The MC: The Mackinac Center Blog

Vernuccio Joined WXYZ for Primary Night

How labor issues factor into the 2016 election

The Mackinac Center’s F. Vincent Vernuccio joined Chuck Stokes and Dave LewAllen for WXYZ’s prime time election webcast Tuesday night.

Just before the first round of primary election results were released, Vernuccio, director of labor policy at the Center, spoke to ABC 7 about labor issues and how they have factored in to the 2016 presidential election. When asked about whether or not right-to-work has been good for Michigan, Vernuccio explained it has forced unions to provide value to members.

“Wages are up, unemployment is down, employment is up and last year, we added over 36,000 new union members,” Vernuccio said. “You take those stats into account and I think it has been pretty good for us. You take all the stats out of it and what right-to-work really means is that a union can’t get a worker fired for not paying them. It’s about freedom.”

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Vernuccio noted the unusual fact that a number of major labor unions have failed to make endorsements in the race, and the importance of the election for cases before the Supreme Court like Friedrichs v. California Teachers Association, which would give public employees in every state the freedom to choose whether or not they join a union.

Yahoo News also published Vernuccio’s segment.

Watch the full segment at WXYZ.

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A new national report further undercuts the case for creating a politically appointed commission to dictate school enrollment decisions across the Motor City.

The Detroit Education Commission has been touted as part of the solution to rescue a failing education system. Proponents want to give the commission jurisdiction over all public schools within the city, including the ability to close charters it deems unsuccessful. In effect, the new governmental body would be empowered to take away options parents believe to be safer or otherwise better for their children.

On March 7, Detroit Mayor Mike Duggan pitched the idea of a commission to a skeptical House Appropriations Committee. Fellow Democrat Rep. Harvey Santana pushed back on Duggan’s call for the authority to appoint the commission’s entire board.

The same day as the mayor’s testimony, the nationwide trade group for charter schools gave Michigan high marks for the health of its public charter school sector. For the second consecutive year, the National Alliance for Public Charter Schools ranked Michigan third in the nation. The group’s analysis was based largely on the high-need student population charters serve, their demonstrated ability to increase academic growth and their commitment to closing low-performing schools.

The report attributed Michigan’s strong rating in part to “a common set of comprehensive oversight and accountability standards” adopted by the nonprofit Michigan Council of Charter School Authorizers. MCCSA has worked to strengthen charter school oversight; recently it introduced a new rigorous system of accreditation in partnership with AdvancED — the same organization that accredits Michigan’s public intermediate school districts. The accreditation process, believed to be the first of its kind, may help lift Michigan’s No. 3 ranking higher in future editions.

Ignoring this key upgrade, the advocacy group Education Trust-Midwest last month released a report calling for the state superintendent to follow through with his predecessor’s threat to crack down on weaker charter authorizers. Ed Trust Executive Director Amber Arellano asserts that the 2011 lifting of the statewide charter cap and what she calls “Michigan's no-accountability approach” toward charter authorizers has created a chaotic environment in Detroit.

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State Board of Education President John Austin appropriated the same sort of rhetoric during his March 7 committee testimony, using the term “educational chaos” to describe the state of charter authorization in Michigan.

But Ed Trust’s heavy-handed proposal is a solution in search of a problem. The organization's own chart shows the rate of new charters opening on the decline, and authorizers to which it gave a grade of D or F opened no new schools at all in 2015. The trend depicted in the chart aligns with the conclusions about the health of Michigan’s charter sector from the recent NAPCS analysis.

(Meanwhile, Ed Trust’s report has been exposed for cherry-picking data in an attempt to downgrade the value of Michigan charter schools.)

Charter authorizers have already been working to police their own and help weaker authorizers raise their standards through accreditation. But there’s one thing state lawmakers could do to tighten oversight of charter schools without also enabling aggressive bureaucratic regulation. The recent report from NAPCS calls on Michigan to outlaw the practice of “authorizer shopping,” a loophole through which some ineffective charter schools escape closure by seeking out a new authorizer with lower standards.

