Springfield Should Eliminate Its Economic Development Agencies

Posted on by David Stokes

A version of this commentary appeared in the Springfield News-Leader.

In July 2010, Missouri politicians joined the state’s economic development agency to announce the awarding of $17 million in state tax incentives, along with $39 million in local tax subsidies, to the Mamtek project in Moberly. The project called for making artificial sweetener using a process that would start in China and finish at a new plant in Moberly, creating 600 local jobs here. There was just one problem—it was all a scam.

It may seem unfair of me to criticize a government agency for falling victim to a criminal conspiracy, albeit one that really wasn’t that sophisticated, but government economic development agencies are a Catch-22 for taxpayers. When they do a bad job—as they did in Mamtek—they waste our tax money. As with the Bass Pro Shop in Independence and the Jamestown Development near Springfield, we can list plenty of private business projects government had no reason to get involved in but did to the detriment of taxpayers. But we can only wish they always did a bad job. It’s when they do their jobs right that taxpayers and average citizens really get burned.

When economic development officials do their jobs right, all they are really doing is subsidizing economic activity that likely would have happened anyway for the benefit of politically connected companies. As the old joke goes, economic development officials are great at creating jobs for other economic development officials. For everyone else, not so much. For all their skillful use of political buzzwords and claiming credit when none is deserved, it remains true that “government is a bad venture capitalist,” to quote President Obama’s economic advisor, Larry Summers. Summers was being polite. Government, in the form of local, state, and federal economic development agencies, is a terrible venture capitalist. It’s not that government officials don’t get their bets right often enough; it’s that they actively get them wrong because economic development officials are heavily influenced by the political incentives to reward supporters of the politicians who employ them. A short-term political payoff is more important than long-term success.

Late to the subsidy game but catching up fast, Springfield—having seen how St. Louis and Kansas City have operated their own subsidies and failed by every measure—has decided to follow in their footsteps. The trucking industry has long been important in Southwest Missouri, and there are numerous companies, stations, and stores in Springfield to service the various fleets. But not enough for the City of Springfield’s Department of Economic Vitality (that’s its actual name), which decided to use over $4 million in taxpayer funds (along with other subsidies) to entice an enormous new gas station company, Buc-ee’s, to locate in town.

The head of another local convenience store company, Rapid Robert’s, rightfully took issue with the plan. He didn’t object to the competition, but rather the use of tax subsidies in a field full of local companies that had grown without them. His objections fell on deaf ears, and likely would have been meaningless to the members of the city’s “economic vitality” department. They, like economic development officials everywhere, care nothing about history, propriety, or capitalist theory. They care about getting the forms marked up, the tax money spent, and the deal done so that they can claim credit, add it to their resume, and start searching for the next job.

Economist Dick Netzer mocked the exaggerated claims of success made by economic development officials when he wrote, “Who needs oil wells, when a state can be another Kuwait just by increasing the budget of a tiny agency?” Claims of subsidy successes often border on the absurd. The author once heard a Clay County economic development official claim that “All of the growth” in the town of Liberty—a fast growing, exurban community north of Kansas City, the likes of which have been growing across the nation for decades—was due to a tax-increment financing (TIF) package they passed. As if suburbanization hadn’t existed until Missouri’s TIF law was passed in the late 1980s.

Economists Alan Peters and Peter Fisher studied tax incentives closely and concluded that they work about 10 percent of the time and are simply a waste of money the other 90 percent. They added that, like the Clay County officials mentioned above, economic development officials often credit all new employment and growth to tax subsidies.

As Christmas approaches, Springfield residents could get no better Christmas gift than the elimination of state and local economic development agencies. They are a blight on capitalism and an actively harmful influence on the civic and economic life of our state.

Does the Independence School District Have a Teacher Shortage Problem?

