This morning, SMI’s Patrick Tuohey joined McGraw Milhaven on The Big 550 KTRS to discuss reports that the Missouri Attorney General is asking to be allowed to enforce portions of a 2015 law that Missouri courts initially set aside in 2016. The law at issue “set minimum standards for municipalities in St. Louis County and capped the amount of revenue they could raise in municipal court from traffic cases.” 

LISTEN: https://soundcloud.com/550ktrs/show-me-institute-reinstating-court-caps

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Aired: 4-12-16 on KWTO, Springfield, Mo.

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Some background: When Springfield police and fire department employees won increases to their pension several years back, they agreed to pay for it themselves through employee contributions. However, the cost of the benefit has ballooned as the number of people paying into the pension fund has shrunk. Because the pension is a defined benefit plan, growing unfunded liabilities now put the entire pension fund at risk. In this case, taxpayers may end up paying for a benefit they were told they wouldn’t have to cover.

Springfield is not the only municipality facing a defined benefit pension with growing unfunded liabilities. According to SMI’s 2016 study on the funding of Missouri’s state and local pension liabilities, the average public pension could be between 48 and 59 percent underfunded. According to that same study, total unfunded liabilities for Missouri’s public pensions could be as high as $89 billion.

In theory, a defined benefit pension plan can be fully funded and operated in a sustainable way. But in practice, elected officials tend to promise more than they can deliver, and defined benefit pension systems can run into problems years or even decades after they were put into place.

For cities that want to avoid issues like the one facing Springfield, making the switch to a defined contribution plan might be the way to go. With a defined contribution pension, the city would make regular contributions into an employee-managed retirement account throughout the employee’s career. When the employee retires, he or she would draw from the money deposited into that account plus or minus any investment gains or losses. Underfunding situations like the one in Springfield would be impossible, because a defined contribution pension is necessarily and by definition fully funded.

A defined contribution pension benefit is not a cure-all, because benefits already accrued will have to be paid out pursuant to the older defined benefit plan. But switching to a more sustainable benefit system might keep a potential problem from becoming a catastrophe. 

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As it turns out, the error might have been in the system since 1991, making it older than all of the students in the Belton School District.  Pretty embarrassing.

But there is also a lesson we can learn from this.

In SMI’s 20 for 2020, we recommended requiring clear tax incentive reporting by cities on their financial statements. As we wrote:

“Consistent with recommendations from the Governing Accounting Standards Board, Missouri cities should clearly identify in their financial statements the projects that the city is, and will be, subsidizing.  Moreover, each city should be required to publish every tax incentive liability that it has incurred, proving this information either as a part of a city’s financial statement or as an annually produced and readily available separate document. If local officials want to spend taxpayers’ money on other taxpayers, that money should be clearly and regularly disclosed.”

Perhaps if the city and county had made these figures easier to access, such an error—that over time cost the children of the Belton School District a huge sum of money—would have been caught earlier.

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In Missouri, once a union becomes the “exclusive representative” for a group of public employees, that union remains in power indefinitely. Some have suggested fixing this system by allowing unionized public employees the ability to vote to maintain or replace their union every few years. A regular secret-ballot election sounds like a good check on the potential abuses that can occur when a representative body isn’t held accountable to its constituents. But aren’t elections expensive?

This study shows how our state can provide regular elections for its unionized government employees at a low cost to incumbent unions and at no cost to taxpayers. In The Low Cost of Labor Reform, I examine some of the ways the cost of these elections can be greatly reduced or shifted away from taxpayers entirely. 

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P.S. 199 is a National Blue Ribbon Award-winner with high state test scores, strong parent involvement, a high percentage of white students, and a low percentage of students qualifying as poor. P.S. 191 is made up of mostly poor, Hispanic, and black students from the public housing unit across the street. Because of overcrowding issues, P.S. 191, which sits within nine blocks of P.S. 199, may enroll wealthier students if the districts are rezoned.

Parental response has been mixed. Some want to erase the boundaries between the two schools altogether, allowing for a greater mix of students at each. Others say they’ll move to another school district or send their kids to private school if their children are sent to P.S. 199.

The story of P.S. 199 and 191 may sound familiar to residents of Saint Louis County and City. Here students may live within walking distance of one school but attend another, because of where boundaries are drawn.

For years, numerous groups have advocated for a unified district in the Saint Louis area, but as SMI’s James Shuls has pointed out, this solution is too pie-in-the-sky to make a difference for students who need better education options today. As an alternative, the St. Louis Post Dispatch Editorial Board proposed an open enrollment policy last November. “Districts would agree to a set tuition amount that would follow any student who wanted to cross boundaries. Transportation would be provided for those below poverty level,” they wrote.

Open enrollment policies have become more common over the past several decades. In 1988, Minnesota passed the first mandatory open enrollment law. By 2013, 21 states had allowed students to transfer from their home district to another school district. Some of these states, like Missouri, only allow students to transfer if their current district is failing.

But there are many reasons why a student would want to transfer to another school district aside from poor student achievement. A student might just live closer to a school within another district (this example also applies to students who live in rural parts of Missouri).

Another way to create more options for students would be to allow charter schools to operate anywhere in the region, and allow students to transfer across district lines to attend them. For example, if a charter school opened in the Bayless school district in Saint Louis County, students in the Affton, Hancock, and Lindbergh districts could apply to attend.

In the upcoming legislative session, I hope lawmakers consider the alternative to unifying school districts—expanding the state’s open enrollment policy to include not just students in failing schools, but all students in the Saint Louis area and across the state. 

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This week marks the 10^th Anniversary of Sunshine Week. It’s a time to celebrate freedom of information, but also serves as a reminder that there are still some dark corners of government in need of transparency. In a recent study, the non-profit organization, Better Together, tried to obtain financial and operational information from municipalities using the state’s Sunshine Law.

The report found that some cities responded quickly and at low cost, while others did not. Deputy director of community based studies Marius Johnson-Malon was quoted by Saint Louis Public Radio:

“Sometimes we were met with different requests for money up to $2,000 to provide the information we were looking for. Sometimes people would say it was going to take up to six months, and that is in contrast to some municipalities that got us the information on the same day they received the request and provided it for free.”

Johnson-Malon’s experience with varying transparency is not rare. I encountered a similar issue while requesting information regarding public school collective bargaining agreements. Some districts emailed the information within minutes at no cost. Others referred me to the district attorney or offered to retrieve the information at costs of up to $100.

Collective bargaining in public schools should be transparent, but as SMI Policy Researcher John Wright has pointed out, a legal loophole allows collective negotiations between school districts and teachers’ unions to remain behind closed doors.

Last month, a bill was introduced that will open collective negotiations to the public. Parents and taxpayers have the right to know what demands unions are making, especially if those demands affect the education of children.

The Missouri Sunshine Law may be nothing like a subscription to the Jelly of the Month Club, but as Eddie in Christmas Vacation famously said, it’s “the gift that keeps on giving all year round.” Happy Sunshine Week!

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