The Scholarship That Wasn’t

Posted on by Susan Pendergrass

In addition to the nearly $3 billion in federal relief funding that Missouri received to try to right the public education ship that was knocked of balance by COVID, Governor Parson received $50 million as part of the Governor’s Emergency Education Relief fund. Governors were given wide discretion over how to spend the money, but they had to spend it within one year of receiving it. Governor Parson followed the lead of several other states and created a scholarship program, called Close the Gap, in which low-income families could receive up to $1,500 to purchase tutoring or other education materials that would help combat learning loss.

Although over 21,000 families signed up, the program had problems from the beginning. First, it took the Department of Elementary and Secondary Education (DESE) a full year to figure out how to implement the program. How that impacts the federal regulations is unclear, but families had only a short window after that to spend the money. Families had problems finding what they needed and, ultimately, the program was not as impactful as it might have been.

According to the DESE budget requests, in fiscal year (FY) 2024, $25 million was appropriated to the program, but none was spent. In FY 2025, the other $25 million was appropriated, but just $13,875,123 was spent. It’s too late to spend the money, so what happens to the $36,124,877 that went unspent? Technically, it needs to be returned to the federal government.

What a shame. At the same time, the legislature has created another scholarship program, MO Scholars, aimed at low-income students and students with disabilities, but hasn’t appropriated any money to fund it. The MO Scholars program has structure, scholarship-granting organizations, and thousands of scholarship recipients. Thousands more students across the state would probably love to participate in this program if it were funded.

The logic of helping disadvantaged students find their best educational option is there. The structure of the program is there. Why not the funding?

Missouri Nearly Fails Cato’s Test

Posted on by Elias Tsapelas

Missouri’s government spending is out of control, and a new report from the Cato Institute, a free-market think in Washington, D.C., confirms it. Each year, the institute grades America’s governors on a variety of budget-related characteristics: revenues, spending, and tax rates. After years of middling grades, Missouri’s Governor Mike Parson received a nearly failing grade of a “D” in the report’s latest edition.

According to the report, “Parson has been a tax reformer, but he has dropped the ball on spending control.” To Parson’s credit, he’s signed multiple bills into law that have cut Missouri’s individual income tax rate. When Parson entered office, the rate was 5.9%, and next year the governor has already announced that it will be dropping again to 4.7%. This will mark the 5th time the rate has been lowered since 2018.

Working against Gov. Parson is his support of the state’s gas tax hike in 2021. During the debate about the gas tax hike, I wrote frequently about my concerns with the bill. I am generally supportive of user fees and gas taxes, but the 2021 bill had a lot of problems. After multiple attempts to convince Missouri voters to raise the gas tax, our elected officials decided they could do it without public support.

At the time, I questioned whether the move violated the state’s constitution. The Hancock Amendment purportedly prevents Missouri’s general assembly from raising taxes without a public vote. But the bill sidestepped the amendment with a convoluted rebate scheme and implementation over several years.

Nevertheless, the biggest mark against Gov. Parson by Cato was the state’s out of control spending, which is another topic I’ve been writing about for several years. Missouri’s budget has grown tremendously under the current governor’s watch, in both size and scope. For several years, it was easy to attribute much of the increase to the federal influx of COVID-19 relief money, but that money is drying up, and Missouri’s expected general revenue (where our state income and sales taxes go) spending is still up nearly 50% from just three years ago.

Though it shouldn’t need to be said, this cycle of perpetual spending increases is unsustainable. Not only is our government spending outpacing inflation, but it’s also outpacing our neighboring states. Gov. Parson’s grade was tied for the worst among Missouri and its bordering states (Kentucky also got a “D”), with the governors of Iowa, Nebraska, and Arkansas receiving exemplary “A” grades.

It should be unacceptable that the Show-Me State lags our neighbors, let alone much of the country, in the stewardship of state tax dollars. Going into 2025, Missouri will have a new governor, and a new chance to improve its fiscal policy grade. Let’s hope our elected officials  take advantage of the opportunity.

$10 Billion Is a Lot of Money

Posted on by Susan Pendergrass

In a $10 billion budget request that goes on for almost 950 pages, it might be easy to overlook a few hundred million dollars here and there. But there are a couple of line items in the Department of Elementary and Secondary Education (DESE) budget request for fiscal year (FY) 2026 that deserve a closer look.

One such item is DESE requesting a much higher than usual increase in the Foundation Formula. The Foundation Formula is the principal vehicle for distributing state general revenue to school districts in a way that (theoretically) reflects student needs and (theoretically) balances resources between poor and wealthy districts. The total Foundation Formula funding has been creeping up from about $3.4 billion a few years ago to $3.8 billion last year. For the next fiscal year, DESE would like to keep the $3.8 billion and add another $500 million, which is three or four times the typical increase.

Why the big increase? Three years ago, DESE asked for an increase in the base amount per student, in part because enrollment was declining. (For reference, the number of students being funded by this “student-based formula” has decreased by over 20,000 students in the last five years). Apparently, having the formula vary with the number of students is only okay if that number is going up. In fact, the increase in the base amount accounts for over $300 million of the request.

