Susan Pendergrass speaks with Todd Davidson, Vice President of Programs at the State Policy Network, about how artificial intelligence is reshaping the think tank world. They explore what AI is good at and where it falls short, how organizations like the Show-Me Institute can use it to become more productive without losing their edge, why face-to-face relationships will only become more valuable as AI-generated content floods the internet, how a Hawaii think tank used an AI agent to help fire victims submit legislative testimony, what good policy looks like in an AI-driven energy landscape, and more.

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Episode Transcript

Susan Pendergrass (00:00) Great, well, thanks so much for joining us this morning. Todd Davidson of the State Policy Network, to talk about the topic du jour: artificial intelligence. Thanks so much for coming on to talk about it. I’m afraid to even say anything out loud about AI because by next week it’ll be…

Todd Davidson (00:11) Yeah, happy to be here. Thanks for having me.

Susan Pendergrass (00:18) Nothing really ages — it changes so fast. But I did just read that Mark Zuckerberg has an AI agent who is performing his CEO duties for him. Did you see that? Why not, right?

Todd Davidson (00:28) I saw that, yeah. And then he can just kick back, go down to his Hawaii bunker and just let Facebook run itself.

Susan Pendergrass (00:37) Yeah, I mean, I still haven’t really dabbled in agentic AI, but I know it’s right there and I’m going to want to do it soon. We’re going to talk about AI in the think tank world, but I have to check legislation and hearings and see how those things are going every day. I can well imagine an AI agent doing that for me.

Todd Davidson (01:01) Yeah, if it’s properly trained. So ShowMe Institute, to give the audience broader context, is a member of State Policy Network, and we have sister organizations like ShowMe in states across the country. The Libertas Institute, which is based out of Utah, did exactly what you’re talking about. Connor Boyack, the CEO, built a legislative tracking system that then feeds into their scorecard where they keep track of legislation. He said it took him about eight hours of work to code the agentic AI, but now it does the work automatically. Of course it needs fine-tuning and always has a final human observer that verifies everything, but it’s being used for those purposes right now across the country.

Susan Pendergrass (01:59) So we’re in the think tank world, and it’s probably more of an art than a science at the state level. Tracking the policies — first of all, thinking about the policies that we think would be best for Missouri, then doing a bunch of research on those policies, then creating content on those policies, then trying to talk to legislators and hope that they see our point of view, and that they enact actual laws that reflect those policies. That’s a really labor-intensive job. Which parts of that could you see being picked up by AI?

Todd Davidson (02:33) I’m by no means an expert on AI, but I work with someone who is. What has been explained to me is that AI is very good at synthesizing information. It’s very good at predicting — it essentially predicts the next word. It takes all these inputs and predicts the next set of words, which comes out to us as sentences. So if you are able to give it certain inputs — say, I want you to look at these bills, I want you to look at these things — and give it a sort of walled garden, it can then be prompted to produce any type of analysis that you want. The reason you want that walled garden is because AI can still hallucinate. It can make stuff up. Actually, this just went viral last week: a lawyer down in Georgia went before the Georgia Supreme Court and had AI produce her entire argument. It cited five fictitious cases, and the judges called that out. So you have to give it constraints and say, here are the data inputs, now summarize this for me. And it can get you a pretty solid first draft of that summary. Of course, you’re still going to need a human to go through and edit it and add voice and texture to it. But summarizing that data, saying tell me which of these align with our principles or does not align with our principles — it would be very good at that kind of thing. What it’s not going to be able to do is the creative part. When you think about what is the policy that we want to design for Missouri, what does Missouri need — it’s not at the stage where it could do that. That’s where you would still want Show-Me Institute experts to be crafting those kinds of things. But if something’s already out there and existing, you can summarize it and score it based on criteria pretty easily.

Susan Pendergrass (04:35) So given how quickly firms are moving towards AI — and in fact mandating AI because it’s such a time saver and productivity increase — how does a think tank position itself in that world? There’s so much talk about AI just replacing all of our jobs. Maybe it does replace my job — I don’t know. I’ve heard podcasts generated by AI in my voice, so it could be doing this job right now. I would like to think it wouldn’t be as great, but how does a think tank position itself? What’s our value add in that scenario?

Todd Davidson (05:12) Start by going back to what your mission and objective is. ShowMe Institute — and by the way, I am a resident of Missouri and a big fan of the Show-Me Institute, both from my SPN perspective and from my Missouri resident perspective — we have principles: free markets, a robust civil society, a thriving economy. We want the feds to get out of the way in a lot of cases. We want the government to get out of the way. And then how we execute that mission is through policy change, mostly at the state level, though I know you also work at the local level. So state and local policy change is the objective. How do we go about that? We produce research and then we advocate — in some cases talking directly to policymakers, communicating out to the public through op-eds and things so that the public then talks to lawmakers. And ultimately we get policies passed that lower the income tax, reduce barriers to work, and provide more options for kids in schools. So what AI is going to do is make research and content much easier to produce. By research, again, I mean that summarization kind of research — it’s going to make that kind of stuff extremely easy for folks to produce. Everybody’s going to have a research assistant. What AI cannot do is personal relationships. It will never be able to do that. What it also cannot do is tour the entire state of Missouri, know all of the history and relationships and connections of people throughout the state. So I believe Show-Me Institute and all of the affiliates across the country that are state and local based are going to have an advantage because you’re in your community. You know people, you know policymakers, you know community leaders, you know people that are affected by your policies. And that’s something AI is not going to be able to do. AI can look at the statistics and arguments and academic literature, and it could put together a brief, and that could be useful. It would make your job more efficient — you’d be able to produce those things in a fraction of the time you do right now. But then with that extra time, I would use it to go out and build stronger relationships in the communities, and then use those relationships towards policy change.

Susan Pendergrass (07:51) What about grassroots? More grassroots-type stuff?

Todd Davidson (07:55) Grassroots very much. AI is going to have an interesting relationship with grassroots. In one way, it actually makes it easier for grassroots individuals to engage their legislature. On the other hand, it’s going to create a flood of grassroots engagement digitally. So face-to-face grassroots engagement is going to have more impact. I’ll tell you a story: Hawaii had the terrible fire that destroyed Lahaina a few years back. Hawaii has terrible building codes — it’s incredibly hard to build homes there. That town was completely destroyed, so the state needed to relax its building codes in order for homes to be rebuilt. Well, they weren’t making this change. Show-Me’s sister think tank, called the Grassroots Institute of Hawaii, built an AI platform that allowed individuals to submit testimony to the legislature. Testimony has a higher bar, right? You can email your lawmakers pretty easily, but testimony goes into the legislative record and has to follow a certain format and be structured in a certain way. That’s not something that grassroots individuals were very equipped to provide. So a think tank would typically provide the testimony and then get grassroots supporters to send emails to lawmakers. What Grassroots Institute of Hawaii did was build an AI agent so that an individual could say, “Hey, my house was burnt down, I need these things,” and the AI agent would turn that into testimony and submit it directly to the legislature. It resulted in a skyrocketing number of testimonies being filed. Because of that, the legislature said, “Wow, we’ve heard from 500 constituents — we’ve never heard from that many constituents before.” So they relaxed their regulatory regime, and now homes are being built in Lahaina much faster.

Susan Pendergrass (09:48) Did they know that AI was doing it? Were legislators thinking, okay, this is AI?

Todd Davidson (10:12) That is why they went through testimony. Legislators’ email inboxes — they’re not reading their emails anymore, right? They get thousands of them. But through testimony, the AI was not making up the stories. The people had to fill out the content and explain their story. The AI was just structuring it in a way to make sure that it got submitted as testimony. I do think that is a bit of an arms race. At some point the same thing that has happened with email will happen — there will just be thousands of pieces of testimony and you won’t be able to read all of them. So there was a bit of a first-mover advantage. And once that becomes ubiquitous, I do think what you predicted is going to happen, where legislators just say, well, this is AI-facilitated. And that’s where it’s going to have to go back to face-to-face, bringing those people in.

Susan Pendergrass (11:08) I think you’re absolutely right. As more video content comes out and we all realize it’s AI — I just don’t really believe that any videos are real anymore. I don’t really believe pictures are real. I don’t really believe music is real. And it doesn’t necessarily bother me that much, but I think because of that skepticism and unwillingness to believe in digital content, things happening in real life right in front of us are going to take on higher and higher value, so that we know for sure that if I’m speaking to a legislator, it is me saying it and what’s coming out of my head. That’s about the only way we’re going to know if something is real — or the default is just going to become AI-generated.

Todd Davidson (12:01) 100%, I absolutely agree. And that’s where I think organizations like ShowMe are well positioned. Because you’re in the state of Missouri, you can be in Jefferson City or you can be in St. Louis or Kansas City in those face-to-face relationships. It’s going to make your government affairs personnel far more valuable, your fundraisers who can be face-to-face with donors far more valuable, grassroots activists that are face-to-face. It’s going to put a premium on face-to-face interactions for sure. I agree — there’s going to be so much content out there. You’re still going to need content because that gives you credibility, it gives you what you’re going to talk about. But then you’ve got to pair that with the face-to-face interaction, otherwise it’ll just get ignored.

Susan Pendergrass (12:47) And you can definitely see the gap when people are generating stuff through AI and they don’t know the subject matter enough — like you said about the attorney. But there is definitely a role for humans to say, I mean, I do this all the time with AI: I’ll say give me five of these things, give me five infographics or something like that. But the human has to know which one is the best or which one makes the most compelling argument. AI simply really can’t do that. So while some people would love to believe that AI is going to run the world, I do believe there is an emerging role for human discernment to know which AI products are better than other AI products. Would you agree with that?

Todd Davidson (13:32) Yeah, 100%. I think the sweet spot is utilizing AI to make yourself more efficient or do things that you don’t like doing. But then that raises you up into that discernment phase where you’re the one making the call. I do this all the time — I’m having conversations with AI to increase the outputs. I should not spend any time making infographics. I’m not good at it. But I can have a conversation with AI where it produces that infographic much more effectively than I could. I’ve also found that, if you put the prompting on it, it can help you find those particular sources that you’re looking for. Say you want to write a survey on school choice research — it can help you gather all of those materials much faster. But then you have to make sure that it’s of high quality.

Susan Pendergrass (14:35) What do you think about the current pushback on AI-generated pictures? Do you think that is just a learning phase we all need to get through? Some top artists on Spotify have been determined to be AI-generated.

Todd Davidson (14:57) Really?

Susan Pendergrass (14:59) Yeah. The number two Christian artist is just AI, and across all genres there are artists with millions of subscribers who are just AI-generated music based on what AI knows we all like. So we do like it. Does it matter that there’s no real person writing the music? I don’t know.

Todd Davidson (15:12) It’s kind of sad. Yeah.

Susan Pendergrass (15:21) I know the initial reaction is, that’s sad. But then after a while you’re like, I don’t know.

Todd Davidson (15:26) There is going to be intense pushback to all things AI. AI is very unpopular right now. I saw some polling just last week that showed it is the number one concern of voters. There will be a populist pushback against AI. We’re seeing this pushback against the data centers. There’s even polling that showed a plurality of the population believes it’s immoral to use AI. And I think it gets at the core of some of what you’re talking about here — yes, there’s this very popular, satisfying music, but it loses some human element because there’s not a human behind it. I do think we’re going to see a lot of pushback to AI on multiple dimensions. There’s that cultural dimension. There’s the economic anxiety dimension right now: a fear that AI is driving up energy costs, a fear that AI could take my job. There’s going to be pretty significant pushback. Right now we’re mostly seeing that in anti-data center efforts, trying to stop the building up of data centers across the country. I was looking at some Democratic pollsters today who were pitching that Democrats should advocate for a guaranteed job, guaranteed income, guaranteed healthcare, and a guaranteed home if you lose your job to AI. That kind of populist messaging is going to resonate with a lot of the public. What is the response going to be to that? What are the other solutions that we could advocate for that both allow the continued growth and opportunity and also allow continued innovation around AI, because we’re going to need AI to continue to develop?

