Detroit News. April 13, 2017
Cut college costs to fix student debt crisis
America’s younger generation is staggering under student debt loads that will alter the way they participate in traditional American society as they age. Total student debt now stands at $1.4 trillion, more than outstanding vehicle loans and credit card obligations, and second only to mortgages.
On average, college students are accumulating debt at a rate of $8,250 for every year they are in school. Coming out of college already burdened with loans that promise to consume a large chunk of their earnings for decades ahead, the graduates are likely to encounter difficulties when they finance homes. They are also more likely to put off starting families.
The crisis has escalated since 2003, when outstanding student loans totaled $240 billion. Driving the skyrocketing debt is soaring college tuition, and the two share a symbiotic relationship.
Justin Haskins of the Heartland Institute writes that since the federal government first expanded its role in student lending under former President Bill Clinton in 1993, college costs have risen by 190 percent. Just since 2008, average tuition has risen by 25 percent.
As the government took over responsibility for student lending - former President Barack Obama drove private lenders nearly out of the market - conditions for getting loans eased, and were unlinked from financial need.
The federal government basically guarantees that any student, regardless of income, can have access to any college or university, public or private, without regard to whether the student can afford the tuition cost without hefty loans. This has encouraged students to choose schools they might have otherwise passed on, covering the costs with massive loans.
But more significantly, it has freed universities to raise tuition at will, knowing students can get loans to cover the rising costs. As a result, universities have sidestepped the fiscal reckoning of most other institutions and remain aloof to hard financial realities.
A first step to reversing the debt trend is to return lending to the private marketplace. Private lenders would put in place more realistic screening for issuing loans, and be more attuned to the borrower’s ability to repay the money.
Obama-era policies limited repayment to 10 percent of a graduate’s annual income, with up to 25 years to repay the loan. But that insures the student debt will be around their necks until they reach middle age. Trump is promising to shorten the payback period to 15 years by requiring payments of 12.5 percent of income.
A better approach is to avoid the debt in the first place. Indiana has cut student borrowing with a simple financial literacy technique: It sends students a letter detailing their debt and their future monthly payments. After those notices began going out, borrowing at Indiana University dropped 18 percent.
A study by NERA Consulting found that two-thirds of student borrowers were surprised by the details of their obligation, and didn’t fully understand the terms of their loans. Fair lending practices are essential when dealing with young borrowers.
But of course the real solution is to hold tuition costs in check. And that starts with bringing greater accountability to universities, particularly in the public realm.
Academic integrity is not compromised by expecting highly paid professors to teach a full class load, nor by asking college deans to trim the excesses from their budgets. Graduates should leave college full of bright dreams for the future, not with nightmarish debt loads.
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Traverse City Record-Eagle. April 12, 2017
Put pension question in taxpayers’ hands
When it comes to government funding, the buck stops at the taxpayers, or at least it should in the case of Grand Traverse County’s multimillion dollar pension debt.
Like parents confronting a teenager who racked up a mountain of credit card debt, taxpayers soon could face a decision about whether to bail the county out of a self-imposed financial crisis.
County commissioners tonight will consider a recommendation from a pension advisory board that would put the fate of the municipality’s balance sheet in voters’ hands in the form of a millage request. A proposed 1-mill levy would cover more than $50 million in unpaid, constitutionally guaranteed retirement costs for 276 county retirees and a few dozen current employees who eventually will collect pension payments.
The unfunded pension debt in question has been at the center of discussions at the county for the past few years as officials cope with ballooning payments dictated by a schedule set by the Municipal Employees Retirement System, the county’s pension provider. Those payments - now 10 percent of the county’s general fund budget - are projected to peak at nearly 25 percent of the county’s annual spending in the next five years.
The payments already served as the impetus for several county cutbacks and promise to gut many county services if something doesn’t change, and soon.
The situation probably was summed up best by pension board Chair Michael Gillman during a recent meeting of the panel.
“The bottom line is that the public has to somehow understand that we received services that we haven’t paid between $50 (million) and $70 million toward those services,” he said. “We got those services. We got the bill. The bill has to be paid constitutionally.”
