Founded in 2005 by Rex Sinquefield, Crosby Kemper III, and Michael Podgursky, the Show-Me Institute has spent two decades championing free-market solutions. With key victories like reducing Missouri’s income tax, expanding school choice, and increasing government transparency through initiatives like the Missouri School Rankings Project and the Show-Me Checkbook, the Institute has driven meaningful progress across the state.

As we look to the future, the Show-Me Institute remains committed to empowering Missourians and policymakers to build a freer, more prosperous Missouri.

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It’s a bleak future without the Kansas City earnings tax. If the earnings tax ends, no Kansas Citian wins. And as Kansas City goes, so goes the region. If the region and St. Louis take a hit, so does Missouri.

Well, yes and no. Kansas City and St. Louis do play an oversized role in the state’s economic picture, but right now that role is not a positive one. According to a recent essay by The Show-Me Institute’s Michael Podgursky and Nick Pretnar,

In Missouri, where over half of output comes from the Saint Louis and Kansas City metropolitan areas, the state’s economic fortunes as a whole are tied to the performance of those two cities. Unfortunately, Saint Louis and Kansas City have experienced very poor growth in recent years compared to major metro areas in other states. In addition, the Missouri portions of these two areas have performed worse than the Illinois and Kansas portions.

In short, Kansas City is a drag on the state and the region. It’s not just the Show-Me Institute saying this, by the way; the left-leaning Brookings Institution has been reporting the same thing for years.

Later in his testimony about a legislative effort to end the earnings tax, James said, “I’m not here asking for a penny. I’m simply asking you to leave us alone.” But Missouri may not be able to afford to leave Kansas City alone and allow it to bring down the rest of the state.

Podgursky and Pretnar conclude with, “Improved state economic growth will require much better performance by our two large cities. In terms of government policy, business as usual is not working.” Sadly, business as usual seems to be the only thing Kansas City leadership is offering.

The post Kansas City: Missouri’s Economic Albatross appeared first on Show-Me Institute.

Based on Steinhoff and Yoakum’s comments, I’d like to make three points:

Point #1: Pensions Take From Some to Reward Others

The generous teacher retirement benefits for those who stay in the system for their full career are made possible by the contributions of those who leave the system early. According to Yoakum, “The retirement system is designed to provide a career employee in Missouri schools with roughly the same standard of living they had.” The key phrase there is “career employee.” Workers who leave early face a severe financial penalty.

As McShane pointed out in the article (and as I’ve noted before on the Show-Me Institute blog), benefits from the teacher pension system do not exceed a teacher’s contributions until they have worked for 28 years. 28 years! As a report from the Urban Institute noted, 62% of Missouri teachers do not stay for that long. The majority of teachers are not benefiting from the pension system, but are instead subsidizing the benefits of others.

Point #2: Retirement Benefits are an Ineffective Way to Recruit Teachers

Yoakum contends that the pension system is helping recruit teachers to Missouri. This is a poplar refrain among pension supporters. At first glance, the argument makes sense—better benefits attract more people. The problem is that people, especially young people, typically don’t pay much attention to their retirement benefits. This is illustrated by the quote from Steinhoff, “It is the best kept secret even within the profession because, for most teachers, it doesn’t come on their radar until they’re teaching for about 25 years.” I fail to see how a well-kept secret helps recruit teachers.

As a National Bureau of Economic Research report notes, employees value current pay much more than they value deferred compensation into a pension system.  Thus, a better way to recruit and retain teachers might be to pay them more now, rather than promise them more later.

Point #3: Pensions Pull Some to Stay, Push Others Out

OK, maybe pensions aren’t the best way to recruit new workers, but they do help keep teachers in the system, right? As Yoakum said, “From the employer standpoint, it does provide golden handcuffs to a certain extent. When a teacher has accumulated a certain years of service, it’s very hard for them to leave. This helps our school districts retain those very good teachers.”