Susan Pendergrass (17:30) It’s already here. I mean, we’re doing this in reverse order. And I think my opinion is that massive new technologies always get pushback — like the car. People were on their horses, and then we started designing roads for cars. Calculators got a lot of pushback, the internet got a lot of pushback. But ultimately people decided that they liked it better. I think AI is the same — we just have to figure out how to work with it. And I know that it is threatening to take a lot of jobs, but I see it more as a good thing. It gives us an opportunity to become the expert over AI. AI is not going to be the expert — we still need the human component. Like you said, face-to-face interactions. Legislators are still going to know what Missourians want and how to represent their constituents, and those are real-world issues. The data center pushback is because I don’t want to look out my window and hear a buzz and see a data center — I don’t want all that land going to data centers. That’s a real-world, in-person issue. But I just think we’re going to have to learn to work with it. I don’t think robots are going to — maybe this is where I don’t want to say things out loud — but maybe the robots will take over the world, I don’t know. But personally I feel like it is helpful to get a lot more content out, because you don’t know what’s going to resonate with stakeholders. Whether it’s a video or an infographic or a report or a different type of content, the fact that we can generate these things much more quickly I think is a benefit to us, and it makes the in-person time more meaningful to me.

Todd Davidson (19:11) You’re absolutely right. When a new technology comes out there’s going to be pushback, and organizations like ours have to figure out what’s the policy framework that allows that innovation to thrive without getting in the way. And fortunately we have a lot of those policies already. Like Avery, your colleague at Show-Me Institute, talks a lot about energy. One of the biggest pushbacks on AI is that it’s driving up energy costs. There’s some research that shows that’s not quite what’s happening. What’s happening is a lot of green policies that got passed in the 2010s are coming to roost — the renewable portfolio standards and those things are really what’s driving up energy costs. But even still, what can we do to make energy more affordable and reliable, even with a bunch of data centers added to the grid? And Avery’s got good policy on this: expanding nuclear power, expanding the use of reliable energy sources.

Susan Pendergrass (20:23) It’s separating out consumer electricity from data center electricity. You can carve these things differently.

Todd Davidson (20:29) Yeah, that’s another one — where the data center has its own power source. So there are policies out there that can mitigate it. And on the job question, unfortunately AI is happening at the same time that we’re having a continued cost of living and inflation issue. It’s one more thing that is driving anxiety. It’s not the root cause of what’s going on — we’ve got other factors that we need to address to get inflation under control, particularly on the energy side.

Susan Pendergrass (21:08) Yeah, but I do think it’s great that we have so many opportunities to expand or improve how we do things. In our little corner of the world, which is think tanks, we’ve been doing things kind of the same way for a long time. So I think a new approach to how we do business is a welcome change, and I think we could be a lot more effective.

Todd Davidson (21:38) Yeah, I think we’re going to see far more productive think tanks on the research side. On the litigation side, I was talking to Wisconsin Institute for Law and Liberty. They litigate a lot of cases. With the advent of AI, every lawyer essentially got a legal clerk right away. They went from nine lawyers and a handful of legal clerks to nine lawyers who each now have their own AI legal clerk. It’s dramatically expanded the number of cases they can take on. And the same thing on the research side. On the marketing side, production of content is going to be quite a bit easier and more cost effective as well.

Susan Pendergrass (22:26) Well, I appreciate having a chance to talk to somebody who has a positive perspective on it, because I do hear a lot of doom and gloom when it comes to AI. I was reminded by somebody that many of the scenarios in movies and books about AI are very dystopian, but perhaps it’ll be utopian. We don’t know. It’s all in how we approach it, right?

Todd Davidson (22:48) Yeah, it is. It’s going to be an exciting new world that we live in and we’re right on the frontier.

Susan Pendergrass (22:54) Anyone with little kids, like you — who knows what the world’s going to look like when they’re going to college. So you’ve got to stay flexible, right? Well, thanks so much, Todd. I appreciate you coming and talking to us about it. We’ll have to talk about it again sometime soon when the whole thing has changed.

Todd Davidson (23:02) Yep, stay flexible and always be learning. Yeah, sounds good. Thanks, Susan.

Produced by Show-Me Opportunity

The post AI, Think Tanks, and the Future of Policy Work with Todd Davidson appeared first on Show-Me Institute.

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Transcript

Susan Pendergrass (00:00)
Great. Mike McShane, EdChoice, always great to have you on the podcast. I read your Substack, Informed Choice. I know you do not write them all, but you write a lot of them, and I think they are super interesting. A month or so ago, there was a lot of “what’s out, what’s in,” closing down 2025 and starting 2026. I really liked your post about six words for 2026, but…

Mike McShane (00:03)
Always great to be with you. Thanks for having me. I tried to.

Susan Pendergrass (00:28)
I want to talk about that, but generally speaking, I have been having this feeling, and I think we have even talked about this on the podcast, that something has changed in K–12 education in the United States. Something seems different than it did. You track the number of kids in private school choice programs, which took forever to get to a million, and now it is like a million and a half, right? It just seems to have been growing so fast.

Mike McShane (00:52)
Yeah. I think there has definitely been a shift. I have noticed that, with the start of the year and legislative sessions starting across the country, I am talking to journalists and other folks, and it seems like the normal conversation I would have had in the past was, “Are we going to have these programs, is there going to be choice, or what?” Now it is, “What is the shape of it going to be?”

So much of choice now is being taken as a given. I think we are even seeing that within public school districts. Even in states that might not have private school choice or robust charter schools, they are at least saying, “Parents are going to need to have choice, and maybe we can keep the genie in the bottle by just having it within public school districts, or in between public school districts.” But the idea that we are going to go back to residentially assigned public schools…

Susan Pendergrass (01:41)
Like Kansas.

Mike McShane (01:50)
…with the odd aberration here and there, it just seems like that shift has happened. Now it is a question of what it is going to look like, and it is going to look different in different states. It is not a “whether,” it is a “how.”

Susan Pendergrass (02:03)
That’s right, because we have a whole bunch of second-generation choosers, right? We have parents of young kids whose parents chose it, so they are not, like you said, going to go backwards.

Another interesting outcome you have talked about over the years is that the Catholic school movement is growing again, right? Like in Florida, we are seeing a resurgence in Catholic schools, and in Iowa, because parents did not necessarily not want to send their kids to Catholic schools. Some got mad about the scandals…

Mike McShane (02:05)
Yeah, for sure. Iowa, Florida, and probably other places when data comes out, for sure.

Susan Pendergrass (02:32)
…or they did not want to pay tuition, and now they can. And certainly this survey you all have done for so long, on where parents would send their kids to school versus where they do send their kids to school, maybe we are going to see some sort of convergence where parents can actually send their kids to the school they want.

A couple of the words you said are going to be big in education in 2026, “participants,” is that right? Participants.

Mike McShane (02:34)
Yeah. Totally, absolutely. “Participants” is one of them.

Susan Pendergrass (03:02)
And “supply side.” What do you mean by “participants”?

Mike McShane (03:06)
“Participants” is, there is this big debate now, and in the piece I started with very general words that are part of the broader conversation, and then I got very narrow into school choice research words. “Participants” is kind of a school choice research word, but not entirely. I think it is going to be part of broader debates about choice in general.

There is a big question out there, who uses these programs? Who is going to participate? There are competing theories. Skeptics say it is going to be all rich kids, or kids who are already in private schools. Stronger advocates say it will be low-income kids, or kids desperate for more options.

The answer is probably somewhere in the middle, and it will probably be different in different places at different times. Some of the emerging research suggests that when universal private school choice programs first start, for reasons that are perfectly predictable, students who are already in private schools are the first movers.

Susan Pendergrass (04:01)
Sure.

Mike McShane (04:28)
That is probably because private schools find out about these programs and have an audience. They can say, “Hey, you all know how you are paying to go here? Now you do not have to do that anymore.” And then over time, the circle expands outward.

Susan Pendergrass (04:33)
They pass out a piece of paper in every backpack, yeah. “You should get this.”

Mike McShane (04:48)
More and more, those families have neighbors, cousins, and people they play YMCA basketball with. The word gets out over time. A lot of traditional channels for educating people do not work as well. It is not like everyone watches the nightly news or reads the local newspaper.

Susan Pendergrass (05:08)
“Put it on your website.” That’s a Missouri legislative mainstay, put it on your website.

Mike McShane (05:14)
So a lot of this comes out via word of mouth or discussions. You could look at the same state and see participation change over time.

Because these programs are rolling out in different states at different times, there is not going to be one national answer to who is participating. It could be the first year in Mississippi, but the second year in Alabama, and the makeup of students will be different. Because of the nationalized nature of coverage, people will keep pushing for “the one answer,” but there isn’t one. Though, to be fair, some people will say there is. I do not think that will be true.

Susan Pendergrass (06:07)
Yeah, I get a ton of questions around the rural issue. Either it is going to be the demise of our rural school system because we are all going to close, or rural families do not need it, which are opposites. It is opposites, right?

Mike McShane (06:09)
Yeah. It cannot be both. And yet a frequent criticism is that it will be both of them.

Susan Pendergrass (06:25)
But I get that a lot. “There are no private schools for them to go to,” and “it is going to cause rural schools to close.”

Certainly in Missouri, even our MOScholars program is quite small, and we do not really have charter schools outside of two districts, two very far away places. So I think for a lot of folks in Missouri, it is mysterious, who would do this, and why would anyone want it? And of course, “All the poor kids are going to go to the wealthy school districts.” Still a lot of talk about property taxes. It is almost like 2005 in Missouri, a lot of that going on.

But the reality is, in long-running programs, and now I am thinking open enrollment, anywhere you let parents pick, you get a lot of rural participation. They have the fewest choices, right? And you get a lot of urban participation, and some suburban participation. Like you said, I do not think you can…

Mike McShane (06:55)
Yeah, right.

Susan Pendergrass (07:20)
I have had so many parents over the years say, “We do not need that here because all our schools are good.” And I am like, I promise you there is a child who got on the bus with a stomach ache this morning because they did not want to go to school, for whatever reason. They think the teachers do not like them, or they are being bullied, whatever it is. I promise you there are families who would leave if they could easily do it.

Mike McShane (07:30)
Yeah, for sure. Totally.

One thing that is going to be interesting, as we watch this play out, with questions about who is participating and who is leaving public schools, is that there are broader trends of public school enrollment decreasing. You hear in some states, “My gosh, all these public schools are closing because of choice programs.” But the state next door that does not have a choice program, their public schools are closing too, because there are just fewer kids than there were before.

So that is another thing we have to disentangle, the broader population trends. I was just seeing something earlier about how congressional seats and electoral college seats are going to change because of population shifts.

Susan Pendergrass (08:17)
It’s huge.

Mike McShane (08:26)
You look at states like New York and California losing large numbers of people, Florida and Texas increasing numbers of people. These are people in general, because that is how it all happens. We have to start with that baseline and then layer these other things on top, because I feel like school choice is going to get blamed for this, even in places where it does not exist.

