Contents of this issue:
  • Granholm pushes sin tax hikes for education

  • Teachers opting out of MEA's extra fees by June 1 deadline

  • Union protests nonunion construction firm in school expansion

  • East Detroit case may uncover Macomb County scheme

  • Federal student loan program may increase interest rates

  • Poll: Students disruptive, hurt learning

LANSING, Mich. — A projected $54 million shortfall in the state's education budget inspired Gov. Jennifer Granholm to sponsor a tax increase on cigarettes and liquor earmarked for education and health care to make up for the deficit.

The tax increase, 75 cents per pack on cigarettes and a $32 million tax increase on liquor, would generate an expected $295 million for the state. The money from smokers and drinkers would be given to the state's education fund, while the rest would be spent on Medicaid. If approved, Granholm's planned tax increase would bring the total cigarette tax to $2 a pack, making Michigan's the highest in the nation.

According to state budget researchers, Michigan is facing an upward trend of growth and job creation this year and in 2005, which will alleviate budget shortfalls in the future.

Detroit News, "Granholm seeks quick sin tax hike," May 19, 2004

Mackinac Center for Public Policy, "Lawmakers Could Balance Budget by Cutting Spending and Selling State Assets," May 2004

Mackinac Center for Public Policy, "Sinful Sin Taxes," April 2004

MIDLAND, Mich. — MEA members have until June 1 to opt out of paying $200 in new fees before the union begins automatically deducting the money from teacher paychecks in the fall. Union officials in one district received so many teacher inquiries about the fees that they waived their normal procedure for allowing members to avoid the extra payments.

A teacher and MEA member in a Southwest Michigan school district reported that she informed her colleagues of the MEA's new fees after Michigan Education Digest first reported it online May 11. The teacher, who did not wish to be identified, said the news created "quite a buzz" among MEA members who said they had not been aware of the MEA's plans to hike fees. Union documents related to the fees posted on the Digest's website have been downloaded more than 1,000 times by MEA members and others.

Although a union memo says members must "write an individual letter" by June 1 to avoid the fees, a union official told teachers in the Southwestern Michigan district that they could opt out of the fees by merely sending an email to the local union representative.

Teachers who opt out will save ten dollars per year for 20 years. MEA officials say the extra money would bolster the union's political clout by automatically adding members to the union's retiree organization. If no members opt out, the move is expected to raise another $1.1 million annually for the union. The state's fourth-largest newspaper, the Oakland Press, has editorialized that the union should "change its ways, not raise its dues." The editorial stated, "The union's quest for more dollars for its defense is not a good sign."

Oakland Press, "MEA should change its ways, not raise its dues," May 17, 2004

Mackinac Center for Public Policy, "100,000 Public School Employees Near Deadline to Save $200 Each," May 2004

Michigan Education Association memo, April 30, 2004

Michigan Education Association flyer, "All Inclusive Membership," April 30, 2004

SAGINAW, Mich. — The Saginaw-based Iron Workers Union Local 25 is protesting a construction project for the Swan Valley School District because the firm it hired to complete the work for the best price is not unionized.

The firm hired by the district to expand three Swan Valley schools, Midland-Based Helger Construction, bid $96,950 for the work, which is $8,000 less than the union's bid. Union workers criticized Helger of "substandard" wages for its employees, allowing them to win the bid.

Though Helger is a nonunion company, state law requires it to pay its workers on government construction projects a "prevailing wage" pegged to the pay of unionized employees.

Swan Valley superintendent Richard Syrek said the choice to hire nonunion Helger was in the interest of savings. "That's a lot of money," Syrek told the Saginaw News.

Prevailing wage laws increase the cost of public buildings, including schools. In 2003, the Mackinac Center for Public Policy found that the state of Michigan could save over $400 million annually by repealing its prevailing wage law. Exempting just public schools from the law, as the state of Ohio has already done, would save taxpayers $150 million per year according to the findings.

Saginaw News, "Union upset with school district's decision," May 19, 2004 1084980022266650.xml

Mackinac Center for Public Policy, "Prevailing Wage Repeal Would Save State $400 Million Annually," January 2003

Mackinac Center for Public Policy, "Michigan's Prevailing Wage Law and Its Effects on Government Spending and Construction Employment," September 1999

DETROIT, Mich. — A man believed to have been the leader of successful schemes to embezzle millions of dollars from construction contracts in two Macomb County school districts appeared in a U.S. District courtroom last week to accept a plea bargain with prosecutors.

William Hudson, along with several others, will go on trial beginning June 15 to uncover the extent of the operation, which skimmed $3 million from construction contracts in the East Detroit and Clinton Community school districts between 1990 and 2000. At least 18 others have been charged in connection with the investigation; ten have pleaded guilty so far.

The government has charged the former superintendents of both districts along with contract workers and board members in connection with Hudson's racketeering and money laundering.

Hudson has been free on $1 million bail since his arraignment in July 2002.

Detroit Free Press, "Plea may unravel Macomb Co. school billing scheme," May 18, 2004

Michigan Education Report, "Financial scandals exposed in Michigan school districts," Fall 2002

WASHINGTON, D.C. — Under a new proposal, students participating in federal student loan consolidation programs would lose the ability to lock in a low interest rate for the life of their loan and be obliged to pay the current interest rates on the principal instead.

Currently, the federal government subsidizes the difference, if any, between the locked-in rates and the prevailing interest rate. The plan to end that subsidy would save the government $21 billion over the next seven years, according to proponents.

Lawmakers say they plan to use the savings to decrease loan application fees and increase the amount of money available to loan to undergraduate students.

Because students repay federal loans only after graduation, "The variable rate will impact students at the back end who have already graduated, who have already been given that leg up," said Rep. Howard McKeon, R-Calif. Current indicators show that the fixed interest rate for 2006 would be 6.8 percent, and is capped at 8.25 percent.

Lansing State Journal, "Proposal would sharply increase interest on student loan payments," May 19, 2004

Mackinac Center for Public Policy, "Student Loans and the High Cost of College," November 1997

LANSING, Mich. — A new study found that poor student behavior negatively affects the education of fellow students and may be a leading cause of the high turnover rate for new teachers.

The study, conducted by New York-based Public Agenda, includes a survey of 1,000 teachers over the behavior of their students and its effect on the learning environment. "Rowdiness, disrespect, bullying, talking out, lateness and loutishness — these misbehaviors are poisoning the learning atmosphere of our public schools," Public Agenda President Ruth A. Wooden said in a press release.

Unfortunately, for the teachers and students that are exposed to poor behavior, little can be done to curb the behavior, because "The present legal environment undermines order in schools by enabling students and parents to threaten a lawsuit over virtually anything," said Philip K. Howard, Chair of Common Good, a coalition dedicated to restoring common sense to U.S. law.

According to the study, 82 percent of teachers and 74 percent of parents believe that the biggest school problems are due to parents' failure to teach and enforce discipline in their children. "It's way past time to focus on solutions to this impediment to educating all our children," said Wooden.

Lansing State Journal, "Many students disruptive in class, poll finds," May 24, 2004

Public Agenda, "Discipline Problems, Unruly Behavior Seriously Threatening Student Achievement," May 11, 2004 press_release_detail.cfm?report_title=Teaching%20Interrupted

Michigan Education Report, "Lack of Support Makes Teachers Quit," Early Fall 1999

MICHIGAN EDUCATION DIGEST is a service of Michigan Education Report (, a quarterly newspaper with a circulation of 130,000 published by the Mackinac Center for Public Policy (, a private, nonprofit, nonpartisan research and educational institute.

Contact Managing Editor Neil Block at

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