Show-Me Institute Presents: Pension Reform in Missouri

Posted on by Michael Rathbone

Hawley

It’s not news that Missouri’s pensions are underfunded. In fact, they’re an economic ticking time bomb that could leave taxpayers on the hook for billions. Unless we want taxpayers to get stuck with the bill, these pensions need to be reformed. However, there are legal barriers that might stand in the way of any reform effort. These barriers have been difficult to determine . . . until now.

Yesterday, the Show-Me Institute released a new policy study titled, “Pension Reform in Missouri.” The study’s author, Erin Morrow Hawley, sets out the legal framework that will govern pension reform in Missouri. In analyzing the statutory provisions related to Missouri’s public pensions, questions arise:

  • What interests are protected?

  • May the general assembly modify pension benefits retroactively? Prospectively?

  • What about contribution increases or decreases?

This study analyzes the statutory provisions related to these inquiries and sets forth a variety of pension reform measures that may be possible under Missouri law.

With the need to reform pensions becoming more acute every year, it is vital that any reform effort be able to successfully address the legal issues that might arise. With this new study, doing so has become much easier.

Airline Revenue Guarantee Could Make Touchdown in Branson

Posted on by Joseph Miller

branson_airport

Branson Airport (BKG) made news in 2009 when it became the nation’s only privately constructed and operated commercial airport. Unfortunately, in large part due to poor timing, passenger levels were far below expectations and the project has been in financial trouble for the last couple years. The airport’s problems trebled when Southwest decided to halt service to the market last year.

Stripped of its only major airline, Branson Airport management has been trying to lure new service. To do that, the airport plans to use $1.5 million of private money and $500,000 of public money (courtesy of Taney County) to create a revenue guarantee for prospective airlines. If an airline agrees to serve Branson Airport and fails to turn a profit, this guarantee will make up the difference.

We’ve seen the use of revenue guarantees before in Missouri, notably at Columbia Regional Airport. The Columbia region provided a revenue guarantee to American Airlines, which prompted Delta Airlines (who was already serving the airport) to end service. In essence, publicly funded airline revenue guarantees take the risk of providing airline service from the private sector and give it to taxpayers. This is a questionable use of public resources, and it subsidizes air travel.

Even though Branson Airport is a private operation, a revenue guarantee would not be the first public support it has received. The city of Branson has paid a set amount to the airport for every out-of-town passenger that it has brought in, and Taney County helped the airport secure initial financing. With the airport on the verge of financial collapse, and the county now preparing to subsidize commercial air service, the question becomes whether the public should be invested in bailing out this private venture. Especially with nearby Branson-Springfield National Airport (SGF) growing briskly in the last couple years, it may be in the interest of the taxpayer to let the airport sink or swim on its own.

Audit the Kansas City Public Schools

Posted on by Patrick Tuohey

We actually went back about eight years and found that there was over $25 million paid in stipends either unapproved, unauthorized or improper. I have to say, with all the money paid in stipends, the district would not be in the condition it’s in if it were under control.

This quote comes from the late Missouri State Auditor Tom Schweich, in remarks about his report on the St. Joseph School District. In the same story, Schweich reported, “There were significant other problems with payroll, overtime hours, summer school credits, nepotism issues and other questionable spending.”

The St. Joseph District is not alone in wanting to spend more money. The Kansas City Public School District has been putting “trial balloons” in the air for some time seeking to increase the taxes that fund schools. Many education advocates want to spend more money on teachers and in the classroom. But in Kansas City, the amount spent per student, approximately $16,000 per pupil per year, is already very high. The likely problem, as highlighted by Schweich’s audit in St. Joe, is that the money is often not making it to the classroom; it is being eaten up by administrators through bad policy and perhaps even fraud.

In his 2011 audit of the Kansas City School District, Schweich found lots of similar problems. According to a story by KCTV:

The district could not account for $4 million in food costs and student incentives, repeatedly failed to competitively bid projects and monitor contracts, has excessive overtime and failed to properly oversee its closed buildings, the audit found.

The state audit said a principal at Lincoln College Preparatory Academy made $58,000 in unauthorized purchases and cash withdrawals. Jamia Dock is no longer at the school and has been charged in Jackson County Circuit Court with stealing more than $25,000 in district funds. She has pleaded not guilty and the case is still pending.

