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Why is Missouri Suing the President Over the Environment?

Posted on April 14, 2021January 13, 2026 by Jakob Puckett

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.

We Have the Money. Let’s Expand Education Options for All Students

Posted on April 13, 2021January 13, 2026 by Susan Pendergrass

In the latest round of federal stimulus, Missouri will receive about $2 billion in funding for public education. Of this, the Missouri Department of Elementary and Secondary Education (DESE) keeps 10 percent, or $200 million. What should DESE spend it on? How about supporting the education hubs that have already popped up to help parents with virtual learning? How about creating more of them so that students can access tutoring and other services to overcome learning losses and prepare for next year? Private organizations, such as The Mind Trust and the National Parents Union are already joining the effort.

A database collected by the University of Washington offers several examples of where this is already happening in Missouri. The Boys and Girls Club in Columbia created a virtual learning center this year that provides students in grades K-5 academic support for remote learning and enrichment activities. They charge $150 per child per week. The YMCA locations in Kansas City created the Y Learning Academy. They provide in-person learning support for children up to 12 years old. Staff members are trained in youth development and provide enrichment activities. They charge $35–$60 per child per day. The Timothy Lutheran Church in St. Louis created a virtual learning classroom for parents working outside the home. Church staff help students with their virtual learning. They charge $50 per child for a full day and $25 per child for a half day. The Discovery Center of Springfield created a Learning Support Care program for children in grades K-8. They offer multiple options, including having district teachers leading remote instruction while Discovery Center staff provide support and tutoring. They charge $40 per child per day, plus an additional $25 for tutoring.

These are just a few examples of what is happening across the state. These pop-up education hubs have become a lifeline for working parents. Undoubtedly, many struggle to pay the $150-$250 per week, but what are their other options to keep their children safe and learning? Where are the children with working parents who can’t afford private options?

If DESE used just ten percent of the $200 million in stimulus funding to support these programs, it could fund hundreds of thousands of weeks of learning. More hubs would give more students the chance to catch up and recover lost learning. As we emerge from the fog of COVID, we will need to pull out all the stops to ensure that every child gets the education they need. Supporting programs such as education hubs should be part of the plan.

Earnings Taxes and St. Louis’s Catch 1%.

Posted on April 12, 2021January 13, 2026 by David Stokes

A version of this commentary was published in the St. Louis Business Journal.

As voters in the City of St. Louis prepare to vote on whether to retain the earnings tax in April, the city is in a tight spot. The city and school district need more revenue, which comes about through more taxes. But because taxes are high and a detriment to growth (especially the one-percent earnings tax), businesses are not locating in the city and the economy is not growing. So, to attract new businesses and convince current ones to stay, the city selectively gives out generous tax incentives. These may attract some businesses and residents, but because of the incentives, they don’t provide the tax revenue that the city was after in the first place.

Are you with us so far? Count us among those who agree that poor public schools and a high crime rate are harming the City of St. Louis more than taxes. But if the economy were growing, City Hall and the board of education would have more money to hire more police officers and teachers. It’s as if St. Louis is in its own Catch-22: a problem or situation where every solution is impeded by other conflicts. Call it our Catch 1%.

St. Louis’s “solution” to the problem of losing businesses and residents over the past couple of decades has been to offer generous tax benefits to every politically influential Milo Minderbinder who asks for them. Last year alone, there were 70 million uncollected tax dollars because of various subsidies. That approach has been a failure. It has led to substantial tax subsidies for developers who do not need them, such as the St. Louis Cardinals and their Ballpark Village development. They succeed while paying significantly reduced taxes. Their subsidies have helped them drive out smaller competitors (e.g., Mike Shannon’s) who paid taxes, but now no longer do because, well, they are closed. The use of tax subsidies actually leads to a reduction in tax revenues. That’s Catch 1%.

The same thing goes for the idea that tax subsidies are intended for blighted sections of the city. Clearly, there are parts of St. Louis that are struggling, and these areas might well benefit from the use of tax subsidies. But for the most part they aren’t getting them. Why not? From an economic development official’s point of view, the incentives are misaligned. If you have tax dollars to invest, why not direct them into a thriving area surrounded by other successful businesses? You’ll look that much smarter when the development succeeds—even if it would have been just as successful without the government handout. The projects that truly need the incentives aren’t the sure things . . . and that’s the whole point of the incentives—to bridge the gap between failure and success for a project in an economically depressed area. But in St. Louis, the less a project needs a tax subsidy, the more likely it is to get one. That’s Catch 1%.

So here we are, giving out tax incentives to people who don’t need them in places that don’t need them and still funding city government with an earnings tax that limits economic growth. Could the City of St. Louis operate without the earnings tax if the residents and voters wanted to do so? Of course. Most large cities in the United States do not have local income taxes. One problem (of several) with the tax subsidies and abatements the city gives away is that they make it impossible to rely less on the earnings tax and more on local property taxes, which is how many comparable cities fund their local services. Nobody says it will be easy to phase out the tax, which brings in an estimated $159 million per year. But if voters decided to end it, during the 10-year phase-out period an overall effort toward ending corporate welfare, raising alternative (and less economically harmful) taxes, budget cuts, continued pension reforms, service sharing with other governments (as in re-entering St. Louis County), and privatization efforts (e.g., the water utility) would allow St. Louis to continue to fund necessary services. It bears repeating that most comparable cities, including Chicago, Memphis, Omaha, Tulsa, and Nashville, fund their local services without local income taxes.

As St. Louis City voters prepare to decide the fate of the one-percent earnings tax in April, they do not have a simple choice. But the way the city has been operating for years is not working. The population is still declining, crime rates are high again, and the schools are failing too many students. If the city continues to go along as it has been for years, managed decline is about all we can hope for. Perhaps it is time to break out of the Catch 1% the city is in and do something radical.

St. Louis Voters Support School Choice

Posted on April 12, 2021January 13, 2026 by Michael McShane

The Missouri Association for Public Charter Schools has released a new poll measuring the opinions of voters in St. Louis.

The online survey, conducted by Change Research, surveyed 614 St. Louisans in February of 2021 and asked them a battery of questions about their opinions on education in St. Louis.

Some highlights:

57 percent of voters in St. Louis say that public education is on the wrong track.
87 percent of voters earning less than $30,000 per year say that education in St. Louis needs to change “somewhat” or “a lot.”
92 percent of voters who earn between $30,000 and $50,000 say that education in St. Louis needs to change “somewhat” or “a lot.”
90 percent of voters say that it is “somewhat important” or “very important” that parents be able to pick their children’s school.
Charter schools have a 21-point favorability advantage over traditional public schools in St. Louis.
Interestingly, when asked about some basic facts of charter schools (respondents were asked whether statements such as “charter public schools are free” or “charter public schools are public” were correct or incorrect) lower-income St. Louis voters were more likely to get the answers right than higher-income voters.
58 percent of respondents disagree with the statement “Public district schools in St. Louis are serving Black students well.” Only 25 percent of respondents agreed.
39 percent of voters said that they were more likely to support a candidate who supports opening more charter schools while only 26 percent said that they would be less likely to support a candidate who supports opening more charter schools.

Voters know the score. Public education in St. Louis is not working for thousands of families. Parents should have more choice in where their children attend school.

That said, it is quite interesting that higher-income St. Louisans were more likely to not understand basic facts about charter schools. It would be a shame if their ignorance created political headwinds for solutions that their lower-income neighbors want and need.

How will this sentiment translate into policy? We don’t know. But, hopefully, civic leaders will respond to the needs and wants of their voters.

If This Is a War, Who Needs Peace?

Posted on April 9, 2021January 13, 2026 by Susan Pendergrass

Apparently, Missouri is continuing its “war on public education.” According to a recent op-ed by a columnist at the Northwest Missourian, a House Bill (HB 543) that would give more Missouri parents access to a charter school is evidence of this war. In fact, according to the columnist, if the bill passes “it will be the next step in destroying public education.” The bill actually pertains to open enrollment, not charter schools, but other bills would expand access to charters.

Let’s look at some facts. The Missouri Legislature is currently considering a budget that will fully fund the education foundation formula next year even though many predicted doom and gloom for school finances. For the purposes of funding, Missouri public school districts get to use this year’s attendance (difficult to keep track of), last year’s, or the year before. In other words, they get to pretend that no parents got fed up with their district’s educational offering this year and left— something we know is not true.

In addition, Missouri has received approximately $2 billion in federal stimulus money in the past year, 90 percent of which is required to be distributed to school districts. That’s nearly $2,500 per student in additional funding beyond the $11,000 average expenditure per student in Missouri. The supposed war on public education seems to involve giving public schools a lot of money.

But here’s the real deal—the public education establishment doesn’t want to give parents a way out. Here’s a direct quote from the op-ed: “There is only so much money to fund public education, and increasing the parents’ choice in where their child goes to school will bleed established districts dry.” Wow. Katie bar the door!

We all know that parents with the means to do so already choose where their child goes to school. They choose by moving. So, what this columnist is railing against is evening the playing field for everyone else. The op-ed points to Hickman Mills, a district that serves mostly disadvantaged students, as one of the districts that will be hurt by this bill just when they’re “already so close to getting things together.” Do you want to send your child to a district that is so close to getting things together? Neither do I. Parents in Hickman Mills deserve to choose whether they’re willing to wait for that to happen or to enroll their children somewhere else, like a charter school.

It is the rare parent who sees their role as the protector of their school district and its finances. Most parents I speak with just want to do the best they can for their children. Using inflammatory rhetoric and fearmongering to restrict them is a tactic that could easily backfire.

More on the Earnings Tax

Posted on April 8, 2021January 13, 2026 by David Stokes

We have written several times about the earnings tax in recent weeks and its detrimental economic effects. On Tuesday, voters in both the City of St. Louis and Kansas City voted to retain the tax. Whatever your view of the tax, then candidate, now Mayor-elect, Tishaura Jones acknowledged in a recent St. Louis Business Journal Article:

[A]lternatives need to be examined because the tax totals a third of the city’s general revenue. “That is just unsustainable,” she said. “We need to see how we can diversify our sources of funds to make us not so dependent on the earnings tax should the voters ever decide that they don’t want to pay it anymore.”

She is absolutely right. The City of St. Louis needs to get serious about leaning less on the earnings tax, for a variety of reasons. The newest reason, resulting from the pandemic, is the increase in working from home. The city is, unfortunately, attempting to claim that people working from home in the suburbs still have to pay the tax. Through legislation or litigation, I hope that this new and intentionally improper implementation of the law is prohibited. Nevertheless, the long-term impacts from increased working from home on the earnings tax in St. Louis will likely be substantial.

And yes, voters may one day (Tuesday was clearly not that day) decide they want to phase it out, and the city should move in a direction to encourage that, not discourage it. The single most important thing the City of St. Louis can do is reduce the enormous tax subsidies it gives out each year. As stated in our recent op-ed in the St. Louis Business Journal, the city gives out about $70 million per year in subsidies. Expanding the tax base by letting those subsidies expire and not granting new ones is the single best way to phase out the earnings tax without large tax increases elsewhere.

Even if one thinks that the City of St. Louis (and Kansas City) should maintain the earnings tax, not depending on it so much would be a smart thing to do.

How Empowerment Scholarship Accounts (ESAs) Work

Posted on April 8, 2021January 13, 2026 by Susan Pendergrass

Download Infographic Here

How ESAs would be funded

ESAs are not paid for through the state budget – Under the proposed ESA legislation, individuals and businesses would make a donation to a scholarship granting organization and in return receive a tax credit. Those donations would then be used to grant scholarships to qualifying students who could use the funds to enroll in another school district, a charter school, a private school, or cover the costs of homeschooling.
ESAs do not directly impact the funding formula – As a result of this funding structure, ESAs may result in decreases in the general revenue through tax collections, but they will not directly impact the foundation formula funding for public schools in Missouri.
Tax credits go to donors, not scholarship recipients – There is no connection between the individual or businesses making donations and those receiving scholarships. For example, making a donation does not guarantee access to a scholarship for your child and conversely, families do not receive any tax credit for paying for private school tuition or homeschooling expenses.
There are no federal funds being redirected to support proposed ESA legislation – ESAs would be funded solely through donations that would be encouraged/rewarded through tax credits. No direct funding, either from the state foundation formula or from federal education funding is involved.
Learn more here

ESAs actually increase funding for public schools

Two amendments to HB349 would actually increase funding for public schools in Missouri if Empowerment Scholarship Accounts are finally passed.
- The first amendment ties the operation of the ESA program to increasing state reimbursement for school transportation costs to at least a 40% level. In recent years the state has only reimbursed district schools for 10%-15% of their transportation costs, so this would be a major increase in funding, especially for rural schools. The same provision has been added to SB55.
- The second amendment creates a “hold-harmless” condition that guarantees that any district that has students leaving their schools as a result of receiving an ESA scholarship will still receive state funding for that student for five years. This means that over a five-year period district schools could receive $31,875 in state funding for every student who receives an ESA even though they no longer have to pay for that child’s education.
- See the final text of HB349 passed by the House: https://house.mo.gov/billtracking/bills211/hlrbillspdf/0711H.03P.pdf

