Page 484 – Show-Me Institute

Part-Time Nation: Forever 21 Stores Cap Staff Hours

Posted on August 21, 2013May 5, 2026 by Patrick Ishmael

As I’ve said before, one of the least-covered consequences of the Affordable Care Act (ACA) since its passage was the impact it would have on young people. Along with directly imposing onerous new health insurance mandates on young workers who 1.) generally can’t afford them and 2.) generally don’t use much in the way of health services, the ACA also gave companies the perverse incentive to reduce employees from full-time to part-time status as a way to avoid Obamacare’s employer penalties. In fact, a 2012 Congressional Budget Office described as much, estimating that the equivalent of about 800,000 jobs would be eliminated from the economy because of the law.

So what will the Obamacare part-time “new normal” look like? Like this:

“Forever 21,” reads the memo from human resources associate director Carla Macias, “recently audited its staffing levels, staffing needs and payroll in conjunction with reviewing its overall operating budget. As a result, we are reducing a number of full-time non-management positions.” All employees who received the memo will be reduced to a schedule to not exceed 29.5 hours per week. Why is that the magic number? Because under President Obama’s Affordable Care Act, mid- and large-sized employers are required to pay for health insurance for employees who work 30 hours or more. Forever 21 thinks it can get around this simply by reducing its technically-full time staff to part-time positions.

And they’re right.

Yes they are. Of course, Forever 21 is now denying that the move has anything to do with the health care law, but there’s plenty of reason for skepticism there. Why 29.5 hours? Why not 31 hours? Or 30 hours? Heck, why not a round number? And this is not the first time we’ve seen the ACA’s 30-hour work week limitations come into play. As I’ve written before, Obamacare also incentivizes companies to ship jobs overseas to avoid the 30-hour full-time equivalent work and health care requirements. Maybe legislators should have read the bill to find out what was in it before they passed it, not after.

Young people want gainful full-time employment. For many, the Affordable Care Act is standing foursquare in their way.

Is It Time For Teacher Tenure Reform?

Posted on August 20, 2013May 5, 2026 by James V. Shuls

Debates about teacher tenure often are contentious. Teachers’ unions argue that tenure laws are necessary because they give teachers access to due process. Opponents of tenure often argue that tenure makes it impossible to remove an awful teacher. So, which is it? This is one of the questions addressed in a new essay that I co-authored with Kacie Barnes, “The Power to Lead: Analysis of Superintendent Survey Responses Regarding Teacher Tenure.”

We surveyed 192 Missouri public school superintendents. We thought these individuals would be in the best position to tell the truth about teacher tenure. What did we find?

Seventy-three percent of superintendents in our survey stated that it is somewhat or very difficult to remove a tenured teacher. They note that the process of removing a teacher based on his or her performance in the classroom takes much effort and could cost a significant amount of money. For these reasons, among others, approximately 92 percent of the superintendents stated they would be supportive of some type of tenure reform.

According to the superintendents in our survey, it is time for tenure reform. The question is, what type of reform should it be? Superintendents have thoughts on that as well.

You can read the full paper below.

That Sucking Sound Is Your Money Being Taken From Missouri’s Private Economy

Posted on August 20, 2013May 5, 2026 by Patrick Ishmael

Whose money is it?

Supporters of higher taxes have spilled a lot of ink suggesting that Missouri House Bill 253 will decimate the state’s budget, the bill’s revenue triggers notwithstanding. Taking their figures as gospel only for the sake of argument, I wonder, do tax hike supporters recognize that all that tax money is actually the taxpayers’ money first and foremost? By sustaining the governor’s veto, tax cut opponents are actually taking every dollar it “costs” the state or a political subdivision from the private economy to grow the size of government. Put another way: Does taking more money out of taxpayers’ hands and letting the state spend it — a state that, under the present status quo, ranks 48th in the country in GDP growth since 1997 — sound like a recipe for economic success to you? Sounds like business as usual, and here in Missouri, business has been too bad for too long.

