Missouri’s Municipal Failure

Posted on by Patrick Tuohey

According to the Brookings Institution Metro Monitor 2019, per data from 2016–2017, Kansas City ranked 78th in economic growth out of the 100 largest metro areas in the United States. St. Louis fared a little better at 69th. Kansas City ranked 84th in prosperity (measured by productivity, standard of living, and wage growth); St. Louis ranked 52nd. Missouri’s cities are underperforming.

The Kansas City metro area, despite all the talk about innovation and tech jobs, scored 81st in percentage change in jobs at young firms—one of the worst performances in the United States.

Missouri’s top cities spend hundreds of millions of dollars on incentives and subsidies each year in an effort to improve the economy. Exactly what have we gotten in return for all this spending?

Report after report details exactly how St. Louis and Kansas City have given away such a huge amount in incentives. We’ve rebuilt downtown Kansas City, yet haven’t grown or created jobs in any meaningful way. In fact, it appears we’ve actually overbuilt Kansas City. The population of St. Louis is actually shrinking despite all the investment.

Any reasonable person would look at this and conclude that while these incentives and subsidies may make wealthy developers wealthier, they aren’t actually creating very many jobs or doing much to increase investment. That is certainly what the research says.

So why are we still doing it?

 

 

Charter Schools Can Exist in Rural Areas, Too

Posted on by Abigail Burrola

There are 1,300 charter schools in rural and township areas nationwide. Exactly zero of them are in Missouri, and that’s a problem. There are plenty of examples of charter schools serving rural areas very effectively. A recent article from the 74 Million highlights the story of a charter school serving rural, low-income students in Gaston, North Carolina.

KIPP Gaston College Prep opened in 2005. Six years after graduation, 61 percent of graduates from the 2009 class had earned college degrees. The degree-earning rate after six years was 48 percent for the class of 2010, and 62 percent for the class of 2011. The graduating class sizes are small, with 48 graduates in 2009 and 568 alumni so far, but the early returns are very encouraging. These rates are impressive considering only 11 percent of children raised in the lowest-income quartile (annual family income of $37,564 or less) earn bachelor’s degrees within six years. Gaston KIPP families mostly fall toward the bottom end of that lowest quartile.

In the 2016–17 school year, the National Center for Education Statistics reported that over 225,600 Missouri students that attended a public school in a rural or township area qualified for free and reduced-price lunch (representative of a low family income but not necessarily the lowest income quartile)—roughly a quarter of all Missouri public school students. As the achievement gap between high- and low-income students persists, successful efforts to support rural, low-income students should be encouraged.

KIPP Gaston College Prep is just one example of how educational choice can benefit students beyond urban areas. Isn’t it time Missouri expands charter schools to better serve its low-income, rural students?

 

Film Tax Credits Still a Bad Idea

Posted on by Patrick Tuohey

It is appropriate that in the St. Louis Post-Dispatch story on an effort to reinstate film tax credits, the newspaper chose a scene from the movie “Three Billboards Outside Ebbing, Missouri.” The town of Ebbing does not exist; neither do the benefits of film tax credits.

Back in 2010, Missouri’s own Tax Credit Review Commission wrote in their report that the film tax credit should be cut because it “serves too narrow of an industry and fails to provide a positive return on investment to the state.” As my colleagues wrote in 2015, “according to data gathered by the Bureau of Labor Statistics, jobs related to film production decreased during the time the film tax credit program was in place.” What has changed since then that justifies a change in policy? No one is saying.

Instead, the sponsor of the effort to offer yet another state tax credit sings paeans about the work ethic of Missourians, telling the Post-Dispatch:

If given the opportunity for a production company to select anywhere they would choose without having the tax credits being part of the equation, they would certainly choose Missouri more often than other states that don’t have the work ethic and the pride that we have as Missourians.

The characters portrayed in “Three Billboards” and the Netflix show “Ozark” aren’t the examples of work ethic for which any state would want to be known. Furthermore, wasting money on investments that fail to provide a positive return isn’t a good work ethic; it’s careless.

