Five ways to put $1.3 billion surplus to work without affecting revenue

By: Dave Palmer

Michigan appears to be in the throes of the financial better days many people looked forward to after 2008’s economic meltdown. The Detroit News reported that Michigan’s Senate Fiscal Agency projected “…in December that the state will exceed prior revenue projections by $434 million
this budget year, $327 million in 2013-14 and $514 million in 2014-15 — a total of $1.3 billion.” No sooner than that information came to light, politicians jockeying for re-election this year on both sides of the aisle immediately began dreaming up ways to spend the surplus. Ideas such as decreasing the Michigan Income Tax (favored by Republicans), shoring up the School Aid Fund (favored by Democrats), improving roads (one of Governor Snyder’s fiscal priorities), and some other localized spending options floated in the legislative air.

Snyder appears to be cautious about any sort of surplus talks with official estimates due today and the upcoming January 16 State of the State address.

Snyder’s concern is not unfounded. Just because we have a projected surplus does not mean that we will still have a surplus at the end of the fiscal year. And even if we do, should we go about planning ways to give it back to taxpayers or spend it before we know how much of a surplus we actually have?

It is indeed too early to tell how much of a surplus we have, much less making plans regarding how to spend that surplus. But, just for fun, let’s assume for a moment that we will have the projected $1.3 billion in surplus. Reducing the income tax sounds like a great idea until you consider what happens when the surplus dries up and the income tax becomes too little to cover the expenses it is intended to cover.

If you said “painful budget cuts” you are absolutely right. Anyone up for re-election will tell you that it is practically political suicide to talk about raising taxes, especially for Republicans who run on the platform of returning to the taxpayers what is already theirs. Not that Democrats believe any differently, they are just more willing to admit that sometimes the price of governance increases and sometimes increasing revenue is a better way to deal with a shortfall than slashing budget items like the School Aid Fund or municipal services.

Instead, the legislature should consider the following five ways to deal with a possible $1.3 billion surplus that doesn’t involve setting future politicians up for failure when taxes need to be raised once budgets are slashed to bare bones and there is no other option to make up a shortfall.

  • Stop taxing pensions: Not so long ago, near the beginning of Snyder’s current tenure as governor, he approved “belt tightening” legislation that taxed pensions for the first time in Michigan history. If Republicans are bound and determined to return the money to the taxpayers, then they should start with the most vulnerable financially speaking; retirees. They already live on a fixed income that will never increase and in some cases gets decreased as a municipal cost-saving measure. Let’s get them back out in the economy spending money on wants and needs, not just needs.
  • Return the Earned Income Tax Credit to its previous level: Another “shared sacrifice” Snyder and the GOP controlled legislature imposed was to slash the Earned Income Tax Credit from 20 percent of the rate used by the federal government to just six percent of the rate. This crushed needy families and for the first time, middle class families tended to owe money to the state rather than receiving a refund, while wealthy individuals saw their refunds increase. (I went from getting an $80 refund to owing about $300.) This is another way the legislature could give back to the citizens without an across-the-board cut to income taxes.
  • Increase state revenue-sharing with communities: The state has been steadily cutting its revenue-sharing with local communities, a fact cited by Detroit as one of the reasons it entered bankruptcy. Other communities that have an emergency manager seem to have suffered a similar fate whereby cuts to state revenue-sharing filled their accounting ledgers with red ink. As a result, they have had to cut such basic service budgets as police, firefighting, schools, trash collection, and road maintenance. If the state increased their revenue-sharing with local communities, the taxpayers would certainly benefit, though not directly on their paychecks.
  • Reinstate public mental health institutions: Governor Engler was responsible for shuttering nearly all of the state’s mental health hospitals, stopping services on a dime and turning any patients who didn’t get picked up by family out onto the streets with a month’s worth of meds and a prescription for a refill to last them another month until they could get other mental health services. Since people who are mentally ill enough to be in a hospital rarely seek those services out themselves, many ended up homeless or in jail where they treat people with mental illness with the same deference as you might bestow on a redheaded step child. Bringing back public mental health services would create jobs, provide the proper medicinal treatment so mentally ill individuals would have a chance to rejoin society as a functioning citizen and clear space in our prisons for real criminals.
  • Shore up the School Aid Fund/Invest in K-12 education:  This could be the most important and  longest-lasting return we could get from returning a budget surplus to the taxpayers without an income tax break. The School Aid Fund and funding for schools in general has been cut and cut again just about every time the state starts running out of money for just about any other budget line item. Yet, the legislature’s approach to correcting this problem thus far has been to lambaste teachers and throw good money after bad on unnecessary standardized tests. (Each junior in Michigan is required to take the ACT, which is paid for by the state to the tune of $52.50 per test. Assuming there are 100,000 juniors statewide that comes to $5.2 million spent every year on a test students used to have to pay for themselves if they planned on going to college.) At the federal level, the belief is that improved early childhood education creates the greatest return on investment, while others believe that an across the board investment in better technology, building improvements, and better teacher salaries is the ticket. No matter what your stance on what facet of education brings the best results, Michigan lawmakers definitely need to consider making schools better rather than cutting income tax.

