On Thursday, August 8, Patrick Tuohey joined the Ruckus panel to discuss the Jackson County property tax assessment controversy, the truce in the Kansas and Missouri business border war, and other local issues.
Medicaid’s Long-Term Problem
The United States’ population is getting older, and that’s a troubling sign for Missouri’s Medicaid program. Next year’s Medicaid budget is expected to be the largest ever for the state—consuming nearly 40% of all government spending—and the elderly population makes up a significant portion of the expected costs. As life expectancy has increased over the past few decades, so too has the cost of care for elderly individuals. But what does that mean for Missouri, a state already struggling with growing Medicaid costs?
Every day, 10,000 baby boomers in the United States (individuals born between 1944 and 1964) reach retirement age, and a new study estimates that 75% of them will need nursing home care at some point. The majority of Missourians reaching retirement age do not currently qualify for Medicaid, but with nursing home costs in Missouri averaging more than $5,000 per month, the longer individuals reside in such facilities, the more likely they are to become eligible for Medicaid. In fact, Medicaid pays the highest share of nursing facility costs in the country, totaling 65% of all expenditures at Missouri’s nursing facilities in 2016.
So what should Missouri do to prepare? For starters, policymakers should reform the state’s Medicaid program. Medicaid is an enormously expensive program with very little evidence showing it actually improves health outcomes for participants. One way to provide better services at a lower cost would be to change the payment model for various services to ensure it is incentivizing desired outcomes. Reforming the way Missouri pays for long-term care would be a good place to start.
Missouri’s nursing home reimbursement rates are per diems based on each facility’s historic costs, which includes construction expenses, and are not adjusted according to the level of care each resident needs. Rather than base payments off the quality or quantity of care delivered, the size of the per diem nursing homes receive is simply based on the number of patients they have. This discourages nursing homes from moving patients out of their facilities and into more appropriate and less restrictive environments. As a result, Missouri spends a lot of money on nursing home patients who could receive the care they need in a different environment and at a lower cost to taxpayers.
Missouri’s seniors should have access to the best possible care, in the most appropriate setting, and, for those who need government assistance, at the best possible price for the state’s taxpayers. Though there is no magic bullet that could fix Missouri’s Medicaid program, increasing the value received from each provided service would be a welcomed change.
Getting Sent Back to School
What a mixed-up world we live in. In order to keep her daughter in the school she has chosen, a school that is working wonderfully for her daughter, Renita Jones has to do the impossible. She has to sell the home she has owned for fifteen years and quickly find an affordable apartment in Ladue, a wealthy suburb of St. Louis. If not, her daughter will be sent back to a failing school in her home district of Normandy.
Jones is part of a student transfer program that was created when the Normandy schools were so low performing that an emergency exit was created that allowed students to enroll in other districts. Now, the “system” that the Missouri Department of Elementary and Secondary Education (DESE) uses to rate the performance of school districts has somehow declared that Normandy, a district in which just three percent of 7th graders were proficient in math last year, is good enough. The transfer program is over, and the exit has been closed.
But let’s look at the bigger picture. Parents (and I can’t believe how often I have to say this) want to have choices when it comes to their child’s education. Of course parents in one of the lowest-performing districts in the state jumped at the chance to leave when it was offered. But guess who else chooses something other than their neighborhood school? Parents of bullied students, parents of students who are assigned to a big school but would do better in a small school, parents of students who want or need a particular curriculum such as fine arts or the classics and parents of students with disabilities who find a program that connects to their child’s needs. This list could go on and on.
So now the media is highlighting the tragedy of Tyler Ratlif Woods, who was on the path to college. Woods just found that he will not be attending high school in Ladue, where he went to elementary and middle schools. Instead he must return to his low-performing and potentially dangerous neighborhood high school in Normandy. One article quotes a transfer student’s father, Paul Davis, who called the transfer program a “gift from God.”
These stories are upsetting. It seems unfair. Forcing these children to return to their crumbling district isn’t going to help that district much, but it is going to hurt those children. In this case it’s obvious. But let’s not forget the less obvious—school-aged children are not the property of a school district by virtue of their address. They are individuals with individual needs who should have options when it comes to their education.
