Retail Competition in the Energy Market

Posted on by Scott Tanner

Missouri took a step toward reshaping part of its electricity market with the passage of House Bill 417 out of the House General Laws Committee. This legislation would introduce retail competition in Missouri’s electricity generation sector, shifting away from the current monopoly-based model. In the other chamber, a similar bill (Senate Bill 487) also had a public hearing.

Today, many Missourians receive electricity from state-approved monopoly utilities, which own and manage the generation, transmission, and distribution of electricity for their customers within exclusive service territories. Transitioning to a retail competition system would shift the ownership of generation from state-approved monopolies to private entities competing to sell power, while transmission and distribution would remain under utility control.

Responding to Change

The energy sector is in a state of flux, with several critical uncertainties lingering:

These unknowns highlight the challenges of relying on a regulated monopoly model, where long-term infrastructure planning is guided by government oversight rather than market signals. Competitive markets, on the other hand, offer greater adaptability. For example, the rise of hydraulic fracturing led to significantly lower natural gas prices over the last decade. Customers in competitive markets experienced the benefits of low gas prices sooner than customers in monopoly markets did.

Additionally, in a competitive market, private suppliers, not ratepayers, bear more financial risk of failed energy investments. If there is a significant cost overrun or if a project fails to come online, customers have less exposure as they can switch to another supplier or remain insulated through competitively priced default service (if they do not select a supplier).

Further Considerations

Despite the benefits of retail competition at the state level, other free-market reforms are needed. Energy regulation is complex, with overlapping layers of subsidies, taxes, and federal mandates distorting market forces. A truly free and competitive energy market would require broader regulatory reforms at the federal level to ensure private developers can better respond to market demand.

Another key consideration is the role of incumbent utilities in a competitive system. House Bill 417 requires utilities to divest their generation assets before retail choice begins, but it grants them discretion in how they do so. Utilities like Ameren could choose to sell their power plants to unaffiliated private developers or transfer them to a newly formed competitive affiliate, as long as the transaction occurs at fair market value and receives commission. As Missouri considers this transition, it will be important to define the appropriate role of former monopolies in a newly competitive market.

Retail competition is not a silver bullet, but it could introduce market forces to a historically insulated energy sector. Missouri policymakers ought to consider how implementing retail competition might work, and what potential barriers exist at both the state and federal levels.

Medicaid’s Check-Up: Part 5

Posted on by Scott Tanner

At this point in my Medicaid blog series, it should be abundantly clear that the program is in dire need of reform. But as I mentioned in previous posts, Medicaid is financed as a partnership between states and the federal government. This means that Missouri can only reform its Medicaid program as much as the federal government will allow. Fortunately, recent discussions at the federal level have stirred optimism that opportunities for states to enact reform could be on the way.

Congress is expected to debate a budget reconciliation package later this spring that primarily extends tax cuts passed in 2018 but also may include some federal Medicaid spending reforms. Here are a few ideas that have been discussed (keep in mind this is a non-exhaustive list, and all details are subject to change):

  • Reduce “enhanced” federal match: As I explained in earlier parts of this series, the federal government is currently paying 90% of all Medicaid costs for able-bodied adults in the expansion population but only 65% for everyone else (aged, blind, disabled, etc.). Congress is considering reducing its expansion share to something closer to what is paid for the traditional population.
  • Rein in financing gimmicks: In recent years, states have ramped up their use of Medicaid financing gimmicks to help pay for rising healthcare costs. Missouri is more reliant on provider taxes than almost any other state in the country. Congress is considering changing this arrangement to reduce the amount of money states can earn with these gimmicks.
  • Work requirements: Show-Me Institute researchers have been writing about the potential of implementing Medicaid work requirements for more than a decade. But the federal government has rarely allowed them, and after a few court cases several years ago, it was determined that congressional action was needed for them to move forward. While it’s unclear who would be included in the requirements, how exactly they’d work, or whether they would be possible in Missouri, it’s certainly worth watching what Congress decides to do on this topic.

In the coming weeks and months, I’ll be keeping a close eye on whether Congress follows through with any of these reforms. It’s never too early to begin thinking about, if enacted, what they could mean for Missouri. There’s no doubt that the federal government reducing its spending on Medicaid could have an enormous impact on our state’s budget. But as with most things, the devil will be in the details. It will be particularly interesting to see if the federal government affords states any additional flexibility to deal with potential Medicaid changes.

In the next post of this series, I’ll discuss some of the steps Missouri’s lawmakers can take today to reform Medicaid and prepare for any opportunities in the future that could help get the state’s program back on a sustainable fiscal track.

Phones Down: The Negative Effects of the Internet on Student Learning

Posted on by Scott Tanner

In the early days of the internet, it was widely seen as a gateway to opportunity. Many believed that the wealth of information available at the click of a button would enhance student learning. However, reality has not lived up to those expectations. A growing body of evidence shows that as students become more connected to the internet, they learn less, especially when their connectivity is facilitated through smartphones.

A recent study by Ronak Jain and Samuel Stemper offers compelling new evidence on this issue. Drawing on data from over 2.5 million student test scores across 82 countries, the researchers examine how the rollout of 3G internet affected educational outcomes. Because 3G technology was introduced unevenly across regions, it created a natural experiment; it was available to some students before others based on where they lived. This variation allows Jain and Stemper to isolate the causal impact of 3G technology on student performance.

Importantly, the rollout of 3G was not just about internet access—it was also about mobile internet access. It facilitated the rise of smartphones and data-intensive social media and gaming applications. Correspondingly, Jain and Stemper show that the spread of 3G internet increased student access to smartphones, in addition to overall internet use.

The research shows exposure to 3G networks caused significantly lower test scores in math, reading, and science. Students also reported greater difficulty making friends and a weaker sense of belonging. For many parents and educators, these results likely confirm what they already know, or at least strongly suspect: smartphones and the constant connectivity they allow are taking a toll on both the academic performance and well-being of our children.

Fortunately, there are steps we can take to address this problem. One straightforward policy with growing support is to ban smartphones in schools. Several states have already passed statewide bans, but even in the absence of a statewide ban in Missouri, local officials in school districts can enact bans on their own. Available research suggests the stricter the phone policy, the better.

The Final Weeks of the 2025 Session

Posted on by Zach Lawhorn

David Stokes, Elias Tsapelas, and Avery Frank join Zach Lawhorn to discuss: the final stretch of Missouri’s legislative session, including debates over education funding, Medicaid spending, and the state’s overall budget growth. They discuss proposed education reforms, reading instruction standards, and open enrollment. The conversation also covers late-session legislative dealmaking, concerns over tax credit expansions, the pause of St. Louis’s transit project, new land bank plans in St. Louis County, and developments in telemedicine and electricity market reforms.

Listen on Spotify

Listen on Apple Podcasts 

Listen on SoundCloud

Timestamps

00:00 Budget Week: The Countdown Begins
02:57 Legislative Priorities: Education and Medicaid
06:00 Senate Bill 10: A Mixed Bag of Economic Development
09:03 House Bill 660: Local Tax Reforms
11:49 Education Legislation: Open Enrollment and Safety Measures
15:11 Land Banks: A Controversial Expansion
17:58 Telemedicine and Energy Policy: Future Prospects
20:49 Final Thoughts: Legislative Outlook and Community Impact

Produced by Show-Me Opportunity

New State Board of Education Has a Long To-Do List

Posted on by Mike Ederer

A version of this commentary appeared in the Columbia Missourian.

Governor Kehoe has appointed four new members to the Missouri State Board of Education, including two who will, if confirmed, replace the president and vice-president. Given that the current president, Charlie Shields, has held the position for a decade and his term expired five years ago, I would say it’s about time. Hopefully these new members will bring new energy and fortitude as they tackle a challenging to-do list.

First, there is the glaring issue of (a lack of) accountability. Currently, Missouri school districts are held accountable through the Missouri School Improvement Plan (MSIP) 6. According to the standards set by this plan, like those in versions 1 through 5 before it, all but six of Missouri’s 520 school districts receive the state’s seal of approval, also known as full accreditation. It defies logic that a district like St. Louis Public Schools, with its numerous academic and financial problems, could be fully accredited. Part of the reason is that when the board switched from using MSIP 5 to MSIP 6 in 2024, it determined that the MSIP 6 results for a single school year were not reliable enough to justify changing any district’s accreditation status. Rather, the board decided to use a three-year rolling average to make that determination, meaning that accreditation decisions will need to wait until 2027. The new Board needs to recognize this for the nonsense that it is, and it needs to create a meaningful accountability system.

Second, the new Board should get fully behind the governor’s effort to revise the Foundation Formula, which distributes most state education dollars to districts. The existing formula is over 20 years old, and at least one-third of our districts don’t even use it. Instead, those districts are “held harmless” and given the amount they received in 2005, regardless of any changes in enrollment or property values. The board, as stewards of billions of dollars in public funding, should insist on a new formula that is highly targeted to student need, is transparent, and allows funding to follow a student to the school of their choice. Ironically, the same MSIP 6 that can’t be trusted to measure student achievement has been deemed perfectly reliable when the board requests that the legislature raise the formula’s base funding amount per student. Which is it?

Third, the Board’s job is to hold schools and districts accountable for their performance, not to hide or apologize for failure. Currently, students who have mastered grade-level content and are ready for the next grade are classified as “Proficient.” In other words, they’re where they should be. But a bill currently under consideration in the Missouri Legislature would add a classification called “Grade Level.” If you didn’t know better, you might think that meant something very similar to “proficient,” but it would actually describe students who may be on grade level. What purpose could this new classification have, other than to provide false reassurance to parents whose children are falling behind? The Board should resist any attempts to water down results.

Finally, the Department of Elementary and Secondary Education (DESE) has a website that is notoriously difficult to use. One of DESE’s main jobs is to disseminate information and data on our 2,500 schools and the 850,000 students who attend them. If Missouri were to allow students to choose a public school other than their assigned one, DESE would need a functioning website to track those students. If the Foundation Formula is revised, taxpayers deserve to be able to easily track public funds as they follow students. The Board should prioritize the building of a user-friendly and comprehensive website with easy-to-find, accessible, and transparent data.

Last year, four in ten Missouri 4th-graders tested in English/Language Arts couldn’t read. This fall they will move to middle school, and one can only imagine the difficulty they’ll be having when they can’t read their textbooks. DESE used to publish the percentage of high school graduates who were deemed either college- or career-ready by DESE standards. The percentage for the last year I could find (2017) was 42 percent. My own calculations from last year put the number at around 62 percent. When fewer than half of our young students can read on grade level and only about half of our graduating seniors are prepared for what’s next, we are in an educational crisis.

Being appointed to the State Board of Education is an honor, but it comes with responsibilities. We want board members to know the truth about how Missouri schools and students are faring, and we want them to tell us the truth about it. We want them to have a plan to fix what’s broken. That may include a performance audit of DESE to make sure the agency is functioning at the highest possible level. It may include working to expand rather than restrict parents’ choices for the education of their children. It also should include requesting the appropriate amount of state funds for their budget, rather than reflexively asking for more money each year. Time will tell which direction this new board takes, but one thing is crystal clear: It can’t be business as usual.

Royals May Stay at Kauffman Amid Stadium Inertia

Posted on by Scott Tanner

A new story by Kansas City Business Journal’s Thomas Friestad suggests a growing likelihood that the Kansas City Royals will remain at Kauffman Stadium beyond 2030—not because that’s their preference, but because no alternative is coming together.

The Royals, who have spent more than three years insisting they will vacate the K after their lease expires in 2030, face a conundrum: they have no new stadium site selected, no clear funding source, and no legislative momentum. Missouri lawmakers are on track to adjourn without approving any stadium funding bills. Kansas, meanwhile, has not yet extended the STAR bonds meant to lure the team across the border.

The Royals’ 2024 pitch for an East Crossroads stadium fell apart when Jackson County voters overwhelmingly rejected a new 40-year sales tax. Since then, the team has gone quiet. They have options—North Kansas City, Washington Square Park, and previously Overland Park—but each presents new complications. Land assembly, tax votes, and public skepticism loom large.

According to Friestad, the Royals do have the option to extend their lease at Kauffman for up to 10 additional years, through 2041. The provision, part of their 2006 lease, only requires 12 months’ notice and a clean track record with the Jackson County Sports Complex Authority.

That means the team isn’t nearly as cornered as some may think. And as experts in Friestad’s piece explain, the ticking clock shouldn’t pressure local officials into bad deals.

“This point just means your current agreement ends,” said Geoffrey Propheter, a University of Colorado-Denver professor who studies sports economics. “Nothing bad happens at this point.”

Indeed, Propheter compares it to a standard lease renewal in the housing market—if both parties want to keep the arrangement, they’ll find a way. That’s an important reminder in Kansas City, where both major sports franchises have long benefited from generous public terms. Royals critics, such as former City Councilwoman Becky Nace, argue that the team already enjoys the best deal they’re likely to get: a dedicated sales tax for stadium maintenance and operations, covering hundreds of millions in costs. Proposals in Kansas and downtown Kansas City would cover only construction, not ongoing upkeep.

The article also touches on the broader context. MLB relocations are rare and messy. Nashville, Salt Lake City, and Las Vegas are often floated as threats, but relocating to any of those locations would involve significant political or financial headwinds. Economist Victor Matheson called such leverage “overstated,” pointing to the Oakland A’s relocation saga—the team is now stranded in a minor league stadium with uncertain funding for a Vegas move.

