Michigan Cities and Schools Beware — Don’t get Schimmeled!

schimmel:  v.  to commit graft by taking advantage of a flaw in governance, specifically through illegal unfunded mandates.

Unfunded manadates, the scourge of Michigan cities and schools for over three decades. The Legislative Commission on Statutory Mandates was empowered by Michigan lawmakers in 2007 to investigate this widespread unconstitutional practice. The Headlee Amendment  is unambiguous as to the illegal nature of the State enacting laws that place the funding burden on local units of government and school districts. 

This committee produced a scathing report that spanked Michigan lawmakers for blatant and repeated violations of the constitution — in 2009 alone they legislated over $2.2 billion in unfunded mandates. The blue ribbon panel was comprised of five respected experts, included among them was Lou Schimmel, of Municipal Financial Consultants, Inc. The group made very specific recommendations on how the state can avoid any future violations of Headlee. The panel advised creating a legislative oversight “special master” to enforce the provisions of the amendment and thereby protecting our cities and schools from unfunded mandates. 

The conclusion was clear:  unfunded mandates were a major cause of fiscal stress on local units of government in the State of Michigan. 

Fast forward to early 2011 when Public Act-4, The Emergency Manager Bill, was signed into law by Michigan’s Gov. Rick Snyder — that’s when a joke of sorts started making the rounds. At that time it became widely known that the training program for Emergency Managers (EMs) was a short 12 hour course, a day and a half, with lunch, that cost only $175.00. The law requires an EM to possess a paltry five years of unspecified “business” experience to run a city or school district and earn a generous salary of up to $250,000 plus benies. (This begs the question: Does that mean the guy with all the facial piercings at the Taco Bell drive-up qualifies? He’s been there quite a while.)  But, that’s not the “joke”.  No, it was what everyone said upon learning those facts: “I want that job!”  Who can blame them, it does sound like a pretty sweet gig.

What makes that funny is the ethical incongruity it presents. It’s a given that people of conscience and principle would never actually want to be a dictator.  Or would they?

Enter Lou Schimmel.

At about the same time that Schimmel was decrying the horrors of those unconstitutional unfunded mandates, he also became the Director of Municipal Finance at The Mackinac Center for Public Policy. While in that position he conducted a fiscal analysis of the City of Pontiac in which he advocated for the privatization of much of their services as a solution to their financial woes, much of which were directly caused by the burden of unfunded mandates. Then in early 2011, through his position at the Mackinac Center, Schimmel started lobbying newly inaugurated Governor Synder for strengthening the powers of the old Emergency Financial Managers found under Public Act 72 of 1990. Schimmel called for a “far more powerful”  EM — he wanted to see local dictators in Michigan cities, especially Pontiac. 

Nine months later, Lou Schimmel was coronated as the all-powerful dictator of the City of Pontiac, with a salary of $150,000, plus benefits and full staff — all paid for through an unfunded mandate. Public Act-4 is very specific on its demand that all costs are to be the burden of the unit of government being seized — the law unabashedly violates Michigan’s constitution. Michigan’s legislature has become so cavalier about its addiction to unfunded mandates that they actually put it in writing this time. Most of these mandates are passive, in that the laws demand compliance without specifying the source of funding, leaving the cost burden on cities and schools who try to squeeze it out of their shrinking budgets, while ballooning their deficits. 

Emergency Manager salaries currently range between $132,000 and $225,000. The typical defense for the high salary, compared to that of the elected officials they replace, is the demanding nature of the job. In fact, some of these EMs have cried foul about public criticism of their compensation claiming they are taking a pay cut because they could earn much more in the private sector. They paint themselves as making a great personal sacrifice to do their civic duty by “helping” these struggling municipalities. 

Okay then, how would an EM justify their compensation if assigned to a similarly struggling, yet much smaller municipality or school district?

Conservatively, we can estimate that an entire Emergency Manager set-up, including salaries, benefits and expense accounts for the dictator and their entourage comes in at $500,000 per year.  The whole package for half a million bucks a year.  Now let’s overlay that expense on the deficits of the 48 school districts that are currently deemed in fiscal distress — all of them nearly ripe for an EM assignment. Of those schools, 25 have deficits under $1M total, with 7 of the districts having an entire operating budget of under $2M.  How would these districts bear the added burden of the unfunded mandate of a dictator and staff?   Would the EM be willing to make a significant personal sacrifice for the sake of civic duty and serve at a reduced rate?

Fat chance of that.  And this is why tiny Galien School District, in Berrien County, with annual revenues at $1.35M and a deficit of $500,000 (that’s a deficit ratio of %45 — the second worst in Michigan) will never see an Emergency Manager charging in mounted on their white steed making the personal sacrifice to save their school.

Emergency Managers — it’s time you admit you took the job because it’s good to be king, and to enjoy all the king’s spoils.

And Pontiac Michigan….considered yourself Schimmeled.

Amy Kerr Hardin

 

 

 

 

  

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One Response to Michigan Cities and Schools Beware — Don’t get Schimmeled!

  1. I live in Garden City and would like to know what schools offer that program. I would like to be an ultrasound technician.

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