Detroit Schools Will Sell to a Prison, But Not a Charter School

Moves criticized by parents and community members

The vacant Detroit Public Schools property.

After spending months fighting to prevent the sale of an abandoned building to a charter school, Detroit’s superintendent supports the sale of another property to a prison.

The Detroit Free Press reported last week that Superintendent Nikolai Vitti recommended accepting the sole $200,000 offer for vacant Detroit Public Schools Community District property from a developer in conjunction with a new Wayne County Justice Center. However, Detroit's school board narrowly rejected an offer to sell after member LaMar Lemmons insisted that the community did not want a correctional facility in the area. Two other board members joined him to stop the sale.

Community opinion didn't inform the district's attempts to keep an actual school from occupying one of its former buildings. On Nov. 30 Vitti told a legislative committee that DPSCD officials found a 2017 law against deed restrictions "problematic" in their fight to bar the sale of a former district building to Detroit Prep, a successful charter on the city's east side.

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The superintendent blocked a property sale to a competing school, which some legislators saw as an attempt to flout the law. His actions come despite the neighborhood association favoring the new school location, and the school needing extra space to match its growth. But he apparently is now fine with selling property that will be part of a project to house convicted lawbreakers. While the Mackinac Center has no position on whether the district should sell a property to a correctional facility, the combination of moves certainly looks bad.

As Detroit parent and education activist Bernita Bradley wrote: "New schools are a threat, but new prisons are the answer to helping DPSCD gain new funds. Wow! Is the war against charters really this serious for you?"

The good news is that DPSCD backed down from its legal fight when the state Legislature squeezed the last ounce of ambiguity out of the law banning deed restrictions on school properties. Detroit Prep reached an agreement with the district, and is now on track to remodel the building and move into it by December.

And, at least for now, a new Wayne County Justice Center will have to be built without former school district property.


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State’s MBDP Job Creation Claims an Inconvenient Fiction

Just because government says its effective doesn’t mean it is

As state budget discussions are underway, now may be a good time to revisit the state’s corporate welfare complex to search for scarce dollars that could be redirected to higher priorities. One area that could be examined involve subsidies that support the Michigan Business Development Program. This program takes money away from lots of people and business and gives it to a few in the hope it may create more jobs than might otherwise occur.

The Mackinac Center just yesterday released a study about the MBDP and it finds it does not, on balance, create new jobs. The state of Michigan thinks differently. It claimed last year that so many jobs will be created by the program that $10 in new personal income tax revenue will flow back to the state economy for every dollar it gave to companies in fiscal 2016.

The program gives subsidies, loans and other handouts to a favored few firms in exchange for promises to create jobs or make certain investments. It has offered up $300 million in 319 deals through fiscal 2016, though only about half of that amount has actually been disbursed. As part of state law, the agencies managing this program must produce return-on-investment analyses to help justify the program. They do this by using a software program known as REMI, which helps them measure the economic and fiscal impact.

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Here’s out it works. The analyst plugs the pledged inputs — new jobs, compensation and investment, for instance — into the REMI software, which generates a report on expected outcomes. These estimates are done for each MBDP deal, summed up and averaged for the relevant state agencies (the Michigan Strategic Fund and the Michigan Economic Development Corporation) and the report they present to the Legislature each year.

The bad news is that companies often don’t live up to their pledges. Companies that get deals in one year may fail, and in the next year see their agreement terminated. That means the agencies’ annual report to the Legislature shows the effects of successes that turn out to be failures. Yet when that next year’s report comes around, it doesn’t mention that the previous ROI estimates were too high. Such an omission may lead lawmakers and others to believe the program is more successful than it really is.

It’s fairly common for companies to fail to live up the terms of their deal. In the previous three legislative reports 34 companies are shown to have had their deals revoked. A spokesperson for the MEDC said that at least eight more revocations will be included in the 2018 report. Not all failures are due to company performance short comings, but many are. The fiscal 2016 report detailed nine revocations, and eight involved a company’s failure to meet some milestone or parameter of its agreements with the state.

That’s only a portion of the problem. Around a third of MBDP deals have been or are in some stage of default and dismissal (revocation). Sometimes the company may turn it around and at other times, it will not. Even then, some companies on the fringe of failing to meet some stipulation in their agreement with the state may ask for their deals to be amended. In the MSF-MEDC fiscal 2016 report to the Legislature, 38 amendments are offered up and 28 of them appear to lower some performance standard such as the expected number of jobs to be created.

