay tuition at a private school or to secure a spot at an exceptional place like Detroit Cristo Rey.
  • The movement for school choice has reached a critical moment of opportunity. Roughly 3 million students in 43 states and the District of Columbia are enrolled in public charter schools. The number of school choice program participants, meanwhile, has grown dramatically in recent years, and now includes nearly 400,000 students in 25 states who benefit from an educational voucher, tax-credit scholarship or education saving account. While many state legislatures consider launching or expanding choice programs of their own, the United States Senate weighs a confirmation vote on the nomination of influential choice advocate Betsy DeVos to serve as secretary of education. Despite our onerous state constitution, opportunities exist at the federal level to help expand choice in Michigan.

Put the pieces together, and this National School Choice Week offers a chance not only for reflection and celebration but also for action that gives an unprecedented number of students access to effective education options.

Stay Engaged

Receive our weekly emails!

~~~~~

Related Articles:

Mackinac in the News for School Choice Week

Detroit Schools Show Importance of School Choice

New Survey Finds Broad Support For School Choice In Michigan

Charter School-Prison Comparison Misses the Mark

Why School Choice is So Valuable

Cheers for Detroit Schools Transparency

District has come a long way

The Mackinac Center typically sends hundreds of Freedom of Information Act requests to public offices every year. A FOIA request requires public entities to turn over documents and is an extremely important tool for holding government accountable.

These requests have helped us uncover unions skimming money from home health care aides and child care providers, break news of a scandal involving a film studio, expose teachers who couldn’t be fired despite committing criminal acts, find out about millions of public dollars being used for private union employees, discover a pension spiking scandal and more.

I’m the one who sends out most of our FOIA requests, and many of them go to Michigan’s 540 public school districts. The largest district in the state is the Detroit Public Schools Community District, which gets its fair share of requests, especially since it has had multiple problems with fraud and abuse.

A year or two ago, asking for information from what was then Detroit Public Schools was a headache. It was hard to figure out who the right person was to send the request to and the person who officially handled FOIAs was often slow to respond. So getting information from the district often took a long time.

But all that has changed. After the district was overhauled — which required a bailout from state taxpayers — it reorganized its FOIA division and added two new employees to who process requests from the public. Over the past nine months or so, the new school district has handled more than a dozen requests from the Mackinac Center on a variety of issues. And I’m happy to report that every single one has been handled promptly and thoroughly. If releasing the requested information is taking longer than what was first promised — even just a little time longer — I am notified immediately with an email or a phone call.

Stay Engaged

Receive our weekly emails!

Michigan has thousands of government entities, all subject to FOIA. Most are pretty good at responding to requests, especially with recent legislative changes requiring them to name someone as a transparency officer. I’m happy to add Detroit Public Schools Community District to the list of government entities that strive to serve taxpayers and residents well by promptly responding to FOIA requests.

~~~~~

Related Articles:

Mackinac Center and Sierra Club Call For More Transparency in Michigan Government

Transparency Bills A “Significant Step Forward”

Government Official Denigrates Citizen for Seeking Public Information

Court Rejects MDEQ’s Avoidance Tactics in Flint FOIA Lawsuit

Public Records and the Office of the Governor

Elect Speaker of the House; Names of Senators

January 20, 2017 MichiganVotes Weekly Roll Call Report

The 99th Michigan Legislature met for the first time on Jan. 11. New officers were selected for the House, which has 42 new members. Senators are half-way through their four year terms, and the Senate retained the same leadership.

This report includes a procedural vote or attendance roll call from each body so that readers can see the names of their own new or continuing state Representative and Senator.


House Resolution 2, Select House officers for the 99th Legislature: Passed unanimously by all members present

Stay Engaged

Receive our weekly emails!

To elect House leaders for the 99th Michigan Legislature, including Rep. Tom Leonard, R-Dewitt, to be Speaker of the House. Democrats selected Rep. Sam Singh of East Lansing to be the House Minority leader. Minority Leader Singh seconded the motion to make Rep. Leonard the Speaker.