The Legislature could also increase accountability by adopting a statewide A-to-F school grading system that meaningfully measures student academic achievement and growth to provide parents with accurate, easy-to-understand pictures of performance. All district and charter schools should be graded on a consistent basis.

Detroit’s charter schools as a whole already outperform their district school counterparts, though no one will dispute the need for further improvements citywide. Neither statewide bureaucratic authorizer oversight nor a politically appointed Detroit Education Commission promises to help. However, both could well quash the improvements charter operators and authorizers are making.

Parents, not politics, should be given the pre-eminent role in the school decision-making process. Let’s focus on helping them by giving useful information and access to more quality options.

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Despite Candidate Rhetoric, Michigan Exports to Mexico Continue to Gain

Freer trade is good for Michigan and the country

Michigan Exports

The North American Free Trade Agreement’s influence on the state economy is being argued in both Republican and Democratic parties. (National Public Radio recently interviewed me on Bernie Sanders’ claims.) The presumption is that Michigan’s economic history is a prime example of the downside to free trade.

Yet a simple look at the data suggests that more trade with Mexico has been a boon to Michigan. Mexicans purchase more Michigan-made products than the citizens of every other country save Canada, and the demand continues to increase.

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Michigan exports to Mexico increased roughly five fold since 1999 (the earliest in the data source), growing from $2.4 billion to $11.1 billion in 2015. The country now accounts for 20 percent of all Michigan exports.

Blaming more trade with Mexico for this state’s past economic performance ignores the other side of the free-trade coin that directly benefits Michiganders: Mexicans buying Michigan-made products at an increasing rate.

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DeGrow Letter Published in Wall Street Journal

Rebutting DPS allegations from teacher union president

The Wall Street Journal published a letter by the Mackinac Center’s Ben DeGrow this week, setting the record straight on what caused the financial demise of Detroit Public Schools.

DeGrow, education policy director at the Center, responded to claims made in an earlier letter by American Federation of Teachers President Randi Weingarten that the district’s financial troubles were caused by “state intervention, financial ‘austerity’ and ‘outsourcing’” DeGrow paraphrased. In reality, he explained, the hardships in Detroit originated with irresponsible school boards:

State intervention has done little to help, but Detroit school board control created the deep financial challenges that prompted former Democratic Gov. Jennifer Granholm to begin appointing the current round of emergency managers.

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“Poor management decisions in the past have left school facilities in disrepair,” he added.

DeGrow noted that Detroit’s charter schools are producing better results at a significantly lower cost, and school choice options should be increased to help children succeed.

More focus should be placed on replicating the work of successful models. Centralizing control over the charter schools that families have chosen would turn back the clock for students who badly need more hope, not less.

Read the full letter at the Wall Street Journal.

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NPR Quotes Hohman to Correct Sanders

NAFTA is not responsible for Detroit's woes

NPR recently turned to the Mackinac Center to set the record straight on claims made by Bernie Sanders that free trade is responsible for Detroit’s blight.

In its Break It Down fact-checking series, NPR corrected Sanders’ claims that the North American Free Trade Agreement is the reason Detroit and surrounding areas have dilapidated, abandoned buildings. Mackinac Center’s James Hohman, assistant director of fiscal policy, weighed in on the matter, pointing out that the empty buildings featured in Sanders’ tweet were likely vacant prior to NAFTA’s adoption in 1993.

Hohman disagreed with Sanders that free trade agreements have caused Detroit’s population to decline.

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"That's really not going to be NAFTA," Hohman said. "That's basic corruption and mismanagement of the city government that has made it unable to provide the basic services."

"Detroit and Flint are suffering, largely from self-inflicted, in some cases state-inflicted, wounds."

Read the full article at NPR, and read more commentary on how NAFTA has impacted Michigan here.

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Michigan Corporate Welfare’s Secret Giveaway: $1 Billion in 2016

State refuses to disclose how much each company gets

According to the latest revenue estimates, Michigan state government expects to pay out $1.03 billion this fiscal year to companies awarded refundable business tax credits under programs that were repealed in 2011. Even for Lansing, this is a huge transfer of taxpayer resources to favored interests.