Susan Pendergrass (08:36)
Yeah. I cannot tell you how many times I have talked about this and shocked people. Every school district in St. Louis County, for example, has declining enrollment by large numbers. Clayton’s declining enrollment, Ladue declining enrollment, all declining enrollment. People are like, “Where are they going?” And I say, “They were not born.” They simply were not born.

We had our biggest kindergarten cohort in 2013. That moved through to senior year of high school like two years ago. It is just demographics. They just were not born.

Mike McShane (09:00)
Right? Yeah.

Susan Pendergrass (09:20)
We have net out-migration of some groups of people, people with bachelor’s degrees, but for sure, it is demographics. These kids were not born.

There is going to be this push and pull between five-to-seventeen-year-olds and retirees, basically, because we are getting more old people and fewer young people. Do we build a school or a nursing home? I think it is going to be a thing.

And we still have school districts getting bonds, 30-year bonds, to build schools and buy buses. I do not know if that is the right answer. At least the charter school sector, and probably similarly the private school sector, figured out how to not be in the real estate business, how to lease a building, or do different types of arrangements. They are going to benefit from this, while the public school system is still building schools. The kids are not being born, but we will see how that plays out.

Another thing you mentioned, one of your words I have been thinking about a lot, two of them, is “transparency.” I have wondered, can I start calling accountability transparency? Because accountability is kind of negative, but transparency, of course.

And you talk about “rage bait.” Sorry, I am rolling these into one, but with early media stories around some of these private school choice programs, like Arizona, people really jumped on what parents were spending their money on. As though they cannot be trusted to spend this money, in the way the public school system can be trusted with billions, I mean trillions, of dollars. Parents cannot be trusted with this $8,000, they will simply…

Mike McShane (10:52)
Totally. This is the irony. The irony is kind of like the discussion earlier, how there are no places in rural America, and everyone will leave rural schools to go to these non-existent places. Both cannot be true at the same time.

We cannot say these programs are not transparent and then talk about all the individual purchases families are making. That has to be transparent for you to be able to make those arguments. It is kind of a shell game people are playing when they talk about transparency.

When you say, “Here are ways in which ESA programs are not transparent,” your research is a perfect example of the opposite. Transaction-level data, you have published papers that offer transaction-level data on every purchase in the ESA program.

Susan Pendergrass (11:59)
Trust me, there are hundreds of thousands of records.

Mike McShane (12:00)
Right, hundreds of thousands of records that are available for anybody to look at.

I think this is actually good. We need to have discussions about what should be included in these programs and what should not. It is an education savings account, not just a savings account, so we have to draw the borders around what is an educational purchase and what is not.

We live in a big, vibrant democracy, so we need to have these discussions. Should you be able to buy a trampoline, or a Lego set, or whatever? Let’s talk about it. That’s fine. Maybe we decide in some cases it is allowed, and in some cases it is not.

This is part of transparency and accountability. You are democratically accountable, we need to participate in this.

But I am still blown away by the number of people who claim these programs are not transparent, when what we know about what parents are doing is more granular and more detailed than any public school district, any charter school network, almost any institution you are going to see. You just do not get transaction-level data on anything.

We can debate whether those are good purchases or not good purchases, but to say they are not being transparent is wild to me.

Susan Pendergrass (13:09)
No, I mean, my kids all went to public school. They certainly went to amusement parks. They certainly watched a lot of movies. They would not want anyone scrutinizing every, you know, you have 30 teachers buying 30 whiteboards. Decisions were made that were not the best.

I did not see anything in the transaction-level data that made me think, “This is outrageous.” And who am I to say woodworking is not an okay thing for your child to learn? Swimming lessons, I had to swim. I do not know.

I do not want to get into that conversation because I assume the best intentions for parents. I cannot understand why a parent would invest the time and effort to get into these programs to simply buy themselves a trampoline, and not really care if their kids are reading or not. I do not understand that, but that is what…

Mike McShane (14:04)
Right.

Susan Pendergrass (14:15)
…they are throwing mud at the wall to try to discredit. Clearly, it is what parents want.

I am baffled that, when you look at politics in the United States right now, those on the left just refuse to accept this fact. It is a fact. Parents want to choose their school.

There are certainly Democrats for education reform, and plenty of people working hard from the left, but the general approach feels very last century. The teachers’ union saying, “Nobody wants this, we have to stop it at all costs. We have to put a halt to this and put more money into the public school your address sends you to. We need to fund those fully first before we can ever let kids out.” That is such a failed argument to me.

Mike McShane (15:18)
Look, this is why “accountability” and “transparency” are two of the words for 2026. Opponents to choice have figured out they cannot just go out hammer-and-tongs against it, or directly say, “We are against choice.” People do not learn lessons in politics, but they learn that one.

I was looking at the gubernatorial candidate just to Missouri’s north in Iowa. It was interesting. There was an interview with the Democratic candidate for governor, Rob Sand. He would not come out and condemn the ESA program outright. The interviewer perceptively drilled down and asked, “Are you saying you are not opposed to this program, you just want changes?” He never said yes to that. He has never said, “I am for this program.” If you read between the lines, he is saying, “I am not for this program, but I cannot come out and say it.”

His pivot was immediately, “I am just talking about accountability and transparency.” He wants private schools to follow every single one of the same rules that public schools do, and expects them to somehow do better.

Part of it is, these are folks working in red states who need to make arguments that appeal to conservatives. Accountability appeals to conservatives. Fiscal responsibility appeals to conservatives, not wanting to waste tax dollars. So it is smart strategy. People need to see what it is.

If this is a blue state, these exact same people are making arguments that appeal to progressives. But you are in a red state, so they are trying to make arguments that appeal to you. If you think about it for a little bit longer, what they are saying does not hold a lot of water.

Susan Pendergrass (17:41)
Yeah, and with this federal tax credit program, even though every state has to decide whether or not they are going to take the money, it is going to be a weird shifting of resources. If I live in a state that says, “We are not going to take the money,” that is fine. I can give my $1,700 to a scholarship group in any state. I will just send my $1,700 to another state.

Some states, like Virginia, the governor, one of the last things he did when he left was opt in. Now the new governor is going to have to make this weird choice. Do I want to go against it? If you looked at any poll of parents, any poll, you would know they want to be able to choose where their kids go to school. Do you really want to be the person that withdraws?

Mike McShane (18:21)
Yeah, when she seems to be in a perfect position to just say, “Oh, the last guy did this on the way out, so I guess we are going to do it.” Once they do it for a year and everybody is fine with it, it is just, “Oh well, whatever.”

Susan Pendergrass (18:33)
I do not know. I did not do it.

I think it is going to be really interesting because, again, the way we started this, there is a groundswell. I do not think you are going to turn it back. If you stay on the side of saying it is better when kids can only go to their assigned public school, you are in quicksand. You are going to bury yourself.

Mike McShane (19:03)
Yeah. The only thing I would say, and it was another one of my six words, is “rage bait.” It is always lingering in the background for me. I am seeing it more and more, all day, every day, stuff that shows up in your feed deliberately to upset you, terrify you, whatever.

Rage bait is unpredictable. You never know what is going to catch fire and cause a big shift. There is obviously potential for rage bait content, as we mentioned, we have crossed one and a half million, hundreds of thousands of people in various states, with lots of flexibility in what they can buy. People making bad decisions, people stealing things, it is totally possible that happens. Something egregious could happen.

With a large enough population, even very improbable events can happen. One fear I do have is that something rage-bait-y happens and people lose their minds over it.

But this is the key, if one parent in Arizona does something crazy, that does not mean the other 1,499,999 parents around the country should not have the right or opportunity to do this. We have to be able to say, “This is rage bait, this is not actually what is happening.”

Susan Pendergrass (20:51)
Yeah, we have talked about this. Those of us who have pressed for school choice for so long have said, “We will do anything you want, take our arm. We will put all our data out there, we will be as transparent as possible.” And your colleague, Marty Lueken, had a Substack about this recently, like, “We will take half the money. We do not need all the money, half the money will be…”

Mike McShane (21:08)
For sure.

Susan Pendergrass (21:19)
…150 percent transparent. We will jump through all these hoops just to get this thing that everybody wants, and it is from that transparency that we are going to get those stories. We are going to pay for that.

Mike McShane (21:29)
Yeah. It is important for people to be more attuned to the rage bait they are getting. People ask, “Have you seen this thing that happened in this place?” And I am like, okay, yeah, even if it did, what do you extrapolate?

A teacher in Sacramento did something crazy. There are north of a hundred thousand schools across America. There are north of three million public school teachers. At any given moment, someone is doing something dumb. I do not know what to extrapolate from that. It could just be one crazy person.

This is not just education. Across public policy, you point to one person in the military doing something terrible to delegitimize the military in general. Do not fall for this.

To be fair, sometimes we in the school choice movement, or education reform, have done rage bait of our own. People have used social media to point out, “My gosh, look at this assignment that a second-grade teacher in Poughkeepsie did, this is why we need school choice.” People have done that.

The measure with which you measure will be measured back to you. If you live by the sword, die by the sword.

Susan Pendergrass (22:54)
John Oliver did a story on charter schools. Remember, it was the guy in Florida that was letting a charter school be a nightclub at night? There is no way that is representative of charter schools.

Mike McShane (22:58)
Yeah, I remember that.

Susan Pendergrass (23:10)
That was an example I found shocking, but it is not representative. And you are right, they will find those stories.

Mike McShane (23:13)
Yeah, totally. We should all use less rage bait. We should not use rage bait to say just because one teacher in one place did something dumb, that is an indictment of public education in general. Nor should we allow the same thing to be done in reverse, which is, because one family did something crazy, we should not have choice at all.

Susan Pendergrass (23:49)
That leads to another one of your words, “slop.” There is so much talk about AI in schools and what to do about it. Is one person going to figure this out for every school everywhere, or are we all going to figure it out individually?

Mike McShane (24:03)
Yeah, I played out the scenario I am worried about. I do not know if it will happen in 2026, but it might.

We have heard a lot about AI in schools, students cheating, which is real and worrisome. But the specific scenario I have not heard as many people talking about is the prevalence of AI video, and the ability to create videos of things that did not happen.

How many, if you have a student in a classroom, after taking a picture or a short, unrelated video of their teacher, they can put it through a series of prompts, “Hey, have this teacher do,” and then insert whatever horrible thing, say something horrible, do something horrible.

Susan Pendergrass (24:34)
Yeah.

Mike McShane (24:53)
And if you are not savvy, and I will be the first to say I think I am a savvy consumer of the internet, I have been fooled or very close to fooled. AI videos of animals doing things, dogs protecting people from bears, or that one recently that went around with a bald eagle that had ice on its beak that someone knocked off, whatever.

Susan Pendergrass (24:58)
It is like a parlor game, right? No dogs are going off diving boards, just to clarify. The rabbits on the trampoline, these are not happening. But you are right.

Mike McShane (25:20)
People who are not as savvy, the thing I spelled out was, someone does that, and then suddenly the next PTA meeting is flooded with people because this viral thing went around. The superintendent or principal has to say, “This did not happen, it is not real.”

If you do not have the media literacy, it is like one person’s word versus another. “We saw it happen, it is on video.” “No, it did not happen, it is AI.” How we adjudicate those things, and how it could be weaponized by teenagers, or by bad actors, all of that stuff will happen. Whenever a new model is released, everyone tries to break it immediately, they are much more creative than I ever was.

I am worried for teachers, worried for schools, worried for school board meetings. It could be anything. It could be taking video at a football game and saying something happened that did not. Even if it all works out eventually, the time and energy wasted dealing with it…

Now, again, I am hoping more and more schools, this could be a real kick in the rear end to get phones out of schools and say, “We are not going to have phones in schools, because people are going to be making AI videos of their teachers.” That is one of a thousand reasons we should not have phones in schools.

But it is not the only place kids are interacting with one another, or with teachers. So we have to be really skeptical when we see that video of that teacher, or that student, or that principal doing something. Take a deep breath and ask, “Is this video real? Does this pass the smell test? Does this sound like something a teacher would actually do?” I am increasingly worried about that. There are many other things people worry about that I do not really worry about, but AI video in the context of schools, bad news bears.

Susan Pendergrass (27:53)
Yeah, I think we are going to have to start adjusting our thinking to only believing things that happen in front of our face, things we can touch. The prevalence of, you know, Amazon ads now, they are… I mean, I went to get my haircut and somebody was holding up a picture, and she was like, “Okay, well, that is not a real person.” We are going to have to default to disbelief if it is on a phone or on a screen. If it is happening in front of you, you can touch it, you can believe it. But the rest of it, I think we are going to become extra skeptical, because I do not believe much stuff anymore.

Mike McShane (28:22)
Totally. Are schools going to need CCTV cameras everywhere? Are we going to be oddly surveilled in a lot of different ways, just for CYA? “If people are going to be making up fake videos, we need the real video of what is going on.” I do not know how that is going to go, but…

That was the “rage bait” one, my plea to people, please do not fall victim to rage bait. It is pinging parts of our brains that we should not. I get wrapped up in it too. “My God, I cannot believe that is happening.” Then you take 10 seconds and you are like, “Wait, why am I fired up about this road rage incident in South Carolina?” Someone cut somebody off on the highway. Who cares? I am not there. It is not my deal.

I think this “slop” stuff is also something we are going to have to be really cautious about and thoughtful about, because it could cause lots of problems.

Susan Pendergrass (29:35)
Yeah, but then people are like, “I am not going to allow AI, I am going to check it.” I think AI, we are going to have to accept, right? We have to live with it.

Mike McShane (29:41)
Yeah, we are going to have to realize this is just part of it. There will be so many great things that come out of it, the creativity it will unleash.

In our own Substack, a bunch of the graphics we do are AI generated. I could not, I laugh, I have young kids, they are better drawers, I am horrible at it, but I can do this stuff with a couple of prompts in ChatGPT. “Hey, make me…” and they can be funny. You can do someone in the style of a famous painter and suddenly it is a Renaissance painting of me.

That is incredible productivity. The fact that I do not have to have a graphic designer, I can basically do it myself and put out essentially a small newspaper with some contributors and a bit of AI. That is an insane productivity increase, and it is incredible, but we have to be cautious of the downsides.

Susan Pendergrass (30:48)
Finally, your last word, “supply side.” In Missouri, folks will say, “Well, we do not need private school choice in our rural areas, there are no private schools,” as though the supply of private schools is fixed. It is treated like a natural result of how much interest there is, the kind of people who live in the community, and what is there is there, without thinking that if parents suddenly had $7,000 or $8,000 to spend, maybe somebody would open a new school.

Or not even a new school. Maybe somebody would open a visual arts business, or a soccer academy, tutoring, dyslexia therapy, whatever it is they think parents want or need. You would be free to be an entrepreneur in that space. That piece is largely overlooked, because it is like, “We have this many private schools with this many seats, so we can only have this many scholarships.” It is like, no, that is not fixed. Do you think we are going to see a lot of changes in that area?

Mike McShane (32:00)
Yeah, because another dimension where people think things are fixed is not only the number and locations, but the shape of what schools look like. “We are not going to have a private school in this small area because we cannot have a brick-and-mortar building with 30 rooms and 250 kids.” That is not what we are talking about.

If you can get 10 kids together at $8,000 apiece…

Susan Pendergrass (32:26)
There are no buildings.

Mike McShane (32:36)
…you can do a lot of interesting stuff. Especially if you can get space donated, leverage resources in the community, maybe some online stuff, and a local teacher. You could put together a heck of an education on $80,000 or $100,000.

It is happening. What makes it challenging to talk about is that it is happening across different dimensions. At the same time we are talking about Catholic schools growing and starting new schools in a traditional sense, two blocks away in some rented bungalow people are creating a Montessori micro school.

Because these things get spoken about in national terms and in a thousand-word news story, we struggle to discuss multiple dimensions. Existing schools are growing, new schools are emerging, and those new schools are going to look different. Some will grow, some will shrink, all these things can be happening at once.

Our job as researchers and observers is to do a lot of descriptive work, describe what is happening. There has been a push in earlier generations of school choice research toward causal results, horse-race comparisons, “Are they better than public schools?” “Is this type of private school better than that type?” But the only reason we were able to do that in 1998 is because, for a hundred years before, people did descriptive work to know, how many schools, what are they doing? Then you can talk about who is doing better, because you have to decide what they are doing, where they are, who is attending, are there differences.

It is almost like we are starting over.

Susan Pendergrass (34:39)
Yeah.

Mike McShane (35:01)
…doing that basic descriptive work. What is actually happening? What are people doing?

Susan Pendergrass (35:08)
Yeah, I know somebody who started a school in a barn on their property, and the parents came and converted the empty barn to a school. I know somebody who started a mobile school, basically in a big van, so that the school came to their house one day a week. And I know someone who started one in a high-rise in Queens. It is only limited by people’s imagination, basically, right?

And a like-minded group of parents. There are more people homeschooling now than used to be, so you could do this individually, but there are many more opportunities to do it. Parents, what emerged from the pandemic, at least, is they want their kids home maybe two days or three days. That is popular, and people are finding that two days out of the house creates unique opportunities in that space.

I think it is limited by people’s imagination, and some curriculum standards, and perhaps some accountability. But if you can meet those, I think we are seeing this idea.

I am not trying to be anti-traditional public school, but I butted up against this when my kids were little. “We are the only ones who know how to do this, so you have to accept our way of doing it because it is tried and tested and comes out of our schools of education at the universities.” This is the one and only way you have to teach the number line in third grade. “This is how it has to be, we cannot vary it because we are the great equalizer of civic society in the United States.”

Your boss, Rob Enlow, really shut me down on this. It has not panned out. We only read and do math less well each year.

I cannot imagine that letting all these flowers bloom is going to have a worse result. If we fast forward 20 years and look at median earnings and educational attainment rates, and we let this thrive, I think the outcome would improve. I do not see how it goes down.

Mike McShane (37:23)
That is the thing. You mentioned the interesting times we are living in now. So many of the “parade of horribles” choice opponents talked about forever, polarization, balkanization, people retreating to silos, it is like, hey guys, that already happened without choice. You cannot blame choice, because choice did not exist yet for that to happen.

Lots of people pushing each other in the streets went to public schools. Statistically, these are public school graduates having large problems with one another.

The conservative in me says things can always get worse. The fundamental progressive view is things can always get better, and the fundamental conservative view is things could always get worse. That strand in me says, yes, things could get worse. But across a lot of these dimensions, academic outcomes, civic outcomes, there is a lot of room for growth, and not nearly as much bottom end to fall out. So the risks associated with giving people more choices are not nearly as severe as proponents of the traditional public schooling system make it out to be.

Susan Pendergrass (38:58)
Yeah. Well, in Missouri, 40 percent of our fourth graders are below the basic level in reading, which means they cannot read at all. They cannot read. They are illiterate.

Would 40 percent of parents, if given the money to spend on their child’s education, have a nine-year-old and say, “Turns out they cannot read. I tried and tried, we just did not get there. They just cannot read.” I do not think so.

I know this is not the perfect solution, that accountability through parental choice is the answer. I am not saying that. But I do not think that if parents were truly put in charge, four out of 10 would just say, “Gosh darn it, this kid is never going to read, there is probably a lot of opportunity in the service industry.” I do not think so. I think that would be a much better check on the system.

Interesting stuff. Thanks so much for joining us. I really appreciate it, always.

Mike McShane (39:42)
Yep. Yeah. I agree with you. Agreed, 100 percent.

Susan Pendergrass (39:59)
So great to talk to you. What is your Substack called?

Mike McShane (40:02)
Informed Choice, so people can check that out. Informed Choice on Substack. Subscribe, it would be great.

Susan Pendergrass (40:05)
Yeah, it is really interesting. Great. Thanks so much.

Mike McShane (40:10)
Thanks for having me.

Produced by Show-Me Opportunity

The post The Six Words Driving the Education Debate in 2026 With Mike McShane appeared first on Show-Me Institute.

Susan Pendergrass is joined by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to explain what was actually at stake in the recent federal government shutdown. They break down the debate over extended Affordable Care Act subsidies, why health insurance costs keep rising, how COVID-era provisions distorted the marketplace, and what Congress may do next.

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Timestamps

00:00 Understanding the Government Shutdown
06:31 The Debate Over ACA Subsidies
09:10 Impact of the Affordable Care Act
13:24 Proposals for Health Care Reform
17:53 The Future of Health Care Costs

Transcript

Susan Pendergrass (00:00)
Well, this is going to be a very timely and interesting conversation with the Show-Me Institute’s own Elias Tsapelas. You are the Director of State Budget and Fiscal Policy, two things that are front and center right now, but I really wanted to just have you on to talk about a little bit of stuff around the recent government shutdown.

And I just want to say upfront, if I understand this correctly, the federal government can’t pay its bills unless it’s got an approved budget to pay the bills, right? And the fiscal year runs October 1st to September 30th. And if you don’t have a new budget for the next year, you can’t pay your bills. So it’s up to the Senate, the House, and the President to agree on a budget. And this past September, as has happened before, they could not agree, and Democrats were holding out, and that caused the government to shut down. What were Democrats saying they were holding out for?

Elias Tsapelas (00:52)
Well, I guess I should start with just a little caveat that some of what the Democrats were saying they were holding out for was not precisely what was on the table. So no matter what happens, health care premiums are going to be going up, that’s just a fact, because health care costs are up. Health care costs are going up everywhere. Hospitals, Medicaid, we see it everywhere.

Susan Pendergrass (00:56)
You know, fix it up for me. Why?

Elias Tsapelas (01:20)
What they were holding out for were these extended or expanded ACA subsidies, Affordable Care Act subsidies. We’re talking about the marketplace here. This is typically for people making between 100 percent and 400 percent of the federal poverty limit. For example, a couple of two: 100 percent of the federal poverty limit is about $21,000 per year, 400 percent is about $85,000 per year. That’s roughly the range you’re looking at.

Now, some small employers do purchase plans through the marketplace, but the big piece here is that the ACA provides subsidies for people. And the way it works, essentially, is that people pay a proportion of their income. If your income is 100 percent of the federal poverty limit, you’re going to pay roughly 2 percent of your income. Now, there are extended subsidies that change that calculation. But the point being, the law set out that if you make this amount of money, you’re only going to pay this much on health insurance, and the government is going to subsidize the rest. You are not sensitive to costs at all, because your costs are tied to your income.

Susan Pendergrass (02:54)
So, for example, if you earn $4,000 a month, theoretically, and I don’t know the numbers, the government would say you won’t pay any more than $300 in insurance premiums?

Elias Tsapelas (03:05)
Yep. And so that is a percentage that you pay scaled off how much income you have from that 100 to 400 percent. That is a core piece of how the Affordable Care Act worked, and everyone paid a portion based on the base subsidies.