The Mackinac Center for Public Policy’s new study, titled “An Assessment of the Michigan Business Development Program,” eschews projections for historical fact. We built a statistical model based on workforce data at the county level and reports from state agencies from 2012 through 2016 in an attempt to isolate the impact of this program on the number of jobs. We find that for every $500,000 in disbursed funds, there was a loss of more than 600 jobs in the county in which MBDP projects were located.

Our economic analysis shows that this state program doesn’t create jobs but rather costs them. It should be eliminated.


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Snyder's proposal undercuts cyber school, shared time options

Last year Gov. Rick Snyder failed in his attempt to reduce funding for full-time online students. Rather than seek an equitable solution, the governor is now using his final budget proposal to double down on the attack and penalize certain parental choices.

The core of Snyder's education budget pitch is a significant boost to Michigan's foundation allowance. That’s the money which the state gives on a per-pupil basis to serve as a guaranteed floor and revenue source for K-12 public schools.

The current school funding system, enacted with Proposal A in 1994, was designed to achieve greater equity between districts with differing levels of taxable wealth.

To his credit, Snyder's proposal builds on the 20-year trend, giving most of the lower-funded districts an extra $240 per pupil compared with an extra $120 per pupil for the small number of districts at the high end. But he pays for those funding increases by reducing payments for students who choose certain kinds of schools or programs.

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Snyder's proposal recommends cutting the foundation allowance by 25 percent for the roughly 10,000 Michigan students enrolled in one of 14 cyber schools. State Superintendent Brian Whiston backs the governor's call, telling a news outlet, "We want to make sure that we're paying for it fairly, and that allows more money to go to all students around the state."

Snyder called for cutting the foundation allowance for cyber schools by 20 percent in 2017. The justification didn't add up. His second attempt to cut funding — by an estimated $25 million, this time – certainly doesn't either. His executive budget cites research that says it costs 23.8 percent less to run a cyber school than a conventional brick-and-mortar school. But the budgets of cyber schools are already that much lower, if not more, mainly due to disparities in funding sources outside the foundation allowance, where districts have an advantage.

In 2016-17 cyber schools took in 71 percent of the total per-pupil revenues of an average school district. Just comparing the costs of operations rather than capital and debt service costs, these online schools still only spent 78 cents on the dollar. Widening the gap through cutting the foundation allowance would be truly unfair, leaving cyber schools to get by with less than 60 percent of what districts receive in total per-pupil funding.

Full-time online school may not be the best choice for most students and families, but for some it has proved to be a true lifesaver. Still other families are eager to enroll their private- or home-educated children in flexible district programs that offer elective courses. A growing number of districts have created homeschool partnerships and shared-time programs to reach more students and, in some cases, to learn innovative approaches that help them serve all students better.

Yet Snyder's proposal would greatly restrict how many students a district could serve though these programs, no matter how great the demand. It includes a mechanism to keep any district from having more than 5 percent of its students enrolled in an online program, which would cut funding for such programs by an estimated $68 million statewide. Artificially capping participation would leave it to the districts to decide who to turn away, or perhaps to figure out how to keep the programs going at all.

Snyder's office appears intent on giving legislators a stark choice between his full foundation allowance increase (an extra $312 million) or standing with parents who have chosen from the options of a cyber school, partnership or shared-time program.

If legislators need other education budget items to roll back, they should look first at the political projects in some of the state's existing categorical grants. The governor's proposal streamlines the number of categorical grants but does very little to reduce their overall funding.

Lansing leaders have a chance to challenge the governor's proposal and stand by student-based funding that more closely follows families' choices and priorities.


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Michigan Is Not a Windy State

The true cost of wind in Michigan is beginning to become clear

Michigan is not a windy state, but you wouldn’t know it from the actions of state regulators. Michigan’s Legislature has favored the wind industry, mandating that an increased portion of energy produced in the state must come from wind. These mandates are typically advanced under the assumption that energy produced by wind will eventually become competitive on price. That seemed true for a while, but lately wind energy prices have been stuck in neutral or even started to increase in Michigan. Unfortunately, it seems unlikely prices will improve with protective federal tax provisions being phased out and with the best locations for wind farms already occupied.

