Page 462 – Show-Me Institute

In Education, Money Itself Is Not The Answer

Posted on January 22, 2014May 5, 2026 by Rik W. Hafer

Missouri Gov. Jay Nixon’s State of the State address correctly identified education as a key policy area this year. This is due to the fact that Missouri’s educational record to date is middling at best. Stanford economist Eric Hanushek and his co-authors in a 2012 study compared gains in National Assessment of Educational Progress (NAEP) test scores for math, reading, and science across states. Out of the 41 states for which assessment results are available, Missouri ranks 27th.

Gov. Nixon called upon the legislature to increase spending on K-12 education in Missouri by $278 million in 2014. Will spending more money on educating Missouri children push us to the head of the class? The chart above, taken from the Hanushek study, does not support the governor’s claim. As shown by the experience of many states over the past 20 years, spending more money on education does not guarantee marked improvements in student achievement.

The chart above indicates no reliable relationship between spending on education and educational success across states. The correlation is 0.12. In other words, the correlation between spending and student outcomes is essentially zero.

The School Funding Shell Game

Posted on January 21, 2014May 5, 2026 by James V. Shuls

Many proposals are being floated around Jefferson City to fix the student transfer issue. Some of the proposals are no more than a shell game. For instance, the Missouri Association of School Administrators (MASA) suggested simply renaming “unaccredited” schools “academically stressed.” This simple sleight of hand would mean that no school districts are “unaccredited,” therefore, no students would be allowed to transfer. Well, I have my own renaming idea that legislators may wish to consider — renaming parts of the funding formula.

People often complain about the amount of “state funding” for education. The St. Louis Post-Dispatch is notorious for pointing to the rankings of “state” spending and crying foul. Student transfers have been hung up in Kansas City because the district would not pay more than the “state” gives the district per pupil. Lee’s Summit Superintendent David McGehee recently told me on Twitter that the state should cover all costs for transferring students. Well, my sleight of hand will address these problems.

Missouri schools are provided funding based on a complex formula (read my funding formula primer for a deeper explanation). There are several pots of money calculated as “local effort” or local dollars. The biggest pot of money comes from local property taxes. “To calculate how much local revenue can be generated from property taxes, DESE multiplies the assessed valuation, as of December 31, 2004, by 3.43 percent and then deducts collector and assessor fees from the local tax revenue.” Here is an illustration of how this works.

1	Assessed Valuation (Dec. 31, 2004)	$200,000,000
2	Performance Tax Levy	3.43%
3	Local Tax Revenue (Line 1 x Line 2)	$6,860,000
4	Collector and Assessor Fees	1.57%
5	Line 3 x Line 4	$107,702
6	Net Local Tax Revenue (Line 3 – Line 5)	$6,752,298

It doesn’t matter what tax rate the district actually uses. It could be higher than 3.43 percent or it could be lower, but the state will calculate using the $3.43 per $100 of assessed valuation, or 3.43 percent.

Those dollars are called “local dollars.” They could just as easily be called “state dollars.” After all, that is the consistent figure the state uses to determine how much additional funding a district needs to meet the “state adequacy target.” The state adequacy target is the dollar amount that the state ensures every school district will have to educate students.

It may sound crazy to call local dollars “state dollars” but it is not unprecedented. This is what Arkansas does and that state outranks Missouri in the rankings the Post-Dispatch always uses.

This simple sleight of hand would not change tax rates, would not increase taxes, and would not change anything about school funding. It would increase what we call “state funding” for education. It would improve our rankings in the state-by-state comparisons. And it would increase the “state” share of funding used for student transfers.

Streetcars Will Waste Your Money And Your Time

Posted on January 20, 2014May 5, 2026 by Patrick Tuohey

Paul Jacob writes in his blog This is Common Sense:

Transportation scholar Randal O’Toole regales us with the fix that California’s overlords have put themselves in. Merely assuming that dense city living decreases commuting, California’s legislators cooked up a law requiring local governments to increase population density.

But it turns out “transportation models reveal that increased densities actually increase congestion, as measured by ‘level of service,’ which,” O’Toole informs us, “measures traffic as a percent of a roadway’s capacity and which in turn can be used to estimate the hours of delay people suffer.”

This should be no surprise to Kansas Citians, who are familiar with official calls for increased urban density and the streetcar system that they believe will bring it. An effort to raise private money for the streetcar (so far, $3,775 of their $10 million goal) says that streetcars:

. . . provide high-quality transit service that promotes compact, walkable, higher-density development.

