A bipartisan initiative in Lansing aims to spend $105 million of taxpayer money on a business startup program that some say is reminiscent of the 21st Century Jobs Fund.

Under the Granholm administration in 2005, lawmakers allocated $137 million in Competitive Edge Technology Grants. The companies that received the money projected 794 jobs would result. Those companies currently have 22 jobs, according to the Michigan Strategic Fund’s fiscal year 2023 report.

The new initiative, the Michigan Innovation Fund, aims to create 5,000 jobs. If the idea were enacted into law, it would allocate $105 million to five Michigan nonprofit organizations that would award the money to new business startups.

Reps. Greg VanWoerkom, R-Norton Shores; Jason Hoskins, D-Farmington; and Alabas Farhat, D-Dearborn; sponsored legislation to create the fund.

Hoskins and Farhat did not respond to requests for comment. VanWoerkom said in a statement that the bill would pull money from Venture Michigan funds, which have seen returns exceeding $100 million.

“This plan is an opportunity to make our state more competitive nationally by propping up young businesses that create jobs and breed innovation,” said VanWoerkom.

Lawmakers originally earmarked $400 million for the 21st Century Jobs Fund, but they recently allocated an additional $225 million over the next three years, according to James Hohman, director of fiscal policy at the Mackinac Center for Public Policy.

John Mozena, president of the Center for Economic Accountability, told Michigan Capitol Confidential that taxpayers would bear the risk but not the reward of investing in companies backed by venture capital.

“The entire idea of investing in venture capital is that it’s high risk and high reward for people who put their money into these funds,” Mozena wrote in an email. “But when it comes to taxpayers, this model has all the risk of traditional venture capital investing, but none of the potential reward.”

A 2020 Mackinac Center study said the previous program created jobs at a cost of between $274,800 and $330,600 per job per year.

“We found that the programs created jobs but had to offer between $274,800 and $330,600 of incentives per job per year,” the study concluded. “Even if the new jobs paid $400,000 each, they would not return to the treasury what was necessary to create them.”

Mike LaFaive, the senior director of the Morey Fiscal Policy Initiative at the Mackinac Center who wrote the study, told Capcon that the program is costly and repetitive.

“This is tiresome,” LaFaive wrote in an email. “We’ve been here before with Gov. Granholm’s 21st Century Jobs Fund. It’s not an effective jobs program.”

In 2013, The Michigan Office of the Auditor General found that the jobs fund only produced 19% of the promised jobs, or 96 jobs out of a projected 500.

(Editor's note: This article has been updated to include a quote from State Superintendent Michael Rice.)

The State Board of Education approved a resolution on April 9 calling for increased state control of charter schools, but a charter school advocate says the resolution wrongly describes the independently operated public schools.

On a 6-1 vote, the board called for the Michigan Department of Education and local school districts to have more oversight over charter schools in the state. The resolution calls charter schools “a threat to democratically governed community-based schools.”

The education agency says 285 charter school districts statewide are responsible for 363 charter schools.

In an April 9 meeting, State Superintendent Michael Rice responded to a question about whether charter schools provide better academic opportunities than traditional public schools.

“The research on charter schools does not reflect that [charters are uniformly better than traditional public schools and districts],” Rice said. “There are some studies that suggest that they [charters] have likely improved. There are others that say not. There are some people that argue that the methodology around some of those studies is flawed. I’m one of those people.”

Buddy Moorehouse, vice president of public relations and media at the Michigan Association of Public School Academies, composed of charter schools, told CapCon the discussion included inaccurate information.

“There was a lot of inaccurate information that was said at the meeting, particularly statements by Superintendent [Michael] Rice that research does not show that charter schools outperform traditional public schools,” Moorehouse wrote.

Moorehouse pointed to two studies, one from Stanford University and one from MIT conducted by a researcher from the University of Michigan. Together, he said, they conclude that charter school students have better academic outcomes and achievements than children attending traditional public schools.

The advocate group says charter schools serve over 150,000 Michigan students, of which more than 75% face socioeconomic disadvantages.

Board member Mitchell Robinson, a long-time critic of charter schools, sponsored the resolution.

“While the original notion of charter schools as laboratories for innovation came from teachers unions,” Robinson said at the meeting, “that purpose has now largely been lost to predatory for-profit charter management organizations, education reformers, and politically motivated special interest groups.”

“I’ve studied the effects of the unfettered proliferation of charter schools in Michigan over the last ten-plus years,” Robinson continued. “I see no evidence of innovation in the charter sector and I believe it is time for much stricter oversight and accountability measures for the existing charter schools in our state.”

On May 15, Robinson reposted a social media post saying in part that “charters bleed public schools dry, proudly announcing that they have ‘saved’ one child even though they had to poke holes in the boat that still carries ten other children.”

MAPSA President Dan Quisenberry questioned why the board was targeting charter schools.

“They’re open to any student in the state without qualification and they serve a far higher population of minority students and students living in poverty,” Quisenberry said in a statement. “Charter schools are among the highest-performing schools in the state, particularly in Detroit.”

Charter schools are already subject to state oversight, said Michael Van Beek, director of research at the Mackinac Center for Public Policy. State law defines them as public school districts, which, he said, means any law that applies to school districts also applies to charter schools.