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

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

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

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

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

Susan Pendergrass (01:41)
Like Kansas.

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

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

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

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

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

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

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

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

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

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

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

Susan Pendergrass (04:01)
Sure.

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

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

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

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

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

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

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

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

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

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

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

Mike McShane (06:55)
Yeah, right.

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

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

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

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

Susan Pendergrass (08:17)
It’s huge.

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

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

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

Mike McShane (09:00)
Right? Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mike McShane (14:04)
Right.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mike McShane (21:08)
For sure.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Susan Pendergrass (24:34)
Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It is almost like we are starting over.

Susan Pendergrass (34:39)
Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Produced by Show-Me Opportunity

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

Pushing Back Against Policies that Dilute Standards

Currently, Missouri students are categorized into one of four performance levels based on their state standardized test scores. From lowest to highest, these are: below basic, basic, proficient, and advanced.

HB 607 proposes the addition of a fifth performance category, called “grade level,” which would be above basic but below proficient.

• Proficient: Demonstrates mastery over all appropriate grade-level standards
• Grade level: Demonstrates mastery over appropriate grade-level subject matter
• Basic: Demonstrates partial mastery of essential knowledge and skills for the grade level

This definition of “grade-level” implies that it should not be expected for Missouri students to have mastery over all appropriate grade-level standards.

Rather than diluting standards, Missouri should implement policies that make meaningful use of state assessments. One such example is a third-grade retention policy. The transition from third to fourth grade is pivotal—students shift from learning to read to reading to learn. To combat the well-documented fourth-grade reading slump, states such as South Carolina and Mississippi adopted mandatory retention policies paired with targeted phonics-based interventions. The result has been very positive.

Open Enrollment—Better Choice, Better Accountability

Currently, where you can attend school is largely determined by where you live. This prevents many families from changing schools. Establishing a cross-district, universal open enrollment program would allow more families to vote with their feet. Markets excel at revealing best practices, and districts with best practices will likely attract more students and pressure other districts to change.

There is some potential to align open enrollment with Missouri’s accreditation process. In December 2024, it was announced that for the 10th year in a row, the state’s accountability system would not be used for district accreditation. Perhaps there is fear of a trigger in the policy that would allow students to transfer out of unaccredited school districts, especially because the unaccredited districts must pay the tuition for the transfers to receiving districts. If universal open enrollment were adopted, lawmakers could revisit the tuition rule for transfer students out of those districts and implement a meaningful accreditation system.

These strategies offer ways to maintain high standards for our schools and children. Better accountability systems in education are the key to learning which strategies are working and which are not. Encouraging transparency and openness will generate more competition and innovation in our schools, and should ultimately strengthen our education system.

The post Accountability in Missouri’s Public Schools appeared first on Show-Me Institute.

There is a part of Illinois that may actually be interested. On election day, voters in seven Illinois counties approved a referendum (non-binding, obviously) on seceding from Illinois and creating a new state without Chicago. This makes a total of 33 counties that have passed this Illinois Separation Referendum, as it is called. Twenty seven of these counties either border Missouri or can be connected to Missouri by other counties that have also passed the referendum. Five more counties could connect to Missouri if just two more counties pass it, too. (One county, Iroquois County in northeast Illinois, is going to have to look toward Indiana.)

While the referendum calls for leaving the current state of Illinois to create a new state, like the West Virginia model that I assume they are following, I think Missouri needs to get aggressive here. In the same way that President Trump could embrace destiny by acquiring Greenland, I think Governor-elect Kehoe should take that approach as well.

Territorial switches between states are rare, with Maine and West Virginia being the two most famous examples. North and South Carolina made a very minor land exchange as recently as 2017. The last time Missouri made a territory change was 1950, when Missouri and Kansas exchanged some land after flooding along the Missouri River border. The primary expansion of Missouri territory after statehood was the Platte Purchase, which added our six northwest counties to the state. However, that land was ceded from unorganized territory, not another state.

So, let’s get this done, Missouri! Let’s grow our state’s territory and population the old-fashioned way—by taking it from someone else! (Though we’ll do it peacefully, of course.)

The post Let’s Grow Missouri, Literally appeared first on Show-Me Institute.

In one moment, they counted him out, and in the next, they were amazed at his determination. I’m hoping for an epic comeback story like this in Missouri public schools. Our scores faded badly following the COVID-19 pandemic. And sadly, with the recent release of the preliminary 2023–2024 Missouri Assessment Program (MAP) results, it is fair to say we are not running past everyone yet.

One state board of education member stated she was “a little deflated that we didn’t see more growth and progress.” I agree that the results were a little disappointing, so let’s delve into the specific statistics.

It is worth noting these are preliminary results for the 2023–2024 school year, so they could be subject to minor changes.

Overall, English/language arts (ELA) scores remained stagnant and math scores continued to gradually improve.

Figure 1: Missouri Assessment Program: ELA

Figure 2: Missouri Assessment Program: Math

After the pandemic, math scores fell more than ELA scores, but math scores have bounced back, and even surpassed pre-pandemic levels in some areas. Growth in math scores has been driven primarily by success in middle school mathematics, as 6th and 7th grade scores have surpassed pre-pandemic levels and 8th grade scores now match 2019 levels (not shown in Figure 2).

For elementary math, scores still remain below 2019 levels. Third grade scores have declined the most. 5th grade scores did not improve from 2023 and remain below pre-pandemic levels. There could be a need for greater focus in elementary instruction.

ELA scores continue to remain flat and far below pre-pandemic levels. They have actually dipped even further after the initial COVID drop. No grade-level cohort has exceeded its pre-pandemic levels, and only two cohorts (4th and 7th graders) improved from last year. Sixth graders have particularly struggled in ELA post-pandemic, as their pre-pandemic scores have declined more than any other grade level.

Missouri needs drastic action to help our students improve their ELA skills. A solid reading foundation is paramount for educational success, and we need to do everything in our power to catch our students up. Further commitment to the Missouri’s LETRS program (an evidence-based reading initiative) could yield results. Focus on evidence-based reading instruction has proven successful in other states such as South Carolina, Tennessee, and Mississippi. Those three states have also made phonics instruction mandatory. Reams and reams of research support evidence-based reading instruction.

Let’s dig deep and further commit to helping our students grow. I want to see a legendary comeback story.

The post Is There a Comeback Story in Missouri Schools? appeared first on Show-Me Institute.

In a few states around the nation—particularly South Carolina, Tennessee, and Mississippi—dedication to the science of reading (explicit phonics instruction) has done more than solve Wordle puzzles. It has helped English/language arts (ELA) scores in these states surge past their pre-pandemic levels.

If you’re wondering if other states are experiencing a similar surge in scores, the answer is no. Researchers at Brown University have examined scores from nearly 30 states (data are not available for all states yet) and only Iowa, Mississippi, South Carolina, and Tennessee have exceeded pre-pandemic performances in reading.

With Missouri’s ELA scores continuing to decline post-pandemic (29% of Missouri 3rd graders had a below basic understanding of ELA), I believe that our new science of reading program, LETRS, will help our students, and I am happy that DESE is using it. However, I also think there is reason and opportunity to further commit to the science of reading.

For background, Missouri’s new LETRS program provides optional training opportunities for teachers in “evidence-based reading” and requires comprehensive reading examinations for K-3 students. Any student who is diagnosed or at risk for dyslexia must be provided evidence-based reading instruction. While this in itself is a good program, there is a key lesson from South Carolina, Tennessee, and Mississippi that we could adopt: Fully commit to the science of reading—for all students.

As I have discussed in previous posts, commitment to explicit phonics instruction could be key to making Missouri a leader in reading. Phonics instruction has a proven track record in independent research, in other states, and even in our own backyard. Back in 2019, the Greenville School District in South Carolina, with 77,000 students (largest in the state), failed to meet state literacy standards. Due to this, teachers in the district had to receive two years of training in the “science of reading” and use a new curriculum rooted in explicit phonics instruction. However, this “punishment” actually turned into a blessing: district scores on the SC READY state assessment have risen past pre-pandemic levels.

All three of these states have committed to the science of reading being the core of literacy instruction, while Missouri appears to emphasize it only after a struggling student is identified. When breaking out the scores by demographics, the data show that the science of reading was useful to all groups. While data were not available for Mississippi, ELA scores for every ethnic group improved at a near-equivalent rate in Tennessee and South Carolina.

