What Does It Mean for the State to “Underfund” Education?

Posted on by James V. Shuls

A new budget proposal from Rep. Scott Fitzpatrick (R-Shell Knob) would fully fund Missouri’s foundation formula for K-12 education for the first time in years. As I have noted in the past, there were some obvious reasons for why the formula has been underfunded. The formula had features that let it grow rapidly. When this happened, the state simply could not keep up with the obligations. Last year, legislators reinstituted a five percent cap on growth in the formula. That change makes fully funding the formula an actual possibility—one that could become reality as soon as next year.

The fact that Missouri has not fully funded the formula has been a rallying cry for more education spending. Indeed, educators across the state have claimed that we are “underfunding public education.” This new budget proposal has me wondering what will happen to those calls for increased spending when the state finally does fully fund the formula. Will they die down, or will they persist? To answer this question, it is important to define “underfunding” public education. Below, I explain three ways to think about education spending.

Constitutional Obligations

State constitutions vary in what they require in terms of education spending. Some state constitutions say very little. Others call education a “paramount duty” of the state. In Missouri, the constitution explicitly requires the state to spend 25 percent of state revenue on public education, which the state regularly does. The Missouri Supreme Court has upheld the funding system as recently as 2009.

Formula Obligations

The legislature is responsible for creating a formula to fund public schools. Missouri uses a foundation formula, which calculates exactly how much the state should spend on each student in the state. The Show-Me Institute recently released an updated version of my paper, “A Primer on Missouri’s Foundation Formula for K-12 Public Education,” which explains exactly how schools are funded by the state.

In creating the formula, the state creates what may be seen as another form of obligation—a stated obligation of adequacy. This obligation may be separate from a constitutional requirement, but it nevertheless creates an expectation among public school officials. They expect lawmakers to fully fund the formula they created. As we have seen failure to do so creates a useful talking point for advocates of higher education spending—we are underfunding the formula.

Now, it seems that argument may disappear.

Moral Obligations

What happens when Missouri fulfills its constitutional and formula obligations to fully fund public education? This will take some of the wind out of the sails of advocates for higher education spending, but it certainly will not end calls to increase funding. The truth is that individuals have their own views on education. These views may or may not be informed by research, but ultimately they flow from our own personal values, beliefs, and morals. I call this the moral obligation to fund schools. The level of this obligation is not universal; rather, it varies from individual to individual.

I applaud the legislature’s effort to fully satisfy both constitutional and formula obligations in funding Missouri’s schools. Nevertheless, we should anticipate continued calls for increased spending. Those calls, however, will be easier for lawmakers to address when they can point to a fully funded formula. 

Criminal Justice Reform: Mandatory Minimums

Posted on by Patrick Tuohey

Legislation has been introduced in Missouri that would relax the state’s rigid sentencing laws in favor of more flexible guidelines. Known as the Justice Safety Valve Act, the bill would offer a reprieve from inflexible one-size-fits-all sentencing and could save taxpayers a lot of money.

Under current law, sentencing courts are required to issue minimum prison terms based on several criteria including severity of the crime, previous convictions, and whether the infraction involved violence and/or firearms. The new legislation gives courts greater discretion.  In cases not involving serious physical force or abuse of a child, courts may:

depart from the applicable mandatory minimum sentence if the court finds substantial and compelling reasons on the record that, in giving due regard to the nature of the offense, the history and character of the defendant, and his or her chances of successful rehabilitation, imposition of the mandatory minimum sentence would result in substantial injustice to the defendant or the mandatory minimum sentence is not necessary for the protection of the public.

The opportunities presented by the Justice Safety Valve Act—cost savings for taxpayers, real rehabilitation for offenders, and reduction of recidivism—seem well worth the legislature’s consideration.

How Should Saint Louis Fund Its Zoo?