The implication at the core of the veto supporters’ argument is that the state knows how to spend that money better than we do. I disagree. If you support smaller government, you support tax cuts. If you support bigger government, you make excuses.

James Shuls, Ph.D., on Teacher Tenure Reform

Posted on August 20, 2013May 5, 2026 by Kacie Barnes (Galbraith)

Of all the decisions an employer must make, none may be as important as staffing. This does not just include who they hire, but also who they fire. An effective leader should be able to identify those who are not performing at an acceptable level, work with that individual to help them improve, and terminate him or her when necessary. But what if state law does not provide such flexibility? What if the employer is required to give the employee 90 working days to improve before finally being able to dismiss the employee and replace him or her with a higher quality employee? That type of regulation does not seem optimal for a business’ success, but it is exactly the position in which Missouri school leaders find themselves. In many instances, these restrictions limit the power principals and superintendents have to effectively lead their schools.

Read the essay: The Power to Lead.

The Cost Of Teacher Pensions

Posted on August 20, 2013May 5, 2026 by Michael Rathbone

Yesterday, education economist (and Show-Me Institute Board Member) Michael Podgursky had a commentary published in The Washington Times about the costs of teacher pensions on governments and how school administrators gain the most from the status quo. This is due to the way most school pension benefits are calculated.

Currently, Missouri teachers participate in a defined benefit plan. Their pension benefits are calculated by averaging several years of that employee’s highest salary, not by averaging the salary of the employee over his or her entire career. This benefits administrators, who tend to get a big boost in average salary after they move from teacher to administrator. According to Podgursky’s calculations, a school superintendent will end up contributing 53 percent more to his or her pension plan than a senior teacher would over the course of his/her career, but receive 89 percent more in benefits.

On the other hand, new teachers do not benefit as much because their starting annual salaries are lower than a “senior” teacher. Again, according to Podgursky’s calculations, these novice teachers will contribute 30 percent of what a senior teacher does, but only expect 18 percent of the benefits. Novice teachers will eventually become senior teachers and these differences will all even out … if they remain teachers. However, as Podgursky notes, those who leave early rarely collect their benefits.

Because school administrators benefit the most from these types of plans, they have little incentive to insist on changes, even though they can be burdensome on the district and taxpayers.

The fundamental problem with Missouri’s defined benefit plans is that they do not directly tie an employee’s contributions to his or her benefits. Podgursky notes that “cash balance” plans address some of these problems. Personally, I prefer defined contribution plans. They’re personal, portable, and for the employer, there is no ongoing liability once the employee leaves. Whether it is a cash balance plan, or a defined contribution plan, some type of reform is needed.

Will School Transfers Lead To Disaster Of Biblical Proportions?

Posted on August 19, 2013May 5, 2026 by James V. Shuls

Is it just me, or does a lot of the conversation lately about school transfers sound a lot like a conversation from the movie “Ghostbusters”?

Peter Venkman: You can accept the fact that [the Normandy and Riverview Gardens School Districts are] headed for a disaster of biblical proportions.

Mayor: What do you mean, “biblical”?

Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath-of-God type stuff!

[Brad Desnoyer: We have done more than give up on the unaccredited districts; we have ensured that they will not regain accreditation absent state intervention.]

Venkman: Exactly.

Stanz: Fire and brimstone coming down from the sky! Rivers and seas boiling!

Egon Spengler: Forty years of darkness! Earthquakes, volcanoes!

Winston Zeddmore: The dead rising from the grave!

[Karl Frank Jr.: Further economic devastation!]

Venkman: Human sacrifice! Dogs and cats living together! Mass hysteria!

Citizens in the area are rightly concerned about the impact thousands of transferring students will have on the unaccredited school districts. However, it is important to keep things in perspective. Normandy and Riverview Gardens receive money to educate students. When those students leave, the money follows those students. When those students go to a district with high tuition rates, Normandy and Riverview Gardens will indeed lose money. However, when students transfer to less expensive districts, they will save money.