In Tennessee, school districts with poverty levels between 0–10 percent and 15–25 percent saw the largest gains. In Mississippi, districts with poverty levels between 10–15 percent and more than 25 percent saw the largest gains. In South Carolina, districts with poverty levels between 15–25 percent saw the most improvement. These numbers demonstrate that students of all different backgrounds benefit from the science of reading, and it should not be compartmentalized into one particular group.

These states understand that our institutions of higher education are not adequately instructing our teachers how to teach reading. Mississippi requires that all prospective elementary school teachers pass a test in the foundations of reading (which largely includes phonics). Tennessee requires that all K-5 teachers complete at least one approved foundational literacy skills course. South Carolina requires classroom teachers to use evidence-based reading instruction that includes phonics. These states have also tied the science of reading to their third-grade retention strategy, which may be valuable for Missouri to evaluate. Missouri should strengthen LETRS by creating a requirement for all elementary teachers to participate in the program, and further commit by targeting science of reading instruction to all students, not just the ones struggling.

The post Some States Making Large Reading Gains Post-Pandemic appeared first on Show-Me Institute.

In Mississippi, eyebrow threaders, eyelash technicians, and makeup artists can now operate without an esthetician license. Niche occupations such as these often get lumped into a license for which the training and education requirements are overly broad and don’t relate to the specific occupation. Missouri lawmakers fixed one example of this problem this year—a shampooer no longer needs to be a fully licensed cosmetologist or barber. In the future, lawmakers should review occupational licenses to make sure other niche occupations are unfairly burdened by license regulations and standards.

Ohio will enter the Interstate Medical Licensure Compact this year (and the Nursing Licensure Compact, of which Missouri is already a member), allowing workers to move and work more freely between states. Though Missouri has universal licensing reciprocity, compacts such as these would make it easier for Missouri licensed workers to work in other states that may not have universal reciprocity, but are in the same compact.

South Carolina will soon allow licensed barbers to apply for a license to operate out of a mobile unit and Nebraska repealed locksmith registration requirements after a licensing review found many problems with the current state of locksmith registration. Both measures increase opportunities for workers and consumers, which can ultimately promote economic freedom and growth in these states.

Missouri has another chance to do right by its workers next year. Though lawmakers have taken steps to curb the negative effects of occupational licensing, that forward momentum should continue. Missouri could create opportunities for workers and consumers and spur economic growth by ensuring niche occupations are free from broad licensing requirements, participating in interstate licensing compacts, and eliminating overly burdensome and ineffective licenses and restrictions. Using other states as a guide, we should pursue similar occupational licensing reforms next year.

The post Additional Opportunities in Occupational Licensing appeared first on Show-Me Institute.

This exemption would favor large, traditional nuclear power plants at the expense of cutting-edge nuclear energy technology—small modular reactors (SMRs). Putting aside the merits of the current monopoly structure—customers in other states benefit from competitive electricity markets—does it even make sense for a bill to promote traditional nuclear over SMRs?

Let’s put this in perspective. Few large, traditional nuclear power plants have been built nationwide in the past few decades. In recent years, multi-billion dollar cost-overrun debacles for new traditional nuclear plants in South Carolina and Georgia have put a damper on constructing new large nuclear plants. So what’s so special about SMRs?

SMRs are much smaller than traditional nuclear power plants (generating fewer than 200 megawatts of electricity per year) and are also cheaper to construct on a per-megawatt basis than traditional nuclear plants. NuScale Power, which is on track to receive the U.S. Nuclear Regulatory Commission’s first construction approval of an SMR this August, expects its SMR to produce electricity for $65 per megawatt-hour. That price is competitive with electricity from natural gas plants, which are also “baseload” power providers. (Baseload power is reliable, around-the-clock power, as opposed to the intermittent power provided by solar and wind.)

SMRs are also safer than traditional nuclear plants. The traditional way of generating nuclear power is already the safest form of electricity production available, even when considering disasters like Chernobyl or Fukushima, but SMRs come with enhanced safety features. For instance, traditional nuclear power plants cool their reactors by circulating water via electricity, meaning that in the event of a natural disaster that removes all possibility of power (such as what happened in Fukushima in 2011), the reactor could malfunction. SMRs use natural circulation rather than power to cool the reactor, meaning that a disaster like Fukushima is even less likely to happen with SMRs, and it is already extraordinarily unlikely.

