The MC: The Mackinac Center Blog

July 1, 2016 MichiganVotes Weekly Roll Call Report

Repeal 'stand your ground,' assert 'right to drinking water,' make policy body camera images secret, more

The House and Senate are on a summer and primary election season break. Therefore, this report contains several recently introduced bills of interest.

Note: There will be no Roll Roll Report on July 8. The next report will be July 15.


Senate Bill 563: Ban “sky lanterns”

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Introduced by Sen. Dale W. Zorn (R), to ban the use or sale of “sky lanterns,” which are miniature, candle-fired hot air balloons made of paper and sold as a novelty item. Referred to committee, no further action at this time.


Senate Bill 574: Mandate specified nurse-patient ratios

Introduced by Sen. Rebekah Warren (D), to mandate that hospitals maintain detailed staff-to-patient ratios specified in the bill. Referred to committee, no further action at this time.


Senate Bill 584: Let assisted living facilities sell drinks to residents

Introduced by Sen. Peter MacGregor (R), to allow up to 20 “homes for the aged” (assisted living facilities for seniors) around the state to get a liquor license that lets them sell drinks to residents and “bona fide guests.” Referred to committee, no further action at this time.


Senate Bill 611: Repeal 2006 “stand your ground” law

Introduced by Sen. Rebekah Warren (D), to repeal the 2006 law signed into law by Gov. Jennifer Granholm establishing a “home is my castle” and “stand your ground” self defense doctrine, under which an individual need not first flee from a threatening attacker before resorting to deadly force. Referred to committee, no further action at this time.


Senate Bill 634: Exempt police body camera recordings from disclosure

Introduced by Sen. Rick Jones (R), to exempt police body camera recordings from disclosure under the Freedom of Information Act. Note: House Bill 4229 would mandate these cameras for Michigan police. Referred to committee, no further action at this time.


House Bill 5101: Assert “right” to drinking water

Introduced by Rep. Julie Plawecki (D), to assert in statute that each person has a right to “safe, clean, affordable, and accessible water” for cleaning, cooking and drinking. The bill does not specify upon whom would fall the duty to pay the water bills if a person can’t or won’t do so. Referred to committee, no further action at this time.


House Bill 5103: Prohibit and define “aggressive solicitation” (begging)

Introduced by Rep. Michael McCready (R), to prohibit various actions and behaviors by people who are begging for money or other things of value, as specified in the bill, subject to a $100 civil fine. This would replace the current criminal sanctions, which House Bill 5104 would repeal. Referred to committee, no further action at this time.


House Bill 5114: Make election days a government holiday

Introduced by Rep. Adam Zemke (D), to establish that the three regular state dates for all elections in May, August, and November are state holidays, which among other things would probably result in most government employees getting the day off. Referred to committee, no further action at this time.


House Bill 5154: Require schools provide suicide warning sign training

Introduced by Rep. Peter Lucido (R), to require that public schools provide student instruction and staff training in warning signs for suicide and depression. Referred to committee, no further action at this time.


House Bill 5160: Require high schools to provide CPR and defibrillation classes

Introduced by Rep. Thomas Hooker (R), to mandate that public and private middle and high schools provide instruction in cardiopulmonary resuscitation and awareness of automated external defibrillation, and prohibit a student from graduating unless he or she has successfully completed this instruction. Reported from committee, pending before the full House.


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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May 13, 2016 MichiganVotes Weekly Roll Call Report

This week the state released the long-awaited Michigan Education Finance Study, better known as an “adequacy study.” Twice delayed from its original March 31 deadline due to errors by different parties, the report authorized by December 2014 state legislation has been greeted with an underwhelming reaction.

Colorado-based Augenblick, Palaich, & Associates secured a $399,000 taxpayer-funded contract to produce the report. The company’s 13 studies of different states’ school finance systems all concluded with a call for more money, typically, a large dollar figure clearly stated in the report.

Poring through the Michigan adequacy study’s 224 pages, one thing readers won’t find is the overall recommended price tag. For the biggest backers of spending more on schools, reading the report must have been like waiting until spring break to open a shiny wrapped Christmas present, only to find an elaborate disassembled puzzle and a thick stack of detailed instructions.

