News Story

'Bail Out Irresponsible Unions Act' Proposal Getting 11th Hour Push in Congress

On May 29, Michigan Capitol Confidential reported that Congressman Thad McCotter, R-Livonia, was one of just nine Republicans nationwide to co-sponsor a bill that would bail out multi-employer union pension funds, putting taxpayers "on the hook for $165 billion in unfunded union pension liabilities," according to Americans for Limited Government.

Today, the Wall Street Journal reports that, anticipating Democratic losses in November and in advance of new accounting rules that will add more pressure to the affected pension systems, unions have begun a full-court lobbying press to get the bill passed this year. Specifically, the Senate companion to the bill that McCotter co-sponsored, this one introduced by Sen. Robert Casey of Pennsylvania. Says The Journal in an editorial:

If Democrats could shift orphan company pensions to the taxpayer, the liabilities for the remaining companies would fall dramatically, and the multi-employer scheme could continue. Unions and employers could keep promising current workers fabulous pay and benefits, without which they have little chance of stemming their continuing decline in membership.

Two labor watchdogs cited in the Michigan Capitol Confidential article put this more succinctly with their own revised title for the measure: The "Bail Out the Irresponsible Unions Act."

 

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

School Consolidation Is No ‘Silver Bullet’

As superintendent of the 1,700-student Godfrey Lee School District, David Britten says he also doubles as the curriculum director.

Britten said he has one secondary school principal that oversees three buildings and one elementary principal that supervises two buildings.

So Britten is skeptical of reports that say consolidation of smaller school districts could save schools millions.

"I'm tired of the simplistic battle war cries for consolidation that don't factor in all the variables that are going to differ from district to district," Britten said. "It doesn't solve the financial problems you have in the state."

A new Michigan State University study suggests that consolidation of school districts at the county level could save about $612 million. Rural districts or districts with fewer than 2,000 students would be the biggest winners, the study states.

The study was done by the Education Policy Center at Michigan State University.

"State and local boards of education, operating under pressure to run schools efficiently and meet national and state performance goals, must consider administrative options such as consolidation or the coordination of services to reduce operating costs and improve the quality of education for all students," the study states.

Britten said many studies are too simplistic and don't take into consideration things like raises for employees taking on additional responsibilities and schools hiring additional bureaucrats for the larger districts created.

Andrew Coulson, an adjunct fellow for the Mackinac Center, authored a 2007 study on school consolidation plans. He found that school costs would continue to rise unless market incentives were introduced. Coulson wrote that a significant finding of his study is that school officials maximized operating spending regardless of the public demand for educational services.

Coulson said that while consolidation could save money in theory, it wasn't practical because smaller districts would have to be adjacent to each other to maximize savings.

Michael Van Beek, director of education policy at the Mackinac Center, said what is underreported is that the state has been consolidating for decades. Van Beek said there were about 5,000 districts in 1960. Today, there are 550.

"I think consolidating services will save money," Van Beek said. "But consolidating districts, that's not a silver bullet and shouldn't be considered. There is no evidence to show that consolidating districts will save taxpayers in Michigan."

Van Beek said the MSU report wasn't applicable to this state.

"It takes data from 20 years ago from a study in rural New York and runs all the calculations based on current spending in Michigan," Van Beek said.

Read the MSU study here.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.