IRS Complaint Filed Against Michigan GOP Sham “Social Welfare” Group

“The disastrous Citizens United decision opened up the floodgates for dark money groups to spend on politics. But there are still some limits to the amount of spending and secrecy these groups are permitted—and too many brazenly ignore these modest limits.” — Noah Bookbinder, Executive Director of Citizens for Responsibility and Ethics in Washington

Sterling 2

Photo source: Sterling Corporation website

A prominent Michigan Republican “social welfare” group is among ten organizations targeted for legal action over engaging in political activities not reported to the IRS. The watchdog group Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint against Michigan Citizens for Fiscal Responsibility (MCFR), a 501(c)4 spinoff of the Sterling Corporation, for failure to disclose $290,000 in political spending in the 2014 election cycle.

Social welfare groups which file under 501(c)4 status are prohibited from engaging in significant political spending, and what little direct or indirect spending they do make must be reported on an IRS Schedule C. The CREW complaint filed with the Commissioner of the IRS alleges that Steve Linder, president of MCFR, filed a false report omitting significant contributions to two political groups.

The Michigan-based Super PAC, Hardworking Americans Committee, spent just shy of a million dollars in 2014 trying to influence Michigan House and Senate races. Their Federal Elections Commission report for that year indicated the receipt of three contributions from MCFR totaling $155,000.

Plus, the Republican State Leadership Fund, a self-described “caucus of Republican state leaders… whose mission is to elect down-ballot, state-level Republican officeholders” reported to the IRS they received MCFR contributions to the tune of $135,000 in 2014.

Yet, the tax report for that year filed by MCFR, and signed by Linder, indicated there were no “direct or indirect political campaign activities on behalf of or in opposition to candidates for public office.” The CREW complaint asserts that Linder is an experienced political fundraiser who has previously demonstrated a detailed knowledge of applicable tax law, and therefore must have been acting willfully when omitting the expenditures.

The name Michigan Citizens for Fiscal Responsibility may sound familiar to some readers. The group is the spawn of the Sterling Corporation — a GOP mothership with ties to multiple political organizations and operatives. The Senate Majority 2014 PAC, the West Michigan Preservation Fund, and the Moving Michigan Forward Fund II, all shared an address with Sterling in the previous election cycle and had similar contribution profiles — all giving to the Hardworking Americans Committee.

Linder is the president of the Sterling Corporation, working alongside political operative and senior counsel, Bob LaBrant. The two are up to their chins in Michigan’s dark money machine — and they’re mighty proud of it!

LaBrant recently penned a braggadocious memoir titled PAC Man, a compendium of his shrewd use of Super PACs to ensure GOP dominance in Lansing. There’s a Facebook post from several days ago where the Sterling Corporation promoted an article about LaBrant’s prowess, then became the sole party to “like” the post, and followed-up with an excerpt quote describing how LaBrant gamed the system. (And yes, they “liked” their comment too.)

Sterling FB post

Back in 2012, another Sterling generated PAC, Citizens for Fiscal Responsibility, spent thousands attempting to invalidate petition signatures collected by Stand Up for Democracy — the group behind the successful referendum to repeal Michigan’s emergency manager law. Although the PAC failed in its mission to keep the question off the ballot, Michigan lawmakers, with the blessing of Gov. Snyder, re-enacted the law, claiming the electorate didn’t fully understand what they had done.

The IRS complaint filed against Linder demands a full investigation, and if found guilty of a potential felony, the imposition of the full penalty of the law — steep fines, including significant incarceration should apply. Noah Bookbinder, of CREW, cautions:

“These groups have demonstrated a clear disregard for the law. If the government does not act, it will send a signal to dark money groups that no laws or limits apply to them and it is open season for secret money in our elections.”

Even with the possibility of Linder being fitted for an orange jumpsuit, the GOP department of skullduggery will remain alive and well in Michigan for the 2016 election cycle.

DSCN0444Amy Kerr Hardin

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Michigan: After 5 Years of GOP Tyranny

A Calculated Attack in Progress

“It was obvious that House Republicans brought this bill up this week to undermine the petitions that are being gathered across the State of Michigan on a number of initiatives. They’re undermining the rights of those citizens.” — Michigan House Democratic Floor Leader, Rep. Sam Singh, speaking last month against yet another GOP attack on citizen-initiated petitions.

MCFN graphic

Graphic: Michigan Campaign Finance Network

The people’s right to petition in Michigan is considered so sacrosanct that it’s been codified into the state’s constitution. Yet, unintended loopholes in that broadly worded document are allowing opportunistic lawmakers numerous means to manipulate, if not entirely scuttle the basic rights of their citizenry.  And under recent Republican dominance, surreptitious obstructionism has now become the norm. GOP lawmakers in the Great Lakes State routinely go the extra mile just to punish voting constituents for attempting to exercise their core democratic rights at the ballot box.

