Short-term Rentals, Long-term Questions

Posted on by David Stokes

Turning primary or secondary homes into assets by renting them out via AirBNB or VRBO has become very popular. It also often conflicts with local zoning regulations banning or limiting such practices. When a similar debate—technological changes versus old laws—emerged with Uber and Lyft a decade ago, I unambiguously took the side of Uber and Lyft because the existing regulations were rank protectionism for the taxi companies. The short-term rental question is trickier.

The debate over municipal limits on renting out your own property is happening all over Missouri, but most immediately in Lake Ozark and the City of St. Louis. In Lake Ozark, which currently bans short-term rentals in much of the city, the city council is voting Tuesday night on amending the zoning laws and allowing short-term rentals in certain parts of the city. I am opposed to municipalities having a comprehensive ban on short-term rentals. In a tourism-driven area like the Lake, it makes even less sense to have an outright ban.

The arguments for allowing short-term rentals are that: (a) you have right to rent out your own property if you wish to (b) allowing more rental options is good for the tourism industry and local economy; and (c) complaints about the rentals are often overblown, and police or regulators can handle such problems as they arise.

I agree with all of that—but even if you believe with all your heart that zoning violates property rights, the courts have decided that zoning is legal. So, if zoning regulations where you live say you can’t rent out your property, you may need a better argument. Point (b) is hard to dispute, and while point (c) is also true in my opinion, I understand why homeowners next door to the property that is the exception—with lots of parties, noise, crime, etc.—may want their city to take more proactive action.

The legitimate arguments against allowing short-term rentals are also straightforward. Too many of them do involve large parties and general mayhem. More importantly, one has to have sympathy for the property rights of the people who bought a home or condo under existing zoning laws that limited or prohibited such rentals, and are now seeing people trying to change (or governments ignoring) those laws. I support allowing short-term rentals, but I won’t be cavalier about the property investments people made with the understanding such things are not allowed.

It’s a tough issue. I think short-term rentals should be allowed in a tourist area like Lake Ozark (and the entire Lake region), but I understand that limits and rules may be necessary. In more residential locations, tighter limits may be appropriate. However you look at it, this issue isn’t going away in Missouri anytime soon.

I’ll be writing more soon on the role homeowners associations can play in this issue and how short-term rentals should be taxed.

Breaking: The Actual Starting Teacher Salary According to DESE

Posted on by James V. Shuls

The St. Louis Post-Dispatch, and other major media outlets in Missouri, continually claim that Missouri teachers are, on average, the lowest-paid in America. That claim is false. As the data clearly show in the National Education Association’s report, which the Post-Dispatch cites for its claim, Missouri ranks 50th. That’s 50 out of 51 because Washington, D.C. is included. Montana ranks lower than Missouri.

You may ask, “So what? Isn’t this just splitting hairs?”

Undoubtedly, being second to last is hardly better than being dead last. But this correction is not simply about making Missouri teacher salaries look marginally better. It is about calling for clarity when it comes to this important policy discussion.

Right now, the Missouri Legislature is debating measures that could cost taxpayers hundreds of millions of dollars to increase teacher pay. To date, no lawmaker has been provided accurate information regarding Missouri teacher pay. That’s the problem.

Take, for example, this NEA report in which Missouri ranks 50th. The figures from this report are being described as the average starting “teacher” salary. But the numbers are actually the average starting “district” salary.

“So what?”

But this distinction matters! Each year, Missouri hires thousands of new teachers. An actual calculation of the average starting teacher salary would use the data from each of these teachers. A district that pays well and hires a bunch of teachers would pull the average up.

The NEA report calculates the average starting salary of Missouri’s more than 500 districts. It counts small, low-paying school districts the same as it counts large, higher-paying school districts.

If the Middle Grove School District, which according to the Missouri State Teachers Association is the only district to start teachers at the state minimum of $25,000 and has just 35 students, were to hire one teacher, and the Parkway School District, with more than 17,000 students, were to hire 20 teachers at the starting salary of $44,250, the NEA report would count each district once and say the average starting salary was just $34,625. In reality, the average of those 21 new teachers would be $43,333. This is a difference of more than $8,700.

