Can A School Transform A Community? (Part 2)

Posted on by James V. Shuls

Last week, I wrote about KIPP Inspire Academy (KIA) and asked, can a school transform a community? This week, the St. Louis Post-Dispatch released a great story about City Garden, essentially exploring the same question. Their answer, like mine, is yes.

Like KIA, City Garden is a charter school, but that is about all the two schools have in common. The instructional practices at KIA are markedly different than they are at City Garden, which uses a Montessori approach. Another notable difference is that KIA is an open enrollment charter school without an attendance zone. That means students from anywhere in Saint Louis can enroll at KIA. City Garden, on the other hand, does have an attendance zone. Like a traditional public school, this means only students who live in that zone are allowed to enroll.

There are interesting implications with having an attendance zone, which the Post-Dispatch piece discusses, but I will discuss at another time.

What strikes me about KIA and City Garden is that they are both able to have a tremendous positive impact on their surrounding community.

For cities with low-performing school districts, the infusion of a great school seems to make a tremendous impact. But what can suburban or rural areas learn from this? Most of those communities do not need to “transform.” Indeed, many of them are doing quite well.

If we continue to have a limited view of charter schools as “schools for failing districts” then we make a mistake. What I see from KIA and City Garden is the opportunity for choice that they bring. These two schools offer something very different to families.

As I have written before, school districts often cannot meet the needs of all families, especially when they implement the same policies and instructional strategies district-wide. The lessons we should take from KIA and City Garden is that there is no one recipe for success and that families throughout the state would benefit from having more educational options.

Pevely Should Disincorporate

Posted on by David Stokes

In the past year (plus a little more), three Missouri towns — St. George, Mack’s Creek, and Quitman — have disincorporated. I particularly like the fact that a town named “Quitman,” well . . . quit. Uplands Park is now considering disincorporation, and another town needs to: Pevely.

Pevely, a small (but not tiny) town in Jefferson County, is having trouble on a number of fronts. It cannot pay for its employees’ health insurance, it cut fluoride from its water to save money, and it is staring down the barrel of a substantial judgment against it from a lawsuit. I am confident the troubles run even deeper.

Many small cities in Missouri, and especially in Saint Louis County, are having trouble providing a base level of services. For most of these situations, the county is better suited to provide local services in a cost-effective manner. Generally, this can be accomplished without raising overall county costs much, due to transferable taxes such as utility taxes, business licenses, state road funds, court fees, etc. (I am defining a transferable tax or fee as one where the tax is not layered. The city gets it if it is incorporated, and the county gets it if it is not.) This is especially true in Saint Louis County, where the sales tax pool comes into play.

Jefferson County has a solid county government system and it should take over services within the community of Pevely. Hopefully, Pevely can become another example of successful disincorporation in Missouri.

Teachers, Health Care, And Inefficiency

Posted on by James V. Shuls

In a study recently released in EducationNext, Bob Costrell and Jeff Dean find that the cost of health care for public school teachers is increasing rapidly in comparison to the private sector. Health care costs for teachers are 26 percent higher than for workers in the private sector, up from a 12 percent gap in 2004 (see graph below).

Costrell_Dean_HealthCare

The authors do not present specific figures for Missouri, but note that across the country, health care expenses contribute to a significant portion of a teacher’s compensation. According to the study, “in 2004, health insurance costs tacked 11.4 percent onto teacher earnings; in 2012, they added 15.5 percent.”

The money spent on teacher health benefits is approximately $560 per pupil per year. If we assume that we spend $560 per student in Missouri, that would be nearly 6 percent of our total operating expenditures on health care benefits for teachers.

So what accounts for the higher health care expenditures on teachers? Costrell and Dean note that teachers’ unions and collective bargaining are driving factors toward “higher total premiums, higher employer costs, and lower employee contributions in both the public and private sector.”

Now, there is nothing wrong with providing teachers good health benefits, but we could improve options for teachers and decrease costs by shifting some of the teacher compensation from the school district to the teacher. Namely, this would align incentives to keep costs down, give school districts greater flexibility, and provide teachers with options.

As Missouri school districts face tight budgets, they must begin to look at ways to not just trim costs but to also improve efficiency. Health care benefits are a good place to start.

Contract With Veolia Would Benefit Saint Louis Water Services

Posted on by David Stokes

Innovation comes from the private sector. You need not be a radical capitalist to agree with that simple statement. It is a plain truth. For example, a private inventor, not a government water company, invented the water meter. (Note: The water meter was invented 160 years ago, but the City of Saint Louis still has not adopted it.) City residents will benefit from the proposed consulting deal with a private company to improve the city’s water division.

In putting together a team of officials to launch an effort to improve water services, Saint Louis Mayor Francis Slay deserves credit, not condemnation. When an agency such as the water division, which has been doing something for a long time, wants to look at ways to improve, it is obvious they should look outside the organization for new ideas. Anything short of that is an exercise in futility.

