FBI officials raided the office of the Indianapolis Land Bank on May 28 after a months-long investigation revealed evidence its officials were receiving kickbacks for selling properties to favored nonprofit groups.

The land bank's director, Reginald Walton, has been charged.

Allegedly, land bank officials were exploiting a policy that gives nonprofits preference over other would-be buyers of land bank property. The Indianapolis Land Bank would sell properties at a steep discount to nonprofit organizations, instead of using a bidding process. Michigan land banks, such as the Kent County Land Bank and the Genesee County Land Bank, also have policies that favor nonprofits.

Indianapolis Land Bank officials allegedly took bribes to exploit this policy. Officials reportedly then sold land bank properties to "pass-through" nonprofits at a steep discount. According to reports, the executives of those nonprofits would then transfer the properties to private investors — while collecting a fee.

In light of this, the Indianapolis mayor has suspended the land bank's operation.

The corruption of the Indianapolis Land Bank is not surprising to anyone who has tracked these government entities. The country's oldest land bank, in St. Louis, Mo., has a similar history of corruption and favoritism.

Granting government officials the power to choose who can buy property and for how much, along with the ability to funnel subsidies to certain developers, is a recipe for corruption. And yet, that is what Michigan's land bank law allows.

The Kent County Land Bank created controversy when it blocked properties from going to auction — where they would have been bid on in a transparent process — to be able to pick and choose who could purchase property.

Indianapolis officials' misdeeds should cause legislators here to revisit the wisdom of allowing such entities to exist in Michigan. While there is no evidence of bribery, land bank officials around this state have already put in place policies that favor nonprofits and government employees. 

At the very least no land bank should be allowed to block property from being sold at tax auction. Moreover, these government agencies should adopt uniform pricing policies, instead of extending preferred treatment to some. 

Michigan has 40 or so land banks, and they operate without much independent oversight. It would be best to eliminate or reform them now, instead of waiting for a scandal to occur.

On the “Craig Fahle Show,” on WDET last Thursday, Oakland Schools Superintendent Vickie Markavitch joined Tri-County Alliance Executive Director Mark Burton to talk about a range of educational issues. Unfortunately, the program was misleading in many ways.

Right off the bat, the Tri-County Alliance was mistakenly referred to as a "parent association."* As reported in Michigan Capitol Confidential last month, there is no mention of parents or evidence of parental involvement with the TCA, according to documents obtained in a Freedom of Information Act request.

Instead, the documents show that the group is funded by the school districts in Wayne, Oakland and Macomb counties, overseen by former superintendents and largely exists to lobby legislators for more money for school districts and less educational freedom for parents. The schools pay for the group to lobby but do not report lobbying expenses on their district websites. 

Nobody should be under the illusion that Markavitch and Burton are just two people who happen to share the same interest in the status quo to try and improve public education. Oakland Schools hosts the TCA in its building, covering most of its operating costs. Before taking the executive director job at the TCA a few months ago, Burton worked for the Democratic Senate Minority Leader. He ran his own lobbying group (which had provided services to the TCA) based in the Lansing area. Documents suggest the TCA is scheduled to be moved to Burton's offices.

There were other questionable claims made in the interview:

• A lot of discussion focused on the direct school aid districts get from the state with claims that the schools are receiving less money as a result of Proposal A. Actually, total spending by districts is much higher than it was in the 1990s and years past.
• Markavitch claimed that charter schools educate "less expensive kids" (i.e. fewer low-income or special needs students) and she said the students who are able to leave the districts are the problem. The reality is that as a percentage of student population, charter public schools educate far more low-income students and only a slightly lower portion of students needing special education services. In an email, the district passed on some sources showing that nationwide, parents of special-needs children tend to keep them in traditional schools and that they tend to spend more on those pupils. In any case, that appears to be changing.
• A claim about the United States having the second-most children in poverty in developed countries (behind only Mexico) was made. When contacted, the district pointed me to a UNICEF report from 2012. Similar reports come out and are cited by left-wing groups every few years, but the use of such statistics is quite suspect. In this case, the study is saying that someone making 50 percent of the median income in the U.S. is the same as someone making 50 percent of the median income in a much poorer country, which is ludicrous. To take an extreme example, consider whether you would rather earn half the median income in America vs. North Korea. There also is something silly about the superintendent of the ISD in the richest county in the state making such a claim while criticizing charter schools that largely serve low-income students.

The 26-minute interview does include some good discussion on what an "adequate education" means and opinions on issues like testing. The necessity of ensuring that teachers pay for some of their health care is even acknowledged (before recent reforms, teachers paid an average of 4 percent of their own health care premiums and more than 300 plans statewide required them to pay nothing). Overall, the participants made some good points about Lansing micro-managing local schools.

But the best way to solve these problems would be to allow parents to choose which schools are the best fit for their children and to let this competition drive excellence.

Disappointingly, Burton and Markavitch advocate for the state to limit where parents can send their children to be educated and for taxpayers to simply continue sending them more and more money with no say in how the funding is spent.

School districts are made up of people, and people respond to incentives. In that way, parents taking their children out of one school and going to another is a good thing — but don't expect those in the district they left to be happy about it.

*Editor's Note: Fahle and Markavitch clarified that the group was inadvertently identified as a "parent" group and this was later corrected during the program.