Real School Shopping

Posted on by James V. Shuls

August has arrived and that means many families will begin their back-to-school shopping. Typically, this means buying the right folders, the best backpack, and the coolest clothes. But in many places, school shopping is taking on a whole new meaning.

For a growing number of families across the country, school shopping means having the freedom to choose one school over another. It means looking at different schools and selecting the one that is the best fit for the child.

Increasingly, charter schools, voucher programs, and tuition tax credit scholarships are making it possible for families to have a choice in where to send their children to school. Nationwide in 2011, approximately 2 million students attended a school of choice through a national- or state-run program. According to the Center for Education Reform, the number of students attending a choice school was up more than 400,000 from the previous year. The large increase in school choice programs led the Wall Street Journal to call 2011 the “year of school choice.” Still, less than 4 percent of all students in the United States were able to utilize a school choice program.

Missourians currently do not have access to private schools via a voucher or tuition tax credit scholarship program; until recently, charter schools were restricted to Saint Louis and Kansas City. Thus, choice was limited to few students, with about half of a percent attending a charter school, according to data from the Missouri Department of Elementary and Secondary Education.

Rigorous evaluations have found positive benefits in terms of academic achievement and graduation rates from choice schools. These programs also enable parents to shift from recipients of educational services to consumers of those services because they can shop for their child’s school at a host of educational providers. Becoming a responsible shopper of schools may not be an easy transition for some families, a fact brought to light with the closing of the Imagine Charter School network. For some, the closing of the Imagine schools has tarnished the reputation of school choice. Indeed, the low performance and poor management of the Imagine schools was unfortunate, especially because more than 1,000 students will be displaced as a result of the closure. It is more unfortunate, however, that thousands of other students across the state are trapped without options in failing schools that will never close.

The failure of Imagine is not a failure of school choice. Rather, what happened with Imagine illustrates the importance of making informed decisions. It could easily be argued that finding the right school is every bit as difficult as buying a home or a new car. These types of decisions require planning and research, where consumers must judge between many options. In their chapter of The Demand Side of Education, school choice experts Thomas Stewart and Patrick Wolf note the importance of being wise consumers when choosing a school. Though the transition may be difficult at first, even the most disadvantaged parents can adapt into savvy shoppers. Stewart and Wolf note: “… the added responsibility of choosing a child’s school from among many distinct options appears to inspire some parents to become more active consumers and involved citizens.”

Missourians should have the ability to enter the education market to choose the best school for their child from a number of high-quality schools. As Nobel-winning economist Milton Friedman once said, “We allow the market, consumer choice and competition to work in nearly every industry except the one that matters most: education.” If charter schools were expanded throughout the state and students were able to use a voucher to attend the private school of their choice, families in Missouri would finally be able to enter the market to do some real school shopping.

James V. Shuls is an education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Missouri’s Taxpayers Lobbying To Pay More Taxes?

Posted on by Mary Hopkins

As a resident of University City, I was interested to learn that the city spent $26,000 to hire a lobbyist in Washington, D.C. Through an internship at the Show-Me Institute this summer, I researched the extent to which this practice is used in Missouri; the results were eye-opening, to say the least.

The practice is called intergovernmental lobbying, or taxpayer-funded lobbying. Local government entities like cities, counties, and fire districts hire lobbyists to represent them in Congress and the state legislature. Those lobbyists then vie for a bigger piece of the government’s pie. As the pie grows, however, so do the taxes needed to pay for it.

In the past 18 months, 53 local entities spent more than $2.6 million on contracts with outside lobbyists. This is just a small sample of the hundreds of publicly funded local institutions that can contract lobbyists. This number does not include the lobbyist’s expenses (such as hotel rooms and dinners out with lawmakers) that are paid for with taxpayer money. It also does not include dues paid to lobbying associations, such as the Missouri Municipal League or Association of Police Chiefs, which receive taxpayer funds from member cities or police districts. These associations have been known to lobby for legislation that would close various public records, such as property tax records or police investigation records. So, in that case, Missourians are paying more to know less.

Clearly, this is a problem. So what can Missourians do about it?

In 2010, Missouri Rep. Shane Schoeller (R-Willard) proposed House Bill 1872 that would have banned lobbyists who receive taxpayer money from “advocating” a position while educating lawmakers and monitoring the legislative session. While the intentions were good, the ban would have been difficult to enforce because lobbyists are constantly doing both. The legislation, predictably, stalled in committee.