Michigan’s GOP Rap Sheet

Just during the Snyder years, GOP offenses include (but are not limited to):

  • When voters opted to oust Republican Representative Paul Scott in 2011 over his anti-union, anti-teacher leadership of the House Education Committee, the legislature retaliated against constituents by rigging recall rules to make the process nearly impossible in the future.
  • Within months, these same lawmakers reinstated the emergency manager law just days after its repeal by popular vote — a law which in itself is a grave affront to democracy.
  • Michigan’s minimum wage petition initiative was short-circuited by GOP machinations, never reaching the voters for approval.
  • There was an endless barrage of legislative skullduggery employed to bypass popular support for the petition to protect Michigan’s threatened wolf population.
  • Women in particular remember when a largely male cadre of lawmakers fast-tracked the “rape insurance” law, requiring women to purchase a special policy to cover abortion, even in the case of rape — a feat accomplished through another abuse of the petition process which prevented voters from having their say.
  • Most recently, by changing the signature-gathering rules mid-stream, they circumvented ongoing petition drives, including one to put on the ballot the question of legalizing pot.

Petitioning is Hard Work

Petitioning is already an arduous undertaking, fraught with legal challenges and legislative chicanery. Yet GOP lawmakers remain hell-bent on rendering the endeavour humanly impossible. I was recently reminded of how very difficult the process can be, even in its simplest form, when asked to assist a group in a neighboring municipality with a local ballot initiative for their city. Educating them on the process brought back stressful memories of my participation in the 2011-12 petition drive and referendum election to repeal Snyder’s first version of the emergency manager law — a citizen effort rendered moot by an unconstitutional GOP override.

And now we have Senate Bill 776, enacted last month as Public Act 142, designed to prohibitively limit the window for gathering signatures to 180 days — a standard which had been informally followed in the past, but was not codified into law, nor cited in the state’s constitution. MI Legalize, the group collecting signatures on the marijuana question, asked the Board of State Canvassers to approve an expedited computerized process for validating otherwise “stale-dated” signatures, older than 180 days — which had been the long-standing practice until Republicans stepped-in. Yes, GOP lawmakers sprung into action to put the kibosh on the request, thus killing the citizen-initiated effort altogether, or not… MI Legalize has since filed suit in the Michigan Court of Claims, and requested a fast-track decision, hoping to recapture this election cycle. It’s worth noting that the courts, although at times political animals themselves, tend to take a stronger stand on the separation and balance of powers than we find in their legislative and executive counterparts, even here in Michigan.

Hard Work and Tons of Money

Executing a successful statewide ballot drive requires a serious bankroll — with hiring lawyers, printing petitions, training signature-gathers (paid or not), contracting support firms, all in addition to the day-to-day costs of running the campaign and building a coalition. This grassroots apparatus demands a whole lotta jack.  It’s not a casual hobby for the armchair activist.

The Michigan Campaign Finance Network reports that, over the past year and a half, 11 ballot question committees have raised $6.4 million, spending $3.5 million thus far, and of that amount, $2.9 million on the petitioning process alone. Most of the money went to professional signature-gathering companies, with nearly half of that going to one firm, Silver Bullet, in an effort to repeal the state’s prevailing wage law. MCFN prognosticates that none of the 11 questions will be on the ballot this November — the signature requirement bar is set too high, and the time-frame is too narrow.

Ballot proposals in Michigan consist of referendums, initiated laws, and constitutional amendments, with increasingly higher signature requirements in that order — all based on a percentage of the number of ballots cast in the most recent gubernatorial election.

It’s clearly a topic on the minds of lawmakers. Other pending legislative items that could impact ballot proposals in the state include:

Sen. Curtis Hertel Jr. (D-23) introduced legislation late last fall designed to regulate and provide penalties for false statements made by petition gatherers on ballot questions and recall attempts. The bill would make it a misdemeanor for someone who “intentionally makes a false statement or misrepresentation concerning the contents” of a petition.

Late last year, Rep. Jim Townsend (D-26) offered a House Joint Resolution, with strong partisan support, to amend Article II, Sec. 9 of the Michigan Constitution to close what’s known as the appropriations loophole — a provision which renders laws referendum-proof if a spending package is attached. GOP lawmakers have a storied history of abusing this clause when they know a majority of voters disagree with a piece of their legislation.

Both of these proposals predictably remain in committee.

DSCN0444Amy Kerr Hardin

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Our First Amendment Rights Are Under Seige on Campus and Beyond

“Truth comes from the competition of ideas. Critical thinking skills involve listening to both sides.” — Robert Rosenkranz, chairman of Intelligence Squared, speaking at a debate over the question of free speech on campus.

Troubles Come to a Boiling Point on Campus:

The First Amendment is under attack, and not just due to unconstitutional school policies, of which there are plenty. No, it’s all too frequently the student body itself demanding censorship of free speech. Collective outrage over opposing opinions has become epidemic in the halls and on the quads of American academia. It’s a hot topic, earning front page billing in two major publications just this week.

frre speech in media

The Newsweek piece opens without any preliminary niceties. Presenting their premise, author Nina Burleigh launches with the following:

“Graduates of the Class of 2016 are leaving behind campuses that have become petri dishes of extreme political correctness and heading out into a world without trigger warnings, safe spaces and free speech zones, with no rules forbidding offensive verbal conduct or microaggressions, and where the names of cruel, rapacious capitalists are embossed in brass and granite on buildings across the land. Baby seals during the Canadian hunting season may have a better chance of survival.”

By way of example, Burleigh reminds her readers that it wasn’t until last year that the 20-year-running acclaimed play, The Vagina Monologues, was censored. In 2o15, Mount Holyoke College cancelled its performance explaining that “the show offers an extremely narrow perspective on what it means to be a woman.” Bottomline — it was considered insensitive to transgender women.