Who Voted "Yes" and Who Voted "No"


Senate Resolution SR, Senators of the 99th Michigan Legislature

Names of the state Senator or Senators who represent districts in your area. This is shown for reference purposes.

Who Voted "Yes" and Who Voted "No"


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.

~~~~~

Related Articles:

Recently Introduced Bills of Interest

Votes on Electric Regulations, Asset Forfeiture, School Restraint Rules, More

December 2, 2016 MichiganVotes Weekly Roll Call Report

October 21, 2016 MichiganVotes Weekly Roll Call Report

October 14, 2016 MichiganVotes Weekly Roll Call Report

The Hypocrisy of 'Public' Education Rhetoric

What’s being protected here: The Constitution or union dues?

At Betsy DeVos’s confirmation hearing to become U.S. secretary of education, Democratic senators repeatedly lectured her on the need to “protect public education.” Notably, ranking member Sen. Patty Murray asked DeVos, “Can you commit that you will not work to privatize public schools or cut a single penny for public education?”

The senators, including Murray, framed the issue in constitutional terms, saying public money must not be used to support overtly or implicitly faith-based education.

However, many of these same senators then pushed DeVos to commit to expanding federal Head Start and early childhood programs, or to involve the federal government more deeply in higher education funding. This sentiment reached its pinnacle when Sen. Bernie Sanders memorably asked DeVos to commit to “free” higher education for all American students, eliciting her response that it’s not free; “someone has to pay for it.”

Some senators oppose voucher programs and other choice-based funding mechanisms for students in K-12 education. How, though, do they square that position with their support for other programs that share the voucher model? These include Pell Grants and Head Start, among other publicly-funded educational services for students younger than five years old and older than 18 that may be provided by faith-based institutions.

Stay Engaged

Receive our weekly emails!

Across the nation, 34 colleges with “Bible” in their name, 21 seminaries, 18 rabbinical institutions and many other faith-based colleges or universities (including nine “Methodist,” five “Lutheran” and six “Catholic” named schools) received federal Pell Grant funding in 2014-15. That’s not a loan, that’s the federal government paying directly for that student’s education at the faith-based school of their choice. A voucher, in other words.

The senators voiced specific opposition to DeVos’s efforts to create an educational voucher system in Michigan that would have allowed students in Detroit (and elsewhere) to attend any school of their choice. This was portrayed as an unacceptable weakening of the wall between church and state. Again, though, these senators also asked her to commit to expanding Head Start and other early childhood educational services. The reality that dozens of the Head Start centers in Detroit are operated by explicitly faith-based organizations and that the DeVos Department of Education would be increasing funding to them did not appear to raise constitutional concerns.

If the senators are concerned about protecting low-income students from faith-based service providers who accept federal dollars, they have plenty to look at beyond education. These children often already benefit from health care vouchers (Medicaid) and food vouchers (Bridge Card, SNAP and WIC) that can be used at private and nonprofit providers, including those with religious affiliations. And the senators who expressed concern with educational voucher programs broadly support both Medicaid expansion and federal food aid expansion, without constitutional concerns about their use at Catholic hospitals and halal or kosher butchers.

The reality is that it’s only K-12 education in which these politicians have discovered constitutional qualms about the government compensating faith-based institutions for providing public services to private individuals. In every other facet of society, there’s bipartisan acceptance of the U.S. Supreme Court’s guidance that so long as the choice is made by a private individual, public funding is not a government “establishment of religion.”

This of course raises the question whether there was some other factor truly in action as the senators grilled DeVos for hours about her support for “public education” and her advocacy for increased parental options that may take children out of traditional K-12 public schools.

The National Education Association, which represents public school teachers, was the top donor to “outside groups” trying to influence voters in the 2016 election cycle, and its donations went overwhelmingly to Democrats. Whether this political self-interest or the Constitution was more influential in shaping the senators’ questions is left as an exercise for the reader.