This “Golden Handcuffs” phenomenon is discussed by economists Robert Costrell and Michael Podgursky in an Education Next article with the same name (see their excellent illustration above). The yellow line is the value of Missouri’s teacher pension system, while the black line represents a smooth-accruing cash balance plan. This shows how teachers who leave early are worse off under the current system. As a result, Costrell and Podgursky agree with Yoakum that the back-loaded nature of PSRS pulls teachers to stay until full retirement—but at a cost. First, there is no indication that the “pull” is felt only by the “very good teachers” to whom Yoakum alluded. Indeed, there may be some teachers who are burnt out and want to retire, but feel compelled to stick it out until they reach full retirement. How is that good for kids? And after a teacher reaches their peak pension value, the system punishes them and pushes them out. Thus, beyond a point, the system acts as a disincentive for veteran teachers to stay.

We cannot accept the merits of defined-benefit pension systems simply because they provide a terrific benefit to a fraction of our teachers. Rather, we should consider whether the system is designed to provide fair retirement support for every teacher in Missouri. Clearly it is not. 

The post Missouri Pensions Reward Some, Punish Others appeared first on Show-Me Institute.

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As it stands, the pay schedule for Kansas City teachers starts low and provides only modest increases in the initial years. Largest pay increases come at the end of a career, in a manner to maximize pension value. As my colleague James Shuls has argued in previous posts, this is a disincentive for new and effective teachers to stay on. Dane Stangler and Aaron North of the Kauffman Foundation wrote in a March 2014 op-ed in the St. Louis Post-Dispatch:

Because most of the pension value accrues in the final years of an educator’s career, the typical new teacher in Kansas City or St. Louis does not benefit from the current system. Based on our research, we estimate the likelihood that a traditional public school teacher in St. Louis stays in the profession long enough to earn the maximum pension benefit to be about 4 percent. In other words, 96 percent of teachers in St. Louis will leave prior to reaching the full benefit and the percentage is comparable in Kansas City (approximately 3 percent).

As a result, new teachers are less likely to stay on. According to the Show-Me Institute’s Michael Podgursky, “After eight years, roughly 70 percent of teachers remain on the job. The eight-year survival rates in STL and KC are far lower, ranging from 10 percent to 30 percent.”

Podgursky’s paper urges more transparency and,

Given the relatively small share of new teachers in Kansas City or Saint Louis who can expect to complete an entire career in either district, as a strategic recruiting tool it makes more sense to raise front-end salaries, 

rather than “generous end-of-career retirement benefits.”

Certainly, there are many reasons why teachers in Kansas City and Saint Louis are much more likely to leave, and creating a more fair pension system will not solve all of them. But one thing we can do in Kansas City is to let new teachers know they are valued early on in their careers and that we want them to stay on.

The post Ideas for Kansas City Schools: Pay Teachers More Sooner appeared first on Show-Me Institute.

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In a recent Saint Louis Beacon editorial, I noted that budget decisions have reduced funding for higher education. Spending on higher education has declined in real terms since 1990. This has had several effects, including forcing Missouri universities and colleges to raise tuition. It also has affected the educational accomplishment of the average Missourian.

How does Missouri stack up when compared to other states in educational achievement by its citizens? In 2008, Missouri ranked 33rd out of the 50 states using the statistic “percent of adults having a bachelor’s degree or more.” Don’t like “number of degrees” as a measure of what you have learned? Using standardized test scores (the National Assessment of Educational Progress, or NAEP) as a measure of educational attainment, Stanford University professor Eric Hanushek recently reported that since 1992, the gain in NAEP test scores for Missouri relative to other states is unimpressive.  On this score, Missouri ranks 27th out of 41 states for which data are available.

Missouri’s lackluster educational record is one of several factors that has negatively affected our economic standard of living. In a 2012 Show-Me Institute study, SMI economists Joseph Haslag and Michael Podgursky reported that Missouri’s economy expanded at a slower pace than any of its neighbors since 1997. Compared to all 50 states, Missouri ranked 48th in terms of economic growth. Even in a world of social promotion, this is not a passing record of achievement.

Nixon has called for additional funds for higher education in the fiscal year 2015 budget. Whether these funds survive the political battlefield and find their way to colleges and universities is a dubious proposition. Nor do I mean to suggest that simply throwing more dollars at education is the answer to improving the situation. One thing is certain, however: Unless Missouri’s educational report card improves in the coming years, do not expect to experience an economic boom any time soon.