A firm hired to help build the streetcar system offers as a potential benefit, “Increase[d] population and economic density to the urban core.” Streetcar booster and former Kansas City Mayor Mark Funkhouser claimed that a rail system “produces density, which is key to efficient land and resource use.”

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. We know that the people of Kansas City have voted down streetcars every time a legitimate election has been held. And judging by the effort to raise private funds yielding only three-ten-thousandths of 1 percent of their goal, Kansas Citians still don’t support it.

But just as in Kansas City, California politicians continue undaunted. O’Toole writes:

The gist of the new standards of “regulation”? “[T]hey ignore the impact on people’s time and lives: if densification reduces per capita vehicle miles traveled by 1 percent, planners will regard it as a victory even if the other 99 percent of travel is slowed by millions of hours per year.”

If you doubt that city leaders care more about spending taxpayer money than respecting taxpayer time and convenience, consider the plans to build a $1.2 billion airport terminal.

Spending Money Kansas City Doesn’t Have On Streetcars It Doesn’t Need

Posted on January 20, 2014May 5, 2026 by Joseph Miller

Optimistically anticipating that their initial 2.2-mile downtown streetcar line will be a resounding success, Kansas City planners are proposing a Transportation Development District (TDD) to fund a $500 million streetcar system. This move is a blatant bid to get federal dollars to pay for an expensive and outmoded transportation device.

The Show-Me Institute policy staff has argued numerous times that streetcars do not improve mobility or connectivity. Development along streetcar lines is likely due more to tax incentives and other government investment that diverts development to the favored corridor. Even researchers who do not oppose streetcars point out that there is a lack of proper research on a streetcar line’s effect on regional development.

However, backers of the streetcar in Kansas City are not content to wait for real, rigorous studies on the success or failure of the streetcar fad before charging ahead. That is because streetcars are too expensive to build without matching federal dollars, at more than $50 million per mile, and federal policy can change quickly.

For instance, during the Bush administration, streetcars received little federal dollars. The department at the time focused on transit projects that were cost-effective and promoted congestion relief. But those guidelines changed under the Obama administration to favor “livability.” This change in policy, coupled with the stimulus, made billions of dollars available for streetcars in Kansas City and across the country, mostly in the form of TIGER and MAP-21 grants. However, the federal favor shown streetcars may not outlive the Obama administration, which would effectively kill any attempt to expand the streetcar in Kansas City. There is little wonder that there seems to be a race to lock up federal dollars.

Funding expensive and inefficient transportation options with money that falls from the sky is a short-cited policy for Kansas City. Federal grants may fund new transit infrastructure or increased capacity, but grants for repair and maintenance are rare. This means that the costs of the proposed $500 million streetcar system will continuously rise for Kansas City, likely beyond what the initial TDD will support.

And as the experience of Portland has shown, streetcar users will not be willing to pay anything like the full cost of their ride. After years of “free zones” (free streetcar rides in many areas of the city), tax breaks, corridor improvements, and high-density zoning, passengers using the existing streetcar lines declined following the imposition of a $1 fare. That fare, enough to deter ridership, only generates an insignificant percentage of the Portland streetcar’s $251 million capital or $8.2 operating budget, all for 7.3 miles of track.

If Kansas City cannot afford to build the streetcar without federal aid, it cannot afford a streetcar with federal aid either. If Kansas City residents approve the TDD and the proposed system is built, it virtually guarantees that, like Portland, everyone in the city, region, state, and country will pay for a mode of transportation whose sole purpose is to divert development to favored sections of downtown Kansas City.

Three Recommended Reforms For Tax Increment Financing (TIF)

Posted on January 17, 2014May 5, 2026 by David Stokes

As Missouri’s General Assembly gets underway in 2014, they should move to reform Tax Increment Financing (TIF). David Stokes suggests three reforms that the legislature should enact this session:

Prohibit elected city officials from overriding county TIF commissions
Focus TIF subsidies on returning property to greenfield status
Prohibit TIFs from being awarded in floodplains statewide

CEE-Trust Study: Something For Everyone To Love…And Hate

Posted on January 17, 2014May 5, 2026 by James V. Shuls

Any plan that offers a solution to the persistent problem of failing inner-city schools is bound to receive some pushback. As Joe Robertson, of the Kansas City Star, warns, “History tells us to expect a fight.” That is especially true when the plan entails completely restructuring how schools are governed and operated. On Monday, CEE-Trust presented to the Missouri Board of Education a draft of its highly anticipated, and highly controversial, plan to improve Kansas City Public Schools. The plan argues “that it is not the people in the system that is the problem; it is the system itself.” The solution: transition from a school system to a system of schools.

Like other school districts in Missouri, a central office and a school board directly run the Kansas City Public Schools. This governance has left very little decision-making power to the local schools. CEE-Trust’s plan would shift governance to a “Community Schools Office” (CSO). The CSO would not seek to run schools, as central offices have; instead, it would manage a portfolio of independent, locally run schools. These schools would be given greater control over their budgets and greater flexibility to develop programs that meet the needs of their students.

A key element in the CEE-Trust proposal is choice. The authors note that “A system that is driven by parent and student choice will create more diverse options to appeal to students’ varying needs, and those schools that fail to attract enough students will be replaced by other schools with a better chance of success.” Indeed, it is choice that has led to the creation of language immersion, STEM-focused, performing arts, and a host of other types of schools.

In addition to choice, there are many other ideas contained within the 78-page report. The proposal calls for improving teacher pay, maintaining the right of teachers to unionize and collectively bargain, and universal pre-kindergarten. There is indeed something for everyone to love, and hate, in the CEE-Trust proposal.

The proposal is intriguing. Indeed, I have argued for many of the ideas presented in the proposal (also here and here). Most importantly, CEE-Trust calls on us to “re-imagine” how we operate public education. I could not agree more.

Listen as I discuss the CEE-Trust proposal on KCMO Talk Radio.

Missouri Leading On At Least One Health Care Reform

Posted on January 16, 2014May 5, 2026 by Patrick Ishmael

Earlier this month, I had the honor of presenting at this year’s State Health Policy Summit, a meeting that the Cato Institute annually hosts to bring together health policy experts from around the country. The topic of my presentation was last year’s passage of the Volunteer Health Services Act (VHSA), a medical licensing reform which I often pointed out was needed in Missouri. Reforms such as the VHSA have been discussed at free-market events like this for a while, but it was great to be able to speak about something that actually went from just talk to action. One Missouri health care reform down, many more Missouri health care reforms to go.

Many thanks to Cato for the invite and continued support. And if you’re not familiar with Cato, check out the institute here.

Taxicab Reforms In Missouri

Posted on January 16, 2014May 5, 2026 by David Stokes

Kansas City officials are considering changes to the taxicab licensing ordinance that would make it easier for non-profits and churches to offer rides around the city. Tony’s Kansas City has the story here. I support the changes, even though I understand the concerns about treating non-profits differently than regular cab companies. It is a difficult call. If you support treating all companies the same (I do), but the treatment, a.k.a. the local regulations, is awful, do you force everyone to suffer from the same awful rules? In this case, I do not, and I hope loosening up the regulations for some will lead to less restrictive rules for all.

It is the same story of awful taxicab regulations in Saint Louis. Here is Uber, the nationwide, web-based private car service, explaining why they won’t enter the Saint Louis market. The same basic explanation applies to Kansas City, which means they are not giving consumers more choice in Missouri, while they do in many other parts of the nation. Are the safety and regulatory concerns in Missouri substantially greater than all those other cities? Of course not.

I know a little about taxicab licensing. I once opened a bribe for a county councilman from a taxicab operator looking for stricter regulations to protect his company from competition. That councilman and I reported the bribe to police instantly, but another councilman who had been taking bribes went to prison.

Taxicab licensing is there to protect the interests of the cab companies, not the public. Consumers now are more empowered by knowledge when dealing with cabs, like your cell phone and GPS telling you if a cabbie is taking you on a long route. Old rules such as uniforms, regulated fares, limits on cab licenses, and restricted areas (i.e., the airport) are no longer necessary. All that is needed is a basic cab registration with the city or county (for the protection of both the driver and passengers), driving record checks on the drivers, and inspecting meters (but not rates) to make sure they are accurate and properly posted. That’s all.

With these changes, maybe people in Saint Louis would be able to get a cab on New Year’s Eve.

Policy Breakfast: How Expanding School Choice Could Save Millions

Posted on January 16, 2014May 5, 2026 by James V. Shuls

Show-Me Institute Director of Education Policy James V. Shuls, Ph.D., introduces his latest paper, “Available Seats? Survey Analysis of Missouri Private School Participation in Potential State Scholarship Programs.” Shuls surveyed private school leaders in Kansas City and Saint Louis. His findings suggest that a private school scholarship program would expand choice while potentially saving taxpayers millions of dollars.

Read the full essay:

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