The team the mayor established collected water consulting bids from major water industry applicants. They chose the French consortium Veolia — one of the world’s largest private utility companies — to advise the city. The contract calls for a $250,000 consulting deal. Depending on which recommendations the city chooses, Veolia would then be paid more to help implement the improvements.

This is not privatization. Trust me, I wrote the study on privatizing the city water division and I wish this was privatization. It is not. This is a simple consulting deal. The city would still own, operate, and maintain every part of the water division. All this proposal calls for is tapping into the expertise of the private sector to improve water provision in the city. That will benefit everyone in the city and should be embraced, not attacked.

Opponents of this proposal are applying the shotgun approach in their fight: objecting to everything possible. This includes the irrelevant (Veolia’s work in the West Bank and Israel), the ideological (general left-wing opposition to private companies), the incomplete (cherry-picking a few Veolia municipal contracts that have not worked out and ignoring the many that have) and the idiotic (Veolia is foreign). Veolia has been successfully providing comprehensive water services in Oklahoma City, Okla., and Edwardsville, Ill. — to give just two Midwest examples — for many years. Those cities have routinely renewed the Veolia contracts.

While nothing about this proposal involves privatizing the water division, the absolute objection to private water from some is still peculiar. Private water companies have been serving the one million people in Saint Louis County, just one step north, west, and south of the city, for a century. Do you recall all the scandals and controversies about private water provision in the county? Neither do I.

But it is scandalous that the city water division has never implemented water meters. I am not blaming current leadership — this should have been completed 50 years ago. The lack of water meters encourages waste, overuse, inefficiency, and is unfair to consumers. When the city raises water rates, as it did in 2010, residents have no ability to react to that price increase (other than non-payment). Businesses, which use water meters within the city, can react to price increases by reducing usage and saving money, as AB InBev has done in recent years. City residents deserve the same ability to benefit from conservation as companies. People who use lesser amounts of water have long subsidized heavy water consumers in the city, and that is wrong. If you want to have the most glamorous lawn in the neighborhood, that is fine. But you should pay for it, not your neighbors.

The consulting deal with Veolia will result in many different ideas to improve water delivery in the city. These will range from the obvious, such as water meters, to the creative. People, businesses, and governments all benefit when they seek advice from knowledgeable parties outside their normal circles. Saint Louis city government and the water division are no different. The objections to the contract are an example of scattered ideology trying to stop practical steps for general improvement. The contract for consulting services from Veolia will improve water quality and services in the city, and that will benefit everyone.

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

The Better Angels Of Our Tax Code

Posted on by Michael Rathbone

As a free-market proponent, I often talk of the wonders of entrepreneurship. Yet, when Missouri tries to encourage entrepreneurship, it seems, more often than not, it goes about it the wrong way.

Case in point: The Missouri Angel Investment Incentive Act, which is aimed at encouraging individuals to provide seed-capital financing to certain Missouri start-up businesses. This encouragement takes the form of a tax credit, with an annual cap of $6 million. Now, as far as tax credits go, encouraging start-ups is not as bad as say, subsidizing wine and grape growers. But this project is just a symptom of the same development mindset that the state has been on for a while.

Considering what Kansas has done in terms of fostering a healthy business environment, and looking at what Nebraska and Louisiana are aiming to do, a tax credit aimed at angel investments is kind of a feeble response.

How about Missouri completely eliminates its tax on business income instead? My colleague Patrick Ishmael and I have illustrated how Missouri could eliminate its corporate income tax by capping and eliminating economic development tax credits. We also have highlighted how Missouri would be better served if the income tax on pass-through entities is eliminated.

Encouraging individuals to invest in start-ups is not the worst way to encourage economic development, but fundamental tax reform will allow all businesses — those just starting and those decades old — to expand and grow. Missouri needs to take bold steps to keep up in the development game. A $6 million tax credit is not the way to go.

The Medicaid Expansion Issue, Bullet-Pointed

Posted on by Patrick Ishmael

I have related my concerns about a Medicaid expansion in Missouri many times. Not only does Medicaid provide low-quality care to patients, but expanding the program without establishing a plan to pay for the services is simply short-sighted and irresponsible. Here are a few of my specific concerns and criticisms:

  • The expansion is not a “jobs program.” It is a mortgage imposed on the future incomes of our children and grandchildren to provide services today that we cannot afford. If the creation or expansion of an entitlement is important enough to pursue, it should be paid out of today’s dollars, not tomorrow’s.

  • The expansion is not funded. The expansion alone would add nearly $3 billion in new costs to Missouri’s annual budgets over the next decade. I have not seen a plan to address that cost. If the absence of a payment plan is not enough of a reason for concern, what happens if future federal budgets, already bathed in the red ink of debt, cause the Feds to dial back their funding on the expansion — raising the state costs further by effectively forcing states to pick up that slack?

  • No, other states would not “get Missouri’s money.” This is among the more remarkable, and incorrect, claims. Expansion funds are distributed based on enrollment, not on how much Medicaid money is “in the pot” and how many states are drawing on it. If only one state adopted the Medicaid expansion, that state would not receive the funding of the other 49 states. Nor would two states split the Medicaid expansion funding of the other 48 states. And so on.

  • Is Missouri a government that sometimes provides health services, or a health service provider that sometimes governs? If the state expands Medicaid, Missouri’s Medicaid program is projected to eat up 38 percent of the state’s entire budget. Is this what we want the Show-Me State to be reduced to? A mere vessel of the federal government through which federal Medicaid prerogatives are promoted and administered?

  • The expansion would reinforce an emerging subsidiary relationship between the state and the federal government. Moody’s has already downgraded Missouri’s credit outlook because the state already relies heavily on federal funding, and will rely even more heavily on it if the state expands Medicaid. Is that the sort of relationship the state wants to promote? Shouldn’t the state want to inoculate itself from the consequences of the federal government’s spending binge?

While supporters of the Medicaid expansion blithely send legislators Beyoncé Knowles Valentine’s Day cards in an attempt to coax policymakers into blowing a multi-billion dollar hole in the state’s budgets, it is time for serious policymakers to get serious about this issue. If the Missouri Legislature is going to engage Medicaid this session, it should be to fix what we already have rather than to spend what we do not.

Regarding The Renewed Voter ID Conversation

Posted on by Patrick Ishmael

It might not be an election year, but it looks like the vote protection debate has been jump-started with a new proposal that would require photo identification to vote in Missouri. That makes this a pretty good time to re-post video of the event we held last year titled “Suppressing the Vote or Stopping Fraud: The Voter ID Debate,” which dealt with these vote protection issues. I have argued that voter fraud is a serious issue and that voter ID matters. It is good to see that the state is willing to grapple with this problem.

Can A School Transform A Community?

Posted on by James V. Shuls

One criticism I often hear when I talk about holding schools accountable and empowering parents is that schools can do little when they are facing obstacles such as student poverty and parents who are not involved. These critics suggest that attempts to grade schools or evaluate teachers somehow denigrate the teaching profession and unfairly point fingers at educators for poor student achievement. In short, it is a poverty and parenting problem. This refrain sounds a bit like James Carville: “It’s the [parents], stupid.”

I completely agree that poverty and family life have a tremendous impact on a student’s success in the classroom, but this does not mean that a school cannot improve a child’s circumstances. Across the country, and even here in our state, we are seeing examples of schools that are changing lives in spite of overwhelming obstacles.

IFF, a nonprofit that helps many charter schools in Saint Louis acquire facilities, recently released this video on KIPP Inspire Academy (KIA).

IFF- KIPP Inspire Academy from IFF CDFI on Vimeo.

IFF argues that KIA is having a positive impact, not just on kids, but on the community. In the video, Saint Louis Mayor Francis Slay says that he is seeing the benefits of KIA spilling over into the Fox Park neighborhood.

KIA certainly has a long way to go to reach the level of achievement of some Saint Louis County schools, but they are making great strides. Their success illustrates that we should not downplay the impact a great school or a great teacher can have. In fact, rather than denigrate them, evaluating teachers and schools based on their ability to improve student achievement recognizes their important role in protecting the future of this country.

We cannot put education reform on hold and wait to fix the issues of poverty and society, issues that have flummoxed mankind for literally thousands of years. Instead of waiting, we need to recognize schools that are making a difference and increase quality options for parents.

Here We Go Again . . . Raising The Minimum Wage

Posted on by Michael Rathbone

President Barack Obama delivered his State of the Union address last night and in it, he called for raising the federal minimum wage to $9 an hour. “This single step would raise the incomes of millions of working families,” he said.

This an appealing sentiment, but Prof. David Neumark’s 2012 study for the Show-Me Institute, “Should Missouri Raise Its Minimum Wage?” found that “research for the United States on state minimum wage increases generally fails to find evidence that minimum wages help the poor.” This is because the minimum wage targets low-wage workers and not low-wage families.

In 2008, 12.7 percent of all workers earning the federal minimum wage ($7.25) were in poor families, while 44.6 percent of workers earning less than $7.25 were in families that earned more than three times the poverty line. In their book “Myth and Measurement: The New Economics of the Minimum Wage,” authors David Card and Alan B. Krueger admit that the minimum wage is a “blunt instrument” for reducing poverty.

Not only would raising the minimum wage be ineffective in helping poor families, it would also mean that many businesses will hire fewer workers because of increased labor costs.

On the surface, increasing the minimum wage is an attractive idea. However, doing so does not help those who need it. The market should set wages, not the government.

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