As of Aug. 1, there are 2,641 students who have transferred from the two unaccredited districts. They enrolled in 26 area school districts. Using these enrollment figures, I calculated an estimated cost for tuition. These figures were based on each district’s 2012 per-pupil operating expenditures. It is true that Normandy and Riverview Gardens will be out a substantial sum of money, but we must not forget that they also will receive money to educate these students. By my estimates, Riverview Gardens looks to be upside down by approximately $2 million and Normandy might actually come out ahead. Of course, these numbers will be even lower when factoring in the cost of transportation.

	Operating funds the district receives to educate transferring students	Cost of Tuition	Difference
Riverview Gardens	$13,751,892	$15,659,798	($1,907,906)
Normandy	$14,596,164	$13,758,937	$837,227

While the school transfers most likely won’t result in “mass hysteria,” the two unaccredited districts undoubtedly will be placed in a tough position. There is, however, a solution — tax credit scholarships. If those same students were allowed to attend private schools with scholarships funded by tax credits, the unaccredited districts would actually come out ahead because they would only lose the portion of their funds that they receive from the state or federal government for those students.

In 2012, approximately 31 percent of Riverview Gardens’ and 36 percent of Normandy’s operating expenses came from local property taxes. This is money that would stay in the district. Moreover, the districts would not be liable for tuition because private donations would cover the costs of a tax credit scholarship program. As a result, the districts would actually have more money to spend per pupil. Here is a simple illustration of the savings.

	Operating funds the district receives to educate transferring students	Cost of Tuition	Difference
Riverview Gardens	$5,218,129	$0	$5,218,129
Normandy	$4,228,707	$0	$4,228,707

There are few options that expand choice for students and lessen the financial burden on the unaccredited school districts, but tax credit scholarships are one good option.

For more about tax credit scholarships and other private school choice programs, see the links below:

Public Dollars, Private Schools: Examining the Options in Missouri

The Fiscal Effects of a Tuition Tax Credit Program In Missouri

Uncertainty In Airport Funding

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

A quick look at the Kansas City Aviation Department’s (KCAD) financial statement shows that without money from the Airport Improvement Program (AIP), which the Federal Aviation Administration (FAA) distributes, the department would be on shaky financial ground. This program provides a large partition of money for projects that maintain or increase aviation capacity at airports. However, just as the Kansas City Aviation Department will require more, there may be less to go around.

KCAD is taking a risk by relying on the AIP to cover additional airport expenses. The Airport and Airway Trust Fund (AATF) funds both the AIP and 75 percent of the FAA’s operating budget. Sequestration has frozen growth in the FAA’s federal funding, requiring it to reach further into the AATF. More for the FAA means less for the AIP, which the FAA proposed to cut by 38 percent in 2013. To make matters worse, the FAA plans to cut grants to most large airports, such as Kansas City International Airport (MCI). The FAA has proposed an increase in the other federal programs to cover the gap, but this requires congressional action.

Should there be a reduction in the AIP without commensurate increases in other funds, it might require the Aviation Department to seek alternative funding sources for its proposed $1.2 billion terminal. This would likely mean greatly increasing landing fees. While the airlines pay these costs, they will respond by either raising ticket prices and/or reducing service. Should this not cover the increased debt, the KCAD will be hard-pressed to maintain the airport without local subsidies.

While federal law disallows the use of airport funds to support a city’s other expenses, there is no barrier to a city funding an airport. With the future of federal funds uncertain, airport planners should fully consider the effects of potential higher landing fees or taxpayer subsidies.

The Price Of Air Travel

Posted on August 16, 2013May 5, 2026 by Patrick Tuohey

Steve Sexton at the Freakanomics blog has an informative post about the cost of air travel. But the costs he discusses are not the kind that affect ticket prices; rather, he analyzes the cost of time for delayed and canceled flights. He writes:

Researchers at MIT and George Mason University estimate that delayed and canceled flights imposed on passengers an aggregate delay of 28,500 years in 2007. The cost of these delays, and of risk-averting behavior like traveling early to destinations, was estimated at $15.3 billion, a startling number that accounts for the opportunity cost of time but doesn’t measure the consequences of missing critical appointments like weddings or job interviews.

While Sexton refers specifically to airline cancellations, his larger point is about the time costs to passengers. This study mirrors recent observations from SaveKCI’s blogger Kevin Koster:

Yesterday, I had to make a day trip to Denver. As I tweeted yesterday morning, it literally took me only 8-minutes from the time I locked my car in the KCI garage until I was through security and standing at the gate ready to board. By comparison that afternoon in Denver, it took me 45 minutes from the time I was dropped at the curb until I was at the gate – and I was told the security lines were unusually short.

More impressive though was our return to KC. It took me less time to get from the gate to my home than it did in Denver to get from the gate to a waiting cab outside. To the business traveler time is money – on average $150/hr. We should be selling KCI’s “private jet speed” convenience to businesses in other markets, rather than considering destroying it.

Airport administrators want to move to airport models used elsewhere in the country to maximize revenue. Kansas Citians like Kansas City International Airport because it allows them to be efficient with their time. For many in the region, this time cost is the most important.

The Blind Men And School Funding

Posted on August 16, 2013May 5, 2026 by James V. Shuls

Many people know the story of the blind men and the elephant. As the story goes, several blind men each look at one part of an elephant and think it is something way off base. The tail is a rope, the tusk is a spear, the trunk is a tree branch, etc. Though many know the fable well, we are often prone to make the same mistake. For a prime example of this mistake in action, you need not look any further than the pages of the St. Louis Post-Dispatch editorial page. The most recent culprit was Brad Desnoyer, a law professor from the University of Missouri-Columbia, in a piece he wrote about school funding.

Like the blind men, Desnoyer looks at one part of school finance and thinks he can explain the whole. This just isn’t so. For instance, he makes the claim that districts with high poverty rates receive less funding than districts with low poverty rates. Sure, if you look at the Clayton School District and the Riverview Gardens School District, this seems correct. However, it is not true when you look at the whole elephant.

Below, I present a table that plots each public school district in the state (charter schools not included). On the Y-axis is 2012 per-pupil expenditure. On the X-axis is percent of students in each district who are eligible for free or reduced price lunches (FRL), a proxy for poverty. As it turns out, school districts with higher poverty rates actually spend more, on average, than those with lower poverty rates. In fact, a 10 percentage point increase in FRL is associated with a $168 increase in per pupil expenditures.

The same is true when you plot the percentage of black students and per-pupil expenditures. Here, a-10 point increase in the percent of black students is associated with a $275 increase in per-pupil expenditures.

Desnoyer cites statistics that indicate we spend less on our impoverished schools. I’m not sure where he gets his statistics (he doesn’t say), but they don’t hold for Missouri. In 2012, we spent an average of $11,099 in the 17 districts with greater than 80 percent of their students receiving free or reduced price lunches (FRL). We spent just $10,179 on the 15 districts with less than 20 percent FRL.

He goes on to suggest we need a “mechanism that guarantees a minimum amount of funding for each district to stay accredited.” What he is suggesting is simply impossible. We do not know how much money it takes for a district to stay accredited. As we saw in Kansas City throughout the 1980s and 1990s, throwing massive amounts of money at a school system does not guarantee success. We do, however, have a mechanism that helps to level out funding and bring poor districts up to a reasonable level — our funding formula.

Either willfully or unknowingly, Desnoyer looks at a few facts and thinks he knows the whole; he does not. School finance is indeed a complicated endeavor and we can have a legitimate conversation about whether we should spend more money on disadvantaged students, but we should not start that conversation with a misstatement of the facts.

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