News Story

'Protect Our Jobs' Amendment Would End Binding Arbitration

Police and fire union contracts would no longer be decided by arbitrary third party

The Protect Our Jobs ballot proposal that seeks to change the state constitution with union-friendly provisions would eliminate a big negotiation tool for public safety unions, according to a Mackinac Center for Public Policy analysis.

If passed, the Protect Our Jobs Amendment would end the practice of binding arbitration. Police and firefighters can't go on strike nor would they have the right to go to an arbitrator during contractual impasses.

The Mackinac Center thinks the Protect Our Jobs Amendment would end binding arbitration, which is also known as Public Act 312. Ending binding arbitration would benefit taxpayers significantly, according to Mackinac Center research. Michigan has considered legislation in the past that would end binding arbitration.

The key section of the proposed constitution-changing amendment is Article I, Section 28, which states: “...to bargain collectively is to perform the mutual obligation of the employer and the exclusive representative of the employees to negotiate in good faith regarding wages, hours, and other terms and conditions of employment and to execute and comply with any agreement reached; but this obligation does not compel either party to agree to a proposal or make a concession.” (emphasis added)

"The radical provisions in POJA would devastate Michigan's economy," said Vincent Vernuccio, labor policy director at the Mackinac Center. "However the one thing the drafters of the amendment, perhaps inadvertently, got correct is banning the binding arbitration provision in PA 312. No longer will unelected bureaucrats write final contracts putting taxpayer on the hook for millions."

City officials have said in the past that arbitrators don't take into consideration the city's ability to pay when making a decision.

In 2009, the city of Ann Arbor faced an $8 million deficit over two years. Then an arbitrator ruled that the city would have to pay police retroactive pay raises dating back to 2006, costing the city another $1.5 million.

In 2006, an arbitrator ruled that the city of Flint must pay Police Sergeant's Union members bonuses totaling $7,350 a piece. Some police sergeants saw their base salary increase 14 percent. All members received additional 2.5 percent increases in each of the two years of the contract. Union contracts played a part in Flint’s financial problems. In 2006, Flint had a $5.9 million surplus, but was $48.1 million in the red just four years later.

Samantha Harkins, director of state affairs for the Michigan Municipal League, said they were still reviewing the amendment and had no comment.

Dan Lijana, spokesman for Protect Our Jobs, and Ed Jacques, a legislative assistant with the Police Officers Association of Michigan, didn't return emails or phone messages seeking comment.

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

Inkster Schools Wrongly Blames Previous Emergency Financial Manager for Its Deficit

District overspent every year without emergency oversight

Seven years after then-Emergency Financial Manager Howard Morris left Inkster Public Schools with a balanced budget, the school district is blaming him for its current financial deficit.

Inkster submitted a deficit-reduction plan to the Michigan Department of Education when it fell into deficit in 2011-2012. On the form, the state asks what caused the deficit. Inkster’s response: “Management by an emergency financial manager, compounded by a formal dispute the district lost in arbitration.”

In fact, Inkster Public Schools’ financial troubles got better only when it had an emergency financial manager.

The school district ended the 2010-2011 school year $10.5 million in debt.

Morris served as the emergency financial manager for Inkster Public Schools from 2002-2005. He left in August 2005.

Finance Manager Kelley Howey said the emergency manager’s pay was based on whether the district showed a profit. Because of that, she said a lot of repairs to buildings were neglected and the fire marshal came in and closed several buildings. She said it was “several million” in repairs. Howey said the current deficit-reduction plan has been approved by school district and state officials.

When contacted, Morris said it was hard to see how he could be responsible.

“To say seven years after someone was there, they are responsible ... on its face, it doesn’t seem plausible,” Morris said.

Morris said he shut down schools due to dwindling enrollment and didn’t include maintenance to buildings among his budget cuts.

According to the state’s Center for Educational Performance and Information, Inkster spent $2.1 million, $2.1 million and $2.3 million on operations and maintenance in Morris’ three years as emergency financial manager. In 2010-2011, the district spent $2.6 million on operations and maintenance, or about the same as what Morris spent when the cost of inflation is factored in.

Inkster had $16.3 million in general fund expenditures in 2004-2005 when it spent $2.3 million on operations and maintenance and had $31.3 million in general fund expenditures in 2010-2011 when it spent $2.6 million on operations and maintenance.

Operations and maintenance include salaries and employee benefits, supplies, property and purchased services.

The district spent $4.8 million on operations and maintenance in 2008-2009.

According to the Michigan Department of Education, Inkster Public Schools was in debt in 1997-1998 ($1.4 million), 1998-1999 ($1.9 million) and 1999-2000 ($1.7 million).

In 2002-2003, Morris took over as the emergency manager. The next school year, the district was $135,186 in debt, but it was debt-free in 2004-2005 and the year after he left in 2005-2006. Inkster was back in deficit in 2006-2007 and has been in the red ever since.

Morris said he was surprised Inkster was in trouble financially because its enrollment is increasing.

Inkster’s student population has increased from 1,172 in 2004-2005 to 2,965 in 2010-2011.

With twice as many students comes twice as much operating funding. Yet Inkster still was in the red.

“You know what causes that?” Morris said. “Overspending.”

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.