~~~~~

Related Articles:

How Education Secretary DeVos Could Help Michigan Advance Choice

School Choice on the National Stage

School Choice Opponents Pick Institutions Over Special Needs Families

Family Finds Online School to Be a Lifesaver

A Survey of Michigan's Private Education Sector

Two personal income tax elimination bills are apparently in the offing on the Senate and House sides of the Legislature. Both call (ultimately) for the wholesale elimination of the state’s personal income tax, born in Michigan 50 years ago, this Oct. 1.

The first proposal (not yet introduced) is being floated by Sen. Jack Brandenburg. His offer would also reportedly come with offsetting tax increases (sales tax, for instance) elsewhere and spending cuts, too. It sounds like a net tax cut, effective immediately, but the devil will be in the details.

The second proposal, introduced by House Speaker Pro Tem Lee Chatfield, would roll back the personal income tax to 3.9 percent (from 4.25 percent) starting in 2018 and then reduce it each year by 0.1 percent until it was zero, which would take 39 years.

Both proposals have some pluses and minuses. Economists find sales taxes to be a more economically efficient way to fund the government, although they are also considered more regressive. But higher income taxes are known job killers. That’s especially true in multi-rate systems, which Michigan’s constitution thankfully bans.

Although his plan would only gradually reduce the state’s income tax, the first cut in Chatfield’s bill is significant. Michigan taxpayers are owed one. In 2007, Gov. Granholm and the Legislature promised taxpayers that the 11.5 personal income tax hike they imposed would only be temporary. It would be rolled back, they said, starting in 2011 at 4.35 percent until it got to 3.9 percent in 2015.The complete rollback never happened. Gov. Snyder (and a new Legislature) did not permit it. Today, that tax stands at 4.25 percent. There are other good reasons beyond fulfilling an overdue promise to cut taxes today.

Stay Engaged

Receive our weekly emails!

The Brandenburg proposal eliminates the personal income tax more quickly. But some or even a majority of the revenues it raises will be offset by hiking other taxes, such as the sale tax. The Chatfield proposal, by contrast, does not call for higher taxes elsewhere and cuts income taxes after the initial drop to 3.9 percent over almost four decades.

I will believe that 39-year tax elimination happens when I see it. Like the income tax, I turn 50 this year too. Actuaries say it is unlikely I will live long enough to see this fulfilled, even if future lawmakers don’t stop cuts in their tracks.

While the 39-year phase out is well-intentioned, the previous two administrations both promised future tax cuts that never happened. The first was Gov. Engler’s promise to roll back the Single Business Tax by 0.1 percent per year over 23 years, starting in 2001. The second was Gov. Granholm’s 2007 promise mentioned above. Short of a constitutional amendment, it is simply impossible to bind future lawmakers to the promises of those no longer in office.

A better approach might be to cut personal income taxes and state spending deeper and faster than proposed and only then discuss phaseouts or a hike to the sales tax.

Critics might complain that there is nowhere in the state budget to cut spending and offset revenues lost from eliminating the personal income tax. But Mackinac Center experts and others have repeatedly offered ideas for saving billions and other reforms to state spending that would help lower the tax burden, invest in infrastructure and shore up pension liabilities, too.

You can review many of those ideas by clicking on the links below.

Some Budget Ideas for 2017 (2017)

$2.1 Billion in Michigan Budget Reforms (2014)

State Budget Follies (2014)

Benefits in Balance (2011)

