More on the Education Funding Lawsuit

Posted on by Dave Roland

As Sarah has already noted, the Missouri Supreme Court yesterday brought an end to the lawsuit in which half of the state’s school districts claimed that the Constitution required taxpayers to give them as much as $1.3 billion extra dollars every school year. The court ruled against the districts, including several important holdings.

First, the court unanimously agreed that the state government is meeting its two major constitutional obligations where educational funding is concerned, providing a system of free public schools and allocating at least 25 percent of state revenue to their upkeep. Second, the court unanimously agreed that “equitable education spending” is not a fundamental right secured by either the state or federal constitutions, and so the state’s funding formula must be upheld because the districts failed to prove that it was irrational. Third, the court ruled that insofar as the Missouri Constitution forbids the state government to create unfunded mandates for local authorities, the proper remedy is to relieve the local authorities of the responsibility to fulfill those mandates — not to order the state to pony up the money for them. And, finally, the judges ruled that the legislature did not act arbitrarily in relying on information provided to them by the State Tax Commission when fashioning the education funding formula that was at issue in this case.

Judge Michael Wolff’s voice was the only one raised in partial dissent, communicated through a fascinating, heartfelt separate opinion that is lengthier than the majority opinion. If you have an interest in either law or education, I think it is well worth reading. The judge agrees with the majority opinion on most (if not all) of the above points, but believes that the funding formula is unconstitutional because it permits counties to adopt different standards for the assessment for taxable property. In Judge Wolff’s opinion, the result is that “counties where property assessments fall well below market value are rewarded with increased state funding for schools.” He remains studiously agnostic as to which parts of the state might be said to be benefiting from this arrangement. That question, he suggests, should be answered by the legislature — but he maintains that regardless of the beneficiaries, the unevenness of assessments should trigger the state’s constitutional obligation to see that assessments are equalized across the state.

To be sure, the majority opinion did not disagree with Judge Wolff’s legal reasoning regarding the equalization of assessments. Rather, they (correctly) noted that the plaintiffs in this case had not brought that claim before them and, thus, resolution of that issue must wait until it has been presented and argued fully.

I think that Judge Wolff may have a valid point about inconsistencies in assessments across the state, but the broader thrust of his opinion is that the legislature has earned little of his respect because it has failed to adopt fundamental reforms that might greatly improve education in this state, and that the fact that some school districts are given far less funding per student than others remains tremendously unfair.

Judge Wolff apparently accepts the research presented by our own Dr. Michael Podgursky in his acknowledgment that “there is not a direct relationship between a school district’s money and its performance,” although he goes on to suggest that “money is not irrelevant … money is needed to buy the academic leadership, the teaching staff, the time on task for mastery of basic subjects and other resources needed for educational enrichment that can produce optimal outcomes.” This might or might not be true, given that a number of useful reforms might save money, thus allowing the excess to be reallocated into longer school days or higher pay for teachers that go above and beyond the current call of duty. But, ultimately, I share Judge Wolff’s desire to see a true sea change in the way education is undertaken in this state. Perhaps he’ll be open to some of the reforms that we have suggested!

Assignments for Sept. 8

Posted on by Sarah Brodsky

As you’ve probably heard, the president will address public school children next week. I’m not bothered by the address itself, which seems little different from elected officials speaking in schools, but the announced assignments for elementary school students are creepy. Students will be asked questions such as:

Why is it important that we listen to the President?

What is the President asking me to do?

What specific job is he asking me to do?

And this question is somewhat amusing:

Are we able to do what President Obama is asking of us?

It gives the impression that students may not be capable of achieving the President’s lofty goals for them.

Students are also supposed to write letters to themselves about how they can help the president. I thought that was a tactic used to brainwash prisoners of war, not an assignment for the first day of third grade.

As a group, students are supposed to list the goals they’ve come up with in a “cluster web,” which sounds like some kind of politically correct Venn Diagram, and there will be school-wide incentive programs to reward good little followers of the president. Another assignment is to “exchange sticky notes.”

I liked it better when speeches to schools were just about photo ops and soundbites.

Missouri’s Ticking Pension Time Bomb

Posted on by Josh Smith

The front page article in today’s Post-Dispatch is about the underfunding of Missouri’s public employee pension programs. This is a serious issue that deserves more attention, and the Show-Me Institute is happy to oblige. Check out our full policy study on the matter, as well as this op-ed by Joe Haslag, who is quoted in the P-D article.

The main problem with Missouri’s public employee pension plans, as discussed in both the P-D article and our policy study, is that they use an outdated system of defined benefits. This plan is generally less expensive for the employees (who are likely concerned about retirement savings, at least somewhat) and more expensive for the employers (who have to pay the difference when the amount they set aside in anticipation of payouts turns out to be insufficient because of changes in valuation, such as stock market fluctuations).

The economics of this arrangement can be simplified as follows (pardon if this is too abecedarian): Employees accept a certain wage and benefit package when choosing between employers. It is common for employers to compete for employees by offering different combinations of wage and benefit packages. When viewed in context of the prevailing type of plan offered by employers, the Missouri public employee pension plans are more generous to the employee and more expensive for the employer. It may be the case that in order to attract the number and quality of employees that the various state agencies desire, a less attractive benefits package with a less generous pension plan would need to be balanced with increased salaries.

As I see it, this is a very good thing. The costs of retirement benefits are only fully realized in the future, when market fluctuations may cause a plan to become underfunded — a situation that is likely to happen only with defined benefit plans. One reason these plans are popular, however, is because the nature of political incentives means that politicians have a much greater chance of enacting a plan with benefits that can be realized today and costs that are paid for tomorrow. If government agencies in Missouri were forced to compete with private companies based on salary rather than benefits, this would lead to increased immediate costs for public employees, which would also mean higher taxes. I think that Missourians would be more likely to vote for less public spending if the spending had to be paid for here and now, rather than after the lifetime of the employee’s career.

As Richard Dreyfuss points out in his Show-Me Institute policy study, defined contribution plans would not only level the playing field between public and private employers pursuing potential employees, it would put the Missouri pension plans on firm ground, economically — defusing the time bomb of underfunded employee pensions.

“Buycott” for Organic Foods

Posted on by Caitlin Hartsell

When John Mackey, the CEO of Whole Foods, wrote an op-ed in the Wall Street Journal, he hardly could have imagined the backlash it would receive. But some of his regular customers, many of whom are interested in sustainable growing practices and organic foods, decided to boycott the store when they read that Mackey did not support the federal government’s proposed health reforms.

The Post-Dispatch reported that the St. Louis Tea Party Coalition, a group that also opposed Obama’s health care reform, has proposed a rather fecund idea to combat the boycott: a “buycott.” This involved coalition members going to buy a week’s worth of groceries at the Whole Foods in Town and Country. Many members of the coalition were not regular Whole Foods customers, but they were willing to show their support for Mackey’s free-market health care reform ideas — and his right to express them. Whole Foods has tried to distance itself as an organization from the personal views of its CEO through a forum on its site, but this seems to have had little effect.

Mackey exercised his right to free speech when he wrote his op-ed, and some of his company’s customers exercised theirs by boycotting. But the “buycotters” are arguably the most creative in this situation. By going out of their way to shop at Whole Foods, they are “voting with their dollars.” While it may well be difficult to replace the boycotters’ dollars, a “buycott” helps make up for some of it through positive reinforcement. And, who knows? Perhaps once the health reform hoopla has ended, Whole Foods will have a few new regular customers who might not have considered patronizing the store otherwise.

More on Local Food

Posted on by Sarah Brodsky

There’s nothing wrong with people voluntarily eating produce that was harvested nearby. However, the locavore movement’s claims need to be refuted when its activists lobby for taxpayer support — whether in the form of subsidies or purchasing mandates. This essay in Forbes by Elisabeth Eaves shows why we shouldn’t buy into the locavore argument. I love this part:

Most of the values the locavore movement claims to embrace–healthier food, environmentalism, good treatment of labor–actually have little to do with whether or not a producer is located in one’s own ZIP code. So why not just tackle the issues themselves, rather than using localism as a proxy?

And the next question is also relevant to the more general debate between free trade and protectionism:

Why this parochialism that only seeks prosperity for those in my immediate midst?

Going Above and Beyond

Posted on by Sarah Brodsky

The St. Louis Beacon has a recent report about the Missouri Supreme Court’s decision that the state’s education funding formula is constitutional. This is from a response to that ruling by the House Democratic Caucus:

The Missouri Supreme Court today ruled that the state’s method of funding local public schools meets the minimum constitutional requirements. The court, however, did not rule that the state is doing all it can to improve the quality of public education.

When would the court ever have occasion to make such a ruling? It’s not the judges’ job to give out E’s for effort. Nor would it be possible to determine that the state is “doing all it can” on any policy issue, because the state could always do a little extra or spend a bit more money.

The caucus’ statement is correct that we shouldn’t be complacent about public schools. We can stop wondering whether the funding formula is in accordance with the Constitution, and instead focus on new ideas for reform.

Cash for Clunkers Refuses to Go Away

Posted on by Sarah Brodsky

Like a phoenix rising from its ashes, Cash for Clunkers will return this fall in the form of a rebate program for household appliances. This new program promises to be as wasteful and short-lived as the original was.

A cause for worry is that the program is growing more specific with this latest incarnation. The rebates will apply only to models of the government’s choice. Cash for Clunkers gave out free money right and left; Cash for Appliances will be targeted, with politicians picking winners.

Tort Reform 2: Reform Schoolin’

Posted on by David Stokes

Today’s Kansas City Star has an excellent article about the debate over whether tort reform should be part of the health care changes imposed on us by the federal government. The article highlights the great success tort reform has had for Missouri: 

Since the 2005 reforms in Missouri, malpractice premiums at Hagen’s practice have fallen 24 percent — a decline he attributes to the reforms. Reintjes said his premiums have declined 30 percent.

Kansas has some of the strictest liability limits in the country, so medical malpractice costs are not much of a problem there. Illinois, which is not discussed in the Star‘s article, desperately needs tort reform — but I have no faith that they will see it enacted anytime soon. Every doctor in Southern Illinois will have moved to Missouri by the time they pass it.

As I said a few days ago, I support tort reform, but don’t necessarily want another example of the federal government taking over what has long been a state issue — tort and malpractive laws. I am not willing to go along with such an expansion in federal scope just because this might be one rare instance in which I’d agree in principle with the reforms the federal government were going to pass. This should remain a state issue. Missouri has properly addressed it, and can go further if need be.

Kansas has addressed the issue very successfully as well:

The report stated that, for the fiscal year ending June 30, 2008, there were 34 medical malpractice cases involving 41 health care providers that went to a jury (In Kansas). Only five resulted in damages awarded to the plaintiffs and only three required payouts by the fund, for a total of $1.73 million.

If Illinois refuses to deal with its legal system, then Illinois will pay the price for that.

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