Let's talk about exploitation of poor and middle class workers.

     Through two separate scams over the last few years, unions took $36 million from workers whose earnings are already on the low end of the scale: people who provide child day care in their homes and people who help the elderly and disabled in their homes.

     In January 2009, the Department of Human Services began deducting 1.15% from the state payments to about 40,500 home-based child day care providers. DHS turned the money over to a union called the Child Care Providers Together Michigan (CCPTM), a joint enterprise of the UAW and AFSCME. (Here is the first edition of CCPTM's newsletter). The operation continued through February 2011, and the total take was $4,774,869.50 (source).

     Through a similar arrangement that started in 2005, the Michigan Department of Community Health deducted 2.75% (source) from payments to 55,000 home help providers and turned it over to SEIU Healthcare Michigan. (SEIU is the Service Employees International Union). Those deductions continue to the present, and the total is now over $32 million.

     What did the unions do for these workers in return for $37,000,000?  Little, if any.

    The problem was that this was no traditional collective bargaining setting. The day care providers had no employer; they were independent business owners, often with their own employees. The home help providers were employed by the people they cared for; essentially, each had a different employer, and most of the time it was an elderly or disabled relative. Although both groups received payments from the state, they were not state employees.

     So to make the unions appear legitimate, an employer was found for each. For SEIU Healthcare Michigan, it was the Michigan Quality Community Care Council (MQCCC). The MQCCC has been in existence since April 2004 (source, page 2), formed through an interlocal agreement between Michigan Department of Community Health and the Tri-County Aging Consortium. (Interlocal agreements are explained here.) Its purpose is to support the Medicaid-funded Home Help program, which pays people to assist those who cannot adequately care for themselves in their own homes. The program has been in existence since 1981, operated by the Adult Service Division of the Michigan Department of Human Services. It provides a much less costly alternative to nursing home care. To ease the task of finding appropriate helpers, MQCCC maintains a registry of Home Help providers. Before listing a provider, the MQCCC checks references, checks the sex offender registry, and checks to see of the person has a criminal record. It also provides training. In addition to the savings from keeping people out of nursing homes, MQCCC saves the state money by checking the Home Help payroll against the Unemployment Insurance payroll and reporting those who were receiving UCB's ineligibly.

     For Child Care Providers Together Michigan (CCPTM), the "employer" was the Michigan Home Based Child Care Council (MHBCCC), formed through an interlocal agreement between the Michigan Department of Human Services and Mott Community College. Unlike the MQCCC, the MHBCCC's main reason for existence seems to have been to act as an employer for purposes of collective bargaining. The interlocal agreement stated that MHBCCC was formed "to assist the Department in carrying out its duties and functions, including licensing, regulating, assisting, providing training for, and administering the subsidy payments to eligible home based child care providers." (source) It also says:

The Council shall have the right to bargain collectively and enter into agreements with labor organizations, including those representing Council employees and Providers. The Council shall fulfill its responsibilities as a public employer subject to 1947 Public Act 336, MCL 423.201 to 423.217 with respect to all its employees. (Source: the video in this story. Public Act 336 of 1947, as amended, is the Public Employment Relations Act.)

The MHBCCC had a suite of offices at 3186 Pine Tree Road in Lansing, a website that no longer exists and an impressive board of directors, including Karla Swift, who was elected president of the Michigan AFL-CIO in October 2011.

     Each union filed a petition with the Michigan Employment Relations Commission (MERC) seeking to organize against its newly-found employer.  In the SEIU Healthcare Michigan election, held in the spring of 2005, 8,545 of the 43,000 home health care workers voted, 6,949 in favor and 1,007 against, with 589 spoiled ballots. In the CCPTM election, held in the fall of 2006, only 6,396 of the 40,500 home day care providers voted. 5,921 favored the union and 475 opposed. (source) In both cases, many providers claimed they never got a ballot and were not aware of the election. Since Michigan has no law requiring public notice of public employee representation elections, hardly anyone knew about the elections. (source)

     For the unions, this was a gold mine. Since there was no employer in the traditional sense, there was no collective bargaining; "wages" were set by the state legislature. The unions didn't even have to collect the dues - the state did it for them. There was nothing for the unions to do but sit back and rake in the money.

