The Show-Me Institute is proud to welcome U.S. Senator Joni Ernst as a featured speaker at our Freedom Celebration on March 21. More details about the event will be available next week.
A Homegrown Challenge to Blaine Amendments
The U.S. Supreme Court has decided to hear Trinity Lutheran Church of Columbia v. Pauley, a case out of our own backyard.
Here are the details: Several years ago, Trinity Lutheran applied to the State of Missouri for a grant to resurface their playground. They were denied that grant because they were a church, and Missouri’s Constitution explicitly bans public support of religious educational institutions. The church is arguing that by discriminating against religious organizations in awarding grants, the state is violating those organizations’ right to free exercise of their religion.
Historically, the U.S. Supreme Court has held that states can give funds to religious educational organizations without violating the Establishment Clause of the U.S. Constitution—supporting organizations that are doing something to help society isn’t establishing a state religion. In general, these programs were simply required to be neutral toward religion; that is, that any religious denomination or non-religious organizations would be just as likely to get support as any particular religious group would be.
Several state constitutions, Missouri’s included, went a step farther. Missouri’s constitution includes the following language:
“Neither the general assembly, nor any county, city, town, township, school district or other municipal corporation shall ever make an appropriation or pay any public fund to help to support or sustain any private or public school, academy, seminary, college, university or other institution of learning controlled by any religious creed, church or sectarian denomination.”
This is called a “Blaine Amendment,” named after James G. Blaine, who in 1875, while he was in the US House of Representatives, proposed an amendment to the US Constitution that said:
“That no money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, sect or denomination of religion”
Blaine failed, but that language did end up in numerous state constitutions, like Missouri’s. The court now has to decide if it is constitutional. This particular case matters because Blaine Amendments have been a huge impediment to private school choice programs, and bringing down Blaines would be a huge win for children and families desperate for more schooling options.
What I Saw at the 2016 Missouri Transportation Conference
Last week, the Missouri Chamber of Commerce held its annual transportation conference in Jefferson City. Missouri state and national representatives, department of transportation officials, and private sector spokespersons were in attendance to talk about the future of Missouri’s transportation infrastructure. While topics varied, this year (as in previous years) the focus was on funding the Missouri Department of Transportation (MoDOT) and the state highway system.
Hopes are high that this year the legislature will take concrete action on MoDOT funding. Speakers talked about how SB 623, which would increase the state’s fuel tax (1.5 cents regular and 3.5 cents diesel) had already been voted unanimously out of committee. The dire predictions of the last two years, namely that MoDOT would fail to maintain the highway system in its present condition, took a back seat to new discussion on how MoDOT might rebuild I-70 and whether MoDOT might bring back its cost-share program to help local transportation initiatives.
With I-70, most speakers emphasized the fact that Missouri has one of a few slots in a federal pilot program that allows tolling on existing interstate highways. But with passage of the FAST Act, Missouri now has a limited time (22 months) to “use it [the slot] or lose it,” meaning the slot could be taken away and given to another state. A representative of Macquarie Infrastructure Corporation, an international infrastructure investment group, discussed how public-private partnerships could be an option for major infrastructure financing and operation. Macquarie’s most famous (or infamous) acquisition is the Indiana Toll Road, which, following its privatization promptly went bankrupt. The Macquarie representative pointed out how the transfer of toll road traffic risk to private investors greatly benefited Indiana residents, which we’ve written about before.
The general focus on the fuel tax and tolling, both user fees, as solutions for MoDOT’s funding problems, is a welcome change from a just two years ago. At that time both options were barely mentioned as officials drove for a transportation sales tax. But there were exceptions to this salutary trend. A representative of the state’s gas station lobbying group discussed a plan to fund highways with increased cigarette taxes. There seems to be no logical connection between smoking and highway maintenance expenses. When questioned why smokers should be targeted for road funding, the representative responded that the tax was likely to go up anyway and that roads were a good place to spend money. We would point out that there is no reason why cigarette taxes must increase. In addition, one could imagine fairer ways to spend any such money (like, say, health care or addiction treatment).
Funding talk was only part of the conference, and we will discuss some of the other topics, such as ridesharing, port development, and highway safety, in future writing.
Conventions, Saint Louis, and the Future of the Edward Jones Dome
During the drama over whether the Rams would move to Los Angeles or remain in Saint Louis, discussion of the future of the Edward Jones Dome and the St. Louis Convention Center took a backseat to visions of new stadiums and speculation about backroom NFL dealings. Now that the Rams have left, the Dome’s future is taking center stage.
Civic leaders claim conventions support tens of thousands of jobs and bring more than a billion dollars into the local economy. Therefore, if the city can spend another $200 million to upgrade the convention center and renovate the Dome, the region might see an even greater benefit. Unfortunately, the Dome and the Convention Center are underperforming, and the businesses conventions they support are not even close to being the main breadwinners in Saint Louis’s economy.
The city upgraded the convention center in the 1990s, adding the Edward Jones Dome and funding the completion of the Renaissance Center. The convention center itself does not directly make any money, but the argument is (and was) that it brings in tourists who spend money (mainly at hotels), which translates into a tax benefit for the city. When the Dome was built, city leaders expected “hotel nights” from conventions would rise to 800,000 annually. But it didn’t happen. Saint Louis convention business growth has been low ever since.