Secondly, a bill was passed last year that made several changes to education programs at the state level. The estimated cost of all of those changes was “up to” $228 million in FY 2026. But that includes changes in a laundry list of budget items—not just the Foundation Formula.

Here are what the fiscal effects directly associated with the Foundation Formula were calculated to be for FY 2026 by the Committee on Legislative Research’s Oversight Division. Just over $1.6 million was estimated for changes to how virtual students are counted. A change in how students are counted—from being based entirely on attendance to being based 90 percent on attendance and 10 percent on enrollment—was expected to cost $41 million in FY 2026. A change to how preschool students are counted is expected to cost an additional $61 million in FY 2026. Finally, incentives that increase the Foundation Formula for districts that keep a five-day school week, instead of switching to a four-day school week, are projected to cost $40 million in FY 2026.

So why is the legislature being asked for an additional $500 million? It seems that DESE will not accept districts receiving less money for fewer students.

Choice and Competition Lead to Better Outcomes

Posted on by James V. Shuls

The Progressive Policy Institute (PPI) recently released a report confirming what free-market advocates like Milton Friedman and many of us at the Show-Me Institute have argued for years: choice and competition lift all boats. According to PPI’s findings, cities where at least 33% of students attend charter schools experience significant academic improvements not just for charter school students, but for traditional public school students as well. This conclusion aligns perfectly with Friedman’s vision, where empowering parents with educational choice benefits everyone.

Friedman, one of the foremost proponents of free-market principles, advocated for school choice as a means to improve education for all. His idea was simple: by giving parents the ability to choose, schools would be forced to compete for students, thus driving innovation and improvement across the board. The PPI report supports this theory, demonstrating that competition doesn’t just help the students in charter schools but raises the overall standard of education in a city.

The report highlights that when a critical mass of students attend charter schools, the pressure on traditional public schools to improve becomes undeniable. This pressure results in better outcomes for students of all socioeconomic backgrounds, particularly those from low-income families. It’s a compelling validation of the core free-market belief that competition drives quality.

Critics often argue that school choice drains resources from public schools, but the data in PPI’s report suggest otherwise. Instead of diminishing public schools, competition enhances them, as they are compelled to adapt, innovate, and meet higher standards.

As we continue to debate education reform in Missouri, this report serves as an important reminder: competition and choice, far from being threats to public education, are key drivers of improvement. By expanding options, we give all students a chance to succeed, fulfilling Milton Friedman’s long-standing belief in the power of choice.

Shocker! Local Leader Demands More Money to Address Issue

Posted on by Patrick Tuohey

I attended a screening of the KCPBS documentary “A Tale of Three Cities” on Tuesday hosted by the Kansas City Chamber of Commerce. (Full disclosure: I appear in the film twice, but only briefly.) It was a good conversation, and panelists included the police chiefs for both Kansas City, Missouri, and Kansas City, Kansas, as well as people working with ex-offenders or those at risk of offending.

The screening came just as Kansas City announced another city-sponsored initiative to deal with crime, Kansas City United for Public Safety (KCUPS). It is not yet clear how this group will differ from the previous similar collectives such as KC Nova, the Violence Free Kansas City Committee, KC Common Ground, and Jackson County’s COMBAT. Somehow this group expects to succeed where others have failed. KCUPS had meetings, published a plan, and held a press conference, so it is as real as any anti-crime effort in Kansas City.

The leader of KC Common Ground, Klassie Alcine, was at the screening and gave an interview to Jonathan Ketz of FOX4 KC. Her answer when asked how much money would be needed to address crime in Kansas City? “Billions.”

I have been writing about crime, policing, and criminal justice reform at Show-Me Institute for years. I do not present myself as an expert and I am quick to admit these issues are complex. Kansas City has gotten where it is because of years of bad decision-making. The road ahead will be difficult, slow, and expensive.

But anyone who is remotely aware of Kansas City’s history knows that we spent billions on public education and have little to show for it. We spend millions each year on anti-crime programs through the county COMBAT program without even trying to measure their impact. Kansas City shoppers are also taxed to fund an economic development fund for the city’s poverty-scarred east side. That includes a publicly subsidized grocery store recently suffering high crime.

The people of Kansas City are generous, perhaps to a fault. One more effort to address crime that looks and sounds like other failed efforts needs to do better than leading with a price tag. Tell us what you want to do and give us reasonable goals and the ways you are going to measure success. Anything less seems like asking taxpayers to throw good money after bad.

Senior Citizens Get to Have Their Cake and Eat It Too in Jackson County

Posted on by David Stokes

Rarely do my predictions come through as quickly, starkly, and  ironically as they are in Jackson County right now.

Last year, Jackson County passed the senior property tax freeze. I have testified against these plans across the state. In many of these comments, I have pointed out that it is extremely troubling to create a system where people (i.e. seniors) will vote on property tax increases they won’t have to pay. As I said in one of my testimonies:

Similarly, this bill will lead to the troubling issue of people voting on property tax increases that they themselves are not subject to. The single best aspect of property taxation is that it focuses the costs of local services on the people who pay for those services. . . . Instituting a system where people vote on property taxes they won’t pay breaks that beneficial connection. It dramatically alters the voter calculation if seniors are voting on property tax increases they are immune to.

Now, Jackson County has placed a property tax increase on the November ballot. So, as I stated, senior citizens in Jackson County will be able to vote on a property tax increase they won’t have to pay. But it gets even better. It isn’t just any property tax increase—it’s a property tax increase to create a new fund for senior services in Jackson County. You can’t make this up. The county has proposed a new tax to fund benefits for senior citizens that senior citizens get to vote for but won’t have to pay for. What rational senior citizen won’t vote for this tax? All the potential benefits, none of the potential costs. It’s simply ludicrous.

I said before that:

“This bill is every bit as much of a tax increase on non-senior citizens as it is tax relief for some senior citizens,” Stokes said.

I had no idea of just how right I was going to be, unfortunately.

 

Missouri is Spending Less on Instruction

Posted on by Avery Frank

When considering the costs of running a school, we may think of items like teacher salaries, classroom technology, textbooks, and tutoring services. It seems natural to assume that instructional expenses would dominate school budgets. However, statewide trends over the past decade reveal an interesting story. Instructional costs have been decreasing as a proportion of overall spending, while expenditures on student support and non-instructional services have steadily risen. In fact, student support services are now on the verge of overtaking instructional costs in Missouri.

Classifying Missouri Public School Spending

The Department of Elementary and Secondary Education (DESE) classifies spending as:

  • Instructional
  • Student support
  • Non-instructional/student support

Instructional costs include salaries and benefits for teachers, aides, and specialists. It also covers instructional materials (paper, microscopes, software, paint brushes, sports gear, etc.), professional development, and standardized testing materials.

Student support services cover (but are not limited to) salaries and benefits for counselors, psychologists, social workers, nurses, behavioral specialists, and college-preparatory specialists. It also covers costs for mental health services, plus behavior and outreach programs. Administrative, transportation, and food service costs are also classified under this category.

Non-instructional/student support costs in Missouri cover a wide variety of services, such as early childhood instruction, afterschool programs, adult education, and purchases with bonds.

The figures below show how costs have shifted in Missouri over the last decade, as well as changes in staff numbers.

Figure 1: Share of Total Expenditures in Missouri Public Schools by Type, 2013–2023

Figure 2: Number of Missouri Public School Students and Teachers

Figure 3: Total Number of Staff: Student Support Services

Source: Department of Elementary and Secondary Education (DESE)

The 2018–19 school year marked the first large decrease in the share of instructional costs in total expenditures, and it has decreased further since then. If the trend continues, spending on student support services in Missouri may soon surpass instructional spending.

Figure 1 is even more fascinating when considering that the total number of teachers has continued to rise in Missouri, with student enrollment decreasing in the same time period. Even with 26,000 fewer students than in 2012–13, there are around 4,000 more Missouri teachers and 2,000 more student support staff (as of 2022–2023, the most recent data).

The trends emerging from Missouri’s public school spending raise important questions about financial priorities and the need for increased educational transparency. Are funds being used to improve classroom instruction and foster better learning environments? Once DESE releases financial data for the 2023-2024 school year, it will be interesting to see whether this downward trend continues.

How Much Does My School District Spend?

Posted on by James V. Shuls

As a resident of the Wentzville School District, I recently received a copy of the district’s 2023–24 annual report. The well-designed, 16-page document highlights the district’s growing work-related pathways, new construction projects, expanded early childhood programs, and academic performance. The report also contains a two-page spread on the district’s finances and spending. The report declares the district’s property tax rate “remains the lowest it has been in more than 10 years.” It also explains where the district is spending money, with 84% of operating funds being spent on salaries and benefits.

There is one key piece of information left out of the report—how much the district actually spends. The report tells residents the district spends $1,718 less per pupil than the state average on operating expenses, but it does not tell us that amount.

While it is understandable for organizations to want to put their best foot forward, this lack of transparency is a real problem. Taxpayers should know how much their schools are spending. Unfortunately, districts and the state make this information hard to find.

That is why the Show-Me Institute created MOSchoolRankings. In addition to having detailed academic data, the site provides detailed financial records for every school district in the state. In 2023, Wentzville spent $15,759 per pupil in total expenditures. That means roughly $390,000 is being spent on a classroom of 25 students. Want to know exactly where those dollars are being spent? The website breaks these expenditures down by program, providing the most granular level of analysis in the state.

The annual reports sent by districts are not meant to be a detailed accounting of performance and spending. They are promotional materials designed to paint the district in a positive light. There is nothing wrong with that—organizations should share their successes. Taxpayers who want more information, however, should have access to it.

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