If readers agree, I suggest that, as a purely intellectual exercise, they consider for a moment if the production was instead about the angst and anguish of women who lacked that particular anatomical feature at birth — should the college axe that performance too? Would they consider that non-inclusive of women with vaginas?

Last March we reported on some bipartisan legislation proposed in the Michigan Senate which would offer specific protections from censorship for student journalists at public institutions. That bill remains lodged in committee, but lawmakers in Arizona have taken the fight to the next level by successfully enacting a law with much broader protections of free speech in public schools. The legislation prevents school administrators from setting up “free speech zones” — an egregious rule designed to limit First Amendment protections at colleges and universities. The policy shunts students and protestors engaged in acts of expression to specific areas, often on the campus boondocks, where few will hear their message. They additionally gave the thumbs-up to a new law which would impose criminal penalties for protestors who physically interfere with the right of others to assemble. The latter legislation seems to have been inspired by protests which blocked individuals from participating in Trump rallies. (More on the irony of Trump below.)

Greg Lukianoff, a self-proclaimed liberal and atheist, is the president of the Foundation for Individual Rights in Education — a nonpartisan, nonprofit organization championing free speech in higher education. In an Intelligence Squared Debate last year, he described the reality on campuses as biased toward liberal free speech, and stifling of intellectual diversity, especially of conservative voices. From his opening statement:

“If you’re going to be censored on the modern college campus for your opinion, chances are you are going to be censored by the left… Take any hot topic in America today and I can point you to examples of students and faculty members getting in trouble for being on the conservative side of the issue.”

Lukianoff went on to specifically cite a number of such examples, including an incident at Dartmouth where a Pro-Choice student, with a “Coexist” bumper sticker, felt so offended by a Pro-Life campus display of tiny American flags, that he felt compelled to run it over with his car.

It’s No Laughing Matter:

Standup comedians think twice about booking college gigs anymore because they’re finding student audiences are increasingly unable to process the very nature of humor and its role to push the envelope in our freedom-loving culture. And some schools have taken their new humorless environment to the point of censorship by decree, requiring comedians to sign contracts agreeing to avoid offensive language and sensitive topics. The kangaroo court of social media is in part driving the self-censorship crusade, as students and faculty worry about backlash on Twitter and Facebook.

A documentary on the trend to stifle comedy, Can We Take a Joke?, is due out this summer.

“It’s the duty of a comedian to find out where the line is drawn and deliberately cross over it.” — Gilbert Godfrey in Can We Take a Joke?

View the trailer below.

Troubles off Campus Abound:

In a larger sense, free speech is in the national crosshairs in the realm of the tender sensibilities of presidential politics. Donald Trump, the king of unmitigated hubris, has vowed, if elected, to curtail the First Amendment rights of the media as they continue to report his all too frequent dumbo eruptions — with the irony being that it’s his own free speech that he should be self-policing. The presumptive GOP nominee simply does not enjoy the right not to be offended, particularly by the repetition of his own hate-filled speech. Yet, if the worst were to happen in November, this thin-skinned manbaby, along with his low-information sycophants, could further imperil First Amendment protections both on and off campus. Yes, with the authority of the oval office, he would have much more than the abusive power of civil litigation at his disposal.

It’s not as if it hasn’t happened in American history. Gene Policinski of the First Amendment Center recently wrote a cautionary op-ed reminding us that back in 1909 none other than sitting president Theodore Roosevelt ordered government attorneys to sue newspaper publisher Joseph Pulitzer over his coverage questioning the purchase of properties related to the construction of the Panama Canal. Policinski expressed concern that the landmark 1964 Supreme Court ruling, New York Times Company v. Sullivan, may be in peril. The unanimous decision found that public officials, (later extended to include public figures), bore the burden of proof that a journalist intentionally and recklessly disregarded the truth. Lest we forget, a President Trump would likely be naming the next Supreme Court Justice, thereby determining the balance of the high court.

Now more than ever, our nation needs young adults familiar with the rights and responsibilities that accompany the First Amendment.

DSCN0444Amy Kerr Hardin

Post Script: A recent post in Democracy Tree drew some word-policing from progressive readers. The objection was to the term “bailout” in reference to the legislative appropriation for Detroit Public Schools. It appears that in some circles the term has taken-on a meaning that is wholly derogatory. bailout def.However, a simple consultation with a reputable dictionary finds no nefarious meaning, nor does it imply ineptitude, blame, or any characteristic at all, good or bad. Modern dictionaries are careful to point out when a certain word has acquired a defamatory or contemptuous tone, or evolved in meaning. In the case of the term “bailout”, the meaning has not changed, at all. While the financial distress at DPS is very real, and clearly created in large part due to underfunding by the state, it is a situation the “bailout” won’t fully remedy — now that would be a solid reason to avoid the term in question. This seems to be a case where those who can’t change the ugly political reality have opted to get precious about words. Semantics, when all else fails.



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Michigan’s Smaller School Districts Get Screwed, as DPS is Poised for a Bailout

Updated 6-26-16

“Three years ago, the state of Michigan made the decision to dissolve Inkster Public Schools against the will of the people,… it is past time for the state to step up and remove the burden of debt from the residents of Inkster. There has been enough suffering as a result of decisions made by the state. It’s time to allow Inkster to move forward without being forced to pay for a school district that no longer exists.” — Sen. David Knezek 


Sen. David Knezek, Photo: SenateDems

The rest of Michigan looks on with skepticism as Detroit Public Schools are headed toward an inevitable legislative bailout, while other school districts toil under the Snyder administration’s starvation-level budgets. Year after year, the gap between richer and poorer, (the latter often being smaller communities), widens into an unbridgeable chasm.

