Lansing State Journal. April 28.
Think of 13th checks as bad luck
Quite probably the minds who came up with paying public retirees a “bonus” pension check when investments were performing well had good intentions.
But good intentions pave many roads that travel to undesirable locations, and the so-called “13th check” bonus payments are now considered among the reason that some pension funds suffer financial troubles.
There are laws and accounting standards used to help assure that long-term investments such as pensions are managed in responsible ways.
Yet somehow, the entire nation has heard the story of how Detroit’s General Retirement System paid out almost $1 billion in “13th checks” over 22 years, a fact now regarded as central to the underfunding of the pension program for city employees.
Detroit is the extreme example, but, as recent news reports show, other public pension funds have used the bonus system, too, including funds for retired state of Michigan employees and for retired Michigan teachers.
The Detroit Free Press recently reported that some $641.4 million was paid from the Michigan Public School Employees Retirement System and $238.5 million from the Michigan State Employees Retirement System between 1982 and 2002.
The last such checks were issued in 2002 to teachers and state officials say there are no plans to resume the practice.
But state law allows it when investment returns exceed 8 percent. State officials apparently once interpreted that to mean an annual return, then a return spread over several years and now a return spread over the life of the pension funds, which date to the 1940s.
Fortunately, fewer than 500 of 57,000 state retirees would even be eligible for a 13th check. (Only those who retired before Oct. 1, 1987, could participate.)
Unfortunately, the law remains, a relic of a time when we had less understanding of how deep a future economic downturn might go.
The Great Recession taught Americans a number of difficult lessons about financial risk. Ignoring those lessons is foolish. Bonus payments to pensioners are no bargain when they leave pension trusts underfunded and put a growing burden on taxpayers.
Those overseeing public pension funds big and small must take a hard look at how they do business. Caution and responsibility are watchwords going forward.
_____
The Detroit News. April 30.
Don’t rush school bus seat belt bills
Student safety is of the utmost importance for Michigan families, and it should be for school districts as well. Lawmakers in the state House have introduced several bills that would require shoulder belts in all new school buses. Yet studies related to the effectiveness of seat belts on buses are mixed.
The jury is still out on whether safety on school buses would be enhanced by seat belts. In fact, some studies indicate school bus seat belts could be dangerous to young passengers.
The bills would also require local school districts to pay for installation of seat belts. This would increase the cost of each bus by an estimated $7,000 to $9,000 and represent an unfunded mandate - when the state passes a law but places the financial burden on local governments.
Because of the costs and questions on the effectiveness of the seat belts, more research is merited before moving on these bills.
School buses are safe vehicles. The National Highway Traffic Safety Administration concluded in a 2002 study that “American students are nearly eight times safer riding in a school bus than with their own parents and guardians in cars.”
Similarly, the report said lap belts have little, if any, benefit in reducing serious injuries and fatalities in severe frontal crashes. It also indicated lap belts could actually increase the number of serious neck and abdominal injuries.
NHTSA reinforced its position in 2011 when it denied a petition from the Center for Auto Safety and 21 others asking the agency to mandate the installation of three-point seat belts in all school buses.
Statistics support NHTSA’s conclusions.
According to recent figures, the National Safety Council reports the school bus accident rate is 0.01 per 100 million miles traveled, compared to 0.04 for trains, 0.06 for commercial aviation and 0.96 for other passenger vehicles.
In Michigan over the past five years, eight people have died in school bus related accidents. Seven were killed in vehicles that collided with a bus. However, the student passenger death did not involve a crash. A Detroit girl in 2011 was hanging outside a bus window and was killed when she was struck by a tree limb.
There is a federal rule mandating all new small school buses - those weighing less than 10,000 pounds - have lap-shoulder belts rather than just lap belts. But only six states require some type of restraint on all new large buses.
Rep. Robert Kosowski, D-Westland, the main sponsor of the bills, is keeping an open mind.
“I’d like to get a hearing on this,” he says. “If there’s enough evidence to show they’re not needed, I’ll understand and I will back off of this pursuit.”
More research is required to determine if seat belts improve student safety on large buses before lawmakers place another cost burden on school districts.
_____
Traverse City Record-Eagle. April 29.
