On August 20, Show-Me Institute Director of Municipal Policy David Stokes submits testimony to the Missouri House of Representatives Special Interim Committee on Property Tax Reform. Click here to read the full testimony.
Sun Fresh Failed Because of Subsidies, not Despite Them
On August 12, KCUR ran a story with the headline “A troubled Kansas City grocery store has closed, despite $18 million in city investments.” I take a different view: the evidence suggests that Sun Fresh may have failed because of city investment—not despite it.
For more than a decade, Kansas City leaders treated Sun Fresh at 31st and Prospect as both a grocery store and a public policy tool to address food access and economic development. According to KCUR, the city has invested $17 to $21 million since 2015, plus a $750,000 operating and security appropriation in May 2025. Yet customer traffic reportedly fell from about 14,000 a week to roughly 2,000–4,000 by mid-2025 (sources differ by date and estimate). According to The Washington Post, the store’s insurance costs rose 45% year-over-year, thefts mounted, and by this summer the store’s shelves were bare. Less than three months after the latest infusion of taxpayer money, the store closed.
This should not have been a surprise. I wrote as early as 2015 that the effort would fail. I saw this not because I’m imbued with a mystical power of prediction, but because I’m roughly familiar with some basic economic principles.
Friedrich Hayek described the price system as “a mechanism for communicating information” that enables millions of separate decisions to coordinate without central control. Prices, sales, and profit margins signal what customers want and whether a business can supply it sustainably. Subsidies blur those signals. Falling sales normally push owners to change their product mix, improve service, or close. If government funds fill the gap, a business may avoid—or delay—those choices until the underlying problems are too great to fix. This is exactly what happened with Sun Fresh.
Ludwig von Mises argued that without real market prices, decision-makers cannot allocate resources rationally. A subsidized store like Sun Fresh is insulated from these tests. Are prices too high? Is the product selection wrong? Are operating costs out of line? In a subsidy environment, these questions may go unanswered because survival depends more on political approval than on customer satisfaction.
And what do politicians want? Ribbon cuttings and pretty pictures. Sound economics doesn’t photograph so well.
Adam Smith, in The Wealth of Nations, warned that the interests of producers and the public often diverge. A subsidized grocery may fulfill a political need to “do something” about food access, but it may not deliver what shoppers actually want at prices they will pay. If a store cannot sustain itself even with taxpayer support, the model—not the market—is the likely problem.
Supporters of the subsidies might argue that they were necessary to correct a market failure, and that the store’s closure proves even more support was needed. But the record suggests the opposite: prolonged subsidies masked underlying weaknesses, delayed inevitable closure, and diverted resources from other food-access efforts such as mobile markets, independent co-ops, or smaller-scale grants. Subsidies likely harmed other grocery stores as well, such as an ALDI on Prospect within about 1.5 miles.
Markets provide important information that no city hall central plan can replicate. Public funds cannot replace this information; they can only distort it. It’s true of sports stadia, entertainment districts, and the hotel industry. When those signals are ignored, the cost falls not only on taxpayers but also on the communities policymakers aim to help.
Lastly, and perhaps more importantly, this debacle is an example not only of the city doing what it shouldn’t, but also failing to do what it should. Many of the challenges the shopping center endured—theft, prostitution, open drug use, and violence—were the result of the city failing to do something we (should) all agree is a basic function of government: public safety.
Even if one believes subsidized stores could work, nothing can succeed amid the bedlam surrounding this store.
I wrote of this project in 2015: “When [the grocery store] fails, the city and its residents will be no better off than before, just poorer. And the infrastructure, crime, and education issues that really need to be addressed will be that much worse.” This is exactly where we are now.
What the New Federal K-12 Tax Credit Program Could Mean for Missouri
One of the most notable policies in the One Big Beautiful Bill (OBBB) is the establishment of the first-ever federal K-12 tax credit program, which could strengthen educational choice in Missouri and states across the nation. This new program allows taxpayers to donate to a scholarship-granting organization (SGO) that will distribute funds to families, who in turn can use them for private school tuition, special needs services, textbooks, tutoring, and more.
This is not a new concept for Missourians familiar with our similar state-level program, MOScholars.
How the Program Works
Each taxpayer can direct up to $1,700 of their federal tax liability to an SGO in any state rather than sending it to the IRS. While donor contributions are capped, there is no federal limit on the amount an eligible student may receive, or how many students are funded. SGOs determine funding allocation based on pre-set rules (evenly, tiered by income, etc.).
Participating SGOs must be federally recognized, legitimate nonprofits (not private foundations), and the governor or another state authority must approve the list of eligible SGOs. In Missouri, the State Treasurer’s Office approves organizations for MOScholars, so it may also have this role for the federal program as well.
State Participation
The federal program requires states to opt in to this new program. I expect Missouri will, but we have not declared our intent to participate at this point. The tax credit is slated to become available beginning in 2027.
If Missouri opts out, Missouri SGOs would not be eligible to receive or distribute federal funds. This means no Missouri students could benefit from the program. However, Missouri residents could still claim the federal credit by donating to an SGO in another participating state.
Participating in this program would complement MOScholars and bring even greater choice, flexibility, and opportunity to families around the state.
Let’s Celebrate (and learn from) State Tech, One of the Best Technical Colleges in the Country
State Tech in Linn bills itself as “Missouri’s premier technical college, dedicated to providing hands-on, industry-driven education that prepares students for high-demand careers.” External rankings back up the claim—for example, Wallethub regularly lists State Tech among the best two-year technical colleges in the country.
I was interested, but skeptical. After all, many universities seem to be highly rated somewhere. Is State Tech really that good? In a 2024 article, I worked with two University of Missouri graduate students, Maxx Cook and Michael Reda, to find out. We examined State Tech’s impact on student graduation and earnings.
It quickly became apparent that State Tech students had better outcomes in the data, which is consistent with what they report on their website. However, we weren’t sure whether this was because of State Tech’s superior educational programming, or just because it attracts stronger students in the first place.
We used two strategies to sort this out. First, we used detailed data from the Missouri Department of Higher Education and Workforce Development to compare students who attended State Tech with students who had similar pre-college qualifications but attended other two-year colleges in Missouri. Second, we used econometric tools to isolate a group of students who attended State Tech only because it happened to be near where they lived, rather than for other reasons. We then compared these students to otherwise similar students who happened to live farther away. This strategy helps remove a lot of potential confounding factors that might make State Tech look better than it really is.
Our findings confirm that State Tech is the real deal. It increases associate degree attainment by more than 20 percentage points compared to other two-year colleges in Missouri, and State Tech students graduate faster. It also increases earnings (measured six years after initial enrollment) by over $11,000 annually. Importantly, State Tech students outperform both non-technical and technical students elsewhere in Missouri.
We should celebrate the presence of such an excellent institution in our great state. We should also try to learn from State Tech to replicate its success. If this were any other industry, competitors would be flocking to Linn to figure out the secret sauce. But based on my years of experience studying education, I doubt this is happening. Why not? Because there is no competitive incentive to do so. In business, an exceptional company forces rivals to adapt or close. In public education—K–12 or higher ed—the risk of closure due to poor performance is almost nonexistent.
This means Missouri’s other public two-year colleges have little reason to put in the work required to emulate State Tech. It’s a missed opportunity, but we can still appreciate State Tech’s success and be proud to call it our own.
Crime, Public Safety, and Perception in St. Louis with Braxton Steele
Susan Pendergrass speaks with Braxton Steele, intern at the Show-Me Institute and student at Missouri State University, about his summer research on crime and public safety in St. Louis. They discuss his personal experiences living in the city, how crime in St. Louis compares to other Missouri cities and peer cities across the country, the gap between reported crime data and public perception, and more.
Timestamps
00:00 Introduction to Public Safety in St. Louis
01:01 Braxton’s Experience Moving to St. Louis
04:06 Crime Statistics and Perceptions
06:08 Comparative Analysis of Crime Rates
08:48 Motor Vehicle Thefts and Clearance Rates
11:10 Unreported Crime and 911 System Issues
13:05 Public Perception vs. Reality of Crime
14:39 Conclusion and Future Directions
Produced by Show-Me Opportunity
More Big Beautiful Medicaid Changes
Missouri’s Medicaid enrollment is up by almost 400,000 recipients since 2019, but how many of those newly on the rolls are legally eligible to be there? As of now it’s hard to say, but before too long we’ll likely have a better answer.
Several weeks ago I started my deep dive into the many healthcare reforms included in the One Big Beautiful Bill (OBBB), specifically focusing on Medicaid. This week, I’ll discuss three of the bill’s provisions that are intended to improve program integrity and reduce waste.
- Increasing Redetermination Frequency: Instead of the current practice of checking each recipient’s eligibility once per year after they enroll in Medicaid coverage, the OBBB requires states to start doing so every six months. This provision isn’t solely about cutting costs, though Medicaid’s out of control spending should be reined in. It’s also about making sure that taxpayers are only covering the high cost of healthcare for those that really need it.
- Reducing Retroactive Eligibility: In the past, Medicaid would cover medical bills for new recipients up to 90 days prior to their joining the program. The OBBB shortens this window to 30 days in an effort to incentivize those who are truly eligible for the program to maintain their enrollment or enroll while they are healthy. If successful, this provision should improve program integrity and help lower costs by treating recipients earlier, before their ailments become more costly.
- Reversing Recent Actions: Toward the end of the Biden administration, several new Medicaid rules and regulations were promulgated that would significantly increase the program’s costs without much evidence of benefiting the health of recipients. The OBBB rolls back many of these rules, specifically one that would drastically raise the cost of nursing home care.
Taken together, the reforms contained in the OBBB represent a forward-thinking evolution of the Medicaid program. By focusing on clearer eligibility requirements, more practical retroactive coverage, and a scale back of burdensome regulations, these changes could strengthen Medicaid, making it more sustainable and better equipped to provide essential healthcare services for those who depend on it.
In my next blog post on the OBBB topic, I’ll dive into some of the healthcare reforms that will impact the entire sector, not just Medicaid.
Municipalities Should Not Be Commercial Landlords (I’m Looking at You, Chesterfield)
Chesterfield, which is poised to be the largest city in St. Louis County, is attempting to get into the commercial real estate business. I mean that literally. The city is planning to purchase a commercial property building and operate it as a landlord. I can’t believe this has to be said, but municipalities have no business being in the commercial property business. I don’t think you have to be a libertarian extremist to believe that. The more extreme position is actually that owning and operating a commercial office building—or any business, really—is, in fact, the proper role of government. (In fairness to the city, they do plan to hire a property manager for the building.)
I attended the city council meeting where the relevant bill was introduced. Supporters of the proposal offered two different reasons why this was a good move for the city. First, supporters said the leases for the businesses in the building would pay the costs of the purchases, so the city would come out ahead. According to the Chesterfield city manager, the current leases “would mean the building would create no annual cost for the city.” This reminds me of the famous story of when former St. Louis Mayor Vince Schoemehl told some veteran members of the St. Louis Board of Aldermen that the new convention center downtown would not cost the city anything, and longtime alderman Red Villa responded with, “Well then, why don’t we build two of them?”
The other reason why supporters like the purchase is because Chesterfield could use some of the building for its own future needs, such as a police substation, civic center, or parks department headquarters (all these examples were given at the meeting). But here is the problem: If you use the building for city offices or needs (which may be the more defensible position), then you don’t have the paying tenants who will cover the price of the purchase for the city. Yes, the building’s parking lot would come in handy for some events at the nearby park, but, as opponents noted, that is just a few events each year.
Then there is the belief by the city that they won’t have to pay property taxes on the building, leading to a higher profit margin for the city (stated by a member of the board and elsewhere). That is a very dubious argument. There is plenty of case law that says if a tax-exempt entity owns property but that property is not used for tax-exempt purposes that property taxes are still owed. (Scroll down here for citations.)
If one believes that buying and operating a commercial office building is the proper role of local government, then I wonder what limits there would possibly be on the role of government? If a municipality can do this, what can’t it do? That’s the scary part.
The One Big Education Opportunity with Shaka Mitchell
Susan Pendergrass speaks with Shaka Mitchell, senior fellow at the American Federation for Children, about how a new federal scholarship tax credit, created through the One Big Beautiful Bill, could transform K–12 education across the country. They discuss what this means for Missouri families, the legal threats facing the MOScholars program, how education policy is shifting nationally, and more.
Timestamps
00:00 The Evolution of School Choice in Missouri
02:59 Charter Schools and Teacher Innovation
05:40 The Impact of Lawsuits on Educational Freedom
08:35 Federal Tax Credit Programs and Their Implications
11:19 The Future of School Choice and Parental Empowerment
Episode Transcript
Susan Pendergrass (00:00):
Thank you so much for joining us on the Show-Me Institute podcast, Shaka Mitchell of AFC. But I think you wear a lot of hats. We’ll just do that hat for now. There have been a lot of changes in the last few years—certainly since the pandemic—regarding how kids end up at the school they attend, especially with parents now getting more opportunities to choose instead of just being assigned. I know you’ve been on the front lines of this, especially through your work with charter schools.
In Missouri, we’re sort of creeping into it. We have a scholarship program now that’s growing, and finally, like in so many other states, the legislature has decided to put some public funding toward it. And now it’s tied up with a lawsuit. Are you following what’s going on with Missouri’s scholarship program?
Shaka Mitchell (00:45):
Yeah, thanks Susan. Thanks for having me on. I sure am following it. I’ve been encouraged in recent years by the steps Missouri has taken to expand school choice. As you know, there had been a charter school law for years, but it was really limited—to Kansas City and St. Louis. That’s a lot of students, but still many others couldn’t access those schools.
Then you had the MOScholars program, which I bet we’ll talk about. On the one hand, there are some encouraging developments coming out of Missouri. And then, per usual, there are lawsuits. Because, in the words of the famous 20th-century philosopher Taylor Swift, haters gonna hate.
Susan Pendergrass (01:30):
That’s right.
Let’s go back to this charter school thing for a minute. Now, for the first time, a charter school can open anywhere in the state—but only if the school board is the sponsor. That happens all over the country, but in Missouri, no school board would even consider authorizing a charter school. Not running them, just authorizing them.
Now there’s one other county where they can open without the board as the sponsor. But there is such strong resistance to the idea of charter schools. Do you find that surprising in 2025?
Shaka Mitchell (02:06):
Yes and no. I’ve worked in charter schools and with several charter networks. I have lots of friends still working in that space. At the American Federation for Children, we’re school-type agnostic. We support parents’ ability to choose.
In some ways, it’s not surprising that school districts—which have in many places become jobs programs for adults—don’t want to disrupt the status quo. Budgets continue to increase, while enrollments decrease. So they’ve got fewer students per classroom, but more money per pupil.
They’ve got it pretty good in terms of job security. But I think what you’re getting at is important: there are great educators who want to do right by kids. And many of them are trapped within that system.
We’re seeing some start their own schools or move to other states or online programs. There’s a lot of innovation happening. But unfortunately, you mostly see the negative reaction from public school districts when it comes to innovation and choice.
Susan Pendergrass (03:42):
Yes, and what’s so tragic in Missouri is that we’ve shut the door on teachers as entrepreneurs. We have plenty of entrepreneurial teachers. Some of the strongest charter school networks were started by teachers who said, “I have a great idea, and I need to do this outside the regulations and bureaucracy.” Cutting off the teacher-as-entrepreneur option is tragic.
Shaka Mitchell (04:10):
Yeah, super tragic. One of my colleagues, Dr. Patrick Graff at AFC, has done work on teacher spending accounts—similar to ESAs.
It’s a great idea. Teachers often say their classrooms are under-resourced. Every parent knows it’s almost back-to-school season—we’re about to get a list of supplies.
Every time I get that list, I think, “Why haven’t we budgeted for enough glue or crayons?” Patrick’s idea is that teachers should have accounts to buy what they need. Surprise: teachers love it, and legislators do too.
But when you say, “Cool, it works for teachers—now let’s do it for parents,” suddenly it’s hair-on-fire. The education establishment just says no. It’s unfair.
Susan Pendergrass (05:19):
Yeah. Public funding for MOScholars in Missouri currently serves mostly low-income students and students with disabilities in Kansas City and St. Louis. That’s where the program started. It’s expanded a bit—but only through tax-credit fundraising, and the organizations have to ask for donations.
Now the lawsuit is basically saying those kids have to go back to their old schools. That we can’t publicly fund private schools for students. It’s saying, “You have to go back to the school that didn’t work for you.”
I know the teachers’ unions brought the lawsuit, and they often take on the PR risk of being on the wrong side of things—like trying to take scholarships away from kids. I don’t see how they can sit well with that.
Shaka Mitchell (06:20):
Yeah. I had the great fortune of meeting a parent in Missouri, Becky Ucello. Her daughter was able to attend a private school through the program. Becky is a public school teacher.
So the idea that private choice programs are anti–public school is a myth. Of course she wants the best for her students—and her own daughter, who has exceptional needs. The district school wasn’t working. Who among us wouldn’t want the best for our child?
The unions get this wrong every time. And they usually get defeated in court. I expect the same in Missouri. There’s strong federal and state case law supporting the idea that parents can choose and that funds given out in a non-discriminatory way can be used at religious schools—because the parent is making the choice, not the government.
Susan Pendergrass (07:47):
In addition to the lawsuit, there’s a potential initiative petition in Missouri to amend the constitution to say you can’t spend public funds at private institutions for students.
But we already have several higher ed programs that work like Pell Grants—you can take them to public or private colleges. We have Bright Flight. This petition might even cut off those programs, too.
And even when open enrollment comes up, it’s often the lowest-performing districts that say, “We can’t be part of it—we can’t let our kids leave.”
Shaka Mitchell (08:41):
It’s totally short-sighted. Nearly every district already outsources some of their special needs education to private providers. That petition could cut off even that.
It’s absurd. Districts don’t make their own computers, books, or desks. They purchase from private companies all the time. The idea that public education is this sacred, fully public institution is a fiction.
Susan Pendergrass (09:33):
Cisco trucks are in every school. Pearson brings the textbooks. Public education is filled with private corporations. And we’ve made so much progress nationally.
I’d love for you to explain the potential for federal scholarship expansion through tax credits. What is that new program, and how will it work?
Shaka Mitchell (10:09):
Sure. The federal scholarship tax credit passed as part of the One Big Bill earlier this year. It’s the first-ever federal K-12 tax credit program.
First, it’s a tax program—not from the Department of Education. So it’s not adding to federal bloat or undermining local control.
Any federal taxpayer can direct up to $1,700 of their tax liability to a scholarship granting organization—like the ones already in Missouri. So instead of sending it to the IRS, I could say, “Let’s send this to a scholarship org in Kansas City.”
Then, the organization can award scholarships to families, most of whom will qualify based on income. The families can use them for a range of educational expenses—just like ESAs. It’s really exciting.
Susan Pendergrass (12:09):
I’ve heard opponents call it a federal voucher—but it’s not a voucher, right?
Shaka Mitchell (12:18):
Correct. Think of it like when your tax return asks if you want to give a dollar to the presidential campaign. But now it’s $1,700 to a scholarship org.
In Missouri, we have Catholic, Hebrew, and non-sectarian scholarship organizations. You can choose which one to support.
Susan Pendergrass (12:59):
Do you know the total amount of available tax credits?
Shaka Mitchell (13:06):
It’s unlimited, within that $1,700 per-taxpayer cap. Initially, there were discussions of state-by-state limits, but now the limit is per individual—not by state.
Susan Pendergrass (13:34):
So governors have to opt in, right?
Shaka Mitchell (14:10):
Yes. Governors or other state officials need to opt in. That may look different state to state. Some legislatures, like North Carolina’s, have already voted to participate.
Susan Pendergrass (14:45):
Where does Missouri stand?
Shaka Mitchell (14:59):
Probably not much discussion yet. It doesn’t go into effect until 2027, so there’s time. But Missouri is in a good spot—you’ve already got scholarship organizations and experience with tax credit programs.
Susan Pendergrass (15:20):
What about blue states like Oregon or California?
Shaka Mitchell (15:27):
Great question. All eyes are on states like California, Pennsylvania, New York. There are a lot of taxpayers there.
Imagine millions of California taxpayers sending $1,700 each to scholarships in Missouri. It would be crazy for a governor to allow that much money to leave their state. But we’ll see.
Susan Pendergrass (16:13):
What do you think those states will do?
Shaka Mitchell (16:25):
Hard to say, but some Democratic governors have said they’re researching it. It’s not really a partisan issue—it’s just the tax code. And everyone pays taxes.
Susan Pendergrass (16:55):
It’s an interesting political move—making school choice national.
Shaka Mitchell (16:59):
Exactly. And because it’s tax-based, it reaches everyone—Republican, Democrat, or Independent.
Are states really going to let billions in scholarships go to other states? I doubt it.
Susan Pendergrass (17:45):
It’ll be interesting to see how private school supply responds. Like in Arizona, where more parents have access, vendors have stepped in with customized, creative options. This could fuel huge innovation. The fact that it’s unlimited in size is surprising.
Shaka Mitchell (18:43):
Yes. These federal scholarships could stack on top of state programs.
Say your state gives $6,000, but tuition is $9,000. The federal credit could close that gap. That’s a big deal.
Susan Pendergrass (19:38):
Will there be a lawsuit?
Shaka Mitchell (19:39):
There probably will be. Lawsuits are easy to file. But this program is part of the tax code—it’s hard to challenge. It’s not clear who would even have standing.
If unions want to burn money on a lawsuit, I say go ahead.
Susan Pendergrass (20:27):
I think what works against them is how happy families are with these scholarships. Satisfaction is high.
Shaka Mitchell (20:53):
Yes. Since 2019, we’ve seen an explosion of education freedom.
And there’s now long-term data—like from Ohio—showing EdChoice students, especially Black and brown students, have higher college attainment. That kind of data is compelling.
Susan Pendergrass (21:59):
And the ROI is incredible. You keep one kid out of prison or help one finish college—you’ve already saved more than the scholarship cost.
These families take $6,000 when the public system spends $18,000. They make it work. I’ve never seen anything in traditional public education with this much impact.
Shaka Mitchell (23:10):
It reminds me of the early 2000s with the excitement around No Child Left Behind.
But this is even more grassroots. Parents are organizing—helping each other on Facebook, answering questions, forming communities. That’s powerful. You can’t put that genie back in the bottle.
Susan Pendergrass (24:34):
Right. I don’t think we’ll go from more choice to less. And I know people who considered moving to Missouri until they realized they couldn’t pick their child’s school.
Kids from these programs are having their own kids now. It’s not going backward.
Shaka Mitchell (24:40):
Exactly.
There was a great article today in the New York Times saying, “The monopoly is dead.” I mean—from the New York Times!
Susan Pendergrass (25:21):
That’s what these lawsuits feel like: a desperate last gasp.
Never underestimate parents. They’ll show up. Thank you so much for joining us today. That was fascinating. I know you’ll be following the lawsuit.
Shaka Mitchell (25:59):
Happy to do it. Thanks for having me, Susan.
Susan Pendergrass (26:01):
Great, thanks.
Produced by Show-Me Opportunity
How Often Should Schools Close?
I’ve been writing a lot lately about the poor performance of Missouri’s schools; for recent examples, see here and here. I don’t enjoy being all doom and gloom, but I worry that many Missourians don’t grasp the scale of the problem. I can give plenty of examples of schools and districts in our state where most students are not testing at grade level, and many are not even testing within a year of grade level.
Yet these schools and districts rarely face meaningful consequences and there is virtually no threat that they will close, which raises an interesting question: How often should schools close? Frequent closures would clearly be disruptive, but too few could also be a problem. In a healthy education ecosystem, schools that consistently underperform should be replaced with better alternatives. That’s what would happen if the public school system operated like a market.
However, public schools rarely close. And when they do, it’s usually due to declining enrollment or budget cuts, not poor performance. As a result, even schools that fail year after year remain open and funded.
All of this points to a perverse indicator of the effectiveness of expanded school choice: more school closures. This may seem counterintuitive, but if charter and private schools close at higher rates than traditional public schools, it suggests they operate in a system where failure has consequences. That’s a good thing. Replacing inferior providers with stronger providers, through competition, helps make markets more efficient.
Given this background, I enjoyed reading this recent study by Doug Harris and Valentina Martinez-Pabon. It puts hard numbers on school closures nationally. The authors estimate that just 0.9 percent of traditional public schools in the United States closed annually between 2014 and 2018. In contrast, closure rates were 2.9 percent for private schools and 5.1 percent for charter schools—roughly three and six times higher, respectively. The higher closure rates are a sign of a healthier market.
It may feel like a foregone conclusion that failing public schools will always persist, but it doesn’t need to be. Infusing more competition into our education system will push all schools to perform better. And for low-performing schools that cannot figure out how to improve, it will force them to close, making way for new, higher-quality providers. These changes would benefit all children, but especially those who are currently trapped in persistently ineffective schools.