The post Governor Nixon And Higher Education appeared first on Show-Me Institute.

Currently, Missouri teachers participate in a defined benefit plan. Their pension benefits are calculated by averaging several years of that employee’s highest salary, not by averaging the salary of the employee over his or her entire career. This benefits administrators, who tend to get a big boost in average salary after they move from teacher to administrator. According to Podgursky’s calculations, a school superintendent will end up contributing 53 percent more to his or her pension plan than a senior teacher would over the course of his/her career, but receive 89 percent more in benefits.

On the other hand, new teachers do not benefit as much because their starting annual salaries are lower than a “senior” teacher. Again, according to Podgursky’s calculations, these novice teachers will contribute 30 percent of what a senior teacher does, but only expect 18 percent of the benefits. Novice teachers will eventually become senior teachers and these differences will all even out … if they remain teachers. However, as Podgursky notes, those who leave early rarely collect their benefits.

Because school administrators benefit the most from these types of plans, they have little incentive to insist on changes, even though they can be burdensome on the district and taxpayers.

The fundamental problem with Missouri’s defined benefit plans is that they do not directly tie an employee’s contributions to his or her benefits. Podgursky notes that “cash balance” plans address some of these problems. Personally, I prefer defined contribution plans. They’re personal, portable, and for the employer, there is no ongoing liability once the employee leaves. Whether it is a cash balance plan, or a defined contribution plan, some type of reform is needed.

The post The Cost Of Teacher Pensions appeared first on Show-Me Institute.

So what exactly is the reckless Kansas policy that the Post-Dispatch editors tell us must be avoided at all cost? First, Kansas lowered its income tax rate from 6.45 percent to 4.9 percent on individual income. For small businesses, namely those organized as S-Corporations, LLCs, Partnerships, and Sole Proprietorships, cases in which business income that is passed through to owners, Kansas eliminated the income tax altogether.

What does economics tell us about the likely effect of such a policy? For simplicity, assume that there are two main sources of income: labor and capital. The former is the payment for supplying work effort to a firm. The latter is the payment for resources that you provide to companies and is usually returned to you after the risk you face is realized. So income from loans and other assets, along with returns to entrepreneurial activity, are deemed capital income. Given that government has to raise revenues for public needs, which should be taxed more — capital or labor? In research that Christophe Chamley and Kenneth Judd conducted independently, the conclusion is unambiguous: tax rates on capital income are very detrimental. Chamley’s and Judd’s work is in line with the analysis that two Nobel Laureates put forward: Peter Diamond and James Mirrlees, who argued that taxes should be applied to the most inelastically supplied goods. Because capital is so mobile, its supply is very elastic and the optimal tax rate on capital income is zero.

Ironically, the editors at the Post-Dispatch accept that people on the Kansas border are very mobile, just not in response to taxes. They argue that people move from Missouri to Johnson County, Kan., because of school quality. The unstated premise is that these people still work in Missouri. Will a substantial tax nudge not lead to even more people seeking out those Johnson County schools? Or, more importantly, induce employers to plant businesses where their employees want to live?

The issue for policymakers is this: for a given level of state revenue, what set of tax policies will yield the revenues while doing the least economic damage? Kansas is trying an experiment. There is an economic rationale for this experiment. If you have to tax income, there is good reason to try to separate out taxes on labor income from taxes on capital income, because capital is highly mobile. In spite of the editorial board’s heated rhetoric, the economic fundamentals favor Kansas on this one.

Joseph Haslag is chief economist and Michael Podgursky is a co-founder and director of the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Taxes Do Harm Growth appeared first on Show-Me Institute.

The new law reduces the state’s top tax on wage income from 6.45 percent to 4.9 percent. Much more dramatically, however, it also abolishes the state income tax for many entrepreneurs and small business owners.

Under the new law, partnerships, S-corporations, and sole proprietorships are now exempt from paying any state income tax in Kansas. For example, if the owner of an S-corporation has $10 million in sales and $500,000 in “pass-through income” — meaning income after wages and other expenses — he would pay zero taxes to the state of Kansas on his $500,000 income.

Officials in Kansas make no secret of the fact that they want to promote their state as a Midwestern tax haven — appealing to entrepreneurs and small businesses in neighboring states, including Missouri, which has a top individual income tax rate of 6 percent, or $30,000 on $500,000 in income.

If small business owners in Missouri, Oklahoma, or other states want the same deal that Kansas is now offering to more than 190,000 small businesses, they just need to relocate to the Sunflower state.

How big a threat does this pose to the future growth and prosperity of our state? As economists, we can offer a few back-of-the-envelope calculations.

Missouri entrepreneurs in the 11 counties bordering Kansas would presumably be among the first to move. The population within these counties is 1.48 million people, or just more than 24 percent of the state’s total. For 2010, the total aggregate income of people filing individual income tax forms in Missouri for partnerships, S-corporations, limited liability partnerships, and sole proprietorships is $13.2 billion. Based on the population distribution, we would therefore expect that people with pass-through income in the border counties would account for roughly 24 percent of the $13.2 billion, or $3.17 billion.

Let us suppose that 10 percent of small businesses and entrepreneurs in those border counties deemed it worthwhile to move. That would translate into a $317 million reduction in goods and services and a roughly 1 percent reduction in income in the border counties. Based on 2011 income per worker, Missouri would see about 4,500 jobs go across the border.

Of course, people in other parts of Missouri might also elect to take advantage of the welcome mat that Kansas has put out for entrepreneurs and small business owners and that would further erode the base of our already weak and under-performing state economy. Entrepreneurs who might otherwise have launched their new business in Missouri may choose to launch it in Kansas instead.

Oklahoma Gov. Mary Fallin is advocating a reduction in her state’s top income tax rate to 4.5 percent from the current 5.25 percent, and she has cited the new Kansas law as cause for urgency. “Oklahoma needs to compete with our neighbors,” Fallin said. “To do that we need to lower our income tax.”

In a recent press conference, Missouri Gov. Jay Nixon sounded strangely complacent, saying “we haven’t spent a great deal of time talking about what they (Kansas) did.” With all due respect, we suggest that this is something worth discussing.

Our lawmakers need to start thinking seriously about creating a more favorable tax regime for economic growth and job formation in Missouri.

Joseph Haslag is chief economist and Michael Podgursky is a co-founder and director of the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post More Bad News for Missouri Competitiveness appeared first on Show-Me Institute.

Franklin County has and continues to violate the state’s Constitution by allocating hundreds of thousands of taxpayer dollars annually to fund counseling and antibullying programs in area private schools.

That’s according to Tony Rothert, legal director for the American Civil Liberties Union of Eastern Missouri.

The Blaine Amendment of the Missouri Constitution prohibits the use of public funds to support or sustain any school controlled by any religious creed, church, or sectarian denomination. The Missouri Supreme Court previously struck down statutes requiring that bus services and textbooks be provided to private school students. 

Annie Schulte, executive director of the Franklin County Children and Families Community Resource Board (FCCRB), raised a number of arguments detailing why the program does not violate the Missouri Constitution; unfortunately, none of them are very persuasive. The use of public funds to support a sectarian school is unconstitutional, whether the funds are paid directly to the school or indirectly support the school. The Franklin County program is also not analogous to Title I. Title I grants bypass the state and local agencies and go directly to independent contractors. Because no state or local agency ever controls the funds, they are not “public funds.” The FCCRB, on the other hand, is a local agency and does control the funds. 

The fact that the Franklin County program seemingly is unconstitutional is an illustration of how the Blaine Amendment currently stands as an obstacle to the freedom of school choice for students in failing districts, such as Saint Louis and Kansas City. As University of Missouri-Columbia Professor Michael Podgursky argued, the rigidity of the Blaine Amendment is keeping students stuck in unaccredited schools following the Missouri Supreme Court’s Turner decision. While the Supreme Court of the United States held that a voucher program for students to attend a private sectarian school does not violate the federal constitution, it is clear that a similar program would be struck down in Missouri. If the state cannot provide private school students with books, buses, and (probably) counseling services, a voucher program stands no chance of passing constitutional muster.

It is unfortunate that students at private sectarian schools likely cannot receive counseling services from the Franklin County program, but students who are stuck in unaccredited, failing schools is a much bigger issue. Given accredited public schools’ unwillingness to accept students from failing districts, these students may remain stuck until the Blaine Amendment is repealed.

The post Is Franklin County Violating The State’s Blaine Amendment? appeared first on Show-Me Institute.

The good news is that two high-performing school districts have offered to take these students in large numbers. These districts do a great job of educating high poverty and minority children, and do so at much less than the $15,000 and $16,000 per attending student spent in Kansas City and Saint Louis, respectively. Moreover, decades of social science research has demonstrated that the types of schools that these districts run are exceptionally good at educating poor urban youth. So why isn’t our legislature rushing to take advantage of this remedy? The districts in question are the Saint Louis and Kansas City dioceses. This high-quality yet affordable option is off the table.

Why? Opponents argue that it is inappropriate to provide public funds for private religious schools. Indeed, strong language to that effect — Blaine Amendments, named in honor of the Maine senator who led the movement — was placed in Missouri’s and some other state constitutions in the late-19^th century precisely to prevent public monies from flowing to Catholic schools.

The Blaine Amendment, and the associated ideology, has warped K-12 education policy. In other areas of policy — including education — faith-based organizations routinely receive tax dollars to provide services for the general public. Missouri students can take their Bright Flight or Access Missouri scholarships to public institutions like the University of Missouri as well as private religiously-affiliated colleges such as Hannibal-Lagrange, Saint Louis University, or Rockhurst. Low-income parents in Missouri can use tax-supported vouchers to purchase pre-school care from religiously-affiliated providers.

In nearly all other areas of social welfare policy, public funds flow to faith-based organizations for social services. This is based on a recognition that government support for a service does not mean the government should be the only, or even the primary, producer. The public interest is best served if multiple vendors can compete to provide services and give consumers choices.

Freedom of choice is the key. In a voucher system where money follows the student to a school that parents choose, government is not favoring one religious doctrine over another. When a student takes his Bright Flight scholarship to Hannibal-LaGrange College or Saint Louis University, the state is not “establishing” or promoting one religious doctrine over another.

Charter schools provide valuable options to parents. The Missouri law, currently limited to just Kansas City and Saint Louis, should be extended to all school districts statewide. However, the charter schools currently operating in Saint Louis and Kansas City have a mixed achievement record. Some are producing above-average achievement gains for their students, whereas many are performing no better, and in some cases significantly worse, than the district schools. Over time, the low performers will be winnowed out. Unfortunately, substantial capacity of high-performing charters is needed now, not 10 years from now.

With each passing school day, the harm inflicted on Saint Louis and Kansas City children grows. The private schools have thousands of seats available for these children now. A remedy is looking us in the face.

Michael Podgursky is a professor of economics at the University of Missouri–Columbia and a member of the Show-Me Institute Board of Directors.

The post Private School Choice and the Turner Decision appeared first on Show-Me Institute.

A couple recent videos:

• Are Missouri Public Schools Failing to Make the Grade? Saint Louis Public Schools Superintendent Kelvin Adams and University of Missouri Professor Michael Podgursky have the scoop.
• If You Play, You Pay I-70 in Missouri may be switching to a toll road, and Show-Me Institute Policy Analyst David Stokes thinks this sounds better than raising gas taxes for everyone.

Both videos are embedded below.

The post Are Missouri Public Schools Failing to Make the Grade? appeared first on Show-Me Institute.

The post Missouri Public Schools: Policy Discussion appeared first on Show-Me Institute.

Ed Robb, Rest In Peace.

The post In Memory of Ed Robb appeared first on Show-Me Institute.

I thought that we as a state were making steady progress toward that end. As I see it, there have been a number of real pluses:

• Over the past couple years, the Missouri legislature responded to a challenging fiscal environment with responsible spending cuts, as opposed to harmful tax increases;
• Missouri is home to a robust Tea Party movement; and
• Missouri fielded a bumper crop of candidates espousing strong free-market principles during the November 2010 mid-term elections.

