Page 483 – Show-Me Institute

The EPA And Kansas City

Posted on October 25, 2013May 5, 2026 by Patrick Tuohey

Most people know that as a result of foot dragging from Kansas City politicians, the Environmental Protection Agency (EPA) sued the city over our antebellum sewer system. As a result, our already inefficient and Byzantine water department will be increasing our rates in order to pay for the overhaul — whenever that happens.

If you like paying more for your water, wait until you learn about what the EPA wants to do to energy costs. According to the Associated Industries of Missouri, the impact of new regulations on coal “will require the reduction of emissions of toxic air pollutants from power plants in the U.S. The cost, estimated by the EPA, is expected to be $9.6 billion in 2015, and nearly that amount in 2016 and beyond.” For those of us in Kansas City, the news is especially bad [emphasis added]:

The EPA estimates rates will rise by an average of 3.1% nationally as a result of this rule alone. Because Missouri generates a major portion of its electricity from plants that will be affected by the rule, the impact to your rates are estimated to rise by 6.3% in the far western part of Missouri, 2.8% in Eastern and Central Missouri, and 3.1% in Southeast Missouri.

The city is already struggling to pay the hundreds of millions of dollars for the construction of a streetcar system that was adopted with a vote of about 300 people. Now we learn that once built, thanks to the EPA, the costs of operating it are apparently going to be about 6 percent higher.

The EPA is conducting “Clean Air Act listening sessions” across the country, and one of them is scheduled for Nov. 4 just across the border in Lenexa, Kan. In order to attend and tell them what you think, you have to register in advance (no surprise there). Proponents of the streetcar are already wringing their hands about a proposed Jackson County tax — they may want to take a good look at an EPA rule that effectively taxes their pet project and would make non-electric transit even more attractive.

Looking For (Broad) HealthCare.Gov Pricing For Missouri? We Have It

Posted on October 24, 2013May 5, 2026 by Patrick Ishmael

Downloaded directly from HealthCare.Gov. The easiest way to sort through this information is by holding CTRL-F and inputting your county. As the Affordable Care Act’s (ACA) website explains:

Plans in the Marketplace are primarily separated into 4 health plan categories — Bronze, Silver, Gold, or Platinum — based on the percentage the plan pays of the average overall cost of providing essential health benefits to members. The plan category you choose affects the total amount you’ll likely spend for essential health benefits during the year. The percentages the plans will spend, on average, are 60% (Bronze), 70% (Silver), 80% (Gold), and 90% (Platinum). This isn’t the same as coinsurance, in which you pay a specific percentage of the cost of a specific service.

Keep in mind that if you qualify for subsidies, this spreadsheet will only provide the pre-subsidy cost to you. Also keep in mind that the data the government has made available only has very broad categories; consider these your ballpark estimates for what your plan would actually cost.

In my case, the most comparable plan in the marketplace to the one I have now is nearly twice the price. That would also be the price I’d pay, because I don’t qualify for subsidies.

Happy hunting.

Note: Pricing is for monthly premiums. As you peruse those premiums, the columns proceed in this order: Premium Adult Individual Age 27, Premium Adult Individual Age 50, Premium Family, Premium Single Parent Family, Premium Couple, Premium Child.

HealthCare.Gov Now Delivering . . . Incorrect Plan Pricing

Posted on October 23, 2013May 5, 2026 by Patrick Ishmael

This morning, CBS reported that a new feature on the Affordable Care Act website allows users to get quotes for their premiums — but is often delivering false information. Are you 49 years old? You may be getting prices for a 27-year-old, meaning your actual costs could be twice as high as what the website is telling you. And those pricing problems extend to shoppers of just about every age.

This could be the result of a few things: lazy programming, bad programming, and/or purposefully bad programming. The underlying dataset the tool uses is probably based on this data, which I downloaded from HealthCare.Gov on Oct. 1. Notice that of the columns divided by age, the two ages are . . . 27 and 50. Programmers probably just split the population into the two groups they found in the spreadsheet and dropped everyone into these pricing categories, even though those prices only applied to two ages of people.

Obviously, a 27-year-old’s insurance is not priced the same way as a 37-year-old, or a 45-year-old, or a 49-year-old. Why the government’s “experts” would put out demonstrably false information — information that anyone who knows anything about insurance pricing would know is wrong — is just beyond me. Are these really the people we want running our health care system?

Federal Funding By Any Other Name

Posted on October 23, 2013May 5, 2026 by Joseph Miller

Previously, we discussed Kansas City Aviation Department Director Mark Van Loh’s objection to local voters interfering with his $1.2 billion airport plans. He also took aim at the federal funding of airports, saying, “We want the government out of this.” His main complaint: airports are dependent on federal funds for maintaining or expanding capacity, but sequestration has meant there is less to go around. Van Loh wants Congress to increase another type of tax, the Passenger Facility Charge (PFC), which would make Kansas City International Airport (MCI) less reliant on other federal funds.

Most federal funds for airports come from two sources: PFCs and the Airport Improvement Program (AIP). The AIP funds are distributed to airports on a needs basis. PFCs are collected per ticket and then given to airports based on each facility’s total passengers. This means that busy airports, such as MCI, stand to gain substantially if the PFC rate is increased. Van Loh wants the federal government to increase the rate on PFCs in return for large airports (like Kansas City’s) receiving fewer or no AIP grants. This means less federal funds based on need in exchange for more funds based on passenger level.

However, it is an unfounded assertion that if the PFC rate increases from $4.50 to $8, as Van Loh proposed, MCI would no longer need the federal government. First, the PFC is a federal tax, and as such, receiving PFCs is receiving federal aid, just in a different form. Second, assuming higher-priced tickets do not impact demand, Kansas City International Airport would have only received an extra $20 million in 2012 if the PFC rate was raised to $8 per ticket. From 2010 to 2012, Kansas City International Airport received an average of $20 million in AIP grants per year. A chart of AIP grants and PFCs for the last seven years shows this:

Therefore, exchanging more PFCs for lower AIP grants will not increase the airport’s income on average. It would, however, increase the stream of income immediately, helping to finance a new terminal in the short term.

Either way, the Kansas City Aviation Department is not getting the government out of its business.

Robbing Peter To Pay Paul’s Defined Benefit Pension

Posted on October 22, 2013May 5, 2026 by James V. Shuls

After graduating from college, Peter and Paul began teaching in different Missouri public school districts. Feeling satisfied with their long, successful careers, they both retired after 30 years in the classroom. Little did the men know that for nearly three decades, the defined benefit pension system had been robbing Peter to pay for Paul’s retirement.

Though this story is fictional, the situation is a reality for many teachers in Missouri. Take, for example, the actual salary schedules of two public school districts, Jefferson City and Hickman Mills. Teachers in Jefferson City (Peter) start at a slightly higher salary than teachers in Hickman Mills (Paul), and they continue to earn a higher salary for 23 years. However, toward the end of their careers, Hickman Mills teachers receive larger pay raises and surpass their Jefferson City counterparts.

Over the course of a 30-year career, a teacher in Jefferson City will earn $29,213 more than a Hickman Mills teacher. Each of these districts is part of the Public School Retirement System of Missouri (PSRS). This system requires 29 percent of a teacher’s salary to be contributed to the pension system, 14.5 percent each from the employee and the employer. Assuming a constant 29 percent contribution rate, a Jefferson City teacher will have $8,472 more deposited into the pension system than a Hickman Mills teacher.

Because he or she deposits more into the retirement system, it would make sense for the Jefferson City teacher to earn more in retirement; however, that is not the case. Pensions in the PSRS system are based on a teacher’s three highest consecutive salaries, usually his or her final three years. The spike at the end of their careers gives Hickman Mills teachers higher final average salaries, meaning they earn more in retirement than the Jefferson City teachers.

Despite paying $8,472 more into the pension system, the Jefferson City teacher will receive more than $55,080 less than the Hickman Mills retiree over the course of a 30-year retirement.

This may sound unfair, but this is just the tip of the iceberg regarding problems with defined benefit pension systems. In an effort to boost their final average salaries, teachers and administrators regularly game these systems, switching positions near retirement. The result of the various forms of gaming is escalating payments by states or declining benefits for pensioners.

Missouri teachers and schools have seen an increase in their contribution rate eight times since 2004, rising steadily from 21 percent to the current 29 percent. Contribution rate increases are necessary to combat growing pension liabilities. In a recent report for the Show-Me Institute, the American Enterprise Institute’s Andrew Biggs noted that Missouri’s five largest public pension systems have unfunded liabilities of nearly $54 billion. PSRS accounts for more than $31 billion of those unfunded liabilities.

Each of the problems mentioned here stems from the fact that Missouri’s defined benefit pension systems do not tie an individual’s contributions directly to his or her pension benefits. That is why a teacher who has paid considerably less into the system can earn more in retirement.

Missouri and other states should act quickly to reform public employee pension systems. In a recent report from the Manhattan Institute, Josh McGee and Marcus Winters laid out a plan that would allow states to reign in unwieldy pension liabilities and make the system fairer for pensioners. This can be accomplished by abandoning our current defined benefit plans and replacing them with a system that allows pension wealth to accrue smoothly based on an individual’s contributions. McGee and Winters note that in many cases, this would allow states to raise teachers’ salaries considerably.

This type of reform would ensure that individuals who pay less into the system do not get larger benefits than those who pay more. It would also make pensions portable. This would be attractive to individuals who would like to teach, but are unsure of making it a career.

Our current defined benefit pension system for Missouri teachers is unfair and unsustainable. It’s time to stop robbing Peter to pay Paul’s pension. It’s time to fix our pension problems.

New Missouri Educator Profile Test Tells Teachers…Something

Posted on October 21, 2013May 5, 2026 by James V. Shuls

As of this fall, prospective Missouri teachers are paying $22 to take a test that will tell them…something. Missouri’s Department of Elementary and Secondary Education (DESE) has revamped the teacher certification process. DESE has replaced the licensure exams we have used for many years with new exams that Pearson Education, Inc. designed. Among these new exams is the Missouri Educator Profile. The strange thing about this test is that it has “no right or wrong answers.”

It is somewhat strange to require a test (you actually have to take it twice) that has no right or wrong answers. How could this possibly be useful? Well, the test is supposed to help prospective teachers develop their “work habits.”

The fact of the matter is that this test does have right and wrong answers. According to a DESE official with whom I corresponded:

When building this assessment we had a number of exceptional teachers from the various areas (SPED, Elementary, Secondary, Principals, Counselors, and Librarians) take the assessment. They became our norming group. The student [pre-service teacher] responses will be compared to the norming groups.

Students’ answers will be “right” if they reflect the work habits of these exceptional teachers. They will be wrong if they don’t.

In designing this test, DESE and Pearson violated one of the basic tenants of good social science research — don’t select on the dependent variable. Let me explain. They selected “exceptional teachers” and then tried to see what traits those teachers had. Without a comparison group of unsuccessful teachers, we don’t really know if the traits are unique to the “successful teachers” or if they caused them to be successful. Essentially, DESE’s norming group for this test is meaningless.

Like I said, beginning this fall, prospective teachers will take a test that will tell them…something.

Why Should County Taxpayers Fund Private Medical Research?

Posted on October 18, 2013May 5, 2026 by Caitlin Hartsell

Jackson County’s ballot proposal for a medical research tax to raise $800 million over 20 years has had a controversial reception. The proposed tax is intended to fund research on “translational medicine,” which turns existing scientific research into marketable drugs, medical devices, and diagnostic tools. The Pitch recently wrote an excellent summation of different viewpoints on the tax, including those of Show-Me Institute Chairman Crosby Kemper III.

Supporters of the tax leave a few questions unanswered: Why a county-level tax? Supporters cite lack of federal research funds as an impetus to look for more local funds, but sales taxes typically fund public assets such as parks or public safety projects. The half-cent tax would make Kansas City’s already high sales tax rate one of the highest in the country. Do other local governments fund this type of research with specific taxes?

I could only find two comparable taxes: one in Johnson County, Kan., and one in Rochester, Minn. (If anyone knows of other like taxes, please share them in the comments.) Even these two taxes have very important differences, however, from the Jackson County proposal.

Voters in Johnson County passed a one-eighth-cent sales tax in 2008 to fund the Johnson County Education Research Triangle. The money went toward building facilities at Kansas University and Kansas State, as well as to some researcher salaries. Jackson County’s proposal, however, would divert more than half of the revenue to private medical institutions: $20 million to Children’s Mercy and $8 million to St. Luke’s Hospital.

In 2012, voters in Rochester extended a half-cent sales tax that devotes $20 million in bonds (approximately one-seventh of the revenues) to the “Destination Medical Center” (DMC). The Destination Medical Center is the Mayo Clinic’s 20-year, $5 billion project to upgrade its own facilities and the surrounding area’s infrastructure and amenities.

Importantly, the Mayo Clinic initiative uses mostly private funds for the venture — more than $5 billion in Mayo Clinic’s own funds and those of private investors. The $500 million that the state, city, and county pledged over 27 years are primarily for infrastructure and transit improvements, which are the sorts of things public tax dollars typically fund. Additionally, state funds are contingent upon private investment occurring first. Mayo Clinic President and CEO John Noseworthy said in an interview:

We are not asking for a handout. We’re asking for nothing upfront. We’re not asking the state to fund the medical facilities, the science facilities and so on as other states are doing for our competitors, by the way. We’re simply asking for, once we have grown and proven that growth, to have some of that tax revenue infused into the public infrastructure.

Jackson County voters, unlike those in Rochester, are facing a different request. The translational medical research tax is a unique proposal that taxes citizens to fund buildings and salaries for researchers at primarily private institutions, in a field that private investment traditionally funds.

Being on the cutting edge of implementing new and higher taxes is not the right kind of innovation for Kansas City.

You Can’t Take The Public Out Of Public Airports

Posted on October 16, 2013May 5, 2026 by Joseph Miller

In an Oct. 14 Kansas City Star article, Kansas City Aviation Department Director Mark Van Loh railed against government policy and local politics that are hampering his efforts to build a new $1.2 billion airport terminal. However, the legal and regulatory framework of Kansas City International Airport (MCI) is part and parcel of what it means to be a public airport, and the director cannot simply pick and choose the sections he likes.

The Aviation Department director appears to believe that Kansas City residents should not have to vote on whether MCI can issue revenue bonds, because they will not be responsible for those bonds. But those bonds he wants to issue are tax-exempt, special facility bonds, which MCI can issue because it is a public airport. Without that advantage, the capital costs of building a $1.2 billion new terminal might be too much for the airport to handle. But the Aviation Director only wants to forgo the government-mandated vote, not the government-mandated access to cheap capital.

And that’s only one of the many trade-offs the airport makes for being publicly owned. The truth is, Kansas City and the federal government provided the property and money to build the airport and constructed the framework for how the airport is run and how it is funded. Kansas City residents own the airport. They are going to have to pay most, if not all, of the cost of a new terminal, either directly or indirectly. It’s perfectly reasonable to allow the citizens to block a project that might be both wasteful and unnecessary.

Do Schools Really Want To Fix The Teacher Retention Problem?

Posted on October 15, 2013May 5, 2026 by James V. Shuls

Like nearly half of all teachers, I did not last five years in the classroom. After four years, I went to graduate school. Many factors prompted me to leave the classroom; my salary was one factor. Most teachers are paid on a single salary schedule. These salary schedules aren’t inherently bad. They can be designed well or poorly. Unfortunately, most school districts do a poor job and design their salary schedules in a way that sacrifices young teachers at the expense of veteran teachers.

Take, for example, the salary schedule for a teacher with a master’s degree in the Parkway School District. In his or her first 10 years, a teacher in Parkway only receives a 17 percent pay raise. Between their 11th and 20th years, they receive a 51 percent pay raise. The difference is $20,000. It is no wonder we have difficulty retaining new teachers. The system is designed by veteran teachers for veteran teachers. After all, veteran teachers are usually the ones who serve on salary bargaining committees.

If we are serious about retaining new teachers, why do we design our pay schedules so poorly?

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