Andy Smarick joins the podcast to discuss his recent piece in The Dispatch titled What the Narrative on School Reopenings Has Missed.
Andy Smarick is a senior fellow at the Manhattan Institute, where his work focuses on education, civil society, and the principles of American conservatism.
He currently serves as the chair of the Maryland Higher Education Commission and was previously the president of the Maryland State Board of Education.
On Tuesday, April 27, David Stokes, Director of Municipal Policy for the Show-Me Institute, joined The Mcgraw Show on The Big 550 KTRS to discuss push back from a local community on merging police departments with another municipality and provide some thoughts on the current state of the St. Louis County Auditor’s Office.
LISTEN HERE:
The economic recovery from the COVID-19 pandemic has been much more rapid and robust than people initially predicted. It’s possible that memories of the slow rebound from the Great Recession created pessimistic expectations. However, despite the faster-than-expected rebound in 2020, employers are reportedly experiencing hiring difficulties, which may slow the return to economic prosperity. Evidence from the aftermath of the Great Recession suggests one risk factor that may delay jobs recovery: generous unemployment benefit extensions. This blog post will be the first in a series that discusses the unemployment insurance program, its economic effects, and its implications for the current recovery.
In the spring of 2020, the COVID-19 pandemic and associated shutdowns quickly sent our country into unimaginable economic lows. The national unemployment rate reached its peak of 14.8 percent in April 2020 while Missouri’s unemployment rate jumped to 12.5 percent the same month. However, the economy has bounced back faster than expected. Recent numbers show the national unemployment rate at 6.2 percent in February 2021, and Missouri’s preliminary unemployment rate for January 2021 was 4.2 percent.
Though still higher than the national unemployment rate of 3.5 percent from January 2020, we’ve recovered much more quickly than we did from the Great Recession. It took nearly five years for the unemployment rate to fall from its peak of 10 percent in October 2009 to below 6 percent. As the image below shows, unemployment reached an even higher peak during the pandemic but has still managed to fall to 6 percent in less than a year’s time.
Source: https://www.bls.gov/opub/mlr/2020/article/employment-recovery.htm
Perhaps the historical fiscal relief packages passed in 2020 help explain the more robust recovery. The CARES Act was passed in March 2020 to support the economy in a variety of ways through a period of widespread lockdowns. Included in the CARES Act was enhanced unemployment insurance to help those who had lost their jobs at a time when it was difficult to find jobs.
However, with the economy re-opening, job postings on the rise, and accelerating vaccinations signaling a potential end to the pandemic, it is worth re-examining the evidence on the effects of unemployment benefits during downturns and recoveries. Are the benefit extensions helping the recovery by sustaining consumer spending, or are they slowing the recovery by discouraging people from searching for jobs by paying them generously not to work? This will be discussed in future blog posts.
I was an aide at the St. Louis County Council in 2003 when the council appointed Mark Burchyett as the county auditor. Mr. Burchyett was a highly qualified, experienced government and business auditor before coming to St. Louis County. Before him, the county auditor’s office had been, in the words (spoken to me) of a Post-Dispatch reporter who shall remain nameless, “A dumping ground for political hacks.”
Fast forward a decade or so, and the county has unfortunately appeared to have returned to those undistinguished roots. Several years ago, the council appointed an individual to the auditor position who had essentially no experience in large-scale government auditing functions. Over the past several years, the inability to actually do such audits has resulted in an auditor’s office almost without audits. This is not an exaggeration. It just takes a moment to compare the output of the St. Louis and St. Charles county auditor’s offices to see the striking difference. One has some very short reports over the past several years. The other (St. Charles) has real audits.
In fact, if you go to the two pages that list St. Louis County audits and reports, there is exactly one (ONE!) released financial document in all of 2020 and 2021, and that document is one (ONE!) page long.
This county auditor oversees a very small staff of just 2 or 3 people The auditor is not just overseeing audits and reports; he has to actually do the work himself. Members of the St. Louis County Council have recently asked for a state audit of county funds in light of the fact that the county auditor has not performed this vital task. The county council is also considering instituting tighter qualifications for the position.
With the enormous amount of money coming into St. Louis County over the past year from federal aid, the office of the county auditor is more important than ever. The county needs a qualified, independent auditor’s office to provide oversight on the spending. (The auditor’s office is one of two positions in St. Louis County government that reports to the council, not the county executive.)