But now I am wondering how much progress we have really made — given what seems to me the complete abandonment of principle by some self-described conservatives in the legislature. These so-called conservatives have thrown their support behind the proposed bill to grant $360 million in tax credits for the supposed purpose of creating a “China Midwest Hub” or “Aerotropolis” at Lambert-St. Louis International Airport.

This legislation — which may be considered at a special session of the legislature in September — would spawn the largest tax credit subsidy in Missouri history.

The proposed bill is also the epitome of bad public policy. Let me count some of the ways that it fails the test of serving the public good:

• It would take from the many (basically, all Missourians who pay income taxes, as individuals or businesses owners) and give to the few (mostly to owners or developers of warehouses and real estate in designated areas near the airport, some of whom have already received or are in line to receive substantial tax credits);
• The legislation is being rushed to a vote in the absence of anything resembling a serious cost-benefit analysis — and in the absence of any proof the Chinese government or ANY major air carrier is committed to a plan to turn Lambert into a major air cargo hub;
• It therefore represents a huge (and completely misplaced) leap of faith in the ability of our legislators to outsmart and outthink the marketplace in putting taxpayers’ money at risk.

In a positive development earlier this year, top business leaders in the Kansas City metropolitan area called on the governors of Missouri and Kansas to declare an armistice in a senseless “border war” over the use of economic development incentives to poach jobs from one side of the state line to the other. The two-way traffic of companies chasing tax credits has depleted tax revenues in both states without a net increase in wealth or employment. We should all give thanks for this outbreak of common sense.

Now, however, supporters of the Aerotropolis legislation would have us believe that it will create thousands of jobs in the Saint Louis metropolitan area and generate nearly $34 billion in economic activity over a 20-year period — paying back the original investment in taxpayers’ money more than 100 times over. Why, then, is the smart money (private capital) staying on the sidelines? Why hasn’t it acted on its own — given the supposedly fabulous returns cited by supporters?

The answer is clear: The underlying economics is not there. Heavily promoted “investment opportunities” predicated on tax credits or other subsidies are almost always accidents waiting to happen.

A dozen or so years ago, we were told that subsidizing a new runway at Lambert would bring new traffic, and it didn’t. We were also told the Mid-America Airport — deeply subsidized on the Illinois side — would bring huge traffic. Now there is just one subsidized cargo flight a week out of the entire airport.

Karl Marx (not normally someone I quote) said that history repeats itself, “first as tragedy, then as farce.” Let’s hope that history is not about to repeat itself with the misconceived and hugely expensive Aerotropolis legislation.

R. Crosby Kemper III is chairman of the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.

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At this event, Dr. Michael Podgursky spoke of the benefits of school choice, Dr. Susan Feigenbaum spoke of the negative impacts of discrimination in a free market, and Dr. Daniel Thornton spoke of the dangers of irresponsible monetary policy. Dr. Joseph Haslag moderated, and Dr. Bonnie Wilson introduced the event.

The post Milton Friedman Celebration 2010 featuring Michael Podgursky, Susan Feigenbaum and Daniel Thornton appeared first on Show-Me Institute.

Society makes a promise to children that no matter their race, ethnicity, or socioeconomic status, every child should have the education necessary to realize his potential. For many children in Saint Louis, however, that promise has been broken.

Saint Louis Public Schools maintains a handful of excellent institutions, but for three years now, the state has deemed the district as a whole to be unworthy of accreditation. State law requires that if a school district fails to maintain accreditation, the students living in that district must be given the opportunity to escape their troubled schools and attend accredited public schools in nearby districts. Just as SLPS was about to lose accreditation in May 2007, however, the elected school board formally urged county school districts to deny admission to any students seeking transfer under this law — and the county districts complied. For three years, many students from Saint Louis have been denied the educational lifeline provided by state law, trapped in failing schools for years they won’t get back.

Thanks to the Missouri Supreme Court, that now seems likely to change. With a 4-3 decision in Turner v. School District of Clayton, the judges ruled that the school districts in Saint Louis County cannot turn away Saint Louis residents seeking admission to their schools.

