MEA Culpa

I reproduce an e-newsletter* from Jack Hoogendyk regarding Governor Granholm’s proposal to spend $300 million on high school reform.

Dear Duane,

In her state of the state address a couple of weeks ago, the governor introduced a new idea to improve high school graduation rates and encourage more students to attend college. There was a note familiarity to the idea…

The Proposal: Specialized High Schools

As described by Peter Luke in his column of February 4th, “A new $300 million state fund would over the next three years provide planning grants and startup cash to districts that agree to dramatically change the way high school students are educated. The proposal would replace large high schools that don’t work well with smaller schools of 400 pupils or fewer. The principal and a teaching staff of his or her selection would have broad freedom to personalize learning environments for students.

The financial incentive for districts to participate is clear. Every student who drops out of school represents a loss of nearly $7,500 in annual state aid.”

Why Does This Idea Sound Familiar?

Five years ago, retired businessman Robert Thompson offered $200 million of his own money to build 15 specialized high schools in Detroit. You could accurately describe it as startup cash in a district that dramatically needed to change the way high school students are educated. His offer would have replaced large high schools that didn’t work well with smaller schools. The principal and a teaching staff of his or her selection would certainly have been given broad freedom to personalize learning environments for students.

If it was such a good idea five years ago, why didn’t it happen? Follow the money.

As described in a National Review article on July 28, 2004, “Granholm may have committed her most ignoble act in late 2003: the craven rejection of $200 million proffered by Michigan businessman Robert Thompson to build charter schools for Detroit’s inner-city poor. Her cave-in to Michigan’s powerful teacher-union lobby was a slap in the face of Democrats’ claimed constituency, the thousands of urban black families on waiting lists to send their kids to charters.”

The Thompson offer of five years ago and the governor’s idea of two weeks ago are similar; they both look for ways to improve graduation rates in failing districts. They key difference is that Mr. Thompson’s proposal uses private dollars and works outside of the MEA and union scale employment; the governor’s proposal is a government solution that will cost much more to implement.

A private investment of $200 million would have provided hundreds of new jobs in an ailing economy. Under the governor’s proposal, new schools will be constructed under the prevailing wage which means inflated labor costs with the bill going to the taxpayers rather than a private business owner.

While I certainly am open to any ideas the governor has to improve the abysmal graduation rates of inner city school districts, I find it unfortunate that the governor and the city of Detroit were unwilling to accept a $200 million gift and the Legislature was unwilling to lift the cap on charter schools to give students in Detroit better opportunities for success.

This newsletter is written by Jack Hoogendyk, who is solely responsible for its content. The opinions expressed here are those of the author alone.

I, for one, share Hoogendyk’s opinion.

The net difference between private and state funding for this idea is half a billion dollars on its face. It is actually quite a bit more, because the economic impact must include the loss to consumers and investors of $300 million in loot that could have otherwise been deployed, the inefficiency of processing that money through the government bureaucrats, the closed-shop prevailing wage requirement for State funded construction and the lowered productivity the MEA’s tentacles will wring out. Not to mention the increased risk of failure of the entire concept due to increased government regulation.

It is quintessentially Democrat to decide that an idea that would have been privately funded will work better if it is funded by the State. Better yet if it involves an entrenched labor union. The total costs noted above, which I guess to be a billion dollars, can be laid directly at the feet of the MEA. This is what it costs to buy their support. You’re paying for it. You didn’t have to. The project would now be in its fifth year, instead of not even begun. On Robert Thompson’s dime.

The UAW, though it has been running General Motors since about 1960, has finally had to come to terms with the fact that the market won’t support the wages and benefits to which it had become accustomed. The MEA does not care about a market, and this arguably damages teachers, students and Michigan’s future. Thompson’s proposal was rejected because it was likely to make this starkly obvious.

On a related note, Hoogendyk makes note of a bill reported out of the Michigan House Education committee last week to raise the compulsory education age to 18.

The governor says this will lead to higher graduation rates. There is no data to support that assumption. What it will do is inflate the school population by 25-30,000 “students” who have no interest in being in school, and probably shouldn’t be there. This will increase the expenditures to the school aid fund by over $200 million, putting pressure on a fund that is already short of cash.

Ask yourself, who does this benefit most?

*If you would like to receive the free weekly newsletter via e-mail, just drop a note to

Making the impossible happen

RightMichigan has the story of the Democrats’ intentions for more tax hikes here:

Dillon has another tax-hike in store for you after the November election!!!

All Andy Dillon can be thinking is, “Oops!”

We can hope this information will make it to the State Journal under Mr. Skubick’s byline.

The Governor can be expected to reiterate her pledge of December 6th, “The most important thing I learned is I’m not ever going to raise taxes again. It’s too hard. It’s too impossible.”

Michigan’s legislative taxation policy SNAFUs

… are not over yet.

It’s been fashionable lately to blame Michigan’s legislative buffoonery on term limits rather than the more obvious cause; overdependence on reptilian brain synapses. The usual explanation is something like this – “They aren’t around long enough to develop expertise or trust each other.”

Even if they’re around as long as our brain stems, evolutionarily speaking, no Republican will ever trust House Speaker Andy Dillon, whose gamesmanship and false “negotiation” tactics should not be forgotten. Worse, while Dillon was performing his duplicitous dance no one seemed to notice the horrendous provisions of the new Michigan Business Tax. The hastily passed 6% tax on a random array of services was so bad (in addition to imposing a $600 million tax it would have carried a $900 million compliance cost) it made some businesspeople see the MBT surcharge as the lesser of two evils. Andy Dillon claims avoiding one horn of the dilemma qualifies as supporting the other horn, but the legislature hasn’t yet taken notice of the looming disaster the MBT represents for small business.

This oversight isn’t an issue of trust, or even disingenuous Democrat brinkmanship. It is simply government incompetence. They don’t even seem to realize what they’ve done.

Here’s an example of the effect on small business: I almost threw up…

Then I called my competitor. I then called another competitor. I made a few calls and started planning my exit from being in business. I started thinking of how to move out of the state I love because some thieves in Lansing haven’t the faintest concept of economics. One of my competitors wondered aloud how insane that kind of tax was. I agreed.

Read the rest at the link above.

Never, or the end of my term, whichever comes first

LSJ 6-Dec-2007
Gov. says she won’t raise taxes ever again

Granholm instead will look to cuts, reforms for future

Kathy Barks Hoffman
Associated Press

Gov. Jennifer Granholm, stung by outrage from the business community over a now-repealed tax on services and some discontent with a state income tax increase, says she won’t resort to tax increases to cover any future shortfalls.

“The most important thing I learned is I’m not ever going to raise taxes again. It’s too hard. It’s too impossible,” Granholm said.

“Especially in light of our economy and what we’ve been through, I just don’t think that there’s anybody who’s interested in proceeding down that path again. And I’m first at the head of that line,” she added.

The Granholm administration still is asking for fee increases to help fund the state departments of Natural Resources and Environmental Quality. Lawmakers have agreed to take up the proposed raises in hunting and fishing license fees and DEQ permitting fees next month.

But the Democratic governor made it clear she’ll be looking at other ways to deal with the budget during her remaining three years in office.

“It has to be cuts and reforms. And there’s got to be some creative partnering with the private sector on some stuff, too,” she said.

Granholm pushed a general tax increase this year because she said the state no longer could rely on one-time fixes if it wanted to have enough money to educate its citizens and provide health care for children and the elderly.

In proposing her plan, the governor followed the advice of her bipartisan Emergency Financial Advisory Panel, which called for a mix of tax increases, spending cuts and government restructuring to balance the budget.

Granholm said the budget structure now is on much more stable footing, although she regrets that infighting over a compromise triggered a government shutdown and budget deadline extensions before the work was done.

“[T]oo impossible” is a very unique statement.

She’s not not going to raise taxes because it’s a seriously bad idea, she’s not going to do it because it’s too hard.

Leadership, Jen, it’s what your husband consults about. Have you read his book?

Neither have I.

Is it possible for this woman to feel embarrassment?

Jennifer Granholm, that is. She can’t do her job, so at the urging of others she hires someone else to do the most important part of it – at a six figure salary. He’d better be excellently qualified, don’t you think?

Since excellent qualifications are not head smackingly obvious in this case, I’m guessing she neglected to consult her Chief Communications Officer. Maybe that’s her next hire.

Think about how you might have handled this had it been your decision. Here are some relevant parameters:

You are Michigan’s Governor. You are in your second term. Michigan’s economic performance, by any measure, is abysmal. Blaming George Bush has become problematic since the rest of the country is enjoying a sustained multi-year economic boom.

Michigan’s 2008 budget process is continually deadlocked in the legislature on the issue of raising taxes vs. cutting spending. There is a looming one-point-eight billion dollar shortfall primarily due to your proposed eight-percent increase in spending. You have described this increase as a “cut.”

A series of deadlocks and inept brinkmanship caused by both legislative chambers results in tax laws that become objects of national derision. The surreal ineptness of the process, much less the outcome, damages the State’s credibility and frightens small businesses. In the end, however, you have presided over a one-point-five billion dollar tax increase.

In the past year, you have been urged by some of Michigan’s most powerful CEO’s, many female, to appoint a Chief Operating Officer who could make the timely management decisions wherein you continually fail – someone who could streamline state government by applying sound business practices.

Should you follow such an embarrassing course, it’s obvious that a key element would be an appointment reassuring to businesspeople.

You are prepared to formally acknowledge your ineptitude. You decide to hire someone else to do the most critical part of your job. Would you:

A- Hire someone with free market credentials known to be sympathetic toward business, keenly aware of the effects of tax policy and having a record of job creation.

B- Hire a leading tax-exempt sector academic whose credentials are heavily weighted toward diversity training – a former fundraiser for Detroit public television, a former head of parks and rec for Mayor Coleman Young and an ordained minister with a reputation as a “peacemaker.”

I know what I would do, but let’s get another viewpoint. The Detroit Free press has this “conversation starter:”

Lansing gets a peacemaker

Dan Krichbaum is a good guy with a well-deserved reputation as a bridge-builder. Still, he was a surprise pick to be Gov. Jennifer Granholm’s new chief operating officer. The business community had been hoping for a bare-knuckles type to force some order on the chaos in Lansing, so evident this week in the failure to strike a deal to replace the reviled new services tax. Krichbaum is a Methodist minister with a long background in nonprofit and human relations agencies, most recently the Michigan Roundtable for Diversity and Inclusion. His resume, unfortunately, does not include either lion tamer or reform school headmaster, both of which might be helpful in dealing with legislators and lobbyists. But Krichbaum certainly has been a solid administrator — and a determined peacemaker.

By all accounts, then, Krichbaum is a conciliatory individual. If, as Governor, you think that conciliation and bridge building is the top priority, Krichbaum is a perfect choice. If making peace between the Democrats and Republicans in our legislative chambers is the major issue facing Michigan, he’s your guy. To be sure, there is a diversity issue in the legislature. However, it’s more about diversity of thought rather than diverse ethnicity. Unfortunately, as CEO of the tax-exempt Michigan Roundtable for Diversity & Inclusion, Mr. Krichbaum is without credentials regarding the former.