Two pieces of legislation are currently moving through the Missouri Legislature. One good, and one bad.
Produced by Show-Me Opportunity
Missouri Sparks a Brighter Future for Students, Parents, and Teachers
A long-awaited breakthrough came this past Thursday in the Missouri House of Representatives, as the chamber narrowly passed Senate Bill (SB) 727, the large education bill. The bill now heads to the governor’s desk. SB 727 provides a wide array of benefits to students, parents, and teachers of the Show-Me State.
For students, this bill expands access to Missouri’s education savings account (ESA) program, provides a new pathway to creating a charter school in Columbia, and creates a new evidence-based home reading program.
SB 727 provides students increased access to schools that better suit their needs. We tell children all the time to dream big, and this will give many students additional opportunities to attend a school of their dreams—not just of their address.
Parents also receive an additional benefit from this bill. In larger communities (of more than 30,000 or in/partially in a charter county), districts now must win parental approval by vote in order to move to a four-day school week.
For teachers, increased salaries and scholarships are on the way. Minimum starting salaries will be raised from $25,000 to $40,000. Additionally, salaries for teachers with a master’s degree and ten years of experience will be raised from $33,000 to $46,000 (and then to $48,000 by 2027–2028).
For teachers in hard-to-staff subjects, districts will have the option to provide them differentiated compensation through higher placement on the teacher salary schedule. Additionally, teachers who work in hard-to-staff schools can be granted differentiated pay from the district. A scholarship program will also be created for individuals who agree to teach in hard-to-staff subject areas and schools in Missouri following their graduation. For a state that does not have a general shortage of teachers, but a shortage in specific areas, this is a step toward retaining and recruiting these high-need teachers.
While there are other policies that I hope can be implemented to strengthen SB 727, such as open enrollment for all, I will save those discussions for another day. Today, I am just glad for the progress that has been made.
SB 727 Reaction with Susan Pendergrass and James Shuls
Susan Pendergrass and James Shuls join Zach Lawhorn to discuss the House passage of SB 727, sending it to the governor’s desk.
Produced by Show-Me Opportunity
Transparency Stalled
It ain’t over ’til it’s over, but the chances Missouri’s general assembly takes action on healthcare price transparency in 2024 are getting smaller by the day.
At the end of January, I traveled to Jefferson City to deliver testimony on House Bill (HB) 1837, and at the time it seemed like the state’s legislature had finally decided to make healthcare price transparency a priority. HB 1837 is a bill that, among other things, codifies the federal government’s healthcare price transparency rules into state law, and was the first of its kind to receive a public hearing in Missouri. But since that hearing it has yet to receive any further attention from policymakers.
As my colleagues and I have written numerous times, Missouri desperately needs healthcare price transparency. And despite the federal government requiring hospitals to publish their price since 2021, fewer than 40% are complying nationally. That’s where HB 1837 comes in.
In addition to codifying the federal requirements into state law, the bill provides new protections for patients who receive health services in Missouri without being adequately informed of the prices beforehand. If patients aren’t told how much a procedure is going to cost before they receive it, there’s no way for them to plan for the expense, shop for a better deal, or even change their mind about the procedure altogether if the price is more than they can afford at the time.
HB 1837, which is modeled after legislation that became law in Colorado a few years ago, would shield patients from debt collection efforts by hospitals that aren’t complying with the required price transparency laws. Patients who find out they were overcharged would also have recourse for financial restitution (a way to get some of their money back).
With Missouri’s legislature, it’s always difficult to know why a bill stopped advancing, but one thing that was clear from the hearing on HB 1837 was that hospital lobbyists were vehemently opposed to it becoming law. The opposition claimed that complying with the transparency requirements would be too expensive. In fact, the cost is one of the primary reasons the federal government cites for not currently punishing noncompliant hospitals. But these requirements have been in place now for more than three years, which is more than enough time for hospitals to budget for this.
Given how confusing and expensive our healthcare system is, Missouri patients can’t afford to wait any longer for hospitals or the federal government to act. Healthcare price transparency would be a real win for Missourians in their battle against ever-rising healthcare costs. There’s still about a month left in the legislative session, so it’s still possible that our general assembly could push healthcare price transparency across the finish line this year, but at this point, I certainly wouldn’t hold my breath.
Let’s Jump on the Nuclear Energy Bandwagon
A few months ago, I delved into a fascinating bill being debated in Congress, the ADVANCE Nuclear Act, which had the potential to reinvigorate the nuclear energy sector in the United States. This bill would have helped streamline and modernize the cumbersome regulatory process that restricts construction of new nuclear plants (you can read the specifics of the bill here). Now, a new House version of the bill, the Atomic Advancement Act (AAA), seems to be inching closer to the president’s desk.
Nuclear momentum is building at the federal level, and with the AAA gaining serious traction in Congress, shouldn’t Missouri position itself to take advantage of possible federal changes?
In Missouri, there appears to urgency in finding coal’s replacement. Nuclear energy could be the keystone piece in this future transition. So what can Missouri do?
While I have highlighted numerous state reforms in previous blog posts and testimonies, the most pressing issue is fixing a statute passed in the 1970s, seemingly at the behest of the anti-nuclear lobby. This statute prevents utilities from raising rates in order to help pay for construction works in progress (CWIP). Nuclear power plants are both extremely capital intensive and subject to extensive holdups in the regulatory process. These two factors make nuclear developments risky investments, and this absence of a financial backstop has been, and continues to be, a roadblock for further nuclear development in Missouri.
While there are many important topics being debated in Jefferson City, legislators should not forget about the importance of nuclear regulatory reform—especially as federal reform could be near. In the Missouri Legislature, House Bills 1435 and 1804 (which address the CWIP statute) have made little progress.
As coal power is being phased out, Missourians will need an energy source that will keep the lights on and the air clean. Nuclear power can check both these boxes—but power plants do not arise out of thin air, and they will not be built in Missouri if the regulatory environment here makes them infeasible or prevents them from being cost effective. Eliminating the longstanding CWIP statute through HB 1435 and HB 1804 would help utilities shoulder the upfront cost of plant construction so that they can work with both domestic and international nuclear developers to revive our state’s nuclear industry.
We should set a solid foundation in our state while the federal government works on its end. Missouri should not miss opportunities for nuclear development because we allowed bad state policies to remain in place.
A Win for Education in Missouri
Senate Bill (SB) 727, which has been moving through the legislature in fits and starts this year, was finally passed by the House and will be going to the governor’s desk. The bill ended up being quite large. Here is some of what’s in it.
Charter schools could be coming to Boone County. If a group of teachers, parents, or citizens wants to open a charter school and has a solid application, it can now apply to a university or the state charter school board for sponsorship. The group does not need the approval of a local school board.
Eligibility for the MOScholars scholarship program for low-income students and students with disabilities has been greatly expanded. There are no longer geographic restrictions for who is eligible. The income limits for eligibility have been raised. The total amount of tax credits that can be dedicated to the program was increased from $50 million to $75 million. And the dollar amount of the scholarship was raised to bring the number in line with the Foundation Formula amounts for similar types of students.
Districts in the state’s largest communities must now put a potential switch to a four-day school week to a vote. There is also a financial incentive that will be remitted to any district that remains open five days per week.
There is also an important change to the state’s foundation formula. Previously, students were counted purely based on attendance. Now, the formula will be 50 percent based on attendance and 50 percent based on enrollment.
The minimum teacher salary was raised from $25,000 to $40,000 for all teachers and from $33,000 to $46,000 for teachers with master’s degrees.
Districts will be able to attempt to fill teaching positions in “hard-to-staff” schools by placing teachers higher on the salary schedule than they normally would be.
There are many more provisions to SB 727. It represents a defensible trade-off between increasing options for Missouri students who need them and investing in the system. I look forward to the governor signing it.
Documents Give Conflicting Numbers on the Cost of a New Stadium
The other day I asked in a post about the missing Populous report about Kauffman Stadium. I still don’t have the full Populous study, but I do have a slide deck presentation based on the study that Populous was presenting in 2022. I am confident that this is the deck that KCUR references in its November 2023 story.
The Populous slide deck (available here) is dedicated to the problems facing Kauffman Stadium, including the infamous Alkali-Silica Reaction (ASR) or “concrete cancer.” The deck indicates that when this appears, it must be replaced. The report also highlights problems facing several parts of the stadium and concludes “the age of the building systems and outdated technology will force replacement of major mechanical, plumbing and electrical systems as their service life expires.”
The final slide lists the renovation cost estimate as $1.072 billion. That is more than the new ballpark cost estimate of $1.005 billion. These estimates suggest that a financially prudent decision would be to build a new park.
But wait . . .
On page 9 of the term sheet the Royals presented to Clay County on September 28, 2023, the cost of a new ballpark in North Kansas City is listed at $1.277 billion. That’s 27 percent higher than the Populous estimate of $1.005 billion. That increase may be due to inflation, which would also affect the cost of repairing the K. We don’t know the projected costs of the plan to build a stadium in the Crossroads district that voters rejected on April 2 because no one will tell us. We also don’t know the cost estimates of building in the East Village.
Unfortunately, there is so much we don’t know about these proposals. The Star reports that the city manager is now in talks with both the Chiefs and the Royals and that a public vote may not be necessary. It would be a shame if the lesson that new stadium proponents learn from the April 2 vote is that the public should be even less informed and involved in how the city spends tax dollars.
Collecting the Earnings Tax on Remote Work is Illegal. ‘Nuff Said
The St. Louis Post-Dispatch has had two recent columns criticizing the Missouri House for passing legislation that would further clarify that the City of St. Louis can’t collect the earnings tax from remote workers. I say “further clarify” because it shouldn’t be necessary at all. What the city did when it started charging the earnings tax for remote work at the start of the pandemic was contrary to the law. Anyone who can read the basic words of the statute can see that. Here is the statute as it is now and has been written for some time (emphasis added):
Salaries, wages, commissions and other compensation earned by nonresidents of the city for work done or services performed or rendered in the city.
It says, “in the city.” Not “near the city.” Not “connected to the city by a phone line.” Not “in the city unless the city’s budget really needs the money in which case outside the city is fine.” In the city. For the record, a judge also ruled that what the city is doing violates the law.
Both columns admit to this to various degrees. Tony Messenger describes the city’s legal argument in the court case as “. . . probably a specious argument.” Members of the editorial board admit in their piece that the city’s legal argument “isn’t strong.”
But both pieces conclude that the state legislature should not be doing what it is now doing—further clarifying the law—because the city needs the money. The city’s budget problems, however, do not justify the city breaking the law in its tax collections.
That leads me to another point. The evidence from Kansas City is clear that if you refund earnings taxes for remote work, the sky won’t fall. Kansas City officials have stated this in hearings that I have attended. The amount of money refunded was not as large as they had feared it would be. In 2019 (all of these are fiscal years), Kansas City collected $272 million in earnings taxes. That fell to $245 million during the pandemic. It quickly rose to $289 million in 2021. And this happened while Kansas City was still refunding earnings taxes for remote work when requested.
There is no evidence the legislation passed by the House would “have a devastating effect on the city” as Tony Messenger says in his column. Even if the bill did have that effect, that wouldn’t justify city government ignoring the law.
We can all agree that getting rid of the earnings tax is harder than ever in St. Louis, with skyscrapers that sold for $200 million just over 20 years ago now selling for $3 million. It’s hard to depend on property taxes—like most cities in America do—in this scenario.
Decades and decades of bad policies combined with new, fiscally irresponsible “progressive” changes are making St. Louis look more and more like the new Detroit. It’s probably time to revisit the optimistic work from Institute analysts a decade ago.
Harsh Budgeting Truths
Just how broken is Missouri’s budget? Last week, Missouri’s House of Representatives finished work on its nearly $51 billion version of the state’s budget—and some lawmakers claimed this budget was a sign of fiscal restraint.
To be fair, if the House budget becomes law, it will be Missouri’s first budget in more than a decade that is smaller than the previous year’s budget. Not only is the House budget smaller than last year’s, it’s also approximately $2 billion smaller than what Governor Parson recommended for next year, which represents a small step in the right direction.
It should be noted that the budget process will now move to the Missouri Senate—the chamber more accepting of higher spending in recent years. It’s therefore still too early to tell if the state’s streak of record-breaking budgets is coming to an end.
The recent budget negotiations in Jefferson City also served as a reminder of how much things have changed for Missouri financially over the past several years.
- Missouri’s total budget has nearly doubled since Fiscal Year (FY) 2019, growing from a little more than $27 billion to $53 billion this year (FY 2024).
- General Revenues (mostly state income and sales tax collections) have increased by significantly less, going from approximately $10 billion to more than $13 billion over the same period.
- The biggest driver of budget growth has been the temporary influx of federal funds associated with the federal COVID-19 pandemic relief and infrastructure packages.
- The federal share of Missouri’s budget has grown from around 30% to closer to 50%.
- While Missouri (much like the rest of the country) has dealt with record-breaking inflation in recent years, state spending growth has outstripped the increase in prices, and has even grown faster than the state’s population and economy.
- Going into next year, the state will lose access to the billions of temporary federal dollars, all while state general revenues are expected to remain relatively flat or decline.
Keep in mind that the extraordinary state spending growth in recent years occurred even though Missouri’s constitution includes a balanced budget requirement—the requirement does not apply to federal funds.
There are myriad reasons to think the road ahead will be a tough one, and cutting spending will be a mandatory part of the equation. That’s why I’m happy lawmakers in the House took the measures they did to start turning the tide on state spending, even though I wish they’d gone further. I’m also looking forward to the Senate debating its spending plan in the coming weeks, with the hopes that members of the Senate also share the House’s view that spending should be reined in.
But with so many important spending decisions left to be made, and such dark clouds ahead in Missouri’s financial future, state taxpayers should join me in waiting until the budget makes it across the finish line before considering whether to celebrate any savings.
