Agency Fees in Government Aren’t Allowed in Missouri, But That Didn’t Stop Some Local Governments

When?Janus vs. AFSCME?was decided earlier this summer, its immediate effect was on the 22 states that allowed government unions to collect agency fees from workers. Thanks to?Janus, those government workers can no longer be compelled to support a union as a condition of employment. But fortunately, workers in Missouri had those rights already by statute, namely Missouri Revised Statute §105.510. That section makes clear a number of things, but relevant to the agency fee discussion?is this?(emphasis mine): 

 

No such employee shall be discharged or discriminated against because of his exercise of such right [to form and join a union],?nor shall any person or group of persons, directly or indirectly, by intimidation or coercion, compel or attempt to compel any such employee to join or refrain from joining a labor organization. 

 

Which brings me to a research project that we have recently embarked upon: to catalogue and review the collective bargaining agreements (CBAs) that have been instituted by the state, and by local governments across the state.?The Show-Me CBAs Project?is still in its early stages, but it has been remarkable to see how often agency fee requirements are included in these contracts. 

 

For instance, Crystal City in Jefferson County appears to have amended an existing agreement on March 26 of this year to add a provision requiring employees to pay and become union members, to pay the union the amount of union dues but not be a member, or be fired.?Page 13:

Crystal City

Meanwhile in a contract agreed to this past June, the City of Grandview also included in its contract with Grandview Firefighters, Local No. 42, a provision compelling non–union members to support the union’s activities through a “modified agency shop.” Page 2 of the agreement

Grandview

Curiously, both Crystal City and Grandview struck their respective agency fee sections shortly after we contacted them about their collective bargaining agreements. On the same day that we contacted Grandview (July 24) requesting its collective bargaining agreements, the Grandview Board of Aldermen removed the offending section by ordinance.  We also contacted Crystal City on July 24; and on August 13its agency fee section was removed. 

 

While the removal of these sections was appropriate, the larger problem here is that it appears these local governments (and many others) may have been violating of Missouri workers’ rights even before the?Janus?decision was handed down. When a contract the city negotiates purports to give the union power over you, and especially when you aren’t given reasonable notice of your actual employment rights, hasn’t the city, through its CBA, “directly or indirectly” attempted to compel you to join a labor organization, in violation of the plain language of §105.510 of the Missouri Statutes? Moreover, if any of these cities exercised a termination provision of one of these agreements against an employee—if they fired someone (or formally threatened to fire him) because he didn’t pay the union as a condition to employment—then the statutory violation seems even more obvious.

 

In Missouri, these provisions shouldn’t have been in these contracts even prior to?Janus, as they were already contrary to existing state statute. Local governments should be very concerned about whether past and current employees—all workers, both union and non-union, who made decisions based on such language—will want back the dues and fees taken under a CBA regime that misled them about their rights under Missouri law.

 

More of the Same for the New KCI Project

For years, Kansas City Mayor Sly James asserted that revenue generated at the airport cannot be redirected to the city. This is incorrect. Airport funds have been redirected to the city to cover other bad economic development investments. But his strong insistence makes the recent news all the more puzzling.

According to The Kansas City Star, part of the deal the city struck with Edgemoor, the winning bidder for construction of the new terminal, included diverting airport revenue to workforce training, gap-financing for developers, and support for a program to help the elderly with home renovation. The FAA rejected these expenditures. According to the Star:

The FAA also rejected the use of airport revenues for $1.5 million in assistance to the Northland, including housing, economic development and mental health needs.

Why is this a surprise? Even if city hall doesn’t have a command of the specifics about how airports operate, shouldn’t it be aware of these prohibitions? Shouldn’t Council members—especially the members who served on the Council’s short-lived airport committee—have known this?

This is the second in a recent set of embarrassing revelations about the airport project. Recall that a few weeks ago we learned that the Aviation Department director didn’t know enough about FAA regulations regarding environmental assessments. And before that there was the years’ long parade of advisory groups and consultants.

Building a new airport terminal is a big project, and unforeseen challenges and setbacks are no surprise. But what we’ve seen so far indicates a serious lack of competent leadership.

It’s Time to Fund Bryce’s Law

Dwight Scharnhorst was elected to the Missouri House of Representatives in 2006. Shortly thereafter his grandson, Bryce, was diagnosed with autism. On April 22, 2007 Bryce suffered a seizure that took his life. To Representative Scharnhorst, those events were not unrelated. In a recent interview with the Show-Me Institute he said, “I think the Lord was tapping me on the shoulder, ‘I put you here, and that’s part of why.’” For more on Bryce’s story, see this brief video.

In 2008, Scharnhorst introduced a bill known as “Bryce’s Law” to the Missouri legislature. Had it passed, it would have created a valuable school choice program that provided scholarships for children like Bryce who suffer from autism or other severe health impairments. Funding for the scholarships would have come from donations from individuals who in turn would receive a credit toward their taxes. The tax credit scholarship bill failed to gain support in the House of Representatives and did not pass. Many lawmakers simply would not support a school choice bill that would allow students to use funds at a private school, no matter how needy the students might be.

Undeterred, Scharnhorst proposed similar bills in 2009, 2011, 2012, and 2013. Finally, in 2014 the Missouri Legislature passed Bryce’s Law. However, the bill that finally passed was not the same as the bills that Scharnhorst has previously proposed—it did not contain a tax credit. Instead, the truly agreed to and finally passed bill called on the Missouri Department of Elementary and Secondary Education (DESE) to seek grants to fund scholarships.

The change in the bill meant that donors would only receive a standard deduction for donating to a scholarship organization, just as they would had the bill not been passed. Since 2014, DESE has not reported a single student as having benefitted from Bryce’s law.

Next year Bryce’s law is set to sunset. However, the needs of students with autism and other severe impairments have never been greater, and expanding their education options has never been more important. Rather than let this worthy program simply die without ever having reached its potential, lawmakers should finally fund Bryce’s law. They should do so directly, not through a tax deduction or a tax credit program. This is the only way to ensure that funding is available to serve these precious children in the programs their parents choose.

Check back later this month when the Show-Me Institute releases an essay, “Bryce’s Law Revisited: Serving Missouri’s Neediest Students Through Targeted Scholarships,” co-authored by Michael McShane, Susan Pendergrass, and James Shuls.

Tallying the Costs of Development Subsidies

Cities across Missouri are struggling to provide basic public services. At the same time, they’re giving hundreds of millions of public tax dollars to corporations for private development projects. What’s going on here? We decided to delve into dozens of financial reports to figure out exactly how much schools, libraries, and other public districts across the state have lost because of the generous awarding of subsidies like tax-increment financing (TIF) and other tax-abatement agreements.

A new government accounting standard known as GASB 77 theoretically requires public districts to disclose how much revenue they have foregone because of tax abatements. While GASB 77 provides a starting point, in the first year of reporting under this rule lost revenue was greatly understated—mostly because of carve-outs from the reporting requirements and misunderstanding of how to implement the rule.

Nonetheless, the numbers reported by the governments themselves show that the affected districts lose out on tens of millions of dollars every year. Instead of funding education, libraries, and other services, this money ends up in the bank accounts of private developers who in most cases don’t need subsidies to finance their projects.

About half of all public school budgets comes from local property taxes—so it matters that Missouri’s school districts lost out on nearly $100 million in fiscal year 2017 alone. St. Louis Public Schools missed out on at least $10.5 million, or nearly 3 percent of its annual operating budget, while Kansas City Public Schools lost out on at least $24 million, or nearly 10 percent of its annual budget.

The effect incentives have on other smaller districts, like Ste. Genevieve County R-II School District (1,858 students in 2018), can be even more significant than the larger ones. The amount forgone in fiscal year 2017 was $7.8 million. But with only about 4,500 students in the district, that’s equal to $4,172 per student.

Libraries also took a hit. According to the reports we examined, the 20 largest library districts across the state lost out on at least $6.8 million. A significant chunk of that foregone revenue came from the St. Louis Public Library, which missed out on $1.1 million (nearly 4 percent of its annual operating budget) and the Kansas City Public Library, which missed out on $2.5 million.

These numbers give taxpayers an idea of the cost when policymakers decide to put developers’ interests ahead of basic government services. But even the statistics above fail to capture a significant amount of the total revenue lost. GASB 77 is a step in the right direction, but more transparency is needed.

During a time of teacher protests and tax hikes, these figures give taxpayers an idea of how much money has been diverted from schools and other public services. The next time local officials stump for more revenue, ask them this: What did you do with the taxes we already sent you? Unfortunately, many have been giving them away through tax incentives.

Teachers Live Forever

It has been said that “teachers live forever in the hearts they touch.” And a new report from the Society of Actuaries (SOA) suggests that some teachers live nearly forever, period. Here is a summary from Pensions & Investments Online: “The public-sector tables also show that pension obligations for teachers are higher than other job categories, when other factors are equal. Female teachers reaching age 65 have a life expectancy of 90 or above.” You read that right; the life expectancy for female teachers who have reached 65 is 90 years old or more. Given that roughly three-fourths of teachers are female, this spells trouble for many teacher pension funds.

Missouri’s largest teacher pension fund, the Public School Retirement System (PSRS), has already begun to recognize the improved mortality rates of teachers. A PSRS report on contribution rates for 2017-2018 notes that the system has already begun updating the plan’s mortality assumptions:

People are living longer. Mortality is improving, not just in Missouri, but also across the nation. As a result, actuaries are utilizing updated mortality tables, which reflect this trend. PSRS/PEERS conducted Actuarial Experience Studies to compare our actuarial assumptions to the actual experience of the Systems. In other words, are members living as long as we assumed they would, or are they actually living longer?

According to the internal PSRS analysis, people are living longer than the plan had assumed. Adjusting for greater longevity led to a tremendous increase in the plan’s liabilities. According to PSRS board chairman Aaron Zalis, “the revised mortality assumptions better reflect PSRS/PEERS’ actual experience, which results in an increase of over $2.1 billion in liabilities to the Systems.”

Teachers in PSRS are eligible to retire with full benefits after 30 years of service, and there are also early retirement options. This means a teacher may retire by 55 with 30 years of service. Given the new mortality tables from the SOA, a large subset of teachers might be expected to live beyond 90 years old, drawing a pension for 35 years or more.

It is unclear if the SOA’s updated mortality tables for teachers will encourage PSRS or Missouri’s other two pension plans to once again change their assumptions. If they do, we can assume the financial health of the plans will decline.

Let’s process what that means for a second. Some teachers in the past did not put enough into the retirement system to cover their own benefits. As a result, the pension plan will become increasingly underfunded. To make up for this, the plan will have to increase contributions for new members, hold down retirement benefits for retirees, or seek higher returns on investments (Read: “risky investments”). None of this is good for teachers of today or tomorrow.

So teachers, keep this in mind when you sign that contract. You are agreeing to fund the benefits of those who went before you. You may be striking a bargain that you end up regretting.

St. Louis Airport Privatization Documents

Last year, the City of St. Louis applied to the Federal Aviation Administration (FAA) to relinquish St. Louis Lambert Airport to a public–private partnership. The request for proposal sought to:

receive bona fide proposals from firms, partnerships, consortiums, etc., with the technical expertise and financial resources to enter into a public–private partnership for the long-term lease, management, operation, and development of the Airport. The Airport Lease RFP shall be in a format acceptable to the FAA and shall be appropriate for submission as part of the City’s final application document.

The Show-Me Institute filed an open records request for the request-for-proposal document (available here), the proposals the city received, and the resulting contract with the winning bid. Those 11 bids are listed below, with links to the full text of each. Note that in two cases the document we received was divided into two parts, perhaps to make electronic transmission easier. Note also that some bids contain redactions, perhaps to protect sensitive information.

The selection committee for the city chose the Moelis & Grow Missouri proposal. The resulting contract with the city is here. We note that Rex Sinquefield, the president of the Show-Me Institute, is associated with Grow Missouri.

Show-Me Institute researchers have not had the opportunity to go through the proposals, but the information is presented above for public review.

It Depends on What You Mean by “Accredited”

Parents: Read the fine print. A recent blog post on chronic student absenteeism was written under the assumption that a school that displays a “Fully Accredited” banner does so for the same reason that school districts claim full accreditation—because of the school’s score on the state’s Annual Performance Review (APR). Actually, there’s a difference. Missouri’s Department of Elementary and Secondary Education (DESE) accredits districts, not individual schools. And because accreditation is a district matter, any school in a qualifying district can fly a banner like the one shown above, even if the school’s APR score on its own wouldn’t pass muster.

In other words, the Department of Elementary and Secondary Education (DESE) has developed a system for evaluating school districts by evaluating schools, but the accreditation label is only applied at the district level. If you find this a bit confusing, you aren’t alone. On my commute to work, I drive by schools in St. Louis that proudly display “Fully Accredited” banners. Like any reasonable parent, I assumed that the banner and the status apply to the school. Apparently, the fine print at the bottom suggests that it’s actually the St. Louis Public School District that is fully accredited, and therefore any public school in the district can advertise under that blanket designation. Given that all but six of over 500 school districts in Missouri are fully accredited, one could assume that nearly every school in the state could fly the same banner. If public schools were subject to consumer protection laws, then a number of parents might be the victims of false advertising.

What does any of this tell parents? The Missouri School Improvement Program (MSIP) 5 system, in which schools and districts are rated on the percentage of possible points attained, is very confusing on its own. It’s unlikely that a parent would know that an APR score of 67 means that their child’s school got 50 out of 75 points on a scale with five sets of indicators. Why doesn’t DESE make information more easily available and understandable to parents? Why is DESE providing cover for low-performing schools.?

My colleagues and I try to be careful in our analysis; still, mistakes happen, and we need to own them. We also believe that those who serve the public need to own their mistakes. We will continue to press DESE to provide parents with accurate, complete, and usable information on each school in our state.

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