The Ann Arbor Public Schools paid $766,800 extra to carry 200 ineligible dependents on its health care plan in 2010, according to district documents recently obtained by Michigan Capitol Confidential.

The district paid a private contractor, Employee Benefit Eligibility Solutions, $82,778 to audit its employee benefits in 2010, and the contractor discovered the 200 ineligible dependents. This information was made available in documents released Thursday by the district in response to a Freedom of Information Act request filed by Michigan Capitol Confidential.

Ann Arbor Public Schools spokeswoman Liz Margolis has called the audit “very productive.” The district said it does not have a form to verify documentation under the new federal health care requirements and instead asks for documentation in the form of a birth certificate. 

Last month, Ann Arbor Public Schools stated that it conducted the audit, but didn’t provide details of the cost or the length of time that the 200 ineligible dependents were receiving benefits. In the June 8 response to the FOIA request, Margolis stated that the school district could not determine the amount of time the ineligible dependents had been covered by the district benefits policy.

Michigan Capitol Confidential received a tip from a former Ann Arbor Public Schools employee. They stated that the district had never asked for documentation when employees signed up their dependents. The Mackinac Center’s news website has put in other FOIA requests to other school districts about their policy for verifying dependent eligibility.

There are two arenas of union collective bargaining in our society: one legitimate, the other not.

The illegitimate form is collective bargaining with government and public school employee unions. This practice is not necessary to protect the rights of these employees, is damaging to taxpayers, and is corrupting our democratic process. It should be outlawed, and the sooner this is done, the better for the future of our communities, states and nation.

The legitimate form is collective bargaining in the private sector. Unfortunately, the federal Labor Relations Act, the Taft-Hartley Act and other laws have biased the practice by granting unfair advantages to unions at the expense of employers. That bias should be corrected to create a fair field with no favors. Doing so would make private-sector unionism purely a voluntary affair between workers and employers, with few public policy implications.

In contrast, collective bargaining for government employees is inherently corrupting, because the politicians representing “management” are chosen by a political process in which the unions on the other side of the negotiating table exercise tremendous influence. They get this largely through benefits granted at the bargaining table by the very politicians they help elect, creating a vicious circle that has contributed greatly to the unsustainable fiscal mess that is bankrupting many states and municipalities.

Another reason the practice is illegitimate in the public sector is that government employees don’t collectively bargain against self-interested CEOs and investors, but against their fellow citizens and taxpayers. Private companies can expand, increase profits and “grow the pie,” but public-sector labor negotiations are a zero-sum game: Every dollar gained by the union is a dollar lost to taxpayers and the larger economy, which prosper when government spends less to provide a given level of services, and suffer when it spends more.

Additionally, as the U.S. Supreme Court has noted (Abood v. Detroit Board of Education, 1991), a government employer — and a government employee union —  “lacks an important discipline against agreeing to increases in labor costs. ...” Specifically, in the private sector, labor and management know that excessive labor costs will ultimately drive an employer out of business. This tends to make unions more reasonable in their demands. No such “discipline” constrains government employee unions, whose response to the budget pressures their outsized benefits help generate is always to agitate for higher taxes.

Finally, government unions are major obstacles to reform not just in fiscal matters but on critical policy questions also. A major contributor to the mediocrity or outright failure of so many public school systems is opposition from teacher unions like the Michigan Education Association to commonsense reforms, such as merit pay for teachers and expanded school choice.

It doesn't have to be this way. Most people are unaware that public-sector collective bargaining is a fairly recent phenomenon that only became common starting in the 1970s. Before then (and still today), government and school employees enjoyed extensive job protections in the form of civil service and related laws intended to insulate them from politics. Government unionism has obviously undermined that intention, and is not needed to protect the rights of employees.

The conclusion that collective bargaining for government employees should be abolished may seem startling to some, but it is not really a radical or “extreme” position. Even President Franklin Delano Roosevelt spoke strongly against the practice, saying, “The process of collective bargaining, as usually understood, cannot be transplanted into the public service."