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Some people have latched on to the recommended $8,667 per pupil base expenditure, without a clear understanding of what the number represents. It’s the average amount spent by 54 school districts deemed to be “notably successful,” but only after factoring out expenses and applying a series of “efficiency screens” loosely explained in the report.

Federal government data actually shows the 54 districts spent a combined $11,285 per student on operations in 2014-15. By comparison and after excluding the report’s high-spending outliers, the per pupil expenditure for districts not deemed successful was only $60 less: $11,225. Add in intermediate school districts, and the total statewide figure surpasses $12,000 per pupil.

When the highly touted adequacy report leaves attuned observers wondering what the actual figures for K-12 spending are, it’s no wonder that the average Michigander struggles to give a well-informed answer:

(The $13,000 per student figure mentioned in the video includes all education-related spending, both operational costs and capital projects.)

The $8,667 figure doesn’t capture the total of the adequacy study’s recommended increases. APA also proposes an additional 30 percent for each low-income student and 40 percent for each student who is not a native English speaker.

Such a plan might make funding more equitable, but the recommended spending amounts offer no real hope of improved outcomes for students. Following the state’s legal guidelines for the study, APA noted that base expenditures for 19 of the 54 top-performing districts were on average 10 percent less than the recommended amount. And many unsuccessful districts already spend more.

Using a regression analysis, APA estimates that each extra $1,000 spent per student increases high school math and reading proficiency rates by 1 percent. This finding differs somewhat from the Mackinac Center’s more rigorous, multiyear, building-level analysis that found no relationship between increased spending and 27 of 28 academic indicators.

Yet even granting that APA’s estimate is true, Michigan school districts would have to more than double their spending just to ensure one-third of 11th-graders meet the math standard on the state’s new test called M-STEP.

Even if our eager gift-opener could follow the dense instructions and successfully assemble the new puzzle, a huge letdown would be all but assured. The state should shelve the adequacy study and undertake the hard work of changing the education system’s incentives to maximize results.

Reforms that engage and empower parents offer one very promising path. Most gold standard research shows that robust school choice programs tend to produce better results — not only for participating students but also for those who remain enrolled in traditional public schools. And good news for lawmakers who recently had the adequacy study cross their desks: These programs almost always save money.

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Mackinac Center Weighs in on State’s Education Adequacy Study

State media covers school funding study

The state has released its long-awaited, twice-delayed education funding adequacy study, which claimed the state’s average school district operating expenditure of $12,000 per pupil is not enough.

Augenblick, Palaich & Associates, the Denver-based firm paid $399,000 to produce the report, also suggested increasing education funding in the District of Columbia — which spends over $29,000 a year per student — so its findings about Michigan were not surprising. Ben DeGrow, education policy director at the Mackinac Center for Public Policy, spoke with the Detroit News this week to offer his perspective on the state-commissioned study:

“Even given the information presented in this report, it doesn’t lead us to the conclusion that money alone is going to improve Michigan’s weak educational performance,” said Mackinac Center Director of Education Policy Ben DeGrow.

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DeGrow pointed to a study he co-authored earlier this year that found no relationship between increased spending and student performance. What seemingly matters more than how much is spent is how education funds are used. Though the state’s study found a number of districts that spend less are seeing greater student achievement, it failed to explain how they are achieving such success, DeGrow told Gongwer News Service.

He also argued that the formula the study used ignores the districts that are doing more with less. “Of the 54 districts they’re looking at, they also point out that 19 of those districts spend an average of 10 percent less than that $8,667,” he said. “What they don’t answer is how some districts are able to get the higher quality results with less money.”

The study also failed to explain how it determined a $1,000 increase in per-student spending would lead to a one percent increase in math and reading proficiency. In speaking with the Detroit Free Press, DeGrow explained it seems like a high sum to pay for comparatively small results, and that lawmakers should not accept the study as a carte blanche justification to spend more.

DeGrow said Michigan residents shouldn't jump to the conclusion that increased spending equals better outcomes. He said he found the opposite in a study he released earlier this year.

Whether lawmakers in Michigan do anything about the findings remains to be seen. The 2015 state law that required the study doesn't require the state to take action on its findings.