Voters can push lawmakers to address state road crisis
Like a face full of sunshine, for most of us an income tax cut is something you just don’t turn your back on.
But Michigan lawmakers appear ready to do just that - and most anyone who owns a car or truck should be glad they are, and be ready to demand more.
Just a couple months ago, when Michigan was still in the grip of the Winter From Hades, it seemed a lock that lawmakers were going to concoct some sort of income tax reduction as a way to give back to taxpayers a modest $100 million budget surplus. A plan by Gov. Rick Snyder would have provided a tax cut retroactive to 2013 that would have given most taxpayers $79 on average.
Instead, lawmakers are finally listening to constituents who are fed up with the Legislature’s dereliction of duty concerning state roads and bridges. For decades now, lawmakers have siphoned off untold millions in general fund money that should have been spent on roads and used the money for other purposes - usually a politically motivated pet project.
It was a gross redistribution of wealth that led, pothole after pothole, to the place we find ourselves today - an estimated $1.2 billion per year short of what we need to maintain our road system.
Michigan is regularly ranked among the worst states in the nation in terms of its roads, and we must spend billions to catch up. While the damage to bridges is less apparent than to our pocked, patched and potholed roads, the situation is just as dire - and in the end much more dangerous.
Sure, $79 on average is a nice piece of change; and who doesn’t want to actually get some money back from the government? But our roads reached the crisis stage years ago and the recent winter made things much worse. We’ve now gone from serious to critical. There’s no time left to kick the can down the road - and into a pothole.
So there are two things to celebrate here - that state roads may finally get some of the money and attention they so desperately need; and that state lawmakers have finally listened to their constituents.
But beware - promise to spend money on roads may last only as long as patch in a pothole.
But there is leverage here. Every seat in the Michigan Legislature is up for election this year, so if voters want a say, now is the time, Tell your state lawmaker you expect him to vote for meaningful road funding - even with the tax cut money the state is only about half way to the $1.2 billion Snyder says we need annually - before the August primary elections, and you’ll be watching.
Who knows? The politicians appear to have listened once; maybe they’ll do it again.
_____
Times Herald (Port Huron). April 28.
E-cigarette regulation long overdue
The growth of the electronic cigarettes industry is remarkable, but its appeal is no mystery. E-cigarettes are loopholes to America’s smoking regulations.
Increasing numbers of electronic-cigarette smokers often are immune from the rules tobacco smokers face. Most laws against smoking in public are aimed at tobacco. E-cigarettes were largely unknown when those laws were enacted - and the marketing strategies put that to good use.
E-cigarettes enable users to inhale nicotine through battery-operated devices. Vapor rather than smoke is the result - and the new industry encourages consumers to take advantage in bars, restaurants and other places where tobacco smoking is prohibited.
The “freedom” the e-cigarette promotes is alluring, but it also is troubling. Because the cigarettes aren’t subject to the same regulations as tobacco products, children in increasing numbers are attracted to them - and 17 states, including Michigan, don’t bar their sale to minors.
It is right that the Food and Drug Administration finally involved itself in regulating e-cigarettes. The FDA’s decision last week was remarkably late. E-cigarettes’ popularity has been impossible to ignore in the past few years. But at least the federal agency finally has come to recognize the risks they pose.
E-cigarettes are promoted as safe alternatives to traditional cigarettes, but that’s only a contention. As bad as tobacco cigarettes might be for the users’ health, their contents are known, thanks to federal regulations.
There is no such required information about E-cigarettes. The nicotine vapors the users inhale purportedly are less harmful than tobacco smoke, but there is no definitive proof that’s the case.
That’s especially a problem for minors. E-cigarette use has doubled for middle and high school students from 2011 to 2012. It’s one thing for adults to use the product. With questions about its safety, children’s e-cigarette use is alarming.
The FDA wants to prohibit e-cigarette sales to children under 18, limit vending machine sales to adults-only facilities and end the distribution of free samples.
The FDA also would require manufacturers to divulge the ingredients in e-cigarettes. The industry has been getting away with pushing them as safe. The FDA will decide if that’s true.
E-cigarette regulation was long overdue. Federal intervention is an important first step in defending public safety.
Please read our comment policy before commenting.