Even in 2014, total convention-related hotel nights remained at 425,411. Worse yet, about 60% of those hotel nights are accounted for by convention groups with fewer than 2,000 participants, who certainly don’t require a venue as large as the 60,000+ seat Dome. In 2015, only nine conventions had more than 10,000 participants (accounting for 80,000 room nights). The CVC often blames the NFL schedule for holding down the number of conventions the city can compete for, but in the six months when no games were held at the Dome, nine large conventions was a far cry from busy.
What of the convention center’s huge impact on the Saint Louis economy? City leaders can throw numbers around all day, but according to the Census, less than 1 percent of Saint Louis City’s business payroll came from the hotel industry in recent years. That’s less than a third of the city’s total law-firm payroll. Even if we combine all the restaurants, all the entertainment venues, and all the hotels in the city (many of which are mainly supported through non-convention business), we’re talking about 7 percent of the city’s payroll. That’s less than city’s manufacturing payroll and about half the city’s healthcare industry payroll.
|
Business Sector |
Percentage of Total City Payroll (2013) |
|
Educational services |
13.82% |
|
Health care |
12.80% |
|
Professional services |
11.79% |
|
Finance and insurance |
9.70% |
|
Management of companies/enterprises |
9.62% |
|
Manufacturing |
8.32% |
|
Accommodation and food services |
3.53% |
|
Accommodation |
0.95% |
|
All Other |
29.48% |
Despite these realities, the city is not $400 million in debt for infrastructure improvements to lure manufacturing companies. It is not planning to spend more than $200 million on hospitals or legal offices. How has it come to be that the city’s focus (both financially and politically) has become so tied up in entertainment and tourism when that is clearly not the city’s competitive advantage?
Course Access Is Working in Texas
Brittany Wagner and I released a paper last month outlining how a course access could work in Missouri. Tens of thousands of Missouri students attend schools that do not offer advanced-level course work, and course access could go a long way to helping meet their needs.
The Foundation for Excellence in Education has a great new video out about Texas’s course access program. Click on the link above to check it out.
Why should Texas have all of the fun? Let’s get stories like this out of the Show-Me State!
The Illusory Goal of a Fully Funded K-12 Formula
If you’ve ever seen it, there is something funny about a dog chasing a car. At first it seems as if the dog may grab hold of a tire, but inevitably, right when the dog is about to catch it, the car speeds up, leaving the dog behind. Bless poor Fido’s heart, but it is an exercise in futility. In many ways, funding for Missouri’s public schools is the same way—just when you think you can catch it, it accelerates out of reach.
It’s hard to read a story about education in Missouri without seeing that public schools are “underfunded.” What they are really saying is the legislature is not fully funding the formula that determines how much each school is supposed to receive—the Foundation Formula. Some suggest the shortfall comes from the economic downturn of a few years ago. Others say taxes aren’t high enough to generate sufficient revenue to fully fund the formula. Both theories imply something is wrong with the dog—either he’s too sluggish, or we aren’t feeding him enough.
Here is another explanation: Fully funding the formula is difficult because the funding formula continues stepping on the gas.
The Foundation Formula is designed to continually increase. How much schools should receive from the state is determined by something called the “state adequacy target.” The target is recalculated bi-annually and, by law, can never go down.
Now, follow me here for a minute. The target is based on how much Missouri’s successful school districts spend per pupil. Setting aside whether that is a good idea in and of itself, let’s imagine the legislature appropriates an extra $400 million dollars to the funding formula. What would happen to spending in these districts? It would go up, of course. Subsequently, when the state adequacy target is recalculated the target would go up again. . . and so on.
We already see this happening. From the 2015-16 school year to the 2016-17 school year, the state adequacy target will increase $230 per student. The goal of fully funding public schools just went up another $203 million.
Despite the continually growing requirements of the formula, the state does not adjust “local effort”—the amount the state expects districts to raise locally. Right now, the Department of Elementary and Secondary Education uses assessed property values that are over a decade old. Property values, and taxes, have gone up in the meantime. Yet, the formula doesn’t capture these changes.
Try as they might, lawmakers will have a tough time ever fully funding the system, because the very act of increasing funding leads to the requirement of another increase in the formula amount for the next year. Just like Fido, they’ll always be looking into an exhaust pipe.
This isn’t to say that Missouri should or should not spend more on K-12 education. Rather, these illustrations demonstrate the need to restructure the formula so it is more dynamic and attuned to the changing demographics of school districts.
No Surprise: Health Care Spending Accelerated in 2014
One of the most ballyhooed promises of Obamacare was the law's supposed effect on Americans' health care spending. Frequent talk of the law "bending the cost curve down" was intended to allay concerns on both sides of the aisle that the Affordable Care Act would actually make health care more expensive for individuals in the private market and the government itself.
Supporters of the law claimed this wouldn't be the case, but data released late last year by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) show very clearly that, again, they were wrong.
Although the ACA was enacted in 2010, its most significant provisions went into effect in 2014. The expansion of Medicaid eligibility, as well as health insurance premium tax credits and cost-sharing subsidies paid by the federal government, contributed to federal government health care spending growth of 11.7 percent in 2014 — 8.2 percentage points faster than in 2013. Correspondingly, the federal government’s share of health care spending increased from 26.0 percent in 2013 to 28.0 percent in 2014.
Other provisions of the ACA that took effect prior to 2014 continued to affect overall health spending — including changes to Medicare and Medicaid provider payments, increased Medicaid prescription drug rebates, reductions to the size of the Medicare Part D coverage gap, prescription drug industry fees, and implementation of the medical loss ratio requirement for private insurers.
For regular readers of our work, CMS's findings will come as no surprise. In our paper on direct primary care, released last year, we detailed how health care costs for both the government and for private individuals were going up in all sorts of ways: through mandated coverage, higher premiums, bigger deductibles, less-generous copays, and other cost-transferring practices. From the very beginning, the mechanics of Obamacare clearly pointed to significantly increased, not decreased, health care spending in the United States; the results since its passage bear out that very straightforward reality.
With Riverfront Stadium Dead, City Leaders Back Other Expensive Projects
When the Rams decided to move to Los Angeles, it meant the end of plans to spend $400 million on a new stadium in downtown Saint Louis. Well, probably. But like cutting off the head of the Hydra, the decapitation of one spending proposal seems to spawn two more. Thus, it comes as little surprise that even with the autopsy of Rams move still in newspapers, new hundred-million-dollar-plus plans for stadiums and convention centers are gathering steam.
According to the Saint Louis Convention and Visitors Commission (CVC), the Scottrade Center, the America Center, and the Edward Jones Dome are in need of expensive renovations. The suggestion is that the Scottrade Center requires $100 million in upgrades, the America Center needs $120 million to remain competitive, and as for Dome, the head of CVC didn’t even have estimate. If the Post-Dispatch is to be believed, the Dome will need $64 million just to maintain its current condition. The price tag for any major changes is likely to be much higher. Altogether, the cost of renovations to just these three facilities would come to more than $280 million.
So who will pay for these renovations? With the convention center and dome, it will almost certainly come from the public, and probably from Saint Louis City. The Scottrade Center was mainly a privately funded enterprise, but there is no guarantee that renovations would be handled in the same manner.
If the city is forced to shoulder the burden of these upgrades, it could be backbreaking. The city’s outstanding debt on the convention center, dome, and Scottrade Center is about $420 million already, requiring more than $20 million in annual debt service. The city also spends an additional $5.7 million on conventions and tourism, most of which goes to convention center operations. These costs far outstrip the total revenue of the city’s hotel and restaurant taxes ($13.5 million in 2014), which were set up to support the convention center. If the city were to take on the debt necessary to fund the renovations above, its yearly convention/stadium spending would increase to about $46 million per year. For comparison, in 2014 the city spent $49 million on health and welfare and $70 million on streets.
Spending hundreds of millions of public dollars and tying up the city in debt for decades to compete in the increasingly cutthroat convention center arms race is questionable policy. But what should be galling to city residents is the fact that, whatever had happened with the Rams, these upgrades would still be thought necessary. They would still cost hundreds of millions of dollars and still be public liabilities. If the Rams had been forced to remain in Saint Louis, city residents would have been committed to spending $150 million on a new stadium, only to be told that the city’s old stadiums needed $300 million themselves.
Sound policy would be to make sure we can afford what we have before we try to build something new. Regional leadership is taking the opposite approach.
Study Finds Health Care Price Transparency Should Be a Top Policy Priority
We have talked many times about market-based reforms that would help to bend down the cost curve of health care in this country. One important reform is the promotion of price transparency to make it easier for health care purchasers to compare prices for and save money on routine health care procedures. Transparent health care pricing helps keep health care costs down, and this fact was made clear in an important study published just last year.
For years, hospital executives have defended these prices saying it’s about quality, or that they see sicker patients, or lots of folks on Medicare.
“That’s just not true,” said co-author Yale economist Zack Cooper.
Cooper said the team, including John Van Reenen from the London School of Economics and the University of Pennsylvania’s Stuart Craig, controlled for all those factors. And Cooper said market power matters more than the rest….
Change starts, says Cooper, when people who buy the MRIs and the C-sections can simply see real prices. And change may happen when those same people negotiate next year’s deals knowing what they know now.
You can find the full report here. Its implications are straightforward. For one, a hospital that holds and can maintain monopoly control over a health care in its region can charge higher prices than if it had competition. For another, concealing the prices of health care services serves to fatten providers' wallets. Without readily available prices, it is harder for patients to determine whether they're being overcharged. That was true before Obamacare was passed… and has continued long after Obamacare was implemented. The problem in health care is not the free market. The problem is the lack of a free market in health care.
Market reforms like price transparency are important tools to make health care in this country better, less expensive, and more accessible. Rather than go farther down the hole of failed government-run health care, we need to move toward freeing our health care system to make sure that patients' needs—both their health needs and their financial needs—are in the center of the system. Price transparency would be a step in the right direction after far too many steps in the wrong.