Their smaller size also means that SMRs may be deployed in places where it wouldn’t make sense to build an enormous, traditional nuclear power plant, such as in remote towns or industrial sites. SMRs can operate individually as well as being grouped together, again in contrast to traditional nuclear plants. This allows for more flexible operation and even expansion if population or industry requires it.

SMRs are nearing full approval by federal regulators and are already being built in several countries. Putting aside the concerns about the monopoly powers Missouri utilities currently have (which are not insignificant), wouldn’t Missouri be better off focusing on the future of nuclear energy technology rather than the past?

The post Suggested Change to Missouri’s Nuclear Construction Bill appeared first on Show-Me Institute.

Instead of raising the fuel tax by 2 cents per gallon each year for five years, the bill would raise the fuel tax 2.5 cents per gallon each year for five years. If it were to become law, Missouri’s fuel tax would be raised from 17 cents per gallon now to 29.5 cents per gallon in 2025. The bill’s sponsors estimate that, once the increases are fully phased in, these measures would raise an additional $462 million per year starting in 2026.

The tax increase would eventually cover a little more than half of the annual $745 million MoDOT claims it needs for high-priority road and bridge needs. Increased transportation funding is needed, Show-Me analysts and other organizations have pointed out.

There’s another new wrinkle added to the bill: residents can claim an exemption and refund for the additional tax amounts they paid as a result of the fuel tax increase. This exemption would only apply to vehicles that weigh less than 26,000 pounds, effectively ruling out commercial trucking companies from receiving the refund. The recordkeeping and reporting requirements for the exemption and refund are onerous particularly if you have more than one vehicle. Under the current draft of the legislation, the claim for a refund shall at a minimum include:  (1) Vehicle identification number of the motor vehicle into which the motor fuel was delivered; (2) Date of sale; (3) Name and address of purchaser; (4) Name and address of seller; (5) Number of gallons purchased; and (6) Number of gallons purchased and charged Missouri fuel tax, as a separate item.

It’s hard to know how many Missourians would take advantage of this refund mechanism, but available evidence suggests that most won’t. The fuel tax refund is modeled after South Carolina’s fuel tax rebate, and only $3.4 million in rebates were issued out of over $500 million raised.

Perhaps the most interesting change is that the bill would establish an Electric Vehicle Task Force to study how to ensure drivers of electric vehicles (EVs) adequately pay for the damage they cause to roads. As more people use EVs and don’t fuel their cars with gasoline, this will become a salient question for future legislation. The task force would also study how the charging of EVs will impact the state electric system, the role of utilities and the Public Service Commission in overseeing charging stations, and ensuring that electric customers without EVs don’t end up subsidizing those who do.

The bill still faces another vote in the Senate, so things could change once again. Hopefully, we see a final bill that addresses transportation funding issues in Missouri in a fair and equitable way.

The post Gas Tax Bill Undergoes Several Changes appeared first on Show-Me Institute.

Missouri’s gas tax—MoDOT’s largest in-state funding source—has not been adjusted since 1996.  Inflation, the rising costs of road maintenance, and increasing vehicle fuel economies have all lowered the value of the static gas tax over time.

However, many states have found ways to keep their gas taxes in line with changing times.

For instance, numerous states have indexed their gas taxes to inflation to keep gas tax levels in step with the rest of the economy. Some states index gas taxes to other metrics. For instance, North Carolina’s gas tax is indexed to account for changes in the state’s population, as well as for inflation. Nebraska’s gas tax adjusts based on a combination of the state transportation budget and a tax that varies based on the price of fuel. Georgia’s gas tax is indexed to vehicle fuel efficiency to keep up with auto industry advances. Other states apply the state sales tax to gasoline on top of a base cents-per-gallon rate, so that the total fuel tax revenue collected varies with the price of fuel.

In other states gas tax increases are revenue neutral, a point which is worthy of consideration, especially this year. South Carolina is in the process of increasing its fuel tax in two-cents-per-gallon increments over six years. However, residents can write off the extra gas taxes paid at the pump from their income taxes. This essentially restructures where the taxes go, as residents don’t necessarily pay more taxes, but more of the taxes they pay go toward transportation.

Lawmakers have already proposed measures to raise Missouri’s gas tax by 10 cents per gallon over five years in the new legislative session. And while gas taxes are not a perfect solution, as they do not always align road usage and damage to payment for their upkeep, they are one option. And as evidenced by other states, Missouri policymakers have options as to how to approach this problem.

The post Gas Taxes Around the States appeared first on Show-Me Institute.

Read the latest from Susan Pendergrass

Parents are angry and confused right now. Many are receiving mixed messages from school districts. Critical information arrives late in the process and changes frequently. It’s up to school districts and the Missouri Department of Secondary and Elementary Education to fix this. But that doesn’t seem likely to happen before school starts this fall—and parents need help right now. So we’ve created a resource page designed to help parents figure out what their options are and what sort of questions they ought to be asking. Of course, this is only a small subset of what is out there, but we hope you find the below information useful. Please feel free to share this with anyone you think might benefit.

Questions parents should be asking superintendents, school board members and legislators:

1. Can I have a portion of my child’s state funding to purchase in-person learning if my district isn’t offering it?
2. Will the district make teachers available for micro-schools for those who want and need them?
3. Could the district open some school buildings for students to do their virtual learning with an on-site teacher assisting?
4. What if I don’t have high-speed internet access? Hot spots were insufficient last spring.
5. I don’t like my school’s virtual education programming. Can I switch to MOCAP after the school year starts?
6. Why hasn’t the state waived the requirement for receiving district permission to enroll in MOCAP this year?
7. My child can’t attend school in person. Can I have state funds to enroll them in a high-quality virtual provider of my choice?
8. If I decide to have my child stay virtual, do I need to register as a homeschooler?

Options that may or may not be available for this school year:

Missouri Course Access Program (MOCAP) – MOCAP has 11 providers of full-time virtual education that have been vetted and approved by the Missouri Department of Elementary and Secondary Education (DESE). A law passed in 2018 gives all Missouri students the right to request enrollment in any of the providers. Currently, districts are required to assess the request and determine if virtual education is a good fit for the student or not. Parents can appeal a denial of permission. Districts have an unlimited amount of time to respond to MOCAP enrollment requests.

UPDATE September 22, 2020 – 10 Day Deadline for MOCAP Review

Missouri Virtual Ed

Letter: Missouri online program virtual lifesaver for students

Missouri committee may propose changes to virtual education program

Missouri panel to request temporary removal of districts serving as MOCAP gatekeeper

Free virtual resources:

Khan Academy

NoRedInk

Virtual resources that cost money:

Virtual Stream tutors

Florida Virtual School

Micro-schools – A group of 10-15 multi-age students with one teacher. There are several national networks, but parents would have to work fast to create a micro-school at this point. Any that aren’t charter schools charge tuition.

What Is a Micro School? And Where Can You Find One? (edweek)

Acton Academies:

Acton Academy

Lighthouse International 

Prenda network:

Prenda

More on the Micro-school Movement (Forbes)

What are “micro-schools” and “pandemic pods”? (Today)

Why and How to Open a Microschool (gettingsmarter)

PODs – Groups of families that agree to have their children learn in-person together while limiting their access to anyone outside the group. These are being formed in Missouri, but with no public assistance.

Parents turn to “pods” as a schooling solution

YMCA of Metropolitan Columbus offering learning pods

College Station Taekwondo business offering learning pods

Kansas City YMCA

At least one parent has started a POD business

Watch: How to Start an Education Pod

“Little Pod Platoons” Are Education’s Answer to Lockdowns This Fall

“Pandemic Pods” Are Fundamentally Reshaping K-12 Education

Microschools on the rise in Arizona, with COVID providing added boost (AZ Mirror)

Parents Turn to “Pods” for School During Pandemic (WebMD)

Scholarships – Giving state money directly to parents to pay for tuition or tutoring. These are not available in Missouri, but could be. Each governor received flexible stimulus money under the Governor’s Emergency Education Relief Fund (GEERs) program. Governor Parson has received $54 million. So far, Governor Parson has allocated $24 million to higher education. The allocation of the remaining $30 million is unknown. Other governors have used portions of their GEERs funds to create scholarships for low-income students.

Oklahoma used GEER funding to create a scholarship that will help low-income families purchase curriculum content, tutoring services, and technology 

South Carolina used GEER funding to create SAFE Scholarships

Governors Direct Federal COVID-19 Aid to Private School Scholarships (EDweek)

The post Fall 2020 Educational Resources for Missouri Parents appeared first on Show-Me Institute.

In some states—Oklahoma, South Carolina, and New Hampshire, to name a few—governors ve used flexible federal stimulus funding provided through the Governor’s Emergency Education Relief (GEER) to directly help these parents. In South Carolina, Governor McMaster created the Safe Access to Flexible Education (SAFE) grant program for low-income students. Students who apply can receive up to $6,500 to help them pay tuition at a private school. Oklahoma’s Governor Stitt used GEER funds to create the Stay in School Fund, which gives low-income parents $6,500 to keep their children in private schools.

These seem like great ideas that are addressing an immediate need. In a perplexing move, Missouri’s governor has dedicated $15 million of the just over $54 million in GEER funds received to a Transportation Supplement Grant program. This money will eventually go to districts to cover additional COVID-related transportation costs. Other than PPE and cleaning buses more often, I can’t imagine what these costs would be, especially when so many districts are all virtual. But maybe it’s just me. Districts can request reimbursement for any COVID-related transportation costs between now and September of next year and they have until September of 2022 to make the requests.

The Secretary of Education sent a letter to every governor with the following guidance:

This extraordinarily flexible emergency block grant empowers you to decide how best to meet the current needs of students, schools (including charter schools and non-public schools), postsecondary institutions, and other education-related organizations in your State so that faculty continue to teach and students continue to learn. My Department will not micromanage how you spend these funds, but I encourage you, at a time when so many school boards, superintendents, and institutions of higher education have had to close their brick and mortar campuses for the balance of the school year, to focus these resources on ensuring that all students continue to learn most likely through some form of remote learning. They and their families are depending on your leadership to ensure that they don’t fall behind.

We have thousands of desperate families with immediate needs, and yet we’re putting millions of dollars in emergency relief into an account so that two years from now districts can request reimbursement for face masks and bus cleaning? I don’t get it.

The post Is It Just Me? appeared first on Show-Me Institute.

THE SOLUTION: Right to work.

Right to work ends forced unionism and lets workers decide whether joining a union best serves their interests. This means that being a member of a union cannot be a requirement for employment, and gives employees the final decision about whether they want to give money to a union that may or may not have their best interests at heart.

In 2017, Missouri passed Right to Work, but in 2018, the state will hold a referendum on that law.

WHO ELSE DOES IT? Alabama, Arizona, Arkansas, Florida, Georgia, Guam, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.

THE OPPORTUNITY: If the state’s Right to Work law is put into full effect, Missouri will join the majority of American states that already have right to work laws, finally placing Missouri employers and employees on a level playing field with other states.

KEY POINTS

• Missouri will be better able compete with neighboring right-to-work states in attracting businesses.
• Existing unions will be more responsive to the concerns of members, thanks to the credible threat of members leaving the organization.
• Employees will have greater control over their representation in negotiations with their employer.
• Employers will have greater flexibility in managing their businesses and making their operations more successful.
• Private employers are the focus, but similar laws in the public sector, like paycheck protection, should be pursued by policymakers as well.

SHOW-ME INSTITUTE RESOURCES

Policy Study: A Primer on Government Labor Relations in Missouri

Op-Ed: Rise of the Roosevelt Law: Is Reform in Government Unions Coming to Missouri?

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: Right to Work appeared first on Show-Me Institute.

The prevailing wage sets a floor for pay, but it can actually hurt the workers it’s intended to help by denying employment to people who can do the job at a more competitive price. To make matters worse, making projects more expensive also means that less taxpayer money will be available for other priorities.

THE SOLUTION: Let the market set wages.

Rather than dictate wages, the government should have policies that support a healthy jobs environment where higher wages for all sorts of construction projects—including public construction—develop on their own without the harmful effects of wage floors.

Policymakers must keep in mind that project delays can hurt their communities over time. It would be better to let the market set wage rates for these projects and to begin delivering those public services sooner rather than later.

WHO ELSE DOES IT? States with no prevailing wage law include Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, Virginia, and West Virginia.

THE OPPORTUNITY: Moving away from market-distorting policies like the prevailing wage will help the state promote job growth and spend taxpayer money efficiently.

KEY POINTS

• These reforms would promote job growth and make public works projects more affordable.
• Taxpayers get the most bang for their tax buck when their money is spent efficiently and effectively.

SHOW-ME INSTITUTE RESOURCES

Blog Post: Special Interests Inhibiting Joplin’s Recovery?

Blog Post: Playing Favorites on the Board of Aldermen?

Blog Post: The Race Is On: Wisconsin Pushes to End Project Labor Agreements and Prevailing Wage

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: Prevailing Wage 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.

Unfortunately, the idea that Missouri is getting the short end of the stick on federal fuel taxes is mistaken. In fact, since 2000, Missouri has gotten more from the federal highway trust fund than it put in. The latest official data shows that in 2013 Missouri got back about $1.17 for every highway user dollar it sent to Washington. In fact, in 2013 only one state (Texas) did not receive what amounts to a federal subsidy for its highway spending, as the map below demonstrates:

There have been years, specifically in the 1990s, when Missouri put more into the federal highway trust fund than it got out. But, since the inception of the state highway system in 1956, Missouri has gotten back about $1.06 for every $1.00 it sent to Washington in terms of fuel taxes and other user fees. Only Texas, Indiana, North Carolina, and South Carolina can claim to have given more than they have gotten back over the last 60 years. The map below shows this in detail:

Simply put, the federal government cannot be accused of precipitating a funding crisis at MoDOT and will not be able to solve Missouri’s problems by remitting fuel tax dollars. The fact is that Missouri already receives federal subsidies for its highways, and any more assistance likewise would be a subsidy to highway users.

The post Highway Dollars: Does Washington Give Missouri Its Fair Share? appeared first on Show-Me Institute.

Why is this important? These states are all making moves to ensure their state’s economic competitiveness. Missouri already lags behind most of the country in economic growth. It will find itself falling further behind other states if it does not match or exceed the reforms being put forward in other states.

That is why it is important for Missouri to act quickly. Patrick and I have both written about the benefits of Missouri eliminating its corporate income tax and how it could be done in a way that would not negatively affect state revenues via the elimination of economic development tax credits. Missouri should eliminate its corporate income tax because it benefits all businesses, not just those who are politically favored. It also lessens government involvement in planning the economy due to the removal of tax credits.

Missouri does not have the least attractive environment for business . . . yet. However, its current inaction in the face of other states’ increasingly aggressive moves to make their states more competitive, especially Kansas, put Missouri at risk of being a permanent economic wasteland.

The post The Corporate Income Tax . . . Leaving Missouri Behind? appeared first on Show-Me Institute.

After all, the government is well-equipped to bust some proverbial knee caps of their own, and it looks like the National Labor Relations Board (NLRB) and the Labor Department are taking out the big bats. First, it was Boeing’s decision to move some of its operations from Washington state to South Carolina, which the NLRB is now trying to block. This week, it’s the Labor Department’s turn to do some damage, tightening requirements on employers to report their anti-unionization activities. And today, the National Review editorial board lays out the NLRB’s latest plan to help organized labor and make employer attempts to dissuade employees from unionizing that much more difficult.

It is truly worrisome that the small, ideological leadership of these bureaucracies can so easily, and unilaterally, craft American labor law and interfere with the movement of labor without even a contemporaneous, affirmative act of Congress compelling these fresh rule-making activities. We already know that Obamacare didn’t empower the administration to offer waivers to the law. We know that the Obama administration wants to enact gun control through administrative procedure. Is there anything federal bureaucrats can’t do? If not, isn’t that an enormous problem?

National Review‘s Kevin Williamson puts the problem this way (emphasis added):

If you are an entrepreneur thinking about starting a large industrial enterprise, or an incumbent firm thinking about building a new factory or launching a new line of production, you want to know that your tax and regulatory environment is livable — and that it is not going to change at the whim of one or two or three people in Washington, D.C. The NLRB has five seats (and four members serving; there’s a vacancy at the moment). The fact that such a tiny group of unaccountable political appointees can just wake up one fine morning, have some Pop-Tarts, and then decide to rewrite the nation’s union-election rules is terrifying. Such changes ought to require an act of Congress.