Detroit Schools will be at the top of the agenda at this week’s Detroit Regional Policy Conference on Mackinac Island where lawmakers and business leaders are typically all about the business of exchanging money for policy. But this year, House Leader Kevin Cotter is keeping his kids in class down in Lansing during their regular legislative session — preventing them from schmoozing and boozing on the island. Between trays of drinks and canapés, Detroit business leaders had hoped to put the squeeze on reluctant House members to approve a more generous DPS bailout package.

One way or another though, Detroit will get some form of support, albeit insufficient and negligently late. But, what of those other struggling districts — those not too large to fail?

Inkster and Buena Vista come to mind.

Public Acts 96 and 97 of 2013 were the two hastily enacted laws that provided means for the state to dissolve small school districts that are fiscally distressed, yet not big enough to support the cost of the emergency manager apparatus or to warrant a bailout. The first strips a district of local control, and the second sorts through the details and financials. The laws provide an appropriation of $2.2 million, over four years, for the purpose of grants to the receiving school districts for transition and enrollment costs as they take on students from the dissolved schools. Additionally, the receiving districts earn a 10 percent bonus over the per pupil foundation grant of transferred students for four fiscal years.

To date, only two school districts have been forcibly dissolved — Buena Vista and Inkster. In truth, the above laws were maliciously written and enacted specifically with them in mind. It was a nadir for the previous legislature — a time when the chair of the House Education Committee, Rep. Lisa Posthumus Lyons, referred to public school teachers as swine in her argument supporting the dissolution of Inkster and Buena Vista.

After a careful evaluation of the fiscal fallout from the dissolution policy, the Citizens Research Council of Michigan published a detailed analysis titled School District Dissolutions: Another Approach to Address Local School District Fiscal DistressIn the report, the CRC outlined several concerns about the wisdom of the law, mostly stemming from slight-of-hand tax policies that simply shift burdens and ignore underlying systemic problems. They concluded that the law is not good public policy and should be revisited, referring to its hasty enactment as an “ad hoc reaction” which “illustrates that state government lacks a uniform model that will apply when school districts fail”.

The policy not only transferred students against their will to surrounding districts, it also conveyed the defunct district’s assets to the receiving districts — creating a costly burden for the receiving schools in the form of the maintenance of crumbling buildings. The 10 percent per student bonus offset some of those expenses, which in the case of Buena Vista totalled an additional $2,019,000, and Inkster students were worth an extra $8,138,000 over the course of four years. Yet, the legislature was forced to shell-out additional millions to the receiving districts just to keep them solvent.

The state also became responsible for the dissolved district’s portion of pension funding through the Michigan Public School Employee Retirement System. The two defunct districts’ portions have since reverted to the state, which the House Fiscal Agency estimated to be $4.1 million in additional costs.

The bulk of the debt load of the dissolved districts remained where it was — with the taxpayers of that school-less community.

All Prop A taxes collected in the defunct districts are allocated to paying-down the residual debt, and thus, do not contribute to the School Aid Fund. Any additional millage monies are rerouted to the receiving district, via their local Intermediate School District, to be used at their discretion.

In an effort to ease the local tax burden, two lawmakers serving the Inkster area, Sen. David Knezek (D-5) and Rep. Julie Plawecki (D-11), have introduced legislation which would allocate state funds to payoff the Inkster Public School debt of $37 million. Plawecki explained:

“The four school districts surrounding Inkster have welcomed their students with open arms, but the dissolved Inkster Public Schools still has a substantial debt, which places an onerous burden on the city and its residents. This is similar to the situation that Detroit Public Schools are facing, as they are dealing with a debt due to several decisions, many of which were made by the state. And just as the state is helping DPS with its debt obligations, we believe the same should happen with the community of Inkster.”

(Update: Rep. Plawecki passed away suddenly while vacationing over the legislative break with her family. She will be missed by all.)

House Bill 5708 and Senate Bill 1006 have both been referred to their respective Appropriations Committees. It is doubtful they will emerge to see the light of day.

Perhaps, a pricey tray of champaign and canapés, served with a generous promise of campaign dollars, would do the trick.

DSCN0444Amy Kerr Hardin



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Smackdown of a Michigan Lawmaker and His Mean Spirited Potty Bill

Sen. Tom Casperson (R-38), one of Michigan’s worst lawmakers, who’s currently running in a crowded field to replace U.S. Congressman Dan Benishek in Michigan’s 1st District, today offered his long-expected politically pandering “bathroom bill.”


The proposal is a tortured exercise in passive-aggressive doublespeak:

First, the legislation is couched in falsely inclusive fuzzy language — granting the student a legal right to declare their gender preference, with parental consent of course, and additionally requiring the school district to make a “reasonable accommodation” which “does not impose an undue hardship”…  on the school district, not the student. Translation: the school doesn’t have to go out of their way to accommodate the needs of transgender students, at all, ever. But, transgender students, it is suggested, should declare themselves to the district.

Second, the proposal explicitly forbids transgender students from accessing facilities that align with their declared gender. Period.

