James Shuls, Ph.D., explains that educational excellence follows from schools empowered to innovate and parents empowered to choose.
Announcing New Case Study: Live Free and Learn
Over the course of the past year, I have spoken and written a lot about tax credit scholarships. When I do, I am often bombarded with questions. “Who would be eligible?” “How would this work?” “How much are the scholarships worth?” The questions go on and on. My response often is, “It depends.” Tax credit scholarship programs can be, and have been, designed in many different ways. Still, the Show-Me Institute wanted to give some concrete examples for Missourians to consider and to help answer some of the questions or concerns about tax credit scholarships. Therefore, we commissioned three case studies about tax credit scholarship programs in other states by some top experts. We will be releasing these case studies over the next few weeks.
Today, we are pleased to announce the release of “Live Free And Learn: A Case Study Of New Hampshire’s Scholarship Tax Credit Program,” by Jason Bedrick. Bedrick is a policy analyst at Cato Institute’s Center for Educational Freedom. Previously, he served as a legislator in the New Hampshire House of Representatives, a small state with the “fourth-largest English-speaking legislative body in the world.” After his time in office, he was instrumental in the passage of the Granite State’s tax credit scholarship program.
His paper describes the particulars of the New Hampshire scholarship program. It also provides data from the first survey of scholarship recipients. The survey indicates that most of the scholarship recipients were from low-income families. The tax credit scholarship allowed many students to attend private schools that they would not have been able to afford without the support that the program offered.
As you might imagine, parents who received a scholarship for their child tended to be very satisfied. In fact, “All of the scholarship recipients who attended a public school in the previous year reported greater satisfaction with their current school” (p. 19).
I encourage you to take a look at “Live Free And Learn.” And stay tuned for our next two tax credit scholarship case studies.
Current Teacher Pension Systems Impose A “Tariff” On Labor
As first appearing in TeacherPensions.org on 25 Feb, 2014, and Education Next on 26 Feb, 2014:
In Missouri, students in unaccredited school districts can now choose to enroll in neighboring accredited school districts. Some students who have elected to leave their struggling school now find themselves riding a bus for more than two hours a day. This has led many to question the school transfer idea and look for alternative solutions. Some have begun to ask, “What if instead of busing students from failing school districts to accredited ones, we bused great teachers from accredited schools into the failing districts?” It is an idea that has won a fair amount of attention.
Last November, the Cooperating School Districts of Greater St. Louis pitched the idea of providing high-quality teachers as instructional coaches in struggling schools. A similar idea was raised by CEE-Trust, the consulting firm that the Missouri Department of Elementary and Secondary Education hired to address problems in the Kansas City School District. The CEE-Trust proposal called on accredited school districts “to play a significant role in helping [unaccredited] systems improve.” The St. Louis Post-Dispatch heaped praise on this idea, calling it among the “more promising ideas.”
However, there is one easily overlooked obstacle standing in the way of turning this localized version of a teacher peace corps into a reality in Missouri’s two biggest cities: the incompatibility of different pension systems.
With the exception of Saint Louis and Kansas City, which have autonomous pension systems, all of Missouri’s school districts are part of the Public School Retirement System (PSRS). If a teacher moves from PSRS to one of the city plans, he or she will incur a significant loss in pension wealth. Koedel, Ni, Podgursky, and Xiang, economists at the University of Missouri and authors of a recent report from the Ewing Marion Kauffman Foundation, put it this way:
Consider two teachers who work thirty-year careers in the profession. The first teacher works all of her thirty years in a single plan. The second teacher works fifteen years in one plan and then fifteen years in another. Because of the way pension wealth accrues in these plans, the latter teacher will have less than half the pension wealth of the former teacher at age fifty-five.
Though this may sound like a Missouri problem, it has bearing nationwide. As the Kauffman report notes, Missouri’s separate pension systems are “a microcosm of larger national issues concerning teacher pension systems—particularly the ability of teachers to move between systems.”