Compare the amount to the $1.1 billion the state expects to collect this year in corporate income tax revenue. Nearly all the business tax money collected this year from thousands of companies both large and small will be doled out to a handful of mostly large firms who were fortunate enough to swing special deals with the Granholm administration.

Worse, state economic development officials keep secret the names of the companies collecting these payments. They claim releasing the names would violate the beneficiaries’ taxpayer confidentiality, but this relies on a thin and tendentious reading of the law (and one the Legislature could reverse).

Meanwhile, agency officials continue to ignore legal reporting requirements that require the names and amounts to be disclosed. Apparently, government secrecy, shrugging off statutory rules and continued special treatments for special interests is standard procedure for state economic development programs, and not a problem to the lawmakers who fund them.

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Trump, Snyder Agree: More Visas for Foreigners With Degrees

Possible change of course for presidential candidate

Donald Trump and Michigan Gov. Rick Snyder may be aligned on the issue of increasing the number of work visas issued to foreigners with college degrees.

Trump startled his supporters by appearing to reverse course on the issue during a March 3 candidate debate in Detroit.

“I'm changing. I'm changing,” Trump said in response to a question from Fox News personality Megyn Kelly. He continued:

We need highly skilled people in this country, and if we can't do it, we'll get them in. But, and we do need in Silicon Valley, we absolutely have to have.

So, we do need highly skilled, and one of the biggest problems we have is people go to the best colleges. They'll go to Harvard, they'll go to Stanford, they'll go to Wharton, as soon as they're finished they'll get shoved out. They want to stay in this country. They want to stay here desperately, they're not able to stay here. For that purpose, we absolutely have to be able to keep the brain power in this country.

While many Trump voters probably regard Michigan Gov. Rick Snyder as part of the Republican Party’s “establishment,” on this issue he and Trump appear to agree. Among proposals for returning Detroit to greatness, Snyder has called on the federal government to issue “50,000 employment-based visas for skilled immigrants and entrepreneurs.”

Whether the Snyder-Trump alignment is real on even this narrow slice of the policy debate remains to be seen. After the March 3 debate, Trump posted a statement reasserting his opposition to more visas for low-skill workers, but also attacking the H-1B visa program for workers with college degrees.

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Ride Sharing

Charter Schools Are Not to Blame for Pension Woes

The way to catch up on underfunding is not to rope more people in

Government pension systems around Michigan are a mess, by and large, and there’s no better example than the public school employee pension system. It is need of reform, carrying $26.5 billion in unfunded liabilities. Unfortunately, some lawmakers and local officials do not understand how pension systems work and believe the only way to catch up on underfunding is to rope more people into the system, namely charter school employees.

State representative Jeff Irwin (D-Ann Arbor) exemplified this recently, claiming “As we all know, the shift to charter schools in Michigan is responsible for a big chunk of the added MPSERS costs the rest of our school districts have to pick up,” according to MIRS News.

This is not just a view from the Democratic Party, either. During a debate on reforming the school retirement services a few years ago, Senator Tonya Schuitmaker (R-Lawton) said that it wasn’t “fair” that charters get to avoid the school pension system.

Education officials have echoed similar sentiments. State school board president John Austin claimed in a memo, “Continued expansion of school choice through charter schools, cyber schools, and the EAA shifts school employees away from the MPSERS system, as does privatization of any school services. The result is [unfunded actuarial accrued liability] costs spread over a smaller base, and with school district contributions capped, the state will pick up a larger part of the tab.”

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Former candidate for state superintendent and then-Oakland Intermediate School District superintendent, Vickie Markavitch told Bridge, “Public school academies get state money, they want to be called state schools, then they should be in the MPSERS program … Either get rid of MPSERS entirely or require them to get in. If they were paying their share, we wouldn’t be paying $900 (per pupil). You don’t get the average unless you spend the average.”