What’s worse, governments don’t even do a good job of picking films anyone will see. A study from the Beacon Center of Tennessee found that “using available box office data, over 40 percent of films that receive grants made less at the box office than they received in incentives.” If we want to promote a good work ethic, let’s stick with rewarding filmmakers who apply their craft well, rather than filmmakers who merely apply for handouts.

It would be laudable if supporters of this proposal argued that Missouri’s taxes are too high, and that there would be more private investment if we lowered them. Instead, they are effectively saying “taxes are too high, and we’d like to lower them for one particular industry that we favor.” That is wrong; government should not be picking winners and losers. It’s just bad policy.

 

Students Who Are Bullied Deserve Educational Options

Posted on by James V. Shuls

Kids can be terrible. I know. I have four of them. They bite. They kick. They scream. They mock. They tease. They do just about everything you tell them not to . . . sometimes because you tell them not to. As parents, my wife and I try our best to teach them to love each other, to have compassion, to offer forgiveness, and to just be decent people. We fail at this on a daily basis.

That is why I have some sympathy for teachers and school leaders when it comes to issues related to bullying. I have four kids; they have hundreds. I understand that some amount of bullying or fighting is going to occur at schools because schools are filled with children.

This doesn’t mean we can’t do anything about it. Parents and schools need to be proactive about preventing these kinds of problems. But what do we do for students who do not feel safe at school right now?

In most cases, our policies require the child being bullied to confront their bully. They have to come forward to their parents, teachers, or principals. Then, often times, they have to work with that student to overcome differences. While there may be some merit in attempting to build these bridges, sometimes this is just a bridge too far.

The problem with all of this is that most parents have little recourse. They can bring the issue to the attention of the school, but then they must trust the professionals to address the issue that first happened under their watch.

Students should not be forced to continue attending a school where they don’t feel safe.

As my colleague wrote about recently, Florida did something innovative to address this problem. It created the Hope Scholarship Program, which allows “purchasers of motor vehicles to contribute their vehicle sales tax to fund private school scholarships.” Those scholarships are awarded to victims of bullying or physical attacks.

School choice programs, such as this or Empowerment Scholarship Accounts, give parents control. These programs equip parents with the resources to place their child in a school where they will feel safe and supported.

Teachers and school administrators will do the best they can to help students and prevent bullying. But like it or not, it will occur. When it does, those children deserve educational options.

 

Health Care Desperately Needs Competition-Retail Medicine Provides It

Posted on by Kelvey Vander Hart

If you need a flu shot, you could make an appointment with your physician, wait at a potentially inconvenient location, and likely receive an expensive bill. Or, you could head to your local grocery store and quickly receive the shot for under $30 with additional incentives like discounted shopping coupons. Some places like Walmart have even delivered flu shots for free, realizing they are a way of getting people into the store.

Why is there such a difference between the two? Charles Silver and David Hyman, authors of Overcharged: Why Americans Pay Too Much for Health Care, argue that it is because of the free market.

Traditional providers, like hospitals and clinics, are expensive and inconvenient for the consumer because their pricing is primarily based on what insurers will pay. In comparison, retail providers, like the clinic found in your grocery store, have to price their services in order to attract customers and strive for convenience. The two offer many of the same services but have completely different ways of doing business.

Retail providers are becoming an increasingly disruptive challenger of traditional providers. This should not be surprising—when providers are able to compete the results typically are lower-priced and more attractive options for the consumer. Just as internet shopping is disrupting brick-and-mortar businesses, retail medicine is disrupting traditional medicine, an industry that is used to being insulated from competition.

A great example of this is the way retail medicine is transforming audiology. While traditional audiologists charge steep prices for hearing aids and hearing checks (with additional charges for things like testing, warranties, and damage coverage, which can often make up 70 percent of the total price of a hearing aid), retailers are improving services while lowering costs. Costco Hearing Aid Centers offer similar services to that of audiologists without the additional charges.