101 Recommendations to Revitalize Michigan (2009)

Recommendations to Strengthen Civil Society and Strengthen Michigan’s Budget (2003)

~~~~~

Related Articles:

Michigan Income Taxes Already Progressive

Legislators Should Give Taxpayers the Income Tax Cut They Deserve

Graduated Income Tax Won’t Help Income Inequality

Number of Michigan Millionaires Grows 25-Fold

Progressive State Income Tax Would Damage Michigan’s Economy

Detroit Charters Far Outperform Traditional Schools

Mackinac’s CAP scores align with rigorous research findings

With the confirmation hearing for Betsy DeVos delayed until Jan. 17, the heated conversation has continued surrounding the state of Detroit charter schools and her work as an educational choice advocate.

The Manhattan Institute’s Max Eden and I debunked the “Wild West” myth of the Motor City’s educational landscape and clarified DeVos’ mainstream position on school accountability. Further, National Review’s Ramesh Ponnuru repeatedly has corrected The New York Times’ twisting of the best available research that highlights the benefits of Detroit charters. Ponnuru compared the journalistic malpractice to “a game of telephone being conducted by propagandists.”

According to the Times’ calculated descriptions of the highly regarded 2013 CREDO study, Detroit charters “often” perform as well as their district counterparts and “sometimes” more poorly. The truth is that the study found nearly half of charters helped students learn more in reading and math, and about the same number performed the same, while only a tiny number did worse.

The Mackinac Center recently released the latest version of the Public High School Context and Performance Report Card, assigning grades to schools based on multiple years of testing data that are adjusted for student poverty rates. Since low achievement scores at a school are strongly correlated with a high-poverty student population, it’s useful to take student poverty into account in comparing schools. A CAP score of 100 indicates a school performs as expected given the share of students in poverty. A higher score indicates that a school does better than what its demographic profile might predict.

Stay Engaged

Receive our weekly emails!

A number of high-poverty schools with unremarkable test scores get higher marks on our report card by outpacing their peers. Higher CAP scores are garnered not only by Detroit Public Schools buildings with selective admissions policies, but also by some conventional schools like Davison Elementary and Charles Wright Academy. Such schools are especially noteworthy, since childhood poverty, especially of the extreme version often found in Detroit, pose extra challenges for educators.

DPS schools with higher CAP scores represent the exception, however. While the bottom 10 percent of schools statewide are assigned an F, fully half of the district’s schools received that grade. This finding is consistent with the repeated results of NAEP scores that place Detroit at the bottom of the nation. While a straightforward analysis of our CAP scores is not as rigorous as the widely regarded CREDO study, it does give us a glimpse into how well the city’s charter and district schools are doing.

When measured by the 2015 elementary and middle school report card as well as the 2016 high school report card, the 76 Detroit charter schools earned an average CAP score of 99.16, just below the expected performance level. Roughly 30 percent earned an A or B, in line with state averages, while nearly 40 percent received a D or F.

By contrast, every one of the failing schools taken over by the Education Achievement Authority got a failing score. The EAA is slated to shut down at the end of this school year.

When we take student poverty into account, Detroit charters are significantly overrepresented among the top 5 percent of schools statewide. But they also appear too often in the bottom third. Overall, the city’s charters perform solidly on average, but stand head and shoulders above district schools. These CAP score results fit well with the findings of the more rigorous CREDO research.

The Motor City presents an exceptionally difficult educational challenge. Significant improvement is needed in order to help lift many more kids from poverty to success. Charter schools have proved themselves to be much more part of the solution than part of the problem.

~~~~~

Related Articles:

'Reckless Expansion' of Charter Schools? Not Quite

Detroit Charter School Parents: Don’t Take Away Our Freedom to Choose

Detroit Public Schools' Collapse Preceded Charter School Expansion

Healthy Charter Sector Belies Need for Commission, Extra Regulation

Charter Schools Are Not to Blame for Pension Woes

At Michigan Radio, columnist Jack Lessenberry thinks that new school employees should continue participating in the state’s grossly underfunded retirement system. It’s better for teachers to have an employer-sponsored pension income, he says, than employer-sponsored retirement savings accounts.

But the system he supports hurts the very people he thinks it helps.

School Retirement System Continues to Harm Members
At Michigan Radio, columnist Jack Lessenberry thinks that new school employees should continue participating in the state’s grossly underfunded retirement system.

It’s important to remember that public school employees must work for 10 years before they “vest,” or have a right to receive a pension. If they leave before then, they won’t get a pension. And roughly half of Michigan’s public school employees do just that. If, though, they had been in a 401(k)-style system, they would have built up savings they could take with them when they go. Add in investment earnings and the savings become larger. So which scenario is better for these teachers who leave before vesting: no retirement benefits, or a personal account with real dollars in it?

When it comes to funding the pension system, the state has had to make a number of assumptions, and it’s gotten many of them wrong. As a result, the system has only 60 cents for every dollar it is obligated to pay. Apply that gap to all the teachers and other school employees who are counting on a pension and you have a shortfall of $26.7 billion.

Stay Engaged

Receive our weekly emails!

When an employer makes deposits into a well-run pension system, it is setting money aside for upcoming obligations. But with Michigan’s school pension system, 89 percent of the deposits simply pay down obligations already on the books. Instead of setting aside for the future, the system is trying to play catch-up.

The costs of having an underfunded pension system are real. Each year, schools have to pay more and more money for pensions. Schools had to put 13 percent of their payroll into the pension system in 2004; this year, it’s 37 percent. This skyrocketing cost is prompting districts to lay off teachers. Other teachers have kept their job but have endured pay freezes or even pay cuts. It’s all happening because the state is in effect taking money from today’s classroom to make up for failing to fully fund pensions yesterday.

Imagine what would happen if, every year, your employer put an amount equal to one-third your salary in a retirement savings account of your own. Even if you took the most cautious approach to investing that money, you would soon have a healthy nest egg.

Instead of having that happy scenario, though, Michigan’s school employees face something else. They are in a pension system so broken that it costs more than one-third of their salary — and it still can’t provide basic retirement benefits to more than half its members.

As I wrote in The Detroit News, “The problem with government pensions boils down to a simple issue: The state promises something now, but pays for it later.” The state either needs to fix its funding assumptions and put more cash in the retirement system or it needs to move to a system — the government equivalent of a 401(k) plan — that doesn’t allow it to defer retirement expenses. The current policy is hurting teachers and taxpayers alike.

~~~~~

Related Articles:

Most Michigan Teachers Leave Before Qualifying For a Pension

School Pension Iceberg: Beware What’s Under Budget Surface

Time To Fix MPSERS Pension Problem

Michigan School Pension Costs Almost Quadrupled

Officials Shortchange School Pension Fund 7th Year In Row

Delayed Payment On Granholm Early Pension Gambit Raises Costs To Taxpayers

Michigan Should End Civil Asset Forfeiture

Require a criminal conviction before taking people’s property

Lansing began 2017 on the right foot by enacting a law to make it easier for people to try to recover property seized through civil asset forfeiture, but the state should end the practice altogether.

Last week, the Mackinac Center for Public Policy and the ACLU of Michigan issued a joint press release applauding the Michigan Legislature and Gov. Rick Snyder for passing and signing into law House Bill 4629. The new law removes the requirement that people pay a bond equivalent to 10 percent of the value of the property seized through civil asset forfeiture if they want to try to get it back.

Stay Engaged

Receive our weekly emails!

“This new law will further protect the constitutional rights of citizens,” said Jarrett Skorup, a policy analyst at the Mackinac Center. “But Michigan needs to do more. Twelve states require law enforcement to get a criminal conviction before forfeiting property and two – New Mexico and Nebraska – have banned civil forfeiture altogether.”

Skorup spoke with ABC 12 this week about the case of a Genesee County man whose property was seized by a Saginaw County detective in 2014.

“All we know is the police never pressed charges against him, never convicted him, yet they ended up with over $20,000 in cash and some of his property, and that should raise a lot of eyebrows for people,” Skorup said.

Now, a Saginaw County deputy is suing over the matter, saying the sheriff’s department retaliated against him after reporting the seized money was used for confidential informant drug buys.

Since 2015, the state of Michigan has passed several reforms to limit how police may seize property. The standard of evidence required to take property is now higher, and the process is more transparent.

“Previously, if they wanted to forfeit someone’s stuff, it was based on a very low standard of evidence, and they’ve raised that a little bit higher,” Skorup told WSJM. “However, they still aren’t requiring that someone be convicted of a crime in order to take their stuff and forfeit it over to the state.”

Skorup added that a number of incoming legislators are interested in further reforming Michigan’s civil forfeiture laws.

Read the full report at WSJM.

Watch ABC 12’s full coverage.

Read the full press release.

Read the Mackinac Center and ACLU’s report “Civil Forfeiture in Michigan: A Review and Recommendations for Reforms.”

