Will The Missouri House Ever Learn On Tax Credits?

Posted on by Patrick Ishmael

Legislators can rename their new tax credit programs if they want, but it is utterly absurd to suggest that a “tax rebate” for data centers — as it has been portrayed and presented in the Missouri House of Representatives — or a tax credit for sports events is anything other than business as usual in the Capitol. State officials are picking yet another set of presumably hot new industries on which to bet their development roulette chips. Giving special tax breaks to special interests is the history of Missouri development policy over the last few decades. Every year or two, a new flight of special big ideas is enshrined in the law, with a new round of fresh special interests ensconced in the state’s pantheon of practically untouchable tax credits. The Missouri Department of Economic Development’s own tax credit documents outline the timeline of Missouri’s nearly imperishable tax credit growth with exquisite clarity. (Click the image to enlarge.)

timeline

Lobbyist detente on tax credits is not a sustainable status quo, and continuing to carry old tax credits forward while instituting new ones is a failure of leadership. That state officials would try to re-brand a failed system and grow the development tax credit leviathan beyond its current confines is hugely disappointing. It is just more of the same, and Missourians deserve better than that.

School Reform: Have We Reached The Boiling Point?

Posted on by Greg Aubuchon

Parents continue to demand solutions to failing schools in Missouri. As an example, five Saint Louis firefighters recently sued three suburban school districts for failure to enroll their children under the Missouri Supreme Court’s Turner decision. One of the firefighters is spending $20,000 per year in Catholic school tuition just to avoid sending his children to Saint Louis public schools. This is in addition to taxes he has paid to fund the very school district that has failed him and his family. Like many families in similar situations, this family pays twice for securing the benefits of the “free public schools” that are guaranteed in our state constitution.

My post last week discussed a lawsuit between the Kansas City Public Schools and five suburban school districts regarding the implementation of the Turner decision. In a nutshell, Turner requires surrounding districts to enroll students who live in unaccredited (failing) school districts (i.e., the Saint Louis and Kansas City public schools and the Riverview Gardens School District). In effect, this is a limited school choice option under Missouri law.

Practically speaking, one issue is, how can the suburban districts in Kansas City and Saint Louis handle the potential influx of urban students? A recent survey estimates that approximately 13,500 students may flee Saint Louis schools for Saint Louis County under the Turner law. That is close to one quarter of school-age children in Saint Louis city. Pressure to abandon the Saint Louis public schools is apparently growing.

While it is easy to get caught up in the apparent chaos, why don’t we disengage for a second and reflect on the deeper issues; specifically, the failure of urban education in the Saint Louis and Kansas City public schools. Perhaps the Turner decision is a blessing of sorts, compelling both the legislature and the courts to address head-on comprehensive school reform, not only for our urban districts, but for all districts in Missouri.

Teacher tenure reform, collective bargaining, charter school expansion, school closure, and expanded school choice are on the table. The legislative session is just beginning to heat up. Perhaps Turner was merely the first act in an unfolding multi-act drama. If so, the script should promote an increase in accountability for teachers and school districts, and an expansion of school choice, including choice of private and parochial schools for students in failing public schools.

Do Aldermen Still Have Outsize Power Over Whether LRA Sells Property?

Posted on by Audrey Spalding

The St. Louis Land Reutilization Authority (LRA) met today to consider offers to purchase vacant property. The LRA, part of Saint Louis City government, is the largest owner of vacant property in the city.

Our research showed in 2011 that the LRA had a track record of frequently rejecting offers to buy city property, often for no discernible reason. The agency would cite “lack of aldermanic input” when rejecting offers, or plans for “future development” that would fail to materialize.

I have written here about improvements to the LRA’s practices that were made in the wake of the publication of our research and the resulting media attention.

This month’s meeting went pretty well — most offers to purchase property were accepted or countered (meaning the LRA asked for a higher purchase price or change in contingencies). However, I still cannot help but think that Saint Louis City aldermen still have outsize influence over whether the agency accepts or rejects offers to purchase property.

An offer from Transformation Christian Church and World Outreach Center to purchase four properties illustrates this well.  LRA staff members recommended that the church’s offer be rejected. However, former Alderwoman Irene Smith (ward 1) spoke on behalf of the church during the meeting and managed to sway the commission. It seemed that the decision of whether to sell the property hinged on whether the area alderman was supportive of the sale.

Smith, speaking to the commission, noted that the church had spoken with Alderman Sam Moore, saying that after “swapping” some property with him, he had agreed to provide a letter supporting the sale of LRA property to the church.

But LRA Chairman Mark Wells initially would not recommend moving to sell the property, saying that “Based on the information we got from Alderman Moore, I think more discussion is needed.”

Smith responded: “We’re taken aback by that. We sat down with Alderman Moore.”

Ultimately, the commission moved to counter the church’s offer instead of rejecting it. And I am glad — the church has a history of purchasing, maintaining, and rebuilding LRA property.