     How did this happen? Because the Democratic administration of Governor Jennifer Granholm wanted it to happen. Millions of dollars for the unions meant millions of dollars for Democratic politicians.

    The involvement of the Granholm administration is pretty clear in the case of MHBCCC and CCPTM. In an email obtained by the Mackinac Center for Public Policy, Nick Ciaramitaro, director of legislation and public policy for AFSCME Council 25, says:

In many ways, this is an experiment with little guidance from statute and virtually no administrative or judicial precedent to follow. ... The Interlocal Agreement came about at the recommendation of Michigan AFSCME and the UAW with the support of the Executive Office. (source)

Cutting off the money flow

     In September 2009, the Mackinac Center Legal Foundation brought suit before the Michigan Court of Appeals against the DHS and its director on behalf two day care home owners, asking that the deduction of union dues be stopped. At about the same time, the state House of Representatives removed the appropriation for MHBCCC from the state budget for fiscal year 2010 (Michigan's fiscal year starts in October). The Court of Appeals rejected the lawsuit with no explanation and MHBCCC continued to operate without specific funding, surviving instead on money from DHS' own budget (source).

     In February of 2010, the Senate included language in a DHS appropriation bill prohibiting money from being used to fund the "Michigan Home-Based Child Care Council" or to pay for collecting union dues from independent home day contractors. In May, a attempt was made - and defeated - to tie-bar the Senate bill to a House bill that established new regulations for child care providers.

     On September 15, 2010, the Michigan Supreme Court ordered the Court of Appeals to explain its rejection of the Mackinac Center's lawsuit. In its response, the Court of Appeals again neglected to address the merits of the case.

     In December of 2010, the Mackinac Center submitted an appeal to the Michigan Supreme Court to overturn the dismal of its lawsuit by the Court of Appeals. But something happened in November that was the beginning of the end for the deduction of dues from day care providers: Republican Rick Snyder was elected governor, defeating Democrat (and Lansing mayor) Virg Bernero. In January 2011, soon after Snyder replaced term-limited Governor Granholm, he appointed Michigan Supreme Court judge Maura Corrigan as director of the Department of Human Services, and on March 1, she announced that DHS would stop funding the MHBCCC. She also stopped dues deductions as of March 18, saying "these providers are not state employees.” The announcement also said that

DHS' Child Development and Care program . . . ensures child care providers have the skills and knowledge to provide safe and stimulating environments for more than 60,000 children in their care. DHS also has implemented a basic training requirement for unlicensed aides and relatives providing care, in partnership with the Early Childhood Investment Corp. Michigan is one of the first states to require such mandatory training before providers receive payment.

     With all the attention paid to MHBCCC and CCPTM, no one seemed to notice the similar arrangement between MQCCC and SEIU Healthcare Michigan. MIRS (the subscription-only Michigan Information & Research Service) questioned outgoing Governor Granholm about in December 2010, but it wasn't until May 2011 that the legislature took action, eliminating funding for MQCCC for fiscal year 2012, which would allow the operation to continue through September. As it turned out, MQCCC kept right on going after September. Cutting off funding didn't work when the legislature tried to kill CCPTM and it didn't stop MQCCC. The agency found funding elsewhere. (source)

     Defunding was the wrong move for another reason. MQCCC actually provided a valuable service by connecting people in need of care with Home Help providers, keeping them out of nursing homes. It also reported people to the Unemployment Insurance Agency when it found that they were receiving UCBs and Home Help payments at the same time. Unless those functions could be taken over by another agency, destroying MQCCC was like throwing the baby out with the bath water.

