A Freeze in July?

Posted on by Scott Tanner

As a former tutor at a Tennessee Boys & Girls Club, a recent headline caught my eye: the Boys & Girls Club, along with other after-school programs, is facing a funding freeze after the Department of Education decided to hold back around $6 billion across the country for review.

Missouri anticipated around $80 million from these frozen programs. The Department of Education’s budget summary suggests the funding for many of these frozen programs will be consolidated and given as a lump sum under the K-12 Simplified Funding Program.

This fund seems to be designed like a block grant, as it would allow states to spend money on previously allowable activities (such as after-school programs) but with fewer administrative regulations. This model is not unprecedented, as Temporary Assistance for Needy Families (TANF) is currently funded using a block grant, and there have been discussions about switching Medicaid to a block grant structure as well.

The department’s actions could signal that federal funding to states may continue to decrease, and there may be fewer strings attached to federal funding. That would mean that states, including Missouri, will have to decide which programs that rely on federal funding will be sustained, and to what extent.

Evaluating Deeper Budget Decisions

Missouri likely will need to make some hard budget decisions in the coming years. Prior to COVID, federal dollars comprised about 14 percent of Missouri’s total revenue for K-12 education. In 2021–22, an additional $1 billion in federal dollars ballooned that percentage to 28. In 2022–23, the federal share fell slightly to 25 percent. In my colleague Elias Tsapelas’ paper “Saving Federalism,” he notes that the Department of Elementary and Secondary Education’s (DESE) inflation-adjusted federal spending was roughly 45% higher in fiscal year 2022 than fiscal year 2011.

This extra money is fizzling out as the pandemic spending evaporates and the Trump Administration continues to evaluate longstanding programs and rules. The changes at the federal level should incentivize Missouri to rightsize the budget by eliminating unnecessary or unhelpful spending. Establishing a Missouri Office of Government Efficiency would be a good initial step.

Beyond that, Missouri will need to take a more proactive approach to funding specific education programs. Should we increase funding for after-school programs at the expense of a program to improve teacher effectiveness? Before the recent federal policy shift, Missouri was largely guided in these decisions by what we could get federal money for. Now, DESE and school districts will need to set their priorities.

Here’s to hoping Missouri can rise to the challenge and prioritize programs with the greatest potential to benefit students.

St. Louis’s Improving Crime Data

Posted on by Braxton Steele

If you were to guess that St. Louis was the most dangerous city in Missouri, you would be correct. You would also be correct if you assumed it would rank within the top ten most dangerous cities in the United States. The rankings can vary slightly depending on the website and the metrics used, but St. Louis ranked near the top of nearly every one of them. The Kansas City Star article linked above uses a report from U.S. News and World Report for 2024–2025. The rankings were determined by FBI crime reports of each city’s murders and property crime per capita. The same list had Kansas City at eight.

St. Louis has a reputation for being a violent city. Crime issues have helped push people out in droves and deterred newcomers from settling in the area. St. Louis City’s population has decreased by over 30% since the 1980s, and the number of vacant downtown buildings has increased substantially. The Wall Street Journal went as far as to call downtown a “real estate nightmare.”

Although St. Louis continues to rank among the most dangerous cities in the country, efforts have been made to solve the ongoing crime problem, beginning with the replacement of former St. Louis Circuit Attorney Kim Gardner in 2023. Gardner exacerbated the crime issue in several ways, including having an exclusion list of police officers who were not allowed to bring cases to her office and creating a massive backlog of more than 6,700 cases that awaited charging decisions. The current St. Louis Circuit Attorney, Gabe Gore, has since cleared all cases in the backlog.

More recent efforts include House Bill (HB) 495, signed by Governor Mike Kehoe into law in March. This legislation transfers control of the St. Louis Police Department to a state-appointed board. The governor has already made five interim appointments to the six-person board (the mayor is the sixth member of the board). In addition, a $45 million 911 dispatch center broke ground last year in St. Louis with the goal of improving response times. In St. Louis, only half of the 911 calls in 2022 were answered within the national standard of 10 seconds.

It is unclear whether these efforts will have positive impacts on public safety in St. Louis, but what is clear is that violent crime in the city is down. It was down 7.8% in 2024 compared to 2023. The St. Louis Metropolitan Police Department (SLMPD) reported homicides were down 6.3 % in 2024. It is worth noting that crime is down across the country, so this may be part of a larger trend.

The fact that St. Louis has lower violent crime and homicide rates is a positive sign, but time will tell if the city can sustain this success and lose the moniker of being one of the nation’s most dangerous cities.

Missouri Families Need the “Unsafe School Choice Option”

Posted on by Mike Ederer

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

When asked why they want school choice, families often cite safety as their number one reason, which makes sense. How is a child supposed to learn if they’re afraid to be at school? Under the federal Every Student Succeeds Act (ESSA), students trapped in persistently dangerous schools are supposed to have a way out. It’s called the Unsafe School Choice Option (USCO). Unfortunately, Missouri has all but ignored this protection—and that needs to change.

ESSA requires every state to identify persistently dangerous schools and offer students the right to transfer to a safer public school. This is not a suggestion; it is federal law. Yet in Missouri, no school has ever been labeled as “persistently dangerous,” and no families have ever been notified of this option. Either Missouri schools are perfectly safe—which is unlikely—or the state’s criteria are so vague and restrictive that no school could ever qualify.

But let’s look at that more closely. Consider Poplar Bluff High School. According to data from the Department of Elementary and Secondary Education (DESE), there were 12 violent incidents at the school in 2022, 19 in 2023, and 10 in 2024. In that same three-year period, there were 266 out-of-school suspensions. A “violent incident” in a Missouri school is one in which “a student uses physical force with the intent to cause serious bodily harm to another person.” It seems hard to believe that a school with these levels of violence would feel safe to students.

And then there’s University City Senior High School. From 2022 to 2024, according to DESE, there were 51 violent incidents and 21 weapons violations at the school. That is a lot of weapons being brought to school, and it certainly doesn’t sound like a safe environment to me. Last year in St. Louis Public Schools, teachers at Vashon High School sent a petition to the district claiming that they were teaching in a dangerous situation. In fact, one teacher had to use pepper spray on a crowd of students to get them under control.

There is no substitute for giving families an immediate exit from a dangerous situation. Additional funding, new programs, or behavior contracts might help improve school safety in the long run—but they do nothing for the student being bullied today, or for the child afraid to walk the halls because of fights, weapons, or harassment. For these families and students facing these problems, the only meaningful solution is the freedom to exercise their current legal right to transfer to a safer school.

In Missouri, for a school to be considered persistently dangerous it must have experienced at least one violent incident or one weapons violation in two out of the past three years. At least 30 schools in the state meet that criterion. However, the school must also have expelled at least five students (ten if the school enrolls more than 250 students) in each of the past three years. No school has met that criterion since the law was enacted. What if the Missouri definition were changed from violence/weapons and expulsions to violence/weapons or expulsions? Thousands of Missouri students could move to a safe learning environment—which should be the minimum standard.

Parents deserve honesty. It’s absurd to suggest that there are no unsafe schools in the state. If a school is unsafe, the state must acknowledge it and provide families with options—not pretend the problem doesn’t exist. If the state refuses to define what “persistently dangerous” means—or sets the bar so high that no school ever qualifies—then the federal requirement becomes meaningless in practice.

It’s time for Missouri to adopt clear, reasonable criteria that reflect real risks to students and activate the USCO in schools that meet those criteria. Every Missouri child deserves to attend a safe school, no matter where they live. Families in struggling districts should not be forced to wait years for conditions to improve—or worse, accept that their child’s school is unsafe with no way out.

The Unsafe School Choice Option was designed to give families an emergency exit from these situations. Missouri leaders must stop ignoring this law and start empowering parents to protect their children.

The MOScholars Program: Why and How to Participate

Posted on by Susan Pendergrass

On July 10, 2025, Keith Kehrer and Derek Rose, lawyers from Bryan Cave Leighton Paisner, joined Show-Me Institute Director of Research Susan Pendergrass for a presentation on how the MOScholars program operates, followed by a Q&A session.

In 2021, the Missouri General Assembly created the MOScholars program, allowing individuals and businesses to receive state tax credits for contributions to certified educational assistance organizations (EAOs). But what does that mean for your Missouri tax bill?

In this recorded webinar, you’ll learn:

• What the MOScholars program is and who it helps

• How Missouri tax credits work, and how you can direct your tax dollars

• What qualifies as an EAO

• What to do at tax filing time

• How your participation supports school choice in Missouri

School Choice Case Study: Charter Schools in Los Angeles

Posted on by Scott Tanner

A 2024 study published in Education Finance and Policy finds that enrollment in one of five popular charter high schools in Los Angeles significantly improves student test scores, as well as college enrollment and persistence.

This study stands out for its rigorous research design, which credibly estimates the causal effects of attending these schools. Each of the five schools is oversubscribed, meaning more students want to attend than the number of available seats. Admission is determined by random lottery: students whose numbers are randomly drawn are offered admission, while those not selected are not. By comparing outcomes for lottery winners and losers, the researchers can isolate the causal impacts of attending the charter schools on student outcomes.

The schools serve a predominantly low-income Black and Latino population and adhere to the “no excuses” charter model. This model features extended instructional time, mandatory uniforms, strict discipline and structure, and high expectations around academic performance and college attendance. Although “no excuses” schools have recently fallen out of favor, research—including this study—continues to show their effectiveness. The authors describe their findings as showing “large positive effects of enrolling in a high-quality, ‘no excuses’ charter school on academic achievement, enrollment in any college, enrollment in any four-year college, and persistence to the second year of a four-year college” (p. 568).

(The reasons why the “no excuses” model has fallen out of favor are perplexing to me, but this is a topic for a different time. It is especially frustrating because one reason this study is possible—along with numerous other similar studies—is that no excuses schools are regularly oversubscribed, which is a direct indicator that families value them.)

This study contributes to what is now a large body of research showing the transformative potential of school choice. In the face of mounting evidence on the poor performance of Missouri schools, we should embrace policies that can lead to meaningful improvements in student outcomes, including policies that create more school-choice opportunities for our children.

Responding to PortKC’s Defenders

Posted on by Scott Tanner

Michael Collins, a former CEO of PortKC and the founder of Grayson Capital, which specializes in “public-private real estate development,” posted a response to my recent post “Why is PortKC Keeping Secrets?”

Mr. Collins did not appreciate my conclusion. He called it “misleading and inflammatory,” and wrote that I was dealing in “political spin.”

I welcome the opportunity to respond. Collins wrote:

The claim that PortKC’s NDA signals secrecy is misleading and inflammatory. The NDA applies only during early negotiations, and thus, to protect complex deals before terms are finalized. That is standard in any serious public-private partnership. It doesn’t block legal disclosures, doesn’t hide information from taxing jurisdictions, and doesn’t erase public accountability. It protects taxpayers from leaks that can tank deals or drive-up costs.

PortKC literally—and I am not being figurative—requires in writing that applicants sign an NDA. I do not know what the justification is for requiring secrecy, but I do know that it is not “standard in any serious public-private partnership.” The Economic Development Corporation of Kansas City (EDCKC), which also provides a raft of public subsidies, requires no such NDA. As I wrote, I can understand why a developer would want such secrecy, but it is another thing completely to have the public body handing out taxpayer subsidies to be the one demanding discretion.

If you doubt that PortKC maintains a level of secrecy throughout its deals, search online for the terms Project Mica and Project Kestrel.

Collins continues:

PortKC’s process requires more upfront disclosure from developer’s ownership, litigation history, financials, job creation, wage data, and community impact than many.

If this is the justification, it doesn’t appear to be working. It was only three years ago that PortKC failed to discover that a developer to which it was prepared to issue subsidies, Lux Living, had a few Securities and Exchange Commission violations in its past. So much for “more upfront disclosure.”

Separately, in its most recent financial audit, PortKC was faulted for failing to demonstrate that it searched federal databases to determine if any vendors were “suspended and debarred entities” prior to payment. Again, PortKC is not demonstrating that it carefully vets applicants.

Collins continues:

Critics, like this guy [that’s me!], also ignore that PortKC posts its full fee schedule, limits its own ability to rack up costs without approval, and requires developers to follow workforce, equity, and wage policies from day one.

Yes, PortKC posts an impressive fee schedule. I can’t say that it’s complete, but it does make quite a buck from issuing taxpayer subsidies. That’s part of the problem.

Most organizations that grow as quickly as PortKC face similar growing pains, and PortKC has taken action.

Has it, though? The financial audits of 2021, 2022, 2023 and 2024 all point out that PortKC failed to provide “effective internal control” of finances. One such finding may be the result of growing pains, but four consecutive findings suggest an inability or an unwillingness to right the ship.

Mr. Collins concludes:

The idea that PortKC is “insisting on secrecy” is political spin. This is about protecting sensitive financial negotiations; not hiding public subsidy. If you’re serious about transparency, deal with the facts; not headlines.

Again, it’s very clear from the PortKC application that it insists on secrecy.

I understand that Mr. Collins and others in the “public-private real estate development” industry are either happy with things just as they are or are hesitant to be critical of a scheme from which they stand to gain. But the argument that taxpayers are also benefitted by “protecting sensitive financial negotiations” from taxpayer scrutiny is just silly.

Organizations like PortKC and the groups they fund want public funds dispersed in the dark. If PortKC were serious about serving the public, its leadership would remove its NDA requirement and heed the counsel of its financial auditors. Until then, it should be viewed skeptically.

What Could New Executive Orders on Nuclear Mean for Missouri?

Posted on by Avery Frank

In a recent op-ed, I discussed how national security may once again be a catalyst for the development and deployment of new nuclear technology. President Trump’s new executive orders on nuclear power offer potential opportunities for Missouri to consider. Other states, such as New York, are using next-generation nuclear designs to fortify their grids in a time of growing electricity demand. Missouri should be aware of these new developments.

Below are some new directives that could be relevant to our state’s energy future.

Expediting Nuclear Construction at Federal Sites

One order calls for the deployment of advanced nuclear reactors at both military installations and Department of Energy (DOE) facilities, with timelines that call for completion of the projects near the end of President Trump’s term. To support these goals, the Secretaries of Energy and Defense are required to collaborate with the Chairman of the Council on Environmental Quality to apply existing and establish new exclusions to certain requirements from the onerous National Environmental Policy Act (NEPA).

If next-generation reactors are brought online, then this could trigger a broader wave of nuclear construction across the country, as another order requires the Nuclear Regulatory Commission (NRC) to “establish an expedited pathway to approve reactor designs that the DoD or DOE have tested and demonstrated.”

Essentially, it seems the administration is trying to lighten the load of nuclear regulation for the DoD and DOE, and if they succeed with these new reactors, then utilities and developers could follow in their footsteps.

Reevaluating Longstanding Regulation and Radiation Standards

One of the primary barriers to new nuclear development has been construction costs. Many of these costs have stemmed from the adoption of NEPA and the incident at Three-Mile Island (TMI) creating new, stringent regulations.

One study notes that for reactors already under construction when the accident at TMI occurred, median costs were almost three times higher and plants took almost twice as long to complete (not including costs of interest, delays, etc.) than plants that received their operating licenses before TMI. NEPA also had a similar, yet smaller, effect on construction costs and timelines.

To address these issues, another order calls for sweeping reform of the NRC’s operations and regulations. The Department of Government Efficiency (DOGE) is directed to help reorganize the NRC in order to better support innovation and expedite licensing.

Reform is also targeted at the longstanding radiation standards established in the 1970s. To oversimplify, these standards assume there is no safe threshold of radiation exposure, even those below levels that naturally occur in the environment. Essentially, if a nuclear developer can reasonably lower its levels of radiation exposure, it should, regardless of cost or relative risk. These policies have contributed to rising costs and a lack of predictability in both the licensing and construction process. The new executive orders direct the NRC to consider adopting a fixed and predictable exposure threshold, which should improve the environment for financial investment in nuclear.

These are just some of the key changes that are occurring in nuclear energy. If Missouri is to take part in the industry’s growing resurgence, we should be paying close attention to these developments. One way to do this is by establishing a Missouri nuclear advisory council. Such a council could bring experts together to present critical information for new development, assess emerging opportunities, and identify areas for improvement within the complex and rapidly changing nuclear landscape.

Listed are all four executive orders, each issued on May 23, 2025:

(1) Deploying Advanced Nuclear Reactor Technologies for National Security

(2) Reinvigorating the Nuclear Industrial Base

(3) Ordering the Reform of the Nuclear Regulatory Commission

(4) Reforming Nuclear Reactor Testing at the Department of Energy

What’s in a NAEP Score?

Posted on by Scott Tanner

The National Assessment of Educational Progress (NAEP), often called the Nation’s Report Card, is the gold standard for measuring academic performance in the United States. Unlike state exams, which can vary in rigor, NAEP provides a consistent, reliable benchmark for comparing student outcomes over time and across states.

The 2024 NAEP results paint a bleak picture for our country. Scores in both reading and math are on the decline, continuing a decade-long trend. The pandemic made things worse, but scores were already declining prior to the pandemic.

The outlook is even worse in Missouri. Across NAEP’s four core categories—4th-grade reading and math, and 8th-grade reading and math—Missouri ranks, on average, 40th out of the 50 states  after adjusting for demographics and poverty. Our highest ranking is 35th in 8th-grade reading—still in the bottom third nationally. There is no way to sugarcoat it: the academic performance of Missouri’s students is abysmal.

This is bad news if you believe (like I do) that an educated workforce is critical for economic growth. Yet the urgency of this problem appears lost on many Missourians and by extension, our elected leaders.

One reason for the disconnect may be that NAEP scores feel abstract. What does a score of 234 in math or 210 in reading actually mean? Without context, the data can seem vague. In this short piece, I hope to provide a more concrete sense of what NAEP scores are telling us about Missouri students’ literacy and numeracy skills.

First, consider this sample question from the NAEP 4th-grade math assessment:

The question asks 4th graders to identify odd numbers. The correct answer is B: Alex, Megan, and David. What percentage of 4th-grade students in Missouri should be able to answer this question correctly? Ideally, nearly all of them. Maybe at least 90 percent? But in reality, just 6 in 10, or 61 percent, get it right. This means 4 in 10 Missouri 4th graders cannot identify odd numbers.

Here’s another question, also from the 4th-grade NAEP test. This one asks students to complete a number pattern counting by fours:

Only 73 percent of Missouri 4th graders can correctly finish the pattern. That means over 1 in 4 cannot.

Turning to reading, NAEP results reveal that many of our students struggle to extract basic meaning from a text. Consider the following questions from the 4th-grade reading test:

The correct answer, B: Despereaux thinks the light is very beautiful, is selected by Missouri students just 62 percent of the time.

This follow-up question asks students to use the full passage to identify why Furlough’s behavior is important:

The correct answer is D: Scurrying helps mice avoid danger. Only 70 percent of Missouri students answer correctly.

These are just a handful of examples of questions that Missouri 4th graders struggle with. All are considered “easy” by NAEP. Missouri students fare much worse on more difficult items. Interested readers can look up additional examples using NAEP’s sample question tool.

I hope this post provides some clarity around what NAEP scores tell us about the state of education in Missouri. Our students are struggling mightily. We are not a small tweak away from righting the ship. If we want Missouri children to excel, we need big changes.

 

Understanding the One Big Beautiful Bill with Elias Tsapelas

Posted on by Susan Pendergrass

Susan Pendergrass is joined by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to break down the sweeping new federal legislation known as the “One Big Beautiful Bill.” They discuss what it really means for Medicaid recipients, food stamp programs, state budgets, and Missouri taxpayers.

Listen on Spotify

Listen on Apple Podcasts 

Listen on SoundCloud

Timestamps

00:00 Understanding the One Big Beautiful Bill Act
06:44 Medicaid: Changes and Implications
11:23 SNAP Benefits: New Regulations and Effects
14:18 Tax Implications for Missourians
19:09 Future of Medicaid and State Budgets

Episode Transcript: Understanding the One Big Beautiful Bill with Elias Tsapelas (Download Here) 

Susan Pendergrass (00:00)
Okay, here we go. You ready? Elias Tsapelas, we are going to talk about IT—the big IT—the One Big Beautiful Bill Act. I don’t feel like I understand it. I suspect there’s a lot of people reading the news that don’t understand it, but you seem to understand a lot of it. So thanks for coming to talk to us about it today.

Elias Tsapelas (00:19)
No problem. I think there’s a lot of misconceptions, especially about what’s happening with the welfare programs in the bill. So I’m happy to dive into those.

Susan Pendergrass (00:27)
Yes, yeah. I’ve definitely seen claims that this is going to basically strip health care from millions and millions of people and that kids will be hungry. And I don’t want to minimize that. But we had Brian Blase on the podcast, and I thought I had an understanding of it that didn’t exactly line up with that narrative. So let’s just start there. People are saying that tens of millions of people are going to lose health insurance under the One Big Beautiful Bill Act. Explain that to me.

Elias Tsapelas (01:01)
Well, the first thing people need to understand about Medicaid is that it’s gotten tremendously more expensive in recent years. The Biden administration made a lot of changes during COVID—changes to how the program works and its future trajectory. Even after the One Big Beautiful Bill goes into effect, we’re basically just putting the program’s costs back on the trajectory it was on in 2021. This isn’t going back to the Stone Age—it’s more like going back five years.

A lot of this stems from efforts to eliminate waste, fraud, and abuse. And while there’s certainly some of that, what many people don’t realize is that most states, including Missouri, now contract with private health plans to cover people on Medicaid—particularly the Medicaid expansion population, which consists of healthy adults.

Susan Pendergrass (02:11)
Okay, so let’s just pretend we know nothing. Medicaid is a program that covers health insurance costs for low-income and disabled individuals?

Elias Tsapelas (02:24)
Yes. About 50% of kids in Missouri are on Medicaid. The program covers around two-thirds of all nursing home costs and over a third of all births in the state.

Susan Pendergrass (02:34)
So low-income pregnant women can get Medicaid coverage, and their children can as well. Who exactly is in the “expansion population”?

Elias Tsapelas (02:47)
Good question. And just to clarify—yes, Medicaid also covers a lot of very disabled individuals who private health insurance wouldn’t. But the expansion population refers to healthy adults making up to 138% of the federal poverty limit. These are not permanently disabled people. They’re generally able to work.

Before 2021, someone like me—unmarried and childless—couldn’t qualify for Medicaid in Missouri, even if I lost my job. Medicaid expansion changed that, and with it came a lot of problematic incentives. One issue is that states are paying health plans monthly for enrollees, but there isn’t always a process to verify whether those people are still eligible.

Susan Pendergrass (04:53)
Let me just stop you there. So the state is paying monthly premiums for people who might not even know they’re on Medicaid? And they might have a job now and no longer qualify, but the state hasn’t gone back to check?

Elias Tsapelas (05:40)
Exactly. Ideally, people would notify the government when they get a job, but most don’t, and the IT systems don’t really catch that. Previously, states just paid the bills as they came in. If someone didn’t go to the doctor, there was no cost. Now we’re paying premiums whether they use care or not, which adds up quickly.

Susan Pendergrass (06:40)
So what’s in the One Big Beautiful Bill? Are states required to recertify people?

Elias Tsapelas (06:45)
Yes. One big provision is that states must check eligibility at least twice per year. The Congressional Budget Office projects significant enrollment losses just from checking more often. That’s raised concerns about red tape, but the goal is to ensure people who are no longer eligible aren’t still receiving coverage.

Susan Pendergrass (07:13)
Can Missouri do that? Do we have the systems in place?

Elias Tsapelas (07:20)
I’d like to think so, but I’m not sure. During COVID, states weren’t allowed to check eligibility at all for over three years. Missouri spent an entire year catching up when that ended. Right now, about 1.2 million people are on Medicaid in Missouri, including 350,000 in the expansion group. So yes, it would mean more IT strain.

Another major part of the bill is requiring “community engagement” or work requirements for the able-bodied expansion group.

Susan Pendergrass (08:24)
So that’s people under 65 who aren’t disabled? How do they know who’s supposed to work?

Elias Tsapelas (08:32)
There are carve-outs—new moms, parents with kids under 14, people over 65, etc. The idea is to target people who could be in the workforce. There are also alternative ways to meet the requirements, like volunteering. And it’s worth noting: the SNAP program (food stamps) has had work requirements since the 1990s.

Susan Pendergrass (10:25)
Then why are people saying this will “kick people off”?

Elias Tsapelas (10:33)
Because people will have to meet work or volunteer requirements, and the state will recertify them more often. The question is: how many people will get caught in red tape? That depends on how well states implement the changes. Most of the bill’s provisions are phased in over time to allow states to adapt.

Susan Pendergrass (11:34)
Let’s talk about SNAP benefits. People are saying this will take food away from families. What’s actually changing?

Elias Tsapelas (11:46)
The federal government will now penalize states with high error rates in SNAP administration. Missouri’s overpayment error rate is about 10%, and some states are worse—Alaska’s is nearly 25%. Under the bill, if your error rate is over 6% for two years, the state will have to start covering some of the cost. So Missouri may have to pay a portion of benefits if it doesn’t improve.

Susan Pendergrass (14:06)
How does the bill impact taxes for Missourians?

Elias Tsapelas (14:14)
The standard deduction is going up—by $750 for single filers and up to $6,000 more for seniors. There’s also a new deduction for car loan interest and temporary exemptions for taxes on tips and overtime. Since Missouri’s tax code follows the federal code, that could mean less state revenue, too.

Susan Pendergrass (15:41)
So what will this cost Missouri?

Elias Tsapelas (15:46)
It depends. If we reduce our SNAP error rate, the cost isn’t too bad. But a bigger issue is the provider tax cap dropping from 6% to 3.5% over a few years. Missouri is at 4.2% now, so we’ll need to lower it. That tax generates about $1.5 billion per year for hospitals.

Susan Pendergrass (17:09)
How does the rural hospital fund come into play?

Elias Tsapelas (17:24)
The bill creates a $50 billion Rural Hospital Fund to be distributed over five years. States will get a portion based on how rural they are. The hope is this fund offsets the provider tax losses—at least through 2030. But after that, the fund ends. So there’s concern about what happens long-term.

Susan Pendergrass (19:18)
Senator Josh Hawley mentioned he supports the bill but hopes to fix the provider tax issue in five years.

Elias Tsapelas (19:29)
That seems to be the thinking—pass it now and revisit the unpopular parts later. A lot of the tax and spending changes are temporary, which is partly how they got the bill to comply with budget rules.

Susan Pendergrass (20:30)
This reflects what voters asked for—smaller government and more state responsibility. It reminds me of the Department of Education cuts. Missouri will have to decide which programs to keep and how to fund them. But I was surprised the expansion of the MOScholars tax credit program made it in.

Elias Tsapelas (22:35)
Yes, Medicaid will continue to dominate the state budget if we don’t address it. Every year it’s, “How much more is Medicaid going to cost?” Then we build the rest of the budget around that. This bill will force Missouri lawmakers to reevaluate some of those assumptions and perhaps reconsider whether managed care is working.

Susan Pendergrass (25:02)
That’s going to be interesting to watch. Thanks for breaking it down, Elias. This bill is being talked about a lot, but I think a lot of people are still unsure what it really does.

Elias Tsapelas (25:16)
No problem. I think we’re all looking forward to seeing what happens next.

Produced by Show-Me Opportunity

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