Posted on by James V. Shuls

The Independence School District (ISD) school board recently voted to move to a four-day school week. One of the stated purposes of the move is to increase teacher retention. This fits within the Department of Elementary and Secondary Education’s (DESE) narrative that Missouri is in the midst of a devastating teacher shortage and that COVID-19 greatly exacerbated the shortage. (Never mind that some evidence suggests teachers’ rates of exiting the profession are in line with previous years.)

I believe that the topic of teacher shortages is an important policy issue that deserves careful attention, especially when the solutions to the supposed crisis may cost state taxpayers hundreds of millions of dollars.

To better understand the shortages, Show-Me Institute Research Assistant Avery Frank and I requested the data DESE uses to determine the level of shortages in Missouri. Each year, school districts report the number of full-time equivalent (FTE) vacancies they had in each certification area. They also report the number of applications for positions and whether the position was filled or left unfilled. Additionally, each school district rates its level of shortage in each area on a 1 to 5 scale. On this scale, a “1” is “considerable surplus” and “5” is “considerable shortage.”

We have begun to analyze these data and plan to release a more detailed state report. Given the move by the ISD, we believe it is important for parents and policymakers to have a better understanding of what a “shortage” of teachers looks like in Independence.

The data we received span from 2018 to 2021. Unfortunately, Independence is only present in the data in 2018 and 2020.

In Table 1, I present the number of FTE vacancies in 2018 and 2020 and the total number of applications. As you can see, the district received an average of 15.3 applications per vacancy in 2018 and 13.6 in 2020. This ranges from a low of one application for one school psychologist position (not a teaching position) in 2020 to a high of 172 applications for one secondary social studies position in 2018.

Table 1

In Table 2, we present the number of certification areas rated 1–5 in each year. As you can see, a total of 10 areas were suggested to have some degree of shortage in each year.

Table 2

When we asked DESE for a clarification on these rankings, this is what it provided:

Degree of Shortage–Perception of the supply of available teachers as compared with number of positions vacant. Valid entries are the numbers 1 through 5 using the descriptions below:

  1. Considerable Surplus–Many applicants available, inquiries received frequently.
  2. Some Surplus–More applicants than jobs, applicants easy to locate, inquiries received often.
  3. Balanced Supply–Adequate number of available applicants.
  4. Some Shortage–Fewer applicants than positions available.
  5. Considerable Shortage–Applicants very difficult to locate for available positions

Based on these definitions, it does not appear that ISD is reporting its shortages in a manner consistent with the DESE definitions (see Tables 3 and 4). In both years, ISD reported level 4 or 5 shortages in ten areas. Based on the DESE definition, “fewer applicants than positions available,” not one of these certification areas in the table below would qualify as a level 4 rating, let alone a level 5 rating.

Table 3

Table 4

In each year, just one position was left vacant. In 2018, the district did not fill one speech- language specialist position (not a classroom teaching position). In 2020, the district did not fill one secondary mathematics position. Given that the district had 42 applications for four openings, it is likely the position was not filled due to a purposeful decision on the part of administrators.

In total, the district had 76 vacancies over the course of these two years in areas deemed shortage areas. The district received a total of 463 applications for these positions, an average of 6.1 applications per vacancy.

Our data are of course limited, and we can only report on the data DESE provided to us. Of course, these are the data DESE uses to determine shortages. Nevertheless, it is possible the district has more data available, and we would be pleased to present those numbers as well.

Based on these numbers, what do you think? Does the ISD have a teacher shortage? And is that shortage severe enough to justify a move to a four-day school week?

12/21/22–Correction: The data we received from DESE contained information for the years 2018 to 2022. The Independence School District application and vacancy data were present the following years: 2018, 2020, and 2022. Once we received the data, we merged the vacancy data with district demographic data from DESE. Because we did not have 2022 district demographic data, the 2022 observations were dropped from the data set. We have now recovered those data and will post an update that includes the most recent numbers.

Public Schools Without Boundaries With Jude Schwalbach

Posted on by Susan Pendergrass

Susan Pendergrass speaks with Jude Schwalbach about his new report PUBLIC SCHOOLS WITHOUT BOUNDARIES: A 50 STATE RANKING OF K-12 OPEN ENROLLMENT .