Now, what the debate was about, or what Democrats were holding out for, was expanded subsidies, which came about during COVID as part of the American Rescue Plan, ARPA. And it did a couple things, but they were subsidies on top of regular subsidies. So this was not, “If this doesn’t happen, everyone is going to be paying unsubsidized plans.” This was an additional type of subsidy. These additional subsidies were set to expire at the end of the year, at the end of December. ARPA gave four years of subsidies.

Susan Pendergrass (04:04)
Because it was COVID related, temporary, and they said, “We’ll cover more of your premium through December 31, 2025.”

Elias Tsapelas (04:14)
Yes, I think part of the calculation was that people were going to like it so much that it would be hard to get rid of. And it’s certainly the case: if these subsidies go away, people will be paying more.

Susan Pendergrass (04:15)
Ahem.

Elias Tsapelas (04:27)
But that is not to say there would be no subsidies at all. These extended subsidies did a couple things. For people between 100 and 150 percent of the federal poverty limit, quick caveat: in Missouri, if you make under 138 percent, you’re on Medicaid, so you don’t pay anything, but in many states without Medicaid expansion, people go on the marketplace. What these expanded subsidies did is: if you made between 100 and 150 percent of the federal poverty limit, you paid zero percent of your income. You got a plan for free.

You would still have some cost sharing, and the sliding scale up to 400 percent that the normal subsidies used was lowered, so people under regular subsidies who made 400 percent of the federal poverty limit were paying about 10 percent of their income. With the expanded subsidies, you’d only pay 8.5 percent, and the subsidies no longer stopped at 400 percent. They would go all the way up. You would never pay more than 8.5 percent of your income.

Susan Pendergrass (05:30)
Okay.

Elias Tsapelas (05:42)
But typically, people above 400 percent of the federal poverty limit don’t want to buy ACA plans because 8.5 percent of income is expensive. Still, a decent number of people were impacted. It costs a decent amount of money. The Congressional Budget Office says extending these expanded subsidies costs about $350 billion over 10 years. Very expensive. But there are a lot of issues here, which Republicans are pushing back on as they negotiate whether to extend these by the end of the year.

Susan Pendergrass (06:31)
So now we’re in this argument of whether we extend COVID subsidies or not. And like you said, Republicans seemed willing to say maybe a year, or maybe we’ll vote on it in December. Essentially the Democrats didn’t get any of what they asked for, right?

Elias Tsapelas (06:48)
Yeah. A key piece is that when Democrats passed this in ARPA, no Republicans voted for it. There’s a variety of reasons, but a big one is that it exacerbates problems with the Affordable Care Act. People buying health insurance are seeing higher prices, high deductibles, high copays, so people don’t want to buy it. These additional subsidies got more people into the market, but at a very expensive cost. And because people are not cost sensitive, their share is tied to their income, the subsidies scale regardless of what insurance companies charge. That creates unintended effects. There were allegations of fraud. And a larger discussion: if we’re going to spend $350 billion per 10 years, is there not a better way to get healthier people to buy health insurance? Is there a better way to help people?

And the people most impacted are those around 400 percent of the federal poverty limit, not very low income people. Higher income people. And often near retirement folks who aren’t working anymore but aren’t yet on Medicare. They need health insurance, they have health needs, and insurance gets very expensive. That was something the Affordable Care Act tried to deal with. But doubling down on continuously funding this subsidy system is something Republicans didn’t want to do.

Susan Pendergrass (09:10)
Yeah. So we had Brian Blase of Paragon on the podcast, and he absolutely did not want those COVID related subsidies extended. He claimed that the Affordable Care Act caused health related expenses to go up. Do you know how that works?

Elias Tsapelas (09:45)
There are a couple things going on. One big thing Brian talks about is likely enormous fraud from the expanded subsidies. Bloomberg had a good article about what happened in Florida. As soon as the federal government offered zero premium plans for people between 100 and 150 percent of the federal poverty limit, background: Florida hasn’t expanded Medicaid, so people enroll on the marketplace. What happened is that it became a business for insurance brokers to get people enrolled. Brokers make money off enrollments, and people don’t care if they aren’t paying premiums.

So you had an enormous increase in people supposedly making between 100 and 150 percent of the federal poverty limit. Census data suggests far fewer people actually make that income. Tons were getting health insurance for free, and many weren’t using it. You’d expect higher usage. There are reasons to think there was widespread fraud.

More broadly, ACA plans must cover many things people don’t need, which drives up costs. And the marketplace risk pool is heavily made up of sick people, fewer healthy people, which makes insurance expensive.

So the bigger discussion is: how do you get healthier people into the market? How do you offer plans people want? Republicans are taking a stand that doubling down on the ACA model, with subsidies disconnected from costs, won’t work long term.

Susan Pendergrass (13:24)
Correct me if I’m wrong on this, but didn’t Senator Thune or somebody suggest just sending people $5,000?

Elias Tsapelas (13:30)
I don’t know if it was exactly that amount, but yes, there have been proposals essentially saying: maybe there will need to be a one year extension of subsidies because new plans start soon and it would be hard to roll out big changes in a month. But some ideas, from Senator Cassidy, Senator Thune, and others, propose approving the same amount of money but sending it directly to people instead of insurance companies. For many people, subsidies are worth over $30,000 a year. If people got $30,000, they might not spend it all on an ACA plan costing that much. They might buy a cheaper plan, use out of pocket spending, or seek non ACA compliant plans. There are ideas: HSAs, short term plans, specialized plans. A key piece is giving the money to people, not insurance companies, so someone has an incentive to reduce costs.

Susan Pendergrass (15:47)
Yeah. Well, the shutdown ended. Nothing really changed, right?

Elias Tsapelas (15:52)
Yeah. Congress will have to work a lot in the last month of the year. I’m a little disappointed. There were almost some very interesting budget related court cases that could have come from the shutdown. One argument was whether the government must fund food stamps, or SNAP, during a shutdown, whether they must give out money not appropriated. Some judges said yes. That raises major questions: can courts tell the executive branch to spend money Congress didn’t appropriate?

Susan Pendergrass (16:54)
I think they were told that they don’t, right, in the end?

Elias Tsapelas (16:59)
The Supreme Court basically said courts needed to wrestle with the issue. It got resolved before a final answer. We don’t know for now. Judges were on different sides. Democrats pushed back noting that in previous budgets, they fought to fund things, but the executive branch simply didn’t spend the money. There’s a lot of interesting stuff: can courts force funding, can the executive disregard congressional appropriations? I’m upset that didn’t get resolved. But the ACA issue is big enough that Congress has its hands full.

Susan Pendergrass (17:53)
Some folks said that because of the SNAP benefit question, we were just getting to the point where Americans were paying attention to the shutdown and then it ended. And what’s interesting is the amount of misinformation and hard to follow information. I saw headlines about someone’s insurance premiums going from $300 to $2,600. I don’t know if any of that was right, but it got a lot of play.

Elias Tsapelas (18:28)
I don’t think it was covered especially well in terms of what was being argued, because the government shut down far before these subsidies expired. There was a lot of muddying of the waters. Some people thought if subsidies weren’t extended, no one would have subsidies, even though the people most impacted would just go from paying 8.5 percent of income to 10 percent. Not nothing, but not catastrophic.

Health care costs are going up broadly. Medicare enrollees are getting renewal notices. Everything is going up. ARPA was designed to be temporary. If it were supposed to be permanent, Congress could have made it permanent. Whether Democrats thought it would be continued forever or just help temporarily is unclear. But if Congress comes up with something that makes health insurance better, I’m all for it. There are tough decisions. Congress has struggled with ACA reform for a decade.

Susan Pendergrass (20:20)
I think we know the answer to that. At the federal level, when they want to do big splashy things, ARPA, the ACA, the Tax Cuts and Jobs Act, they make expenses short term to reduce the fiscal note, assuming someone will renew them later. Same thing with the Tax Cuts and Jobs Act. They assume future lawmakers will extend them. So it’s not unreasonable that ARPA had temporary provisions assuming they’d get extended. I guess not this time.

Elias Tsapelas (21:12)
People’s health care costs going up is a big issue. People won’t be happy regardless. But returning to issues that should have been addressed when the ACA passed is important. The marketplace is dysfunctional and too expensive. Hopefully Congress finds something better. And I don’t want to minimize issues for people close to retirement. That’s a big issue: people between 55 and 65, not on Medicare yet, often have significant health needs. If you tell a 60 year old who isn’t working that coverage is $40,000 a year, that won’t work.

Susan Pendergrass (21:53)
Yeah. That’s right.

Elias Tsapelas (22:23)
More options will be good. That is an important group that needs to be addressed.

Susan Pendergrass (23:07)
Well, thanks for explaining it so clearly and helping our listeners understand what was actually on the table. It’s a complicated topic, but we’ll watch it unfold over the next year, and hopefully you’ll come back and explain what’s happening as it unfolds.

Elias Tsapelas (23:23)
Hopefully something does happen, so there is something to explain. That would be the best case scenario.

Susan Pendergrass (23:25)
That’s right. All right, well, thanks so much, Elias. Really appreciate it.

Elias Tsapelas (23:31)
Thank you.

Produced by Show-Me Opportunity

The post What the Government Shutdown Was Really About with Elias Tsapelas appeared first on Show-Me Institute.

The largest of these, the Independence School District near Kansas City, will soon hold a public vote on whether to retain its four-day schedule after a judge ruled that the voter-approval requirement in state law is constitutional and must be enforced.

As for the upcoming vote, I expect the 4dsw to be approved. Crystal City recently saw its citizens vote 86.7% in favor of keeping their 4dsw—a result that makes sense, as those who already use the model are typically its strongest supporters. However, the strongest opponents of the 4dsw are those who do not believe that they can provide childcare on the fifth weekday. Even in districts that overwhelmingly vote in favor of a 4dsw, individual families may face real difficulties adjusting.

I believe recent events highlight a broader point: school choice could help relieve some of the tension surrounding the 4dsw by giving parents more options.

Senate Bill 727 and the Four-Day School Week

Senate Bill 727 was an omnibus education bill passed in 2024. One of its provisions requires that districts located wholly or partially in a county with a charter form of government or in a city with more than 30,000 inhabitants hold a public vote for adopting or retaining a 4dsw. As Independence’s recent lawsuit indicated, this only applies to 87 Missouri school districts.

If the goal of this provision was to give Missouri parents a voice on a significant decision, it was fair to ask why the 4dsw would be put to vote in some districts but not others. The recent court ruling clarified that lawmakers had a rational basis for the distinction, citing evidence that suburban and urban districts are more likely to experience negative effects on academics, crime, and childcare access than rural districts. Nevertheless, there remains a need to address the problems that arise when a family’s schedule no longer aligns with its school.

School Choice Can Help

Expanding open enrollment and Missouri’s Education Savings Account (ESA) program could give families the flexibility they need. Open enrollment would allow families to transfer students to districts that best fit their needs, whether that’s a 4dsw district or one with a traditional five-day school week.

This approach enjoys broad support. In 2023, the Show-Me Institute surveyed 1,200 Missouri parents statewide and asked what options should be available if a district moves from a five-day to a four-day schedule. Two thirds of parents supported allowing transfers to another district, while majorities also favored providing vouchers for private school attendance.

Figure 1: Policy Options for Students in 4dsw Districts

“If a school district moves from a five-day to a four-day school week, parents should be given the option to . . . (1) transfer their children to another school district . . . (2) use a voucher for their children to attend private school.”

Support for both options crossed party lines. Among self-identified Republicans, 67 percent supported interdistrict choice and 57 percent supported vouchers. Among self-identified Democrats, 71 percent supported interdistrict choice and 62 percent supported vouchers.

As Missouri continues to debate the 4dsw and how to manage its use, expanding school choice remains the best way to reduce tension and ensure every family has workable options.

Want to Learn More?

My colleague James Shuls and I wrote a series of papers that tackle different questions relating to the 4dsw.

Evidence Based? A Systematic Literature Review of the Four-Day School Week?

Five for Me: A Survey of Missourians Regarding the Four-Day School Week

Longer Days and Fewer Total Hours: Examining the Four-Day School Week in Missouri

The post Four-Day School Week Votes and School Choice in Missouri appeared first on Show-Me Institute.

Crystal City is among the first districts to hold such a vote. It will be fascinating to observe the outcome, which may serve as an indicator of how other districts will vote on this issue. It also raises the question of what options will be available to families who disagree with the vote.

Expanding School Choice Would Strengthen Missouri’s Educational Environment

Last year, my colleague James Shuls reported on results from a survey of Missouri parents on the 4dsw and school choice. In one key finding, 69% of respondents agreed or strongly agreed with the following statement: “If a school district moves from a 5dsw to a 4dsw, parents should be given the option to transfer their children to another school district.” This sentiment was consistent across party lines, with 67% of Republicans and 71% of Democrats in favor. Open enrollment would provide options for families who want something different than what the district decides.

While it is certainly worth mentioning that the 4dsw negatively affects academic performance in mathematics and English/language arts (ELA) on average, this may not be true for everyone, and some students may benefit. For example, supporters of the 4dsw often discuss how a 4dsw can reduce missed days for doctor’s appointments, allow for help on family farms, and lower “burnout” among both students and teachers. But many students need more consistent interaction with academic materials, and the 4dsw is not a good fit for some families’ schedules. The same survey also found that 84% of parents who “are not able to provide childcare on the fifth day” prefer a 5dsw.

Closing Considerations

The number of 4dsw districts grew this past year from 173 to 187 Missouri districts (based on my own compilation of school calendars). This means that about 36% of all Missouri districts use the 4dsw, including nearly half of rural districts.

For districts considering the switch, the research shows that it has several downsides, and on average, it reduces student learning. This suggests proceeding with caution. For parents who disagree with the results of a 4dsw vote, expanding school choice is an appropriate policy response.

Want to read more? Check out these publications:

• A Systematic Literature Review of the Four-Day School Week
• Five for Me: A Survey of Missourians Regarding the Four-Day School Week
• Longer Days and Fewer Total Hours: Examining the Four-Day School Week in Missouri
• Loss of Learning Time in Missouri Public Schools
• Open Enrollment: Erasing Seven Myths in Missouri
• How Will the Four-Day School Week Progress in Light of SB 727?

The post Crystal City to Vote on the Four-Day School Week appeared first on Show-Me Institute.

Susan Pendergrass speaks with Andy Rotherham about how we should evaluate schools in a post-pandemic world, the importance of accountability, and more.

Andrew J. Rotherham is a co-founder and External Relations leader at Bellwether, a national nonprofit that exists to transform education to ensure systemically marginalized young people achieve outcomes that lead to fulfilling lives and flourishing communities. Rotherham also works in Bellwether’s Policy and Evaluation practice area and serves on the Virginia Board of Education. He occupies a unique place in the U.S. education sector working across silos. He has been appointed to senior policymaking roles by Democrats and Republicans, works at the intersection of research and policy, media, and practice, and is a longtime champion of heterodoxy, empiricism, and pragmatism in education policy.

Rotherham writes the blog and newsletter Eduwonk.com.

Learn more about Bellwether: bellwether.org/

Listen on Apple Podcasts 

Listen on SoundCloud

Produced by Show-Me Opportunity

The post A New Baseline We Can Build From with Andy Rotherham appeared first on Show-Me Institute.

But even the best-laid plans can go awry, so how optimistic are legislators that items important to taxpayers will get across the finish line this year? As an article in the Missouri Independent emphasizes, it depends on who you ask:

“I mean, I think we’ll get things done,” said Senate Majority Leader Cindy O’Laughlin, a Shelbina Republican. “Will we get everything done that we want to do? No, we never do. But I’m an optimist.”

Democrats and Republicans share many of the same goals, O’Laughlin said, and progress can be made if people are willing to sit down and talk about how to reach those goals.

The Missouri House has generally been effective in advancing good legislation in the last few years, often only to be stifled in the Senate. The real question for whether 2024 will be “successful” hinges on how the Missouri Senate, now in an election year, handles its business. Will the majority party see itself often split, with leadership joining with the minority party to pass or stop legislation as it did in 2023? Will the majority party use Previous Question motions to scuttle filibusters from all quarters to pass its priorities? Will we see a mix of the two? Or will the chamber mostly be mired in dysfunction and nothing really gets done (again)?

How the factions in the Senate align will play an enormous role in what actually gets done in 2024. With a handful of exceptions, the last few years have been littered with missed opportunities, primarily because the Senate has alternated between watering down important measures or not passing them at all. So 2024 is a Yoda moment of sorts, especially for Missouri’s outgoing senators; lawmakers have entered “do or do not, there is no try” territory if they want to build a legacy before they leave the legislature for good. Giving lip service to good legislation isn’t going to cut it this time around.

What’s ultimately done (or not) remains to be seen, and we at the Show-Me Institute will keep you posted as the session progresses. But I hope that all Missouri legislators will set aside their squabbling and make decisions that keep the good- and limited-government promises made to their constituents. If they do, 2024 could be a banner year for the state, but if they don’t, well, this year will look a lot like last year. And that would be unfortunate.

The post As Legislature Returns, Whose Priorities Will Take Priority? appeared first on Show-Me Institute.

The impact and effectiveness of school choice programs and policies vary based on multiple factors. What does a theoretical “good version” of legislation related to school choice look like? Are there specific examples you can point to?

Well, if you listened to my opening remarks, it may not be hard to guess what I am going to suggest. Choice is good and we need more of it.

After more than two decades, we don’t have charter schools outside of St. Louis and Kansas City. Why is that? Because our current policy requires charters to seek school district approval if they want to open in a district that is fully accredited. This is like allowing Wal-Mart to decide whether a Dierbergs or a Schnucks can open in its town. When it comes to charter school policy, we must, first off, allow charters to open throughout the state under the sponsorship of a university or the State Charter Commission.

Second, we must allow charter schools to enroll students across district boundaries. The average school district in Missouri has something like 1,500 kids. Part of the challenge with opening a new charter school is attracting students—this is particularly challenging when you are limited to a pool of 1,500. Students should be allowed to move across district lines to attend a charter school.

In fact, all kids should be allowed to move across district lines to attend another public school. This is especially true if your local school district moves to a four-day school week. Did you know that roughly a third of all Missouri school districts are now four-day districts? We have some new research coming out at the Show-Me Institute that you might be interested in. We surveyed 1,200 Missouri parents. You know which group was the most opposed to the four-day school week? Parents who cannot provide reliable childcare for their children—the people who will be most impacted by these decisions. I suggest full open enrollment, but at the very least, moving to a four-day school week should be an automatic trigger for open enrollment.

Close to 70% of Republicans and Democrats alike supported the idea of giving parents the right to transfer to another school district if their school moves to a four-day week. More than 60% supported offering a private school voucher.

When it comes to private school choice, again, we need more of it. Our current tax credit education savings account (ESA) program should be expanded. Now, I’m in favor of the state funding these accounts and providing every family with access to at least the state adequacy amount. We can look to Arizona and Florida as models. But I understand expansion is often incremental and there are incremental changes we can make with our current program. Here, the state needs to do three things:

First, remove all geographic limitations. There is no reason a student should be denied access to a scholarship account because they live just over a county line.

Second, increase eligibility. The program should be as near to universal as possible. Every parent should have the ability to send their children to the school of their choice.

I suppose those first two are really the same thing—increase access.

Third, we should increase the average scholarship amount. Opponents of school choice are funny in this regard. They remind me of that old quote by Woody Allen, “The food is bad and the portions are small.” They say “vouchers are bad . . . and the voucher amounts are too small.” Well, I may not be able to change their opinion on vouchers, but we can work to increase the amount!

Currently, we peg the scholarship amount to the state adequacy target, which is approaching $7,000. Yet, in public schools we weight the funding formula. We provide additional funds for special needs students, students with Individualized Education Programs (IEPs), and students who qualify for free or reduced-price lunches. We even weight the formula for places with higher cost of living. The ESA program should be allowed to do the same thing. A student with special needs or a student from a poor family should be eligible for more funds in this program, just as they are in public schools.

The bottom line is this—we should continue to push for expansion of school choice programs until every child in this state has multiple educational options. No child should have to attend their local public school because they cannot access another school. They should attend their local public school only if it is the right choice for them.

The post School Choice is Good – Part 2   appeared first on Show-Me Institute.

Senators are not inherently wiser, or more patient, or more knowledgeable than their House counterparts. In a tweet Friday, state Sen. Lauren Arthur of Kansas City, a Democrat, defended the institution. “The Senate was designed to make it difficult to pass legislation,” she said.

Yet Arthur and her colleagues were unable to prevent the grotesque violation of Kansas Citians’ rights when the General Assembly imposed a 25% floor on police spending in its final day.

If your only goal is to prevent bad stuff, rather than pursue good stuff, failure can resemble success. But it’s still failure. [Emphasis mine]

Nebraska has a one-house state legislature. Perhaps the people skilled at gathering petition signatures can pursue a smaller Missouri General Assembly in 2023.

The Star is right about the philosophical importance of pursuing, and following through on “good stuff,” though I might disagree about what that “good stuff” would be. But for example, high among the alleged priorities of the state Senate leadership was passing a Parents’ Bill of Rights, and that priority was decidedly and bizarrely ignored throughout the session.

The Senate’s bias against its own priorities—debating key legislation last rather than first, and thus always risking its failure—isn’t new. Missouri voters have sent supermajorities to the House and Senate for a reason; it is not reasonable for the legislature to fail so emphatically and so often in enacting the reforms their constituents demand. In that, I agree with the Star.

Now, I’m not prepared to agree with the Star that Missouri should abolish the Senate entirely and adopt Nebraska’s unicameral legislature. But get back to me next year; maybe another year of failure will persuade me.

The post The Kansas City Star Is Right appeared first on Show-Me Institute.

Moving from a system . . . [that has] 1000 of something to one of something sounds a lot like a monopoly, and monopolies don’t always work in consumer interests.

The sheer cost of a Medicare for All program would dwarf our current federal spending levels and require massive new taxes on Americans. The Atlantic reports:

The Urban Institute, a center-left think tank highly respected among Democrats, is projecting that a plan similar to what [two candidates] are pushing would require $34 trillion in additional federal spending over its first decade in operation. That’s more than the federal government’s total cost over the coming decade for Social Security, Medicare, and Medicaid combined, according to the most recent Congressional Budget Office projections.

In recent history, only during the height of World War II has the federal government tried to increase taxes, as a share of the economy, as fast as would be required to offset the cost of a single-payer plan, federal figures show. There are “no analogous peacetime tax increases,” says Leonard Burman, a public-administration professor at Syracuse University and a former top tax official in both the Bill Clinton administration and at the CBO. Raising that much more tax revenue “is plausible in the sense that it is theoretically possible,” Burman told me. “But the revolution that would come along with it would get in the way.”

Health care providers, health insurers and pharmaceutical companies are not always “good guys” in our health care system, but they compete with one another, which serves consumer interests. Policymakers should go much further in compelling such competition and preventing these industries from leveraging government for their own interests. But Medicare for All goes in the very opposite direction—monopolizing control of our health care system, reducing choice and trusting government to provide these services instead.

It was a bad idea last year. And it is still a bad idea this year.

The post “Medicare for All” Remains a Terrible, Terrible Idea appeared first on Show-Me Institute.

As my colleagues have discussed many times before, three consecutive state auditors (both Democrat and Republican) have concluded that the LIHTC program spends less than $0.42 of each dollar on affordable housing. As of 2017, there were over a billion dollars of LIHTCs outstanding or available to be issued, and those are dollars that won’t be available for spending on existing state services. It should be obvious that Missourians deserve better stewardship of their hard-earned tax dollars, but the program’s supporters argue those figures don’t adequately capture the economic benefits the state receives.

The target of the proponents’ critique is the economic modeling tool the state uses to measure the impact of government programs. One conclusion from the 2017 audit that used the model in question was, over a span of 15 years, Missouri received only $0.12 return for each dollar invested in LIHTCs. But proponents argue the model is “incomplete and thus questionable,” and as one elected official recently noted regarding LIHTCs, “value and effectiveness can’t always be quantified in data.”

It is important to note that the critique relating to the audit’s findings does not mention the inefficiencies of the program. Literature on the topic is clear that the regulations surrounding the construction and development of low-income housing inflate project costs. And there are now multiple academic studies that show the federal program does not significantly increase the amount of available affordable housing.

While the LIHTC program is considered a tool for economic development, its effectiveness should be measured by its ability to achieve its defined purpose—increasing the availability of affordable housing in Missouri. More specifically, how have the credits Missouri has issued in addition to the credits offered by the federal government induced additional development of affordable housing, and at what cost?

As the research indicates, the LIHTC program is not an effective or efficient way to increase the amount of affordable housing across the state, regardless of the claims of economic impact made by the program’s supporters. As policymakers consider reviving the state’s practice of issuing LIHTCs, their decision should be based not on the emotional appeal for new housing, but on whether the program as currently constructed is a justified use of their constituents’ tax dollars. The evidence indicates it is not.

The post No, Low-Income Housing Tax Credits Aren’t Effective appeared first on Show-Me Institute.

The immediate aftermath of Amazon’s announcement featured the kind of Democratic recriminations that are the thing of Republican fever dreams. On one side were establishment Democrats like Andrew Cuomo and Bill de Blasio, who like many politicians are conventional when it comes to tax incentive–laden economic development strategies; on the other side were Democrats like Alexandria Ocasio-Cortez, who viewed the tax incentives as denying revenue to state and local government services.

At first, conservatives on Twitter were “rooting for injuries” and joking about the Left’s internecine conflicts. But eventually the conventional wisdom on the Right seemed to coalesce around the Cuomo and de Blasio perspective on tax incentives. It’s crazy, they said, that AOC would have come out against a tax incentive package that would have brought (more) Amazon jobs to New York! Think of the jobs!

But while conservatives delighted in the aftermath of Amazon’s exit as an opportunity to proclaim Ocasio-Cortez’s economic ignorance, Ocasio-Cortez is more correct about the Amazon deal than she is wrong, and far closer to the path of good tax policy than many conservatives.

In fact, there is a larger seen vs. unseen consideration in the Amazon debate that centers not only on whether the average “economic development” project would go forward even without a tax incentive, but also on the overall impact of profligate tax incentive policies on governance objectives generally.

First, we cannot know for sure whether Amazon would have come to New York without, or with reduced, tax incentives, but we do know that the bookies who handicapped Amazon’s search always had Virginia and New York among the favorites for the HQ2s, in no small part because both already had highly skilled workforces, to say nothing of their preexisting proximities to power. In fact, many tax incentive offers to Amazon from other states far exceeded the value of New York’s. Amazon’s statement on its HQ2 withdrawal from New York can easily be read not as one ultimately about the cash, but about the public relations fiasco Amazon was about to endure at the hands of New York’s activist class.

The question of whether, or to what extent, incentives are necessary isn’t just an issue in the case of Amazon, either, and research into the incentives that include or imply “but for” language— “but for the incentive, the project won’t happen” —are helpful here. For example, a study by the W.E. Upjohn Institute published last year reveals that the vast majority of businesses that receive tax incentives under a “but-for” rubric likely would have pursued their projects even without the incentive: that many of these projects are getting tax incentives not because the project wouldn’t happen without them, but because business interests have become accustomed to receiving them and know how to work the system to get them. The result? As local tax incentives proliferate, fewer and fewer taxpayers become responsible for greater and greater portions of local government funding.

This failure of stewardship on the part of governments across the country costs state and local taxpayers billions of dollars annually. That impacts not only government services, including roads and education, but also the ability of a government to reduce taxes for everyone, if it so desired. The city of Kansas City, Missouri, where I’m from, redirects $90 million annually from its budget through tax incentives, but that doesn’t include the additional $45 million that those decisions also redirect from the city’s public schools and other taxing districts, who rely on these tax streams but have relatively little say in their diversions.

Joining this concern with Upjohn’s findings, it’s clear in the case of Kansas City that tens of millions of dollars every year aren’t going to kids, to roads, or to other necessary projects simply because some connected businesses want special taxing treatment for projects they would undertake even if they did not receive the incentives.

In some respects these revenue diversions are only now coming into sharper focus with the promulgation of new GASB accounting standards requiring greater transparency about the money that governments across the country are forgoing in the name of “development.” If you haven’t looked up how much your local and state government is giving away, you probably should; it will reframe the financial picture the next time those governments come to you claiming to be cash poor and looking for tax hikes.

Would some tax incentivized projects be withdrawn if there was no tax incentive? Certainly. Would most others proceed as planned? Evidence suggests that they would.

I’m not arguing that Amazon specifically would have come to New York with no, or fewer, tax incentives, as no one really knows the answer to that question; I’m also not arguing that New York government “deserves” to be funded at a higher level and that Amazon’s HQ2 departure will allow that.

What I’m arguing is that Amazon and other private companies play state and local governments against each other for their own financial benefit, and that politicians are usually more than happy to be played for the sake of donning their hard hats and planting a spade in the ground in front of a bunch of cameras.

What’s mystifying to me is that while national conservative pundits (rightfully) guffaw at the idea of ethanol and sugar cane subsidies and all the rest, that they may not view state and local tax policy failures as similarly deserving of unambiguous and pointed criticism. Perhaps in the context of the players involved – Amazon, Jeff Bezos, Alexandria Ocasio-Cortez, Bill de Blasio and Andrew Cuomo – it is simply too delicious to watch the conflagration of cultural and economic trainwrecks, and comparatively disadvantageous to say, however plainly, that both Amazon and New York will be just fine, and that these tax incentive deals are rarely in the interest of the taxpayers who subsidize them.

More to the point, conservatives would do themselves a favor by recognizing clearly, and repeating loudly, that tax incentives are not indicative of healthy “tax competition,” and that deals like the one struck between Amazon and New York are instead a showcase of a national policy disease that rides the paychecks of individuals and small businesses across the country, to dole out money to the enterprises of the well-connected.

Milton Friedman was right:

You talk about preserving the free market system. Who has been destroying it? The business community must take a large share of the responsibility. … You must separate out being pro-free enterprise from being pro-business.

New York was pro-Amazon; it wasn’t pro-market. And conservatives would do well to focus on the latter approach as their guiding principle on these and similar matters of local tax policy in the future, regardless of the state, and regardless of the players involved.

The post New York Shouldn’t Have Offered Amazon $3 Billion. No One Should Have. appeared first on Show-Me Institute.

Missouri’s tax credit program is a bloated mess. Whether they are intended to support low-income housing or sports complexes, tax credits are often awarded based on good public relations rather than good policy. Former and present state auditors—Democrats and Republicans alike—have for years argued that tax credits such as the LIHTC have been a bad deal.

Expect localities to rail against even a temporary halt to the LIHTC program, seeking to place blame for their own lack of affordable housing stock on Jefferson City. For example, Flatland—Kansas City Public Television’s digital magazine—recently released a short video on the LIHTC program. In it, Bill Dietrich, the president and CEO of the Downtown Council of Kansas City, Missouri, said (starts at 4:28):

The greatest threat we have right now to being able to add to the affordable housing inventory is the state of Missouri’s ill-conceived policy of no longer allocating for low income housing tax credits.

Really? The greatest threat? The program was fully funded up through the end of 2017. Any current shortage Kansas City has with affordable housing has nothing to do with a lack of state tax credits. In fact, Missouri’s LIHTC program is one of the most generous in the country, according to a previous auditor report (see pages 11 and 19). Most states don’t even have such a tax credit program.

Maybe the actual “greatest threat” to affordable housing in Kansas City is inaction from the Council and city leadership. It is just now, in 2018, addressing the issue. Up to this point, Kansas City leaders, including members of the Downtown Council, appear to have been more interested in subsidizing the construction of luxury housing.  Consider this: in 2017, 91 percent of new apartment buildings in Kansas City were considered luxury. So far in 2018, 100 percent are luxury. 100 percent! (All of St. Louis’ apartment construction in 2017 was luxury, and 81 percent so far in 2018.)

If our municipal goal is to support the construction of affordable housing, we can do better than the LIHTC. But any serious program must start with an actual policy, and it should probably stop subsidizing luxury housing, too.

The post Missouri Tax Credit Program Halted for Now appeared first on Show-Me Institute.

You may never have heard of James G. Blaine. He didn’t win. Yet, for more than a century we have been living with one of Blaine’s legacies—Blaine amendments. While he was a senator, Blaine offered an amendment to the U.S. Constitution that would prevent the federal government from funding sectarian institutions. It was widely known that the amendment stemmed from anti-Catholic sentiment. In 2000, Justices Thomas, Rehnquist, Scalia, and Kennedy stated in Mitchell v. Helms that “it was an open secret that ‘sectarian was code for ‘Catholic.’” The federal amendment failed, but similar versions would be installed later in 37 state constitutions.

Many state officials have cited their Blaine amendments as a reason that private school choice programs would be unconstitutional. These amendments have also prevented religious institutions from receiving funds for non-religious activities. For instance, the amendment was used to bar Trinty Lutheran Church in Columbia, Missouri, from participating in the state’s scrap tire program, which helps nonprofits resurface playground surfaces. Trinity Lutheran appealed this decision all the way to the United States Supreme Court and won.

There is still some debate, as my colleague Mike McShane has noted, as to what impact the Trinity ruling will have on school choice legislation. Our first indication, however, is that the court’s repudiaiton of anti-religious sentiment may bode well for private school choice programs. On June 27, the day after the Trinity Lutheran ruling, the nation’s high court vacated the Supreme Court of Colorodo’s ruling in the Douglas County, Colorado, voucher program, which had been found unconstitutional. The case has been remanded to the state supreme court in light of the Trinity Lutheran ruling.

The Institute for Justice, a group that supports school choice, has long stated that Missouri’s Blaine Amendment was relatively strong and has suggested vouchers may not be feasible in the state. It will be interesting to see if the decisions of the U.S. Supreme Court in the Trinity case will further impact Blaine amendments in Missouri and other states. We may never get rid of rancor in politics, but this may be the case that helps us say goodbye to Blaine, Blaine, Amendment Blaine, the school choice barrier from the state of Maine.