Just as teachers in Missouri cannot move between pension boundaries without incurring a financial penalty, teachers cannot move across state pension boundaries without incurring similar costs. Which means, a charter operator with campuses in multiple states, like KIPP, Uncommon Schools, Achievement First, or Rocketship Education, cannot freely move a teacher or school leader between their schools in various states. Indeed, these systems punish all teachers who move from one state to another.
Koedel, Ni, Podgursky, and Xiang liken the costs associated with switching between pension systems to a tariff, “Rather than promoting free trade and labor mobility, the pension plans effectively are imposing a tariff on the import or export of human capital between” the separate pension systems.
This “tariff” on labor is not a new problem, but a longstanding one that Saint Louis and Kansas City have been struggling with for years. Prior research has demonstrated that the separate pension systems create a barrier to recruiting school leaders into the two urban school districts. The separate pension systems also limit the pool of teachers who are willing to work in the cities. Jeffrey Kuntze, chief operating officer of the Confluence Charter Schools in Saint Louis, says “the separate pension systems make it extremely difficult for us to recruit veteran teachers from the county. We can get them when they retire, but not mid-career.”
Missouri’s pension boundaries would make it practically impossible for high-performing school districts to operate a program, run a school, or loan teachers within the Saint Louis or Kansas City boundaries, just as state pension boundaries would make it impossible for schools to effectively work across state lines. They simply could not move teachers or school leaders across pension boundaries without making them suffer great financial penalties.
The only real way to solve this problem is to close the current systems to new entrants and place them in a new, statewide system that participates in Social Security and has smooth wealth accrual. Before this idea causes mass hysteria, let me stress that this would not affect current employees’ or retirees’ pensions. They would remain secure in their current system. It would, however, remove the artificial pension boundaries and allow us to create a better pension system for teachers and students.
Opponents of this idea claim that closing the current defined benefit systems would be financially unsound, as it would lead to considerable “transition costs” that would far outstrip any benefits that we may receive. This is the very issue tackled in a recent Show-Me Institute policy study by Andrew Biggs, a resident scholar at the American Enterprise Institute. Biggs examines the evidence for “transition costs” and concludes that the concerns are “largely mistaken and should not stand in the way of public employee pension reforms.”
Whether you believe busing teachers into failing schools is a viable solution or just another feel-good proposition, fixing this pension problem should be a top priority for Missouri and other states throughout the country. Missouri should not have a system that puts our neediest communities at a disadvantage when it comes to recruiting talented teachers and states should not impose a tariff on attracting quality teachers and school leaders.
James V. Shuls, Ph.D., earned his bachelor’s and master’s degrees in elementary education and taught for four years in the Republic School District. Currently, he is an education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy. His wife is currently vested in PSRS.
Michael Podgursky, Ph.D., on the Minimum Wage
Michael Podgursky, Ph.D., responds to recent arguments to raise the minimum wage. While raising the minimum wage would help a few low-skill workers, it would also eliminate many low-skill jobs. Podgursky says there’s a better way.
Marking-Up And The Funky Bunch
In last Saturday’s blog post regarding the disagreement between the Missouri governor and the legislature about state revenue estimates, I mentioned marking-up legislation. Marking-up basically means that members of a Missouri House committee are taking an introduced piece of legislation and amending it to fit their preferences (e.g., the Budget Committee and the Budget).
Usually, when crafting the budget, the House Budget Committee starts with the governor’s executive budget as introduced legislation. It then assigns these introduced bills to different appropriations committees depending on the department being funded. However, due to the disagreements about expected state revenues, the House is not doing that this year. Instead, the House is working off of last year’s budget and making changes based on that.
The House is doing this mainly for the sake of appearances. Representatives don’t want to be seen as cutting spending in popular areas such as education when compared to what the governor introduced in his budget. That’s understandable, but unnecessary. The House should fund education at the levels it believes are proper given the constraints that limited state revenues impose. If that happens to be less than what the governor suggests, then so be it. If it’s less than what was spent last year, that is fine as well. Don’t spend more just because you want to be seen as spending more.
The chairman of the House Budget Committee, Rep. Rick Stream, has asked appropriators to go line-by-line through the budget and find items to cut in order to free money for other, more important programs. The Show-Me Institute has highlighted several areas which appropriators could cut, such as ethanol subsidies. Hopefully, we can see some cuts to non-essential areas.
Creating a budget is arguably the most important task the legislature has every year. Being informed of how that process works is something worth knowing. The House really wants you to know that it plans to increase spending, just less than the governor does. Hopefully, representatives will get to a point where they can justify the spending levels they set, whether it is more or less than last year.
Education Savings Accounts Are Good For Kids
On Feb. 24, the Mississippi Clarion-Ledger published an editorial supporting the establishment of education savings accounts (ESA) in the Magnolia state. The Mississippi ESA proposal closely resembles a proposal currently before the Missouri Legislature in that it would provide support to students with special needs. Essentially, it would allow students with special needs to receive financial assistance from the state. The students could then use that money to tailor their education to fit their needs.
The Clarion-Ledger wrote:
The Parents’ Campaign and others who oppose the proposal — called the Equal Opportunity for All Students with Special Needs Act — claim it’s a voucher program that would strip money from local districts.
But parents of special-needs children and others who support it say it’s a lifeline and a last-resort measure that will give them the ability to do what the state apparently cannot: Educate their children.
School districts doing a good job educating special-needs children have little to fear. Nary is the parent who will withdraw a child from an excellent educational setting.
In Florida, which passed a statewide choice program for special-needs students in 2001, just six percent of eligible students use the program, according to the Florida-based Foundation for Excellence in Education.
We support public schools, but we cannot support the systemic failure of certain students over the course of several decades without any signal from MDE that something will change.
As I have written before, “the beauty of ESAs is that they are versatile.” They put children and their families in the driver’s seat regarding their education. The Clarion-Ledger editorial board recognizes this fact.
Arizona was the first state to create an ESA program and parents have been very satisfied. Mississippi, Oklahoma, and Iowa may be the next states to adopt an ESA program. Will Missouri join that list? It would certainly help if papers such as the St. Louis Post-Dispatch or the Kansas City Star came to the same conclusion as the Clarion-Ledger — that ESAs are good for kids.
Paycheck Protection Bills Return To The Missouri Legislature
One of Americans’ most fundamental rights is the right to free speech. Unfortunately, that right often is undermined in the area of public employment. Many public employee unions not only collect dues for their representation, but they also collect them for political activity. Generally speaking, the presumption is that the employee supports the union’s politics, even though that’s not always the case.
Shouldn’t unions have to compete for their political dollars and donations like any other interest group? I think so. That’s why “paycheck protection” reforms are so important: they allow employees to opt in to paying for a union’s politics, rather than forcing them to opt out. The presumption, in other words, is that the employee’s political dollars are first and foremost the employee’s, not the union’s. That modest reform would re-balance the power of dues collection in favor of public employees rather than defaulting in favor of public unions.
The good news is that Missouri’s legislature passed a law last year that would have rectified the problem. The bad news is it was vetoed, and that veto wasn’t overridden during the special session.
But the (other) good news? Variations of that legislation are currently circulating in the Missouri House. HB 1093 and HB 1617 address the issue directly, requiring a separate consent form for dues to be collected and used for union political purposes. HB 1093 is particularly good in requiring an accounting of dues to ensure that dues earmarked for representation are not spent on politics. Without that verification mechanism, it would be difficult to determine whether the law is being followed and whether employees’ free speech rights are being upheld.
I will keep an eye on both of these bills; stay tuned.
The Kansas City Streetcar Advisory Panel Is Just For Show
The panel appointed to advise Kansas City Mayor Sly James about the best route for the southern extension of the streetcar met on Saturday morning, and many were skeptical. Of course, Kansas City voters have rejected similar rail efforts for years so this is no surprise.
Whatever the advisory group decides, however, is moot. That is because the city’s petition for the creation of a special taxing district and the increased sales and property taxes therein has already been submitted to a judge for consideration. Nothing this advisory panel does will change it, nor is any decision they reach binding upon the city. As the Kansas City Star published:
Kansas City Councilman Russ Johnson told the group: “We’ll do everything we can to incorporate the preferred alternative.”
Kansas Citians are being asked to commit to very specific and enforceable sales and property tax increases in return for a vague notion of where those rails will be laid; the city is not willing to commit to a specific route. In the petition to the court, the city spends about seven of 15 pages (pages 6 through 13) detailing how the taxes are to be assessed and collected. As for the route, that receives less than one page (page 4) of vague statements such as (emphasis added):
The Expansion Routes will connect to the Starter Line, and are expected to run generally along (i) Independence Avenue, east from the Starter Line, (ii) Linwood Boulevard and/or 31 and (iii) Main Street and/or the public right of way commonly referred to as the Country Club Right of Way or public streets in the vicinity thereof, south from the Starter Line, all as generally depicted on Exhibit D…
The petition does not even include the consideration of public input as to the route, its ending, or the placement of stations. Those will be decided by “further design and engineering.”
The specific Expansion Routes, their respective termini (which may be closer to or farther from any such Expansion Routes’ connection to the Starter Line) and the specific location of embark/disembark points, remain subject to refinement or alteration following further design and engineering;
For the sake of transparency — and an informed electorate — the City Council should have undertaken “further design and engineering” before convening an advisory board and submitted the petition to a judge. But they didn’t, and so the effort to seek citizen input is a tale told by streetcar supporters: “full of sound and fury, signifying nothing.”
Why Would Unions And Some Big Businesses Support Raising the Minimum Wage? Some Reasons
Last week’s Congressional Budget Office (CBO) report brought the negative effects of a proposed minimum wage hike into sharp focus. The CBO found that while wages would, by definition, increase for some employees, up to a million of our most vulnerable workers could lose their jobs. For all the bluster about free-market advocates being “anti-worker,” I can’t imagine a more anti-worker effect to a policy than the one you would see with a minimum wage increase. After all, what could be worse for a laborer than having his or her job taken away?
That’s what makes support for a minimum wage increase from unions and big business seem so odd at first glance. Why would unions such as the American Federation of State, County and Municipal Employees (AFSCME) support a change of policy that would hurt hundreds of thousands of Americans? Why would some businesses want to increase the cost of labor?
A few reasons stand out.
For starters, artificially raising the cost of non-union labor can make union labor more attractive. As the Cato Institute noted more than a decade ago:
Unions are labor cartels that attempt to restrict the supply of workers entering given occupations. Since non-union labor is priced below the cartelized price of union labor, it is an attractive substitute for union workers. Because unionization of all potential competition to the cartel is impossible due to the high policing costs that would be involved, unions resort to the minimum wage. By artificially increasing the wage rate of lower skilled workers — who could substitute for union workers — the minimum wage increase the demand for union workers and hence their wage rates.
Hypothetically speaking, if the labor of an entry-level employee with no experience is worth $7.50 per hour in the open market but the law requires he be paid $15 per hour, trained union labor costing $20 per hour looks considerably more attractive. By harming non-union labor, unions are able to help themselves.
Moreover, some large businesses have supported increasing the minimum wage because it would harm their competition. Costco, for instance, supports raising the minimum wage today at least in part because the entry-level wage for a Costco employee is $11.50, more than $4 per hour above the federal minimum. At a minimum wage of $10.10 per hour, Costco’s business model would remain largely unaffected.
But you know who would be affected by the change in the law? Businesses, large and small, whose profit margins are far narrower. That’s especially true of small businesses in our communities already suffering under a mountain of tax and regulatory burdens in a difficult economy.
Yes, there are, no doubt, some in both the business and labor camps who in good faith might think a minimum wage increase won’t hurt our vulnerable poor. But labor and business leadership know better, and the economics are as clear as the incentives.