A key aspect of Michigan energy policy is the renewable energy mandate. First enacted as Public Act 295 in 2008, the law required electric utilities to ensure that 10 percent of their retail electricity sales are sourced from renewable options. That mandate was expanded in December 2016 by Public Act 342, which requires utilities to obtain 15 percent of their electricity from renewable sources by 2021.

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Today, the majority of renewable generation in Michigan is provided by wind and biomass sources, which — according to the Energy Information Administration — provide approximately 53 and 28 percent of Michigan’s renewable energy, respectively. Hydroelectric provides almost 18 percent and solar provides less than 1 percent.

The renewable energy mandate has been responsible for much of Michigan’s interest in expanding wind power. When combined with the generous federal subsidies, there has been significant artificial incentives to build wind generation facilities. Michigan taxpayers and residents pay for these policies and this development through federal taxes and renewable energy surcharges on monthly electric bills.

Energy experts always expected renewable energy costs to start out high; advocates argued that this was a relatively new industry that needed to get its feet under itself. But ratepayers were assured that early economic and policy support wouldn't be needed for long. Once sufficient experience was gained building and operating wind installations, energy produced by wind would drop in price and begin to outcompete other options.

Initially, those predictions appeared correct. From 2010 to 2012, contract prices of utility wind projects dropped substantially. But, in Michigan, price decreases stalled for four years and, in 2016, they actually increased. A recent wind contract — for the Pine River wind park near Alma — compounded price issues. This contract, one of the most expensive wind contracts signed in the U.S. in 2016, actually pushes Michigan wind prices back up to almost $60 per megawatt-hour.

To put this price in perspective, the investment group Lazard annually reports on the levelized cost of electricity. Their 2017 report describes expected market prices for wind of $30 to $60/MWh. Contract prices in Iowa and Oklahoma are as low as $20 per MWh, one third the price of wind in Michigan.

Michigan Weighted Average Wind Contract Cost Comparison Prices ($/MWh) Source: 2017 PA. 295 report.

The differences in price exist largely because the best wind resources in Michigan would be considered some of the worst wind in Iowa. Wind speed maps demonstrate this reality and show that the only areas in Michigan with wind speeds comparable to interior states like Iowa and Oklahoma are in the middle of the Great Lakes. But building offshore wind turbines is both unpopular and significantly more expensive.

Source.

Utilities and wind developers know where to find the best onshore wind resources, and that’s why Michigan’s wind farms were preferentially located in Huron, Tuscola and Sanilac counties. Michigan’s remaining counties have average wind speeds at the low end of wind resources found across the nation.

The Michigan Public Service Commission, the state office charged with overseeing Michigan’s electricity system, added to these challenges with its September 2017 ruling. Starting in 2022, a minimum percentage of electricity used in Michigan will need to be produced in Michigan – something called a local clearing requirement. That ruling may force Michigan residents to buy $60/MWh wind energy that is produced in Michigan instead of the $20/MWh wind energy being produced in other states.

Expanding wind development in Michigan is becoming an increasingly expensive proposition for Michigan residents. If wind energy were not subsidized and not mandated, but still made economic sense given wind resources and market conditions, there would be reason to celebrate the growth of this industry in Michigan.

It increasingly appears that wind energy is produced in Michigan only because politicians are forcing it into the system. High contract prices are obviously attractive to utilities and wind developers. But the costs of this policy are being passed off to ratepayers and taxpayers. The numbers are not adding up for more wind development in Michigan, so it’s time for legislators to reconsider the state’s renewable energy mandates.


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February 16, 2018 MichiganVotes weekly roll call report

House Bill 5040, "Driver responsibility fees” repeal and amnesty: Passed 36 to 0 in the Senate

To repeal the “driver responsibility fees” that are assessed for various traffic violations in addition to the fine for the violation itself. This and related bills would go into effect on Sept. 30, 2018, and would also clear any outstanding liability an individual may have to pay these fees, and allow reinstatement of drivers licenses suspended for non-payment with no charge. These very expensive fees were originally adopted in 2003 to increase state revenue collections.

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House Bill 5040, "Driver responsibility fees” repeal and amnesty: Passed 109 to 0 in the House

The House vote on the bill described above.


Senate Bill 748, Increase Michigan income tax personal exemption: Passed 36 to 0 in the Senate

To increase the $4,000 personal exemption that is currently allowed under the Michigan state income tax. The bill would immediately increase it to $4,050, and then gradually to $4,900 by 2021, with inflation adjustments thereafter. Taxpayers can claim a personal exemption for themselves, their spouse and each dependent, and these are subtracted from the amount of income that is subject to income tax.


