We Need to Shut Down Failing Schools

On Monday, Missouri Commissioner of Education Chris Nicastro said in an exceptionally strongly-worded letter that the Imagine charter schools in Saint Louis City should close. Nicastro’s letter came after the St. Louis Post-Dispatch published a series of articles showing the derelict state of education at Imagine schools, and after Saint Louis Mayor Francis Slay publicly called for the schools to close.

According to the Post-Dispatch, not only does the charter school company appear to have rushed to open a school without providing textbooks and other school supplies, and with some classes held in hallways, but the school hired a developer who pled guilty to fraud earlier this year (in an unrelated matter). That developer also received historic tax credits for redeveloping an Imagine Schools property, and charged the charter school company $150,000 for the service of acquiring nearly $480,000 in tax credit money from the state.

In her letter to the sponsor of the Imagine charter schools, Nicastro minced no words:

We do not view it as the intent of the Missouri General Assembly that the department engage in intrusive regulatory oversight of charter schools, or to perform the administrative responsibilities of the sponsor. However, it appears from your public statement that [you desire] our recommendations in this matter. Let me be specific:

1) Announce immediately that the Imagine charter schools will close at the end of the current school year.

Some may rush to use Imagine schools’ negligence as evidence that many, if not all, charter schools are inferior, and that the expansion of charter schools in Missouri is bad public policy. On the contrary, it is necessary that bad schools close in order to enable good schools to thrive. In any endeavor, whether it is business, art, or even education, there will always be some successes and some failures. It is important to encourage success and limit failure.

The esablishment of charter schools, which are outside the traditional school district framework, is one way to do this. The theory behind charter schools is that the good ones will thrive on their own merits, and the charter schools that do a poor job of educating students will lose students and funding.

Based on the Post-Dispatch coverage, along with the mayor’s and the education commissioner’s statements, the Imagine schools in Saint Louis City certainly appear to be failing. As such, students and funding should be shifted to schools that do a better job of educating students. If the sponsor of the schools has been negligent in monitoring whether they have been successful (an intricacy created by our convoluted education law), then calls from the  mayor and education commissioner to close schools are certainly warranted.

However, I think that this controversy can also be a learning experience. Yes, Imagine schools appear to be failing. But failing is not unique to charter schools. There are certainly many public schools that are failing their students — be it in providing safety, an adequate mathematics education, or curtailing dropout rates.

For example, Yeatman-Liddle Middle School in Saint Louis City has had increasingly fewer students score proficient or better on the state mathematics test. During the 2007 school year, 35.5 percent of students at the school scored “below basic” on the eighth-grade state math test. In 2010, 64.9 percent of students scored below basic, a proportion almost twice as high as the students scoring below basic just a few years ago. A much more thorough review would have to be conducted, but it appears Yeatman may be doing a poor job of teaching math to its students.

Letting a failing school continue does not help current students. During the past Missouri legislative session, I testified before the House Education Committee to discuss a proposal that would enable parents of students at a failing school to trigger reform, a proposal that I think might help address the problem of failing schools.

Rather than treating Imagine as an isolated incident, let’s recognize that schools can fail — regardless of structure — and consider ways to allow that failure while encouraging successful schools to grow.

What Would You Cut From The Saint Louis County Budget?

Last week, Show-Me Institute Policy Analyst David Stokes wrote at length about the Saint Louis County proposal to close its parks; the County would shut down operation of 23 of its 50 parks to help close what the county executive says will be a $10 million budget shortfall in 2012. If you’re unfamiliar with the story, David’s post is a must-read.

Given the continued furor surrounding the park-closure idea, it is probably worthwhile for Saint Louis County residents to see the proposed budget for themselves. I have embedded it below for review. The 300-plus-page document is searchable, and I’ve queued it to the budget summary (listed as page 10 in the County document).


(We’ve also added the County’s recommended budget to our Show-Me Sunshine library of documents.)

If County residents don’t like the idea of cutting parks, there’s always the option of simply cutting other expenditures. Which budget items would you trim?

Elementary, My Dear Watson

It appears the state of Missouri might be running into some revenue problems (net general revenue collections were down in October compared to October 2010). I previously identified some low-hanging fruit that can be cut without too much damage, but if the state still faces a shortfall next year, which is very possible, then officials might have to make some difficult choices.

Many politicians are justifiably concerned when the topic of education budget cuts is raised. It is easy to imagine why. Nobody welcomes the prospect of facing a 30-second advertisement detailing the many reasons he/she doesn’t care about children because he/she proposed cuts in education spending. However, out of a Missouri Department of Elementary and Secondary Education (DESE) budget of more than $5 billion, it is definitely possible to find some savings. For example, one school district paid lifetime health care insurance just to retain its superintendent another year. Isn’t that a worthwhile issue to examine regarding budget cuts?

I can hear the concern of those who think budget cuts to DESE would cause great harm, but would some cuts really be so horrible? Not really, at least according to figures from the National Center for Education Statistics. Compared to 2003, the test scores for Missouri students ROSE for both fourth and eighth graders in math (for fourth graders, the average score in 2003 was 235; the average in 2011 was 240) and scores remained the same for eighth graders in reading (see page 51). Only fourth-grade reading scores dropped (222 in 2003 compared to 220 in 2011) over that period.

I’m not saying that cutting the state education budget will necessarily lead to BETTER test scores. All I’m saying is that cutting the education budget MIGHT not be as much of a disaster as some may fear. We have been trying the opposite approach for a while now and it’s not producing significant results. It is difficult to argue that there is NO room for savings in the DESE budget. In regards to balancing the budget next year, everything should be on the table.

Saint Louis County: County Executive’s 2012 Recommended Budget

 

Sad CID Sighting in Central Missouri

Voters in Columbia, Mo., are currently voting on a proposal for a downtown Community Improvement District (CID). I say “currently” because this is one of those mail-in ballots to a small number of residents of a mostly commercial area, and the deadline is tomorrow (Nov. 8). Here is a Columbia Missourian article on the issue,  which Eapen Thampy, who is leading the fight against the CID, sent to me.

I think this proposal is poor public policy. It disproportionately benefits a very small number of people while taxing a huge number of people who visit downtown Columbia, in order to finance public spending for things that hardly pass the public goods test (event promotion, business marketing, free Wi-Fi). For more on why I think CIDs in general are a bad idea, please check out this testimony I gave in Nixa, Mo., earlier this year.

TIF is Everyone’s Education Problem

Remember the school district in Kansas City that is asking for a tax increase because of lost tax revenue? Show-Me Institute’s Bruce Stahl wrote last week that Tax Increment Financing (TIF) is the culprit.

Supporters of TIF often say that it is harmless. The rationale behind TIF subsidy is that a development’s taxes are “frozen” at current levels for a number of years. If a developer improves the property during that time, he won’t pay additional property taxes on the improvement.

However, TIF amounts to tax redirection without representation. Tax dollars intended for a school district (which come from property taxes) can be used to pay for costs associated with the subsidized development. Unlike school district officials, city officials tend to be enthusiastic about TIF because they can reap the benefits from increased sales taxes (which generally increase when TIF is used to subsidize box store development) without bearing much of the cost of lost property tax revenue.

Many voters get no say in the matter when they live in a school district impacted by TIF but outside of the city that is imposing the TIF. Some readers may think this is fine. After all, these are local subsidies — residents in Joplin certainly won’t pay for a proposed TIF in Columbia. Aren’t the cities of Brentwood and Saint Louis free to use TIF as much as they want?

Well, thanks to the intricacies of Missouri’s tax system, we all pay for TIF, even if we live in cities that do not award such subsidies.

School districts primarily receive funding from three sources: local property taxes, state aid, and federal aid. State officials use the local property tax base as part of the equation to calculate the funding it sends to school districts.

So, when TIF carves out a portion of the property tax base from a school district, the state can end up sending more funding to that district.

According to a 2003  study by the Brookings Institution’s Center on Urban and Metropolitan Policy, TIF can increase state aid by up to 7 percent in Kansas City-area districts, and up to 5 percent in Saint Louis-area districts. The author, Thomas Luce, estimated that up to 21 percent of the state aid going to the Fort Zumwalt School District in St. Charles County was attributable to TIF revenue losses.

Not only does TIF result in dollars intended for schools to be redirected to development, we all end up paying for it through state income and sales taxes. And yet, it is unlikely that a taxpayer in Cape Girardeau will ever benefit from a Kansas City TIF development that he helped subsidize.

If TIF is truly as transformative as supporters believe, then it should stand on its own. The state funding formula should not reimburse school districts for property tax revenues lost to local governments’ development bets.

A Wild Idea: Kansas City Votes Nov. 8 On Proposed Zoo Tax

When I was a kid, I often visited the Kansas City Zoo with my family; after all, we were members of the Friends of the Zoo program, the private booster organization that now runs the park. Thus, participation in zoo-related activities wasn’t uncommon, and even after seeing the more robustly-funded Saint Louis and Omaha zoos in my youth, I never really felt like I was being short-changed with my hometown facility.

No doubt, the Kansas City Zoo’s funding pales in comparison to some other parks. For example, in 2006, the Saint Louis Zoo’s budget topped $46 million, with nearly half of its funding coming from the Metropolitan Zoological Park and Museum District (ZMD), which Saint Louis City and County property tax dollars fund. For perspective, the Kansas City Zoo’s budget last year was roughly a quarter that size, at $11.6 million — $3.4 million of which came directly from the city.

Is there a funding disparity here? Has Kansas City, to date, placed a different priority on its zoological park compared to other metropolitan needs? Sure, on both counts. But according to a report in the Kansas City Star that may be changing, and soon:

The zoo on Nov. 8 will ask voters in Jackson and Clay counties to create a new zoo district by approving a 1/8-cent sales tax. It would give the animal park an assured stream of money safe from the uncertainties of the Kansas City municipal budget.

Supporters say it would vault Kansas City into the ranks of the truly great regional and national zoos.

“We’re looking at this as one chance in a lifetime,” said Randy Wisthoff, the zoo’s director. “It could be the most important thing to happen at the zoo in its 100-year history, or in the next 100-year history.”

When every big government project is marketed as a “one chance in a lifetime” opportunity to taxpayers, I have to say, the buzz of the suggestion wears off pretty quickly for me. Phraseology like this, of course, is intended to engender urgency for a cause, but while that’s a fine marketing strategy, it can facilitate really bad, and oftentimes silly, public policy decisions.

How much would a fully-implemented Kansas City zoo tax generate? Quite a bit, actually.

If approved in both counties — it must at least pass in Jackson to take effect — the zoo district could generate $14.2 million a year. That is more than the zoo’s entire budget now and would allow it to accelerate a master plan that calls for a $15 million penguin exhibit, an orangutan jungle and a new display for big cats. Plans also include a water play area for kids and a giraffe feeding station.

Another Kansas City Star report notes that “zoo officials say they need a regional tax base to compete with better-funded zoos,” but, is the market for zoos so lucrative that Kansas City really needs to raise its zoo game with a special tax? As someone who had the opportunity to appreciate and enjoy the zoo as a child two decades ago, I would love to see Kansas City expand its zoo, but I’m not convinced that (1) it’s needed, (2) the taxpayers need to pay for it, or (3) that the economic effect of the zoo justifies special taxpayer attention.

It’s the prerogative of Kansas City area residents to determine their tax burdens, so if they see a benefit from the tax, it shall be. But as someone from a family of zoo supporters, I’m not convinced it’s necessary.

Note: Platte County and Cass County, both of which contain parts of Kansas City, will not vote on the zoo tax next week. Residents in those counties might vote on the issue sometime in 2012.

Manufacturing Mania (That We All Pay For)

Missouri Gov. Jay Nixon announced yesterday that more than 1,600 jobs will be created at a new manufacturing plant in Wentzville. The jobs promised are associated with $360 million in planned investment by General Motors to build a manufacturing plant in Wentzville.

I hope that the job and investment numbers touted will hold up as promised. The St. Louis area could certainly use some more economic activity.

However, given the track record of similar job estimates, we should all be skeptical of such claims. It is very easy to issue a press release touting job estimates. Indeed, politicians do this all the time. It is a way to tell voters that something is being done to address the economic recession, even if no economic activity has actually occurred. It is much more difficult to follow a project through completion and track the actual number of jobs created and the actual amount invested.

Regarding the Wentzville plant, we should all watch carefully. A great deal of state and local taxpayer dollars will go to the project. The St. Louis Post-Dispatch reports that GM has been approved for $36.8 million in tax credits over a 10-year period, and that the company has applied for an unspecified amount of tax credits through the state’s Quality Jobs program.

GM will also get to keep 100 percent of employee withholding taxes for a 10-year period. Additionally, the city of Wentzville has approved the plant property for partial tax abatement, meaning that GM will get a nice break on its property taxes (which aren’t all that high).

And, of course, let’s not forget about all of the federal tax money GM  has received in recent years.

I wonder just how much the final bill to Missouri taxpayers will be.

Nixon and others claim that the state incentives have spurred the promised investment. But how do we know? Given the findings of academic studies of tax credit effectiveness, it is certainly possible that the plant would have located here without the incentives. It is also possible that the plant would have located somewhere else in the United States. In either case, the plant would have been built and cars would be made.

I also wonder what we aren’t seeing. When the state awards this much in tax incentives, it is a tacit acknowledgment that the tax rate everyone else pays is too high. How many small businesses are failing because of a burdensome tax rate? How many companies already located in Missouri are harmed when the state hands millions of dollars to their competitors?

I think one person who commented on a Show-Me Daily blog post hit on the tax incentive problem we face. He wrote: “The problem is that abandoning tax credit legislation means abandoning a lot of campaign donors — and legislators hate doing that.”

Tax dollars should be used responsibly, instead of helping elected officials gain political favors or favorable news coverage. It sounds like the state will be facing some tough budgetary problems next year. Shouldn’t we be focusing on encouraging authentic job creation and funding needed programs instead of pinning our hopes (and millions in taxpayer money) on promises?

St. Charles Collecting Business License Fees It Is Not Authorized To Collect

While researching Tax Increment Financing, I visited the St. Charles city website. While there (it is a very good municipal website), I noticed the business license link. So, I clicked on it (as I am want to do) and was greeted with this page:

Business Licenses

Per City Ordinance (Chapter 110), anyone doing business in the City of St. Charles must have a business license issued by the City of St. Charles. This includes:

  • All businesses with a St. Charles address
  • Residents working from their homes
  • Out-of-city businesses such as contractors, sub-contractors, delivery businesses, etc.
  • All professionals

There is just one problem with these statements; they aren’t accurate. First, there are several occupations commonly considered “professionals” that state law specifically excludes from local licensing requirements. Lawyers, CPAs, doctors, dentists, and several other professionals are exempt from local business license fee requirements.

Furthermore, there are other types of “out-of-city” businesses that are exempt from licensing fees unless they fit the first example and have a specific city address. While the examples detailed on the website (contractors, etc.) are correct, other businesses, such as insurance brokers and engineers, are exempt from local licensing unless they have an office in St. Charles.

I bet there are a lot of cities requiring the same thing, and attempt to collect business license fees from firms that don’t know they are exempt. Does the typical land surveyor know he or she is exempt from having a business license? Perhaps. I bet it is less that cities attempt to collect the license fee from exempt businesses as much as they allow people from firms that don’t know better to pay for the license without telling them otherwise.

Is it possible that city officials tell those who are exempt from local licenses that they are so exempt when they arrive to pay for the license? Sure, but that is putting a lot of faith in individual employees to correct the misstatements on the website.  

The city of Saint Louis does a good job of displaying a link to the exemptions on the website of the license collector. St. Charles, and probably many other cities, could stand to take a (web)page from that. I am a big fan of the new mayor of St. Charles. Hopefully, her new administation can correct this soon.

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