But, I wonder: If the church has a track record of being a strong community resource and has the funds to buy the vacant city property, why does it matter what the alderman thinks? The LRA does not have to consider the input of an area alderman. The agency’s authority was established under state law, and the LRA law does not suggest that the agency consider the input of any political officials. Saint Louis government has implemented this practice by choice.

You can download the LRA’s meeting agenda (with a few of my notes) here.

Can The Market Provide Cheaper Short-Term Loans?

Posted on by Bruce Stahl

This article in the Kansas City Star is a must-read for anyone interested in payday lending. Here are some of the details (emphasis mine):

Central Bank has agreed to make old-fashioned signature loans (that means no collateral from the borrower) of $300 to $2,500. That’s also what payday and installment lenders do. Except Fair Community Credit will lend money for slightly longer durations and at a double-digit interest rate, not a triple-digit one. That way borrowers will have a better shot at paying off their loans, rather than defaulting.

What makes that possible is Fair Community Credit’s promise to cover any loan losses from a $200,000-plus loan guarantee pool donated by foundations and individual donors.

The market is creating relatively cheap short-term credit alternatives to payday loan shops. It is incredible to watch society tackle perceived problems through voluntary interaction without the forceful hand of the state. It will be intriguing to see the results of this venture.

A hat tip to John Combest for the link.

Closing Bad Schools Is Exactly What Is Supposed To Happen

Posted on by Audrey Spalding

Two failing charter schools in Saint Louis City will be closed at the end of this school year. You may remember the St. Louis Post-Dispatch‘s somewhat sordid saga of Imagine Schools that was recently published.

It might sound harsh, but this is exactly what is supposed to happen with charter schools: We should let the good ones flourish and try to replicate their success, and close schools that are not meeting students’ needs.

Just because a school is a charter school does not guarantee student academic success. It is important to close failing schools, whether they are traditional public schools or charter schools. Nobody benefits from keeping open a school that is failing its students.

For more on the Imagine closings, check out our latest Show-Me video below.

Hazelwood Responsive Documents: Emerald Automotive

Posted on by Patrick Ishmael
 

The Next Half Measure

Posted on by Michael Rathbone

Now that Missouri Gov. Jay Nixon has delivered his State of the State address, legislators in Jefferson City are prepared to tackle spending in their own way. The Missouri Legislature is considering a constitutional amendment that would cap state spending increases to the annual rise in the Consumer Price Index plus population growth. Any excess money would first go to paying down public debt, then a special reserve fund (not a bad idea considering some of the potential natural disasters this state faces), and then any remaining money would go towards temporarily reducing income taxes.

Along with the Hancock Amendment, this amendment would restrict the power of the legislature. Therefore, the legislature should be commended for proposing this amendment. Constitutional amendments like this, along with a balanced budget requirement (which Missouri has), give legislators an easy way to say “no” to special interests.

Now, this is not a full-throated endorsement of the proposed amendment. There are a couple of things that bother me. First, there was an amendment that passed setting the cap at fiscal year 2008, the so-called “high water mark” of state revenues. Considering that the general revenue is expected to increase 3.9 percent  from $7.3 billion this year and that net general revenue for fiscal year 2008 was slightly more than $8 billion ($8,004,309, to be exact), the cap probably will not matter for . . . a while. Second, the spending limits will expire in five years unless lawmakers extend the time limit. So even if the voters approve the amendment, there is a distinct possibility that the cap can expire before it ever has the chance to restrict spending. Finally, the cap only applies to general revenue, which is where lawmakers have the most leeway in regards to spending, but it is not hard to imagine lawmakers putting down in statute specific spending items they want preserved and directing specific monies to funding them.

Despite my issues with the proposed amendment, the legislature should be commended for trying to push spending restrictions. However, it is unfortunate that such restrictions would have to be so watered down before it can pass.

It Is Time To Reform Teacher Tenure In Missouri

Posted on by Audrey Spalding

It is no secret that Missouri Rep. Scott Dieckhaus (R-Washington, Mo.) is not a fan of Missouri’s teacher tenure law. Last year, he filed legislation to require annual teacher evaluations. Under that bill, the public school teachers who perform best would receive four-year teaching contracts, and those performing the worst would receive single-year contracts. If poor teachers failed to improve, they could be terminated.

There also was good news for some teachers in Dieckhaus’ 2011 legislation. The proposal called for the best teachers to be paid at least twice as much as the poorest-performing teachers. While this may seem like common sense (why not pay the best teachers more, as a reward for their effort?), it runs contrary to the current system of paying Missouri public school teachers.

The 2011 legislation did not pass. However, Dieckhaus is considering submitting tenure reform legislation again this year. The bill is not yet available, but I have listed two areas of reform that are needed to help improve student academic achievement in Missouri. Our priority should be educating  children, not rewarding those who happen to have been teaching for the longest period of time.

Let’s pay good teachers more: In Missouri, teachers are paid under what is known as a “teacher salary schedule.” Broadly, teachers who have more years of experience and higher levels of education are paid more (here is an example). At many school districts, these are the only components of teacher pay — teachers who teach difficult subjects, at-risk students, and teachers who have the best track record of helping students learn do not get a pay boost.

Teachers who do a poor job of teaching students can actually earn more than the good teachers if the poor teachers have a higher education level and/or more years of teaching experience.

Dieckhaus told the St. Louis Post-Dispatch in 2011 that “It’s time we move away from paying people based on how long they’ve been teaching and what piece of paper they have hanging on the wall.” I certainly agree.

Paired with the issue of teacher compensation is the question of how to deal with teachers who have a track record of failing to teach students. Right now, those teachers can stay at a district for years, if not indefinitely.

Let’s help school districts get rid of bad teachers: State law awards teachers “indefinite contracts” if they have taught at the same school district for at least five years. These “permanent teachers” can be terminated, but only through a lengthy process. If a school district terminates a teacher (after going through all of the notification requirements specified by state law), that teacher can appeal the termination, triggering a court case. If the teacher wins in court, the school district must pay that teacher all of the compensation he or she would have received had he or she stayed at the district during the period of appeal.

I suppose that if you are trying to discourage teacher termination, the above makes sense. But, as a state, our concern should not be to hire and keep on as many teachers as possible. We should instead be concerned with how to provide quality education to students. Allowing failing teachers to continue to teach students does nothing to help students, and may be hurting them.

It is an uncomfortable truth, but one we must acknowledge. As U.S. Secretary of Education Arne Duncan put it, “We can no longer pretend that all teachers or all principals are from Lake Woebegone where everyone is above average.” Many academic studies have shown that teacher quality matters. Eric Hanushek, an education economist at Stanford University, has shown that good teachers can teach students three times as much as bad teachers — in a single year. Improving student academic achievement can be achieved in part by attracting more good teachers to the profession, and encouraging the bad teachers to leave the field.

I hope that the 2012 teacher tenure reform legislation can help enable school districts to have more autonomy when it comes to rewarding good teachers and terminating the worst teachers. When the full text of the bill becomes available, I will post my take on it here.

Private School Choice and the Turner Decision

Posted on by Michael Podgursky

It is serendipitous that the Missouri Legislature has gone back to work this month, just in time for the kick-off of national School Choice Week (Jan. 22). One of the many challenges our lawmakers face is what to do regarding the Saint Louis and Kansas City public school districts. The Missouri Supreme Court ruled in the Turner decision that students in unaccredited school districts have a right to enroll in a nearby accredited district. Unfortunately, the suburban districts have made it clear that they will not accept these students in any significant numbers. Thus, thousands of city students and their parents are in limbo while lawsuits are litigated.

The good news is that two high-performing school districts have offered to take these students in large numbers. These districts do a great job of educating high poverty and minority children, and do so at much less than the $15,000 and $16,000 per attending student spent in Kansas City and Saint Louis, respectively. Moreover, decades of social science research has demonstrated that the types of schools that these districts run are exceptionally good at educating poor urban youth. So why isn’t our legislature rushing to take advantage of this remedy? The districts in question are the Saint Louis and Kansas City dioceses. This high-quality yet affordable option is off the table.

Why? Opponents argue that it is inappropriate to provide public funds for private religious schools. Indeed, strong language to that effect — Blaine Amendments, named in honor of the Maine senator who led the movement — was placed in Missouri’s and some other state constitutions in the late-19th century precisely to prevent public monies from flowing to Catholic schools.

The Blaine Amendment, and the associated ideology, has warped K-12 education policy. In other areas of policy — including education — faith-based organizations routinely receive tax dollars to provide services for the general public. Missouri students can take their Bright Flight or Access Missouri scholarships to public institutions like the University of Missouri as well as private religiously-affiliated colleges such as Hannibal-Lagrange, Saint Louis University, or Rockhurst. Low-income parents in Missouri can use tax-supported vouchers to purchase pre-school care from religiously-affiliated providers.

In nearly all other areas of social welfare policy, public funds flow to faith-based organizations for social services. This is based on a recognition that government support for a service does not mean the government should be the only, or even the primary, producer. The public interest is best served if multiple vendors can compete to provide services and give consumers choices.

Freedom of choice is the key. In a voucher system where money follows the student to a school that parents choose, government is not favoring one religious doctrine over another. When a student takes his Bright Flight scholarship to Hannibal-LaGrange College or Saint Louis University, the state is not “establishing” or promoting one religious doctrine over another.

Charter schools provide valuable options to parents. The Missouri law, currently limited to just Kansas City and Saint Louis, should be extended to all school districts statewide. However, the charter schools currently operating in Saint Louis and Kansas City have a mixed achievement record. Some are producing above-average achievement gains for their students, whereas many are performing no better, and in some cases significantly worse, than the district schools. Over time, the low performers will be winnowed out. Unfortunately, substantial capacity of high-performing charters is needed now, not 10 years from now.

With each passing school day, the harm inflicted on Saint Louis and Kansas City children grows. The private schools have thousands of seats available for these children now. A remedy is looking us in the face.

Michael Podgursky is a professor of economics at the University of Missouri–Columbia and a member of the Show-Me Institute Board of Directors.

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