Because bans have been relatively unsuccessful here and in other states, perhaps a better start would be increasing transparency when it comes to publicly funded lobbying in the state. The Missouri Ethics Commission (MEC) is charged with monitoring and reporting lobbying activity in the state. However, the data available are incomplete. It tells Missourians little about the entities that hire lobbyists, does not include salaries that those entities pay, and does not make a distinction between private and public employers of lobbyists.

The next option is to go to the local government’s website. This can prove fruitless as well. For example, there are 114 counties in Missouri: 54 of them have websites. None of the 54 provides lobbying information online. In reality, if Missourians want to know exactly how much taxpayer money is going to lobbyists, they would have to send hundreds of Sunshine Law requests, some of which would inevitably go unanswered or remain incomplete. The Show-Me Institute collected its information on the subject in this manner and, speaking from personal experience, the process is far from efficient.

The simple step of requiring the MEC or individual public entity to disclose information about lobbying expenses online would help address the problem in a few ways. First, it would improve Missouri’s overall transparency, which is clouded by minimal lobbying disclosure requirements. Second, it would put the power back in the taxpayers’ hands; no more closed-door deals and secret contracts. Everything would be out in the open. Taxpayers would have access to the information they need to make a decision about whether they support contracting with an outside lobbyist or not.

The issue of intergovernmental lobbying cannot begin to be addressed until the taxpayers are made aware of how their tax dollars are being spent. If local governments continue to keep citizens in the dark about lobbying expenses, the state government will only continue to expand. It is a vicious cycle, with lobbyists advocating increased spending year after year all over the state and no one stopping to think who is footing the bill. Spoiler alert: we are. Taxpayers need to embrace Missouri’s motto when dealing with local governments and say “Show me!” regarding lobbying expenses.

Mary Kate Hopkins is an intern at the Show-Me Institute, which promotes market solutions for Missouri public policy.

A Better Way To Fix The Dome

Posted on by Michael Rathbone

While the St. Louis Convention and Visitors Commission (CVC) and the St. Louis Rams continue to fight about how much the general public is going to have to pay for renovations to the Edward Jones Dome, people seem to forget that not all sports stadiums are financed with public dollars.

The new MetLife stadium, which the New York Giants and the New York Jets co-own, was 100 percent privately financed. If two teams can get together and finance the construction of a $1.6 billion stadium, then other teams can afford to foot the bill for their wanted upgrades.

I have not been shy about criticizing public financing of sports stadiums. The academic literature is pretty consistent in its findings that public financing of sports stadiums makes no economic sense. Yet, when it comes to these fights about upgrading sports stadiums, the private financing option is rarely, if ever, seriously discussed.

The public does not have to shell out cash for sports stadiums. There is another way. It was disconcerting that the CVC originally proposed a renovation plan that involved public dollars. Close to $60 million if you believe some of the estimates. The CVC’s new plan does not indicate it will be any cheaper for taxpayers. In fact, it is more likely that the opposite is the case. Considering the example set in New York, why should the public spend a dime?

Columbia’s Mayor Provides Flimsy Justification For Airport Expansion

Posted on by Kacie Barnes (Galbraith)

City officials in Columbia, Mo., are considering increases in hotel taxes and sales taxes to fund a costly $17 million airport terminal renovation. This project is part of Columbia Mayor Bob McDavid’s “40 in 2020” initiative to host 40 percent of mid-Missouri airline travel by 2020. Despite the fact that airport expansion would be necessary to accommodate a significant increase in airline travel, simply wanting to expand is not an economically sound reason to do so.

McDavid says the renovation is needed urgently — it is a “crisis.” Let me tell you why this is not a crisis. (At all. Not even a mini-crisis. Or an omigod they cancelled ‘Jersey Shore’ crisis.)

As of Sept. 5, 2012, Columbia Regional Airport has a daily flight schedule that on average includes three outbound commercial flights at different times throughout the day. Starting Nov. 20, 2012, there will be two additional outgoing flights added per week, meaning one more flight on Tuesdays, and one on Saturdays. These two flights to Orlando, Fla., are the reason for the so-called crisis to build a new terminal, according to the mayor.

Now, I am not an aviation expert, nor am I proclaiming that the airport is not in need of renovation or repair. Yet, I can easily disagree with Mayor McDavid when he cites Mizzou’s Southeastern Conference (SEC) membership as another reason for airport expansion, because Mizzou athletics became part of the SEC this year.

He says that they do not “want to be known as the SEC school that has black-and-gold double wides welcoming you to Columbia.”

Does he think that every other SEC school’s city even has a commercial airport? (They do not. Tuscaloosa, Ala., for example, attempted to expand its airport and restore commercial service in the early 2000s, but discontinued all passenger service operations shortly thereafter.) Does being a member of the SEC count as a reason to spend $17 million on an airport? (My gut tells me no, but Texas A&M Coach Kevin Sumlin says “the SEC took over America,” so I assume he would say yes.)

You know, it is extremely important to keep up with those other SEC cities. I do not know if Columbia could survive being the only SEC city without a brand new performing arts center, a top poultry science program, or a national top 40 rodeo facility. Next time, I would like to see city officials provide researched and well thought out justifications for a multi-million dollar project — like studies on demand for air travel to and from Columbia, for example. Is that so much to ask?

It’s Official: Payday Lending, Minimum Wage Initiatives Off November Ballot

Posted on by Patrick Ishmael

Supporters of two proposed Missouri ballot measures have thrown in the towel weeks after the Secretary of State’s office announced the initiatives had come up short on signatures. The Kansas City Star reports that the two groups pushing the measures, Missourians for Responsible Lending and Give Missourians a Raise, have decided to drop their lawsuits challenging the Secretary of State’s findings. While it is clear the issues likely are not dead in the state, it appears they are going into hibernation. The Show-Me Institute has written a great deal about both payday lending and the minimum wage, and we will have an extended examination of the latter in a paper to be published this month.

At their core, the solutions so often pushed ahead for both issues — like capping loan interest rates and raising the wage floor — share a common problem of policy. First, payday lending exists in large part because its customers cannot get credit anyplace else; payday loans are very, very expensive, but if the alternative is having your gas or electric flipped off for lack of money, it is an option many of the working poor would want to remain available. Cap payday interest rates, which are basically set to account for the risk of default, and you will have fewer payday loans, which leads to other, potentially more difficult, problems for the lenders’ former customers. One way or another, those bills have to get paid. Payday loans serve that need and risk, for a price.

Raising the minimum wage presents a similar problem. By raising the floor for what workers must get paid, employers are incentivized to hire only the most skilled labor. In fact, studies show that raising the minimum wage harms the very people it is supposed to help — those on the bottom rung of the pay scale. As David Neumark wrote for the Show-Me Institute in 2006:

When a minimum wage goes up, the higher wages don’t always go to the workers who need them most. Minimum wage laws create winners and losers — the winners see their wages and incomes rise, while the losers are unable to find jobs or to work as many hours as they would like. If the winners were mostly unskilled workers in poor families, a minimum wage increase might be worthwhile. Unfortunately, this doesn’t seem to be the case.

Put more succinctly, raising the minimum wage makes it more difficult for low-skilled workers to find employment. While raising the wage sounds on the surface like compassion, in practice, it oftentimes means anything but.

These are serious issues that deserve serious debate from both sides of the issue. For now anyway, it appears public votes will have to wait.

Stuck In The Middle: Missouri’s Academic Gains

Posted on by James V. Shuls

Last month, a few notable education scholars released a study titled Achievement Growth: International and U.S. State Trends in Student Performance. The study uses data from the National Assessment of Educational Progress (NAEP), and three tests used for international comparisons. These data allow them to compare the United States growth in terms of academic achievement with 48 other developed or developing countries. They also compared states to one another. Essentially, they are estimating how much more students in the same grade know now than they did 14 years earlier.

From 1995 to 2009, they estimate students in the United States gained “just short of the equivalent of one additional year’s worth of learning among students in their middle years of schooling.” While these gains may appear large, when they are “compared to gains made by students in other countries, the progress gains within the United States are shown to be middling, not stellar.” In all, 24 countries ranked higher than the U.S. in terms of growth and 24 ranked lower.

Missouri ranked 27th in terms of academic growth among the 41 states for which data were available. Thus, Missouri is a middling state in the middle of a middling country.

Some might claim that Missouri is faltering because we underfund education. These authors tested the funding theory and they claim “the data offer precious little support” that achievement growth can be attributed to money.

So what accounts for some states growing more than others? A variety of factors may have contributed to each state’s academic growth, including low states catching up and general economic growth (as we know, Missouri’s economic growth has not been stellar). There is also some suggestive evidence that states like Florida and North Carolina, which have enacted numerous education reforms, are seeing more growth than states that resist education reform.

One thing is certain: we cannot get out of the middle with our current strategies. We need to try something new.

On Commissions And The Fountainheads Of Reform

Posted on by Patrick Ishmael

One of the first books I read in my introduction to the liberty movement was Ayn Rand’s The Fountainhead, the tale of an unconventional architect named Howard Roark and his commitment to designing buildings consistent with his principles. About midway through the book, Roark meets with the board member of a hotel who is considering hiring Roark, and their dialogue (located, for your consumption, at this link) pretty well summarizes my general take on what “committees” and “commissions” typically do.

In short? Usually not much.

I bring this point up as a prelude to news from yesterday that the governor of Missouri has “revived” the tax credit review commission he created in 2010, a commission which included elected officials and actually offered a pretty good report on reforming tax credits in the state. Tax credits drain hundreds of millions of dollars from the budget every year, often to the benefit of questionable “economic development” projects. (See: private homes and a country club golf course.)

Of course, since that first report was produced, there has not been tax credit reform. In fact, just months after it was published, the Missouri Legislature almost passed a massive new tax credit in the Aerotropolis bill, which we vehemently criticized pretty much from start to finish.

Attempts at tax credit reform should be applauded, but what exactly will be different about the commission this time around that will make it consequential in a way it was not before? We at the Show-Me Institute have written extensively about the first round of commission hearings and findings and the wastefulness of the state’s development tax credit system. We have offered solutions, like eliminating many of these failing credits and using the savings to completely eliminate the corporate income tax. Tax credits in Missouri are a serious problem. The first commission agreed.

Is the second commission going to . . . agree again? How does that move the reform ball forward? On the national level, you are not going to see a sequel to the 9/11 Commission or the Simpson-Bowles Debt Commission, probably ever, because a “second commission” basically implies that the first commissions did not get its work done. To be clear, the first Tax Credit Review Commission delivered its product with clear recommendations. Our elected officials have not adopted them. The problem is that our political class is basically happy to pay lip service to tax credit reform, but they refuse to expend any political capital on actually reforming tax credits, whether by adopting the substance of a commission report or by reforming tax credits in some other meaningful way.

What I want to see is leadership on the issue from our elected officials, not a cycle of committee meetings where nothing gets done. To be clear, when given the opportunity, I will vigorously fight for genuine reforms before the reconstituted commission. But only the political class can make those reforms a reality — can literally change the law — and I am not convinced at this point that a new commission is going to save taxpayers more money than it wastes. May I be proven resoundingly wrong.

The Tax Credit Problem Is Still A Problem

Posted on by Michael Rathbone

The state issued more than $400 million in economic development tax credits last year, as it did the previous year and the year before that. What did all these tax credit issuances get us?

The number of jobs shrunk and we have an economy that barely grew last year. Considering the other issues that face these tax credit programs, does anybody really think that the taxpayers are getting a good bang for their bucks?

Economic development tax credits interfere with the markets by trying to determine what the future of Missouri’s economy will look like. Monkeys throwing darts have a better chance of determining the future economic needs of Missouri than bureaucrats in Jefferson City.

Meanwhile, Kansas just took a chainsaw to its personal income tax. Starting in January, 191,000 small Kansas businesses will not be paying taxes on their income. How is Missouri going to stop the avalanche of small businesses (especially those in Kansas City) from stampeding across State Line Road, with more tax credits?

The state can carry on with the same game they have been playing (and losing) for years. Or it can try something new. Patrick Ishmael and I continue to express our view that eliminating the state’s corporate income tax would help the state catch up. Eliminating the state’s corporate income tax would benefit all Missouri corporations, not just those who happen to be politically favored. It would give Missouri a leg up on Kansas (which still taxes its C-corporations) and coupled with a phase-out of some state tax credits, would not harm state revenue.

Missouri faces a critical choice. It will either keep playing the development game or it will try something new. Ditching the corporate income tax is not the cure-all, but it would be a positive first step.

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging