MO Money, MO Problems for MoDOT Funding

Posted on by Joseph Miller

MoDOT’s funding future is certainly looking brighter these days. The department’s user-funding base is, at long last, providing more revenue. Since 2013, motor vehicle sales tax revenue increased by more than 10% and license fee revenue is up by 2.6%. Even state fuel tax revenue, which many feared was entering terminal decline, is on the upswing. In the last year, MoDOT’s highway user revenues increased by a total of $27 million. For all this we can probably thank a better economy and lower fuel prices (an average price of $1.66 per regular gallon as of 1/11/2016). Fears of an imminent funding crisis have, for now, subsided. As an added bonus, the federal government passed the FAST Act late last year, opening up the possibility of increased federal funding for MoDOT.

However, in an ironic twist, the increased federal support promised under the FAST Act could once again put Missouri in a bind. As we’ve discussed before, the federal government gives highway funding to states in the form of individual project grants, not as a lump sum. This means that for MoDOT to get federal money for highways, it needs to spend state money. Thus, increased federal support through the FAST Act requires increased state spending.

Back in early 2014, MoDOT officials predicted decreased federal support (of 19% in 2016), not a steady increase, as is now expected (see the chart above). While a decrease in federal dollars was feared, it also meant less revenue would be needed to maintain state matching funds. Even so, MoDOT officials at the time predicted they would not have the funds necessary by 2020.

With more federal funding available, MoDOT’s situation today is similar to that in in 2014—left wondering whether it will be able to match all federal dollars in the coming years. The key difference is that in 2014, the loss in federal funds would have meant the MoDOT would not have had the funds to maintain the state highway system. Now, it would mean the state was not taking advantage of all federal funding that will become available (which would then be redistributed to other states). Better problem.

Furthermore, as we’ve stated before, nearly all major highway projects receive a $4 to $1 federal to local match, meaning that it does not take much increased state revenue to match significant federal dollars. For example, the dollar gap between pre– and post–FAST Act projections should reach $305 million by 2020. MoDOT would need to spend $76 million in additional state-based revenue to cover that gap.

How will MoDOT cope? The department is already using creative accounting to get federal dollars for projects that were previously ineligible. The state legislature is also looking to shore-up the department’s user-funding base through increased fuel taxes and the possible introduction in tolling. If policymakers can focus on fair and economically sound solutions, Missouri should be able to capitalize on the better funding environment for transportation. 

Regional Leaders Should Keep Their Word over Stadium Plan

Posted on by Joseph Miller

It’s official. The Rams are leaving Saint Louis. Residents might have disagreed over whether to spend public money on a stadium to keep them here, but no one wanted the region to lose an NFL team. However, while a lot of frustration has been directed toward Rams ownership and the NFL, including accusations of broken promises, we should remember that Saint Louis regional and state officials made their own promises over the past year regarding the riverfront stadium plan, and residents should make sure that those promises are kept.

First, after the Regional Convention and Sports Complex Authority (RSA) got a judge to throw out the city’s ordinance requiring a vote before public money could go to a stadium, the mayor’s office promised that city officials and the Board of Aldermen would craft a new, legally defensible ordinance in the same spirit. The mayor’s office claimed this couldn’t be done for the riverfront stadium, because time was of the essence. Now the Rams are moving, and there would appear to be plenty of time for ordinance-writing.

Second, at the state level, most legislators were indignant that the governor and the RSA would extend bonds without their approval. Senate leadership threatened to withhold bond payments for a new stadium. They claimed that the RSA was not created with the intent of becoming a permanent stadium-building authority. Now the state legislature has time to close that loophole, assuming that their opposition was more than grandstanding.

Finally, just about every public official and the leadership of the governor’s stadium task force told the public that if there is no commitment from an NFL team, there will not be a stadium. Last time Saint Louis lost a team, the city built a stadium on spec. After failing to land an expansion team, the city and state scrambled to lure an existing team—which turned out to be the Rams—to Saint Louis. To lure them, the region signed the terrible lease that is the cause of our present troubles. Let’s not repeat past mistakes. The RSA has already spent more than $16 million of public money (equivalent to about two years of maintenance on the Dome) planning a stadium (and suing the city) for a Rams organization that was not interested in staying here. It’s not time for the regional leaders to try to buy another football team or build a soccer stadium. It’s time to stop.

The criticism being leveled at the NFL and Stan Kroenke at this moment is understandable. But it is worth remembering that Mr. Kroenke did not attempt to extort money from Saint Louis. He did not ask for a publicly funded stadium. He did not ignore state legislators, cut the county out of the funding scheme, threaten to use eminent domain, or throw out the city’s vote. He did not ask us to grovel. We did it to ourselves. Now it’s time for policymakers to follow through on their promises and make sure this does not happen again. 

Missouri Is Leaving Its African-American Students Behind

Posted on by Michael Q. McShane

 

There’s no other way to put it: Missouri schools simply aren’t giving African-American students a chance.

This was made particularly clear to me last month, when the US Chamber of Commerce Foundation released The Path Forward: Improving Educational Opportunities for African-American Students. I was fortunate to have the opportunity to help collect and analyze the data for the report, and I attended the launch event co-sponsored by the Chamber and the NAACP in Washington, DC.

The Path Forward broke down African-American student performance state by state. The results for Missouri were beyond disheartening:

·         On the 2015 National Assessment for Educational Progress, only 15 percent of Missouri’s African-American 4th graders were deemed proficient in reading and only 15 percent were proficient in math.

·         By the time they got to 8th grade it was even worse, with only 14 percent of African-American students proficient in reading and only 11 percent proficient in math.

·         While the graduation rate stood at 72 percent, only 6 percent of African-American students scored college-ready in all four tested subjects on the ACT.

·         Only 2.7 percent of African-American students graduated having passed at least one AP test during their time in high school. That was the third-worst rate in the nation.

There are over 151,000 African-American students in the state’s K-12 schools—16.5 percent of the overall student population. Our state will never reach its potential if that many students are failed by our education system.

So what can we do?

First, we have to break down the barriers between African-American students and quality schools. Right now, tens of thousands of students are trapped in low-quality schools because of where they live. Several of the small, almost entirely African-American districts of St. Louis County have only one high school. If students are not being served there, they have nowhere else to go. Elsewhere in the state, the geographic assignment of schooling often requires African-American students to attend schools that do not meet their needs. By allowing students to enroll across district lines—or even better, by allowing independent charter schools to open and draw students from across district boundaries—the link between where a child lives and where he or she goes to school can be severed.

Second, we have to engage the whole community in creating quality educational environments for African-American students. Statistics like those above remind us that this is an all-hands-on-deck crisis. Granting funding flexibility for students to attend the school that best serves them, regardless of whether it is a public or private school, would encourage churches, nonprofits, and other social organizations to get involved in schooling and reach out to children in need.

Third, we have to push for higher, not lower, expectations for African-American students. In the No Child Left Behind era, schools have been judged based on how well they meet basic targets of proficiency or how well they do at getting students to graduate from high school. Clearly, these are important stepping stones on the way to a well-rounded education, but they are far from sufficient. Passing AP tests, scoring well on college entrance exams and thus not needing remediation, and other more advanced indicators need to be part of the suite of metrics we use to judge student, school, and district success.

The Missouri Constitution calls for the state to fund and support a system of schools because knowledge and intelligence are “essential to the preservation of the rights and liberties of the people.” An education system that fails to educate a large swath of our students is a threat to our rights and liberties, and fixing it should be a priority of our leaders.

Greater Transparency Would Be Good for Mizzou

Posted on by Michael Q. McShane

Tensions are still simmering following this fall’s student (and faculty) protests at the University of Missouri. Without venturing into the debate on the merits of the protestors’ claims, it is clear that the leadership lost the run of the school. Controversy is going to be a part of any university; young, idealistic students (and the professors who help incubate that idealism) will always clash with administrators. Important issues will be debated, and protests will be held. ‘Twas ever thus.

