Will Missouri Impose One Mandate As It Fights Another?

Posted on by Patrick Ishmael

Regarding health care, Missouri’s legislature is getting it right on at least one front. On the one hand, it is working to close legal loopholes that could allow a health insurance exchange to be implemented unilaterally in the state capitol, either by administrative or gubernatorial fiat. There are lots of reasons to oppose implementing an Obamacare exchange in the state, but there should be little dispute that if it is going to be implemented, it needs to go through the proper legislative channels.

What should raise concerns, however, is whether state legislation that mandates optometrist eye exams for incoming kindergartners is right for Missouri. At least one state commission does not think so, which does not even begin to address the philosophical consistency question implicit in the move. The St. Louis Post-Dispatch reports (emphasis mine):

Calling the law ineffective and a financial burden on families, a state commission recommended that legislators drop the exam and instead beef up vision screenings by school nurses. The state’s eye physicians and surgeons embraced that approach.

Optometrists, however, are mounting a big push to get the Legislature to renew the exam requirement, which is slated to expire this June. The Missouri Optometric Association has hired 11 lobbyists. More important, they have a key ally: House Speaker Steve Tilley, an optometrist.

Tilley, R-Perryville, put the optometrists’ bill on a fast track — it is headed to the House floor after a packed committee hearing last week — while he bottled up the alternative, the school nurse bill, by not referring it to a committee.

Caught in the political crossfire are families who may have to shell out $100 for a child’s eye exam, because private medical insurance generally won’t cover it.

The chair of the Children’s Vision Commission, Oscar Cruz, is not impressed about the merits of the current law. “It’s a political process, unfortunately,” he said. And then there is the fiscal note.

The fiscal note on the optometrists’ bill suggests the state could use a $99,000 appropriation earmarked for blindness screening and treatment to pay for exams for about 6,637 uninsured kindergartners and first-graders in districts without kindergarten.

But that would average out to only $15 an exam. Mickey Wilson, director of the Legislature’s Oversight Division, said the analysis assumes that some optometrists would do the tests for free, or at a reduced cost.

That sounds like an awfully big assumption, and it does not even answer concerns for insured children whose plans would not cover the exams, the cost of which would fall to Missouri’s parents. The commission notes that outfitting school nurses to perform eye care screenings makes more sense.

Cruz said screenings by school nurses catch about 95 to 97 percent of eye problems that can damage vision on a long-term basis. Forcing 65,000 kindergartners a year to get comprehensive eye exams, he said, is “an incredible waste of resources.”

Only two other states — Kentucky and Illinois — have similar eye exam mandates. Is imposing an onerous mandate on Missouri families really the right course, especially as the legislature (very publicly) fights the onerous Obamacare mandate? The inconsistency should cause some pause.

Missouri: Where the Women Are Strong, the Men Are Good Looking, And Every Teacher is Above Average?

Posted on by Audrey Spalding

Last week, Ben Barnes, a Show-Me Institute intern, wrote about the teacher tenure reform bill that Missouri legislators are considering. Reforming teacher tenure may seem like an abstract concept, but the consequences of our current law are very real.

Eric Hanushek, of Stanford University, found that a good teacher can help a student learn one and a half years of material during a single academic year while a bad teacher might only be able to help a student learn half a year’s worth of material. In other words, a good teacher can help a student achieve three times as much educational growth as a bad teacher. A push for teacher tenure reform is not just about holding teachers accountable, it is about creating a way for school districts to get rid of ineffective teachers in order to help students learn more and from better teachers.

It appears that teaching is one of the most secure jobs in the state of Missouri. According to national data, few Missouri teachers are terminated in a given year.

But, I am curious about specific school districts, not just an estimated average across numerous schools. For school districts throughout the state, what number of teachers were terminated during the past 10 years? Are most dismissed teachers new to the profession (and have not yet achieved tenure), with very few being dismissed after achieving tenure? We are still doing research on this issue, but the preliminary data looks like teaching has an extraordinary level of job security.

Consider the following:

  • In the past 10 years, the Cape Girardeau School District, which employs approximately 350 teachers, has terminated just two tenured teachers.

  • During the same time, the Parkway School District, which employs more than 1,200 teachers, has terminated five.

  • The Springfield School District, which has more than 1,600 teachers, has terminated fewer than 10 teachers in the past five years.

  • The Van Buren School District, in its response to a Sunshine Law request, noted that “no teachers …were asked to leave, were terminated, or were fired by the district” during the past 10 years.

  • The Shelby County R-IV School District has not terminated any teachers during the past 10 years.

  • The last time the Gilman City R-IV School District terminated any teachers was during the 2002-03 school year. That year, two teachers were terminated.

Perhaps Missouri is inundated with high-quality teachers to the point that, over a 10-year period, some school districts have termination rates of as little as 0.4 percent. But, the case may be that poor teachers continue to teach at school districts that cannot (or will not) terminate them for performance reasons. And this means that some Missouri students will continue to receive a low-quality education.

Instead of keeping on the best and the worst teachers, it is time let school districts encourage the worst teachers to find new jobs, while rewarding the best teachers with pay boosts. Missouri House Bill 1526 is certainly a step in the right direction.

Is Franklin County Violating The State’s Blaine Amendment?

Posted on by Brennan Connor

A recent article on emissourian.com questioned whether a Franklin County program violates the Missouri Constitution.

Franklin County has and continues to violate the state’s Constitution by allocating hundreds of thousands of taxpayer dollars annually to fund counseling and antibullying programs in area private schools.

That’s according to Tony Rothert, legal director for the American Civil Liberties Union of Eastern Missouri.

The Blaine Amendment of the Missouri Constitution prohibits the use of public funds to support or sustain any school controlled by any religious creed, church, or sectarian denomination. The Missouri Supreme Court previously struck down statutes requiring that bus services and textbooks be provided to private school students. 

Annie Schulte, executive director of the Franklin County Children and Families Community Resource Board (FCCRB), raised a number of arguments detailing why the program does not violate the Missouri Constitution; unfortunately, none of them are very persuasive. The use of public funds to support a sectarian school is unconstitutional, whether the funds are paid directly to the school or indirectly support the school. The Franklin County program is also not analogous to Title I. Title I grants bypass the state and local agencies and go directly to independent contractors. Because no state or local agency ever controls the funds, they are not “public funds.” The FCCRB, on the other hand, is a local agency and does control the funds. 

The fact that the Franklin County program seemingly is unconstitutional is an illustration of how the Blaine Amendment currently stands as an obstacle to the freedom of school choice for students in failing districts, such as Saint Louis and Kansas City. As University of Missouri-Columbia Professor Michael Podgursky argued, the rigidity of the Blaine Amendment is keeping students stuck in unaccredited schools following the Missouri Supreme Court’s Turner decision. While the Supreme Court of the United States held that a voucher program for students to attend a private sectarian school does not violate the federal constitution, it is clear that a similar program would be struck down in Missouri. If the state cannot provide private school students with books, buses, and (probably) counseling services, a voucher program stands no chance of passing constitutional muster.

It is unfortunate that students at private sectarian schools likely cannot receive counseling services from the Franklin County program, but students who are stuck in unaccredited, failing schools is a much bigger issue. Given accredited public schools’ unwillingness to accept students from failing districts, these students may remain stuck until the Blaine Amendment is repealed.

Dough for the Dome

Posted on by Michael Rathbone

The St. Louis Convention & Visitors Commission (CVC) just released its proposal (estimated price tag: $124 million, with the St. Louis Rams football team paying $64 million) on how it will transform the Edward Jones Dome into a “first-tier” stadium. If it fails to reach an agreement with the St. Louis Rams, the Rams will have the option to break their lease with the city and relocate.

