David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program. In this appearance, Stokes and the host discuss topics such as whether the Richmond Heights TIF is gone for good, the economic impact of sports tourism to Columbia, MO, Governor Nixon’s veto of the recent legislation that would have changed the way car sales are taxed, and a rundown of some of the issues on the November ballot.
As the Chicago teacher’s strike carries into its second week, many interesting facts are coming to light. We know the average Chicago public school teacher earns more than $71,000. What makes this figure interesting is that on average, Chicago Public School teachers only scored a 19 on the ACT. That is lower than the national average of 21.1 and the Illinois average of 20.9 (see here). The question is not why are teachers earning so much, but why are we attracting so many below average individuals in terms of academic aptitude into the classroom and so few high-performing ones?
Like Chicago, the difficulty of attracting high-quality individuals into the classroom is a problem we face here in Missouri. Teachers score lower than average on a number of standardized tests, includingthe SAT, the GRE, and the Armed Forces Qualification Test (see here). A study using Missouri data found that 20 percent of teachers scored a 19 or lower on the ACT and 69.6 percent scored a 24 or lower.
There are number of issues that perpetuate this problem of below average individuals entering the classroom. For starters, schools seemingly do a poor job of seeking out high-performing individuals.
In a recent study I co-authored for the Office for Education Policy at the University of Arkansas, we examined the application documents of 50 randomly selected Arkansas school districts. What we found was pretty alarming. More schools asked teachers what high school they attended (67 percent) than how they did on the teacher licensure exams (13 percent). Approximately half asked for the applicant’s GPA and none asked for ACT or SAT scores. Certainly scoring higher on a test does not necessarily make you a better teacher, but there is ample evidence to suggest higher-scoring individuals are higher-performing teachers.
Even if schools did request academic information from applicants, they would have little leverage to attract high-performing individuals. The single-salary schedule, which is in place in almost all public schools in Missouri, does not allow administrators to pay individuals more for their aptitude or their potential for being a great teacher. In essence, we get below-average teachers because we treat all the above-average ones like they are . . . average.
In the tenth installment of the Show-Me Speaker Series, American Enterprise Institute President Arthur Brooks spoke to an enthusiastic crowd on the topic of liberty and free markets.
Essential to the message Brooks conveyed is the idea that proponents of free markets should focus less on cold data such as tax rates and more on individual stories of human flourishing brought about by reduced barriers to trade and robust property rights.
This event was held at and co-sponsored by the Saint Louis University John Cook School of Business.
Kansas, it seems, is not the only state intent on taking it to Missouri regarding tax cuts. Now Nebraska is looking to get in on the act. After already cutting taxes this year, Nebraska Gov. Dave Heineman is mulling various options to dramatically overhaul Nebraska’s tax code. One option “on the table” is eliminating the state’s personal income tax, which, if implemented, would make Nebraska and Tennessee our two neighboring states without an income tax.
So this is the situation Missouri faces. Kansas has dramatically cut its income taxes, including completely eliminating taxes on pass-through entities such as LLCs and sole-proprietorships. Tennessee has no income tax except on interest and dividends. The governor of Oklahoma is dead set on cutting income taxes even though she failed to get a tax cut through the legislature last session. Yet while many of our neighbors take steps to make their states more economically competitive, Missouri creates another tax credit review commission. (Do not get me wrong, I hope the commission succeeds in reducing our reliance on tax credits. But after the lack of any progress from the prior commission, I want to see actual action before I heap praise on it.)
If the biggest economic development item to get out of either house of the Missouri General Assembly is the Angel Investment Incentive Tax Credit then we are really in a sad state. We need to go bigger and stop relying on government economic planning. Yes, tax credits are government economic planning no matter what spin you try to put on them. My colleague Patrick Ishmael and I have proposed eliminating the state’s corporate income tax. The Show-Me Institute also has conducted research on phasing out the state’s income tax entirely.
This is a difficult time for Missouri. Our neighbors are racing ahead and putting us at a severe disadvantage. But there is still time to make changes. Missouri can compete with other states economically. It just takes the will to do so.
The Jackson County Circuit Court issued a final judgment in the school transfer case that seems to have satisfied no one, not even the judge. In his opinion, Justice Brent Powell wrote, “This Court’s ruling will undoubtedly be appealed” and “… could very likely be reversed and/or significantly altered.” Thus, the case and the problem remain unresolved, and neither taxpayers nor students will benefit from the prolonged legal battle. The courts cannot play Solomon here; we need common sense solutions from legislators that will give students in failing districts more options.
At issue in the case is Missouri statute 167.131, which permits students in unaccredited districts to attend schools in a nearby accredited district. The court ruled the law violated the Hancock Amendment because it created an unfunded mandate for some of the schools that would receive students from the unaccredited Kansas City School District. The problem with the statute is essentially twofold. Receiving schools have no say in how many students they will accept into their district and the amount of money rendered to them is inadequate, or so they say.
The court’s decision was based, in part, on the “per pupil cost” of maintaining grade level groupings, as calculated by the accredited school districts. Justice Powell called the estimates “very credible and reliable,” but as an education policy analyst and former public school teacher, I would dispute that assertion. Because school districts spend whatever money they are given, we know how much schools spend, not how much it actually costs to educate students. Ironically, each school district reported it would cost more than they spent in operating expenses last year.
Nevertheless, the Kansas City School District should have enough money to cover the high cost that the districts report. Last year, Kansas City spent approximately $14,500 per pupil, more than almost all of the costs that the accredited districts reported. Part of the problem is Kansas City does not want to pay other school districts what they spend on their students.
The solution is simple. Allow money, both local and state, to follow the child to his or her school. The tuition paid to receiving districts should equal the lesser of the two districts’ per pupil expenditure for the prior year. These figures can be readily calculated from prior year expense data. Furthermore, this system prevents any receiving district from extracting more money from an unaccredited district than would otherwise be spent on that student.
Money, however, is only part of the problem. Neighboring school districts do not want a mass exodus of Kansas City students into their school districts without any control over the number of students. That would force them to hire more teachers and construct additional buildings. Again, the solution is simple. Allow accredited school districts to determine how many available seats they have at each of their schools. Then, rather than forcing them to accept all students, let them hold lotteries to fill these slots.
Because schools have some fixed costs, including facilities and staff, it benefits them to not have empty seats. If a class has 19 students and could hold one more, the district would benefit from the additional dollars a transfer student brings, and crowding would not be an issue. For smart districts, the school transfer law could be a windfall. State and local elected officials must stop kicking the can down the road and face this problem. The solutions provided here do not completely fix the system, but they move Missouri in the right direction by allowing local schools to have local control and increasing educational opportunities for students who desperately need them.
James V. Shuls is the education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.
Click below for live video of the Show-Me Institute’s Speaker Series on Economic Policy, which will begin at about 6:00 p.m. CDT. Tonight’s speaker is Arthur C. Brooks, president of the American Enterprise Institute. Until January 1, 2009, Mr. Brooks was the Louis A. Bantle Professor of Business and Government Policy at Syracuse University. Mr. Brooks is the author of a new book, The Road to Freedom: How to Win the Fight for Free Enterprise, published on May 8, 2012.
Last week, a study presented to the Columbia City Council explored the impact of Missouri’s historic preservation tax credit on the city. The report, funded by the Historic Preservation Commission, found that “historic preservation” had accounted for almost 5,000 Columbia jobs and more than $1 billion of “economic activity” over the last decade, with almost $100 million attributable to the historic preservation tax credit. Like any report of this kind, it paid the requisite homage to the dark art of “economic multipliers,” which we have criticized in the past.
In stark contrast to the study’s claims, official state figures actually show that historic preservation credits return 23 cents for each dollar the state spends. These tax dollars are often used on dubious projects of little or no public use, such as private mansions and at least one country club.
The main point I would like to highlight, however, is that the Columbia study was written explicitly to pump an agenda, a point that may not be immediately evident if casual newspaper readers just saw the headlines. The study’s authors were (refreshingly) transparent about this in the text of the study itself. Goal one on the study’s first page explicitly says that the report “will promote the economic development benefits of historic preservation to an expanded audience.” Goal two makes the study’s goals even clearer (emphasis mine): “This report will encourage tax credit eligible projects to homeowners and developers by promoting visible local examples.” And the “Vision Impact” outlined at the bottom of that page is clear that the objective sought is to preserve “historic areas” through “education, enforcement, and incentives” (emphasis mine) — namely, the HPTC. This is more about marketing than good policy, and should be understood as such.
We at the Show-Me Institute have seen this sort of report before, of course. Back when Aerotropolis was still a thing, I wrote about the National Center for Beef Excellence‘s “report” on whether it was “feasible” to “ship meat to China.” One would think that a state-funded group with “beef” in the name would make it clear that American beef was actually, er, banned in China. Alas, the NCBE attempted to pass off the study as objective when its only goal was to pump Aerotropolis.
That is, in the end, what is going on in Columbia, albeit with laudable transparency. There should be a vigorous debate about the merits of tax credits generally and particularly the historic preservation tax credit, but this report is only one especially biased side of that conversation. There should be no misconceptions about that fact.
Stuck. That seems to be the theme of education in Missouri (see here and here). We are stuck in the middle in terms of academic achievement and most families are stuck in their local public schools. To get Missouri moving in the right direction, we must start by freeing families to choose their child’s school.
Bold Solution No. 2:
Provide parents with options so they can choose the school and type of education that best meets their family’s needs.
A growing body of research suggests school choice has many potential benefits for students.
For example, the Institute for Education Science’s study of the DC Opportunity Scholarship Program in Washington, D.C., noted that students who attended a private school with a voucher were significantly more likely to graduate from high school.
A study released in August showed that “using a voucher to attend a private school increased the overall college enrollment rate among African Americans by 24%.”
Another study released last month tested the impact of school choice on intrinsic motivation and academic outcomes. The researchers found that winning a lottery for a choice school significantly lowered truancy rates even before the students actually enter the choice school. From the study: “The effects are largest for male students entering high school, whose truancy rates decline by 21% as a result of winning the lottery.” The study also found “substantial test score gains from attending a charter school.”
Each of the studies used a lottery to determine if the student would earn a voucher or be able to attend a charter school. In the real world, winning the lottery leads to making you work less, but in school choice, it appears to (thankfully) have the opposite effect for inner city schoolchildren.
By empowering parents to choose their child’s school, Missouri could dramatically improve educational options for all students. Better yet, no child would be stuck in a school without options.
(Here is a link to Bold Solution No. 1.)
Officials in the city of Chesterfield recently approved an ordinance that will allow an overnight surgery center to operate on property at North Outer 40 Road and Boone’s Crossing. At first glance, this seems like a simple business response to a market demand.
There is just one problem. Area hospital leaders argue that the overnight surgery center (the potential site for Regeneration Orthopedics) is a hospital under Missouri law and should follow specific licensing, staffing, and safety standards.
This is a complicated issue and I am not an expert. Like most people, I tend to believe that the area’s leading hospitals are genuinely concerned about patients. But making an overnight surgery center, with approximately a half dozen overnight patients, follow the same regulations as BJC HealthCare, SSM Health Care, Mercy, and St. Luke’s is about business, not patients.
I understand that hospitals face complicated regulations, moreso than many other industries, but we must remember that hospitals are businesses. And as businesses, it is in their best interests to limit the entry of other firms into their field. So, when a business claims a new or emerging competitor has an unfair advantage, we must question their allegations and motives. I recognize that Regeneration Orthopedics is in a unique situation, but just because it provides similar procedures as hospitals does not mean it is a hospital.
What is next? Are we going to make test preparation or tutoring centers follow the same regulations as public schools or universities? I mean, they also “skim off” paying individuals and “leave the poor” ones. Like most licensing debates, the Chesterfield “hospital” debate is best left to the free market to decide instead of the government.
