Update: Lee’s Summit Superintendent’s Amazing Contract

Posted on by James V. Shuls

Lees Summit Super Salary

Yesterday, I wrote a piece in which I noted that the Lee’s Summit School District superintendent earned $258,660. Indeed, this was the figure cited in the recent audit of the school district and it was an accurate figure. It is not, however, his current salary. Shortly after we published the post, an astute reader of the blog pointed me to the superintendent’s current contract. This year, he is earning $282,831. Yes, he received a $24,171, or 9.3 percent, raise from last year to this year. Next year, he is due to receive $294,463, and $306,735 the year after that.

One mistake I made in the post was stating that his fringe benefits were in addition to his salary. His new contract states that the salary “includes the value of certain fringe benefits,” such as deferred compensation, family medical insurance, association dues, cell phone, business expenses, and a vehicle allowance. So, for the most part, his benefits are included in his salary total. Still, this is a pretty nice salary. In addition to these perks, he is allowed up to $3,000 additional income to cover fuel expenses. And, he is given 30 vacation days on top of holidays.

Let’s not forget, the superintendent is also a member of the Public School Retirement System (PSRS). That means the school district must provide a 14.5 percent match to his retirement contributions. All told, the compensation package for the superintendent of the Lee’s Summit School District is north of $320,000.

See the full contract here.

Update: Following this post, we received the following tweet from Dr. David McGehee:

MCI’s Competitiveness Harmed, Not Helped, With New Terminal Plan

Posted on by Joseph Miller

Two weeks ago, Southwest Airlines gave a presentation to the Kansas City Airport Terminal Advisory Group about the proposed $1.2 billion new terminal plan for Kansas City International Airport (MCI). Southwest officials echoed our concerns about the immense cost of the plan.

These revelations pushed some of those who had supported the new terminal to call for a new plan. But in the past week, those who still support the new terminal plan started to push back. As the Kansas City Star reports, transportation consultants working for the terminal advisory group stated that upgrades might attract more flights. These consultants also stated that the new terminal plan has the increased amenities and power outlets the business community demands.

Adding to this, business leaders stated at the most recent meeting of the Airport Advisory Group that unnamed businesses chose not to invest in Kansas City because MCI is not a welcoming “front door.” Those business leaders went on to say, like the aforementioned transportation consultants, that major repairs are necessary to draw more business travelers and investment to Kansas City. In other words, business travelers choose travel destinations based upon which airports have Cinnabons and Sbarros.

However, these arguments are less compelling when one notes that, with 51 cities in reach by direct flights, MCI has relatively good service compared to airports in peer cities. This is largely due to MCI’s price competitiveness.

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In addition, the evidence shows that a city’s economic climate, not the state of its airport terminals, is most important for determining travel demand. As to the need for more amenities like food options and electrical outlets, building a $1.2 billion new terminal to address these matters is like using a jackhammer to drive a nail.

To sum it up, the airlines (and common sense) say that building an expensive new terminal will not increase demand for air travel. Quite the contrary, the higher costs to airlines and passengers may mean fewer flights. Even if we agree with business leaders that MCI requires more amenities, certainly there is a cheaper way of providing these than a $1.2 billion new terminal plan. The cost is so much greater than the supposed benefits that the plan looks more like a vanity project than a sound investment.

Kansas City’s Charter Change

Posted on by Patrick Tuohey

Last week, the Kansas City City Council decided against two charter changes that the mayor had proposed and political groups had backed. The proposed changes that will not go to the voters would have given the mayor the ability to fire the city manager and would have changed the structure of the City Council so that there would be 12 in-district seats.

The Show-Me Institute testified before the Charter Commission last year stating that calling Kansas City’s mayor a weak mayor is a misnomer. While the mayor of Kansas City is more a member of the City Council than his own executive branch, mayors can veto legislation. According to Reza Baqir in his 2002 study in the Journal of Political Economy:

The only indicator of mayor powers that was consistent with statistically significant results was the overall mayor veto indicator.

Kansas City City Councilmember Ed Ford made the correct argument that the power to fire is the power to hire, as any mayor could simply threaten to fire a candidate for city manager while they are under consideration by the City Council. While the Show-Me Institute does not advocate for or against a strong mayoral system of government — in fact, there are benefits of a strong mayoral system — it would be best to build a new governing system from the ground up rather than tinker with one item at a time.

Regarding in-district seats versus at-large City Council seats, our position was more concrete. Research indicates that at-large seats serve as a break on government spending. Lawrence Southwick surveyed 2,000 cities across the country for his 1997 study in Economics and Politics and found that at-large municipal officials:

. . . act so as to reduce both spending and taxes as compared to what ward representatives do. The ward representatives act in a more “pork barrel” framework which results in more spending.

Some on the Charter Commission seemed bewildered about the conclusion that in-district seats can increase per-capita spending, but we find that taxpayers understand the matter clearly. In general, at-large City Council members are more likely to mind the whole store, while in-district City Council members more likely are concerned about earning votes from a small local community.

Mirror Mirror, Who Is The Highest Paid Of Them All?

Posted on by James V. Shuls

Yesterday, the Missouri Auditor’s office released its audit of the Lee’s Summit R-VII School District. Relatively speaking, it was a pretty clean audit. The district has not been flouting state law by passing students on who are well below grade level. Nor has the district overpaid its construction manager to the tune of $1.2 million. In comparison, Lee’s Summit’s infractions are minor: more than $116,000 in no-bid contracts, not managing transactions on the 900-plus purchasing cards issued to district personnel, purchasing a piece of land for $775,000 without an appraisal. You know, no big deal.

What has shocked people the most about the audit may be the salary and benefit package that the superintendent receives. The report noted:

The district’s superintendent at June 30, 2013, was Dr. David McGehee. His annual compensation was $258,660, which included a deferred compensation allowance of $19,716, family medical insurance of $15,377, and association expenses of $12,000. He was also provided a district vehicle for business and personal use.

Let me be clear. That is $258,660 plus those other benefits. None of this should come as a shock to readers of the Show-Me Daily blog. In 2010, we published a policy study detailing the actual pay of public school superintendents in Missouri and we noted that many receive significant perks.

One of the things we highlighted in that paper was that there seemed to be no correlation between academic performance of students and the compensation of the superintendent. From just a cursory glance, this seems to be the case here. From 2009 to 2013, the percentage of Lee’s Summit students scoring proficient or advanced in math and language arts has remained almost unchanged. Other districts, however, have improved and Lee’s Summit has dropped in the rankings. In 2009, the district was in the top 35 districts in terms of performance on the math and language arts exams. The district since has dropped to 90th and 53rd, respectively.

In approximately the same time frame, the superintendent’s salary has increased dramatically. In 2007, he was paid a salary of $170,000. In the seven years since then, he has received a 52 percent raise. According to data that the Missouri Department of Elementary and Secondary Education collects, this makes him the highest-paid superintendent in the state.

Reform, Not Spending, Should Top Agenda

Posted on by Patrick Ishmael

As first appearing in the St. Louis Business Journal on January 24, 2014:

A year ago at this time, Missouri Gov. Jay Nixon railed against the state’s out-of-control, multi-billion dollar tax credit system, using 150 words and six paragraphs to stress his concerns. In this year’s “State of the State address,” delivered on Tuesday night, he devoted all of 18 words – one sentence – to the issue.

That is one unfortunate change. It is not the only one.

It seems the governor has had a change of heart regarding tax policy. After vetoing last year’s tax cuts for all businesses and individuals, Gov. Nixon led the charge to promise nearly $2 billion of new tax incentives to just one company, Boeing. That bid failed.

But if, as we often are told, Missouri is a “low-tax state,” why would we have to make Boeing’s taxes even lower? And why should the state support corporate handouts to one company, but actively deny them to the family businesses in our communities?

Second, the governor is promoting a costly expansion of Medicaid rather than what is really needed – which is substantial reform of the program. Not only is the current Medicaid program wasteful, but the access and quality of care available to Medicaid enrollees is deplorable. To make matters worse, a recent study found that expanding Medicaid may actually increase, not decrease, costly emergency room use, driving our health care costs even higher.

We should be reforming this multi-billion dollar program, not making it bigger.

Many of the other policy prescriptions of the State of the State address are beset by the same philosophical infirmities of the tax and health care plans.

For example, it is not how much money we spend on education that really matters; it is whether we are spending that money effectively and efficiently. Education funding has soared upward over the last few decades, and yet in terms of student achievement, our children remain stuck in the middle. Our kids deserve to have the best education, and one of the best ways to do that is through school choice and competition.

The governor’s address made no mention of such reforms – his focus was on simply spending more.

That is wrongheaded. Wide-ranging reform, not wide-ranging new spending, should lead the state’s agenda in 2014. I hope that is what we will see instead.

Patrick Ishmael is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

 

Streetcars Are Not Economic Development

Posted on by Patrick Tuohey

Over the weekend, KCPT’s current events program Rukus (starts at 4:33) quoted a Show-Me Institute blog post (Streetcars Will Waste Your Money and Your Time) which points out that there is no evidence that fixed rail removes cars from the road or drives development. It read:

We know from previous studies that rail transit does not remove cars from the road. And we know that it is not the rail lines themselves that drive economic development but rather the additional tax incentives that governments hand out along rail lines.

Kansas City Star editorial board member Yael Abouhalkah interrupted Woody Cozad’s comments on the quote to ask, “Proved by what?” For that, we refer him to the links above. Abouhalkah went on to say, “They just had two downtown without incentives.” He never explained what he was referring to, but we suspect it refers to two hotels that Abouhalkah wrote about in August:

Yes, it can be done: Someone can build a hotel in the Kansas City area without a taxpayer subsidy.

Hallelujah.

…It puts new development along the planned two-mile streetcar line, near the Kauffman Center for the Performing Arts, and near the Power Light District and Sprint Center.

First, we at the Show-Me Institute share Abouhalkah’s enthusiasm for anything built in Kansas City without taxpayer subsidies and we are pleased he is highlighting the matter. The problem in the piece is that this development has nothing to do with the streetcar, aside from possibly diverting it from another location in Kansas City. According to Abouhalkah’s own newspaper, the developers’ interest predated the streetcar (emphasis added):

Rob Schaedle said the firm’s first interest in Kansas City was in 2009 when it considered redeveloping the old 21-story Federal Reserve Bank of Kansas City building at 925 Grand Blvd. Though it admired the historic structure, the firm decided to pass on converting it into a hotel.

“But we liked the market,” Schaedle noted and in August of this year bought the property of its new project for $4.5 million.

Abouhalkah and other streetcar boosters are simply claiming credit for any development that occurs after plans to build a streetcar. This is the most basic of logical fallacies: post hoc ergo propter hoc. But this is not uncommon. In a study of economic development programs across Missouri, my colleague, David Stokes, quoted researchers who wrote:

“The best case is that incentives work about 10 percent of the time and are simply a waste of money the other 90 percent.” The authors then relate that, in their experience, “it is not unusual for public officials to attribute all new employment to incentive programs.”

Streetcars will not improve the economy of Kansas City. The economic development handouts, amounting to corporate welfare, will be the engine that drives any development, and even nine times out of 10, that is  “simply a waste.” As time goes on, it will be increasingly difficult to determine exactly what prompted development, but rest assured that everything will be credited to the streetcar.

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