News Story

Highland Park Schools Get State Bailout — Already Receive $14,000 Per Student

State pays $4 million more for same teachers in same buildings

(Editor's note: This story was revised since its initial posting to reflect the role of the Detroit Public Schools in the disbursement of money keeping Highland Park school classrooms open.)

Highland Park public schools will receive an additional $8.2 million in extra funding from the state this school year to keep their doors open.

That translates to an extra $8,000 per pupil, which is more than most districts receive for students for an entire year.

In a deal brokered with the state March 2, Detroit Public Schools will receive $4 million to pay Highland Park's bills, and Jack Martin will take over as the Highland Park district’s emergency manager. As part of the deal with the state, any students who leave Highland Park would have a $4,000 per-pupil allowance follow them to their new districts to pay for their schooling for the remainder of the year.

The 969-student district previously received $4.2 million in the summer of 2011 as part of a hardship loan.

By contrast, Livonia Public Schools and Northville Public Schools each received $8,019 per pupil from the state this year, or about the same per-pupil that Highland Park needed in its $8.2 million bailout.

“If nothing else, it just highlights how poorly managed this school district was financially,” said Michael Van Beek, the Mackinac Center for Public Policy’s director of education policy. “They are getting the equivalent of two school districts worth of funding just to make payroll. If ever there was a fiscal emergency in a public school in Michigan, this would be it.”

Highland Park’s teachers had gone a week without a paycheck before they got paid March 2, said Jack Bauman, Highland Park’s director of human resources.

Since Jan. 13, the state has given Highland Park advances of $188,000, $261,000 and $178,000 so it could make payroll.

“The bottom line is that HPS was leveraged to the hilt,” said Sara Wurfel, a spokeswoman for Gov. Rick Snyder, in an email. “The state went out of its way to give them the opportunity to cut expenditures and right size the district. They never did so and the crisis kept building.  The state’s acting and acting swiftly because HPS didn’t, couldn’t or wouldn’t.“

But Bauman said that surrounding districts have told Highland Park they wouldn’t take their students. Bauman said Highland Park hasn’t had many students leave.

“If it hasn’t happened yet, I’m hoping it won’t,” Bauman said.

Highland Park has seen an exodus of its students in the last six years. The district had 3,179 students in 2006 and now has 969, according to the state.

Highland Park has had an operating deficit five of the last six years despite receiving $14,165-per pupil in state funding, which ranked it 40th highest out of 777 districts and academies, the state said.

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

Health Care Compact Bill Would Shift Power Back To The States

State Senate bill has 20 cosponsors; shifts choices from D.C. to the states and could reduce entitlement spending

Legislation recently introduced in the Michigan Senate to authorize the state’s ;entry into a multi-state Health Care Compact. If approved by Congress - and the chances for that may be less unlikely than they first appear - this would profoundly shift the balance of power away from the federal government and back to the states in a critical area.

The multi-state Health Care Compact would devolve all regulation in this area to states and turn over funding for the two largest health-related social welfare programs — Medicare for the elderly and Medicaid for the poor — to states through no-strings-attached block grants.

One of the cosponsors of Senate Bill 973, Sen. Patrick Colbeck, R-Canton, put it this way in an email to CapCon, “In the spirit of the 10th amendment, (the compact) yanks authority back to the states …”

While its immediate subject is health care, the compact potentially represents an important step toward restoring the constitutional balance envisioned by our Founders. Its real value is to "pick a fight" between state political establishments and Washington on federal overreach. The goal is to force members of Congress into making a “which side are you on” choice.

To put it another way, the compact could convert vague concerns over an abstract concept — federalism and the federal government’s usurpation of same — into a sharp political issue that engages the passions of regular people.

For example, it’s not hard to imagine some members of Congress who supported the unpopular Obamacare submitting to pressure from voters in their states by approving the compact, or risk paying a political price for opposing it.

Some have expressed concern that the compact’s Medicare and Medicaid block-grant provisions may lock Congress into spending fixed amounts on those entitlements. This is a misreading not only of the compact, but of the Constitution itself. No Congress — and no previously approved multi-state compact — can decree how much any future Congress must spend. A sitting Congress can always vote to cut appropriations, and to revise the formulas by which any program’s spending levels are determined.

Moreover, devolving of these massive social welfare programs down to the states could shift the current spending dynamic in a highly constructive manner by changing the incentives on federal lawmakers.

Once Congress turns over funding and management of Medicare and Medicaid, the temptation for federal politicians will be to cut spending on them. Members will begin to ask, “Why should we spend more for something that benefits state politicians?”

That incentive to reduce spending will only increase when some of the 50 state “laboratories of democracy” start adopting reforms that squeeze more bang from the bucks that do get spent. For example, Michigan could replace Medicare’s restrictions and artificial price controls with voucher-like insurance subsidies similar to what Congressman Paul Ryan, R-Wisc., has proposed for future beneficiaries. The state could both save money and remedy Medicaid’s broken promises by converting it into a “cash and counseling” program for the truly indigent.

There is universal consensus on the center-right that Washington has trampled the Founders’ vision by running roughshod over the principle of federalism. Decades of complaining about this has had zero impact. The compact potentially converts those ineffectual complaints into a focused conflict on the issue, imposing a cost on politicians who side with Washington over their own states.

There really is no downside to the compact — except for those who oppose the Founders’ vision, and instead favor the Wilsonian/Rooseveltian/Obamian one of ever larger and more centralized government. Without innovative strategies to change course, that’s the path we’re likely to remain on.

In a statement on the compact, state Sen. Geoff Hansen, R-Hart, said, “I encourage my colleagues to move quickly.” With 20 cosponsors — a majority of the 38 member state Senate — there is no reason it cannot.

The companion bill in the House authorizing compact entry is House Bill 4693, sponsored by Rep. Tom McMillin, R-Rochester.

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.