The post The School Choice Barrier from the State of Maine appeared first on Show-Me Institute.

Well, the RTT movement has expanded since then. Today over thirty states have already enacted the law, and it looks like federal officials may be following suit very soon.

Indeed it hasn’t. With a new Congress, bipartisan support, and a potentially supportive President, the prospects for a federal RTT statute passing are as good as they have ever been. If it does pass, it will be a win for patients across the country seeking greater control in the most precarious health situations imaginable. As we’ve said many times before, government should let people help their fellow Americans on terms largely or entirely unencumbered by state or federal bureaucracies. Right to Try laws are fundamentally designed to advance that end — and to offer hope to the most vulnerable among us. 

It isn’t clear when the federal Right to Try law is going to be debated and voted on this year. We’ll update you as the legislation goes through the process.

The post Right to Try Becomes a National Issue appeared first on Show-Me Institute.

A new Republican governor, Eric Greitens, will replace term-limited Democrat Jay Nixon. “I think that we’re going to see bills that have been vetoed in the past, like right to work, go through quickly,” says Brenda Talent, the CEO of the Show-Me Institute. Last year the Republican House tried to override Gov. Nixon’s right-to-work veto but fell short by 13 votes.

Expanding charter schools, Ms. Talent predicts, will be an “easy lift,” and tackling corporate welfare is a possibility. “To give you an idea of the magnitude of the problem,” she says, “you could eliminate the corporate income tax in the state simply by eliminating economic development tax credits.”

Read the entire article here.

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Now it’s time to get to work. At the top of the to-do list should be education reform. Education reform has a proud tradition among conservatives, and reflects the core conservative values of free enterprise, entrepreneurship, and accountability for public dollars.

The need is great. Among the class of 2015, only 22 percent of Missouri students who took the ACT scored “college ready” in all four tested subjects. On the 2015 National Assessment for Educational Progress, only 31 percent of Missouri 8th-graders were deemed “proficient” in math and only 36% were found proficient in reading. The most recent AP Report to the Nation found that only 9.5% of Missouri’s students graduated high school having scored 3 or higher on an AP test, putting us in the bottom five states in the nation for AP performance.

There is no time to waste. Luckily, there are at least three steps policymakers can take to improve Missouri’s education system:

Expand charter schools statewide. Right now, charter schools are functionally limited to operating within the boundaries of the Kansas City and Saint Louis school districts. Within those constraints, they have created some incredible opportunities for students. Independent evaluators found that Kansas City’s Ewing Marion Kaufmann School produced a whopping 1.35 additional years of learning in Math and 1.29 years of learning in reading for students who attended the school for at least three years—all while serving a student population that is 86% free and reduced lunch eligible. Many students in Hickman Mills (whose performance data looks nearly indistinguishable from that of the Kansas City Public Schools) and other struggling districts across the state would jump at the chance to attend such a school.

Create a course access program. In the 2014–15 school year, 285 school districts in Missouri had zero students take an AP class. 255 districts didn’t have a single student take Calculus. 213 districts didn’t have a single student take Physics. In most cases, these are smaller rural districts that simply don’t have enough demand to justify hiring a full-time AP or advanced Math or Science teacher. Course access programs were created to address this very problem; they allow students to direct a portion of their annual per-pupil funding to approved course providers outside of their traditional public schools and to receive credit for classes they successfully pass. If, for example, a student’s school doesn’t offer calculus, or only offers Spanish and she wants to take Mandarin, she could head to the library and log into an online class. The cost for the class would be paid with the fraction of her state funding that would normally cover that class period.

Establish an education savings account program. Rather than sending a child’s yearly education funding to their local public or charter school, the state could put that money into a flexible-use spending account that parents could control. Parents could use the money in this account for private school tuition, tutoring, special education services, or any number of other approved expenses. This maximally flexible funding system would do the most to move our education system into the 21st century, allowing families to fully customize their child’s education.

Our children deserve a world-class education system. Gridlock, vetoes, or divided government can’t be an excuse. Let’s work together to give it to them.

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On this Labor Day weekend, think of the great labor that Missouri’s official state animal—the plucky, hard-working mule (not to be confused with the donkey, the symbol of the Democratic Party)—performed for our nation in the opening of the west.

Setting out in covered wagons from Saint Joseph, Independence, and other Missouri cities, more than 400,000 pioneers made their way to the Pacific during the 1840s and 50s. Most people have a mental picture of horses pulling the load. But mules did most of the work, even if horses got most of the credit, thanks to later Hollywood westerns. Movie-makers repeated the mistake in their depiction of stagecoach travel in the 1860s and 70s. In reality, once again, the indefatigable mule, not the more fragile and easily tired horse, was the draft animal of choice.

The above-quoted Rinker Buck tells these stories (and many more) in his book The Oregon Trail: A New American Journey. In 2011, Rinker and his brother Nick stopped in Jamesport, Missouri, to purchase three Missouri mules. Having also acquired a rig (a genuine prairie schooner), they then hit the trail—travelling the whole 2,100-mile length of the Oregon Trail from St. Joe to the Willamette Valley. The two brothers were the first in more than a century to complete the journey.

Just over the Kansas border into Nebraska, a fierce storm forced the brothers to camp in the equipment shed of an abandoned farm. In a book filled with hair-raising (and often hilarious) adventures, this was a fairly commonplace occurrence. It might have gone unremarked except that the same storm system that passed over their heads levelled Joplin, Missouri, a few hours later.

I have my own tenuous connection with mules. In his 16th summer, my brother Harry worked in the Bootheel—driving a team of mules in clearing tree stumps from a field. He was mule-struck upon returning home . . . telling stories that filled me, the younger brother, with a mixture of envy and awe. For his 71st birthday this June, I gave Harry the Oregon trail book. He returned it to me no more than a week later—saying it was wonderful. He wanted to be sure that I read it as well.

A cross between a female horse (mare) and a donkey (jack), mules combine the greater size and strength of the mother with the lighter weight, agility, and more feral instincts of the father. Mules require only half the feed of horses. They can travel long distances without water. Most of all, as Rinker Buck writes, “They love to work.”

With a keen sense of smell, they are uncommonly alert to danger. On the trail they saved countless lives in picking up the scent of buffalo herds and packs of coyotes long before they became visible to people. At the approach of predators, mules sounded the alarm, perking their long ears forward, staring in the direction of the threat.

As for their supposedly difficult behavior, or “mulishness,” that too, is a product of superior instincts. Unlike the happy dog or the pliant horse, the clever and independent-minded mule will not plunge willy-nilly into a rushing stream. It prompts the muleteer to show that the next step is safe by riding a horse across or wading in himself. “Mules ponder matters a lot,” Buck writes.

This Labor Day, let’s thank the mule for its super-human (and super-smart) efforts on our behalf. It played a critical role in uniting our country from sea to shining sea.

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A few highlights:

1. 55% of Americans give their local public school an A or B grade, but only 25% of Americans give U.S. public schools as a whole an A or a B.
2. Without prompting, 61% of Americans think that we should spend more on public schooling. When given the actual amount that their local school spends, that drops to 45%.
3. Opinions on Common Core are evenly split, with 42% of Americans supporting it and 42% opposing.
4. 28% of Americans support teacher tenure, and 54% oppose it.
5. 69% of Americans support annual standardized testing of students

The first four findings didn’t really surprise me. The twin phenomena of liking your local school but disliking schools as a whole and thinking that your local school needs money until you’re told how much it spends have been documented by EdNext and others for years now.  The Common Core has been in freefall, so that wasn’t unexpected either.  Teacher tenure remains predictably unpopular.

I was surprised, though, at the durability of opinion on the value of standardized testing. Sixty-nine percent is strong support, and I would have thought with the unpopularity of the standards that many of the tests are based on that would have been a drag on opinion on the tests themselves. It looks like that isn’t the case!

What interested me most as a school choice advocate was public opinion about school choice issues.  The poll asked questions about charter schools, vouchers, and tuition tax credits, and the findings might surprise you.

On charters, overall public opinion is 51% pro and 28% against. When observed by party affiliation, we see Republicans more likely to support charters (60% Pro and 21% Against) than Democrats (45% Pro and 33% Against).

Vouchers are, on average, less popular than charter schools, but interestingly, enjoy more support from Democrats than Republicans. Overall opinion (for a universal voucher program that all students would be eligible for) is 45% pro and 44% against with Democrats splitting 49% pro and 39% against and Republicans splitting 41% pro and 49% against.  When the question is asked about a voucher program targeted to low-income students, the program becomes even less popular, with overall opinion 37% pro and 48% against (with Democrats 42% pro and 43% against, and Republicans 31% pro and 54% against).

Finally, and perhaps most interestingly for those of us in a state with a Blaine Amendment, tax credit scholarships were more popular than either vouchers or charter schools. Fifty-three percent of Americans support tax credits while only 29% oppose them. The partisan split remains though, with Democrats supporting more than Republicans. Democrats split 57% pro and 26% against while Republicans split 49% pro and 33% against.

It is always good to take the nation’s temperature on issues of schooling. School choice supporters in particular should take a moment to reflect on these findings. Perhaps supporters (and opponents) aren’t who we think they are. 

The post Democrats Like Vouchers More Than Republicans Do, and Other Findings from the 2016 Education Next Poll appeared first on Show-Me Institute.

“The basic assumption of your draft regulations appears to be that top down, Washington driven standardization is best…. You are funding teaching interventions or changes to the learning environment that promise to make public education better, i.e. greater mastery of what it takes to become an effective citizen and a productive member of society. In the draft you have circulated, I sense a pervasive technocratic bias and an uncritical faith in the power of social science.”

Was it:

(A)   Then Kansas Senator (now Governor) Sam Brownback

(B)   Then Texas Governor Rick Perry

(C)   Then California Attorney General  (now Governor ) Jerry Brown

(D)   Missouri Governor Jay Nixon

If you guessed Sam Brownback, you would be wrong. It was actually Democrat Jerry Brown.  Yes, that Jerry Brown.

This quote resurfaced in an interesting piece by Matt Barnum of education website The 74 about California’s long-running opposition to federal education policy. Brown’s riposte was a harbinger of the showdown that California ultimately had with the Department of Education in 2013, when California suspended its standardized testing and school rating system. The feds said they couldn’t do it and threatened to withhold funding. Brown responded more like a Texan than a Californian and dared them to come and take it.  The feds backed down.

I think there are two interesting lessons to take away from this story (which is worth reading in full).

First, states can stand up to the federal government. It obviously helped California that it is the most populous state in the union and is one that will reliably deliver Democratic votes, but even with that said, it is clear that the federal government is loathe to pull funding that overwhelmingly benefits poor students and students with special needs. That is not to say that they wouldn’t, but states are probably in a stronger bargaining position than they realize.

Second, the issue itself matters. California picked a smart issue on which to go toe to toe with the Department of Education. Had the feds been opposing standardized tests and the states supporting them, the calculus would probably be much different. A hardline stance might not work with an issue with more divided opinion or one where the federal government has the majority opinion on its side.

I don’t know if what California is doing is right or wrong. I’m by no means a technocrat, but I think they probably swung too far in the opposite direction on testing and school accountability. That said, part of respecting local control of education is realizing that not everyone is going to make the decisions that you would have made had you been part of the process. Agree or not, we can learn from California about what states can do when they feel they have been pushed too far, and we can recognize the need for states to have a game plan in place in case they are asked (or ordered) to do things expressly against the will of their citizens.

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