Posted on by Graham Renz

The Saint Louis Zoo is one of the finest institutions of its kind, and is a source of civic and scientific pride for Saint Louisans. It’s also in a $50 million hole. For nearly half a century, the zoo and other local institutions have been funded in part by property taxes levied within the Metropolitan Zoological Park and Museum District (Saint Louis City and County). In 2015, that property tax brought in $21.5 million in revenue to the zoo. But zoo officials claim those and other revenues aren’t enough to keep up with maintenance and planned expansion costs. So there is now a proposal making its way through the General Assembly that would allow for a sales tax increase in Saint Louis City along with Saint Louis, Saint Charles, Jefferson, and Franklin counties to bolster the zoo’s budget.

There are a number of questions surrounding this proposal, and how to fund the Zoo in general. This blog is not the place to exhaustively consider all of them. But there are two essential points that should be at the core of any discussion of the Zoo’s funding future.

First: Should shoppers across the four counties and the city—rich and poor alike—pay for a zoo they may never visit or directly benefit from? Sales taxes are easy to collect, and they can generate significant revenue, but that doesn’t mean they are an economically sound or fair way to fund the zoo. Is it fair to tax someone buying wine in Defiance or Augusta in order to support a zoo miles away in Saint Louis City, that they may never patronize? Moreover, should those in the Zoo-Museum district—working poor included—be taxed twice for the zoo?

One might object that many of the zoo’s visitors come from outside the Zoo-Museum District, often from Saint Charles, Jefferson, and Franklin counties, so they should help pay for this regional amenity. I wholeheartedly agree that those who visit the zoo should pay for it. But a sales tax across those counties would tax far more people who don’t visit the zoo than people who do. As a percentage of total annual visitors, residents from the three above-mentioned counties only comprise 13% of the zoo’s attendance. Now, one could argue that since some people in the Zoo-Museum District pay property taxes for the zoo and never visit, others in the region can make that sacrifice, too. While this reasoning might appeal to those already paying the zoo tax, exporting bad policy doesn’t make it any better.

Secondly: Can the Saint Louis region stomach any more sales tax increases? In many parts of the city and county, sales tax rates are close to 11%, and there is an almost never-ending list of public projects asking for sales tax hikes. In Saint Louis City, a MetroLink expansion proposal includes a 0.5% sales tax hike; in Saint Louis County, Proposition P includes a 0.5% hike for public safety. At what point will the sales tax capacity of the Saint Louis region be exhausted, leaving no room for other projects and initiatives?

It’s important that the zoo has the funds necessary to keep its property and infrastructure in good repair, and no doubt feeding elephants isn’t cheap. But that doesn’t mean just any funding mechanism is appropriate to keep the zoo running. Leaders and policymakers in the region should carefully consider the funding options before them, and not be too hasty to dismiss options like user fees as an appropriate path toward a sustainable funding future.

L’Affaire Middlebury

Posted on by Michael Q. McShane

Economist Herbert Stein is famous for the quotation “If something cannot go on forever, it will stop.”

For many years, Stein was a Senior Fellow at the American Enterprise Institute, where I am an adjunct fellow and Charles Murray is the W.H. Brady Scholar in the social sciences. Last week, Dr. Murray attempted to give a speech at Middlebury College in Middlebury, Vermont, and well, you’ve probably heard how that went.

It was the most violent instance in the recent trend of out-of-control protesters on college campuses silencing speakers with whom they disagree. Just days after Dr. Murray’s talk, the philosopher Peter Singer, who I think can fairly be put at the opposite end of the political spectrum from Dr. Murray, had a lecture shouted down by students with megaphones.

This cannot continue. Maybe I’m being overly optimistic, but I think the events at Middlebury represent a turning point in the free speech battle on college campuses. My perusal of the media coverage of the event shows near universal condemnation of the students’ actions. From the New York Times to National Review, educated people of all political stripes have opposed it. Dr. Murray himself has praised the administration at Middlebury, which is rightfully embarrassed and has committed to fixing the problem.

Time will tell, and the concrete steps Middlebury takes will be important, obviously. But I think the tide is turning. If you follow writers like Kat Timpf at NRO or Robby Soave at Reason, it seems like not a week will go by without some speaker that deviates even a tiny bit from the orthodoxy on some issue getting shouted down. Liberals are being protested, conservatives are being protested, and seemingly apolitical folks are being protested. It’s like that scene from Oprah’s “favorite things” episode when she gave everyone a car: “AND YOU GET A PROTEST! AND YOU GET A PROTEST!”