Senate Bill 748, Increase Michigan income tax personal exemption: Passed 107 to 2 in the House

The House vote on the bill described above.


House Bill 5220, Increase allowable pepper spray concentration: Passed 88 to 21 in the House

To revise a prohibition on the use of pepper spray with more than a 10 percent oleoresin capsicum concentration in the reasonable defense of one's person or property. The bill would increase the maximum concentration to 18 percent, and allow the formulas to contain an ultraviolet dye. Reportedly, 45 other states allow 18 percent pepper spray concentrations.


Senate Bill 400, Increase tax imposed to pay for 9-1-1 cell phone services: Passed 98 to 11 in the House

To increase taxes imposed to pay for local 9-1-1 emergency phone service for cell phones. A monthly state user fee (tax) would go up from 19 cents to 25 cents per device, and the tax on pre-paid service from 1.92 percent to 5 percent.


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 www.MichiganVotes.org.


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Michigan’s Long 'Bad Driver Tax' Nightmare Will Finally End

A revenue-grab from the state's lost decade left a trail of social costs and broken lives

In 2003, as Michigan was accelerating into what would later be dubbed an economic “lost decade” and tax collections were in decline, legislators were desperate to avoid hard decisions on necessary spending cuts. It was a time of accounting gimmicks and fund shifts, but as one pundit put it, “They’ve turned over all the couch cushions and there’s no more change left to find.”

One of the most unfortunate consequences of the revenue scramble was a new law that imposed “driver responsibility fees” of up to $2,000 for individuals responsible for certain serious or multiple traffic violations. Supporters gave lip service to the notion that this was about traffic safety, but everyone knew it was really a revenue grab.

At the time many predicted the “bad driver tax” burdens would fall most heavily on those at the lower end of the income spectrum, and that the state would never collect the $65 million in annual revenue the measure was projected to extract. Both predictions came true as a House committee heard last fall in testimony on a bill to terminate the fees and cancel the debt of individuals who fell behind paying them. Some examples:

  • A district court judge described a homeless father of five who came before him and who owed $7,000 in delinquent fees and fines.
  • The judge also reported that 45 percent of those before his court for driving without a license lost their license because they could not afford to pay driver responsibility fees.
  • A city of Detroit official reported that some 76,000 city residents owed more than $124 million with an average liability of $1,629. He said most of it will never be collected.
  • As of August 2017 the total liability for unpaid bad driver taxes was $637 million, of which probably half was uncollectable due to individuals inability to pay.
  • Michigan’s current secretary of state was a member of the House when the law authorizing the fees was passed. She told the committee, “I thought they were unfair then and I think they are unfair now. Get rid of them.”

“Get rid of them” is just what happened this week as the House and Senate both approved and sent to Gov. Rick Snyder for approval a package of bills that repeals the fees and forgives all liability for unpaid amount.

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This agreement also resolves tensions that erupted at the same committee hearing last fall when a state treasury official said the administration opposed the original versions of the repeal bills, in part because they didn’t want to lose the revenue.

This came after a number of speakers had described the social damage and wrecked lives left behind by the law, which caused the committee chairman and others to bristle at the seemingly misplaced priorities. The official quickly backed up and expressed the administration’s willingness to work on a solution. With the governor’s expected signature the repeal and debt forgiveness will go into effect next Sept. 30.


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Meet Some Law Enforcement Officers Who Support Forfeiture Reform

Michigan Legislature should strengthen property rights

While many interest groups representing law enforcement employees oppose reforming civil asset forfeiture to require a criminal conviction before the state can take ownership of a person’s property, some law enforcement officers support the changes.

In the Traverse City Record-Eagle, reporter Kyle Kaminski gets comments from a variety of law enforcement officials about forfeiture generally and about a bill that would reform how it's used in Michigan. Here are the responses:

“It would be easier for us and more fair to those who are having their property forfeited to have a criminal conviction,” said Grand Traverse County Undersheriff Nate Alger. “Our system is based on being innocent until proven guilty.”

Attorney General Bill Schuette this week said conviction before [forfeiture] is a “good principle” to maintain.