~~~~~

Related Articles:

Michigan Forfeiture Laws Improving, But State Transparency Still Falls Behind

Trump is Wrong on Civil Forfeiture

Senate Votes for Civil Asset Forfeiture Reform

State Media Covers Push for Civil Asset Forfeiture Reform

House Judiciary Passes Civil Forfeiture Reform Bills

Resisting the Deforming Power of Government

How to preserve the distinction between society and government

Photo by Phillip Hofmeister

The French have a term for the tendency of professionals to try to address every societal issue from the point of view of their own expertise while ignoring other options. They call it “déformation professionnelle.” As new legislators take their seats in Lansing as the Michigan Legislature begins its session, they must take care not to become victims of that professional deformation, lest they risk further damage to the balance between government and society.

It’s tempting for new legislators to try to solve problems, since the arguments in favor of action are so simple and common: They’ve been elected to make things happen. They’ve got immense power to be used for good. They know their intentions are positive. They’re listening to smart people and considering all sides. If they don’t fix it, who will?

That’s why the hardest thing for lawmakers to do is stop and say, “This certainly is a problem we need to address as a society, but it is not appropriate for us to try to solve it using the powers of government.” It’s tremendously tempting for them, with the best intentions, to fall into this “déformation professionnelle.” They then see every injustice as something to be righted by government, every injury as one to be healed by government and every problem as one to be solved by government. Inevitably, every success then becomes something from which government deserves its share to fund all those government interventions.

Stay Engaged

Receive our weekly emails!

This is the fundamental truth that is threatened by even the most well-intentioned legislator: “Government” and “society” are not the same thing. Despite former Congressman Barney Frank’s infamous assertion that “Government is simply the name we give to the things we choose to do together,” the reality is that the most important parts of our lives such as family, faith, work and recreation are fundamentally collective activities that we “choose to do together” with as little involvement from government as possible. Moving outward from that core, as participants in larger societies, we’ve created large and complex mechanisms for working together and helping each other without government. Churches. Charities. Professional associations. Unions. Fraternal organizations. Service organizations. Foundations and other philanthropies. They’re all different ways for us to work together in a way that does not require the organizing – and distorting – hand of government.

The great French philosopher and economist Frédéric Bastiat memorably explained this distinction in 1850:

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.

Why should we differentiate between a solution provided by government and one provided by civil society? Because through the process of solving one problem, government inherently creates another. As Mackinac Center President Emeritus Larry Reed explained in his famous Seven Principles of Sound Public Policy: “Government has nothing to give anybody except what it first takes from somebody, and a government that's big enough to give you everything you want is big enough to take away everything you've got.”