As far as Casperson is concerned, transgender students must learn how to exercise tremendous control over basic bodily functions — Title IX protections be damned.

It’s not my habit to post press releases, especially verbatim, but today I found among the clutter in my inbox one of interest — not just of topic, but also well-written. Congressman Dan Kildee of Michigan’s 5th District has been following the situation and had this to say earlier today about his potential colleague as the story broke:

“Of all Michigan’s pressing problems – fixing our crumbling roads, improving our schools, ensuring access to safe drinking water – Senator Tom Casperson and Republicans in Lansing have apparently decided the most urgent need facing our state is to police bathrooms in search of a problem that does not exist. Their priorities are completely wrong and in disagreement with the majority of Michiganders.

Their ‘bathroom bill’, introduced today and modeled off of other states like North Carolina, is discriminatory and bigoted. It seeks to divide Michiganders and deny people access to restrooms when they simply want privacy, safety and respect when using such accommodations — just like everyone else.

Like North Carolina, Senator Casperson’s bill could cost Michigan thousands of jobs and millions in economic investment. In North Carolina, more than $500 million in investments is in jeopardy after their state passed similar legislation. Over 200 private businesses that create jobs and revenue in the state have condemned North Carolina’s anti-LGBT law, with many pulling out new investments and jobs. We cannot let this happen in Michigan.

Michigan Republicans like Senator Casperson should spend less time bullying Michiganders and more time on the actual problems facing our state. This hateful bill flies in the face of Michigan values like dignity, equality and respect, and it should be promptly shelved and defeated.”

As for Casperson, this isn’t his first self-serving legislative maneuver, and it likely won’t be his last, but it remains among his worst.

DSCN0444Amy Kerr Hardin

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It’s True! — There Really is Bipartisan Support to Ban Conversion Therapy in Michigan

One Michigan lawmaker has been attempting to make “conversion therapy” illegal in the state for a number of years, but he met with little success as a Democrat in a Republican-dominated legislature — now, that may all be about to change.

In his first attempt, Rep. Adam Zemke (D-55) introduced HB 5703 about two years ago to prohibit the use of conversion therapy — a reprehensible and professionally discredited practice which attempts to change gender identity or sexual orientation through hurtful mind games. Under the cloak of faux medicine, quacks and charlatans target vulnerable teens and young adults for psychological abuse, often with the trust and money of their families. The Human Rights Campaign asserts that for this young group conversion therapy can lead to “depression, anxiety, drug use, homelessness, and suicide.”

Rep. Zemke’s 2014 legislation died in the Health Policy Committee with no further action.

Now, with some bipartisan support, a new legislative package will hopefully gain some traction in the Michigan House in 2016. Rep. Mike Calton (R-87) is sponsoring one bill, and co-sponsoring its companion piece, with the goal of eliminating the disreputable practice of conversion therapy on minors and of making violations subject to professional disciplinary action.

A number of other states have already passed similar laws — all which have withstood judicial scrutiny, including the U.S. Supreme Court twice allowing lower court rulings to stand which struck down challenges to these laws. And last year, a New Jersey court found a conversion therapy provider liable for consumer fraud.

In that light, several months ago, the Human Rights Campaign, the National Center for Lesbian Rights, and the Southern Poverty Law Center filed a consumer fraud complaint against People Can Change, a group promoting conversion therapy. Religious organizations are behind the push to intimidate young LGBT individuals, with conversion therapy being their license to bully — but, their snake oil approach is certainly not proven to be an efficacious “treatment.” Litigation is pending.

Groups opposing conversion therapy are too numerous to fully list here, but they include the American Academy of Child Adolescent Psychiatry, American Academy of Pediatrics, American Association for Marriage and Family, American College of Physicians, American Counseling Association, American Medical Association, American Psychoanalytic Association, American Psychological Association…the list goes on and on.

Both new bills have been referred to the Regulatory Reform Committee. Neither Calton, nor Zemke, or any other sponsor is a member of that committee. Let’s hope the issue gets its due respect.

The tide of human rights is rising, and this wave appears to be of the same strong current that brought our nation marriage equality just a few short months ago.

DSCN0444Amy Kerr Hardin


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Michigan’s Myopic GOP Lawmakers Teeter on the Fiscal Cliff

Updated 5-19-16

GOP Leaders Blind to the Longterm Corrosive Effects of Corporate Tax Breaks:

“Temporary fluctuations in statewide tax collections are normal, and the House Republicans have spent six years budgeting responsibly to prepare for situations just like this.” — Republican House Speaker Kevin Cotter

Mr. Magoo

Michigan lawmakers are about as myopic as Mr. Magoo when it comes to fiscal policy, and House Speaker Kevin Cotter’s tone-deaf hubris last week simply iced the cake. Just as both the Senate and House Fiscal Agencies adjusted projected revenues to be considerably lower than expected from estimates voiced at the January consensus conference, Cotter used the occasion to boast about GOP tax and spending policies:

“We have reduced unnecessary spending, saved money and made strong investments in key priorities like schools, roads and public safety.  We are prepared to handle this with minimal impact on state programs and services.”

Yet, the House Fiscal Agency specifically cited sluggish corporate tax revenues as a primary cause for the “temporary fluctuation” in revenues. Gov. Snyder’s 2011 corporate tax cuts were in large part paid for on the backs of schools, low-income workers, and retirees. And now we learn that Lansing may again nick per pupil spending to balance its books. The Detroit Free Press reports that State Budget Director John Roberts said that projections for the School Aid Fund could be reduced.