     In January 2011, House Bill 4003 was introduced. It amended the Public Employment Relations Act to make it clear that someone is not considered a government employee just because all or part of his private employment compensation comes from a government subsidy. The bill didn't pass the full House until June 8. It went immediately to the Senate, but didn't get out of committee until December 1. Finally, on March 21, 2012 - nine months after it passed the House - the full Senate passed Senate Bill 1018, its version of House Bill 4003. It was signed by Governor Snyder on April 10. It makes two changes to PERA. The first one is to Section 1(i):

The second change adds this to Section 14:

     In a May 11, 2012 letter to Marion Owens, Director of the Tri-County Aging Consortium, DCH Director Olga Dazzo said

The Michigan Department of Community Health is sending you this Notice to Terminate the  Agreement as provided in Article VIII, Section 8.02(3) of the Interlocal Agreement. By the terms of the Agreement, it will terminate eleven months after you receive this Notice to Terminate the  Agreement.

And an email soon after from Governor Snyder's office said

The collective bargaining agreement remains in effect through September 20, 2012 unless amended by mutual written agreement.

On May 25, Attorney General Bill Schuette declared that "In order to comply with the law, State agencies should end the withholding of public union dues from private individuals who provide home help." See story by mlive.com's Dave Murray. Then, on May 30, SEIU Healthcare filed a federal lawsuit in federal court against the Snyder administration, and on June 20, U.S. District Judge Nancy Edmunds ordered the state to continue deducting dues for SEIU Healthcare until the contract expires in February (source).

     In the meantime, SEIU Heathcare is conducting a petition drive to put a constitutional amendment on the November ballot to make MQCCC a permanent entity and to allow it to continue to collect dues on behalf of the union. You can see the text of the proposal here.

Legislator integrity

     I don't see how a moral person could support what happened here. Since 2007, unions skimmed $36 million from government payments meant for the neediest of Michigan citizens and provided no services in return. We know that the Granholm administration was instrumental in this effort, but why did it take so long for the legislature to put a stop to it?

     Bills were introduced in the Senate in February 2010 to prohibit the Michigan Employment Relations Commission from recognizing a bargaining unit consisting of individuals who are not public employees. Those bills never got out of committee.

     House bill 4003, essentially the same as the 2010 Senate bills, was introduced May 16, 2011. It passed the House on June 8, 2011 with all Republicans voting in favor and all Democrats voting against. The Senate version didn't get voted on until March 22, 2012, with all Democrats voting against and all but one Republican voting in favor.

    There are 47 Democratic representatives and 13 Democratic senators. Among those 60 Democrats, one would hope that at least one would see that taking union dues out of the state subsidies for day care providers and home help providers would be wrong. None did.

    The one Republican senator who voted with the Democrats was Roger Kahn of Saginaw. He also worked behind the scenes to find another source of funding for MQCCC. His activities are revealed in several documents obtained by the Mackinac Center through the Freedom of Information Act and discussed in this October 31, 2011 story. Other names that come up are Senate Majority Leader Randy Richardville of Monroe, Senator John Moolenaar of Midland and Representative Matt Lori of Constantine - all Republicans. It is not clear if they wanted to preserve the functions of MQCCC or keep the dues flowing to SEIU Healthcare Michigan.

    But it does seem that Roger Kahn is an SEIU Healthcare favorite. The SEIU Healthcare PAC made 19 "expenditures" over $100 from 2006-2012 and five of them went to Senator Kahn:

Date	Amount
3/7/2008	$5000
7/7/2010	$600
10/8/2010	$2000
2/16/2011	$500	(this one was "in kind": valentines tickets)
6/9/2011	$5000

Among the other expenditures were $5000 to the Michigan Democratic Party on 10/28/2008 and $20,000 to the Michigan House Democratic Fund on 10/28/2010.

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     Most of the information for this story came from articles on the website of the Mackinac Center for Public Policy. I've compiled a fairly complete chronological list of those articles here. And here are the websites for SEIU Heathcare Michigan and the Michigan Quality Community Care Council.

     Send comments to stevenrharry@gmail.com. Also, please let me know if you find any inaccuracies in this story.

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     Peter Luke's April 19 column in Bridge contains some information relevant to the Home Help program. He says: