Stadium Subsidies, All Over Again . . .

Posted on by Graham Renz

Earlier this year, the Saint Louis Board of Aldermen narrowly approved the issuance of roughly $65 million in bonds to fund improvements at the Scottrade Center. Renovations have begun, but bonds have yet to be issued, and recently a lawsuit was filed against the city and others which alleges that publicly funding improvements to a facility that benefits primarily private interests—the NHL Blues and its ownership—violates the Missouri Constitution. You can read more about the suit here. The Blues have filed a suit of their own, too.

I am not a lawyer, and I have no intention of commenting on the legal merits or demerits of the suit. Rather, I’d like to use this as an opportunity to think about the policy fundamentals underlying the public funding of arenas.

But first, some facts about the current project*:

  • The city owns the property and leases it out for $1 a year.
  • Scottrade currently brings in about $6 million in sales and other tax revenue a year to the city.
  • The bonds would cost the city a total of $106 million over 30 years.
  • Based on projections, renovations will bring in an additional $145 million in tax revenue over 30 years, meaning the city would make a $40 million “profit” over that period.
  • If the facility isn’t renovated, it is projected to generate less and less, finally bottoming out at $4 million a year. (These are just projections from the Scottrade Center’s consultants—click on the link below to see their full 32-year set of estimates).

*For arguments sake, I am assuming the projections are accurate. But, as an aside, these figures were produced by a consulting firm which regularly is off by margins of 50%.  

So what are we to make of the current situation? For one, “investing” in the facility is not a get-rich-quick (or even a get-rich-slow) proposition for the city. Taxpayers could see a much higher return on a similar investment in a diversified portfolio. Alternatively, no taxpayer investment could be made at all, and the city would still see $4 million come in every year.

Nor will investing in Scottrade significantly contribute to urban core revitalization. For one, if the city doesn’t fund these improvements, the facility will not disappear from the face of the earth. In addition, stadiums and mega-events are overwhelmingly considered by economists as poor ways to grow an economy. It is radically unscientific to claim stadiums and arenas are boons for the economy.

Now one might say that the city owns the building, and so, like any decent landlord, should pay to keep things up. This line of thought is understandable (though some claim the city doesn’t own the facility, but just the land it sits on), but it appears misguided. I understand that a landlord has an obligation to keep property in good shape if a tenant pays rent. The Blues pay neither rent nor property taxes. (Sure, events at Scottrade generate sales tax revenue, but that’s an ancillary benefit of the arena, not an excuse to avoid paying for use of the building or for upgrading it.) Plus, many of the slated improvements are things like new scoreboards and sound systems, not just building fundamentals like piping, furnaces, and other mechanical improvements. Demanding the city pay for upgrades is akin to demanding a landlord install big screen TVs for the squatters living on his or her property.

If the Blues have had the facility rent and tax free, and take in all the revenue from NHL and other events it hosts, isn’t it reasonable for them to pay for upgrades themselves? Perhaps the city can help put in new pipes, but is there any good reason for city, and potentially state, taxpayers to fix up a facility that primarily benefits wealthy team owners?

Why is our city so desperate to hand out tax dollars it simply doesn’t have? 

Obamacare’s Total Eclipse of Bad Policy

Posted on by Patrick Ishmael

On Monday, much of Missouri experienced a complete solar eclipse, the last of its kind in the state until 2024, when Cape Girardeau will be ground zero for science geeks. For other areas of the state, the next eclipse will be a tad more distant; Kansas City’s next total solar eclipse will happen early in the 23rd Century, in 2205. Whatever your perspective, though, it can be said with mathematical precision that you can depend on astronomical events like this to happen regularly.

Unfortunately, bad policy can also recur like an eclipse—and sadly, not nearly as infrequently as Kansas City’s two-hundred year solar eclipse cycle.

Seven years ago, Congress passed the Patient Protection and Affordable Care Act (or “Obamacare”) on a party-line vote and into law. Not only has that law disrupted the health care of millions of Americans—particularly rural Americans—but it has doubled down on a broken status quo that puts “insurance” at the center of our health care system rather than care. Forcing people to purchase value-questionable comprehensive insurance plans as a stand-in for actual care has not worked so far, and it will not work in the future.

But what’s especially frustrating is that some of the same folks who made Obamacare the law of the land now want to commit even further to a government-centric approach to health care policy, labeling it “bipartisanship.” I submit that bipartisanship that views government as the white knight of health care is not an appropriate compromise position, nor is it the solution to our country’s health care problems. The market is.

Market solutions to health care require reliable pricing signals established by the transacting parties, not the continued reliance on a third-party negotiator for services that has affected care quality, cost, and access over the last half-century. That means disintermediating insurance in our health care system. It means massively overhauling Medicaid to ensure our most vulnerable receive the care they need and that the program doesn’t bankrupt us in the process. It means clearing the way for people to freely help one another through licensing and regulatory reform. It means, in other words, often doing precisely the opposite of what Obamacare supporters want government to do—rather than get government more involved in our health care, it means getting it less involved.

I hope that good policy won’t be eclipsed by a broken Obamacare health care system that continues to hurt millions of Americans. But I especially hope the bad policies driven by Obamacare aren’t exacerbated yet again by another cycle of bad government-centric policy, now seven years on from its last appearance. We’ve seen these mistakes before, and we don’t really need to see them again.

Private Schools Aren’t What You Think They Are

Posted on by Michael Q. McShane

Summer fading into fall and children heading back to school . . . it can mean only one thing: Football is about to come back. In addition to my annual tradition of watching Rudy before the first Notre Dame game of the year, I usually find myself trawling through YouTube looking for funny football bloopers and press conference awkwardness.

There are some great NFL press conference moments. Jim Mora’s incredulous “Playoffs? Playoffs? I hope we can just win a game.” Herman Edwards’ punctuated “You play. To win. The game.” Mike Ditka’s forlorn “If I was fired, I’d quit right now.”

But perhaps the most emotional press conference moment came from Arizona Cardinal’s coach Dennis Green, who, after losing a game to the Chicago Bears, angrily pounded the press conference podium and shouted “They are who we thought they were, and we let them off the hook!”

I was reminded of this exhortation last week when NCES released the results of the 2015–16 Private School Universe Survey, an exhaustive analysis of the landscape of private schooling across America. I spend a lot of time in Missouri and across the country talking about private school choice programs, and hearing people’s opinions about private schools and their potential as options for children. Based on people’s perceptions, I’d like to invert Dennis Green’s shouts and say that private schools aren’t what you think they are.

When they hear the words “private schools,” many people think about toney suburban campuses speckled with lacrosse fields and tennis courts. Others think about single-sex Catholic schools run by the Christian Brothers or Sisters of St. Joseph.

Neither of these images is fully representative of the diverse set of private schools in our nation today. So what do we know about private schooling in America today?

The 34,576 private elementary and secondary schools are, on average, quite small. The average enrollment was only 142 students across all schools, 100 students in elementary schools and 263 students in high school. Forty-six percent of private schools enrolled fewer than 50 students.

Single-sex schools are extremely rare. Only 4 percent of private schools in America were single-sex, evenly split between 2 percent all girls and 2 percent all boys.

Catholic schools only make up 20.3 percent of all private schools, though it should be noted that they enroll 38.8 percent of all students. A full 32.7 percent of private schools are nonreligious.

Perhaps surprisingly (though not as surprising if you read this great Brookings Institution paper on the geography of school options across the country), 30.2 percent of private schools were located in rural areas or in small towns.

As to racial demographics, private schools do differ from traditional public schools in meaningful ways. While public schools are roughly 50% white, 16% Black, 25% Hispanic, and 9% all other races, private schools are 69% white, 9% Black, 10% Hispanic, and 12% all other races.

One last data point worth mentioning; private school enrollment is on a serious decline. In just 15 years, it has dropped from 6.3 million children (in 2001–12) to just 4.9 million (in 2015–16).

I’d offer three short reflections.

1.It’s time we update our understanding of what private schools looks like. There is an incredible amount of variation within private schools. On average, they are small, more likely to be religious, and are probably located within a city or suburb. But that’s about all we can say. If you have a mental picture of what a private school looks like and assume they all look like that, you’re probably guessing wrong.

2.School choice risks being too little, too late. As I have argued for years, private schools, and particularly the urban Catholic schools that have a proud tradition of serving low-income and minority students, are closing by the hundreds. School choice is a way to stanch the bleeding—but without a greater sense of urgency, there will be no schools left for children to choose. We cannot be surprised to see private schools serving fewer and fewer minority children when all of the schools that have served them in the past are closing.

3.Private schools should do a better job of reaching out to minority communities. If private schools want to grow, reaching out to growing populations is the way to make it happen. I’m heartened by efforts like Notre Dame’s Task Force on the Participation of Latino Children and Families in Catholic Schools, but we need many more organizations working to connect minority children to educational opportunities in private schools. School choice is also an indispensable part of this effort, as it is perhaps the only tool that can help bridge the gap between what people can afford and where they can go to school.

Private schools are not a monolith. They are a part of the diverse landscape of education in America, and their decline should trouble all of us.

Running the Numbers on the KC Streetcar

Posted on by Patrick Ishmael

Last Tuesday, Kansas Citians voted to effectively block future growth of the city’s streetcar unless and until city leaders can make the case to the entire city that expansion is needed. Longtime readers will remember that, importantly, the streetcar itself was given life in 2012 thanks to 460 voters in a gerrymandered district who mailed in ballots to help establish the line. This time, over 30,000 voters had their voices heard, and the verdict was against expansion.