With the Flint water fiasco, the looming financial collapse of Detroit Public Schools, and a roads spending plan that is charitably described as laughable, Speaker Cotter is clearly blowing nothing but sunshine in lieu of making an honest assessment of Michigan’s eminent fiscal death spiral.

To be sure, the genesis of the crisis predates Gov. Snyder’s reckless 2011 corporate tax cuts — a fact that makes his signature policy all the more foolhardy. He cut taxes at precisely the moment he should have been considering asking corporations to pony-up more to support the state, and the infrastructure they burden so heavily.

The Citizens Research Council of Michigan released a tax revenue analysis this month that paints a picture of continued decline in the state’s ability to sustain itself under current tax conditions. The longitudinal study documents troubling patterns, both in and out of the control of policy makers.

Michigan has diminished measurably in its economic stature, going from a high revenue state, to among the lowest, over the course of several decades. Being both the leader and lagger in the multi-state rust-belt decline, Michigan’s local units of government continue to collect taxes at antiquated rates levied against shrinking tax bases and dwindling populations, while other states have moved on to grow their economies with robust tax-based revenues.

The CRC report echoes the House Fiscal Agency’s findings, pointing specifically to corporate tax policies as a major contributor:

 “It can also be attributed to policy changes, most notably Michigan’s method of taxing corporate income.” 

Michigan’s tax revenues have slipped below the national average as a portion of per capita income in all categories except property, where they remain about average. In 1983, Michigan ranked 12th in the nation in per capita tax revenues, but by 2013, it slipped to 35th place — collecting just $3,750.40, compared to the national average of $4,598.77 — leaving Michigan at just 82 percent of the national norm.

lost revenues

Source: Michigan Municipal League

Lansing’s Great Tax Heist

Lansing has been robbing Peter to pay Paul to balance the state budget — taking money not just from schools, but from municipalities by denying them their statutory revenue sharing. Last year, the Michigan Municipal League reported that Lansing has diverted billions in revenues since 2003 — taking money away from critical revenue sharing intended for local units of government to bolster other state spending priorities. Referring to the diversion of funds as a “heist”, the author of the report explained:

This data begs the question: did municipalities ignore their duty to manage or did someone else change the rules of the game and then throw a penalty flag at them? I see yellow flags all over the playing field.

The figures, based on Michigan Department of Treasury data, adjusted for inflation, found that an estimated $6.2 billion had been robbed from Michigan cities from 2003-14.

Turning a Blind Eye to Corporate Bullies

Update 5-19-16: House Bill 5578 to eliminate the “dark store” loophole is being considered by the House.

Lawmakers continue to sit on important bipartisan legislation that would protect communities and school districts from predatory private sector bullies. The corporate “dark store” scheme works like this:

First, developers propose construction projects that often include plans for multiple super-sized stores. Part of the pitch to local officials includes the enticement of increased revenues due to the development. Subsequently, the mega-retailers file suit to have their taxes reduced to a level similar to that of abandoned structures in the community. The Michigan Tax Tribunal (MTT) has consistently sided with the retailers, granting the abatements.

Then, when these big box retailers inevitably relocate to newer facilities, they place deed restrictions on the old property thereby preventing competing retailers from operating there — creating a win-win for the seller — no competition, and a ready example of an abandoned structure to bolster their “dark store” argument with the MTT. For the community however, it’s a lose-lose — leaving them suffering from blighted buildings and the loss of tax revenues.

Last fall, a bipartisan group of lawmakers proposed legislation to close the two loopholes. Both HB 4909 and SB 524 remain in committee with no action as yet taken.

It’s high time Republican lawmakers crawl out of their ideological trenches on matters of fiscal policy, and attempt to see past their noses for the sake of Michigan’s future. It is doubtful they will do so anytime soon.

DSCN0444Amy Kerr Hardin

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Public Sector Privatization — A Prescription for Corruption and Chaos

“Many companies win contracts by claiming that they will manage the service in ways that are more “efficient” than the government. Some companies also claim that they can reduce costs to taxpayers. However, in an effort to provide the service with fewer resources while also maximizing profits, companies cut corners, which can have significant and detrimental impacts.” — Cutting Corners Report by In the Public Interest, April 2016

Misguided notions of taxpayer savings and imagined efficiencies, often borne out of a pejorative view of the public sector, continue to lead GOP lawmakers down the failed privatization path. State after state, the contagion of corporate thinking has led to all manner of poor outcomes — and little, if any, in savings.

A number of states stand out as examples of privatization gone completely amok — Michigan being among them.

As the media burns-up with reports on the Flint water crisis, also a brainchild of the corporatist mindset, it’s easy to forget about Gov. Snyder’s other big scandal — the privatization of prison food services. Under the initial contract with Aramark Correctional Services, the crimes and cover-ups are too vast to account fully here in their entirety, although the cliff notes include: maggots and mold in the food, rampant vermin, smuggling of contraband, and various sex acts in the kitchen.

Trinity pic

Photo: Trinity Services Group

Privatization pitfalls continue under the new prison food contractor, Trinity Services Group, who similarly boast a rap sheet that should have been a giant red flag for the Snyder administration.