Ironically, the upside is that it isn’t just conservatives who are being shouted down anymore. This has the effect of widening the group of people who oppose the protests. It’s easier to be a bystander when you disagree with the person who is being protested. It’s harder when you feel your own tribe is under attack.

Things that cannot continue, won’t. This has to end, and the sooner the better.

Policy Study: Missouri’s Funding Formula for K-12 Public Education

Posted on by James V. Shuls

The foundation formula put into place during the 2006-2007 school year is the basis for public school funding in Missouri. The formula is an attempt to balance factors including the number of students in a district, the cost of living in various districts, available local revenue, and the number of students with special needs. The fairness of the formula is the subject of debate, but its complexity is unquestioned. James Shuls, Distinguished Fellow of Education Policy at the Show-Me Institute, has updated the primer he originally published in 2012 to clarify how state and local dollars work together in the funding formula. Click here to read the entire primer.

Stuck in the Middle with Mizzou

Posted on by Michael Q. McShane

The University of Missouri has received more than its share of media attention over the past few years, but most of that coverage has focused on the 2015 protests in Columbia and their aftermath. In his new essay, Show-Me Institute Director of Education Policy Michael McShane takes a more measured look at Missouri’s university system and asks how well it is fulfilling its dual missions: education and research. Click here to read the entire essay.

Repealing a Mountain of Regulation with This One Simple Trick

Posted on by Michael Q. McShane

Last week, the U.S. Senate voted 50-49 to strike hundreds of pages of regulations drafted by the Department of Education in the waning days of the Obama presidency.

How did they do this? By invoking a heretofore little-used law called the Congressional Review Act, originally passed as part of the Contract with America in 1996. It allows Congress, through a joint resolution, to strike down recently issued regulations wholesale if they believe that those regulations differ substantially from the intent of the original legislation. The Department of Education’s rules surrounding the Every Student Succeeds Act were ripe for the picking, and for good reason.

The Every Student Succeeds Act (ESSA) was passed in late 2015 and signed into law by President Obama.  After nearly a half century during which the federal government accumulating increasing amounts of power over K-12 education, ESSA was a bipartisan attempt to return a substantial amount of authority back to the states. The Department of Education, however, in writing the rules that states would have to follow to be in compliance with the law, seems to have tried to hang onto everything it could.

The National Governors Association published a list of some of the regulations it had problems with, and just a quick perusal reveals that Department had mandated things like a single summative grade for schools, had narrowed the kinds of indicators that can be used to measure school success,  and had tried to set timelines for things like school improvement plans when the underlying legislation was purposely vague in order to give states more flexibility. These examples and many others show the degree to which bureaucrats acted like mini-legislators in their own right.

It is the job of the executive branch of our government to faithfully execute the laws written by Congress. Members of administrative agencies might not like a law, but it is their duty to see it through regardless.

Practically speaking, Congress just put the ball firmly in Missouri’s court. We can no longer point to the federal government as some bogey-man preventing us from doing what is best for kids. We are in charge of our education system, and we need to work diligently so it delivers for all of our children.

According to this PowerPoint presentation by the Missouri Department of Elementary and Secondary Education, it looks like the state plans to submit its plan to comply with the new law on April 3. When the plan is released, we will make sure to have analysis available for you, detailing what it means for districts, schools, teachers, and children.

Exposing the GO Bond Campaign Claims

Posted on by Patrick Tuohey

On Saturday, The Kansas City Star published a piece titled, “Campaign flier on KC’s infrastructure proposal understates tax increase” in which they pulled some quotes from a Show-Me Institute press release issued on March 7. In the piece, the Star calls the numbers used by proponents of the general obligation bond (GO bond) an “oversimplication” and sets out to explain the real costs to taxpayers.

The Star piece includes a graphic called, “A comprehensive look at taxpayer impact,” which totals the actual tax that property owners would pay over 20 years if the GO Bond is approved. The Star should be commended for cutting through the financial gobbledygook presented to voters by the city and by bond proponents. The Star writes,

The annual tax increases for the first 20 years for the owner of a $100,000 house total about $1,540. For the owner of a $140,000 house, it’s more than $2,000. It totals about $3,185 for the owner of a $200,000 house.

That is a far cry from the $120/$160/$250 cost claims made on the city’s website. My complaint with the Star piece is that it is incomplete. The tax burden for this GO Bond lasts for 40 years, so the Star’s numbers are half of what they should be. As we wrote last week, the total additional tax paid for a $140,000 home and $15,000 car is $4,152.98 over the life of the bonds. If the Star had calculated the cost for the full 40 years of debt, they would have arrived at our numbers.

The Star’s position is that anything beyond 20 years is speculative—so that is where they stopped. The city could refinance, offer additional non-tax bonds, or the economy could boom. All these things are true, and cast further doubt on the city’s account of an $8 average annual increase that assumed no new increases in the property tax levy for 40 years! In the Star’s defense, they did not claim that the costs were only for 20 years. And in previous stories they made clear that the bond sets up 40 years of debt.

Ultimately, voters will decide whether the costs are worth the benefit, and whether they trust the city to do with the new revenue what they have neglected to do for decades: maintain infrastructure. That the Show-Me Institute and the Star are agreeing on the costs—at least in the first twenty years—is a good thing for transparency and good government.

A Minimum Wage Increase and the Unintended Consequences for Kansas City

Posted on by Patrick Tuohey

Members of the City Council are at odds over how to increase the minimum wage—through city ordinance or statewide petition. Kansas City Mayor James calls the ordinance path a waste of time and says that it should be done through statewide petition effort. Lost in the argument over process is the huge and destructive impact such a dramatic increase in the minimum wage will have in Kansas City, especially for low-skill workers at the bottom of the socio-economic ladder.

Moving from a $7.65 minimum wage to a $15 wage by 2020 is a huge increase, and something that is not even supported by all the usual liberal pundits. Matt Yglesias wrote in Vox of the effort in St. Louis,

In St. Louis, people are much more likely to adjust to a higher cost of employing people by employing fewer people. The most relevant precedent for a big hike in a relatively poor jurisdiction may be Puerto Rico, where an effort to match the US federal minimum wage led to a rise in unemployment and increased migration to the mainland United States. St. Louis is richer than Puerto Rico, but moving a person or a job across the St. Louis city line into the suburbs is a lot easier than migrating from Puerto Rico to the US mainland.

Here is what will happen in Kansas City if the wage is increased: Employers who rely on minimum wage employees will seek to avoid the higher labor costs by hiring fewer people and investing in technology. We’re already seeing the latter in fast food restaurants that rely on kiosks for ordering. With fewer jobs available, the competition for them will grow, and those with the fewest job skills—who are also those with the greatest need for that first job—will be harmed the most. There just won’t be enough work for them. This is true is most places that require an increase in wages.

The second item is particular to Kansas City and will further diminish job opportunities for poor and low-skill workers. Middle class kids from Overland Park, where the minimum wage is $7.25, will suddenly have an incentive to cross State Line Road to earn $12, $13, and perhaps even $15 an hour. (Remember, 44.6% of those earning minimum wage or less come from households that earn three times the poverty level.) Many of these kids will have work experience and skills that make them more appealing to employers. If you’re going to pay a higher wage, you will want a better employee.

There will be pressure on Overland Park employers to raise wages to keep workers on their side of state line. And Kansas City workers may then have to commute to Kansas to get the lower wage jobs that are suddenly available, but they may not have the access to transportation that their wealthier suburban job-seekers have. Kansas City’s urban poor will find themselves with fewer job opportunities locally and no good way to get to the jobs that are available to them outside of Kansas City.

There is no shortcut to creating an environment for more jobs and higher salaries—government cannot create wealth and success by fiat. Instead, local governments need to focus on delivering basic services efficiently and cost-effectively and on limiting taxes and business regulation.

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