ESAs are not vouchers and not the same as 529 plans

Empowerment Scholarship Accounts are very different from vouchers used in other states:
- Vouchers involve state funding being directly paid to private schools through a voucher distributed to families sending their children to those schools. Under the proposed ESA legislation, funds would be distributed directly to families who could then choose to use those funds in a variety of ways. As highlighted above, the funds sent to families would come from a non-profit scholarship granting organizations funded through donations NOT from the state budget.
- Vouchers limit families to spending funds for private school tuition. The proposed ESA program would allow families to use funds for a wide variety of educational costs including costs for homeschooling, testing costs, tutoring needs, therapies for students with special needs, transportation to school, tuition at public charter and district schools outside of their home district and private school tuition. As a result, ESAs give families many more options to find an educational environment that meets their children’s specific needs.
ESAs are not the same as 529 plans
- Under current federal law, families can open a 529 savings account for their children, use funds in that account to pay for private K-12 tuition and receive the same tax benefits (about $500 in savings a year) as they would if they used the 529 account to pay for college tuition. While this is a benefit to families who can already afford private school tuition, it does not make accessing a private school a possibility for low-income families in the same way that an ESA would. The Show Me A Brighter Future Scholarship program that has been proposed would be funded the same way as Empowerment Scholarship Accounts, but instead of disbursing funds to families through a scholarship granting organization, the state treasurer would set up a 529 account for families receiving a scholarship and they would then use that account to pay tuition.
- Learn more here

Are Unemployment Benefits Making It Harder to Find Workers?

Posted on April 7, 2021January 13, 2026 by Corianna Baier

If you’re like me, you’ve probably seen “We’re Hiring” and “Help Wanted” signs all over the place in recent months. In fact, the level of job openings is now nearing pre-pandemic levels. I also know that unemployment, though much lower than its peak during the pandemic, is still higher than it was in 2018 and 2019, and the rate of hiring has dramatically slowed down since the summer and fall of 2020. Why is it that, despite strong job openings and millions more unemployed than before the pandemic, we aren’t seeing more people getting back to work?

We saw similar weak employment recovery following the 2009 financial crisis when endless extensions of unemployment insurance benefits discouraged some from seeking jobs and reduced job creation. Could the forces that created the “Redistribution Recession” last time also be a threat now?

One reason to be extra concerned is that people may be getting more money on unemployment than they would if they were working. The most recent federal relief package, the American Rescue Plan Act, extends unemployment benefits through at least September and maintains the $300 supplement that gets paid out on top of the usual state benefit.

Unemployment benefits are meant to provide temporary assistance for people as they look for jobs. These benefits are not intended to replace work and therefore should not put people in a position of taking a pay cut to get a job. Why would people go back to work if that’s the case? We also need to be mindful of other factors here—disincentivizing work hurts small businesses that are trying to find workers to get back up and running.

Of course, not all unemployment benefit recipients are receiving more than their previous paychecks. Some workers are getting paid too much—disincentivizing them from taking a job—while others are still left to make do with less money than when they had a job. To fix these problems, it may make sense to replace the $300 supplement with unemployment benefits that are more closely tied to previous wages.

The best way to get the economy on track is to help jobless workers avoid financial distress while still ensuring that it is financially advantageous for them to find a new job rather than remain unemployed. Putting money in people’s pockets is a temporary Band-Aid that staves off hardship. But if an unemployment insurance program delays the real cure of getting people back to work, is it really a stimulant for the economy? Or a depressant?

An Inconvenient Truth

Posted on April 6, 2021December 16, 2025 by Susan Pendergrass

The Missouri Legislature is considering allowing parents in larger communities (more than 30,000 residents) to access a portion of their state education funding for use outside the public school system. In typical fashion, many rural legislators want nothing to do with such a program and believe that the parents in their district don’t either.

Let’s take a look at some enrollment data to see if that checks out. The following table contains only those districts that saw a 10 percent or higher enrollment drop between 2019 and 2020, as measured by the Missouri Department of Elementary and Secondary Education (DESE).

As it turns out, quite a few parents chose to leave small rural districts. These districts only enrolled about 5,300 total students in both 2018 and 2019, but now over 600 of them have left. Because districts can base their state funding on enrollment from either this year, last year, or the year before, these students will continue to be funded even though they’ve left the district.

Where have they gone? We know that the homeschooling numbers in Missouri have increased dramatically in the last year and I suspect that explains many of the missing 600. Is it reasonable to suggest that these parents don’t need any financial support? At the state average funding of around $6,500 per student, nearly $4 million in state funding will go to these districts for students who aren’t enrolled. Meanwhile, the parents who have decided that their district couldn’t provide an acceptable education this year are left to figure out how to create one on their own dime.

It’s a convenient story that all rural parents love their local schools and have no need for school choice. It keeps all power in the hands of superintendents, school boards, and local teachers unions. But the facts suggest an inconvenient truth. Will legislators pay attention?

How ESAs would be funded

ESAs actually increase funding for public schools

ESAs are not vouchers and not the same as 529 plans

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