If you haven’t noticed, Missouri has a lot of school districts Our state has more than 550 school districts, which ranks 11th in terms of total number of districts. Meanwhile, Missouri is 21st in the number of students. Florida, which has about two million more students, has just 75 school districts. All of these figures come directly from NEA reports. Taken together, these facts mean the NEA calculation of district averages leads to lower averages and lower rankings for Missouri teacher pay.

The NEA reports Missouri’s starting salary as $33,234. But what is Missouri’s actual average starting teacher salary?

According to data I have obtained from DESE, the average regular term salary for a first-year teacher in Missouri was $38,367.33 in 2022. This figure was provided directly by DESE after my request. The increase of more than $5,000 would move Missouri up to 37th on the NEA report.

While we’re at it, I’d like to note some other relevant data. Missouri ranks 43rd in average salaries for instructional staff. Meanwhile, Missouri ranks 48th in student-to-teacher ratio, with 11.3 students per teacher. In comparison, Illinois’s ratio is 14.3 to 1, ranking the state 28th. In 2021, revenues for Missouri’s public schools were $15,809 per student, which is 31st overall nationwide. These data suggest that part of the reason Missouri’s teacher salaries are relatively low is due to staffing choices made by school districts themselves.

Missourians deserve an honest discussion about Missouri’s teacher salaries. For that, we must have all the facts.

Year-End Jobs Report: Goldilocks, or Calm Before the Storm?

Posted on by Aaron Hedlund

For the second year in a row, the U.S. economy enters January under a considerable cloud of uncertainty. In January 2022 inflation was 7 percent, and the “transitory” narrative pushed by defenders of the current administration was itself proving quite transitory in the face of stubborn reality. Although the demand for workers remained strong as the economy continued to ride the wave of a V-shaped recovery that began in summer 2020, businesses were struggling with a labor supply shortage that was driven at least in part by the massive wave of deficit-financed government transfers from the American Rescue Plan Act in spring 2021 that actively pushed workers to stay on the sidelines (most predominantly by extending excessively generous unemployment benefits despite a robust job market and stripping the Child Tax Credit of work requirements).

A year later, in January 2023, a lot has changed, but some things remain the same—especially the amount of economic uncertainty on the horizon. The economy began the year with rock-bottom interest rates, but after the Federal Reserve finally came to terms with the persistence of inflation, it wisely abandoned its lax stance and proceeded to tighten the screws by raising interest rates at an extremely rapid pace—taking its benchmark Fed Funds rate from 0 percent at the beginning of the year to over 4 percent by the end. During this same period, mortgage rates jumped from historically low levels of under 3 percent to over 7 percent. As a result, existing home sales fell by 35 percent over the year, and residential investment plummeted. Meanwhile, gross domestic product shrank during the first two quarters of the year but managed to register a respectable number in the third quarter (fourth quarter data is not available yet).

The primary questions on everybody’s minds entering 2023 are these: Can the economy achieve a soft landing? And can inflation come down without the U.S. economy entering recession? Unfortunately, it is still far too early to tell. Today’s jobs report revealed that the labor market continues to hold up, with payrolls growing by 223,000 in December 2022 and the unemployment rate falling to 3.5 percent. While these data are good news, they don’t tell us much about the future, because the labor market tends to lag the rest of the economy. In other words, if the U.S. economy hits turbulence in 2023 and enters recession territory, the labor market response will likely be delayed, as has been the case historically. In the meantime, the main takeaway from the most recent jobs report is that the prospects for the Federal Reserve reversing its rate hikes are basically nil—at least until inflation drops back down to 2 percent and remains there for a while. The recent release of the Federal Reserve’s minutes from its most recent policy meetings confirms that there is no sentiment at the Fed to begin rate cuts anytime soon.

It is still possible to gather some other tea leaves from some of the recent economic data, however, to get a sense for where the economy may be headed. The downside of the latest jobs data is that there is little to no evidence that workers are being enticed from the sidelines. As shown in the chart here, the labor force participation rate—which counts people who are working and those actively looking for work—remains below 2019 levels by a full percentage point. Some of the drop is due to early retirements during COVID-19, but if one looks at the data just for prime-age workers (those between the age of 25 and 54—see the chart here), their labor force participation rate hasn’t fully recovered either. With 1.75 job openings per unemployed worker, the labor shortage has no imminent end in sight, which also complicates the inflation picture by making it more difficult for businesses to accommodate demand without raising prices.

Thankfully, the end of 2022 offered some promising signs for inflation. Most directly, the inflation data itself showed some moderation, although it continues to run hot at over 7 percent year-over-year. Also, the most recent jobs report showed that wage pressures also may be subsiding to some extent. Of course, faster wage growth in principle is a good thing for workers, but only when driven by sustainable forces. Over the past nearly two years, wage growth has run hotter than in prior years, but the increase took place amidst a backdrop of declining productivity. The result has been even faster price growth, resulting in a steep drop in purchasing power, leaving families poorer in terms of their living standards. Going forward, 2023 offers a lot of uncertainty, and data over the next few months regarding inflation and productivity will be quite revealing. One thing working in the economy’s favor is a divided Congress, which should mean a stop to the glut of inflationary government spending. The question is whether it will be too little, too late to avoid a hard landing.

Reminder: Missouri’s Auditor Has Power to Promote Spending Transparency

Posted on by Patrick Ishmael

As the 2023 legislative session opens this month, it’s heartening to hear the keynote speeches of our elected officials and the extent to which their priorities seem to be hewing toward good government. Tax cuts, education transparency and reform, Hancock Amendment reform . . . that’s a much-shortened list of the good stuff I’ve heard from policymakers on the first day of the session.

Yet while most elected officials have been sworn in and are settling into their offices this week, one important elected office remains between occupants—the office of the auditor, which gets a new officeholder on Monday, January 9. I’ve long been a fan of the state’s auditors because the office plays a critical role in promoting good, transparent, and accountable government, and I’m hopeful that over time, the legislature will vest more oversight power (and funding) in this important office.

That doesn’t mean the next auditor is without powerful tools at his disposal; he’s made clear his intention to focus some of his firepower on educational transparency in curricula, spending, and performance. That’s stupendous stuff. But the auditor ought to include revised reporting expectations for all local governments, as well. More local government transparency would also advance the treasurer’s Show-Me Checkbook.

As I reiterated on January 4, 2021, “the Auditor’s Office could make the Show-Me State a leader on the issue [of spending transparency] by leveraging the office’s existing rule-making power.” How? By using Section 105.145 of Missouri’s Revised Statutes:

  1. The governing body of each political subdivision in the state shall cause to be prepared an annual report of the financial transactions of the political subdivision in such summary form as the state auditor shall prescribe by rule, except that the annual report of political subdivisions whose cash receipts for the reporting period are ten thousand dollars or less shall only be required to contain the cash balance at the beginning of the reporting period, a summary of cash receipts, a summary of cash disbursements and the cash balance at the end of the reporting period. [Emphasis mine]

There are many avenues for the auditor to pursue greater transparency in local spending, but importantly, it seems to me that 105.145 allows the auditor to require political subdivisions to include supporting documentation for their annual transaction reports. 105.145 clearly states that the auditor gets to prescribe the form of these summary reports, and the auditor could easily declare that these financial summaries must include all supporting transaction documents. In addition, those transactions should be made public by the auditor’s office and posted to the treasurer’s Show-Me Checkbook website.

This is, of course, only one idea in a month that is chock full of them in the legislature, but as the auditor considers projects to undertake outside the realm of education, I hope he considers reforming the way all local spending is reported to him, and to the public. The legislature could explicitly require such reporting by passing a new law, of course, and it might in 2023 or beyond. But I don’t think the auditor needs to wait for additional authority from legislators to advance the public interest in spending transparency.

 

Podcast: The Changing Demographics of St. Louis with Dr. Ness Sandoval

Posted on by Susan Pendergrass

In this episode, Susan Pendergrass speaks with Ness Sandoval about the changing demographics of St. Louis, crime in the city, immigration as a possible solution to some of the challenges facing the region, and the cost of a bad national reputation.

Ness Sandoval, Ph.D, is associate director of SLU’s Geospatial Institute (GeoSLU) and an associate professor of sociology. Dr. Sandoval’s research tells stories using maps and works with students to use data and maps to look into the future.

Listen on Apple Podcasts 

Listen on Stitcher 

Listen on SoundCloud

Produced by Show-Me Opportunity

Enthusiastic School Choice Supporters Pack Herzog Foundation Education Rally

Posted on by Patrick Ishmael

Now that we’re between holidays and recovering from our family get-togethers, I wanted to share with our readers video from the Herzog Foundation’s Education Freedom Rally that I attended and spoke at earlier this month. The rally was put on by the Foundation not only to showcase the importance of school choice broadly, but also to focus on the state’s MoScholars Program, for which Herzog has been a pioneering supporter and resource.  My talk, which focuses on our long-standing support for informed school choice, begins at around the 18-minute mark.

Thanks to the Herzog Foundation for the invitation and their enormous contributions to school choice in the state.

Certificate of Need Repeal Must Become a Legislative Priority

Posted on by Patrick Ishmael

As our readers are well aware, the last two years have been harrowing from the perspective of public health policy. The coronavirus pandemic immediately altered the way that government interacts with the public in unexpected and almost schizophrenic ways. On the one hand, the potential reach of government medical mandates and lockdowns has never been greater; on the other hand, market-oriented health care policies like licensing reform and scope of practice expansion have been more widely adopted than at any time in recent memory.

But while the jury is still out on whether society-wide lockdowns really work to stop pandemics, the jury is not out on the importance of supply-side health care reforms: supply-side health care reforms work, and they help patients.

Of course, we’ve made this point often, and one reform we have emphasized in particular is Certificate of Need (CON) repeal. In short, a CON law “gives government the power to manage competition in a given industry through the allowance, or disallowance, of new providers, facility expansions, or certain services as defined by the law.”

In Missouri, the health care facilities covered by the state’s CON law include nursing homes and hospitals, and competing hospitals and care centers are included in the process of deciding whether to allow new competitors into their health care markets. The economics here are simple: more competition means more choices, which puts downward pressure on prices. That’s good for customers and their pocketbooks, but naturally, incumbent hospitals and other care centers would rather have less competition.

But just because hospitals and other care centers might not want competition doesn’t mean the government should be empowered to prevent it. Imagine if grocery stores, or gas stations, or restaurants had a say in deciding whether consumers could have new options for groceries, gas and dining. It’d be bizarre, anti-market, and anti-consumer. Yet, this is how large swaths of Missouri’s health care market operate, and this system survives at least in part because most of the public doesn’t realize what’s happening.

Supply-side health care reforms like interstate license reciprocity have both immediate benefits for combatting a pandemic as well as long-term access benefits beyond the pandemic itself, and such a reform was very popular because the benefits were immediate and easily explainable. But it’s important for legislators to start considering long-term supply-side reforms, like CON repeal, that may have been a low priority during the pandemic because the benefits would be slower to materialize. Fortunately, several bills have been filed for 2023 that would repeal the state’s CON law; I hope they fare well in the coming year.

Something that sounds like “hospital construction reform” may be a low priority when people are being exposed to a lethal respiratory disease, but policymakers should prepare our health care system for the (hopefully) vast period of time between now and the next pandemic, when more typical health care needs will need to be met and the price for care will be an acute concern for payers. Competition in health care is a good thing for patients’ wallets, and Missouri should repeal its CON law to ensure the state’s health care market is as competitive as possible.

Open Enrollment for Increasingly Closed Doors

Posted on by Avery Frank

With its recent vote to implement a four-day school week in 2023, the Independence School District joins 146 other Missouri districts serving 74,076 students that already operate under this system. The move means that over 26% of Missouri school districts will be on a four-day school-week schedule next fall. The decision in Independence will affect 13,765 students and could signify the expansion of the trend toward a shortened school week. Up to this point, districts taking this path have been primarily smaller and more rural (the largest: Warren County R-III, with 3,026 students).

Districts have implemented this new schedule to lure teachers to their schools during a supposed teacher shortage. However, Show-Me Institute Distinguished Fellow of Education Policy James Shuls has raised questions about how serious this shortage is (if it exists at all). But even if we were to grant that teacher shortages are a problem that districts need to address, the four-day school week will generate new problems, which could be amended by a complementary policy–open enrollment.

Forcing families to adapt to a four-day school week is a significant change that will be disruptive for many parents—particularly those with younger children—whose employers are more committed to the traditional five-day work week. For families of children using the free/reduced-price lunch program, there may be additional difficulties for finding care and proper nutrition on the extra day off. With that said, parents who work from home or otherwise have the flexibility to accommodate the shorter school week might find that the new policy is a good fit for them. Every family is unique—which is why the Missouri State School Board’s recent interest in the possibility of instituting open enrollment statewide holds so much promise.

Open enrollment would enable parents in Independence and the surrounding districts to decide for themselves which schedule works best for their families. If the four-day school week would create serious problems for a family in the Independence district, the chance to move their children to a nearby district that has classes five days a week could be a lifesaver. Conversely, there are probably families in the area surrounding Independence that would benefit from the four-day schedule if they were allowed to switch districts. With open enrollment, districts can offer options while decision-making power remains with the parents.

In any case, the welfare of the children should be the paramount concern of all involved, and the effect of a 4-day school week on learning remains a subject of controversy. Paul Thompson at Oregon State University recently published a study evaluating the impact of four-day school weeks. He noted the numerous benefits that accompany attending school in-person, including face-to-face interaction with both teachers and peers along with opportunities for structured group activities. On one hand, four-day school weeks reduce these benefits and increase weekend learning loss; some students may be more vulnerable to these effects than others. On the other hand, an additional day off provides extra downtime for students and teachers and increased opportunities for students to spend time outside school with their peers. Acknowledging both the positives and negatives, Thompson finds that if schools maintain the same number of hours of instruction they had in a five-day week, these negative effects (reduction in test scores) are mostly negated (but still exist). However, if instructional time is not maintained, the negative effects are strongly pronounced.

Just like individual families, individual students will handle a four-day school week in different ways; it will be a better fit for some than for others. The trick is matching each family and student with the right schedule, and that’s a job best left to parents. If the trend toward a shorter school week has staying power, we’ll learn more about its long-term effects in the years to come. In the meantime, open enrollment has the potential to maximize its benefits and minimize its shortcomings.

Does the Independence School District Have a Teacher Shortage Problem? 2022 Data Update

Posted on by James V. Shuls

In a previous post, I presented 2018 and 2020 application and vacancy data from the Independence School District. The data were obtained from the Missouri Department of Elementary and Secondary Education and contain information regarding the number of job openings, applications, and positions left unfilled. In that post, I stated that the data we received were from 2018 to 2021. That was incorrect. The data also contained information for 2022. Unfortunately, we inadvertently dropped those data when we merged the dataset with district demographic data that did not contain 2022.

As I previously discussed, the Independence School District cited teacher shortages as a reason for moving to a four-day school week. My goal in the presentation of application and vacancy data is to give the public a better sense of what Independence means when they say “shortage.”

The 2022 data reveals a clear drop-off in the number of applications for job openings.

In 2018, the district had 2,485 applications for 162 job openings (15.3 applications per vacancy).

In 2020, the district had 1,878 applications for 138 job openings (13.6 applications per vacancy).

In 2022, the number of applications clearly dropped. The district received 967 applications for 161 jobs (6 applications per vacancy).

Per DESE guidelines, the district reports the level of shortage on a 1 to 5 scale, where 4 and 5 indicate shortages. Despite having fewer applications, the district reported fewer areas of shortages (7 certification areas rated 4 or 5, compared to 10 in 2018 and 2020). Just one certification area, industrial technology, was rated as a level 5. The district had 3 applications for 2 job openings, but only 1 application was from an appropriately certified individual.

Despite the decline in applications, the district had zero vacancies left vacant in 2022.

I should note, the district did see an increase in the number of positions filled with individuals who were not appropriately certified. In both 2018 and 2020, the district filled two positions with such teachers. In 2022, the district filled 12 positions with teachers without the appropriate certification.

We should note that “not appropriately certified” is a broad category. It includes, for instance, hiring an individual who is certified to teach high-school math to teach middle-school math where they are not certified. A certified teacher could simply take and pass a certification area test in another area to obtain this additional certification. “Not appropriately certified” may also include individuals who do not have an education degree, but are working toward certification. We do not know the full credentials of the individuals hired by Independence.

The Independence School District is clearly experiencing a decline in the number of applications received. Nevertheless, according to DESE’s definition of a shortage, “fewer applicants than positions available,” the Independence School District did not have one shortage area in 2022.

There are a couple more numbers that readers should consider when considering the severity of the supposed shortage in Independence. From 2018 to 2021, district enrollment declined by 576 students. Yet, the number of full-time equivalent teachers increased by 22.

I repeat the questions asked in my first post. Based on these numbers, what do you think? Does the Independence School District have a teacher shortage? And is that shortage severe enough to justify a move to a four-day school week?

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