Silver and Hyman write:

As more retailers enter the field, prices will become easier to compare and competition will intensify. Bargain-hungry consumers will look for better deals, but they will be interested in quality too . . . With pressure on both quality and price, retail offerings are bound to improve. (pg. 325)

Competitive pricing offered by the retail sector also allows people to avoid markups that come with using third-party payers. While most retail providers take insurance, patients pay out-of-pocket one-third of the time. In contrast, patients who visit primary care doctors pay out-of-pocket only ten percent of the time. Silver and Hyman view this as an important factor in the success of retail providers:

When we pay for health care the same way we pay for other services—by spending our own money instead of an insurer’s—good things happen: prices fall and quality improves as providers compete for business. (pg. 320)

Competition provides good things indeed. Want to learn more about market solutions for health care problems? Join us in St. Louis or Kansas City to learn more from Cato Institute scholars Charles Silver and David Hyman as they discuss why the American health care system is so dysfunctional and costly.

 

 

The Achievement Gap for Low-income Students Continues into College

Posted on by Emily Stahly

Recent research shows that there is a gap in academic achievement between lower- and upper-class students by as much as three to four years of schooling. Being so far behind makes it difficult to get into to college, but even for those who do make it to college, often they are not adequately prepared to complete their degree.

Currently, only four out of ten lower-income students who enter college are graduating within six years. What’s more, few additional students graduate after six years; according to the National Student Clearinghouse Research Center, only an additional 6.1 percent of all students entering college in 2009 graduated within eight years. Dropping out and being saddled with student loan debt makes it that much more difficult for these students to climb up the income ladder and access better-paying jobs that can help break cycles of poverty.

Here’s the data for first-time students in Missouri who started college full-time in the fall of 2011, per the Department of Education:

·         56.7 percent of those students graduated within six years, which is lower than the national average of 60.4 percent.

·         Students from the same group receiving Pell Grants from the federal government—most of which have family incomes below $30,000—have a six-year graduation rate in Missouri of only 40.6 percent, while students not receiving Pell Grants or a subsidized loan graduated at a rate of 68.3 percent.

These are startling numbers for Missouri. Not only are we behind the national average in terms of college completion, but a large number of those who fail to graduate appear to be low-income students. Those are exactly the kind of students who are least equipped to handle the burden of high student debt, especially without the benefit of a degree.

A 2013 report from the Department of Education estimated that in 2009 students who did not complete their degree had on average $9,300 of debt if they attended a public 4-year school and $10,400 if they attended a private, non-profit 4-year school. More recent data from Debt by Degree breaks down student loan debt by Pell status and individual schools; it showed Pell recipients attending Mizzou average $19,328 in federal loans.

Addressing the degree achievement gap must start at the K-12 level and, as I discussed before, competition through choice is necessary if we want better outcomes for low-income kids. But in the meantime, making changes at the college level can help lower-income students getting ready to go to college now or that are already there.

In “Creating Pathways for Self-Sufficiency,” I discuss a few ways colleges can boost graduation rates among low-income students. Retention grants or emergency scholarships can fill gaps in financial aid for low-income students who are on track to graduate but would otherwise have to drop out due to lack of funds. Providing supports like mentorships and enrollment or financial aid checklists have been effective in helping first generation college students be prepared.

Not included in my essay but also worth noting is data-based guidance counseling. Georgia State University’s predictive analytics system has helped students from all economic backgrounds graduate at higher rates by connecting students struggling academically with tutors sooner rather than later and making sure students are not taking unnecessary classes that cost extra time and money.

As taxpayers, we invest too many public dollars in education at every level to have results like these. Isn’t it time to move towards a system that better serves students of all economic backgrounds and ensures that those who go to college leave with a degree?

Why Aren’t More Missouri Students Earning IRCs in Agriculture-Related Industries?

Posted on by Emily Stahly

In many of Missouri’s school districts, career and technical education classes are available either through the local high school or area career centers. But why are only a fraction of our state’s high school students receiving industry-recognized credentials (IRCs), especially in Missouri’s major industries like agriculture? Even where classes are available, it seems that getting some kind of certification is more of an afterthought.

When a student is looking to go to work right out of high school, an IRC shows the potential employer that the student has skills needed for that job. If a student is planning on going to college, an IRC can help them gain valuable experience, make some money, and potentially earn college credit. Particularly in industries like agriculture and animal science where there is a lot of student interest, Missouri should look for ways to create clearer pathways for high schools to earn IRCs.

In a recent article from the St. Joseph area, a local teacher discusses how he is observing more students interested in jobs related to agribusiness such as food safety, veterinary science, and conservation. But according to data from the Department of Elementary and Secondary Education (DESE), only three students from the St. Joseph school district passed the MO Agriculture Skill & Knowledge Assessment, an IRC that shows that students have mastered one of 15 areas including farm management and livestock evaluation. Despite interest in veterinary science, no students in the district received the Veterinary Assistant Animal Care Technologies IRC.

It is worth noting that some districts do very well in getting their students credentialed. For instance, even though Jefferson School District had fewer than 50 high schoolers enrolled in 2018, students in the district earned 23 MO Agriculture Skill & Knowledge Assessment certifications.

Nevertheless, Missouri as a whole could do a better job of helping students get a jump start on a career or college. And not just in agriculture-related fields—there are opportunities, albeit limited, for students to specialize in areas like welding, web programming and development, health care, and automotive repair. In 2018, only 7,084 IRCs were earned by Missouri high schoolers and about 2,800 of those were ag-related (for perspective, there are over a quarter-million high schoolers and over 64,000 12th graders in Missouri).

How can we expand these opportunities and make earning an IRC for career-minded students more of the norm in Missouri? Creating an incentive for teachers and districts through bonus pay is one option. In Florida, teachers are awarded a bonus of $25 to $50 for each student that obtains an IRC. After adopting this policy, IRC obtainment increased from 803 in 2007 to over 86,000 in 2017. North Carolina also has bonus pay for high-performing instructors and over 160,000 IRCs were obtained in 2017.

Missouri has over 500 school districts, all with different strengths and challenges. Establishing a bonus pay program would give districts an incentive to find the best way for them to give more of their students a head start on a career or college.

 

Hotels and Supply and Demand

Posted on by Patrick Tuohey

VisitKC, Kansas City’s convention and visitor’s bureau, is making presentations in which they claim that the city’s occupancy rate—the percentage of available hotel rooms sold each night—is lower than what it should be for a “healthy lodging market.” That low occupancy rate is likely due to the recent addition of so many new hotels into the market, many of them subsidized by taxpayers.

As anyone who took Economics 101 would expect, the increase in hotel room supply will drive down prices. And a drop in prices can hurt hotel operators. This is why—in a free-market system—hotel operators may be hesitant to build new hotels. If they overbuild, their investment won’t be as profitable.

But in Kansas City, they aren’t just spending their own money. They are receiving subsidies in the form of abatements and tax-increment financing to shield them from risk. Recall that one development attorney made exactly this point in a recent letter to the folks who dole out such subsidies.

As a result, Kansas City is in a predicament: too many hotels rooms resulting in lower than ideal occupancy rates. To fill as many rooms as they can, hotels will reduce their rates and settle for lower profits. VisitKC refers to these completely expected free-market forces as “destabilization.”

VisitKC wants to avoid this. So one of their “strategies for combatting the destabilization” is “increased resources for VisitKC” including a “re-focused” sales and marketing strategy. (A copy of the Visit KC presentation is available below.) In short, they want to spend money doing what hotels should be doing themselves: selling hotel rooms. To their credit, they have also called for a halt in development subsidies for hotels.

To recap: city hall spent so much taxpayer money subsidizing hotels that more hotels were built than necessary because developers were shielded from the risks of expansion. Now that overproduction risks reducing hotel rates, city hall wants to spend taxpayer money. As I said on KCPT’s Ruckus, yes, this is as stupid as it sounds. Kansas City must do better.

tif april 10 2019.pdf

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