Jude Schwalbach is a policy analyst at Reason Foundation. He previously worked at The Heritage Foundation’s Center for Education Policy where his research focused on expanding educational opportunities for K-12 students and reducing the federal footprint in education. Before joining Heritage Foundation, Schwalbach taught high school in Phoenix, Arizona.

Listen on Apple Podcasts 

Listen on Stitcher 

Listen on SoundCloud

 

WATCH: The Red Vs Blue Myth and the Real Threat to American Stability

Posted on by Zach Lawhorn

Recorded on December 1, 2022 at the World Chess Hall of Fame in St. Louis, Missouri

Tony Woodlief is Executive Vice President at the State Policy Network. He helps oversee SPN operations, supports SPN’s president in her guidance of the leadership team, and helps ensure the organization’s projects and programs measure success, evolve as SPN grows, and maintain alignment with our vision and mission.

Tony previously served as president of the Bill of Rights Institute, and before that the Market-Based Management Institute. He has also served as president of the Mercatus Center at George Mason University. An alumnus of the University of North Carolina, he has a Ph.D. in political science from the University of Michigan, and an MFA from Wichita State University. Tony has appeared in media outlets including Fox News, The Wall Street Journal, The New York Post, National Review, and C-SPAN’s Washington Journal.

Tony is also the author of I, Citizen: A Blueprint for Reclaiming American Self-Governance. In writing I, Citizen, Tony conducted extensive research on American public opinion to find out what Americans believe and uncover the source of their political animosities. Through his research, Tony discovered that America is more united than divided, despite what the pundits tell us, and traced the source of our perceived animosity to a small minority of dedicated partisans within the political establishment of Washington, DC. I, Citizen tells the story of how these partisans have created the myth of a divided America and how they’ve concentrated power in the hands of unelected bureaucrats and partisan elites, and offers practical solutions for how we can reclaim our right to self-governance by focusing on solutions and commonalities closer to home.

The St. Louis County Budget

Posted on by David Stokes

The St. Louis Post-Dispatch recently ran an article on St. Louis County’s budget situation that was lacking, in my opinion. St. Louis County is trying to address a $40 million budget shortfall, and the article quotes county budget director Paul Kreidler and other county officials about the current predicament. This is the 2023 budget, and they are claiming that financial hits from 15 years ago and Missouri’s Hancock Amendment are some of the causes of the county’s shortfall. As the article puts it:

And it’s [the Hancock Amendment] one of the reasons St. Louis County’s budget situation looks so dire, county officials say.

The [Hancock] amendment forces local governments to adjust their property tax rates to avoid excess revenues. When the county saw a sudden increase in assessed property values around 2007 and 2008, it couldn’t collect the windfall. . . . Then sales tax revenues also plummeted because of the Great Recession—about 10% of revenue from residents buying cars and shopping vanished.

As to the part about not being able to collect the property tax windfall, I hardly know where to begin. First of all, the reassessment process is not and never was intended to lead to tax increases (although it often does). Requiring tax rates to roll back is a good thing and should be more strictly enforced than it is. But in fact, St. Louis County government (and many other local governments) are getting just such a windfall this year from increased personal property taxes (which are exempt from rollback rules). St. Louis County will get almost $4 million more in revenue this year simply due to used cars increasing in value.

I also disagree with the article’s statement that the county “couldn’t collect” the windfall in rising home values. Over the past decade, total assessments in St. Louis County have increased 29%, with the bulk of that being home values. During that period, property tax rates have only been reduced by 10%, leading to a 14% increase in total property tax collections over the past decade. As for the “sudden increase” the county experienced in 2007 and 2008, the county did not lower its tax rate in those years. So, it did enjoy the benefits of the increase! (See page 167 in this CAFR.) When the county did lower the tax rate in 2009, it only lowered the debt rate, not the general fund rate. When assessed valuations started to fall in 2009, the county could have raised its property tax rate without a vote of the people to offset those losses, but it chose not to do that. Maybe they should have, and maybe they shouldn’t have, but the Hancock Amendment didn’t prevent St. Louis County from taking such action.

