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

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

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

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

“So what?”

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

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

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

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

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

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

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

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

The post Breaking: The Actual Starting Teacher Salary According to DESE appeared first on Show-Me Institute.

Similarly to the Trinity Lutheran Church case in Missouri and the Espinoza case in Montana, the court held that allowing students to take their public dollars to a religious school of their choice does not establish an official state religion any more than using a Pell grant at a religious university does. The ruling does not require states to fund school choice. But, if they have a school choice program, they may not exclude religious schools from participating.

Beginning this fall, qualified Missouri families can apply for an Empowerment Scholarship Account (ESA) to be used to pay for, among other things, tuition at a private school. Five of the six approved Education Assistance Organizations (EAOs) that will be disbursing the scholarships are religious. The latest Supreme Court ruling should put to bed any questions as to whether anyone should take issue with that.

The post A SCOTUS Victory for Private School Choice appeared first on Show-Me Institute.

The twelve states with occupational licensing reciprocity are Arizona, Colorado, Florida, Idaho, Oklahoma, Missouri, Montana, New Jersey, Pennsylvania, South Dakota, Utah, and Wyoming. Notably, only one of Missouri’s border states and very few midwestern states have adopted this policy.

Being on the forefront of this movement gives Missouri a competitive advantage. We’ve significantly decreased the red tape that burdens workers when they relocate. Many licensed workers can move to Missouri and continue working much more easily than if they moved to Kansas or Illinois, for example. It’s the legislative equivalent of a giant arrow above Missouri telling workers to move here.

Though there is still more work to be done, occupational licensing reciprocity was a step in the right direction. It’s icing on the cake that Missouri was one of the first states to adopt this legislation, giving us a huge advantage over surrounding states.

The post Hey Licensed Professionals: It’s Time to Move to Missouri appeared first on Show-Me Institute.

Over the past decade, Missouri’s population grew by only about 160,000 residents, or 2.8 percent. This growth badly trails the national rate of 7.4 percent and every neighboring state except for Illinois. In fact, only eleven states in the country experienced less population growth than Missouri. Missouri dropped one spot in total population rank, from 18th to 19th. This is a significant decline from the state’s high-water mark of 5th at the turn of the 20th century.

Census results are important because they have real-world implications for states. Aside from being a measure of a state’s relative desirability, these population totals determine the apportionment of representation in Congress over the next decade. After losing a seat following the 2010 census, Missouri’s population is still sufficient to maintain eight congressional districts for another ten years, but Illinois was not so lucky. Along with Missouri’s neighbor to the east, six other states will be losing a congressional seat: California, New York, Michigan, Pennsylvania, Ohio, and West Virginia. States gaining these lost seats will be Florida, Colorado, Montana, North Carolina, Oregon, and Texas, which gets two additional seats.

While it can be difficult to fully understand what is driving the country’s population shifts, there appears to be a relationship with cumulative tax burdens. The state’s losing seats rank 1st, 8th, 10th, 18th, 23rd, and 26th in total tax burdens. On the other hand, the state’s gaining seats rank 11th, 21st, 32nd, 34th, 43rd, and 47th (Texas). While this isn’t the only factor in migration, people are indisputably moving from high-tax states to states with lower taxes.

State and local governments competing for residents via tax rates is not a new idea, and is something my colleagues have written about for years. Charlies Tiebout originally proposed the idea that people would “vote with their feet” by moving to communities with their preferred level of public services and taxes. If Missouri’s population growth continues to lag much of the country, there’s reason to believe the state’s taxes are contributing to the problem. Over the next decade, it should be a priority for Missouri’s elected officials to bring more people to the Show-Me State, or we could face the same fate as Illinois.

The post Missouri’s Population Growth Is Still Lagging appeared first on Show-Me Institute.

The ruling finally puts to rest whether states can discriminate against religious schools in state-funded scholarship programs. Until now, states have relied upon constitutional amendments—born from an idea conceived by Congressman James Blaine nearly 150 years ago—to prevent any public money from going to religious schools. These so-called “Blaine Amendments” were primarily about discriminating against Catholic schools at a time when the Protestant majority was concerned about Catholic immigration. But no more.

