Getting Sent Back to School

Posted on by Susan Pendergrass

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.

 

Fall 2019 Internships

Posted on by Show-Me Institute Staff

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?

Posted on by Susan Pendergrass

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

Posted on by Abigail Burrola

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

Posted on by Patrick Tuohey

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?

Posted on by Corianna Baier

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. 

 

Up and Up: Sales Taxes Across the State

Posted on by Graham Renz

Making long-term projections can be tricky business, but figuring out where sales taxes across the state are going is straightforward: UP!

Every quarter, the Missouri Department of Revenue releases sales tax rates for all jurisdictions across the state. Because of the growing number of special taxing districts, such as community improvement districts (CID) and transportation development districts (TDD), sales tax rates have been shooting through the roof.

Data for the latest quarter (July-September) pegs Missouri’s average sales tax rate at 7.71%. While that doesn’t sound particularly high, it is important to note two things. First, at this time in 2017, the state average rate was 7.42%. For a statewide average, that is a significant jump for such a short period of time.

Sales tax graph

Source: Missouri Department of Revenue, Sales/Use Tax Rate Tables, numerous years

Second, these figures represent averages: many sales tax jurisdictions have rates higher than even 10% or 11%. For example, in Kansas City where the streetcar TDD overlaps with the Convention Hotel and Performing Arts CIDs, the total sales tax rate is 11.6%. In St. Louis the rates reach 11.68% in places like Ballpark Village and Washington Avenue. What the statewide average does a good job of tracking is the impact of additional special taxes in the hundreds of CIDs and TDDs across the state. If the addition of CIDs and TDDscauses such significant jumps in the tax climate of the state as a whole, that means these taxing districts are not just nickel and diming taxpayers—they are significantly changing Missouri’s tax climate.

In a recent paper, Patrick Tuohey and I discuss reforms to help curb the growth of special taxing districts. Some reforms have proposed a sales tax rate ceiling, and while they would help, they wouldn’t prevent taxpayer abuse in areas with lower sales tax rates than the proposed ceiling. This much is clear: the longer policymakers take to address the state’s out-of-control sales tax problem, the worse it is going to be. The time to act is now. 

A Field of Subsidies

Posted on by William Magee

If at first you don’t succeed, get more government help. That seems to be the mantra of Missouri developers and city officials these days.

Last month, the Hazelwood City Council passed a resolution approving the redevelopment of the failing and deeply indebted St. Louis Outlet Mall. After failing to secure financing for the same project in Chesterfield, the developer, Big Sports Properties (BSP), now plans to convert the mostly vacant mall into a 138-acre youth sports complex called POWERplex, with the help of taxpayer money.

The deal includes nine sources of public financing, which can be divided into four types of incentives:

  • The first type of incentive used is special taxing districts, including a community improvement district (CID) and transportation development district (TDD), and they would together levy a 2% sales tax.
  • Second, the existing tax-increment financing (TIF) district (from the original mall development in 2003) would also collect half of all economic activity taxes paid at the sports complex, and the agreement includes tentative approval of a new TIF, slated to go into effect next January if the project is on schedule.
  • The third type of incentive used involves Hazelwood assisting the developer with debt financing, using economic development loans, Chapter 100 property tax abatement, and property assessed clean energy (PACE) financing.
  • Finally, the fourth source of incentives comes directly from the City of Hazelwood and St. Louis County in the form of $3.6 million to revitalize infrastructure.

If this all sounds too complicated, it’s because it is.

There’s plenty of reason to doubt this project will be a good investment. When the mall was first built in 2003, it received public funds totaling $52.5 million from a TIF and TDD. However, the mall sold for $6 million in 2015, just 6% of its original cost. Earlier this year, it was announced that the mall would be closing, and the TDD was mired in debt. In fact, the TDD’s bondholders agreed to settle the debt for $10.5 million, a reportedly substantial discount, which will be paid by the newly formed CID.

The mall was a taxpayer-subsidized failure, and the city is asking for us to trust them again. Even if BSP manages to see the project through this time (part of the reason the development in Chesterfield failed last year was that BSP missed an important deadline) and the first few years are successful, the long-term risk is substantial. Hazelwood might find itself in a similar situation another 16 years from now.

Besides the risk to taxpayers, government should not be picking winners and losers. Hazelwood pulled out nearly every subsidy in the book to help build a private business with no guarantee of success, and taxpayers got to bear the cost. It’s hard to imagine a time when businesses relied on market forces to decide where to build. Instead, it has become a competition between cities to see who can give away the most taxpayer money, and Hazelwood has done an exemplary job showing us where that leads.

 

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