Our elected representatives in Lansing will be presented with a great many problems in this upcoming legislative session. Each will have an array of constituencies clamoring for a government-based “solution” that advances their special interests. In many cases, the people asking for help will truly need assistance and it will be the legislator’s job to decide whether the state government is the right mechanism to provide it. To be sure, some problems will require governmental action. But let us hope that these new legislators have the wisdom and courage to recognize the difference between the problems that they alone can solve, and those the rest of us can and should address together … without government’s deforming involvement.

~~~~~

Related Articles:

Michigan Must Seize Opportunities for Criminal Justice Reform

2016 Michigan Energy Roundup: Renewable Energy

Final post in a series analyzing changes to Michigan's utility laws

(This is the third article in a three part series that discusses major changes made by the Michigan Legislature to energy utility regulation in the state. Those changes are now enrolled in statute as Public Acts 341 and 342 of 201.)

In the closing days of the 2016 lame duck session, the Michigan Legislature passed two major bills altering the management of electric utilities and electricity generation in the state. The primary focus of the bills was to determine the best way to pay for the construction of new generation capacity, made necessary by the premature closure of coal-fueled generation across the state. The bills also dealt with the future of the state’s electricity choice program, which provides 10 percent of electricity generated in Michigan. Lastly, the bills dealt with renewable energy, including addressing concerns over the state’s “net metering” program and the expansion of the state’s Renewable Portfolio Standard.

Stay Engaged

Receive our weekly emails!

Renewable Portfolio Standard

Legislators and environmental groups lauded the completion of the electric utility bills as a major win, claiming they would “save millions of dollars a year for Michigan residents” by forcing waste reduction and mandating the construction of new wind and solar energy capacity.

The final bills increased Michigan’s 10 percent RPS by 50 percent, meaning electricity providers will now be required to produce 15 percent of their electricity from renewable sources — primarily wind and solar — by the end of 2021. However, imposing this increase is a significant setback for electricity consumers in Michigan as mandates, in place of market options, restrict choice and impose the use of more expensive and less reliable energy options.

A 2015 Institute for Energy Research study applies directly to Michigan utility decisions to partially replace existing coal and nuclear plants with new wind generation. IER found that “on average, electricity from new wind resources is nearly four times more expensive than from existing nuclear and nearly three times more expensive than from existing coal. These are dramatic increases in the cost of generating electricity.”

Net metering

The energy bills also rejected any immediate changes to the state’s net metering — now called “distributed generation” — programs, used by electricity customers with distributed generation systems, such as rooftop solar panels, on their home or business.

These customers are connected to the electricity grid and rely on it to purchase electricity from utilities when their generation system is not producing enough electricity for their needs and to sell electricity when they produce more electricity than they need. In most cases, those customers are paid the full retail rate for the electricity they sell back to the utilities. However, that retail rate covers the cost of electricity, as well as all the infrastructure associated with the grid — transmission lines, generation facilities, electrical poles, meters, etc.

The final language of the bills grandfathers existing net metering customers at their current compensation rates. But, the Michigan Public Service Commission was directed to “establish a nondiscriminatory, fair, and equitable grid charge to apply to customers who participated in a net metering or distributed generation program after the bill’s effective date.”

To do so, the MPSC must complete a cost-benefit analysis to assess the cost of providing the electrical grid infrastructure distributed generators use (at a subsidized rate, compared to other customers) against the benefits their additional energy provides to all electricity consumers. How rates will change for new distributed generators when the MPSC completes its study is currently unknown.

Critics of net metering programs see them as “cost-shifting” from the poor to the rich, as net metering participants typically must be financially secure enough to qualify to lease solar panels or to afford the costs of purchasing their own. Despite their relative financial security, they receive an indirect subsidy that is paid by all other electricity consumers. Net metering opponents believe that distributed generators should pay the full price for the infrastructure they rely on to access the electricity grid. Even if these net metering participants paid these infrastructure costs, they’d still benefit from generous federal and state subsidies that artificially reduce the cost of solar panels and other renewable energy generation.

Net metering supporters argue, however, that Michigan’s two large utilities — DTE and Consumer’s Energy — are government-privileged monopolies with near complete control of the state’s electricity markets. Therefore, the subsidies and higher net metering rates are an essential means of incentivizing a more diverse generation system. In other words, until Michigan’s electricity market is freed to open competition, net metering supporters maintain that these subsidies are justified and necessary.

Whichever side one chooses to take on the net metering issue, the reality is that heavy government involvement in, and regulation of, electricity markets has a substantial distorting effect on efficient energy generation and distribution. Special protections that are afforded to a select few utilities and distributed generators discourage diversification, innovation and customer-focused service.

Additionally, state renewable energy mandates and renewable portfolio standards put government in the role of selecting market winners and losers. They require that generation capacity rely on more expensive and less reliable energy sources, leaving Michiganders to foot higher bills for less effective electricity service.

~~~~~

Related Articles:

Michigan's Wind Energy Mandate Costs Each Family Nearly $4,000

That's a 'Renewable Energy' Job? If You Say So

Renewables Just a Hood Ornament on Fossil Fuel Power System

The Fight Over Energy Mandates

Michigan Won't Be Blown Away By Renewable Energy Jobs