County Prosecutor Bob Cooney noted most local forfeiture cases include a criminal conviction but said current laws force them to continue. “I wish the state would better fund narcotics teams and not incentivize them in any way to go after forfeiture dollars,” Cooney said. “At the same time, those laws were set up to take away profits from those selling illegal drugs. That’s the idea.”

“I’m a little concerned that by tying them to a criminal conviction, it’s going to bring me people who try to barter their way out of things,” Kalkaska County Prosecutor Mike Perreault said. “I could also see the argument then that we’re only prosecuting people to take their stuff.”

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Benzie County Sheriff Ted Schendel said “common sense” dictates police first need to prove someone guilty of a crime. “I know forfeiture is a huge asset, especially for drug enforcement teams. There’s never enough money to fund those things,” Schendel said. “But I like to err on the side of the people and the Constitution.”

The law enforcement officials are joined by others in their field who support the conviction requirement.

House Bill 4158 would do the following:

  • Require a criminal conviction, or plea agreement, prior to any forfeiture taking place for assets under $50,000.
  • Allow for exemptions for people who die, are deported or abandon their property.

This properly balances protecting innocent people’s property rights with enabling law enforcement to forfeit property that was either obtained with proceeds from illegal activity or used for illegal purposes.


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Michigan May Surpass 2000 Employment Levels Soon

An important milestone of recovery for the Great Lakes State

Job growth in the economic recovery following the Great Recession has been fairly steady. If the trend continues — and there’s no way of determining if it will or won’t — Michigan will surpass its 2000 job level peaks in 2020. There’s a symmetry to that. (The future is uncertain, of course, so take this with a grain of salt.)

The chart below provides the details. It shows the number of jobs in Michigan and for the entire U.S. relative to low point of the Great Recession. In 2000, Michigan had 4.7 million jobs, about 22 percent more than existed at the trough of the Great Recession. The job growth Michigan experienced since the recession has almost undone the job loss that occurred from 2000 to 2009.


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Airbnb Ban the Latest in Detroit’s Short-sighted Thinking

City council makes it harder to earn a living and visit a city desperate for population growth

Skyscrapers for large corporations and new arenas for wealthy owners of pro sports teams? The Detroit City Council has you covered. But if you want to live, work, visit or send your kids to school in the city, your endeavor is very difficult.

Detroit has the highest property and income taxes in Michigan. It has arguably the worst regulatory system in the state, creating high energy costs, a $400 “awning tax,” an $1,800 valet fee and restaurant startup costs four-and-half times more expensive than New York City. And Detroit imposes licensing rules above and beyond what the state requires, tacking on fees and regulations for landscapers, window washers, movers, sign erectors and people in other skilled trades.

The traditional public schools in Michigan’s largest city are arguably the worst in the country. Still, the city school district fights to limit alternatives for parents by refusing to sell vacant buildings to charter schools and other leaders have tried to restrict parental choice in other ways.

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Recently, the City Council decided to take it a step further and make it more difficult to even visit the so-called “Comeback City.” City officials quietly banned homeowners from offering short-term rentals through services such as Airbnb. More than 47,000 visitors used these services last year, paying host families $5.2 million — and no doubt spending millions more at local businesses and restaurants.

If you’re a politically connected business, the city government in Detroit may roll out the welcome mat. But if you want to live, work or even just visit, you’ll likely face an uphill climb on a mountain imposed by the city government.


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February 9, 2018 MichiganVotes weekly roll call report

House Bill 4705, Teach proper traffic stop actions in drivers ed: Passed 109 to 0 in the House

To require drivers education courses to teach what to do when pulled over by a law enforcement officer.

Who Voted "Yes" and Who Voted "No"


House Bill 4528, Include EMTs in impaired doctor program: Passed 107 to 1 in the House

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To expand a law that establishes a recovery program and a monitoring system for health professionals who may be impaired due to substance abuse, so that this also applies to emergency medical technicians.

Who Voted "Yes" and Who Voted "No"


House Bill 5456, Ban asbestos lawsuit “double dipping”: Passed 58 to 51 in the House

To require plaintiffs who seek damages for alleged asbestos-related conditions to disclose whether they have already filed suits against trusts or claims pools created in previous asbestos bankruptcy cases. Reportedly some plaintiff attorneys have filed multiple suits seeking duplicate damages. The bill would also authorize reopening and readjusting cases and damage awards in such cases.

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 www.MichiganVotes.org.


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