October 30, 2014

Our Take on Amendment 3

There’s been a lot of talk about Amendment 3, which limits teacher contracts to three years and ties evaluations to personnel decisions. Some arguments against Amendment 3 are rational, evidence-based, and well thought out; others are not. In this post, we present our analysis of several arguments that have been made regarding Amendment 3. We conclude with some final thoughts on the matter.

(1) Amendment 3 will mandate more standardized tests.

Analysis: False.

Here’s what the ballot language says:

The majority of such evaluation system shall be based upon quantifiable student performance data as measured by objective criteria.

The St. Louis Post-Dispatch claims:

. . . the worst thing about Amendment 3 is that it imposes an untested experiment on all local school districts in the state, requiring them to devise a new standardized test for students that becomes the primary evaluation tool for teachers. Don’t our children take enough standardized tests these days?

This is a tremendous overstatement. With the state tests that students already take and the multitude of internal assessments that districts already administer, there is no need for additional tests under this amendment. Moreover, there are other types of performance data, such as districtwide common assessments, which could fit within the Amendment 3 language.

(2) Amendment 3 takes away local control.

Analysis: Both true and false.

If we were moving from a neutral system to an Amendment 3 system, it would be a loss of local control. Of course, we are not moving from a neutral system. Current Missouri tenure laws grant teachers a permanent contract after five years within the same school district and prescribe the exact steps that districts must undertake to remove a tenured teacher. This is a clear loss of local control. Amendment 3 would remove these centrally imposed mandates and would also remove the disastrous “Last in, first out” provision.

Under an Amendment 3 system, contracts would be capped at three years. Amendment 3 would also mandate that districts make staffing decisions based on teacher evaluations. A majority of such evaluations must be based on student performance data. Aside from this provision, districts would largely get to shape their evaluations.

(3) If there is a problem with the new system, Amendment 3 would make it difficult to change policies in the future.

Analysis: True.

How much of a teacher’s evaluation is tied to quantitative data should not be in the state constitution. Ideally, policies such as this would be determined as close to home as possible. That is, authority to determine contract length and evaluation practices should be devolved to the local school district or set in state regulations that could be changed when necessary. Even statutory changes would be preferable to a constitutional change.

Final thoughts:

Proponents argue that Amendment 3 will lead to better teacher evaluations and more recognition for great teachers. Ultimately, they hope this will create an improved teacher workforce. There is just one fundamental problem with that argument—when it comes to teacher quality, we have what is known as a principal-agent problem. That is, we as citizens (the principal) want great teachers in our schools and we hire school administrators (the agent) to make sure this happens. If the agent does not do his or her job, there is little we can do about it. Ultimately, we are dependent upon the school administrator for hiring the right people, evaluating them effectively, and retaining the most effective teachers. If a school administrator lacks the will to remove low-performing teachers, there is little that parents can do about it. Amendment 3 does not change our fundamental principal-agent problem. It may remove tenure restrictions, but if school administrators lack the will, then nothing will change.

The only way to change this dynamic is through greater school choice. With school choice, a parent does not have to depend on an administrator to remove an ineffective teacher. The parent can simply choose to go somewhere else. This places pressure on school administrators to take a more active role in managing the teacher workforce. School choice is the answer to our principal-agent problem. School choice is the answer for improving the overall quality of the teacher workforce.

James Shuls contributed to this post.

October 29, 2014

Indebting Missouri’s Children and Expanding Government? That’s Just Wimpy

Although the Popeye the Sailor cartoons were made long before I was born, I was a connoisseur of the VHS copies I had as a kid. Along with Popeye, the shows typically featured his nemesis, Bluto, and his love interest, Olive Oyl, but perhaps the most memorable character from the series outside of Popeye himself was his companion J. Wellington Wimpy. Unfortunately, he’s memorable for all the wrong reasons.

Wimpy is soft-spoken, very intelligent, and well educated, but also cowardly, very lazy, overly parsimonious and utterly gluttonous. He is also something of a scam artist and, especially in the newspaper strip, can be notoriously underhanded at times.

In the animated cartoons, Wimpy comes off as someone who not only is unreliable in his words but, ultimately, self-aggrandizing in his behavior. His signature phrase, “I’ll gladly pay you Tuesday for a hamburger today,” hints that Wimpy will never pay you at all.