What’s really fascinating, though, is that while the vote that created the district is rarely, if ever, criticized by streetcar supporters for the weakness of its mandate, many of those same supporters had already dismissed the larger and more recent vote just hours after the counts were completed. Local blogger Kevin Collison gave some voice to the frustrations of streetcar backers, tweeting that “#KC should do whatever it takes to challenge this anti-streetcar petition, pivotal moment for future of urban core.” He may be referring to the Council’s option to override the public vote’s results. Other supporters, like Jon Stephens of T-Bones handout fame, bemoaned turnout as a symptom of a broken petition system, even though the streetcar owes its existence to the calculatedly miniscule turnout in an election brought about . . . by a petition!

Streetcar supporters say they want Kansas City “left alone” by the state and others so that locals can control the city’s fate. But if that’s the case, I have a few questions for them:

  1. Why were 460 votes enough to launch the streetcar project?
  2. Why weren’t 30,000 votes enough to circumscribe it?
  3. Why should the 13 votes of the Kansas City Council be enough to override those 30,000?

Streetcar supporters would do well for themselves to stop playing games with the public as they pursue this project.

Jazz, Race, and Crime in Kansas City

Posted on by Patrick Tuohey

The editorial board of The Kansas City Star recently published a column wondering why more people do not attend events at 18th and Vine, or more specifically, why they did not go to Kansas City’s Jazz and Heritage Festival over Memorial Day weekend. It’s a valid question if only because city leaders keep pouring tens of millions of taxpayer dollars into the effort to revive the Jazz District.

We’ve written about this before. The Star is correct that jazz serves only a niche audience, but they argue,

Still, other jazz festivals draw audiences many times larger. The New Orleans Jazz & Heritage Festival this year drew 425,000 for the seven-day event, the Xerox Rochester International Jazz Festival attracted 205,000.

Are those fair comparisons? The 2017 New Orleans Jazz & Heritage festival hosted such non-jazz performers as Tom Petty and the Heartbreakers, Kings of Leon, Usher, and Snoop Dogg. The Rochester International Jazz Festival featured Cheryl Crow—not a jazz artist. And as the Star notes, these festivals took place over more days than in Kansas City.

The Star then speculated whether the cause for such lackluster attendance here in Kansas City was fear of crime or racism. Congressman Emanuel Cleaver, who led the effort to spend public money on 18th and Vine in the 1990s when he served as mayor, offered that New Orleans and Memphis seem to have gotten past this, but not Kansas City. In order for this claim to be true, one needs to believe that the Kansas City region contains tens of thousands of jazz fans who are staying home simply because of the festival’s venue. Does anyone believe that? It seems more likely that event supporters are merely pointing the finger at others for their own failures.

Memphis’ Beale Street is a great success largely, we suspect, because it is privately run. Back in the late 1990s, Beale Street boosters sought private investment at the same time Cleaver was insisting on public financing for 18th and Vine. As to which was the wiser approach, two decades later we know the answer: Cleaver was wrong. New Orleans has a long list of private corporate sponsors; Rochester does too. Kansas City’s sponsors appear to include only “National Endowment for the Arts, the City of Kansas City, and Hall Family Foundation.”

Private administration and sponsorship is a powerful incentive for success and probably accounts for why these festivals include lots of performances by non-jazz artists. That is the lesson Kansas City must learn; government jazz isn’t working. To spend public money and then blame the public for not attending will not make anything better.

New Missouri Standardized Test Scores Don’t Tell Us a Lot

Posted on by Michael Q. McShane

Are Missouri students learning more or less? Are schools improving? Are teachers adapting to the state’s new standards? Well, the state’s MAP test results from the 2016–17 school year are out and they answer none of these questions.

Before I explain why, let’s look at the top-line results. In English Language Arts, proficiency rates for all grades hovered at around 60 percent. They ranged from 59.2 percent (in 7th grade) to 64.2 percent (in 4th grade). In Math, the numbers are lower, with the highest scores recorded for 4th graders (at 53.9 percent) and the lowest from 8th graders (at 30.5 percent). These numbers represent a small uptick from last year.

For students in the two grades for which we have science scores, scores for both have regressed slightly over the past three years, with 47.5 percent of 5th grades in 2015 scoring proficient and only 45.7 percent scoring the same in 2017. Meanwhile, 49.0 percent of 8th graders in 2017 scored proficient, down from 49.4 percent in 2015.

So what can we make of these numbers? In all honesty, not much. The eye-poppingly low 8th grade math numbers are most likely explained by the fact that 7th and 8th graders who take the Algebra I end-of-course exam (a higher-level exam typically taken by high-schoolers) are not counted in that data. They would probably help bring those proficiency rates up.

As to the rest, Missouri has been churning through new standards and new assessments over the last several years, which prevents us from knowing what explains any changes. Are the tests easier or harder? Is the actual teaching going on in the classroom getting better, or simply better aligned to the standards? Are students learning more? We cannot disentangle it.

What’s more, we probably won’t be able to understand these forces for some time. Missouri is rolling out yet another new test next year, making comparison to this year’s test results that much more difficult. Frankly, it is going to take several years of solid data from the new tests aligned to the new standards for us to determine whether or not schools are getting better or worse.

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging