A Fresh Start

Two years ago the Mackinac Center released a little booklet titled “101 Recommendations to Revitalize Michigan,” capsulizing and providing links to some of the most important findings and recommendations by Center analysts and scholars.

A new edition containing some minor updates is about to published. With a new governor and Legislature searching for solutions to the state's "structural" budget imbalance, it contains the following preface:

Top 10 Budget Solutions

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Two statistical realities stand out when examining Michigan governance:

  • Pension, health care and other employee fringe benefits provided by all units of government in the state exceed the average of private sector benefits by $5.7 billion annually. (Approximately $708 million is in state government, $2.45 billion in public schools, $844 million in colleges and universities, and $1.73 million in local governments.) www.mackinac.org/ 10839
  • Charter schools spend $2,200 less per student per year than conventional schools; extended to all public students this comes to $3.5 billion. (This is not a recommendation to “charterize” all Michigan schools, nor an assertion that doing so would save $3.5 billion, but simply a rough cost benchmark.) www.mackinac.org/11462

Converting these statistics into some actual budget savings involves a combination of straightforward “eat your vegetables” program and employee benefits cuts, and process innovations like privatization that generate savings through “second order” incentive changes throughout the system. Here are our Top 10 budget reform ideas:

  1. Place new school employees into a defined-contribution, 401(k)-type pension plan, rather than a defined-benefit system, and “freeze” existing employees accrued benefits. www.mackinac.org/8089
  2. Require school employees to pay the same amount to their health insurance benefits as federal employees in this state (27 percent). This could save around $500 million annually. www.mackinac.org/14155
  3. Require school districts to make a good faith effort to contract-out transportation, food and custodial services. Conservative estimates place annual savings at $300 million. www.mackinac.org/9021
  4. End annual appropriations to the 21st Century Jobs Fund ($75 million appropriated in current-year budget). www.mackinac.org/7123
  5. Eliminate state film production subsidies. (The Department of Treasury estimates these will cost $155 million this year.) www.mackinac.org/ 10733
  6. Privatize one or more state prisons. In addition to direct savings, “second-order” incentive changes throughout the system could generate more than $150 million annually, based on the other states’ experience. www.mackinac.org/7083
  7. Eliminate or reduce restrictions on the number of charter schools authorized by state universities. www.mackinac.org/11462
  8. Fund public universities primarily through a standard per-student grant or voucher, with a university's research financed in a separate line item. www.mackinac.org/7703
  9. Devolve State Police road patrols to county sheriff departments. This nominally saves $65 million, but it assumes a major MSP downsizing that would save much more. www.mackinac.org/5373
  10. Repeal the state's "prevailing wage" law, which prohibits awarding government construction contracts to the lowest bidder unless it pays above-market wages. www.mackinac.org/8907
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