Even as a kid, Wimpy’s character was troubling because, like most children, I was well-acquainted with the idea of “fairness.” Wimpy was always willing to make others worse off for his own immediate benefit, and because of Wimpy’s generalized character issues, it was just hard to like him.

Wimpy would make you worse off . . . and he’d do it with a smile. When I think about how government and its politicians operate, that is, unfortunately, one of the images that comes to mind.

Perhaps this Wimpy image is most appropriate when it comes to the Obamacare debate in Missouri. On the one hand are the true believers who, despite evidence to the contrary, believe that government health care is the best health care. On the other hand are the Wimpys of the debate, whose support of Obamacare’s Medicaid expansion has more to do with their near-term interests than the long-term consequences of their actions. Those consequences include billions of dollars in new spending and debt saddled on future generations to fund a failing and flailing health care program, meant to explicitly benefit the well-connected and highly profitable hospital industry. So before we pick up the Obamacare expansion fight in 2015, let’s be clear: that’s just wrong.

I have no problem disagreeing with and debating folks who have a worldview that expanded government is better policy than small government. We can win that debate on the facts. But I have a serious problem with those out there who have concluded that expanded government is better politics—the contingent that’s calculated that they won’t be paying for their hamburger when the bill comes due.

That’s just Wimpy. Missouri needs genuine Medicaid reform. Fix Medicaid. Don’t expand it.

Some Thoughts on the Proposed Olivette Charter Amendment

Next Tuesday, voters in Olivette will decide on whether to approve Proposition 1, which states (in part):

Any real estate, now or hereafter owned by the City of Olivette or any agency or instrumentality of the City, which is principally used or held out for use as a public park, shall not be sold, leased, given away or otherwise disposed of, and shall be used only as a public park, nor shall any structure be built in any such park to accommodate activities not customarily associated with park use or outdoor recreation, unless such sale, lease, disposal, gift or structure is approved by a majority of the qualified electors voting thereon.

To say this language is broad is like saying the Great Wall of China is long. True, but it is also kind of an understatement.

I get why people would be in favor of this measure. They want to have a say in case the city wants to do something drastic, like sell a public park. However, the problem with this amendment covers more than just selling a park. If passed it would require the city to seek voter approval if the city wanted to lease park management to private operators for a whole assortment of activities.

For example, if Olivette wanted to let a private operator open a restaurant on park grounds, like Saint Louis does for the Boathouse in Forest Park, then it would have to be approved by the voters. If Olivette wanted to let a private company open an ice rink in one of their parks, like Saint Louis does with Steinberg Skating Rink, then it would have to go to the voters. There are other successful examples of  private groups operating recreational services,  like Saint Louis does with the golf courses in Forest Park. Olivette residents won’t have to worry about golf courses, but they just go to show that if Proposition 1 is passed then any lease or contract will have to go to the voters.

The ultimate decision on whether to adopt the charter amendment is up to the residents of Olivette. I believe that voters should have a direct say if, for instance, a city decides to sell their municipal parks. However, I also think that city officials should have more leeway when it comes to leasing the park or contracting for services.

October 28, 2014

Cost of Compliance to Rise for Missouri Wastewater Treatment

Recently, the EPA released a decision letter approving most of the changes to the Missouri Department of Natural Resources’ (MDNR) water quality standards. While this will bring the state in closer compliance with the federal Clean Water Act, the new rules mean pollution limitations will be extended to thousands of lakes and tens of thousands of miles of rivers not previously under strict regulation. That will mean higher costs for Missouri’s water treatment utilities.

According to a report issued by MDNR, upgrading the state’s wastewater treatment plants to meet strict federal standards will cost between $430 million on the low end and $1.2 billion on the high end. However, most municipalities did not set high enough utility fees to cover the cost of regular improvement projects when regulation was more lenient. With the cost of needed upgrades now looming, localities will be forced to find more funds, which means wastewater utility rates, or other forms of local taxation, are likely to increase statewide in the near future.

Conforming to higher water quality standards in the most economical manner possible has pushed many municipalities across the nation and in Missouri to privatize their water utilities. Cities usually receive an upfront payment for leasing these systems, and while the private owners often raise rates, the increase is usually less than what the public utilities planned to do absent of privatization.

