Susan Pendergrass speaks with Shaka Mitchell, senior fellow at the American Federation for Children, about how a new federal scholarship tax credit, created through the One Big Beautiful Bill, could transform K–12 education across the country. They discuss what this means for Missouri families, the legal threats facing the MOScholars program, how education policy is shifting nationally, and more.

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Timestamps

00:00 The Evolution of School Choice in Missouri
02:59 Charter Schools and Teacher Innovation
05:40 The Impact of Lawsuits on Educational Freedom
08:35 Federal Tax Credit Programs and Their Implications
11:19 The Future of School Choice and Parental Empowerment

Episode Transcript

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Susan Pendergrass (00:00):
Thank you so much for joining us on the Show-Me Institute podcast, Shaka Mitchell of AFC. But I think you wear a lot of hats. We’ll just do that hat for now. There have been a lot of changes in the last few years—certainly since the pandemic—regarding how kids end up at the school they attend, especially with parents now getting more opportunities to choose instead of just being assigned. I know you’ve been on the front lines of this, especially through your work with charter schools.

In Missouri, we’re sort of creeping into it. We have a scholarship program now that’s growing, and finally, like in so many other states, the legislature has decided to put some public funding toward it. And now it’s tied up with a lawsuit. Are you following what’s going on with Missouri’s scholarship program?

Shaka Mitchell (00:45):
Yeah, thanks Susan. Thanks for having me on. I sure am following it. I’ve been encouraged in recent years by the steps Missouri has taken to expand school choice. As you know, there had been a charter school law for years, but it was really limited—to Kansas City and St. Louis. That’s a lot of students, but still many others couldn’t access those schools.

Then you had the MOScholars program, which I bet we’ll talk about. On the one hand, there are some encouraging developments coming out of Missouri. And then, per usual, there are lawsuits. Because, in the words of the famous 20th-century philosopher Taylor Swift, haters gonna hate.

Susan Pendergrass (01:30):
That’s right.

Let’s go back to this charter school thing for a minute. Now, for the first time, a charter school can open anywhere in the state—but only if the school board is the sponsor. That happens all over the country, but in Missouri, no school board would even consider authorizing a charter school. Not running them, just authorizing them.

Now there’s one other county where they can open without the board as the sponsor. But there is such strong resistance to the idea of charter schools. Do you find that surprising in 2025?

Shaka Mitchell (02:06):
Yes and no. I’ve worked in charter schools and with several charter networks. I have lots of friends still working in that space. At the American Federation for Children, we’re school-type agnostic. We support parents’ ability to choose.

In some ways, it’s not surprising that school districts—which have in many places become jobs programs for adults—don’t want to disrupt the status quo. Budgets continue to increase, while enrollments decrease. So they’ve got fewer students per classroom, but more money per pupil.

They’ve got it pretty good in terms of job security. But I think what you’re getting at is important: there are great educators who want to do right by kids. And many of them are trapped within that system.

We’re seeing some start their own schools or move to other states or online programs. There’s a lot of innovation happening. But unfortunately, you mostly see the negative reaction from public school districts when it comes to innovation and choice.

Susan Pendergrass (03:42):
Yes, and what’s so tragic in Missouri is that we’ve shut the door on teachers as entrepreneurs. We have plenty of entrepreneurial teachers. Some of the strongest charter school networks were started by teachers who said, “I have a great idea, and I need to do this outside the regulations and bureaucracy.” Cutting off the teacher-as-entrepreneur option is tragic.

Shaka Mitchell (04:10):
Yeah, super tragic. One of my colleagues, Dr. Patrick Graff at AFC, has done work on teacher spending accounts—similar to ESAs.

It’s a great idea. Teachers often say their classrooms are under-resourced. Every parent knows it’s almost back-to-school season—we’re about to get a list of supplies.

Every time I get that list, I think, “Why haven’t we budgeted for enough glue or crayons?” Patrick’s idea is that teachers should have accounts to buy what they need. Surprise: teachers love it, and legislators do too.

But when you say, “Cool, it works for teachers—now let’s do it for parents,” suddenly it’s hair-on-fire. The education establishment just says no. It’s unfair.

Susan Pendergrass (05:19):
Yeah. Public funding for MOScholars in Missouri currently serves mostly low-income students and students with disabilities in Kansas City and St. Louis. That’s where the program started. It’s expanded a bit—but only through tax-credit fundraising, and the organizations have to ask for donations.

Now the lawsuit is basically saying those kids have to go back to their old schools. That we can’t publicly fund private schools for students. It’s saying, “You have to go back to the school that didn’t work for you.”

I know the teachers’ unions brought the lawsuit, and they often take on the PR risk of being on the wrong side of things—like trying to take scholarships away from kids. I don’t see how they can sit well with that.

Shaka Mitchell (06:20):
Yeah. I had the great fortune of meeting a parent in Missouri, Becky Ucello. Her daughter was able to attend a private school through the program. Becky is a public school teacher.

So the idea that private choice programs are anti–public school is a myth. Of course she wants the best for her students—and her own daughter, who has exceptional needs. The district school wasn’t working. Who among us wouldn’t want the best for our child?

The unions get this wrong every time. And they usually get defeated in court. I expect the same in Missouri. There’s strong federal and state case law supporting the idea that parents can choose and that funds given out in a non-discriminatory way can be used at religious schools—because the parent is making the choice, not the government.

Susan Pendergrass (07:47):
In addition to the lawsuit, there’s a potential initiative petition in Missouri to amend the constitution to say you can’t spend public funds at private institutions for students.

But we already have several higher ed programs that work like Pell Grants—you can take them to public or private colleges. We have Bright Flight. This petition might even cut off those programs, too.

And even when open enrollment comes up, it’s often the lowest-performing districts that say, “We can’t be part of it—we can’t let our kids leave.”

Shaka Mitchell (08:41):
It’s totally short-sighted. Nearly every district already outsources some of their special needs education to private providers. That petition could cut off even that.

It’s absurd. Districts don’t make their own computers, books, or desks. They purchase from private companies all the time. The idea that public education is this sacred, fully public institution is a fiction.

Susan Pendergrass (09:33):
Cisco trucks are in every school. Pearson brings the textbooks. Public education is filled with private corporations. And we’ve made so much progress nationally.

I’d love for you to explain the potential for federal scholarship expansion through tax credits. What is that new program, and how will it work?

Shaka Mitchell (10:09):
Sure. The federal scholarship tax credit passed as part of the One Big Bill earlier this year. It’s the first-ever federal K-12 tax credit program.

First, it’s a tax program—not from the Department of Education. So it’s not adding to federal bloat or undermining local control.

Any federal taxpayer can direct up to $1,700 of their tax liability to a scholarship granting organization—like the ones already in Missouri. So instead of sending it to the IRS, I could say, “Let’s send this to a scholarship org in Kansas City.”

Then, the organization can award scholarships to families, most of whom will qualify based on income. The families can use them for a range of educational expenses—just like ESAs. It’s really exciting.

Susan Pendergrass (12:09):
I’ve heard opponents call it a federal voucher—but it’s not a voucher, right?

Shaka Mitchell (12:18):
Correct. Think of it like when your tax return asks if you want to give a dollar to the presidential campaign. But now it’s $1,700 to a scholarship org.

In Missouri, we have Catholic, Hebrew, and non-sectarian scholarship organizations. You can choose which one to support.

Susan Pendergrass (12:59):
Do you know the total amount of available tax credits?

Shaka Mitchell (13:06):
It’s unlimited, within that $1,700 per-taxpayer cap. Initially, there were discussions of state-by-state limits, but now the limit is per individual—not by state.

Susan Pendergrass (13:34):
So governors have to opt in, right?

Shaka Mitchell (14:10):
Yes. Governors or other state officials need to opt in. That may look different state to state. Some legislatures, like North Carolina’s, have already voted to participate.

Susan Pendergrass (14:45):
Where does Missouri stand?

Shaka Mitchell (14:59):
Probably not much discussion yet. It doesn’t go into effect until 2027, so there’s time. But Missouri is in a good spot—you’ve already got scholarship organizations and experience with tax credit programs.

Susan Pendergrass (15:20):
What about blue states like Oregon or California?

Shaka Mitchell (15:27):
Great question. All eyes are on states like California, Pennsylvania, New York. There are a lot of taxpayers there.

Imagine millions of California taxpayers sending $1,700 each to scholarships in Missouri. It would be crazy for a governor to allow that much money to leave their state. But we’ll see.

Susan Pendergrass (16:13):
What do you think those states will do?

Shaka Mitchell (16:25):
Hard to say, but some Democratic governors have said they’re researching it. It’s not really a partisan issue—it’s just the tax code. And everyone pays taxes.

Susan Pendergrass (16:55):
It’s an interesting political move—making school choice national.

Shaka Mitchell (16:59):
Exactly. And because it’s tax-based, it reaches everyone—Republican, Democrat, or Independent.

Are states really going to let billions in scholarships go to other states? I doubt it.

Susan Pendergrass (17:45):
It’ll be interesting to see how private school supply responds. Like in Arizona, where more parents have access, vendors have stepped in with customized, creative options. This could fuel huge innovation. The fact that it’s unlimited in size is surprising.

Shaka Mitchell (18:43):
Yes. These federal scholarships could stack on top of state programs.

Say your state gives $6,000, but tuition is $9,000. The federal credit could close that gap. That’s a big deal.

Susan Pendergrass (19:38):
Will there be a lawsuit?

Shaka Mitchell (19:39):
There probably will be. Lawsuits are easy to file. But this program is part of the tax code—it’s hard to challenge. It’s not clear who would even have standing.

If unions want to burn money on a lawsuit, I say go ahead.

Susan Pendergrass (20:27):
I think what works against them is how happy families are with these scholarships. Satisfaction is high.

Shaka Mitchell (20:53):
Yes. Since 2019, we’ve seen an explosion of education freedom.

And there’s now long-term data—like from Ohio—showing EdChoice students, especially Black and brown students, have higher college attainment. That kind of data is compelling.

Susan Pendergrass (21:59):
And the ROI is incredible. You keep one kid out of prison or help one finish college—you’ve already saved more than the scholarship cost.

These families take $6,000 when the public system spends $18,000. They make it work. I’ve never seen anything in traditional public education with this much impact.

Shaka Mitchell (23:10):
It reminds me of the early 2000s with the excitement around No Child Left Behind.

But this is even more grassroots. Parents are organizing—helping each other on Facebook, answering questions, forming communities. That’s powerful. You can’t put that genie back in the bottle.

Susan Pendergrass (24:34):
Right. I don’t think we’ll go from more choice to less. And I know people who considered moving to Missouri until they realized they couldn’t pick their child’s school.

Kids from these programs are having their own kids now. It’s not going backward.

Shaka Mitchell (24:40):
Exactly.

There was a great article today in the New York Times saying, “The monopoly is dead.” I mean—from the New York Times!

Susan Pendergrass (25:21):
That’s what these lawsuits feel like: a desperate last gasp.

Never underestimate parents. They’ll show up. Thank you so much for joining us today. That was fascinating. I know you’ll be following the lawsuit.

Shaka Mitchell (25:59):
Happy to do it. Thanks for having me, Susan.

Susan Pendergrass (26:01):
Great, thanks.

Produced by Show-Me Opportunity

The post The One Big Education Opportunity with Shaka Mitchell appeared first on Show-Me Institute.

The 2024 results indicate that 4 in 10 Missouri 4th graders scored below the Basic level on the assessment. What does that mean? According to a researcher from the University of Virginia, “students performing below NAEP Basic level have less vocabulary knowledge and less world knowledge, which would limit their inferencing and comprehension capability.” Another researcher describes it thusly: “Below Basic on the NAEP means that a student is performing below the minimum expected level of academic achievement for their grade, indicating a lack of foundational skills and inability to demonstrate even basic mastery of the subject matter being assessed.”  The 42 percent of Missouri 4th graders who scored at below Basic last year are most likely now in the 5th grade trying to figure out what the heck their textbooks in any subject are trying to teach them.

Here is how the performance of Missouri 4th graders has changed over time.

This graph shows scale scores (NAEP is on a scale from 0 to 500). While Missouri was hovering just above the national average until 2017, we then began a steep slide that is barely leveling out.

But scores everywhere have declined because of COVID, right? Not so. In 2024, we outperformed just five states—Oregon, Alaska, New Mexico, Oklahoma and West Virginia. Here is the same chart for Mississippi.

Twenty six years ago, we outperformed Mississippi by 16 scale score points. Now, it’s ahead of us by seven.

What will Missouri look like in 15 years, when almost half of 25-year-olds are barely literate? We have a new governor and a new commissioner of education. Perhaps these questions should be put to them.

The post Missouri Public Schools Have a Very Serious Reading Problem appeared first on Show-Me Institute.

Saint Louis County, Saint Louis City, and Brentwood have decided to mandate that new construction and major renovations for several types of properties (residential and/or commercial, depending on the jurisdiction) must be accompanied by EV charging stations. None of these mandates consider the $5,000-per-charger cost businesses will face, and some of these regulations impose a substantial fine for being a day late and an EV charger short.

Some places—like apartments and office buildings where people park for hours at a time—are a good fit for EV chargers. But for other places, a charging station could actually be a liability. Think of places like diners or convenience stores, whose business models rely on getting people in and out quickly. The last thing the owner of a small diner needs is someone who comes in and occupies a table for an hour or longer, nursing a coffee while his car charges. That’s why decisions about where the chargers should be installed are best left to businesses rather than being determined by a one-size-fits-all government mandate.

If local officials want more EV charging stations, perhaps they should first clarify where they can be built rather than dictating where they must be built. Ironically, the municipal codes for the Saint Louis jurisdictions mandating chargers are mum about where chargers can be built outside of the areas where they are mandatory. This lack of clarity results in several weeks of permitting and site plan reviews, which often vary by jurisdiction. This is backwards. Dozens of municipalities nationwide have amended their codes to allow EV chargers to be built wherever property owners see fit and have fast-tracked the permitting process to finish, in some cases within a day. For example, Kane County, Illinois, and Bellevue, Washington, allow EV chargers to be built in all zoning districts. Several states, such as New Jersey, New York, and Oregon, have classified the installation of EV chargers as “minor work,” which helps speed up installation times and cut down on permitting costs. Chicago grants EV charger installation permits within a day and even provides a guide for the installation process. These are all simple ways to speed up the proliferation of EV chargers without twisting anyone’s arm.

Local officials are right to recognize that fueling an EV is different than fueling a traditional car. Due to the time it takes to charge, EV drivers won’t be waiting in lines at centralized “electron stations.” Rather, they’ll incorporate charging into their everyday life. As more Missourians buy EVs, it will make good business sense for more businesses and property owners to install EV charging stations, either to retain current customers or attract new ones. What EV driver wouldn’t the option of charging his or her car while at the grocery store or while typing away at work? Likewise, charging stations at apartment complex could become an appreciated—or even expected—amenity for prospective tenants.

Policymakers could also make it easier for Missourians to buy EVs. Currently some uncertainty exists about the validity in Missouri of the direct sales model that many EV companies use to sell their cars. Several years ago, Tesla was taken to court over the legality of selling its cars to customers without using a franchised dealership. While Tesla eventually won, it’s not clear if other EV companies would be granted the same freedom to sell. With many more EV companies using direct sales entering the market, ensuring they can operate in Missouri can bring EVs to thousands more residents.

EVs come with many benefits. They help improve local air quality and reduce the transportation sector’s overall environmental impact. For Saint Louis EV drivers, charging their EV at home can lead to hundreds of dollars of fuel cost savings each year compared to a gasoline-powered car. EVs have lower lifetime maintenance costs than gasoline-powered cars. EVs can succeed on their own merits; forcing the hand of property owners is the wrong way to speed up the EV adoption process.

The post EV Charging Stations Don’t Need Mandates to Succeed 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.

In general, economic theory tells us that local income taxes have negative effects on population and economic growth in the cities that have them. Not only do these taxes discourage earning an income, but they are easy to avoid by moving or relocating businesses. This makes localities that have local income taxes less competitive relative to surrounding localities and encourages people to make the short move to where they can keep more of their hard-earned money.

We’ve seen this play out in the St. Louis area, especially regarding population; it’s fairly common to hear about people and businesses moving from the city to the county. St. Louis County does not have an earnings tax and the county’s population decreased by 0.46 percent from 2010 to 2019. The City of St. Louis, on the other hand, has a 1 percent earnings tax and has seen a staggering population decline for years. The city’s population decreased by 5.87 percent in the same period—that’s more than 12 times as much as the county. And just a little bit further from the city, St Charles county’s population increased by 11.12 percent in the same period.

Many factors can contribute to population decline; an additional tax on income is certainly one of them. Economic theory suggests that Multnomah County may see its local income tax hike have negative effects on population and economic growth. St. Louis can confirm that with experience. If they’d asked, we would’ve told policymakers this is a bad idea for their county.

The post Multnomah County, Oregon Should’ve Called St. Louis Before Making This Mistake appeared first on Show-Me Institute.

Missouri’s road maintenance funding is on a road to nowhere.

Interstate 70, Missouri’s economic and transportation lifeline, is falling apart. Many other roads Missourians travel on each day also need to be fixed, and they too will continue to deteriorate because the Missouri Department of Transportation is running out of money.

While travel on Missouri’s roads continues to increase (up 12 percent since 2008), MoDOT’s budget has been headed in the opposite direction (down 15 percent in the same period), and that has resulted in a whopping $745 million in unfunded road transportation needs.

MoDOT remains heavily dependent on the state fuel tax (17.4 cents per gallon) for road maintenance, and that’s part of the problem. Because of the improved fuel economy of today’s gas and diesel-powered cars and trucks, fuel tax receipts have declined even though people drive more and put more wear and tear on the roads. Furthermore, drivers of electric vehicles are paying significantly less for road maintenance because they aren’t paying fuel tax.

It’s time to rethink transportation funding. The damage inflicted upon roads is determined by how much drivers drive on them and how much their vehicles weigh, not by how much fuel they consume. A better way to match the damage drivers do to the road with what they pay for its upkeep is to charge by the mile, instead of by the gallon.

Several states experimenting with road-usage charge programs demonstrate how such programs could be implemented. One method to record mileage is by a simple odometer reading. Drivers could self-report their odometer readings as part of the annual vehicle registration process or by plugging a recording device into the vehicle’s diagnostics port. While this method would pose no threat to driver privacy, it would be impractical for those who frequently drive out of state.

A more controversial method is to record precise in-state miles driven by using GPS technology. Current programs in Oregon and Utah use third-party providers to record in-state mileage either through a GPS-equipped plug-in device or a smartphone app. In both cases, the state receives the total miles driven for billing purposes with no location data.

While this poses more concerns for driver privacy, it should be noted that GPS satellites do not track locations. GPS responders, whether in plug-in devices or cell phones, track their location in relation to satellites, but do not necessarily share their location with those satellites. Protecting driver privacy is a serious concern, and the reporting of personal or location-specific data should only be allowed when explicitly agreed to by drivers.

With these first two methods, as drivers pay for their miles driven, they are reimbursed for the gas taxes they paid to travel those miles.

A third method is to use electronic tolling to raise maintenance funds specifically for heavily traveled highways, as many states already do. Drivers can use transponders that send a signal that is picked up at certain points along the road, and payments can automatically be deducted from that driver’s account. Those with concerns about the privacy implications wouldn’t have to opt for a transponder. Instead, cameras on the highway could record their license-plate number and a bill could be mailed based on their driver registration information.

No system is perfect, but in each of the examples listed above, drivers can choose their method of payment and are presented with several options depending on their privacy concerns.

In any case, our current system of taxing fuel usage is becoming less viable. Missouri policymakers should consider solutions already in use in other states to move Missouri’s transportation funding methods in the right direction.

The post Commentary: Funding Roads by the Mile, Not the Gallon appeared first on Show-Me Institute.

Recording mileage via GPS tracking has some advantages over the odometer-reading method I described in yesterday’s post. For one thing, the GPS method would allow out-of-state miles to be excluded. Additionally, as some roads—such as urban freeways and interstates—are more expensive to build and maintain than typical roads, drivers could pay different rates for using different roads.

However, this type of mileage recording raises privacy concerns. How do these programs work in states that have tried it?

The longest-running and best-established program to date is in Oregon. Drivers who voluntarily participate in the OReGO program can pay a per-mile fee for driving and have any fuel taxes reimbursed. Drivers have several options of how to track those miles, such as paying for a block of miles in advance, odometer readings, or using GPS technology to record miles driven. If drivers choose the latter option, a third-party provider places a GPS-equipped plug-in device in their car, and the device uses vehicle data to determine in-state miles driven and fuel consumption. In order to protect drivers’ privacy, Oregon state law mandates that only the total weekly miles driven may be reported to the Department of Transportation. Personal data not delivered to the Department of Transportation is encrypted and destroyed on a set schedule, in accordance with Department of Transportation policy and OReGO program requirements laid down legislatively. This information cannot be sold or traded without the driver’s express consent.

Utah’s Road Usage Charge program operates similarly, although it is only for electric vehicle drivers. The program’s voluntary participants can pre-select their privacy settings, and a transponder run by a third-party service provider is installed in the vehicle. The third-party system sends monthly total miles driven to the Department of Transportation without disclosing additional data unless tied to a criminal investigation.

Several other states are exploring variants of these programs. Delaware and other east coast states are exploring mileage-based user fees in a series of pilots. California also conducted a road-usage charge pilot program, but legislators have not decided whether to continue the program.

It is also important to note what GPS technology does and does not do. GPS satellites do not necessarily track cars (or phones, etc.) that have receivers. It is the GPS receiver itself, whether in a cell phone or transponder, that tracks its own position in relation to a satellite. But unless the receiver is equipped with reporting capability, the device’s location is not shared with the satellite.

Protecting drivers’ privacy is a serious concern, and reporting of personal or location-specific data should only be allowed when explicitly agreed to by drivers. Further, while it offers the potential for the most accurate measuring of a driver’s miles logged, a GPS-based option must continue to be one of several options for reporting miles. In the next post, I’ll talk about a third method of pairing funding for road maintenance with miles driven.

The post Funding Roads by Miles Traveled—There’s an App for That appeared first on Show-Me Institute.

One example is Oregon’s Liquor Control Commission, which is taking steps to make the temporary relaxation of some of its rules permanent. Even better, Idaho’s governor is taking action to make a wide array of the state’s COVID-19 deregulation permanent, saying that “if waiving these regulations was deemed necessary to improve public health and welfare during the declared emergency, there is a rebuttable presumption that the regulations are unnecessary or counterproductive outside of the declared emergency.”

Sound familiar?

Show-Me Institute researchers have made this argument many times when speaking favorably of COVID-19 regulatory waivers and when calling for lawmakers to make the waivers permanent. The issue is critical enough that it was included in the Show-Me Institute list of the top issues that ought to be addressed in a special legislative session.

This call for deregulatory action is not a call from left field, nor is it an extraordinary ask. Other states are taking advantage of this opportunity to stay competitive and lessen the burden on businesses and workers. Missouri should too.

The post Other States Are Deregulating. Missouri Should Too appeared first on Show-Me Institute.

To measure affordability, researchers divided the median house price within a region by the median household income. Regions scoring under 3.0 are considered affordable. The regions examined don’t just include cities; researchers examined metropolitan statistical areas, often including the several counties surrounding an urban area. So the Kansas City and St. Louis regions include a number of more suburban municipalities as well.

Rochester, New York earned the best score out of the major housing markets, with a score of 2.5. St. Louis was tied for fourth most affordable with a score of 2.8. (This is up from St. Louis’s 2010 score of 2.6.) Kansas City fell within the top 20 with a score of 3.3 among major housing markets, but this too is an increase from previous years. In 1990 and 2015, Kansas City’s scores were 2.3 and 2.9., respectively.

Missouri’s cities have often benefitted from relatively low costs of living, driven largely by housing costs. This is due in part to a lack of a certain kind of land-use regulations that became prevalent in cities in places like California, Oregon and Washington. Missouri and its cities ought to be congratulated for avoiding these pitfalls.

As Kansas City and St. Louis seek to increase housing affordability, they ought to remember that their successes so far stem largely from avoiding overregulation. Many policies, despite being well intentioned, only increase costs by restricting availability.

For more information on housing affordability, read our 2016 study on Kansas City or our 2012 study on St. Louis.

The post Good News on Housing Affordability in Missouri appeared first on Show-Me Institute.

The Port Authority, or Port KC, ultimately could issue up to $25 billion in bonds over 35 years for the Google data center project, a figure that represents the company’s maximum investment in Kansas City. Think of the $25 billion as a credit limit on a personal credit card. It’s not necessarily an indication of how much Google will invest.

The benefit to Google is that the Port KC can issue Chapter 68 bonds that give Google a property tax exemption for 25 years. Vockrodt goes one step further and makes clear in the story that such subsidies for data centers don’t offer a great return, if any, for taxpayers:

Good Jobs First, a research group often skeptical of corporate incentives, in a 2016 report identified a Google data center project in Oregon from 2006 that received $360 million in subsidies in return for 175 jobs, or $2 million per job. Good Jobs First advised cities and states to treat data center subsidies with caution.

“Internet-based companies have to grow the cloud and they will choose stable areas with cheap electricity,” the report said. “They will barely benefit your local economies because they create so few jobs and often import top-wage labor.”

Once again, Kansas City through its port authority is playing handmaiden to large corporations even when there is so little to gain. (Rest assured, this same story will unfold if/when the USDA considers locations in Missouri.) How is Kansas City supposed to fund infrastructure, education, public safety and all the other basic needs on which we depend if we continually offer exemptions from the taxes needed to provide them?

If taxes are too high for Kansas City to be a competitive place to attract business, then that needs to be addressed fairly for everyone. Offering sweetheart deals to a few while the rest of us pull their weight is no way to operate a city.

The post Port KC Versus Taxpayers appeared first on Show-Me Institute.

That’s why news broken by Samantha Liss at the St. Louis Post-Dispatch should be very welcome to patients in Missouri and elsewhere, as it appears the market for at least some pharmacy services is about to grow:

Throughout the past year, and without much fanfare, Amazon.com Inc. has gained approval to become a wholesale distributor from a number of state pharmaceutical boards, according to a review of public records….

According to a review of records by the St. Louis Post-Dispatch, Amazon has received approval for wholesale pharmacy licenses in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee.

An application is currently pending in the state of Maine.

An Amazon spokesperson told the Post-Dispatch via email that the company does not comment on “rumors and speculation.”

It’s a little complicated, but one of the big questions surrounding the Post-Dispatch report is the ultimate aim of the Amazon filings—that is, whether Amazon wants to open up a pharmacy benefits management business only, or whether a soup to nuts model is also in the tech giant’s future. Does Amazon want to be Express Scripts? Does it want to be Walgreens? Or does it want to be both? I would welcome all of the above, actually, and I suspect millions of Amazon customers would feel likewise.

And despite the failure of our Federal representatives to actually do what they said and repeal Obamacare, there is still reason to be optimistic about the trajectory of care in this country. Along with the reform initiatives above, tech innovations like 3D printing of prosthetics, and much more, the potential entry of Amazon into the pharmaceutical space reiterates that the future of health care as some government product remains anything but assured. After all, people are markets, and markets are powerful things.

The post Is Amazon Getting into the Pharmacy Business? Let’s Hope So appeared first on Show-Me Institute.

Last year, Ameren filed for approval to install six charging stations between St. Louis and Jefferson City along 1-70 in order to alleviate the “range anxiety” EV drivers suffer with the current number of stations available.  Instead of approving or denying the request, the Missouri Public Service Commission (PSC) postponed its decision on the matter because it was unsure of whether it even had jurisdiction to regulate the emerging technology.

Some background: utilities such as electricity are often delivered to consumers through monopolies because of how expensive competing delivery infrastructure would be—it is rarely feasible for a startup to lay new pipes or string new wires.  To keep current monopolies in check, regulatory bodies (like the PSC) monitor and approve the prices utilities can charge to cover expenses while still protecting consumers from exorbitant prices.

Many private citizens and businesses already own and operate charging stations, so approving Ameren’s expansion into the market is controversial.  Daniel Hall, the PSC’s chairman, said “. . . it’s unclear whether or not it should be a regulated industry or whether it should be an open, unregulated, competitive market. . . . Where there is a competitive market, I’m not sure that that is a role for the commission.”

Hall’s uncertainty about the PSC’s role makes sense.  If the PSC were to approve Ameren’s project, it’s possible that all of Ameren customers (whether they own an electric vehicle of not) would have to chip in to cover the cost of construction for the new stations. 

Communities around the nation are debating whether the public-utility model would stifle competition, or if it is a necessary kick-start to EV adoption. Kansas’ regulatory body recently denied Kansas City Power & Light’s request to charge ratepayers for a $5.6 million charging station initiative, arguing the proposal was anti-competitive and that it would be unfair to require all ratepayers to subsidize a handful of EV drivers.   Meanwhile, Oregon has ruled (see p. 8) that utilities may own charging stations and cover costs through all ratepayers if they prove an area is in need and would not otherwise receive investment.

Ameren is proposing to construct stations in an area that is currently underserved, but electric cars are relatively new, and technological improvements could soon make them more prevalent than they are today. Missouri’s PSC has been confronted with a difficult decision, and they deserve credit for not blindly jumping into the unknown.  If a free-market model could improve customer choice and spur innovation, then we should be wary of expanding a monopoly where it may not be necessary.

The post Policymakers Wisely Look Before They Leap appeared first on Show-Me Institute.

The new study resulted from the Oregon Medicaid experiment, in which Oregon expanded Medicaid to a limited number of lower-income, non-disabled adults using a lottery. The expansion’s design, which involved random assignment, allowed researchers to draw more reliable conclusions about the impact of Medicaid eligibility than observational studies.

. . . Of crucial importance, the study also found that “[a]cross a variety of alternative specifications, we consistently find that Medicaid’s value to recipients is lower than the government’s costs of the program, and usually substantially below.” They estimated that the “benefit to recipients from Medicaid per dollar of government spending range from about $.2 to $.4.”

Cato director of health policy studies Michael Cannon has said that the Oregon Health Insurance Experiment (OHIE) “may be the most important study ever conducted on health insurance,” precisely because researchers were able to isolate the health effects of Medicaid coverage in ways that, under normal research circumstances, is very difficult to do. These findings, then, represent a gold standard by which claims about the Medicaid program can be fact checked in key respects, including emergency room usage.

In our direct primary care paper, published last year, we looked at emergency room usage and Medicaid as well, and we found plenty of evidence to support the OHIE research team’s findings.

Perhaps most startling is recent news from a survey of emergency room doctors, taken this year by the American College of Emergency Physicians [ACEP], suggesting that the expansion of Medicaid has actually increased—not decreased or kept flat—emergency room usage. As explained by Dr. Howard Mell of the ACEP in the Wall Street Journal, “Visits are going up despite the ACA, and in a lot of cases because of it.”

ACEP’s 2015 report was not the product of a once-off survey, either. In 2014, one-third of emergency departments reported seeing more Medicaid patients; in 2015, over half reported an increase.

With the failures of the Obamacare exchanges, it is more important than ever to ensure that Missourians are not exposed to more of the Obamacare disaster. That means continuing to reject a broken Medicaid expansion that doubles down on bad policy. Without reform, the Medicaid program will continue to imperil both the health of patients and the money of taxpayers, and unfortunately, expanding Medicaid would serve to aggravate the program’s long-standing problems.

The post ER Visits Spike With Obamacare’s Medicaid Expansion appeared first on Show-Me Institute.

The chart below plots the average annual growth rate for each of the 50 states and for the United States as whole for the period 1997 through 2015. The good news is that Missouri’s average annual growth rate increased from 0.93 percent when computed over the 1997 through 2014 period to 1.02 percent when computed over the 1997 through 2015 period. Missouri reported a 1.29 percent growth rate in its real GDP between 2014 and 2015. No one really jumps for joy when growth rates are reported at 1.3 percent for a year; however, Missouri did manage to stagger its way one rung up the ladder, from 49th-fastest to 48th-fastest growing state economy over the period from 1997 through 2015.

Overall, the story for Missouri is little changed compared to a year ago. Since the late 1990s, Missouri’s economy has increased at half the rate of that of the United States as a whole. Eighteen years is not a terribly long time, and we all hope that Missouri’s future will be brighter. But the question remains: Why has the Missouri economy reported such slow growth over the past eighteen years?

The answer is not simple. Note that the ten fastest growing states are: North Dakota, Texas, South Dakota, Oregon, Utah, Colorado, California, Idaho, Arizona, and Oklahoma. There is no one clear feature shared by these ten states that can account for their economic success. Some of them do have natural resources and have benefitted from being able to dig a hole in the ground and extract things that are valuable to the rest of the world. But that is not the only explanation. For example, Arizona, Idaho, Oregon, and Utah (at least) do not fit the oil/natural gas story. Alternatively, the ten states with the lowest growth rates are Michigan, Louisiana, Missouri, Mississippi, West Virginia, Maine, Ohio, Kentucky, Illinois, and New Jersey. No single attribute these states might have in common would account for their struggles, either.

Income tax rates cannot, alone, explain the differences in growth rates. The nine states with no earned income taxes (followed by rankings) are: Alaska (40), Florida (20), Nevada (16), New Hampshire (25), South Dakota (3), Tennessee (30), Texas (2), Washington (13), and Wyoming (11). The nine states with the highest marginal income tax rates (followed by rankings) are: California (7), Hawaii (37), Oregon (4), Minnesota (17), Iowa (23), New Jersey (42), Vermont (26), New York (29), and Maine (46). The mean rank for the nine states with no income taxes is 17.8 while the mean rank for the nine states with the highest income tax rates is 25.7.

Overall, the evidence does not prove, but does suggest, that income tax rates do matter for economic growth. Of course, a host of other factors matter as well. In order to assess the role of income tax rates on growth, the ideal test would involve holding everything else constant. In other words, you would want to examine a parallel version of New Jersey, for example, but one with a lower income tax rate. Holding everything else constant, economic theory suggests that New Jersey would grow faster.

The broader message is that lots of factors that influence a state’s economic growth rate. Each state is an experiment in which tax rates, school quality, and various government services are provided endogenously by state policymakers. The bundle of policies and regulations is too large and complicated for us to identify how each one matters. And on top of the political attributes, there are the things that lie underground, or on the ground itself (or the ocean front—or lack thereof), that people living in each state can consume. All policymakers can do is to try and manage the factors they can influence in a way that will help their state grow faster.

In case you are wondering, Kansas ranked as the 29th-fastest-growing state over this period. So, why can’t Missouri grow at least as fast as its neighbor? It’s a frustrating question, because we have a Gordian knot of regulations, laws, and policies that make it difficult to determine specific causes of our stagnation. Not only have policymakers failed to move Missouri in the right direction in the 21st century, but the complexity of our state’s problems prevents us from understanding why various initiatives have failed to produce their intended results. In my view, it seems like a good time for Missouri to review its entire spectrum of policies. For instance, we have not had a constitutional convention in this state since 1947. Maybe it is time for an institutional overhaul.

The post It Could Be Worse. Not Much Worse, but It Could Be Worse. appeared first on Show-Me Institute.

Not being from Saint Louis, the advisor did not know that almost unrealistically cheap rent (from the rest of the country’s perspective) is readily available in the region. In fact, Saint Louis was just named the most affordable major city in the country for recent grads by Trulia Trends (“investigators of unconventional house hunting trends”).

Their analysis showed that a recent grad in Saint Louis would on average make just under $26,000, allowing them to afford almost 20 percent of units in Saint Louis. How expensive can it get in other cities? In Portland, Oregon, the median wage of recent grads is under $19,000, which would allow them to afford about 0.1 percent of rental units available. Following close behind Portland, in terms of unaffordability, are Riverside, Orange County, and Miami.

One might assume that the relationship here is one of growth and desirability. Saint Louis, with relatively low growth, is not as attractive as the fast-growing Portland or Miami. But economic growth is not the whole story, because following Saint Louis on the list of affordable metros are some of the fastest-growing metropolitan areas in the nation, including Houston, Dallas, Atlanta, and Phoenix. Most likely, multiple factors, including desirable weather and urban containment policies (of which Portland has been a very prominent example), are important in making a city unaffordable for young people. Put simply, it takes capped supply along with high demand for rent to become unattainable for the average grad.

As things stand, Saint Louis is in the opposite situation from cities like Portland or Boston, in that there is plenty of supply but not a whole lot of demand. That puts Saint Louis in a good position to attract startup businesses and startup graduates from more expensive metropolitan areas. However, if Saint Louis is to gather momentum in attracting businesses, it should keep a positive regulatory attitude toward new building and avoid restricting supply through urban containment.

The post Cheap Rent: A Saint Louis Advantage appeared first on Show-Me Institute.

In his 2006 book The Audacity of Hope, then-U.S. Sen. Barack Obama was correct when he called America’s Medicaid system “broken.” Unfortunately, the program remains broken almost a decade later; from busting state budgets to delivering substandard care and access to our most needy, Medicaid serves as an important reminder that spending is no substitute for reform.

More spending, however, is exactly what some in Jefferson City want. Repackaged as a “Medicaid Transformation,” the Medicaid expansion element of the president’s health care law is being rebranded because “the Obamacare Medicaid expansion” — which is what it is — would never fly with the public.

Missourians recognize that, rather than expansion, Medicaid needs reform. Free-market ideas can take us in a better direction to deliver improved care to the less fortunate while also better serving the taxpayers who fund the program.

Free-market Medicaid reform principles aim to empower individuals, improve access and services for the needy, address problems of bureaucratic waste and leverage market forces to improve care for all. Indeed, markets have helped to make all sorts of goods and services less expensive and more available in many areas of our lives. They can do the same for health care.

Here are some ideas the state should be considering to make Medicaid better.

First, empower Medicaid’s patients. An important Oregon study suggests one of the few health benefits of Medicaid enrollment is the knowledge that an enrollee will not become bankrupt if the worst happens. With that in mind, Missouri should convert much of its Medicaid program into government-held health savings accounts (HSAs), splitting current Medicaid spending levels among the beneficiaries. After purchasing at least a catastrophic health care plan, beneficiaries could roll over any remaining money from year to year. This would provide the safety net Medicaid was supposed to be while still allowing patients to tailor their spending to their needs. One size does not fit all when it comes to health care. The state should stop acting like it does.

Second, give Medicaid enrollees an incentive to leave the program. Another Oregon study found that rather than decrease unnecessary emergency room use, Medicaid enrollment actually increased it. As a reform, then, if an enrollee abides by the program’s rules and avoids wasteful ER use, the enrollee could take some percentage of the remaining money with him or her when leaving the program, either as a private HSA or as a reduced amount in cash. This would help both the patient and the taxpayers: It would reward the Medicaid enrollee for healthy and fiscally prudent behaviors and reduce taxpayers’ costs.

Third, with so many newly minted, price-conscious Medicaid consumers, implement price transparency measures for common medical procedures. The federal government has started the process of forcing greater hospital price transparency, but states have done a poor job of empowering customers with the information to shop for health care like they can for cars, homes and even Lasik eye procedures. This also would reduce Medicaid access problems; rather than enrollees having to find providers who accept Medicaid patients, Medicaid beneficiaries could go practically anywhere with their HSA accounts.

Finally, pursue regulatory reforms of “certificate of need” and “scope of practice” laws, areas of regulation that often act as needless barriers to patient care. Along with ensuring prices are as transparent as possible, the state should make sure care is as accessible as possible through as many places and people as possible. Well-researched regulatory reforms that remove unnecessary obstacles to care would help both the poor and middle class.

To be clear, these ideas are meant to contribute to the Medicaid reform conversation, not end it. But that is what the conversation in Jefferson City should be about — reform, not expansion. It is time for the state deliver on its promise of a better Medicaid program.

Patrick Ishmael is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Expansion Is Wrong Move For Medicaid appeared first on Show-Me Institute.

A recent study published in the New England Journal of Medicine found that people on Medicaid fared worse health-wise than people with no insurance. This study joins others from the University of Pennsylvania and University of Virginia that found that health outcomes for Medicaid patients are worse than those without health insurance.

Nor will expanding Medicaid clear up congested emergency rooms. A recent study published in Science found that after Medicaid expanded in Oregon, emergency room visits increased 40 percent. The vast majority of these visits were for procedures that could have been taken care of outside a hospital.

If it expanded Medicaid, the legislature would add billions of dollars in expenditures to a state that cannot afford it while doing little to actually improve people’s lives. It should ignore the Star’s appeals and say “no” to expanding Medicaid.

The post No, Kansas City Star, The Legislature Should NOT Expand Medicaid appeared first on Show-Me Institute.

Tomorrow, businesses in these states [that expand Medicaid] will have a significant competitive advantage – because as more people get health coverage, fewer people show up in emergency rooms, putting downward pressure on private health premiums.

But a “gold standard” study out of Oregon — released just two days after the governor’s statement — suggests that’s not true: that rather than decrease emergency room usage, a Medicaid expansion may actually make the problem worse. (Emphasis mine.)

Writing in Science, the Oregon Health Insurance Experiment researchers found that Medicaid did increase the use of preventive and primary-care services, but emergency-room use rose as well. Over an 18-month period, 100 low-income, uninsured adults in the Portland area would visit the ER about once each, on average. When Medicaid made health care “free” [for] these households, they made an additional 40 visits over that period — a 40-percent increase.

The increase was entirely comprised of people using the ER either for non-emergency medical needs, or for emergencies that could have been prevented with primary care. “Emergency department use increases even in classes of visits that might be most substitutable for other outpatient care,” the authors wrote, “such as those during standard hours (on-hours) and those for ‘non-emergent’ and ‘primary care treatable’ conditions.”

It’s irresponsible to expand a broken Medicaid program. That irresponsibility is accentuated when expansion proponents push arguments — like, “Medicaid reduces emergency room use” — that tend to fall apart when investigated. We all agree that Medicaid is in dire need of reform. It would be nice for policymakers to start recognizing reform as its own, superseding good, rather than just as a convenient rhetorical tool with which to repackage a Medicaid expansion.

The post Oregon Study: Medicaid Expansion Increases Emergency Room Use appeared first on Show-Me Institute.

What would be a better way to deliver this care? Here are some ideas:

• The state currently spends (roughly) between $3,000 and $5,000 on each child and adult enrolled in the Medicaid program. Split the current level of Medicaid spending into the equivalent of state-held health savings accounts (HSA) that the beneficiary controls. After the purchase of at least a catastrophic insurance plan, the enrollee could decide what additional health services he or she needs to spend money on, if any. Leftover money could be rolled over year to year, meaning beneficiaries wouldn’t feel compelled to use or lose those health dollars unnecessarily.
• Give enrollees a reason to leave the Medicaid program on their own. If a Medicaid patient complies with the regulations of the program — high among them, to not use emergency room services unnecessarily — then the patient could take the bulk of the leftover money when he or she exits the program, either as an HSA or as a reduced amount in cash. Indeed, beneficiaries would have something to gain by leaving Medicaid.
• Health insurance is insurance first, not a health plan. One of the few benefits found in an Oregon study on Medicaid was that enrollees felt financially secure after they joined the program. Not only can Medicaid reform of the nature described above provide that security, it can do it at a lower cost and with greater flexibility for the patient.
• Sow the seeds of even wider, positive health care reforms. A market-based reform of the kind articulated here would inject thousands of cost-conscious consumers into the health care marketplace who are not only empowered to negotiate for the services they need, but have the incentive to negotiate.

That’s where I would start Medicaid’s reformation. You can call these ideas a free-market solution or a transformation, but most importantly, I think you could call it a vast improvement over what we have now. Medicaid needs to be reformed first and foremost, and failure to do so will hurt all of its stakeholders. Patients and taxpayers deserve better than the status quo; I think these proposals would help to move the reform discussion and the Medicaid program in the right direction.

The post What Would A Free-Market Medicaid Reform Look Like? appeared first on Show-Me Institute.

Supporters of the exchange claim they will lose their chance to create a Missouri-centric mechanism to provide affordable health coverage to the uninsured. But Missouri lost that chance nearly two years ago, when the federal health bill was signed into law.

The theory of a state-run exchange, designed to navigate and subsidize the purchase of health insurance, is simply that — a theory. Rules that officials in Washington issued to implement the law say that every detail of Missouri’s exchange must have the approval of federal bureaucrats.

And because federal grants and subsidies will flow through state-based exchanges, Washington will always be able to control Missouri’s exchange through ongoing regulation. This “my house, my rules” scenario underscores the new parent-child dynamic occurring between Washington, D.C., and the states, and the Missouri Senate was right to reject the governor’s ability to implement an exchange.

But if Missouri does not set up its own exchange, won’t the federal government do it for the state? The law says yes, but in reality, it is unclear. The Department of Health and Human Services (HHS) is still grappling with recent findings that the law does not technically provide any money to set up a federal exchange, nor does it offer subsidies to people buying insurance in the federal exchange.

Even if the glitches get worked out, it is doubtful that a federal exchange will be up and running by the 2014 deadline. To date, HHS has only doled out $150 million in contracts to build a federal exchange — a system tasked with coordinating the eligibility, subsidies, premiums, and benefits for tens of millions of people who will be forced to purchase health insurance thanks to the individual mandate. That is a tall order.

Meanwhile, we do not know just how much a state-based exchange will actually cost Missouri. The federal government is awarding grants to set up state exchanges, but that money runs out in 2014. Oregon has imposed new taxes on health insurance premiums to fund its exchange once the federal money dries up, and other states are considering similar measures. Indeed, research from the Mercatus Center suggests that every dollar of temporary federal grants leads to 40 cents of state and local tax increases.

Besides, federal money is not free — everyone pays federal, state, and local taxes, and increased federal spending on exchanges means more out of taxpayers’ pockets. In December, the New Hampshire House announced that it will return $333,000 in federal exchange funds to “pay down our national debt, which is a far better use of these funds than building healthcare bureaucracies here.”

Missouri has time to figure out how, or if, it wants to set up a health insurance exchange. Nationally, only 17 states have acted to establish exchanges — and many of those states have made only nominal progress in setting them up. In response, the federal government has delayed implementation timelines, extended grant deadlines, and even offered a “hybrid” model through which states and the federal government can share in exchange governance.

A lot can happen in the next year, with the upcoming Supreme Court decision on the federal health law, the 2012 elections, and the still-unfinished exchange regulations from HHS. Kudos to the Missouri Senate for blocking Gov. Nixon’s rush to act.

Patrick Ishmael is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Christie Herrera is director of the Health and Human Services Task Force at the American Legislative Exchange Council, a nonpartisan association of conservative state lawmakers.

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