Loyalty is a wonderful thing and calling for people to be replaced is not something anyone should ever be cavalier about, but it is well past time for St. Louis County to have an auditor who will get the job done.
I saw a meme once that said “Those who fail to learn history are doomed to repeat it while those who learn history are doomed to watch as other people repeat it.” I can’t help but identify with that as the details of the federal government’s massive school spending plans are unveiled.
Those of a certain age in Kansas City might remember the landmark Missouri v. Jenkins case that wound its way through the courts during the 1980s and 1990s. The decision led to direct oversight of the Kansas City public schools by a federal judge and billions of dollars in spending, but the key indicators that the case hinged on—student academic performance and racial segregation—barely budged.
I can’t do the whole story justice here, but I can highly recommend University of Colorado professor Joshua Dunn’s outstanding book on the case: Complex Justice: The Case of Missouri v. Jenkins.
Here is a brief excerpt from his conclusion, which might give us pause today as we think about the new spending heading our way:
Many of the problems afflicting urban education can be traced to school districts’ political and institutional arrangements, which give incentives to school boards and superintendents to institute quick reforms that do not challenge established interests. The KCMSD is no exception. In the 1970s and early 1980s, a new superintendent would come in with a “new” plan to rescue the city’s schools. The plan would fail. The school board would fire the superintendent and then commission a study to come up with another plan. That plan would fail as well. Missouri v. Jenkins was the continuation of this failed policy strategy by judicial means. Even with the aggressive oversight of a federal judge, the KCMSD’s problems persisted. A dysfunctional organization given all the money it asks for will likely use that money in a dysfunctional way. Fixing the “root causes” of the problem—poor administration and poor instructions—should be the place to start.
The Missouri Legislature is hard at work on the budget for the next fiscal year. One of the biggest components of the budget is K-12 public education. I think it’s helpful to periodically pause and take a look at what is actually spent on education to see if it’s too little or too much. Most people have no idea how much is even spent, and if they think they know, they underestimate the dollar amounts. So, here’s the truth.
The following numbers are from the Department of Elementary and Secondary Education’s (DESE) Missouri Comprehensive Data System (MCDS). The file is called “Finance Data and Statistics for All Districts” and it can be found here.
Last year, when every school in the state shut down and many were able to offer little more than homework packets and buses stopped running and buildings were closed, Missouri public school districts spent just over $16,000 per student. That sounds a lot like the tuition at a fancy private school.
Of course, we did get about $300 million in federal stimulus funds for public education, but that only explains the $330 difference in federal spending per student between 2019 and 2020. State and local spending also increased. In 2021, Missouri is set to receive an additional $2.8 billion in federal stimulus, or over $3,000 for every student in the state. Does that mean that spending per student will be $19,000 in 2021? Will it be more?
In addition to working on the budget, the Senate is set to debate whether donations to scholarship-granting organizations should continue to be treated as tax deductions or if the donor should get a full tax credit. Giving donors a full tax credit would greatly incentivize donations to these scholarship organizations. The tax-credit-funded scholarships would give families money to customize their children’s education outside of their assigned public school. The defenders of the status quo—superintendents, school boards, and teacher union leadership—will undoubtedly say we can’t afford it. In light of the numbers above, does that seem true?
The New York Times had an excellent article on property taxation issues a week ago. The article had a nationwide focus, but it included St. Louis County among its data examples. As Missouri is entering its biennial reassessment cycle, the article is especially timely here.
My first work in government was in property assessment and tax issues. I was hired in June of 2001 to work for the St. Louis County Council as an aide. A short time later, the 2001 “Drive-By Assessment” scandal erupted, and the next few months of my life were devoted to property tax and assessment-related constituent work. In 2019, taxpayers in Jackson County experienced a similarly critical and difficult assessment cycle.
The Times story discusses studies that have found that lower-value homes tend to be over-assessed, and higher-value homes tend to be under-assessed. This leads to a shift in the property tax burden to the poor. Why does this happen? It’s due to the way assessment systems work. Home valuations are based on comparable sales data, and at the extreme high and low ends there are fewer sales to compare to. This naturally creates a regression to the mean; houses at the higher end get compared to houses that aren’t quite as expensive, and houses on the lower end get compared to houses that are a bit more expensive. That leads to lower-value homes being over-assessed, and higher-value homes being under-assessed.