And if you don’t think parents want to be able to find the school that’s best for their children, then you haven’t met Kathy Espinoza. Her years-long fight for her children went all the way to the Supreme Court of the United States. Now it’s settled. But just because the legal question is settled doesn’t mean there isn’t still much work to be done. States still need to act, and lawmakers should recognize that parents want and deserve school choice, regardless of school type.

It’s likely that there will be a lot of unhappy parents this fall as districts begin to release their reopening plans. Missouri has over 25,000 available private school seats; some are in religious schools, and some are in secular schools. This ruling means the Missouri Legislature could let parents access these seats by creating scholarship programs that would allow families to choose the best education for them. As of today, lawmakers are out of excuses.

The post SCOTUS Delivers Key School Choice Victory appeared first on Show-Me Institute.

THE SOLUTION: Open collective bargaining.

Open collective bargaining would allow the public to attend meetings where government bodies are negotiating collective bargaining agreements with unions to ensure that tax dollars are being spent wisely. Openness in public affairs empowers citizens to hold their government representatives accountable. The public is directly affected by policies set during collective bargaining; citizens therefore have a right to be present during such meetings. An open collective bargaining rule would not prohibit the public agency from discussing and formulating its bargaining positions in executive session.

WHO ELSE DOES IT? Alaska, Colorado, Florida, Georgia, Idaho, Iowa, Kansas, Minnesota, Montana, Ohio, Oregon, Tennessee, and Texas all require contract negotiations to be open.

THE OPPORTUNITY: A transparent negotiating process will enable the public to hold government accountable in its dealings with public employee unions and help ensure that the agreements reached between the two parties are in the interest of everyone instead of just a select group of employees.

KEY POINTS

• Open collective bargaining gives citizens the opportunity to attend union negotiations with government bodies and help ensure that tax dollars are spent responsibly.
• Missouri’s Sunshine Law allows government bodies to close meetings to the public if they relate to a negotiated contract, even though there is no compelling reason why negotiations between a union and a public body should be held in secret.
• Government unions can make campaign contributions and support candidates that they will potentially bargain with after election. This advantage makes it especially important that the public be aware of how the government and public employee unions interact.

SHOW-ME INSTITUTE RESOURCES

Policy Study: A Primer on Government Labor Relations in Missouri

Video: Government Unions: Restoring Accountability

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Open Collective Bargaining appeared first on Show-Me Institute.

Far from it. Of the 77 U.S. cities that KPMG ranked (which was not exhaustive of all major metros), Saint Louis ranked 45th and Kansas City ranked 46th. Among the cities cheaper than Saint Louis (and Kansas City) are regional competitors like Nashville, Omaha, Cincinnati, Memphis, Indianapolis, Cleveland, and Oklahoma City, to name a few. Worse yet, Saint Louis was more expensive than all 18 Southeastern cities KPMG looked at, from Atlanta to New Orleans.

So where did the Post-Dispatch get a top ten ranking for Saint Louis? If we only consider regions with populations greater than two million (of which KPMG ranked 31), Saint Louis is the 9th cheapest. I will leave it to the readers of this blog to decide if Saint Louis should pat itself on back for being cheaper than New York, Los Angeles, and Chicago, when it has higher costs for businesses than Nashville, Memphis, and just about every other regional competitor. But if we do decide to use population as criteria, it seems more justified to look at metros with populations similar to those of Saint Louis and Kansas City (between two and three million residents). When we do that, Saint Louis is 7th and Kansas City is 8th out of 14 such cities. That seems awfully middling.

That’s probably why, if one reads the study that the Post-Dispatch reports on, they’ll find that it does not claim that Saint Louis is among the most competitive cities in the country. KPMG didn’t even break down cities by population in the study, choosing instead to do so by region.  The Post-Dispatch story (while citing the study) is actually based on an ancillary KPMG press release, which lauds Cincinnati, and is careful to note context.

Titling an article “St. Louis among most cost-competitive cities for business, report says” when the report in question says no such thing is a questionable decision for a newspaper of record. But this is not just a problem with the headline. The article itself is equally misleading, and it was not a headline writer who placed this story front and center on the Post-Dispatch’s website less than a week before a vote on multiple tax issues (where the city’s business climate is an issue). 

The post Report: Saint Louis, Kansas City *Not* Among Most Cost-Friendly Cities for Business appeared first on Show-Me Institute.

What the proposal did not do under the authorizing legislation in Jefferson City is exempt the new sales tax dollars from Tax Increment Financing (TIF). Because they did not exempt the Arch tax from TIF, a large portion of the revenues are likely to be diverted to the 176 (at least) TIF districts around Saint Louis City and County.

You may think you are voting to support the Arch and parks. However, a significant sum of the new sales taxes people pay will go to the many ludicrous subsidies implemented under TIF in recent decades. Many of the retail shopping districts in our area will now be able to keep half of the new Arch tax for themselves. You read that right. Existing TIFs will be able to “capture” half of the new Arch taxes generated within the TIF district and use it for private purposes. In other words, much of the revenue may not go to the parks . . . or the Arch . . . but to developers, municipal investors, and private retailers.

It was not a simple oversight allowing TIFs to capture the Arch sales taxes. Just a few years ago, the legislation authorizing a sales tax increase for MetroLink specifically exempted the tax from TIF. What is worse, in the very same legislation that authorized the new Arch tax (2012 HB 1504), the Missouri Legislature also authorized a new parks sales tax in Jackson County (Kansas City). Would you believe that they exempted the new Jackson County sales tax from TIF capture, but allowed the Arch tax to be taken by private developers within any TIF in the area? No, it was not an oversight. It was a choice, and voters deserve to know about that choice.

The second objection — as a quite separate matter — is another question that must be raised: Why are city and county residents being asked to support a federal monument — the Gateway Arch — with local tax revenue?

We do not hear of the residents of cities and towns in Wyoming, Montana, or Idaho being asked to support Yellowstone National Park with local sales taxes. Why should Saint Louis residents be asked to provide such support for the Arch?

Officials at the National Park Service have acknowledged that they do not know of any similar situation in which a local tax has been used to improve a national park or monument.

All in all, the Arch tax is a terrible idea on several counts. It deserves a resounding “no.”

Andrew B. Wilson is a resident fellow and senior writer and James A. Bosnick III is a policy extern at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Two Thumbs Down on the So-Called ‘Arch Tax’ appeared first on Show-Me Institute.

Every dime that the state takes away from an individual or business, through an income tax, is essentially taken out of the productive economy. Consequently, the capital that would have been spent investing in future goods is no longer available to the entity that would have otherwise used it. This, in effect, stifles growth.

Some might argue that public spending pumps that money back into the economy, but the 2009 American Recovery and Reinvestment Act is a perfect example of that kind of Keynesian theory failing in practice. The bill massively increased government spending,but did little to stimulate growth in the economy; unemployment remains around 10 percent. In practice, government spending provides much less of a stimulative effect than comparable tax cuts.

It would be in Missouri’s best interest to lower — or even abolish — the state income tax, thus enabling Missourians to spend and invest more of their own money to grow our stagnant economy. As demonstrated in the table below, which displays average annual growth rates per state between 1997 and 2008, Missouri’s growth ranks seventh-worst in the nation. Abolishing or reducing the state income tax would be a step in the right direction toward positive change.

Source for GDP Numbers: Bureau of Economic Analysis

The post Growth by State appeared first on Show-Me Institute.

This made me wonder the the following: Are income taxes correlated with a higher mid-year budget gap as a percent of the FY2010 General Fund Budget? Do states that have no income tax have a lower incidence of mid-year budgetary shortfall?

In an attempt to answer this, I took Table 1 from the CPP report, and added the states that do not have a budget shortfall (Alaska, Delaware, Michigan, North Carolina, Oregon, Texas, and Wisconsin) and those that have a surplus (Montana and North Dakota). I sorted this table by the percentage of budget gap over the 2010 general fund budget. Next, I added the top marginal tax rates for personal and corporate income for each state. The green cells indicate states that assess zero income tax, and the red cells indicate states that have income tax rates of  9.0 percent or greater.

Projected Mid-Year FY2010 Budget Gaps as a Percentage of FY2010 Fiscal Budget by State

(Modified to Include Income Tax Rates and States With Zero Shortfall)

* Washington is reflected low in the list because the amount shown is for the two-year budget, ending in FY2011.

The states that have no income tax are disproportionately aggregated at the top of the list. This graph indicates that states without an income tax may be better at predicting their revenues in the future. I can think of a few reasons why this is, and I invite our blog readers to suggest additional reasons in the comments.

• Sales taxes are a less volatile source of revenue than income taxes.
• Income taxes are closely tied to the job market, and sales taxes are not. When a person loses her job, she then has zero earned income, and therefore generates zero income tax revenue for the state. During this period of unemployment, however, she continues to make purchases and pay sales taxes (either by using personal financial reserves or unemployment compensation).
• Sales taxes are more effective than income taxes in addressing budget shortfalls more immediately, because they are collected at the point of transaction. Income taxes, in contrast, are collected only once per year. States do not have to wait until residents file their income taxes in order to collect revenue.

Notice that Missouri is ranked 37. This means that 36 other states were able to forecast their budgets better than Missouri. Perhaps if Missouri repealed its income tax in favor of a broad-based sales tax, it could predict its revenues better, and it wouldn’t face such a shortfall in the future.

The post Looking at Mid-Year Budgetary Shortfall and Income Tax Rates appeared first on Show-Me Institute.

This article first appeared in the St. Louis Beacon.

In this limited space, it is impossible to deal with all of the issues, real and imagined, that currently swirl around the health care debate. As President Barack Obama learned, it also is impossible to meaningfully reform the industry without substantial debate and fact checking.

Because I am not an expert in this field, I sought opinions and insights by asking the following question to a list-serve for economists: Is there any evidence that the current health insurance market is non-competitive?

I asked this question, which seems fairly relevant to the current discussion, because of recent claims that consumers face few choices when it comes to buying health insurance. Here’s a sample of what I learned.

First, it is not true that there is no competition. As reported in the New York Times, the evidence on insurance competition is mixed. Health insurance in nine states is dominated by a single company. For example, in Alabama one company provides 83 percent of the health insurance coverage.

A notable characteristic of these nine states is that they tend to have small populations. Add together the populations of three of them — Maine, Montana, and Wyoming — and you get 2.7 million, or the population of the Saint Louis metro area. With such small and dispersed populations, it makes sense that only with a single provider can they achieve the scale economies necessary to provide coverage.

What about the other 41 states? In three of the most populous states (California, Florida, and New York) the dominant company covers at most 30 percent of the population. In other states, single-firm dominance is less than 50 percent. In addition, it appears that in the largest metropolitan areas, multiple companies provide coverage. In other words, there is competition.

Second, if competition is lacking, why? Trade barriers. Most consumers cannot buy insurance out of state. This restriction came about in 1945 when Congress passed the McCarran-Ferguson Act in response to states’ concerns that they had lost authority to regulate the insurance industry following the Supreme Court’s ruling in United States vs. South-Eastern Underwriters. Politics and protection of regulatory turf trumped good economics.

Third, market imperfections (exacerbated by government interference) often lead to bloated costs. A study issued by the Commonwealth Fund in July 2009 reported that private insurance administrative costs represented about 12 percent of spending on health services and supplies. This is larger than, say, the administrative costs of government-run programs, such as Medicare. Hence, the notion that adding a government option would increase competition and lower the cost of providing insurance to more individuals.

As I was reminded by one colleague, the charge that private insurance administrative costs are comparatively high reflects the fact that administration is about all insurers do. Private companies administer claims and provide policy oversight for a vast number of employers who self-insure. Instead of layering on a Medicare-like bureaucracy, why not explore the effect that dropping of cross-border barriers might have on lowering the cost of providing coverage?

Fourth, health care providers use the availability of Medicare fee schedules to set reimbursement rates to health care providers. That is, private insurance companies tacitly collude with the government to reduce their reimbursements to that established by Medicare. If Medicare decides that it will pay your ophthalmologist $100 for that new cataract lens when the provider’s cost-covering price is $150, the private insurer will follow Medicare. Health care providers may thus be faced with a “this or nothing” scenario. Price ceilings below the market-determined price, in the end, simply reduce availability of options.

Before overhauling the current system and imposing more government mandates, here’s a modest proposal: Let’s consider whether reducing the government’s interference would increase competition in the health care industry.

Rik W. Hafer is distinguished research professor and chair of the Department of Economics and Finance at Southern Illinois University Edwardsville and a scholar at the Show-Me Institute.

The post Giving Insurers More Room to Operate Would Increase Beneficial Competition appeared first on Show-Me Institute.