The city of Arnold in Jefferson County is considering just such a privatization plan partially in response to these types of costs. We have written before how this deal can benefit Arnold financially, and should it succeed, the privatization plan could become a model for other municipalities as they decide how to deal with increasing regulatory burdens for water treatment.

October 27, 2014

What Uber and School Choice Have in Common: In Missouri


Late last month, founding president and chief operating officer of the Children’s Scholarship Fund James Courtovich wrote an op-ed in the Wall-Street Journal titled “What Uber and School Choice Have in Common.” He said:

When we began the project [Children’s Scholarship Fund] in 1998, teachers, union leaders and their political benefactors said choice was a threat, much as cabdrivers say now. But as [Ted] Forstmann used to say, “Monopolies invariably produce bad products at high prices.” The 1.3 million parents who applied for the scholarships illustrated the tremendous demand for alternatives.

I reread this article after my trip to Washington, D.C., where I took my first Uber and Lyft rides. Reflecting on my positive experience with the taxicab alternatives, i.e., five-dollar fare, I realized—I’m not used to having choice.

In the Show-Me State, it is the status quo to be educated within your zip code. It is also the status quo to pay $40 for a 10-mile cab ride. Saint Louis and Kansas City are two of the largest metropolitan areas to prevent Uber and Lyft from operating their ridesharing services; and there are no private school choice programs in the state. Is Missouri choice-resistant?

As Courtovich suggested, there’s a parallel between the St. Louis Metropolitan Taxicab Commission (MTC) and Missouri’s school choice critics. The MTC claims to protect rider safety, maintaining the balance between cab supply and demand. School choice opponents claim voucher programs will “destabilize” public education, that choice and competition have no place in education.

The MTC and school choice critics are utterly afraid of change, but keeping the status quo has consequences. Children are trapped in low-performing schools, and cab fare is high. Missouri should follow the lead of states that have embraced choice in any context, because as Uber’s tagline suggests, “Choice is a beautiful thing.”



October 25, 2014

Saint Louis Municipalities: Who Is in Trouble With Macks Creek Law?

In previous posts, we have discussed the problem of small Saint Louis County cities supporting themselves through fines and fees, essentially using the police and courts as revenue generators. A report released by Better Together shows the scale of the problem. Twenty municipalities, mostly in North Saint Louis County, generate more than 20 percent of their total revenue from fines and fees.



The largest portion of these fines usually comes from traffic violations and related penalties. But a state law, known as the Macks Creek law, is supposed to cap traffic fines to 30 percent of a municipality’s operating revenue. Fines in excess of 30 percent are to be redirected to schools, and failure to comply can result in suspension of local traffic jurisdiction. While this cap should arguably be lower, the state should first enforce the cap that already exists. But proper enforcement within Saint Louis County may be lacking.



As the chart above demonstrates, eight municipalities within Saint Louis County collect more than 30 percent of their revenue from fines, and in some cases much more. These cities may not be in violation of the Macks Creek law if much of their fine revenue is from non-traffic-related citations. However, all eight cities are home to notorious speed traps and have small populations from which to generate non-traffic citations. For instance, Calverton Park, Bella Villa, and Pine Lawn would need to issue more than $200 of non-traffic-related fines per resident in order to comply with the Macks Creek law. That seems unlikely.

That is perhaps why Bella Villa, Pine Lawn, and Saint Ann (along with Ferguson and six municipalities outside of Saint Louis County) are having their municipal courts audited by the state to ensure that they are “about justice and not revenue.” That may be a hard case for those cities to make.

October 24, 2014

Bring Dead Capital to Life

Think of that spare bedroom left vacant by children leaving the nest. Think of that empty passenger seat in most cars as they clog traffic in our major cities. To an economist, those are unused bits of capital: The room could be rented out, satisfying someone’s need for a short-term stay in town; that car seat could be occupied by someone heading in the same direction as the driver. Such unused sources of production are, simply put, dead capital.

Arthur C. Brooks, president of the American Enterprise Institute, recently argued that significant amounts of such dead capital could be brought to productive life if only local governments would stop protecting vested interests and allow entrepreneurs to invigorate their local economies.

How? There are new, exciting companies that empower individuals to improve their economic condition and, at the same time, improve the productivity of capital. One example is the ridesharing service Uber. Uber brings together those with empty passenger seats and those needing a ride across town. My experience (unfortunately, not in Saint Louis) is that Uber rides showed up faster than traditional taxis and that the drivers were more attentive to my needs. Because Uber drivers are rated by riders even in transit, poor drivers can lose business for inadequate service. Competition drives out poor performers.

Airbnb is a market solution to the problem of underutilized housing capital. With excess bedrooms in the United States, why not allow the owners of those empty rooms to satisfy the needs of individuals seeking a place to stay for a night or two? The needs of those willing and able to pay for a room are served and the owner is rewarded with, especially in these still-difficult times, an extra bit of income.

Unfortunately, a maze of state and local regulations block Uber and Airbnb from operating in many locales. “Governments have their own golden opportunity,” Brooks writes, “to exercise creativity in service of the common good, whether that entails rethinking anachronistic zoning laws or adjusting tax policies that treat someone’s spare bedroom the same as a Marriott suite.”

If bringing dead capital to life is good for the economy, isn’t it time for politicians and regulators to awaken to the potential benefits that such services can provide?

October 23, 2014

An Idea for Kansas City Schools: Give Principals Power

Kansas City Public Schools (KCPS) is seeking input from parents, school staff, and the community about how it might regain and sustain full accreditation and retain and attract students. To that end, it is forming a School Improvement Advisory Committee (SIAC) and has been seeking applicants to serve in that capacity. We have a few ideas we’d like to share about strengthening administration and staff, rewarding teachers, and empowering parents.

First, it is noteworthy that the stated purpose of the advisory committee is seemingly small ball. Their email soliciting participation asks only,

What’s it going to take for Kansas City Public Schools (KCPS) to regain full accreditation? What’s it going to take for your school to regain/sustain full accreditation? How can we retain and attract students?

In other words, “What do we have to do to provide the minimal state-required level of service?” We’re also suspect that they are looking toward parents and the community for ideas when there is an entire industry of specialists who have researched, written, and talked about what to do to improve schools. We at the Show-Me Institute have our own suggestions, and they aim at rebuilding world-class education in Kansas City. All our ideas have a common theme: Move power away from centralized school districts and toward students and parents.

For his 2003 book Making Schools Work, UCLA Professor and Author William G. Ouchi studied more than 200 schools in six cities and found that a school’s educational success may be most directly affected by how it is managed. The way to increase successful management, he argues, is to give schools more control over their own budget.

While schools may boast large budgets, Ouchi’s research uncovered that very little of it is controlled by the principal or the school itself. In one anecdote, he relates that a Los Angeles principal said her school had a budget of $21 million but added, “It doesn’t really matter because I only control $32,000.” Ouchi’s further research indicated that in New York, Los Angeles, and Chicago the local schools only controlled 6.1 percent, 6.7 percent, and 19.1 percent of the budget, respectively.

In school districts that have seen tremendous improvements in their urban school performances, such as Seattle, Houston, and Edmonton, Canada, the percentage of the budget controlled by the local schools was 91.7, 79.3, and 58.6, respectively. This should be no surprise. Administrators, teachers, and parents at the school are best able to identify and address the specific needs of their students.

Here in Kansas City, better school management means moving the power of the purse away from the top-down centralized control at 12th and McGee streets and out to the principals at Paseo, Lincoln Prep, and elsewhere. Ouchi offers this warning to parents:

Control goes with the money. If your superintendent smiles, invites your group into his office, and tells you that he agrees with you and that he’s going to roll out a new school-based decision-making program that includes parent involvement—smile sweetly and ask him who will control the school’s budget. Don’t let him off the hook. Don’t let him think that you can be so easily fooled.

Remember, the author was chief of staff to Los Angeles Mayor Richard Riordan. He has academic credentials, but he has weathered political fights as well. And the Kansas City district appears to be doing exactly what he describes: They smile, invite people to discuss the district, but surrender none of the control that is necessary for success.

Saint Louis County Municipalities: Should More Consider Disincorporation?

In the months following the tragic events in Ferguson, there has been increasing scrutiny on the policing practices in small North Saint Louis County cities. The argument, best made by Radley Balko of the Washington Post, is that micro-cities in Saint Louis County are using local police to shake down poor residents in order to support otherwise unnecessary government.

St. Louis County munis

While we would argue that municipality size is certainly not everything, it is undeniable that many cities in Saint Louis County rely heavily on fines and court fees. One way of curtailing this sort of abuse is the rigorous implementation (or strengthening) of the Macks Creek law, which caps the amount of income a city can receive from traffic fines to 30 percent.