That does not mean we should get rid of the average-based assessment system. In fact, I think we should expand on it and stop individually assessing homes every two years. We should just raise or lower assessments based on the average in an area. We could combine that with accurate assessments at sale price for sold properties (important for high-value ones), individual assessments for new construction, and maintaining the appeal system for property owners who believe their property value has increased less than average.
I have been discussing this problem for years. In a 2007 op-ed for the St. Louis Business-Journal, I wrote:
This would safeguard against incorrectly undervaluing properties – particularly expensive ones – that might be underassessed over time by the use of an average-based system.
These changes would make for a much easier rollback of tax rates. When assessments go up, property tax rates are rolled back because assessments are not supposed to lead to a tax increase. However, this isn’t the case for many people. The rollbacks are based on averages, but assessments are currently individual. So if your assessment increased by 20 percent, but the average in the area was only 10 percent, you will get hit with a significant property tax increase. Using an average would mean that everyone faces the same increase, and the same rollback.
I will have much more to say over the coming months about property taxes in Missouri. In particular, it’s time to remove the Kansas City school district’s exemption from property tax rate rollback requirements. That is a big part of the assessment issues in Jackson County that needs to be addressed. But clearly, as the article in the Times shows, we have work to do in Missouri.
On Thursday, April 15, 2021, Dr. Susan Pendergrass joined The Gary Nolan Show to provide an update on House Bill 349.
HB 349 would establish the Missouri Empowerment Scholarship Accounts Program. The program would allow taxpayers to claim a tax credit of up to 50 percent of their tax liability for contributions to educational assistance programs. The funds would be pooled in ESAs for use on tuition, textbooks, tutoring services, and other costs.
Missouri—along with eleven other states—is suing the president over his administration’s handling of an environmental policy instrument billed as “the most important number you’ve never heard of.”
The lawsuit challenges the authority of the Biden administration to set the “social cost of carbon” (SCC) through executive order and direct all federal agencies to use this value in their evaluation and issuance of regulations. The SCC is an attempt to place an economic value on the damage that each ton of carbon dioxide (CO2) emissions causes to society. The damage comes from things such as health impacts, climate impacts, and the expected impact of future environmental changes on the economy over many decades. The SCC is used in cost–benefit analyses of a wide range of environmental and energy policies, ranging from regulations on air conditioners and microwaves to new laws on electricity generation.
The new administration set the SCC at $51 per metric ton of CO2, in contrast to the prior administration’s value of $7 per ton of CO2. While there’s nothing inherently wrong with trying to evaluate the economic consequences of CO2 emissions for society as a whole, the SCC has shortcomings as a policy tool.
Here’s how a simple cost–benefit analysis using the SCC would work. Suppose a particular policy would reduce 10 tons of CO2 and costs $200 to implement. If the SCC is $51 per ton, this program would provide $510 (51 times 10) worth of societal benefits. $510 of benefits is greater than a $200 cost, meaning the policy would be in theory beneficial and a cost-effective way to reduce CO2 emissions. If the SCC is $7 per ton, this program would provide $70 of societal benefits, and it would not be worth the $200 cost.
The SCC is an attempt to place a value in today’s dollars on costs that may not occur, if at all, until far into the future. The calculation of this present value of potential future damages is done in the reverse manner to how one uses interest compounding to project the future value of current investments in a savings account. In this case, though, the “interest rate” in present value calculations is called a discount rate.
Calculating the present value of future potential damages is very sensitive to the chosen discount rate, with relatively modest changes to the discount rate (say, from 3 to 5 percent) producing drastically different estimates of the present value. These changes can be so large as to mean the difference between concluding that additional CO2 emissions would result in catastrophic environmental damages or that society would be significantly worse off implementing emissions reduction policies. Even if two SCC models have the exact same scientific predictions about future climate impacts, slightly different discount rates can produce wildly divergent cost–benefit assessments about environmental policies and the damage of CO2.
Recent academic literature on the SCC also reveals uncertainty regarding the economic impacts of climate change. How humanity adapts to a changing climate is an uncertain area of environmental research. Moreover, unforeseen technological breakthroughs can quickly change environmental projections, such as how fracking turned the United States into a world leader in emissions reductions over the last 15 years by replacing coal usage with natural gas.
In sum, calculating the SCC is subject to policy, legal, and value judgments in addition to scientific considerations, and all of these layers can have significant economic and practical consequences.
Missouri’s lawsuit raises the important question of which branch of government should determine the official SCC, as well as the appropriate procedures that should be followed in evaluating energy and environmental policies and regulations that affect everyday life.