The bottom line is that Michigan legislature needs to quit counting their chickens before they hatch. We only have rough projected numbers now, and over time there could be unplanned expenses that chip away at the surplus. If we do wind up with the full $1.2 billion, an across the board cut to income tax percentage would give the greatest benefit to the wealthiest Michiganders and leave the middle class and the poor with a pittance of savings. The suggestions above will create a much greater benefit for the community at large, and represents more responsible ways to deal with a budget surplus. Contact your representatives in Lansing and tell them to save the tax cuts for when we have a budget surplus after enacting reforms that will truly benefit all of Michigan’s citizens.





Lansing seeks to expand EAA authority beyond failing schools (Society’s Slideshow)

By Dave Palmer

Michigan Legislature is accelerating the process by which it dismantles public schools and hands them over to private entities, and it’s doing it through the Educational Achievement Authority.

The EAA was originally designed by Michigan Legislature to take over the bottom 5% of schools and school districts (labeled Persistently Low Achieving, or PLA) after three years with that dubious distinction, or sooner if required by a state reform officer. Apparently, Lansing believes that for-profit outsiders with no proven record in education or school reform might have some insight into righting those sinking ships.

While this sounds like a good deal on a piece of paper, statistically speaking, it’s a slow way to ensure that the EAA gets to run all school districts in Michigan. Mathematically speaking, every single school in Michigan could potentially fall into the bottom 5% in performance category, even if all schools were performing between 75% and 80% proficiency. (There will always be a mathematical “bottom 5%”.)

However, Lansing legislators are not content with waiting that long for their desired private takeover of public schools. HB 6004, and its partner SB 1358 would allow the EAA to open brand new schools not in the bottom 5% across the state under a statewide school district and would be allowed to convert a community school to a charter within one year of being identified as a PLA.

The Board of the EAA would be appointed by the governor, not elected by the people, and the EAA would be allowed to receive public tax dollars to run these schools despite their private nature.

It would also allow the State to take over unused school buildings, and require school districts to pay for maintaining these school buildings, costing the taxpayers untold sums of money. School districts under and emergency manager would be forced to allow that person to evaluate their buildings to determine if they will be used for school purposes, redeployed for use by other schools, or if they are unsuitable for school use. If they are suitable for schooling, the emergency manager is required to make these buildings available for both public and private educational institutions, while the title and liability for the building would remain with the school district. Oh yeah, and the EAA is exempt from the state testing requirements that public schools have to endure.

HB 6004 and SB 1358 would effectively destroy the concept of a school district and the property values of the homes contained within, gives parents and students no incentive to work within schools to help them improve, and is borderline fascist policy making.

Allowing the EAA to come in and set up schools wherever it feels like under the auspices of a state-wide school district would completely destroy the concept of a local school district. No longer would a good school district be used in the determining the value of a home, nor could being located in a good school district be used to attract buyers. This could cause property values in all neighborhoods to plummet because someone living in a neighborhood that has a bad school only has to enroll their child in the EAA to move them to a better one.

Schools that are failing often have little input from the community as to what is desired or need to achieve that improvement. If HB 6004 and SB 1358 are allowed to pass, the PTA in those districts might as well be a book club. Parents will no longer have incentive to consult with teachers regarding their child’s performance, or any reason to even attempt to improve their school through a community effort.

Instead, they will simply be allowed to enroll their students in EAA and bounce them from school to school at the first sign of teachers with high standards and low tolerance for excuses regarding why Bobby or Suzy didn’t have a chance to finish their homework. Bobby and Suzy will most likely pass their classes once pliant teachers are found, but will get a lower quality of education because of it.

Finally, allowing a private entity like the EAA to take over public entity like schools and using public tax dollars to fund that private entity is a textbook definition of fascism. Hitler did it. So did Mussolini. They also specified the curriculum for their schools, and anyone who has studied World War II knows what was taught by those private institutions accepting public funds.

It is obvious that not a single member of Michigan Legislature has any inkling what might constitute good school reforms, and it is equally obvious that they don’t care what the consequences might be. Otherwise they would not be attempting to pass the twin atrocities of HB 6004 and SB 1358 in this lame duck session.

The legislature could easily fix failing schools by assigning all new teachers a veteran mentor to observe the newbie one half of the day, and demonstrate their own proven practice to the newbie during the other half.

Another approach is to allow teachers to not only grade their students, but also to grade parents based on their involvement in the student’s education as well as the administration in terms of whether or not the teacher’s needs are being met, then weigh those evaluations against any State evaluation the teacher endures.

Instead, Lansing wants to privatize the whole system and wind up facing a  lawsuit alleging a violation of anti-discrimination laws like Louisiana.

Now is the time to take action. Now is the time to tell the Michigan Legislature to stop using education as a political football and focus on real reforms using real educators with real proven results instead of trusting an unproven, for-profit entity like the EAA to reform their system for them. Do it now before private entities are allowed to take over and pay no attention at all to what the community wants. Tell Lansing to give education back to the educators.

Contact your Representative and Senator in Michigan Legislature now.

Lansing continues war on teachers with pension system fix (Society’s Slideshow)

By Dave Palmer

Lansing legislators are again showing their true feelings toward educators.

First, they moved to remove collective bargaining rights from teachers. Then, school districts began imposing 10% pay cuts without negotiating stateside concessions. Next, the legislature moved to force teachers to pay 20% of their health care costs out of the salary that has been reduced by 10%.

Now, the legislature has passed a bill that will drastically change the public pension system for teachers. The proposed changes will not only require current teachers to pay more into the system or convert to a private 401(k), but will also reduce the amount of money current retirees are receiving and reduce their health care benefits.

As a second-year educator, I am outraged, disgusted, and insulted by these proposed changes. At one point in time, back when collective bargaining agreements had the force of a contract, teachers negotiated a public pension plan in lieu of a pay raise. The idea was that since the state couldn’t afford to give teachers pay raises at the time, at least the state could provide for teachers in their retirement.

Rick Snyder, already proving himself one to not uphold agreements made by previous administrations with the Detroit revenue-sharing agreement, will no doubt sign this legislative atrocity into existence thereby nearly completing bis agenda of forcing educators to prove that they are not in it for them money.

To be fair, the pension system is in dire straits. Changes to the program do need to be made, but why not change it so that teachers aren’t forced to subsidize their jobs, health care, and retirement? Why not repeal the changes to the Michigan Business Tax and reinstate it as a flat 2% tax with no loopholes? Why not ask people across the state for 0.1 mills of new property tax to finance the failing system?

The answer to those questions are simple, and the same: Because Rick Snyder and the Lansing Legislature believe that $1.4 billion in tax breaks for their business cronies are more important than the teachers that provide them with educated employees. Tax breaks for industries that don’t need them trump the retired teachers that gave the politicians enacting them the education they needed to run for office then rip them off for their pension money.

How are retired teachers to pay more into the pension system? How are current teachers to subsidize the public plan when they are being forced to take drastic pay cuts and pay 20% of their own health care costs? This is not a formula to attract the best and the brightest educators to Michigan. This is not even a formula to attract even mediocre candidates.

Based on this latest move, it is apparent that Lansing is not interested in attracting the best and the brightest from this or any state. They would rather allow for-profit corporations run cyber-charters so they can outsource education to the lowest bidder. They would rather trample on the collective bargaining rights of teachers to pay for egregious tax breaks that the state can’t afford and the recipients don’t need.

I hope every educator remembers in November that this Legislature would rather give $1.4 billion in tax breaks to their business cronies than have educators who are properly compensated for their long hours and otherwise generally thankless job. I hope every parent remembers in November that the reason teachers can’t afford to purchase facial tissues, pens, pencils, and other emergency supplies is because of Lansing’s war on teachers.