It also ruled that SLPS must bear the expense of their students’ education and provide transportation.

The court said that when a Missouri school district has clearly failed its students, that district is required to provide access to alternatives.

Many in the county will worry about the potential challenges of integrating kids from Saint Louis into their classrooms. Elected leaders and school officials in the city will complain about the expense of sending students to other school districts. SLPS will argue that without the money those students represent, the district cannot be expected to make the changes necessary to regain accreditation, and that this decision represents the death of public education in Saint Louis.

These arguments overlook what the law and the Missouri Supreme Court did not: Public schools exist to serve the children, not the other way around. Children in Saint Louis have already had their educational progress delayed for too long. Access to better schools cannot wait until the adults straighten out the mess they created. The welcome impact of the Turner decision is that after years of hollow promises that someday all of the students in Saint Louis would enjoy access to high-quality educational opportunities, someday has finally arrived.

Today, another letter to the Post-Dispatch (predictably) responded that the real problem with SLPS is a lack of funding — which the writer attributes to Missouri school districts’ failed attempts to persuade the courts that taxpayers should be spending billions more in school funding. There are, of course, two massive failures of logic in this letter. The first is the notion that students’ academic performance is linked to the amount of money spent by their school district, a point debunked not only by the research of Dr. Michael Podgursky (who happens to be a Show-Me Institute board member), but also by the fact that SLPS maintains some of the very best schools in the state with the same per-student funding it provides to some of the very worst schools in the state.

The second failure is linked to the first. The letter complains about school funding at the state level, but the question at issue is the failing of Saint Louis city’s unaccredited school district. Last year, SLPS spent more than $15,600 per student — far, far above the state average, and on par with the best-performing districts in Saint Louis County. SLPS also maintains a student-to-classroom-teacher ratio of 18 to 1. This means that SLPS has roughly $281,000 to spend for every active classroom in the district. That’s $281,000 per classroom! Even if, say, 40 percent of that money (more than $110,000 per classroom) went to administrative costs, that would leave nearly $170,000 to pay a teacher’s salary (let’s say $60,000) and to properly equip and maintain just that one classroom.

SLPS suffers from a number of ills, but lack of funding is not one of them.

The post Funny You Should Mention It … appeared first on Show-Me Institute.

In this interesting paper, Show-Me Institute researcher Audrey Spalding analyzes a topic that has received little systematic study: the compensation of school superintendents. School superintendents are the CEOs of our public school districts. Missouri school districts spend roughly $ 9,500 per student in current

operating expenses. This rises to nearly $ 13,000 per student when capital expenditures are included. Superintendents, with the approval of their boards, make important decisions about how these resources are allocated.

They make staffing decisions, including hiring and firing teachers and principals. They set pay and benefits for these staff. They invest in technology and curricula. They open and close schools. In many of our counties, the public school system is the largest employer by far. This makes the school superintendent and the jobs and resources he controls a very important person.

So, how are these education decision-makers compensated? Which superintendent and district factors explain differences in superintendent pay? In this study, Spalding attempts to answer these questions by drawing on two new sources of data. The first are salary data reported to the Missouri Department of Elementary and Secondary Education (DESE). These data are routinely reported to DESE by districts, but they are not reported by DESE to the general public. Spalding filed a sunshine request to obtain several years of these reported salary data. However, there is more to executive compensation than just salaries. To get a fuller picture of compensation, Spalding made sunshine requests to all Missouri school districts for superintendent contracts. These contracts provide important data about other benefits that superintendents receive, including the use of cars, additional annuities, vacation time, bonus pay, etc. She coded much of these contract data and worked them into her analysis.

After publication of this report, interested readers will be able to access the underlying data including all of the superintendent contracts, on the Show-Me Institute's website. This project thus advances the institute's mission to provide solid economic analysis of public policy, and also to increase government transparency.

Michael Podgursky
Professor of Economics
University of Missouri Columbia
Board Member, Show-Me Institute

Collected Superintendent Contracts

The post Actual Pay: A Survey of Missouri Public School Superintendent Salary and Benefit Packages appeared first on Show-Me Institute.