The Kansas City School Board was also faulted for repeatedly violating the Missouri Sunshine Law.

Schweich’s 2011 audit grade for KCPS was “Fair,” of a four-point scale including “Excellent,” “Good,” “Fair,” and “Poor.” According to the auditor’s office, most of these findings assume that district spending numbers are correct, which means they don’t do the time-consuming work of digging into expenses. Even still, for Kansas City to score in the bottom half is an indictment.

Many parents and teachers want to see more money making it to the classroom. As Schweich’s comment at the top of this post suggested, efficient money management means that more money can be made available where it matters most. If the Kansas City School District wants to build trust with parents, teachers, and taxpayers, they should invite a thorough and recurring examination of their books and remain transparent in all their expenditures.

classroom

Audit: Medicaid Program Rife With Problems

Posted on by Patrick Ishmael

At this point, it goes without saying that Missouri’s Medicaid program has issues. From technical snafus to indisputable quality and access problems, the state’s Medicaid program has a long track record of failure that should dissuade responsible lawmakers from compounding the problem with an expansion of the program.

This fact is made all the more obvious by this story, reported last week.

Missouri’s Medicaid program could have recovered as much as $27 million from more than 30,000 estates of deceased patients but did not file claims in time, according to a statewide audit of federal programs released Tuesday.

Federal and Missouri laws allow the state to recover Medicaid funds spent on a participant as a state debt but a claim against the person’s estate in probate court must be filed within a year of their death. Of 9,321 cases closed in fiscal year 2014 by the MO HealthNet Division, an average of $15,000 was recovered from 6 percent of those, according to the audit.

The $27 million estimate is based on a similar estimated recovery rate for the 30,000 cases that were past the deadline to file. . . .

According to the audit, “MHD personnel indicated there are not sufficient staff in the Probate and Estate Unit to process all probate estate cases timely and cases are not prioritized in an effort to maximize recovery.” The department says it will work to fix the problem but that response is a recurring theme in audits of Missouri’s Medicaid program.

Indeed, there were more problems uncovered by the audit that a short news story frankly can’t get to, including documentation, oversight, payment, and coding problems. In fact, the sentence construction of “As noted in X previous audits” dots the report’s summary. In other words, many of these are enduring, not passing, problems.

If you believe in good government, the department’s semiannual refrain of “We’ll do better next time” should be intolerable. The solution isn’t growing the program; it’s fixing it. There are ways to make the Medicaid program in Missouri better. Expanding a broken status quo is not one of those ways.

How Dangerous Is an Unlicensed Music Therapist?

Posted on by Brittany Wagner

800px-Musicoterapia_lmidiman_flickr

Legislators will ask themselves this question tomorrow when they consider House Bill 189. Music therapy is a type of treatment that involves creating, singing, moving, or listening to music. It is often used to treat children with developmental disabilities such as Autism. While groups like the American Music Therapy Association seek to elevate the status of music therapists, it is unclear whether or not obtaining a license would actually help a music therapist become more effective.

The Southeast Missourian reported that supporters of music therapy say that untrained music therapists are harming clients. The article did not discuss what kind of harm was being inflicted. It’s difficult to imagine that the creation of music could ever be harmful. Still, Missouri legislators are considering a bill that will make people obtain a special certification to practice music therapy.

As Show-Me Institute analysts have pointed out, certifications create unnecessary barriers to entry, ultimately limiting access for consumers to important services. Studies on occupational licensing have shown that when the government institutes a program like the one House Bill 189 is proposing, the cost of services increases.

Sending Out Subsidies Until the Cows Come Home

Posted on by Michael Rathbone

Missouri has a long history of spending on items of dubious merit. That’s why my stomach shouldn’t curdle when the legislature approves spending on something that seems udderly ridiculous. Yet still it does.

milkingLast week, the legislature approved the Missouri Dairy Revitalization Act, which, among other things, would provide up to 70 percent reimbursement  to dairy farmers who pay their federal Margin Protection Program insurance premiums. The total estimated cost to Missouri taxpayers is between $2 million and $5 million a year. That’s a lot of moolah.

Now, I have nothing against dairy products or dairy farmers, but I am wary awarding state subsidies to agriculture, even if it’s for insurance premiums. Why can’t the private sector provide insurance for dairy farmers? Why is the state supplementing this federal program? Are the premiums too high? If so, shouldn’t that be a warning sign that there is something wrong with the federal program itself? I am genuinely curious, but if we end up getting cheesy answers from proponents of this legislation, then it shouldn’t be enacted. Legislators have better things to do than cowtowing to agricultural special interests. Unfortunately, this bill already has passed the legislature, and by overwhelming margins. Currently, it’s awaiting the governor’s signature, so there is a decent chance this bill will soon become law.

I want Missouri to have a thriving dairy industry, but surely there are butter ways to spend taxpayer money. I know this might sound tired, but a whey better option would be across-the-board tax cuts for businesses. If everybody, including dairy farmers, were allowed to keep more of their money, things like dairy insurance would be more affordable and the government wouldn’t be giving special handouts to favored industries.

New Kansas City Rideshare Rules Need a Rethink

Posted on by Joseph Miller

Kansas City has proposed new for-hire vehicle regulations that are designed to allow ridesharing companies like Uber and Lyft (also known as Transportation Network Companies [TNCs]) to operate. Uber has cried foul over the new rules and threatened to pull out of the Kansas City area altogether. Lyft has expressed guarded optimism. The city holds that revised regulations are fair and designed to protect the public.

The draft ordinance allows TNCs to apply to operate, free of charge, in Kansas City. Drivers for the TNCs must have insurance, pay a $250 annual permit fee, a $44 inspection fee, and get the medical permission to drive. If the TNC agrees to pay $10,000 to the city, individual drivers need only pay $150 annually, and they do not have to pay an inspection fee if they can provide proof of a state inspection.

Paying $294 to drive for Uber or Lyft may not sound like a lot, but the majority of ridesharing partners drive less than 15 hours a week. The higher the permit costs and ancillary requirements, the fewer drivers will be available. One might ask why, if Kansas City permits the overarching ridesharing company (who is required to perform background checks and carry insurance), the individual drivers need city permits at all? At a hearing on possible state regulation of TNCs, a representative from Kansas City’s Regulated Industries Division gave an answer to that question. The representative stated that even though the city could enforce existing safety laws it could take considerable time and effort. It is more effective for the city to be able to pull a driver permit at will. The representative worried that without the permits, the city “won’t have anything to regulate.”

TNCs aside, the proposed taxi regulatory changes are completely disappointing. Taxi permits are still capped at 500 (applicants must have at least 10 cabs to apply). Prices are still regulated, private bus routes are still illegal, and apparently Kansas City is still protecting customers from drivers wearing jogging suits. How long do Kansas City officials think that highly regulated segment of the market will last in competition with (even hampered) TNCs?

The horror!
The horror!

While Kansas City may be changing the name of its taxi code to “for hire vehicle code,” they are a long way from a holistic, safety-driven approach to transportation regulation. Control is still paramount for city officials, and balkanized market controls pervade the code. If officials go forward with changes as they are, they will likely cause instability and a need for further changes in the future.

Finally Some Agreement: Get Corporations Off the Dole

Posted on by John Wright

These days it seems like our political discourse has become more polarized. However, there are some issues we all can agree on. Corporate welfare, the practice of subsidizing big business at the expense of everyone else, is one of those issues. This week, the American Federation of State, County and Municipal Employees (AFSCME) published a piece blasting big business for accepting generous corporate welfare packages.

aFrom the release:

Boeing, a top recipient of federal grants, tax credits, loans, loan guarantees and bailout assistance, received more state and local subsidy money than any other company. In 2013, Boeing got the largest tax break awarded to a single company in any state’s history: $8.7 billion, an enticement for the company to build its 777X plane in Washington state. The company told state lawmakers it would pursue other options if it didn’t receive a sweet deal from the Legislature, along with concessions from workers.

My colleagues at the Show-Me Institute have written about corporate welfare packages directed at Boeing before. See Exhibit B:

With free-market think tanks and government unions both critical of corporate welfare, it’s surprising that the states haven’t done a better job of addressing issues like TIFs, tax credits, tax abatements, enterprise zones, public stadium funding, et cetera.

Depending on who you ask, Missouri is one of the top states in corporate welfare. I hope we can all agree: This needs to change.

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