For those who may be wondering what exactly “first-tier” means, the Edward Jones Dome must be in the top 25 percent of all NFL facilities regarding some established criteria, such as: Fan amenities (box suites, club seats, lounges, etc.), technical areas (scoreboards, lighting, sound, etc.), and revenue-generating facilities (shops and concession stands). Considering that stadiums qualifying as top-tier include the newly-built Cowboys Stadium (price tag: $1.2 billion, with the Dallas Cowboys football team paying $875 million) and MetLife Stadium (price tag: $1.6 billion), the Edward Jones Dome has a long way to go to qualify. In fact, according to Patrick Rishe of Webster University, the cost of upgrading the Dome to “first-tier” status would be, at a minimum, $200 million-300 million (the cost of construction for the Edward Jones Dome was $280,000,000 in 1992 dollars). That is significantly more than the estimated $124 million in the CVC’s proposal.

Thus, officials for Saint Louis City, Saint Louis County, and Missouri have a decision on whether to pay up or face the prospect of the Rams leaving Saint Louis. I would urge the city, county, and state to forgo the use of any public money for upgrades to the Dome for several reasons. The first reason is on principle; the Rams are privately-owned and yet want public money for one of their facilities. If the Rams want a first-tier stadium, they should make a first-tier investment (and put a first-rate team on the field).

Second, even if city, county, and state officials wanted to pay for the upgrades, where are they going to get the money? The state is not exactly awash in cash, and the situation in the county is not much better. Both Missouri Gov. Jay Nixon and the state legislature have ruled out tax increases to help close the budget gap and I highly doubt they will go back on that in order to keep the Rams in Saint Louis. The city, county, and state could issue bonds (the state, at least, has a great credit rating), but they are still paying off ($12 million for the state and $6 million each for the city and county every year until 2021) the bonds issued to build the Edward Jones Dome. Does it make sense for the city, county, and/or state to go further into debt to keep the Rams in Saint Louis for another 10 years? Besides, when Kansas City and Jackson County helped fund renovations to Arrowhead Stadium, Jackson County struggled to keep up with the debt payments. Why put Saint Louis City and/or Saint Louis County in that kind of risky position?

Finally, even if the city, state, and/or county had the money, the use of public funds for sports stadiums does not generate much economic activity. According to a St. Louis Federal Reserve publication, the weight of economic evidence shows that the taxpayers do not get much of a return on their investment. In fact, the Federal Reserve study referred to another study:

Baade found that of the 30 metro areas where the stadium or arena was built or refurbished in the previous 10 years, only three areas showed a significant relationship between the presence of a stadium and real per-capita personal income growth. And in all three cases—St. Louis, San Francisco/Oakland and Washington, D.C.—the relationship was negative.

Considering these reasons, what justification can officials for the city, county, and/or state give for further expenditures on behalf of the Edward Jones Dome?

Retired Missouri Supreme Court Justice: Decline Tax Credit Redemptions for a Year (or More?)

Posted on by Patrick Ishmael

There have been numerous suggestions on how to cure Missouri’s budget deficit this year. Last month, the St. Louis Post-Dispatch’s editorial board suggested that one of the best ways to close the gap is for the state to decline to redeem — that is, decline to apply against a taxpayer’s tax burden — tax credits presented to the state. Holders of tax credits would have to wait until the next year, or possibly beyond, to use their certificates. At the time, I was skeptical of the move, mostly because it was not clear that such a decision is, in fact, legal.

But now former Missouri Supreme Court Justice Mike Wolff is lending some credence to the idea, writing in the Post-Dispatch that not only would the move be legal, it would be preferable to cutting other state programs:

If the governor or the Legislature declared a holiday on accepting tax-credit coupons in payment of taxes, the state would not be reneging on its promise to accept tax credit coupons to pay taxes. The state simply would be saying, “wait until next year.”

Should the state pay interest on tax credits that are on holiday for a year (or more, perhaps)? For example, when a taxpayer eventually is allowed to use its $10 million in tax-credit coupons, which the taxpayer bought for the discounted amount of about $9 million, perhaps the state should pay interest because the tax-credit owner has had to wait. Because these tax credit certificates are bought and sold through banks, perhaps the passbook savings account rate should apply. At the current generous rates, that might cost the state 1 percent or less per year.

But what if the taxpayer does not want to spend cash to pay its taxes because it needs the $10 million to rebuild its jet plane’s engines or to refurbish the yacht? Not a big problem, actually, because remember, the tax credits can be sold. But can these $10 million in tax credits be sold for the taxpayer’s original price of $9 million? Well, probably not, there could be a further discount; markets work, even markets for tax credits.

If Justice Wolff’s idea was implemented, it might help Missouri’s budget problem for a year, but it would not solve the underlying problem: tax credit issuances run amok. In fact, declining to redeem tax credits could actually compound budget problems in future years if other reforms are not implemented to reduce the state’s forthcoming and outstanding tax credit liabilities; tax credits that have been authorized or issued but not yet redeemed constitute a multi-billion dollar (that’s “billion” with a “b”) liability that the state will have to pay in coming years. Preventing budget cuts to favored programs — for Justice Wolff, education — does not seem to be a compelling reason to embark solely on his plan. It is almost like trying to get a hamburger today for $1 tomorrow . . . at some point, you have to pay for the hamburger. Tax credits are a recurring problem, the reduction of which could cure other recurring parts of the budget (for example, reducing taxes on all corporations with the savings, rather than picking and choosing winners and losers.)

Keeping all of that in mind, if done in concert with a moratorium on tax credit issuances (ideally including caps, sunsets, and other permanent changes), Justice Wolff’s idea might be workable as part of a larger reform program; over the long haul, such a multi-pronged approach may actually make a real dent in the state’s looming tax credit liabilities, and ultimately save the state money.

Missouri officials cannot just treat the symptoms of the state’s tax credit excesses and defer cuts for later; it must also treat the underlying disease. Trimming tax credits and reducing taxes is a better, forward-thinking solution, and would provide the foundation for a healthier economy and a more stable budget.

Zombie Bill: Aerotropolis Tax Credit Rises Again

Posted on by Patrick Ishmael

Last week, FOX 2 News in Saint Louis reported that the China Hub at Lambert-St. Louis International Airport was essentially dead. The cause? “[T]he big reason seems to be the refusal of the Missouri legislature to approve tax credits for international freight forwarders to operate at Lambert.” Because the original proposal was a half-billion dollar warehouse-laden boondoggle, it is news to me that the $60 million in freight forwarder credits are now “the key.” Show-Me Institute Policy Analyst Audrey Spalding and I have long assumed Aerotropolis would come back in one form or another, and lo and behold, it most certainly has, in the form of . . . freight forwarder tax credits.

We have the same objections as we had last year. If shipping cargo out of Lambert makes economic sense, why do taxpayers need to subsidize it? Why not just lower taxes for all businesses? As the Aerotropolis proposal has shed more of its baggage en route to this latest forwarder credit, it is fascinating that the argument for the project has turned from “we need all of it!” to “just a little will do.” We may have simply just reached the “bargaining stage,” or alternatively are seeing the last-ditch attempts of Aerotropolis supporters to get something, anything out of this mess.

If the freight forwarder credit resurrection affirms anything, it is that tax credits need reform. Indeed, there is ample room to clip the tax credit waste and cut taxes, and we have talked about this issue again and again. It makes no sense to be adding programs to a tax credit system that is already bursting at the seams and rife with tax credits of dubious value. Tax credit redemptions are expected to reach nearly $700 million in 2013 — ranking right up there with this year’s gargantuan budget deficit. And yet, state officials continue trying to pick winners and losers.

Missourians can judge for themselves whether Missouri’s economic development status quo has served them well. It seems the legislature is more than happy to serve up more of the same.

Teacher Tenure: Why Should Educators Be Different?

Posted on by Ben Barnes

On Monday, Missouri Rep. Scott Dieckhaus (R-Dist. 109) proposed a bill (House Bill 1526) to reform the state’s teacher tenure laws. As we have argued before, getting rid of teacher tenure is good for Missouri’s public schools, and this bill is particularly strong for three key reasons:

1. Teachers could be fired for doing a bad job.

Most of us live in a world where doing consistently bad work means you lose your job.

Not so for teachers.

Under the current laws, a tenured teacher can be fired only for egregious conduct, such as willful or persistent violations of the school laws, excessive or unreasonable absences, and felony convictions. Even then, a severely truant teacher would get generous procedural protections from termination: a majority of the school board must vote to fire the teacher, and the teacher can appeal the board’s decision through an administrative hearing.

If this bill passes, boards could not only fire convicted felons, but they could also dismiss teachers for unsatisfactory performance.

2. No more indefinite contracts for teachers.

Most of us also have to live with the reality of at-will employment.

Again, not so for teachers.

Under the current laws, a teacher who survives a five-year probationary period becomes “permanent personnel” with an indefinite contract to teach.

The proposed bill, on the other hand, gives school administrators more discretion to retain teachers they actually want teaching in their schools. Schools could contract directly with teachers for up to four years; and what’s more, the board would retain the power to terminate a multi-year contract if the teacher scored poorly on evaluations.

3. Teachers will get paid for what they do, not how long they have done it.

That is right, teachers do not live with the reality of performance-based pay either.

Under the current laws, school districts are prohibited from basing salaries on performance-related criteria. Instead, districts pay their teachers based on length of service and level of education. The proposed bill removes this prohibition and requires school boards to consider teacher evaluations when making decisions related to pay, retention, promotion, and dismissal.

Not surprisingly, the unions started speaking out against HB 1526 before it was even proposed. Missouri National Education Association President Chris Guinther told the St. Louis Post-Dispatch last week: “we’ve got to be given the protection that we need to give those kids the quality education that they need.” Wouldn’t our kids be getting a better education if school boards could dismiss failing teachers more easily, like this bill would allow? The problem with the union perspective is that it focuses on teachers, not on kids. Tenure is not about having due process, as Susan McClintic, president of the Columbia Missouri National Education Association, told the Columbia Missourian last week. On the contrary. Teachers do not have a right to their jobs; it is the students who have a right to a public education, and they should have good teachers to boot.

The Cautionary Tale Next Door

Posted on by Michael Rathbone

The state of Illinois recently encountered some bad news. Moody’s downgraded Illinois’s credit rating from A2 to A1, the lowest in the country. On the other hand, Missouri has AAA ratings from all three credit agencies. Times have been tough for both states. Missouri is facing a large budget shortfall. Illinois has its own shortfall and it is using payment deferrals to manage its operating cash fund.

I mention our neighbor’s misfortune because it serves as an example of different approaches to handling financial difficulties. Last year, Illinois raised taxes on personal income and the corporate income. Yet, despite these increases, its financial situation continues to deteriorate. In Missouri, the tax rates have remained the same. Missouri Gov. Jay Nixon brags about not raising taxes and personally cutting $1.6 billion in government spending. While both states have a budget shortfall to close, which budget situation would you prefer?

Illinois officials’ reaction to the state’s financial difficulties also presents an opportunity. As I mentioned before, Illinois responded to its dire fiscal situation by raising its corporate income tax. This has already put pressure on the state’s own businesses, and other states (Wisconsin and Indiana) are trying to entice those businesses to relocate into their states. Missouri has had its own methods of trying to encourage companies to relocate to the state, but they tend to be costly. When the Missouri Department of Economic Development (DED) used tax credits to get Applebee’s to relocate to Missouri, the cost was about $35,000 per job.

Instead of handing out millions of dollars in economic development tax credits, why doesn’t Missouri eliminate the corporate income tax? Considering that Illinois just raised its corporate income tax, wouldn’t a corporate income tax cut (if not outright elimination of the tax) serve as a powerful incentive for Illinois companies to move to Missouri?

Missouri officials estimate receiving $352 million in corporate income tax revenue for fiscal year 2013. Missouri officials also estimate that the state will issue more than $450 million ($463,409,492, to be exact) in economic development tax credits for the upcoming fiscal year. A reduction in tax credits would enable the state to make up for any revenue shortfall it would encounter via the forgone corporate tax revenue and provide a more permanent, and more fair, incentive for businesses to relocate here.

Illinois is in an unenviable situation. Illinois officials’ handling of that situation serves as a reminder that tax increases are not a cure-all for a state’s budget woes. Missouri officials have an opportunity to head in the opposite direction from its neighbor; however, will Missouri legislators embrace a new direction (tax rate cuts), or continue with the status quo?

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