That 14% increase over the past decade does not include the current car-tax bonanza, and next year’s reassessment is likely to be substantial given the large increase in home values seen in 2021 and 2022. Yes, home values have leveled off the past few months, but assessed valuations will be set as of January of 2023, so any real decline in 2023 will not be captured. Combine that with the high inflation rates that local governments will use to reduce their rate rollbacks, and next year is likely going to be very expensive for taxpayers.

St. Louis County’s elected officials can ask taxpayers for a property tax increase at any time. Just because politicians don’t want to ask that, or voters may choose not to approve it, does not mean that the Hancock Amendment is a problem for local government. It is anything but. Just look at what has happened in Kansas City, where the school district is the only local government exempt from Hancock rollback rules. Assessments have skyrocketed in recent years, and taxes have not decreased at all in the Kansas City school district. That’s the reality without the Hancock Amendment, and it’s one I’ll pass on.

 

Note: The original version of this blog post incorrectly stated that the decrease in sales-tax revenue during the Great Recession was less than the approximately 10% that the county claimed. However, county’s figure (as reported in the Post-Dispatch) was correct. I had overlooked a sales tax increase approved by the voters during that period that accounted for the difference.  I thank Paul Kreidler from the St. Louis County Budget Office for pointing out my mistake.

 

What’s the Rush, Chesterfield?

Posted on by David Stokes

Chesterfield leaders have scheduled a special city council meeting for Wednesday, December 14, to vote on (and likely approve) the $300 million-plus subsidy for the Chesterfield Mall (and surrounding area) tax-increment financing (TIF) plan. The special meeting is unusual and likely relates to reports I have heard from multiple places that the proposal has to be done in 2022. These sources indicate the developer is behind this push.

In most instances, the timing of the TIF project would not matter. It would start when passed by the TIF commission and city council and last up to 23 years from that date. But apparently, it really matters here, as the special city council session indicates. Why?

Probably because the work on the project has already begun, and if the work has already begun, there is risk of the property being assessed at a higher value in the looming 2023 reassessment cycle. If it is assessed at a higher value, that limits the size of the tax subsidy available. Don’t get me wrong, it would still be an enormous TIF project, but hey, every few million dollars counts.

Of course, the fact that the work has begun before the TIF proposal is finalized is important, because the justification for this abomination of a TIF project is that the area is “blighted” and that the project would not happen at all “but for” the tax subsidy. It is hard to claim that it would not happen “but for” the subsidy when construction has already started before the subsidy is approved, but this appears to mean nothing to Chesterfield, the St. Louis County TIF Commission, and the various planners and lawyers who are all in on the tax subsidy largesse. (See appendix C of this document for the relevant affidavits.)

There’s another way to interpret construction starting on this project before the money was even approved. The developers were so confident that the TIF commission and the Chesterfield City Council would approve the money that there was simply no need to wait. This attitude, if true, would conform with the broader subsidy culture in our state, where local governments often just rubber stamp tax subsidy requests.

Will the city further contort itself to do the bidding of the developer and get this all approved before 2023 when the reassessment clock will strike midnight? Or will the city protect taxpayers and the other affected taxing jurisdictions, such as the Parkway and Rockwood school districts, by dealing with the reality that the developers used the system to extract taxpayer money for a project that never needed subsidies to begin with?

Missouri vs. Tennessee: An SEC Showdown

Posted on by Avery Frank

A month ago, the Missouri Tigers rolled into Neyland Stadium to face the high-flying Tennessee Volunteers. While the Tigers should definitely be taking notes from Tennessee on how to run an elite offense, there is also helpful policy Missouri should bring back from Knoxville: a comprehensive teacher evaluation system.