Once again, food quality and skimping have fomented unrest in Michigan’s correctional facilities. In late March of this year, 1000 of the 1400 inmates at the Kinross Correctional Facility in the Upper Peninsula staged a silent strike, with only a handful of prisoners showing-up for meals.  A week later, inmates at nearby Chippewa Correctional Facility also refused meals served by Trinity. The Trinity contract has also been plagued by employee terminations due to inappropriate behavior, including relations with prisoners.

A recently published University of Michigan study found that privatized prison food services are a recipe for trouble — creating conditions encouraging crime, smuggling, and gang-related activity. Their 83-page report, Food Service Privatization in Michigan’s Prisons: Observations of Corrections Officers, lays the blame squarely on ill-advised privatization schemes:

Contractor employees were largely inexperienced and inadequately trained to work in a prison environment. The authoritative vacuum created by unfit contractor employees was filled by enterprising inmates. Inmates persuaded contractor employees to smuggle in contraband and commit infractions, such as over-familiarity. Contractor employees were manipulated by inmates to form alliances against officers. In some locations gangs gained control the kitchens.

privatizationThe University of Michigan report amounts to a scathing condemnation of prison food privatization, culminating in the question as to whether the entire enterprise is producing savings of any kind — especially after lower quality service has led to increased compensatory costs, in addition to those services that were at the outset simply shunted to other cost centers within the budget, and not factored into the bottom line.

UPDATE: 5-11-16 A Trinity Food Service worker at Ionia Correctional Facility is under state police investigation for possession of heroin and meth. Story HERE.

The early days of the Snyder administration demonstrated a blind zeal for corporatizing the public sector — resulting in policy decisions of which the state is only now examining the full destabilizing effects.

In the Public Interest, a privatization watchdog group, cites another Michigan example where privatization did more harm than good. In their April 2016 report, Cutting Corners, they point to the Muskegon Heights School District’s contract with for-profit charter school corporation, Mosaica Education, as emblematic of tragic outcomes — and much like in Flint, it was the children left to pay the price. Another commonality –both tragedies occurred under the aegis of a state-appointed emergency manager.

Mosaica attempted to carve-out profit by cutting vital services for special needs students. They slashed support in classrooms — violating educational standards with inadequate assistance and training for teachers. Additionally, they refused special needs kids help with language, occupational, and physical therapy. The vendor hired too few teachers, many poorly trained — with 10 percent lacking a teaching certificate altogether. Mosaica also cut costs through skimping on supplies including toilet paper, and by ignoring essential maintenance tasks. The 2012 contract was terminated in early 2014 purportedly because Mosaica claimed they couldn’t turn a profit in Muskegon.

Michigan veterans have also borne the brunt of thoughtless GOP cost-cutting. Under Gov. Snyder’s leadership, the Department of Military and Veterans Affairs was also bitten by the privatization bug when, in 2013, they hired for-profit J2S Group to manage the Grand Rapids Home for Veterans, laying-off trained state employees. A report from the Michigan Office of the Auditor General exposed dangerous cuts in staffing and training, and found that the vendor failed to perform required room checks nearly half of the time. To solve the problem, Lansing has simply thrown more money at the contractor, and now the Detroit Free Press reports that the projected $4 million in annual savings is dissolving rapidly.

In addition to their love affair with corporate strategies, Michigan’s elected leaders are also known for their unwillingness to invest in infrastructure upgrades, leaving roads and public facilities crumbling. The temptation moving forward will be to enter into public private partnerships (P3s) to rebuild public sector assets. However, the P3 road is littered with potential potholes. P3s, which draw on private capital to bankroll infrastructure improvements, are only as good, or bad, as their contract is crafted.  In the Public Interest warns that these arrangements must be carefully written to protect the interests of citizens — including multiple built-in protections with heavy oversight.

Confidence in Lansing’s ability to get anything right at this point, remains rockbottom low.

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Governor Snyder’s Tragically Failed Dashboard

The False Promise of Spreadsheet Public Policy

“The people of Flint got stuck on the losing end of decisions driven by spreadsheets instead of water quality and public health.” — Dennis Schornack, Aide to Gov. Snyder

Republicans just love standardized tests to measure “outcomes” — especially to evaluate the performance of the public sector. Ask any school teacher and you’re bound to get an earful.

Fully enamored of the concept, newly elected Gov. Snyder implemented his Michigan Open Performance Portal, aka dashboard, back in 2011 as a means to measure the progress of his “relentless positive action” found through “best practices” — a misguided calculation intended to culminate in his triumphal presidential aspirations. The governor’s administrative team also touted the online tool as a shining example of governmental transparency — a real-time repository of actionable information.  Yet, time has proven, over and again, that his spreadsheet-based policy plans have failed to demonstrate measurable, or even anecdotal, progress at nearly every turn during his troubled tenure in Lansing.

And now, Michigan finds the governor’s dashboard gone tragically haywire, not just in concept, but in terms of actually measuring anything remotely useful — if it’s even functioning at all. The dashboard’s stated goal was to “provide a starting point for change in communities.” In reality, it reports stale-dated, static data in a number of generalized categories, while too often missing meaningful content where it truly matters. Additionally, it offers some spotty in-depth numbers specific to sub-categories, at times touching-on individual units of government through a variety of links — which may, or may not work.

Here’s the perpetual “page not found” message for the Flint dashboard — a city that was subjected to years of rule by the governor’s hand-picked emergency manager.

MI Dashboard -Flint

City of Flint Dashboard Website — Not Found

The Flint water crisis, arguably the most critical consideration in Michigan, is conspicuously absent from the governor’s statewide dashboard — not found under any of the eight primary categories, including “Health and Wellness”,”Infrastructure”, nor “Public Safety”, or even “Energy and Environment.” Even in the subcategory of “Water”, all we find are metrics for monitoring beaches, aquatic invasive species, and raw sewage discharge. Toxic levels of lead in the drinking water apparently doesn’t merit a mention, footnote, or an obscure link. Nothing.

The links to Michigan’s counties are equally useless. Of the 83 counties in the state, 82 have ratings on health “outcomes” and “factors” based on 2014 data compiled by County Health (Keweenaw County is not ranked.) Genesee, with its county seat of Flint, ranks 81st under both categories, yet the detailed report indicates a zero percentage of problems under “drinking water violations“, employing data from 2012/13.

Snyder’s focus on corporate-model public policy apparently extends only to measuring the bottom line of the balance sheet — health outcomes simply don’t factor into the equation. If meaningful measurements were taken, they are nowhere to be found. A former Snyder advisor, Dennis Schornack, explained how the governor failed the citizens of Flint:

“The people of Flint got stuck on the losing end of decisions driven by spreadsheets instead of water quality and public health.”

The fallout from Snyder’s disastrous policies has become an academic case study at a number of universities. Bridge magazine reports that Wayne State, Grand Valley State, Michigan State, and Harvard have already focused on the details of his failed legacy. As academics write curriculum on Flint, Snyder’s dashboard still remains out-of-order — begging the question: What else don’t we know about the other 82 counties, including unranked Keweenaw, with its pristine shoreline?

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Michigan Legislator Proposes Law to Eliminate Cruel Forms of Punishment in Schools

“Seclusion in schools is a dangerous and unregulated practice that puts children at risk of harm.” — Mark McWilliams, Director of Information, Referral and Education Services at Michigan Protection & Advocacy Service, Inc.

seclusion room

Seclusion Room, photo: MPAS

Many have seen that heart-wrenching video of the terrified 5-year old Georgia school boy enduring a paddling over his misbehavior at the hands of unbending school administrators. Much of the nation was horrified to learn that this kind of physical abuse remains perfectly legal in 19 states, primarily in the “spare the rod” bible belt region. Corporal punishment may shock the delicate sensibilities of the residents of more refined states, but they too would benefit from a closer look at other, also perfectly legal, “enhanced” techniques employed in their school systems — both public and private.

A Michigan public school my children attended during their early years had a small room in the administrator’s office — windowless, containing only a cot. About the size of a small closet, it was reserved for two purposes — a place for sick children to be quarantined prior to parental pick-up, and an isolation holding cell for the naughty. If one can get past the ill-advised practice of exposing truculent children to all manner of contagion, the salient question would be: Is the use of isolation, officially referred to as “seclusion” among academics, an appropriate and effective practice?

More than a mere time-out — a cooling of one’s heels in the hallway, seclusion is a technique of dubious efficacy, which all too frequently targets special needs students, and is employed in lieu of thoughtful and professional intervention and redirection. The civil rights division of the U.S. Department of Education reports that while children with disabilities make up 12 percent of the school population, they comprise 58 percent of those subjected to seclusion, and a whopping 75 percent of those forced to endure physical restraint.

Among its opponents, the practice falls into the same category as physical restraint of children — another misguided technique regularly used with the intent of correcting challenging behavior. However, not only are these practices dehumanizing and cruel, they simply do not produce favorable results.

Acting through executive action earlier this year, President Obama put an end to solitary confinement of juvenile offenders in prison, yet our schools routinely put very young children, guilty of little more than acting their age within their mental capacity, in solitary for a good portion of their school day.

Stop Hurting, an advocacy group working to put an end to restraint and seclusion, describes the consequences of these barbaric practices:

There is no evidence of the therapeutic or educational value of restraint and seclusion. They are practices that are neither ethical nor beneficial, and often cause a spiraling effect in which additional unwanted behaviors may arise. Further, there is an existing and growing body of evidence in support of positive alternatives in addressing challenging behaviors.

Michigan lawmaker Rep. Frank Liberati (D-13) is championing a package of ten bills that would restrict the use of “archaic methods”, such as restraint and seclusion in the state’s public schools. His son has Fragile X Syndrome — an inherited condition among boys, which is a disorder often accompanied by autism and similarly marked by a spectrum of intellectual disabilities and a number of behavioral problems — the kind of which could prompt restraint and seclusion measures in the classroom.

House Bills 5409 through 5418 layout a detailed plan for eliminating cruel forms of classroom punishment, providing training for school personnel on effective techniques, plus requirements for a documentation and reporting process. The House Fiscal Agency reports that this legislative package is nearly identical to the recommendations made by the Michigan Department of Education compiled by a group of parents, advocates, educators, policy makers, and service providers convened between 2004 and 2006 to study and develop effective policies that protect the dignity of all students and the integrity of the educational process.

Calling it long overdue, Elmer Cerano, executive director of MPAS, supports this legislative package:

“Public schools are still the only service system where these dangerous practices remain unregulated and unreported. The bills before the committee strike a good balance between the legitimate needs of educators and the safety of children.”

Video of Liberati testifying before the Michigan House Education Committee:

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