Missouri’s School District Accreditation Doesn’t Help Students
When the Department of Elementary and Secondary Education (DESE) says 99 percent of districts are fully accredited and doing just fine, it may seem like almost every student in Missouri is receiving a good education. However, accreditation is not entirely reflective of academic performance and it gives little information about how schools are performing. Transparent school accountability would reveal where Missouri schools are failing students.
The current Missouri School Improvement Plan’s (MSIP) accreditation system has a confusing scoring method that is far too generous to schools. As a result, zero districts were unaccredited and only 6 were provisionally accredited in 2018. Additionally, accreditation is only given at the district level and not to individual schools, so low-performing schools might get a free pass based on their district’s accreditation.
Near full accreditation is difficult to reconcile with the fact that in 2018, 25 districts had less than one-quarter of eighth graders score proficient or advanced in English language arts on the Missouri Assessment Program (MAP) exam, yet only 3 of those districts were provisionally accredited. 117 districts had less than one-quarter of eighth graders score proficient or advanced in math and only 4 of them were provisionally accredited. Other districts have similar or lower MAP performance levels than the provisionally accredited districts, but still receive full accreditation.
Other states have adopted more informative school grading systems. Florida has been a pioneer in school grading, using an A–F scale that grades each school and district since 1999. Florida recently announced that teachers can receive a one-time bonus for working in schools that receive Title I funds and receive a grade of D or F. This is a great example of the importance of a clear accountability system for schools and districts. Florida’s grading system was used to identify low-performing schools, and the state then implemented a policy to try and help students in those schools. A teacher incentive program won’t cure everything that ails schools in Florida, but it’s a step in the right direction that is only possible because of a quality accountability system.
A transparent grading system in Missouri could spur demand for options like charter schools or education savings accounts. But as long as 99 percent of school districts continue to receive full accreditation and parents have few ways to find important school information, low-performing schools will fly under the radar and educational choice may never appear in Missouri.
Fall 2019 Internships
The Show-Me Institute is pleased to offer internship opportunities for Fall 2019.
- Internships are open to current undergraduate and graduate students, as well as recent graduates.
- Internships last approximately ten weeks. The exact starting and ending dates are flexible, but we anticipate that each internship will run from September 16 until December 6.
- Fall interns will work a part-time schedule.
- Interns will be involved in many aspects of the Institute’s operations. Interns will work closely with senior staff on a wide variety of projects. They can expect greater responsibility and personal attention than they would receive at larger organizations.
- Interns will assist staff members with a variety of tasks. These may include researching public policy topics, assisting with social media, organizing events, and writing and editing op-eds, newsletter articles, studies, and other documents. Some administrative and clerical tasks will also be required.
- Policy internships as well as communications and development internships are available.
- A Show-Me Institute internship is an excellent opportunity to improve your research and writing skills. Each intern will produce regular blog posts and an op-ed on a public policy topic of interest to him or her. Each intern will receive feedback and assistance from staff members throughout the process.
- Internships are offered in both the St. Louis and Kansas City offices.
- Interns will be paid on an hourly basis.
Those wishing to be considered for an internship should submit the enclosed application and the requested supporting materials. The deadline for applications is Friday, August 30, 2019.However, we will begin conducting interviews as applications are received. Applicants can expect a decision in Early September.
What Works Better-Markets or Government?
This past summer, my family and I spent the Fourth of July at the beach on the Outer Banks of North Carolina. For the celebration, my daughter suggested we try a new recipe she found for the “Best Mojitos Ever.” In addition to the usual ingredients, these mojitos have coconut water, coconut seltzer water, and Velvet Falernum—a fancy Caribbean liqueur.
The idea sounded good to me—so off we went to get the ingredients. But to no avail. You see, the North Carolina state government controls the entire liquor industry in the state. Alcohol can only be purchased at the state-run Bureau of Alcoholic Beverage Control (ABC) stores. Their inventory and prices are decided by the state and, not surprisingly, inventory is minimal and prices are high. There’s certainly no Velvet Falernum, and thus no Best Mojitos Ever in North Carolina.
Recently, it seems “privatize” and “for-profit” have become code words for evil and greedy. But the private sector does many things quite well. My daughter’s Denver neighborhood has multiple boutique liquor stores that would absolutely have Velvet Falernum. Consumer demand is met by commercial supply. In North Carolina, purchasing liquor is similar to getting a driver’s license—strictly on the government’s terms. Do we really want more government control and fewer private markets?
Would the Fourth of July have been better with the Best Mojitos Ever? If you spend it in North Carolina, you’ll never know.
Charter Schools Are Working in Kansas City
Charter schools are making strides across the nation, and Kansas City’s own charter schools are no exception. New research from the Center for Research on Education Outcomes (CREDO) at Stanford University shows charter school students in Kansas City are learning more math and English than their traditional public school counterparts.
The study examined student’s academic growth on the state assessment in math and English for the 2014–15, 2015–16 and 2016–17 school years. CREDO compared traditional public school students in Kansas City to Kansas City charter school students, and then compared both of those groups to the state average.
In order to compare student growth, CREDO uses a “virtual twin” method, taking into account seven student characteristics such as previous academic achievement and income level. CREDO matches each charter student with several traditional public school students who are similar on the seven characteristics and averages the test scores of these students to create each charter student’s virtual twin. The traditional public school virtual twin for each charter school student differ in only one way— what type of school they attend.
Using this model, Credo found that Kansas City charter school students had more academic growth in both math and English than their traditional public school student twins in every year studied. And by the 2016–17 school year, charter school students had more growth than the state average in both subjects.
Although the results of the research are measured in standard deviations, the researchers converted these to days of learning. A typical school year has about 180 days. CREDO found that during the 2016–17 school year, Kansas City charter students received nearly 60 additional days of learning in math than Kansas City traditional public school students and about 30 more days than the state average. Charter school students also showed more growth in English, receiving about 90 extra days of learning compared to the traditional public school students and more than 30 extra days compared to the state average.
When CREDO researchers analyzed student subgroups, they found that Black, Hispanic, English language learner students, special education students and students in poverty all had more days of learning in charter schools than traditional public schools in both math and English. Notably, special education students in charter schools had more than 120 extra days of learning in English and over 90 extra days in math in one school year than special education students in traditional public schools.
While the evidence that charter schools are capable of producing great academic results continues to mount, Missouri remains steadfast in refusing to expand educational opportunity for students. Why doesn’t Missouri want to give kids all across the state the option to attend these high-performing schools?
The Strata Deal Is Built on Misinformation
The Kansas City Star editorial board called for the city council to reject a proposal to use taxpayer money to subsidize the construction of a downtown office tower. They write:
The proposed office building, called Strata, has spurred controversy for months. The combined tower and parking garage would cost $132 million; of that, roughly $63 million would come from public subsidies, including a direct $27 million public investment in the offices.
The editorial board is correct on their call, and while their analysis of market demand and public risk is correct, there are even more reasons to be skeptical of the developers’ claims. Part of the argument for Strata is that Kansas City needs more high-end office space that Strata would provide, but it’s hard to find evidence to support that claim.
In testimony before the Kansas City Finance and Governance Committee on June 26, 2019, a Strata developer asserted that Starbucks recently considered Kansas City for an office location [starts at 9:05]:
Jobs are being lost in Kansas City, opportunities are passing us by because we don’t physically have the space created. So I think that, uh, Starbucks is the example that gets used a lot toward the end of last year where there just was not Class A space on the shelf.
This same argument appeared in a number of outlets. FOX4 in Kansas City reported on June 26 that:
In recent months, a big employer, Starbucks, cited a lack of quality office space downtown as one factor in its decision to take about 1,500 jobs to Atlanta instead of Kansas City.
CitySceneKC, a blog funded by the pro-development subsidies Downtown Council, claimed in December 2018:
But Starbucks needed 100,000 square feet of Class A space relatively quickly, and it would take 18- to 24 months to build it in downtown KC. They went to Atlanta instead where there’s already “four- to five cranes in the air.”
Starbucks did choose Atlanta, Georgia for its new office location. But its operation looked nothing like what advocates for development subsidies claimed the company was seeking in Kansas City. They sought only 85,000 square feet and planned on only 500 new jobs, not the 100,000 square feet and 1,500 jobs alleged by Kansas City developers and their acolytes.
Note: the Atlanta job numbers were reported in August 2018, but developer sources in Kansas City kept using the inflated numbers in their blogs and comments to the media months later.
Furthermore, Kansas City and Atlanta are not in the same league. Atlanta’s metropolitan population is the country’s ninth-largest with just shy of 6 million people—2.5 times the size of Kansas City—and has grown 12.5 percent since 2010. (Kansas City’s metropolitan area is ranked the 31st largest, and has only grown 7 percent since 2010.) Atlanta is growing rapidly and is the headquarters city for 18 of the Fortune 500. (Kansas City has only one.) Atlanta is also home to the busiest airport in the United States, providing executives with direct routes to most places they might want to travel. (Incidentally, the Atlanta Journal Constitution article that detailed Starbucks investment also offered a caveat about the incentives offered to Starbucks.)
It’s also noteworthy that the “most compelling reason” for their decision, according to a July 2018 email from a senior executive at the Kansas City Area Development Council, is Starbucks already had an operation center in Atlanta and the company had a “comfort level in their ability to scale that workforce based on experience.” Also, Starbucks’ Chief Financial Officer had “strong ties” to The Big Peach. Could any of this have been overcome by more readily available office space?
Developers will always seek public handouts to build what they cannot fund through private investment. While it is understandable that Kansas City leaders look toward Denver and Atlanta and New York City, we have a long way to go before we can compete with those places. We won’t get there through subsidies—but through the long arduous work of supporting infrastructure, public safety, and education while being business friendly and an efficient steward of public funds.
Should Students Learn Mises?
Sometimes when universities receive gifts from donors, they come with strings attached. In 2002, the University of Missouri received one of those gifts, with the stipulation that the economics department must hire a few professors to teach the Ludwig von Mises Austrian economics theory. Hillsdale College—my small alma mater in Michigan—was appointed watchdog to ensure Mizzou followed through. These schools are now going to court, with Hillsdale claiming that Mizzou hasn’t fulfilled the Mises requirement, while Mizzou argues that it has.
So, who is Ludwig von Mises and why would a donor believe it so important that students learn about him?
To answer this question, I reached out to Dr. G.P. Manish, a Mises Institute fellow and my Austrian economics professor at Troy University. He is well-versed in all things Mises and he laid out some of the main points.
Ludwig von Mises was an economist who supported free markets and economic liberty. He is most famous for fighting against socialism. He also used economic concepts to explain decision-making in non-market areas like households and government. For example, we think about opportunity cost when we decide to spend money on a sandwich instead of a salad, but we can also use this thinking when deciding whether to spend time cleaning or watching TV.
In general, Austrian economics takes a realistic view of the market. It allows for uncertainty, mistakes, and innovation while other economic theories assume these factors away.
After this mini-lesson, I asked Dr. Manish if he thinks that students should learn about Mises. Here is his response:
I believe it is vital that students learn about the ideas of Mises. Doing so will give them a window into a different way of thinking about economic phenomena and will make them question the mainstream, Neoclassical tradition.
. . .
The free market, as Mises emphasizes time and again, benefits not only a narrow elite, but all groups in society, including the least well-off. This can be eye-opening in a world where capitalism and free markets are often charged with benefiting the rich while leaving the less fortunate masses behind.
. . .
A market economy is not devoid of error: entrepreneurs earn both profits and losses. But it is the only economic system where the production decisions of entrepreneurs and the resulting allocation of resources can be coordinated with the preferences of consumers. This vital lesson can be learnt only by studying the works of Mises.
As I’ve said before, markets work and Mises clearly understood that. The issue at Mizzou will be decided in the courts, but regardless of the outcome, many students would benefit from learning about this important thinker.
Dr. G.P. Manish is the BB&T Professor of Economic Freedom and a member of the Manuel H. Johnson Center for Political Economy at Troy University.
