News Story

Michigan charter schools allege sneak attack, sue feds over grants

Lawsuit claims U.S. Education Department is trying to lessen charter schools’ access to grant monies, not facilitate it

The Michigan Association of Public School Academies, a charter school association, sued the U.S. Department of Education in federal court Wednesday. It alleges that new federal guidelines are a sneak attack on charter schools, and are being used to lessen charter schools’ access to grants rather than allow for it.

The lawsuit was filed by the Pacific Legal Foundation in the Western District of Michigan. A Washington, D.C. nonprofit, The Thomas B. Fordham Institute, is a co-plaintiff.

The 31-page complaint names the U.S. Department of Education, Education Secretary Miguel Cardona and Ruth Ryder, an assistant secretary in the department, as defendants.

In its lawsuit, MAPSA claims that a new federal rule, effective as of July 6, has worked to cut off charter schools’ access to grant funds set aside specifically for their work.

“The department has set out new criteria for grant awards that are designed to decrease charter school programs, and ensure that failing public schools don’t have to compete with innovative alternatives,” the lawsuit says.

“The department’s sneak attack on the charter school program, and on the students caught in the middle, must be set aside by this court.”

The lawsuit claims that the department violated the Administrative Procedures Act, a law which establishes rules federal agencies must follow when they issue regulations. MAPSA also claims that the department also violated the Constitution.

“The rule comes from an agency employee, and lacks even the blessing of a properly-appointed officer of the United States,” the lawsuit claims. The suit claims Ryder, a deputy assistant secretary of education, issued the rule on behalf of the Education Department. Ryder, it says, does not have the authority to issue such rule.

At issue are funds from a federal grant program initiated in 1994 under then-President Bill Clinton.

“By helping charter schools overcome financial barriers, the (federal Charter Schools Program) is also designed to increase the number of charter schools nationwide,” the lawsuit reads. “To accomplish its purpose, the act obligates the Secretary of Education to distribute hundreds of millions in dollars in grants annually.”

“Notably, the statute does not include any delegation of authority for the secretary to consider or implement new criteria or priorities,” the lawsuit reads.

The lawsuit notes that on March 10, Congress appropriated $440 million to the Charter School Program, and then quotes presidential candidate Joe Biden, who said he was not a fan of charter schools.

“No wonder then,” the lawsuit reads, “a day after Congress appropriated funds to the charter school program, the Department of Education released a proposed rule dramatically undermining the grant program.”

The charter school association says that 20 of its 250 members have received Charter School Program grants since 2019.

It argues that its members will be disadvantaged by the criteria. A needs analysis as envisioned in the rule would harm charter schools that try to open in areas where public schools have open seats. And a school that serves minorities can’t prove it serves a racially diverse student body, as required by the rule. In the eyes of the federal officials, these schools’ student bodies are segregated.

The criteria are set up such that charter schools lose and conventional public schools win, the lawsuit claims.

The lawsuit seeks an injunction preventing the U.S. Department of Education from enforcing the new rule.

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

With 87K new IRS agents, middle class can expect more audits

Joint Committee on Taxation says nearly 60% of the new taxes will come from people making $50K or less

The U.S. Senate passed legislation that will increase spending by $740 billion, which includes money for hiring another 87,000 Internal Revenue Service agents, doubling the size of the agency. The House is expected to pass it, and President Joe Biden is expected to sign it.

Who will this affect, and what do officials want out of the new agents?

Biden, the IRS and the Joint Committee on Taxation each give a different answer.

Biden says the IRS will target the rich and the wealthy, saying the increased staffing will not affect those making under $400,000. The Senate, on a party-line vote, rejected an amendment that would have established that policy as a law.

Biden proposed, last year, an idea to bring in another $700 billion in taxes over the next decade, according to an April 2021 story in The Wall Street Journal.

The IRS estimates that the new employees will bring in $124 billion over a decade, not $700 billion, according to The New York Times. The agency, which just armed its agents with 4,500 guns and $5 million in ammunition, also says it will not target those making under $400,000. Nor, it says, will it target small businesses and middle class Americans with more audits.

The U.S. Senate Committee on Finance takes a different view. It cites the Joint Committee on Taxation, which says, “The brunt of any new revenue from hiring an army of IRS auditors will overwhelming hit low and middle-income earners. ...”

The committee, which has an equal number of Democrats and Republicans, also gives an income-based breakdown of where the new funds will come from. Less than 10% of it will come from people making $500,000 per year or more. It also says:

• Between 40% and 57% percent could come from taxpayers making $50,000 or less;

• Between 65% to 78% could come from those making less than $100,000;

• Between 78% to 90% could come from those making less than $200,000.

• Around 4% to 9% could come from those making $500,000 or more.

“Lawmakers owe it to citizens to efficiently administer their taxes,” says James Hohman, director of fiscal policy at the Mackinac Center for Public Policy. “Yet too many people struggle to get simple answers to their tax questions from administrators. I’d be much more interested in having additional IRS agents available to improve their service problems.”

He says that improved customer service is not Biden’s stated objective.

“Instead, the president makes it sound like agents are being added not to help people comply with tax rules, but to harass them under the assumption that they are tax cheats.”

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.