Read the full Detroit News article here.

Read the full Gongwer article here.

Read the full Detroit Free Press article here.

Read the Mackinac Center press release on the adequacy study here.

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I Don’t Have Answers to These Questions

There aren't always easy answers to policy questions

A big part of my job is answering policy-related questions. Some can be handled quickly, some take longer. Others require an in-depth study. But there are some that I just can’t answer.

Here are a few that came up recently.

How many jobs are actually at wind farms in Michigan? Wind energy was pitched as the next big thing, but wind farms probably don’t require many workers once they are established.

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Why did lawmakers not close the school retirement system in 2012? I know that it was not the illusory transition costs issue that some claimed. Lawmakers made some major reforms — including to retiree health care benefits — but the plan remained open and I don’t know why they refrained from taking that additional step.

Why isn’t more attention being paid to the state income tax rate? The rate was supposed to be lowered after the 2007 tax hikes, but the reductions went away during the 2011 tax reforms. These rates have a much larger impact on the state budget — and each and every family budget — than the much-discussed pension tax.

How do public electric utilities actually make money? In a regulated market, it is not likely by selling more electricity to customers.

Why aren’t there more independent advocates for policies? We meet with a lot of member-driven groups to talk about our work. Their leaders seem to find it strange that the Mackinac Center has views on policy issues and connects with people who have similar views, instead of having members that determine our stances.

What is the proportion of Michigan residents who believe that agriculture is the state’s second-largest industry? Industry spokesmen have made that claim for a while, but the agriculture’s economic importance is much smaller than you would expect.

Why have there been corruption charges against Detroit Public School employees? The district’s been under state-appointed emergency managers for some time now, and the law is designed to fix mismanagement. After all, you can’t steal thousands from your employer unless your employer is mismanaging millions.

Why don’t municipal interest groups promise something in return for more money? They’ve been asking for more money from state taxpayers as far back as I can remember, yet I don’t recall them ever saying how they would use this additional money to benefit people. Promising to improve services seems like a more effective tactic.

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Commemorating the Repeal of the Stamp Act

The history of transaction taxes in America

The United States Postal Service puts out many beautiful stamps. One current “forever stamp” isn’t as nice to look at, but you should still consider using it the next time you decide to send some snail mail. It commemorates the repeal of the Stamp Act in 1766.

If you’re like me, you probably have a vague memory of learning about the Stamp Act in grade school. Back then I wondered why it was such a big deal that the colonists had to pay more for stamps, because when I thought of stamps, I thought postage stamps. But for the American colonists, the Stamp Act was most akin to what people today call a “transactions tax.” It required the colonists to pay a tax on almost every legal transaction.

In the age before instantaneous communications, business transactions required more legal documents than they do today. Suppose you wanted to sell your crops back in the 18th century. How would a potential purchaser know that the crops actually existed, or that you had not already promised to sell them to someone else? It was not possible to pick up a phone or check online — verification could only be made by a certified document asserting both your ownership of the crops and their availability for sale.

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Such documents were common and used extensively. The free flow of credit, goods and services depended on them. Land transactions, which were frequent and important in the “land of opportunity,” were particularly dependent on these legal documents.

By taxing these types of documents (requiring them to have a stamp affixed as proof of payment of the tax), the Stamp Act imposed a cost, often a high one, on most business transactions, since most transactions couldn’t happen without these certified documents.

It not only made participating in the economy more costly, but it made the colonists more dependent on the English Crown. And this dependency was a feature, thought the Crown — not an unfortunate side effect. As legal scholars Justin DuRivage and Claire Priest recount, one colonial leader, Jared Ingersoll, mistakenly believed that if Parliament only knew how many transactions would be taxed, they would lower the tax: “I very well knew the information I must give would operate strongly in our favour, as the number of our Law Suits, Deeds, . . . & in short almost all the Objects of the intended taxation & Dutys are so very numerous in the Colony that the knowledge of them would tend to the imposing of a Duty so much the Lower as the Objects were more in Number.”