Universities have to be able to weather these events, though; otherwise, nothing will ever get done. It’s clear that the recent turmoil was more than the administration could overcome. Much ink was spilled in the post-mortem of the Wolf presidency, but I prefer to look to the future rather than dwelling on the past. I’m more interested in what we can do to improve Mizzou as the university moves forward.

That’s why I was heartened to see a legislative effort to promote greater transparency in the university system. Taxpayers and citizens have a vested interest in the university, and they can’t know if their hard-earned dollars are going to productive ends if they don’t know how those dollars are being spent. Louis Brandeis had it right—sunlight is the best disinfectant—and illuminating the inner workings of the university system can empower citizens to influence how the system is run.

The reform efforts have two central planks (available here and here). The first calls for the Missouri state auditor to complete a comprehensive audit of the university every year. The people of Missouri (many of whom will never have a child set foot on Mizzou’s campus) fund the university system to the tune of half a billion dollars every year. Is it going to fund research on Twilight fans, or is it being used to put more microscopes in the chemistry lab? Right now, we don’t know, and we should.

The second reform requires all instructors to put their syllabi and course reading lists online. Now, it’s not as if these documents are top secret today, but in the past when citizens and researchers have asked for access to syllabi to find out what students were being taught, Missouri universities have stonewalled them. Again, taxpayers have a right to know what they are paying for, and they should not have to pull teeth to find out what is actually being taught in the university’s classrooms.

The University of Missouri system is an important part of the fabric of our state. Not only does it instruct tens of thousands of our students every year, but it also serves as the locus of important research, debate, and discussion. A thriving Mizzou is good for Missouri, and greater transparency will strengthen the university and give Missouri citizens greater confidence that their tax dollars are going to fund important work.

Open Boundaries Would Allow More Students to Receive “Tough Love” at North Side

Posted on by James V. Shuls

Students in St. Louis have more options today than ever before. From magnet schools to charter schools, students can choose between college prep schools, ROTC programs, or even schools for the arts. Of course, there is still concern about quality in some of these schools. Nevertheless, the market seems to be moving in the right direction. Yet, just over the district boundaries, in poverty-stricken school districts like Normandy and Riverview Gardens, students have few if any choices. There are no magnet schools and there are no charter schools.

Charter schools could open in these districts, but the low district enrollments ( 3,481 in Normandy and 5,143 in Riverview Gardens) make it unlikely. That could change if charter schools were allowed to enroll students across district boundaries.  It would also enable these disadvantaged students to access the existing charter schools in St. Louis—schools like North Side Community School. 

Show-Me’s Brittany Wagner has written about the school before, noting that it is only a five-minute drive from the struggling Normandy Schools Collaborative. Recently, the St. Louis American had some nice things to say about the school:

About 10 percent of the families are homeless, and many of the heads of households are struggling young parents or grandparents, said Muriel Smith, the school’s director of development. Despite all these factors that could be seen as setbacks, she said students are performing higher than many other schools in the city – especially those with similar demographics.

Sixty-five percent of children at North Side scored proficient or better in both English and math on state standardized tests in 2015, according to results released in August.

“A lot schools think that kids in these neighborhoods can’t really learn because they have so much going on at home,” Smith said. “But our scores and kids prove that that’s possible. We set expectations for our students and our parents to make sure that they are going to be successful.”

Those scores obviously don’t come easy. The second through fifth graders arrive at school at 8:15 a.m. and leave at 4:45 p.m. – an eight-hour day, and the school schedule is year round. Pre-K through first-grade students have a seven-hour day.

 

The newspaper chalked a lot of the school’s success up to the “tough love” system implemented by the charter school’s principal.  Allowing students to cross district boundaries to attend charter schools would enable more students to share in the success of North Side, and it would provide options for students who currently have none. With the Normandy Schools Collaborative continuing to struggle, now certainly seems like a good time for some tough love. 

On Rams Relocation, Saint Louis Media Is as Fickle as Stan Kroenke

Posted on by Joseph Miller

We recently discussed how the Rams, and by extension the Rams’ owner Stan Kroenke, just slammed the Saint Louis metropolitan area to help make the case for moving the Rams. Now seems like a good time for city leadership and media to take a long look at why Saint Louis is in this position, and to reevaluate the merits of promising hundreds of millions of public dollars to a fickle billionaire. Instead, unfortunately, just about every civic leader and media source is focusing on blasting Kroenke for being a callous businessman (if not worse). A tough day for the man the Post-Dispatch once hailed as the new “Stan the Man.”

No joke. The Saint Louis media was not always as harsh on the Kroenke as they are now. Back when he was part of a task force to get an NFL team in the early 90s, many in the Saint Louis press tried their best to praise Kroenke. When he was pushing for an expansion team, Kroneke’s now-derided woodenness was described thusly:

He seems to be that rare individual who is comfortable with himself, and that makes us feel comfortable with him. After all the recent noise pollution, Kroenke's confident, understated manner is pleasing to the ears.

The very act of finding Kroenke, a Missouri native prepared to shell out tens of millions to attract a new team, was praised as a deft maneuver. Any possible faults were then overlooked . . . because football. As one Post-Dispatch writer put it:

"He wants to buy us a football team," I said to my kids. "He wants to bring the Lambs to St. Louis. I sure like him."

When Saint Louis finally bought the Rams, Kroenke was hailed as a victorious warrior. When the NFL voted (21 to 3) to block the Rams’ move to Saint Louis, the newspapers eagerly (and now very ironically) lapped up Kroenke’s promise to get the team here anyway, with litigation if necessary. After enough side deals were cut and the lease, now universally derided, was inked, the Post-Dispatch praised Kroenke as a “quiet source of steady strength.” The praise was so lavish that when the Cardinals faced an ownership crisis in 1995, Post-Dispatch columnist Bernie Miklasz wrote:

The good news is that maybe Cardinals fans will get what they deserve, when all of the brokering is completed: a caring, interactive owner. That person is out there. (HELLO, STAN KROENKE?)

If Saint Louis’s media had spent less time heaping praise on any attempt to get an NFL team, and more time looking critically at of the final deal’s merits, maybe we wouldn’t be in the mess we’re in now. 

 

As Uber Surges, Riders Reap the Benefits

Posted on by Joseph Miller

As another New Years’ Eve has come and gone, more writers in Saint Louis and across the nation have spilled ink over expensive Uber rides for partiers. Fares were as much as ten times what Uber normally charges, leading some to pay well over $100 for short rides. For all the complaining, it is important to remember why Uber uses “surge pricing” and why new ridesharing services are so popular in Saint Louis and nationwide.

It was not so long ago that Uber was not available in any city, much less Saint Louis. Heavy regulation restricted the supply of cabs in most large cities. With competition ruled out, it was often a sellers’ market for cab rides, especially at times like New Years’ Eve. It was the type of environment where someone could write an article like “How to Get a Cab in San Francisco and 4 Other Tips From Taxi Drivers,” which put the inability to hail cabs at the feet of “bossy” and otherwise clueless residents. In Saint Louis, on New Years’ Eves past, much of the taxi fleet decided additional fares weren’t worth their time and stayed home. Partiers waited hours for cabs that did not come.

With the introduction of ridesharing companies, findng a ride home is getting better across the country. People complain about surge pricing, but being able to make 2 or 10 times the normal fares keeps drivers on the road when it’s late or when it’s cold or when it’s New Years’ Eve. An expensive ride home is better than no ride home. Despite fears that ridesharing would lead to underservice of far-flung or economically disadvantaged areas, Uber provides transportation options where taxis are hard to find. At the time of writing, an Uber is within five minutes of my location in the Central West End. But it’s also available within six minutes of locations in Ferguson.

What of traditional cabs? Some may fear that Uber and its ilk spell the end of traditional cabs, but traditional taxis do have advantages. They have full-time drivers who could have more driving experience and knowledge of their cities. Taxi service is integrated into the civic environment, with cab lines at airports, hotels, and cab stands. Centralized operations could allow taxi companies to enforce standards of cleanliness and customer service that Uber cannot.

Some of these changes may already be happening. New data shows that increased competition from ridesharing is raising customer service levels for traditional cabs. Complaints against cabs have fallen greatly in New York City, and in Chicago there are suddenly fewer broken credit card machines. Whether traditional cab companies will survive is still an open question. We can only hope that in Saint Louis, and in other cities, the question is answered by potential customers, not regulatory bodies. 

Deflate-gate in Saint Louis: Air goes out of a plan for a new subsidized football stadium

Posted on by Andrew B. Wilson

In stimulating tourism, trade, and economic growth, the Roman Coliseum may be the world’s only sports stadium that has repaid the cost of its construction more than a thousand-fold, or even a million-fold.

The Edward Jones Dome in downtown Saint Louis is another story. Praised as state-of-the-art when it opened in 1995, the 100 percent publicly financed dome is on the verge of abandonment several months shy of its 21st birthday.

The future of the St. Louis Rams – the dome’s current occupants – will be decided in the next couple of days as the NFL owners club considers two competing plans for new stadiums in the Los Angeles area – one of them put forward by Stan Kroenke, the owner of the Rams, who wants out of Saint Louis.

Whatever happens, the Saint Louis dome’s playing days as a football stadium are probably over. It stands as a monument to wishful thinking – a telling example of the fallacy that public officials can accelerate a city’s growth or reverse its decline by “investing” large sums of money in a giant sports complex.

When the dome was first proposed and developed, its backers – including two Saint Louis mayors, business and civic leaders from the city and county, Missouri legislators, and the editorial board of the St. Louis Post-Dispatch – described the project as a much-needed shot in the arm for downtown Saint Louis. They claimed it would create thousands of jobs, generate hundreds of millions of dollars in new business activity, and more than pay for itself through the additional tax revenues it would create for St. Louis City and County and the state of Missouri.

In a 1993 editorial, the Post predicted a “downtown resurgence” and only worried that the riverfront might become “a gridlock of automobiles overlooked by a garish strip replete with pulsating electric signs and the amplified voices of barkers luring people aboard (casino) boats.”

Today the St. Louis riverfront is emptier than ever.  Over the last two decades, the city has continued to lose both population and jobs, while St. Louis County and the state as a whole have also experienced subpar economic growth. There is no sign of any dome-centered economic growth.

The Edward Jones Dome was desperation’s child.  In 1988, after the St. Louis Football Cardinals took flight for Phoenix, Arizona, leading figures in the city became serious about building the new stadium that the departing owner Bill Bidwill (not wanting to share space with the baseball Cardinals) had craved.  Enlisting the help of Saint Louis County and the state of Missouri as partners, they gambled on building a stadium entirely on spec – not knowing when, or even if, they would be able to attract another NFL franchise to replace the Cardinals.

Surely, the thinking went, a metro area of our size (two and half million people) and with our willingness to open the public purse strings, should have no trouble attracting one of two NFL expansion franchises then coming up for grabs.

That was a big mistake. In late 1993, the NFL awarded the new franchises to Charlotte, North Carolina (with the now #1 seeded Panthers in this year’s NFL playoff), and to Jacksonville, Florida.

Thus, there was great joy in Mudville when Georgia Frontiere, the widow of longtime L.A. Rams owner Carroll Rosenbloom, elected to move the Rams franchise from an aging stadium in Anaheim to a new one in her old hometown of St. Louis.  As the dome was nearing completion, she saved political and civic leaders from the embarrassment of having a football stadium but no team.

Corralling the Rams was hailed as a great victory for the city and state – but was it a good deal for taxpayers?

Plainly it was not.  The Rams shared no part of the cost of building the dome, yet they have paid an annual rent of $250,000, or just 1 percent of the $24 million that the city, county, and state have paid to service the debt on its construction . . . and will continue to pay ($12 million from the state and $6 million each from the city and county) for another five years. That means taxpayers are still on the hook for another $120 million – money that would otherwise be available for public services ranging from fire and police protection to education, roads, and infrastructure.

In addition, the lease agreement allowed the freeloading tenant to demand major improvements at public expense, and gave the team the right to opt out of the lease ten years early – in 2015 – if the city and state failed in their contractual duty to keep the dome in the top tier of NFL stadiums.

That is the option that Mr. Kroenke deployed at the beginning of last year when he announced his intention of moving to Los Angeles.  For a while, the response from city and state officials was déjà vu all over again.  St. Louis Mayor Francis Slay and Missouri Gov. Jay Nixon joined forces in trying to raise some $400 million in public assistance to go toward the building of a new $1 billion-plus riverfront stadium to keep the Rams in St. Louis.

But now it seems the air has gone out of that spheroid. There seems to be a growing realization (even in St. Louis) that if a team thinks it can make a whole lot more money in one city – with no subsidies – than it can in another – even with copious subsidies – it probably makes sense for all concerned to let the team go where it wants.

Increasing Teacher Pay from On High Is Simply Bad Policy

Posted on by James V. Shuls

Are teachers overpaid or underpaid? It’s as old a debate in education as whether Han Solo shot first is for Star-Wars fans. It’s incredibly hard to answer the question, because it requires taking into account a large number of factors that get glossed over every time the argument arises.  The first and most important consideration, of course, is the quality of the teacher.  Better teachers should get paid more, but trying to figure out what makes a “better” teacher is incredibly difficult.

But what we also should take into account (but almost never do) are the conditions of the labor market in which teachers work.  If you pay the same amount to a teacher in St. Louis that you do a teacher in Nodaway County, it’s very likely that you’ve underpaid the St. Louis teacher and overpaid the Nodaway County teacher, even though they got the same amount.  Let me explain why.

There are vast differences in the cost of living and average salaries of workers across the state. Take Shannon County for example. Located just south of the Mark Twain national forest, Shannon County is one of the poorest counties in the state (It also happens to be where my wife’s grandparents call home). The median household income in 2011 was roughly $20,000 less than the state average, at $25,684.  The average teacher in the county makes over $35,000, more than 135% of the median household income. On top of that, teachers receive a 14.5% match on retirement contributions and employer-paid health care. All of this for 180 days of work—that is, unless they use their 10 to 12 built-in sick/personal days. 

What would happen if we gave these teachers a raise? Would paying teachers an extra $2,000 or $3,000 and moving them to 140 or 150 percent of median household income attract new teachers or retain current teachers? That’s unlikely. They’re already far above their neighbors. What’s worse, it would strain the already limited stream of money that the district has to fund its schools. Small benefit, high cost, bad policy.

As I pointed out yesterday on the blog, teacher pay should reflect local economic markets.  The map at the top of this post shows the average salary of teachers in each Missouri county. The color indicates how the salary compares to the median household income of the county. An index can be thought of as a percentage, so in the counties shown in orange, teacher salaries range between 75% and 99% of median household income.  In many areas of the state with “low” teacher salaries, the wages are actually high compared to the median household income. 

Because of all of this, a statewide increase in teacher salaries (like the ones the MSTA calls for) would mean paying teachers in some areas of the state above what their local market demands.  It would push districts that are already financially strapped to take unpopular measures such as holding wages down for more senior teachers or increasing class sizes by hiring fewer teachers.

Today Missouri requires all school districts to start teachers at a salary of at least $25,000, and teachers with a master’s degree and 10 years of experience must earn at least $33,000. Increasing the minimum teacher salary to, say, $30,000 would have little effect on overall teacher pay.  According to a study by the Missouri State Teachers Association, the average starting teacher salary in Missouri is $33,012.

Still, many school districts—poor, rural districts—would be affected by an increase in the state-required minimum wage for teachers. Thus, this type of mandate would disproportionately affect those districts most strapped for cash. It would mean they could hire fewer teachers because they have less money to spend.

Increasing teacher salaries may be a noble goal, but the decision of whether to do so should be made by local school boards taking into account local conditions, not by politicians in Jefferson City.

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