Roll out of bed, toast a pastry, pass a rule. Maybe a bat isn’t necessary after all.

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The result? A schizophrenic tax and tax-break policy that has business looking for the exits. The latest: Sears.

Sears Holdings Corp.’s confirmation Monday that it is considering leaving Illinois could push the fiscally crippled state to dole out incentives to another major company.

In 1989, Sears leveraged the possibility of moving to North Carolina to earn tax breaks that led it to leave Sears Tower (now Willis Tower) in the Loop for its Hoffman Estates campus, said Hoffman Estates Mayor William McLeod.
[…]
The threat looms large: Sears, a 125-year-old mail-order pioneer and retail institution, is the Chicago area’s fourth-largest publicly traded company by revenue ($43.3 billion in fiscal 2010). The parent of Sears and Kmart employs 280,000 in North America, including 6,200 at its 200-acre Prairie Stone campus.

Tax-credit mania!

The article continues (emphasis added):

The news follows Illinois’ $7 million tax credit to keep U.S. Cellular Corp., a $19 million tax break to Continental Tire, $65 million in tax breaks to keep Navistar and $100 million in tax incentives to retain Motorola Mobility’s Libertyville headquarters. Gov. [Pat] Quinn also scrambled to assure Caterpillar that Illinois is a business-friendly state.

One of the best ways to assure businesses that your state is “business-friendly” is to establish low, stable tax rates that don’t punish hard work or pick winners and losers. Tax increases aren’t the answer, and the list of states to which Sears might move — Georgia, New Jersey, North Carolina, South Carolina, Tennessee, and Texas — are mostly the usual, business-friendly suspects, some of whom may literally be laughing at Illinois’ economic policies all the way to the bank. For example, Illinois now applies a 5-percent income tax rate (formerly 3 percent) against its residents; Tennessee and Texas don’t even have an income tax. Under those conditions, where would you rather live and work?

But, Missourians, do note: Our income tax rate settles in at 6 percent. Missouri’s leaders haven’t written off fiscal discipline entirely, but the state’s income tax probably ought to be revisited sometime soon. Food for thought.

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Currently, a bipartisan group of more than 20 state attorneys general and elected officials are asking a judge in Florida to invalidate the federal health care reform law. Missourians should encourage their attorney general, Chris Koster, to join this multistate lawsuit, which resumes on Jan. 10. In my view, the precedent that Missourians set by approving Proposition C could be continued if Attorney General Chris Koster joined the lawsuit.

The following are some facts related to the lawsuit:

• Twenty attorneys general are challenging the Affordable Care Act (ACA), the health care reform law that Congress passed earlier this year, in a courtroom in Pensacola, Fla. They are arguing that the law is unconstitutional and would set a dangerous precedent.
• The case involves two arguments. The first is that the requirement for all Americans to purchase insurance is unconstitutional. The second is that expanding the eligibility requirements for Medicaid, the joint federal-state health insurance program for the poor, threatens state sovereignty and will burden state budgets.
• The states party to the suit are Florida, South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Michigan, Colorado, Pennsylvania, Washington, Idaho, South Dakota, Indiana, North Dakota, Mississippi, Arizona, Nevada, Georgia, and Alaska. Additional states, such as Wisconsin, are considering joining.
• Americans are divided in their support for the health care legislation. Only 42 percent of Americans say they have a generally favorable view of the law, while 41 percent say the opposite, according to a poll by the Kaiser Family Foundation in December 2010.

Missouri voters were the first to oppose this attempt by the federal government to take control over health care. As Missourians, we live in a democracy. We should have a government that represents the demonstrated wishes of Missourians in this matter, thereby advancing liberty with responsibility by promoting market solutions for health care policy.

I will discuss the effort to encourage Attorney General Koster to join the Florida lawsuit on the Mike Ferguson show on the Eagle 93.9 FM tomorrow, Jan. 6 at 5:00 p.m in Columbia. I encourage our readers to tune in or listen online.

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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

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