Although they express their concern in slightly different ways, all of these commenters are equally wrong. And in a big way: If the state were to force charter school employees into the pension system, the underfunding problem would actually get worse. Since the state has consistently underfunded the system, more people in the system just means more opportunity for the already massive liability to grow even larger.

This is because the pension system’s problem has largely been a failure of actuarial assumptions — especially assumptions about investment growth, according to a recent performance audit. Adding charter schools into the system would only magnify the problem.

Nor would it alleviate the burden of paying down the unfunded liabilities. These have to be paid down regardless of how many people are in the system. For example, the state’s legislative retirement system has just one active member, but still has substantial unfunded liabilities, according to its most recent financial statements. The state puts in money to ensure that the plan is solvent. This is no different from what the state can do with the school pension system. Forcing charters to contribute to the school pension system would ensure only that the costs of the unfunded liabilities are paid by those who had nothing to do with creating them.

There is one pension assumption, though, that could improve if charter were roped into the system. The state assumes that public school payroll will increase, even though the long-term trend is down significantly. Payroll has dropped from $10.3 billion to $8.8 billion from 2008 to 2014, a 15 percent decrease. Yet over this period pension planners based their funding requirements on the assumption that payroll would grow 3.5 percent annually (23 percent over the period). Since charter schools tend to be growing and hiring more staff compared to traditional school districts, this payroll assumption would be less of a mismatch if charters were part of the pension system.

But expanding payroll and membership is an expensive way to pay down unfunded liabilities. Consider this: Adding a new employee will cost a school that person’s salary plus the contributions to the retirement system. This would add roughly $50,000 to payroll in order to pay $10,000 in pension liabilities. A better way would be to save the $50,000 and just pay the $10,000 for pension liabilities directly.

Lawmakers have already toyed with this idea. In fiscal year 2015, the state made an extra $108 million contribution to districts to pay down unfunded liabilities. The state can always use its resources to put money in the pension system directly as well.

Those concerned with improving the state’s public school employee pension system should stop trying to make the problem worse by forcing charters — or anyone else — into the system. Instead, lawmakers should close this underfunded pension system to new members and offer new workers defined-contribution retirement benefits instead. There will be no fussing over who pays the costs of underfunded benefits when employers offer benefits that cannot be underfunded.

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March 4, 2016 MichiganVotes Weekly Roll Call Report

Teens with liquor, bikers without a license, DNR double dipping

Senate Bill 332, Reduce minor in possession of alcohol sanctions: Passed 36 to 2 in the Senate

To remove the misdemeanor penalties for a first violation of the minor-in-possession of alcohol law, but not on second or third violation, which carry potential 30 and 60 day jail sentences. First-time offenders would instead be subject to a $100 civil fine. The bill also repeals police authority to require a minor to take a chemical breath test. Senate Bill 333 applies similar treatment to first offenses of minors transporting alcohol in a vehicle or anyone having an open alcohol container in a vehicle.

Who Voted “Yes” and Who Voted “No”

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House Bill 4458, Repeal “complete streets” advisory council: Passed 28 to 10 in the Senate

To eliminate a government “complete streets” advisory council comprised of representatives of various pro-sidewalk interest groups that was created by a 2010 law mandating local governments adopt policies that promote more sidewalks and bike paths.

Who Voted “Yes” and Who Voted “No”


Senate Bill 496, Make operating a motorcycle without a license a misdemeanor: Passed 38 to 0 in the Senate

To make operating a motorcycle without a motorcycle indorsement on the operator’s driver's license a misdemeanor punishable by a $500 fine and three months in jail for a first offense, and up to a year for subsequent offenses.

Who Voted “Yes” and Who Voted “No”


Senate Bill 672, Expand children's sports liability waivers to camping: Passed 38 to 0 in the Senate

To include camping activities in a law that explicitly states that a parent or guardian of a minor who participates in sports or a recreational activity may release the organizer, sponsor or property owner in advance from liability for economic or noneconomic damages for injuries sustained by the minor.

Who Voted “Yes” and Who Voted “No”


House Bill 5128, Allow some pension double-dipping by retired DNR employees: Passed 77 to 28 in the House

To allow Department of Natural Resources retirees to collect a pension while also being compensated on a per diem basis by the department for “wildland fire management services.”

Who Voted “Yes” and Who Voted “No”


House Bill 5202, Create a government youth advisory council: Passed 105 to 0 in the House

To create a government youth advisory council to “recognize contributions of youths in this state” and “hold forums to give youths a voice.”

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.

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Public Records and the Office of the Governor

FOIA lessons from the rest of the states

Flint, Genesee County
Flint, Genesee County

The Michigan Freedom of Information Act provides a compelling declaration in favor of government transparency: “It is the public policy of this state that all persons … are entitled to full and complete information regarding the affairs of government and the official acts of those who represent them as public officials and public employees, consistent with this act. The people shall be informed so that they may fully participate in the democratic process.”

CapCon Commentary
CapCon Commentary

The Flint water crisis has illuminated an important exemption found in FOIA; the law exempts the governor and lieutenant governor and their offices from the requirement to produce public records upon request. This exemption is considered from time to time by the Legislature. For example, in 2009, then-Rep. Pete Lund introduced a bill to eliminate the governor’s FOIA exemption but the bill died in committee.

In spite of Michigan’s gubernatorial exemption, Gov. Rick Snyder has taken a notable step of releasing internal email communication related to the Flint water crisis.

But Michigan is an outlier as the only state with a blanket statutory exemption for the governor and executive office staff. (In Massachusetts, which is often cited along with Michigan, the state’s high court ruled that the state’s public records law doesn’t explicitly list the governor as being subject to the law. Subsequent governors relied on the ruling to assert the law does not apply to them.)

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The last state to eliminate a gubernatorial exemption was Louisiana in 2009 under Gov. Bobby Jindal. The transition was highly contentious because the legislation included significant carve outs for documents in the governor’s office, including intra-office communications of the governor and staff, the governor’s security, schedule and certain budgeting documents. A subsequent change in the law in 2015 pared back some of those exemptions.

Should the Michigan Legislature amend FOIA to include the governor’s office, lawmakers will likely evaluate whether any new exemptions should be created.

Another consideration is whether such a FOIA change would create a constitutional conflict between the Office of the Governor and the Legislature. In at least eight states, governors have successfully asserted executive privilege as a basis for avoiding disclosure of records. (The states are Alaska, Delaware, Maryland, New Jersey, Ohio, Oklahoma, Vermont and Washington.)

In those states, the courts recognized that a governor, like the president, enjoys certain privileges under the separation of powers doctrine. Governors have argued that executive privilege (sometimes referred to as “deliberative process”) shields certain internal communication intended to inform decisions of the governor. The courts in the eight states have recognized a limited executive privilege; that is, the office is not entirely exempt from the public records law but can, in some circumstances, withhold records from disclosure.

Records withheld under executive privilege usually share several features. They are (1) pre-decisional communications that occur for the purpose of formulating a decision, (2) internal communications between the governor and his or her advisers and (3) deliberative communications rather than purely factual documents. If the governor refuses to turn over a record using executive privilege, the burden of proof is on the person requesting the record, who must demonstrate a particularized need for the records.

Florida provides a contrasting approach to allowing courts to determine what executive records are exempt from FOIA. There, the Florida Constitution includes a right of access to public records and meetings — Article I, Section 24 states: “Every person has the right to inspect or copy any public record made or received in connection with the official business of any public body …. This section specifically includes the legislative, executive, and judicial branches of government and each agency or department created thereunder.” The Florida Legislature is subsequently authorized to enact exemptions from disclosure by a two-thirds vote of each legislative house.

If the Michigan Legislature eliminates the gubernatorial exemption in FOIA, the change could instigate questions about the proper executive privileges of the governor’s office and whether it might require amending the Constitution to achieve the goals of full gubernatorial transparency. It is a worthwhile policy discussion, but one that can be informed by the experiences of other states.

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