Ethics Bills Top List of Legislative Movers Early in Session

Posted on by Patrick Ishmael
For many years now our General Assembly has failed to deal with one of the greatest threats to good governance in Missouri—the state's unnecessarily lax ethics rules. These days it's not unusual for legislators to leave public service mid-term, only to begin lobbying their former colleagues on behalf of special interests immediately after leaving office. And that practice accentuates a host of other questionable campaign and gift conventions that have taken root in Jefferson City. There should be no question about who has the allegiance of our legislators at the Capitol. Missouri's political culture is overdue for a pivot toward good governance and away from self-serving cronyism.
 
Fortunately, it appears the legislature is on track to make real progress in the realm of ethics this year. The menu of reforms is diverse, too. Limits to gifts from lobbyists to legislators appear to be squarely on the table. The chambers also appear on track to put a door stop in the revolving door of legislators turned lobbyists so that our elected officials aren't trading on their public service—both while they serve and immediately after they've left. Other campaign finance changes and transparency measures promise to ensure that the line between public service and private gain is bright and unambiguous. Indeed, for taxpayers to have trust in their government, it is important that they have confidence in their own elected officials; clearly circumscribing what the appropriate behavior is while they're in office serves both the trust interests of the public and the long-term professional interests of those elected to serve in public office.
 
Kudos to the legislators from both sides of the aisle who are involved in this effort. I look forward to the debates.

Empowerment Scholarship Accounts Would Be a Boon to Missourians.

Posted on by James V. Shuls

Children with special needs can be extremely challenging, and costly, to educate. Often, they require aides, therapists, counselors, and other accommodations.  Try as they might, public schools often struggle to educate some of the neediest children. Meanwhile, parents often feel as if they are grasping for straws trying to get their children the services they need. This isn’t a criticism of the many dedicated professionals and educators who serve special-needs children; this is a criticism of the system itself. It’s an asymmetrical arrangement: the school system has complete power over the educational resources even though the parents are the ones who best understand how those resources should be used for their own children.

Empowerment Scholarship Accounts, otherwise known as Education Savings Accounts (ESAs), have the ability to change this. They allow parents to direct the funds toward the services that they believe will meet the needs of their children.

ESA bills have been introduced in both the Missouri House and Senate, but have yet to receive a hearing. In previous posts, Brittany Wagner explained how ESAs work and how parents could spend the funds. In numerous other posts, I and others have highlighted how school choice programs could improve educational options for students. Here I want to demonstrate how this type of program is a financial boon for Missouri.

In the proposed Senate Bill, which would cover special-needs students only, a tax credit of 75 percent would be granted to individuals who donate to a scholarship organization. That means a donation of $100 would count as a $75 payment towards your taxes. In other words, the scholarship organization is getting $100 from the donation and the state is still collecting $25 in taxes. As I explained in further detail in my paper, “Available Seats?,” this tax credit feature increases the amount of available funds for education.

That is not the only way savings accrue. Special-needs students who are eligible for the program could receive an ESA worth the “State Adequacy Target.” For the 2016-2017 school year, this will be $6,808. This is roughly $2,500 less than the amount of local and state dollars spent per pupil in 2015, and I can assure you that this is less than most schools spend on special-needs students. 

Every special-needs student who uses an ESA in this program will essentially be giving Missouri taxpayers and public schools a cost-savings.

In total, more than 6,800 scholarships of the full amount could be awarded under the proposed bill.  If we assume that each of these students would have attended a public school (this is not a stretch, since it is stipulated in the bill), then the cost-savings could be in excess of $14 million.

Number of Scholarship Students

Average State and Local Spending Per-Pupil

Total State and Local Spending

(Column 1 X Column 2)

Total Tax Credits

Savings for the State

(Column 3 – Column 4)

6,854

$9,340

$64,016,360

$50,000,000

$ 14,016,360

 Special needs students may be difficult to educate, but it is not difficult to see that ESAs would be a boon for Missourians.  

 

Kansas City’s Earnings Tax Ignorance

Posted on by Patrick Tuohey

Brace yourself: Kansas City leaders are preparing a campaign to scare you into voting for the earnings tax. On Monday morning, Kansas City Mayor Sly James gathered with the usual suspects to decry efforts to end the earnings tax. According to The Kansas City Star:

James said that if the tax is phased out, the city would have to drastically increase property or sales taxes to replace that revenue, but Kansas City doesn’t have authority to raise those taxes to that degree.

James said losing that money could mean laying off 810 uniformed police officers and 550 firefighters over 10 years.

City Hall has known this earnings tax vote was coming for years, and yet they have apparently done nothing to prepare for it. There appears to be no contingency plan. As a result, City leaders do nothing but offer doom and gloom scenarios of public safety cuts and increased taxes.

Almost exactly five years ago, City Hall leaders also came out to oppose the first effort to end the earnings tax. They said the same things Sly James is saying now. Just like Mayor James, Jan Marcason said that if the earnings tax were defeated at the ballot, the city would have to cut benefits and services. Thankfully, I was at the press conference to ask some questions:

Tuohey: Jan [Marcason], you said in your comment that if this passed that the City Council would have to increase property taxes or cut services. Are you saying now that you would vote to cut services to seniors or vote to increase property taxes and vote to increase income taxes?

Marcason: No. I just think we need a plan. If these cuts were to come about, we need a plan to replace that money.

Tuohey: Does the City Council have a plan?

Marcason: The City Council is looking to its leadership…

Cindy Circo: We passed a resolution to…

Tuohey: To what?

Circo: We passed a resolution to look at all the options, but there's no turn off on the light switch. There's no way to do this overnight.

(The rest of the video is entertaining. Dave Helling of The Star pushes back on the idea that the City cannot make cuts and then-Councilman Russ Johnson argues with him over the shoulder of a clearly uncomfortable Jason Kander.)

I am not aware of any contingency plans the city has made if the earnings tax is defeated. Instead they prefer to complain like a petulant student who has not studied for finals, and make threats based on their own unpreparedness.

Full Steam Ahead for Transportation Funding in Missouri

Posted on by Joseph Miller

Before Missouri’s legislative session started a couple weeks ago, we wrote about how one of the main focuses for the body would be the state’s transportation funding issue. Quick action on fuel tax bills in the Senate has confirmed this position.

For instance, SB 623, a bill that would increase the fuel tax by 1.5 cents for regular fuel and 3.5 cents for diesel fuel, has already been voted out of the Senate’s transportation committee (unanimously). A similar bill last year (SB 540) did not even have a hearing until March 18th. SB 623 is not the only transportation bill that has seen a concerted push. SJR 18, which would not only increase the fuel tax but also transfer many of the state’s smaller highways to the control of local governments, has also been assigned to the transportation committee and will likely have a hearing soon.

Measures similar to those going forward in the Senate are making their way through the Missouri House of Representatives (HB 2032, 1581, and 1381), although not at such a breakneck pace. In addition, the legislature has yet to propose any infrastructure-related public–private partnership (P3) bill, which was introduced in last year’s session and would be essential for any efforts to use tolling to fund I-70’s reconstruction. Such a bill might never be introduced, but it is worth noting that the last year’s attempt at P3 legislation came late in the legislative session as an amendment to SB 540.

We’ll keep track of all these bills as they make their way through the legislative process. 

State of the State Address Strikes Happy Notes, But Forgets Opportunities Lost

Posted on by Patrick Ishmael

Last week Missouri Governor Jay Nixon delivered his eighth and final State of the State address to the Missouri legislature. You can find the full text of his speech here. In contrast to previous years, the Governor struck a much less antagonistic tone toward supporters of free market policies, focusing instead on a host of priorities he claims were successes during his tenure. The Governor deserves credit for the positivity in his speech.

But sadly, the Governor's positivity doesn't bring back the missed opportunities of the last seven years. In Jefferson City we have seen hostility to substantive income tax cuts, opposition to serious education reforms, the promotion of a long line of tax incentive boondoggles, and the rejection of reasonable reforms to the state's labor policies. This year's priorities also leave something to be desired; for instance, "keeping tuition low" at Mizzou, a key plank from last week's speech, is probably a misplaced priority while the University fights to earn back the trust of the taxpayers who fund it. 

A few months remain for the Governor and the Legislature to make real progress on a host of important policy matters, and I expect that there will be some forward movement on ethics reform before he leaves office. That is a great thing. I worry, however, that that's where the progress will end. Let's hope not.

Jennings Superintendent’s Departure: Lessons for Education Policy

Posted on by Michael Q. McShane

Tiffany Anderson, the superintendent of the Jennings school district, is leaving to head up the Topeka, Kansas, school district. By all accounts Dr. Anderson is a rock star.  When she assumed control of the school district in 2012 it was in bad shape, deeply in the red and severely underperforming.  It has now reached full accreditation and is back in the black. She will be sorely missed.

There is a lesson to learn here. It is one that people across the country have found when their great superintendent leaves for greener pastures.  We cannot have school systems that are completely dependent on a one-in-a-million talent at the helm in order to succeed.  There is only one Tiffany Anderson.  Missouri has 520 school districts.

One of the main reasons that I advocate for a decentralized schooling system is that it is more resilient to the shocks that occur in everyday life. People move. People’s life priorities change.  People die. If, for example, a school district is run by a collection of independent charter school operators and one amazing principal leaves, there is a limit to the disruption in the equilibrium of the system. But if power is centralized and the person at the top leaves, the whole system is affected.

Tiffany Anderson is proof that there are great leaders out there who can turn around struggling organizations. The problem is that there just aren’t enough of them.  Our response should not be to bemoan this fact, just like it doesn’t make sense to get upset at blizzards or floods or thunderstorms.  We should try and build systems that can handle the snow, the rain, and the wind.

We will have to see if the Jennings district is resilient enough to absorb the loss. For its kids’ sake I hope it is. But if it isn’t, we’ve got to start moving toward a better way.

A Must-Watch Video about Teacher Pensions

Posted on by James V. Shuls

For years now, scholars at the Show-Me Institute have been writing about the problems with teacher pensions.  Don’t believe me? Just look at this impressive list of publications:

The Funding Status of State and Local Government Pensions in Missouri – Andrew Biggs, Ph.D.             

Betting on the Big Returns: How Missouri Teacher Pension Plans Have Shifted to Riskier Assets –James Shuls, Ph.D., and Michael Rathbone

Pension Reform in Missouri – Erin Hawley

Teacher Pension Enhancement in Missouri: 1975 to the Present – Robert Costrell, Ph.D.

Missouri Transition Costs and Public Pension Reform – Andrew Biggs, Ph.D.

Public Employee Pensions In Missouri: A Looming Crisis – Andrew Biggs, Ph.D.

But as informative and compelling as these papers are, there is just something engaging about a video with hand-drawn illustrations. That’s why I love this new video released by TeacherPensions.org, a project of Bellwether Education Partners. In less than three minutes, the video shows the key problems with teacher pensions. Check it out.

Kansas City Government Union Embezzlement Shows Need for Greater Transparency

Posted on by John Wright

The former head of an AFSCME local representing Kansas City corrections officers pleaded guilty to a federal wire fraud scheme this week. Lowell Wreh, the former AFSCME executive, admitted to embezzling $7,642 in checks from the union's bank account to himself and others for his own benefit and personal use. This story is an example of why Missouri government workers deserve the same transparency from their union representation that private sector union workers have enjoyed since the 1950s.

In 1959 Congress passed the Labor-Management Reporting and Disclosure Act (LMRDA), a powerful set of protections for unionized workers and a much-needed check on the power of union executives. Among other things, the LMRDA required all private sector unions to disclose their finances annually in what are called “LM filings.”

The impact of the LMRDA was huge. Although it didn’t fix everything, workers and journalists were better able to discover instances of self-dealing by looking through LM filings. In many cases this meant a better, more responsive union. The lack of secrecy in union finances is still helping workers hold their union leadership accountable.

Unfortunately, the LMRDA does not apply to Missouri’s government unions. As a result, public sector workers have no easy way of finding out where their dues go, which hinders their ability to question the use of these funds. Self-dealing schemes like the kind this AFSCME executive took part in become harder to uncover when union finances are not transparent.

Our public sector workers deserve the same level of protection that private sector workers have enjoyed for decades. It’s time to close the gap between the public and private sectors. Government unions should be at least as transparent as their private sector counterparts.

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