But Britain saw the imposition of this tax as a way to better control the colonies and protect against them rivaling English power. As England’s Junior Treasury Secretary said at the time, the Stamp Act would act as “some Check to those enormous Grants and Conveyances, which are so detrimental to the Colonies.” DuRivage and Priest put it this way: “Authoritarian imperial reformers in Britain had long expressed concern that colonial settlement and expansion needed to be restrained lest the colonies challenge Britain’s economic supremacy within the empire.”

So take this time to recall the importance of the Stamp Act as a transaction tax, and its centrality to the American Revolution. Then consider why people today would still want to restrain economic activity in order to control it out of fear that a successful economy poses a threat to the ruling class. Then, as nice as the planets or national parks stamps are, give a thought to using these commemorative stamps instead.

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New Evidence: Film Incentives Still Don’t Work

Research from Michael Thom analyzes a variety of programs

Last year Michigan lawmakers wisely did away with what was once the most generous film incentive program in the nation. Mackinac Center research showed that despite giving film producers half a billion dollars from 2007 to 2013, there were no signs that the film industry in Michigan was actually growing. Essentially, the program amounted to a taxpayer handout to a select few movie production studios. And now there’s new research that suggests these programs aren’t benefiting other states’ economies either.

The evidence comes from an article published in the American Review of Public Administration written by Michael Thom, a professor at the University of Southern California and graduate of Michigan State University. He analyzed 15 years’ worth of data from more than 40 states and found that film incentive programs, on the whole, have no significant impact on wages, employment, gross state product or film industry concentration in a state.

Thom also carefully analyzed the different types of film incentives offered by states, such as sales tax waivers, lodging tax waivers, transferrable tax credits and refundable tax credits, and tested each of these separately. In doing this, he found some positive effects for particular types of incentives, but the impacts were tiny. For instance, transferable tax credits had a small effect on film industry employment, but no effect on wages. And refundable tax credits had a positive effect on wages for film industry workers, but it was only temporary. Corroborating Mackinac Center research, there wasn’t any evidence that these types of incentives created new jobs.

Film incentives are a relatively new experiment among taxpayer-funded economic development programs. In 2003, there were only five states with such programs — now there are more than 40, and states are handing out close to $2 billion in subsidies to movie studios. Like Michigan, other states are beginning to wise up to the futility of film incentives, and this recent research should cause more states to rethink these programs.

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A $4.6 Billion Transit Millage Is a Tax Too Far for Detroit

Time to question the benefits of the Regional Transit Authority

The other day, I attended a public hearing of the Regional Transit Authority of Southeast Michigan in Northwest Detroit. The Mackinac Center’s analysts haven’t dug deeply into the RTA’s plans and assumptions surrounding its $4.6 billion millage request on November’s ballot. But the rhetoric from the RTA leadership in attendance was troubling — even before we look at the numbers.

Longtime Detroit radio host Mildred Gaddis broadcast from the event for her show on WCHB-AM 1200, interviewing RTA representatives and taking questions from the audience and social media. Virtually all the questions focused on either service concerns — Would the buses get better in a specific neighborhood? How much will the fares be? — or questions around employment, union representation, economic benefits, choice of contractor and other job-related topics.

One question notably absent until I gave Mildred a card asking about it, was whether Detroiters need to be taxed even more than they are now to receive improved transit services. My colleague James Hohman recently pointed out that Detroiters already pay the highest effective property taxes in the nation, a burden to which the RTA’s 1.2 mill property tax would only add.

High property taxes are a challenge for homeowners and business owners in any community. But in Detroit, high tax rates combine with a deeply broken property tax assessment system to destroy neighborhoods and lives. Roughly one in three homes in Detroit has been foreclosed on in the past decade, pushing people out of their homes and creating real and pervasive human suffering. To add insult to injury, these homes too often stay vacant, become blighted and join the long list of homes to be demolished. Detroit is spending hundreds of millions of dollars to knock down houses that could and should have remained Detroiters’ homes.

We’re literally taxing people in Detroit so much that they lose their homes, then asking other taxpayers to pay to knock down those homes. How can we defend this intellectually or morally?

As we respond to the many challenges facing Detroit, it won’t do to give a simplistic response like “the answer is this, or it’s that.” But one point of agreement has to be that Detroiters are simply taxed too much and receive too little. They’re not alone in this regard, but in too many of the city’s neighborhoods, squeezing residents for tax revenues has crushed the community.

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It’s time to say: “Enough is enough.” Detroiters and others in Wayne, Oakland, Macomb and Washtenaw should look at what benefits the RTA is offering. Then they should question whether the benefits justify adding to the tax burdens of all homeowners and business owners, especially those whose burdens are already more than they can bear. Regional transit supporters point out that other metro areas spend more on transit than we do, but none of those other regions have the same challenges as Southeastern Michigan in general and the city of Detroit specifically.

Improving the coordination of our region’s transit systems doesn’t need to cost us $4.6 billion over 20 years, doesn’t need to add to the property tax-driven blight in Detroit and doesn’t need to create another layer of bureaucracy over the existing regional transit systems. Let’s be SMART — pun intended — about transit funding and whether imposing more burdens is the best way to create jobs and opportunity in our communities.

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June 24, 2016 MichiganVotes Weekly Roll Call Report

Noteworthy proposals to amend the state constitution

The House and Senate are on a summer break, so rather than votes this report contains some recently proposed constitutional amendments of interest. To become law these require a two-thirds vote in the House and Senate and approval by voters.


House Joint Resolution GG: Add “sex” to constitution’s ban on denying equal protection

Introduced by Rep. Marcia Hovey-Wright (D), to place before voters in the next general election a constitutional amendment to add “sex” to “religion, race, color or national origin” in the state constitution’s ban on denying equal protection under the law on the basis of these characteristics. This is already in the state civil rights law, but not in the Constitution of 1963. Referred to committee, no further action at this time.

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House Joint Resolution II: Ban lawmakers offices in same building with a lobbyist

Introduced by Rep. Bill LaVoy (D), to place before voters in the next general election a constitutional amendment to prohibit legislator’s Lansing offices from being in the same building where a lobbyist has an office. The measure in part represents a protest against the Senate's plan to sell the body's current office building and move into a new building that contains some lobbyists' offices. Referred to committee, no further action at this time.


House Joint Resolution JJ: Limit legislature’s session dates

Introduced by Rep. Edward McBroom (R), to limit legislative sessions each year to January 1 to June 15, plus an additional 21 days starting in September. This is approximately the schedule the House and Senate have followed in recent years. Referred to committee, no further action at this time.


House Joint Resolution LL: “Taxpayer Bill of Rights” spending cap (TABOR)

Introduced by Rep. Martin Howrylak (R), to place before voters in the next general election a constitutional amendment to cap annual state government spending increases at the rate of inflation plus increases in the state population, with any amount over that returned to taxpayers. Referred to committee, no further action at this time.


House Joint Resolution MM: Make it easier to fire civil servants

Introduced by Rep. Kevin Cotter (R), to place before voters in the next general election a constitutional amendment to limit the power of a state civil service commission and give state government department heads the authority to discipline or dismiss an employee “for conduct that directly and negatively impacts the department's ability to accomplish its statutory duties in a fair, timely, equitable, and transparent manner.” Employees would retain the ability to appeal to the civil service commission, which would retain its authority to reverse the action if it is deemed arbitrary or capricious. Reported from committee, pending before the full House. See also House Bill 5677.


House Joint Resolution NN: Revise allowable School Aid Fund uses

Introduced by Rep. Kristy Pagan (D), to place before voters in the next general election a constitutional amendment to eliminate a provision that allows tax revenue earmarked to the state “School Aid Fund” to be used for higher education, including state universities and community colleges. In other words, tax dollars earmarked to this fund could only be spent on K-12 public schools. Referred to committee, no further action at this time.


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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Snyder’s Veto of Aftermarket Auto Parts Bill a Win for Consumers

MLive covers defeat of anti-competition bill

Gov. Rick Snyder vetoed a bill last week that would have made it illegal to repair vehicles using aftermarket auto parts, and that’s a win for consumers.

Mackinac Center policy analyst Jarrett Skorup spoke with MLive after the veto, explaining that many studies have found aftermarket parts — an auto part made by a different company than the original equipment manufacturer — are just as safe as their often more expensive counterparts.

“Consumers should have that choice in deciding which auto parts they want to use,” Skorup told MLive.

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Skorup explained the bill and the problems with it in a recent blog.

Competition between parts manufacturers is good for consumers and repair facilities. It makes parts better, helps keep down the costs for consumers and can even put downward pressure on the cost of auto insurance. Legislators should be encouraging more competition, not less.

Read the full MLive article here.

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MSU Scholar Ignores School Revenue Sources

Says revenue has been cut

Michigan State University professor David Arsen recently appeared on public radio to discuss the findings of his new research into the causes of school district financial distress.

Arsen’s research lays most of the blame for growing deficits and shrinking fund balances at the feet of state policymakers. In an accompanying article he co-authored with two other education professors and an economist, he argues that these policies exacerbate the declining enrollment trend experienced widely across Michigan and “reinforce a fierce downward spiral,” particularly in high-minority urban districts.

Dozens of school districts have at one time been under close watch by the Michigan Department of Education because of their shaky fiscal foundations. Some districts that have come under emergency financial management, like Muskegon Heights and Highland Park, have experienced somewhat better fiscal outcomes than others, like Detroit Public Schools. Financial hardships led to the dissolution of Inkster and Buena Vista school districts in 2013.

In trying to explain the phenomenon, Arsen claimed, “Statewide, overall inflation-adjusted revenue per pupil has declined by about 25 percent since 2002,” he told Michigan Radio host Lester Graham.

However, the claim falls apart under the weight of closer scrutiny.

Arsen’s article includes a graph to reinforce the point that “statewide general fund revenue per-pupil has declined by roughly 25 percent since 2002.” The graph cites “Bulletin 140” (presumably Bulletin 1014) from the Michigan Department of Education as the source for the comparison with 2013, the most recent year of data used in the analysis.

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Bulletin 1014 does not include significant chunks of K-12 funding that pay for non-general fund programs, such as those used for special education, nor does it include money used to purchase property or to finance school construction. As the Mackinac Center has pointed out before, Arsen’s data source also leaves out revenues collected by intermediate school districts — more than $2.6 billion in 2014-15.

A holistic view of Michigan K-12 education funding provides a less frightening picture. Adjusted for changing dollar values, the state’s public school coffers grew dramatically from 1995 to 2002. Since that time, figures have fluctuated modestly, resulting in a largely flat trend. In the following 13 years, real per pupil revenues grew by about 1 percent, a far cry from Arsen’s claim.

The omission of ISD revenues is particularly startling because those funds are predominantly used to provide center-based programs for special-needs students. Arsen and his colleagues identify inadequate state reimbursement of special education programs as a driving factor behind declining school district fund balances.

Another culprit Arsen points to is the method used to count students for the main funding formula. Districts count students for state aid payments based on a “90-10” weighted enrollment average — 90 percent of students from October of the current school year and 10 percent from the previous February. The balance has shifted several times over the years, at one point based on a 50-50 split.

Arsen and his colleagues say the current arrangement harms districts that are losing students; they specifically blame state policies that allow families to leave for public charter schools or other nearby districts. Getting 10 percent of funds based on last year’s students is not enough to cope with continuing financial obligations districts face, they argue. (Funny how seldom one hears the inverse argument made when enrollments are growing.)

The article presumes districts not only deserve greater protection as students leave for greener pastures, but also that they need the protection to stave off emergency financial measures. Recent evidence suggests the topic deserves a closer look.

Days after Arsen’s interview, The Detroit News reported that the number of Michigan school districts on the state’s financial watch list has decreased from 41 to 23. Less than one-third of the 23 districts are in measurably worse shape compared to the previous year.

These trends emerge even as Michigan’s annual public school enrollment continues to decline (although the decline has slowed a bit) and while the rate of students enrolling across district lines through Schools of Choice grows. And the 90-10 accounting rule for state funding continues.

The state could benefit from discussions about improving equity in the school funding formula and ensuring a greater share of dollars reach students where they choose to be served.

But let’s also not forget that just injecting more resources into public schools is unlikely to make much of a difference when it comes to boosting student achievement, as a recently published Mackinac Center study suggests. And let’s proceed with a fuller understanding of the financial picture, wary of policy prescriptions that avoid hard questions of how schools can adapt to serve students better.

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