Gov. Rick Snyder’s plan to revitalize schools within the city of Detroit has school-choice advocates concerned about potential threats to school choice in the city.

Charter school advocates fear that Snyder’s plan creates a bureaucracy with the authority to stop the growth of charter schools or even shut them down if different political leadership put anti-charter board members in charge.

The governor’s plan calls for the old Detroit Public Schools to be kept in existence for the administrative purpose of paying off the district’s debt. DPS has $483 million in operating debt and a combined capital and bond debt of $1.54 billion.

A new entity called the “Detroit Education District” would be created under a seven-member board, with four members appointed by the governor and three appointed by the mayor. The board would hire a “Detroit Education Manager,” who would have the power to open and close schools within the city.

The role of charter schools in educating Detroit schoolchildren is significant because Stanford University’s Center for Research on Education Outcomes (CREDO) has found they are doing a better job than conventional schools. A CREDO study in March said students in Detroit charter schools receive the equivalent of a few weeks to as much as several months of additional learning every year in reading and math compared to their peers at conventional public schools. The CREDO report stated that Detroit’s charter schools could serve as a model to other communities.

“Charter schools have provided a ray of hope for Detroit students,” said Audrey Spalding, the director of education policy at the Mackinac Center for Public Policy. “This proposal threatens charter schools with the addition of another layer of expensive bureaucracy.”

Despite the success of charter schools in Detroit, members of Democratic minority in the Legislature have introduced bills that proponents fear could undercut charters. Such bills have no chance without Republican votes.

Gary Naeyaert, executive director of the pro-school choice Great Lakes Education Project, said charter schools are at risk under Snyder’s plan.

Naeyaert says the governor's plan appears to be turning over the responsibility of opening and closing schools to a small group (seven-member board) that would select a portfolio manager called the “Detroit Education Manager,” who would make decisions on the fate of public schools, including charters.

“The worst-case scenario is that you have a political appointee with an anti-choice agenda who has the sole power to close dozens of existing charter schools,” Naeyaert said.

Alicia Urbain, vice president of legal and government affairs for the Michigan Association of Public School Academies, said there were possibilities down the road that could create problems for charter schools. Since legislation to make Snyder’s plan a reality has yet to be introduced, many details have yet to be determined.

The appointed board could be given the authority to renew charter contracts, Urbain said. Once the contracts are up, the board could refuse to renew them.

The board could also have the authority to establish an A-F letter-grading system for all schools in Detroit.

Urbain said the board could create a grading system that would make it impossible for any charter school to receive a passing grade, which would force them to close.

Legislation to reform Michigan’s one-of-a-kind no-fault auto insurance system initially moved quickly in the Legislature, but the bills are now in “pause” mode. The legislation, Senate Bills 248 and 249, would replace the current Michigan Catastrophic Claims Association with a new entity to perform the same reinsurance function, institute certain cost controls on the unlimited medical expense claims the law permits, and create an authority to combat auto insurance fraud.

“This is an opportunity for us to preserve the best auto insurance system in the country,” said Rep. Tom Leonard, R-Dewitt, the chairman of the House Insurance Committee. “To do that we need to make changes that contain costs. Under the system as it is now insurance companies are paying three or four times what commercial health care providers pay for the same procedures. For instance, commercial health providers pay about $600 or $700 for MRI scans while auto insurance companies are having to pay about $2,500 to $3,000.”

Michigan’s auto insurance system is unique among the 50 states because it combines both no-fault and unlimited injury coverage. Having unlimited coverage of injuries suffered in traffic accidents exposes the system to the sort of excessive rates to which Rep. Leonard was referring. This is one of the factors making Michigan’s auto insurance system among the most expensive in the nation.

According to Jack McHugh, senior legislative analyst with Mackinac Center for Public Policy, there is really no way to fully rein in the costs of no-fault insurance as long as "unlimited" medical coverage is part of the deal, but the reform bills could provide some improvements.

“Politically, there’s a tension between the popularity of unlimited medical expense coverage for people injured in crashes and awareness that we sure do pay a lot for insurance in this state,” McHugh said. “Insurers say they need cost controls, a view supported by accounts of ‘creative’ approaches used to capture a piece of the lifetime benefits that flow to a person permanently disabled in a crash. A proposed copay on personal care expenses may be one way to unwind some perverse incentives and moderate price controls on other medical charges have obvious cost-containing effects.”

On April 16, the Senate bills, which are sponsored by Sen. Joe Hune, R-Hamburg, squeaked out of the Senate on votes of 21-17. When they arrived in the House Insurance Committee it appeared their progress would be slowed in an effort to win bipartisan support. At roughly the same time, Michigan hospitals publicly offered to cut 20 percent of what they charge for medical services to the catastrophically injured in an attempt to bring about a compromise. However, the details of this potential compromise apparently couldn’t be worked out.

Only days later, on April 23, the bills were amended and reported out of the committee on 9-6 votes despite opposition from all of the committee Democrats. That signaled that efforts to gain bipartisan support had apparently ended.

The House Insurance Committee adopted amendments proposed by Rep. Tom Barrett, R-Potterville. They included imposing a $100 per-vehicle rate rollback on insurers for two years and a new fee schedule that sets the reimbursement rate for medical care provided to those catastrophically injured in auto crashes at 150 percent of the Medicare reimbursement rate.

“Considering that 150 percent of the Medicare reimbursement rate is usually higher than what commercial health care providers pay, I’d ask those who say it is not enough if that means people who come into a medical facility with a Blue Cross card are receiving inadequate care,” Leonard said.

Among the principle opponents of the reforms are the state’s hospitals and auto accident attorneys. The hospitals have mounted an aggressive campaign against the bills. They argue that the legislation would provide a $550-million windfall for insurance companies and cost Michigan's network of hospitals and health systems at least $1.2 billion a year.

The House Democratic Caucus is now officially opposing the bills. Meanwhile, there aren’t enough House Republicans supporting the measures to get them passed — a situation House Republican leadership is trying to change.

The Mackinac Center has published a study on this topic in the past.

See also:

Michigan Auto Insurance Reform a Must

Time to Overhaul Auto Insurance Laws

Auto Insurance Reforms a Good Start