What emerges is a portrait of slow-motion bargaining. The Royals’ ownership may still prefer a new stadium, but they’re learning what voters and lawmakers have long suspected: urgency doesn’t equal necessity, and options, while limited, do exist.

Kansas City Mayor Quinton Lucas has floated a revised package between $1.2 billion and $1.4 billion for either a new stadium or a Kauffman renovation, though specifics remain scarce. Meanwhile, voter fatigue and fiscal realism continue to grow.

The takeaway is clear: a looming lease expiration should not be confused with a deadline for action. Kansas Citians rejected a rushed deal last year. If there’s a better one to be had, it will take time, transparency, and trust to get there.

MOScholars Program Remains a Worthwhile Investment

Posted on by Susan Pendergrass

UPDATE (May 9, 2025):
The Missouri General Assembly has included $50 million in the state budget to expand the MOScholars program. This reflects growing support for educational freedom in Missouri. With this investment, Missouri joins 16 other states that have publicly funded private school choice programs.

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As Missouri’s budget conference committee finalizes its priorities, one investment stands out as both strategic and essential: restoring the governor’s proposed $50 million for the MOScholars program in House Bill 12. This tax credit–funded scholarship initiative expands educational opportunity across the state, especially for students who need it most. In recent polling, two out of three Missourians expressed support for the MOScholars program, and it’s time for the state to commit to it.

MOScholars provides scholarships to eligible K–12 students, particularly those from low-income families or with special educational needs, so that they can attend the school of their choice—whether public, private, or homeschool. By doing so, the program empowers parents, promotes educational freedom, and drives innovation across the education landscape.

Currently, the program is entirely donor funded. It was launched with a $25 million cap, and the six Missouri organizations that raise the funds and grant the scholarships have been working hard for the past few years to serve as many students as possible. The state committing to an appropriation of $50 million would help clear waiting lists, provide stability to scholarship-granting organizations, and ensure that more students can benefit from the learning environments that best suit them.

Giving families more options can lead to healthier competition, better outcomes, and stronger public education systems. States with robust choice programs have shown that when families are empowered, all schools—district, charter, and private—tend to improve.

Moreover, the scholarship expansion would especially benefit rural families, who too often are left out of school choice conversations. By including micro-schools and homeschool supports, MOScholars brings flexible options to small towns and agricultural communities where traditional alternatives are limited.

This is not just about education policy—it’s about economic opportunity, parental rights, and long-term prosperity. A child’s ZIP code or income level should not determine the quality of their education. Missouri’s leaders have the chance to deliver real change by restoring the $50 million commitment to the MOScholars program.

St. Louis Crime Reduction: Progress, Pitfalls, and the Path Forward

Posted on by Mike Ederer

A version of the following commentary appeared in the St. Louis Post-Dispatch.

With a new mayor taking office, St. Louis begins yet another chapter in its long, uneven push toward revitalization. The challenges are familiar: population decline, economic disparity, fractured politics, and struggling public institutions.

But the most daunting task ahead may not be solving those problems—it may be changing how the city is perceived.

A recent national study published in the Journal of Business Venturing Insights surveyed more than 500 entrepreneurs and prospective employees on how they evaluate U.S. cities when deciding where to live, work, or launch a business. The researchers, Kaitlyn DeGhetto and Zachary Russell, didn’t just ask about taxes or economic conditions. They asked how people feel about cities—how safe, stable, and welcoming they seem. And in those perceptions, St. Louis landed in a troubling middle ground: not the most dangerous or dysfunctional, but clearly among the cities seen as risky, especially when it comes to safety and governance.

Out of 25 major U.S. cities, St. Louis was ranked 10th in perceived safety risk—where #1 is the most dangerous. Respondents were asked about “the likelihood that individuals’ security and physical well-being will be endangered due to the normalization of aggression and criminality.”

St. Louis fared better on other measures. It ranked 13th in perceived social risk—how inclusive or equitable a city feels—and 17th on political risk, which the study defined as the threat of erratic or self-serving government action. Still, for a city that has had three mayors in eight years, that perception may be hard to shake.

These findings won’t surprise many locals. But they carry weight outside city borders. Perception—fair or not—influences investment decisions. Employers notice. So do renters, families, and job seekers trying to choose between St. Louis and cities like Charlotte, Austin, or Nashville.

This is the modern challenge for post-industrial cities. It’s no longer enough to compete on cost of living or square footage. Cities are now judged on vibes—by the headlines they generate, the stories residents share on social media, the narratives that take root far from City Hall. And while that may seem superficial, it’s anything but. In an economy increasingly driven by talent and mobility, a city’s reputation can make or break its efforts to attract the very people and businesses needed to fuel a turnaround. The difference here is that St. Louis must deliver not with soccer stadiums or entertainment districts, but with basic services.

We can and should debate the objective data—what’s truly happening on our streets, whether crime is up or down, and how we compare nationally. In the immediate past, St. Louis has seen reductions in certain types of crime. But the more difficult task—the one that falls squarely on the shoulders of the new administration—is shaping what people believe about the city in the first place.

There will be a temptation to reach for slogans or launch rebranding campaigns. But what’s needed is substantive progress—not just on public safety, but in how city government performs. That means competent service delivery, clear budgeting, and leadership that resists the pull of yesterday’s political fights in favor of building civic trust and shared purpose.

In the DeGhetto and Russell study, entrepreneurs ranked safety risk as their top concern—above taxes or regulatory burdens. Conservative respondents emphasized crime and political dysfunction. Liberal respondents focused more on social inclusion. That tells us something important: Everyone is watching, but they’re seeing different things.

For St. Louis, that means the mayor can’t govern just for applause from any one audience. The challenge is to build broad confidence. Do people believe this city is safe? Do they believe it’s run competently? Do they see a place where they and their children can thrive?

The answers may be shaped as much by tone and transparency as by policy. But they begin, inevitably, with what city leaders do to promote public safety—and just as importantly, what people think they’re doing.

Perception isn’t everything. But for a city trying to reverse decades of loss, it’s not enough to make progress—it has to look like progress, too.

“Free” Transit Is Anything But

Posted on by Mike Ederer

A version of the following commentary appeared in the Examiner.

People don’t appreciate things that are free, for good reason. One of the most famous insults in film history is on point here, when Rodney Dangerfield notices Ted Knight’s ugly golf hat in “Caddyshack” and says, “I bet you get a free bowl of soup with that hat.”

The Kansas City Area Transportation Authority (KCATA) didn’t give out free soup to riders when it made all transit free in 2020, but it might as well have. Free transit is great if your goal is to turn buses into mobile homeless shelters. If your goal is to provide quality, safe, affordable transit, then making it free is the last thing you would want to do. It reduces revenues the system needs while making ridership a worse experience for more people.

KCATA head Frank White III has acknowledged that security problems have increased under the free fare system. The agency addressed those problems by adding more security and police, which is better than doing nothing. But it is spending more money on security to address problems caused by collecting zero money in fares. No wonder there is a funding shortfall. Austin, Texas, instituted free fares on buses in the 1990s, and crime dramatically increased. Reinstating fares addressed that problem quickly.

KCATA is finally moving toward reinstating some fares, but it won’t go nearly far enough. According to plans, numerous groups, including the homeless, will remain exempt from paying fares. Politicians and other free-transit backers will blame the inevitable decrease in ridership on the fares while overlooking that the free rides for some will continue to make the bus experience so unpleasant that others who need it will choose not to use it. That’s basically progressive public policy in a nutshell: Make local government services equally awful for everyone.

On another transit front, Independence, Kansas City, and several other cities have been experimenting with a different option for public transit: outsourcing it to a private company. Independence had been contracting for bus services with Transdev bus company, but increased costs and low demand led the city to end those routes and that contract. Now, Independence and Kansas City are contracting with the private company RideCo to offer their own version of Uber or Lyft. To save money and time, the IRIS program in KC takes riders to a general area rather than an exact address, so some walking is required (which most Americans, including the author, could use). The IRIS program is subsidized by taxpayers, as public transit generally is. But it charges a modest fare, as it should. The baseline fare in Independence is $5. Some type of fare is needed both to fund the service and address the (both literal and figurative) free rider problems.

Will this new program succeed? I hope so. Such an experiment with subsidized ride sharing can only be done with the private sector. If it succeeds, wonderful. If it fails, the program can be ended and taxpayers won’t be on the hook for it anymore. Engaging the private sector avoids the complex politics of hiring and firing new government employees.

Successful public transit moves people who depend on it to where they need to be in a safe, efficient, and timely manner. The louder supporters of transit often confuse actual success with more grandiose aims: convincing well-off suburbanites to use transit, designing flashy but useless pet projects, or creating utopia by making everything free. For a perfect example of that confusion, see how KCATA is cutting its bus route hours while the flashy and useless (yet expensive) KC Streetcar route is being expanded.

Reinstituting some bus fares and contracting with private operators for rideshare service will hopefully give KCATA, Independence transit, and the larger region the resources it needs. The purpose of transit is to move people who need it, not to satisfy the dreams of urban planners or ideologues. Free transit and streetcars do the latter, but all actual transit users want is a safe and affordable way to get to work or school on time.

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