Gillman and his pension panel peers floated a three-prong plan to deal with the crushing debt that includes asking for a millage, extending the debt repayment period from 12 to 16 years and setting up a trust for retirement costs.
Those certainly aren’t the only options available to the county and the taxpayers who pay its bills, but it’s probably the most sensible proposal to cross in front of county commissioners in years.
Some pension board members recoiled at previously discussed plans to issue pension bonds to cover the debt, calling the idea a “stealth tax” that could cost taxpayers an extra $24 million in interest payments on top of the millions to pay off the outstanding debt.
That’s not to say a millage proposal should be a carte blanche, perpetual cash infusion for county coffers.
Any plan floated should include a realistic sunset and ask taxpayers to shoulder the minimum burden possible.
But first, county commissioners must decide whether to put the decision in the hands of the people who will foot the bill for the unfunded pension liability, either through reduced services or increased taxes. And they’re probably the most appropriate constituency to make the most important financial decision the county has faced in decades.
After all taxpayers will foot the bill no matter how the debt is repaid.
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Petoskey News-Review. April 14, 2017
Legislators need to fix ’dark store’ tax values
We need our state legislators to end the uncertainty and pass into law a fair and equitable tax policy that closes a major loophole allowing so-called “big box” stores to drastically reduce their property tax burden.
Under what has become known as the “dark store” property valuation assessing theory, big box retailers have been winning arguments that their stores should be taxed at the value of what vacant stores like them are selling for around the state.
The theory is that deed restrictions on such properties limit what can be done with them by prospective buyers. For that reason, some sit vacant and sell for far lower prices than their true cash value when occupied by retailers.
In a case involving an Upper Peninsula Menards store and the city of Escanaba, the Michigan Tax Tribunal settled a 2014 property value dispute between the two, ruling in favor of Menards and assessing the store’s value at less than city officials believed. The city appealed the decision and in 2016 the Michigan Court of Appeals decided in favor of the city, setting up a now-looming battle in the Michigan Supreme Court.
Not only would a decision in favor of the big box stores result in reduced budgets for local municipalities who provide fire, police and other necessary public services, but it sets a precedent for other types of businesses to argue their assessed values.
We agree with organizations like the Michigan Townships Association and the Michigan Municipal League, which say this issue is about taxpayers paying their fair share.
According to the Michigan Municipal League, before the dark store decision, big box stores in Michigan were assessed on average about $55 per square foot.
Now, though, such stores like Lowes, Menards, Target, Sam’s Club and Wal-Mart average about $25 or less per square foot in Michigan. In other parts of the country, the same stores have nearly three times the value.
We urge our state legislators to fix this discrepancy now and make tax policy fair for all residents and businesses within this state.
Please contact your legislators and let them know how you feel.
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Midland Daily News. April 14, 2017
We salute an honored trooper
Members of the Michigan State Police force are very noticeable in public. They wear distinct blue uniforms.
But sometimes members of the state police are not very noticeable. When off duty, a state trooper can blend in with the community so well you can’t tell an officer from a school teacher from an auto mechanic.
And when an officer is off duty, they can take on a different kind of important role - that of community service.
Sgt. Joseph Rowley of the Tri-City Post is that kind of officer. He has made volunteerism and community service a way of life. So when he is not protecting the community, he is still working to make his community a better place to live.
The 17-year veteran has been chosen the American Legion 2017 National Law Enforcement Officer of the Year. The Gladwin native will be recognized at a special ceremony in August in Reno, Nevada.
The state police officer is active in events that honor fallen troopers, and established a Gladwin baseball tournament in honor of local fallen trooper Jeff Werda.
Rowley volunteers his time at Camp Quality Michigan, which serves children with cancer at no cost to their families.
He also has a reputation for helping fellow coworkers and their families in their personal needs.
When on duty, Rowley is a firearms and defensive tactics instructor, a field training officer and an accomplished investigator.
Apparently, it doesn’t take a lot of detective work to know that Sgt. Joseph Rowley is an exemplary officer, who not only knows how to do a good job when he is wearing a uniform, but puts his community first 24 hours a day.
We salute officer Rowley for a job well done and congratulate him for his national honor. His service provides another reason for people to respect our local law enforcement community.___
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