The Tennessee Educator Acceleration Model (TEAM) was implemented in 2012 with the goal of providing educators with a model that helps them continuously improve their practice. By using announced and unannounced in-class observations, academic growth data, and student performance data together, TEAM calculates a teacher score (1–5 scale) and allows teachers and school leaders to have an ongoing dialogue about how what happens in the classroom impacts student performance.

In 2011, student performance in Tennessee was lagging behind Missouri. In 4th grade mathematics and reading, Missouri was 7 points and 5 points ahead of Tennessee on the National Assessment of Educational Progress (NAEP). In 8th grade math and reading, Missouri was 8 points ahead. In 2022, Tennessee is now 4 points and 1 point ahead of Missouri in 4th grade math and reading and tied in the same subjects for 8th grade. While TEAM is certainly not the sole reason for this rapid growth (as a plethora of free-market policies have been implemented), Tennessee education researchers regard this system as beneficial in refining the Tennessee teacher pool.

Show-Me Institute researchers have repeatedly demonstrated how teacher quality is one of the most important factors for improving student performance, and TEAM allows for more informed hiring decisions and growth in teacher’s skillsets. By assisting teachers in developing their full potential, and showcasing high-scoring teachers, TEAM allowed for teacher quality to improve by coaching less-effective teachers and retaining high-quality ones. This is not simply theoretical; lower-performing teachers were more likely to exit Tennessee public schools, and stronger teachers were more likely to be retained.

However, TEAM is not simply a hiring and firing tool for schools, but more importantly, it’s an improvement system that helps coach teachers to enhance their skills and strategies. Through individual observations and one-on-one pre- and post-lesson conferences, an outside observer identifies key strengths from their lessons and asks teachers to self-analyze. Asking questions such as, “When developing lessons, how did you decide on the pacing so sufficient time is allocated to each subject?” allows teachers to reflect on their own strategies and brainstorm areas to improve. These evaluations work; teachers in schools with more robust TEAM evaluation systems (frequency of observation, number of evaluators) improved their students’ math scores faster than those with less robust systems.

Missouri teachers have expressed discomfort with increased accountability programs, but they need have no fear. Tennessee teachers certainly had reservations when TEAM was introduced with only 28 and 38 percent of Tennessee teachers believing that TEAM would improve student performance and teacher performance, respectively. Now those numbers have reached 71 and 76 percent.

It’s understandable that some teachers may have reservations about increased scrutiny on job performance—many may feel the same in their own jobs. In Tennessee, teachers are improving, the best teachers are staying, and teachers believe in the system. This evaluation system is one we should emulate, and we cannot let fear interfere with providing our children with the best education possible. Too much is at stake.

Lead Us into Battle for Academic Development

Posted on by Avery Frank

I still find myself thinking about the Missouri Commissioner of Education’s vague comments following Missouri’s dismal scores on the National Assessment for Educational Progress (NAEP). To paraphrase the quotes: The poor scores are an indication that high-quality instruction matters, and we need to continue accelerating post-pandemic learning.

If we are in a hypothetical war with low test scores, Missouri’s Department of Elementary and Secondary Education’s (DESE) actions do not effectively inspire me to charge up the hill. We need our leaders to formulate concrete strategies and implement real changes to improve our education system. For an example, look no further than Tennessee Governor Bill Lee, and the Tennessee Commissioner of Education, Penny Schwinn.

Policy is guided by leadership, and Tennessee’s education-focused leadership has instituted free-market policies that would help Missouri students succeed.

Parental rights are paramount in Tennessee. New laws were enacted in 2021 for curriculum transparency and 2022 for protection against inappropriate materials in school libraries and classrooms. Show-Me Institute analysts have advocated for a parental bill of rights in the past, although Missouri failed to commit to this idea in the past legislative session.

Governor Lee has stated that: “We can fund public schools and provide alternate opportunities for children at the same time if we are committed to funding students and not systems.” In early 2022, Lee pledged to add $1 billion to education initiatives, including teacher salary raises (tied to accountability measures), increased funding for 110 statewide charter schools (in Missouri, about 60 charter schools exist and they are located exclusively in St. Louis and Kansas City), learning initiatives (e.g. new phonics program), and career and technical programs. This increased funding was conditioned on changing the state’s 30-year-old funding formula.

This past session, Lee’s pledge was fulfilled, as a bill with the additional money and the changes to the funding formula passed. Tennessee’s education funding is now calculated by student, not by system. Under the new formula, per-pupil expenditures are set at a base level of $6,870, and then additional funding goes toward individual student needs: special education funding, personal tutoring, or helping disadvantaged kids in rural and urban areas, as a few examples. This type of “backpack funding” assists schools that serve students with additional needs, helping districts and teachers. This type of funding system also helps pave the way for the expansion of comprehensive school choice, as parents who choose a new school for their children more easily have their funding follow them to their institution.

The actions of Tennessee’s leaders are generating results. Missouri used to be far ahead of Tennessee in terms of academic achievement. In 2011, Missouri scored about 8 points better on the NAEP in every category. Tennessee is now (as of 2022) four points ahead in 4th-grade mathematics, one point ahead in 4th-grade reading, and tied in both 8th-grade reading and mathematics. Missouri leaders could learn a lot from Tennessee.  We need concrete action, not just vague rhetoric about the problems in Missouri education. If something doesn’t change soon, Missouri students will end up getting left further behind.

Some Thoughts on “Pre-Filing Eve”

Posted on by Patrick Ishmael

For many of us, the beginning of December marks the beginning of the Christmas season, kicking off a monthlong period of mirth and Mariah Carey music. From Bing Crosby to Justin Bieber, the sound of December feels simultaneously old and new, ushering out one year and ushering in another.

But December 1st is also an important day for the legislature. That’s because it’s the first day legislation can be submitted for consideration before the chambers reconvene in January. Known as “pre-filing,” the process generally signals what the top priorities are going to be for legislators in the next legislative cycle—with the fastest filers getting the lowest-numbered bills and the sometimes dubious bragging rights of being the first to bring policy ideas to the legislative table.

What will be in the queue? In no particular order, here are some of the ideas that have been getting a lot of talk this fall and will probably be hot topics when the legislature reopens in 2023:

  • Open enrollment is the idea that students in the state should, in some form or fashion, be able to enroll in a public school outside their home district. It appears that this will be a major priority in the House. My colleague Susan Pendergrass has talked about the issue at length, and it seems like she will probably do so again in the upcoming session.
  • The Missouri Parents’ Bill of Rights, or MPBR, looks likely to make a comeback. The bill would guarantee parents a stronger role in their kids’ education and require curricular transparency from schools and districts that currently doesn’t exist.
  • School board reform has been a popular topic of legislative debate during the break, including potential changes to when elections are held and transparency around who board members are and how they can be contacted by the public.
  • Lastly in education, there may be a push to clarify who can participate in girls’ sports.
  • The corporate income tax made a cameo in this fall’s special session, with a cut to the tax being stripped at the last minute from the individual income tax legislation that eventually passed. With a regular legislative session afoot, a push to cut or even phase out the corporate income tax appears likely. As with the individual income tax, I am a strong supporter of the reduction and elimination of the corporate income tax and am looking forward to hearing that debate in 2023.
  • Property tax reform and changes to the Hancock Amendment will likely receive an outsized amount of debate, especially in the House. Both deal with the size of government and the tax burden government can impose.
  • There also appears to be interest in the Clean Slate Initiative both inside the legislature and outside it. National organizations appear primed to get involved with a push to expunge certain criminal records, with conditions, to better integrate former inmates back into society. The exact language of the proposal remains in flux, but when it’s finalized, I’ll definitely weigh in on it.

‘Tis the season for policy. Let’s hope it’s a good one.

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