Missouri is preparing to audit some North Saint Louis County municipalities (along with cities in other counties) to ensure that they are not violating this law. However, the enforcement (or reform) of the Macks Creek law is up to statewide officials and voters. What’s more, if the law is vigorously enforced tiny municipalities might be forced to turn to large property tax increases or face insolvency. But local residents do not have to wait on statewide actions or accept a parasitic government. Voters can, and in the past did, disincorporate a city.

Under Missouri law, the residents can disincorporate their municipality if they: a. Gather 50 percent of residents’ signatures calling for an election on disincorporation; and b. 60 percent vote for disincorporation. At that point, the city would receive its basic services (including police and courts) from the county, unless they decide to join with another municipality.

Cities in Saint Louis County have disincorporated before, and recently. Just a few years ago, the poster child for a dysfunctional, traffic ticket-financed municipality was actually a middle-class, 95 percent white city in South Saint Louis County named Saint George. Major police scandals resulted in the city disbanding its police force, and residents ultimately voted to disincorporate in 2011. In 2013, the tiny (pop. 447) city of Uplands Park also held a vote on disincorporation, but that bid failed to reach the 60 percent mark.

The strategy of disincorporation is not without controversy. Loss of local representation, especially in areas with high minority populations, might be more worrying to some residents than fine-seeking officers. The approach also has limitations, as a municipality that funds decent public services mostly by fining pass-through traffic may serve voters’ interests while causing wider harm to the metropolitan area.

Most municipalities in Saint Louis County, including smaller ones, do not attempt to run their governments through aggressive police citations and court fees. However, residents should know that a local government that fails to provide for the common welfare (or openly harasses the poor) can be removed. A wider knowledge, if not actual use, of that option may result in more responsible city governance in Saint Louis County.

October 22, 2014

ESAs Empower Families in Arizona

All students have unique educational needs, which is why Salima’s parents chose to participate in Arizona’s Empowerment Scholarship Accounts (ESA) program. The ESA is an education savings account that allows parents to use a portion of their public school’s funding and deposit it into an account. The account can be used to pay for private school tuition, online education, private tutoring, or future expenses like college. This makes a world of difference to kids like Salima, who is one of 400,000 people living with Down syndrome in the United States.

This inspiring story is just one example of how school choice can transform lives. Because Salima’s parents were empowered through Arizona’s school choice program, their daughter’s needs finally are being met.

Missouri’s Medicaid Program Striking Out Intended Beneficiaries

In baseball, getting a hit three out of 10 at-bats could make you an All-Star, and maybe even a Hall of Famer if you do it consistently enough. But while batting .300 is pretty good for the National Pastime, in most other contexts succeeding only three out of 10 times won’t get you accolades.

That point was hit out of the ballpark over the past few days.

Last week mid-Missouri’s ABC 17 reported on the story of a pregnant woman who had been trying to sign up for Medicaid benefits, only to have her paperwork lost and her calls unreturned by the Department of Social Services (DSS). When the issue came up at a House hearing, the DSS admitted it had to do better, but it also admitted something astonishing (emphasis mine).

The Department says thirty percent of its callers are having their needs met, which Campbell acknowledges is too low. She says staff are being reassigned to taking calls and other changes are being made to improve that percentage, but [State Rep. Sue] Allen says the situation remains frustrating.

“In a company, in a private business, people would be gone,” observes Allen.

Missouri’s Medicaid program is deeply broken, and yet some of our politicians think now is the time to expand it with Obamacare. It isn’t. In baseball and business, step one would be to fix what is wrong and then build upon successes, not to double-down on a bad system and bad players. That’s what Missouri should be doing: fixing Medicaid, not making an already bad situation worse—especially for the patients the program was supposed to help.

Missouri’s Medicaid system is institutionally well below the Mendoza line. It’s time to rethink the program.

October 21, 2014

The Teachers’ Union Cycle

Last week, Time Magazine released an article titled “Teachers Unions Are Putting Themselves On November’s Ballot,” which reported that the National Education Association (NEA) and the American Federation of Teachers (AFT) will spend a combined $60 million to $80 million this election cycle. What does that mean for education stakeholders in Missouri?

The graphic below represents how teachers’ unions influence local school districts.

teachers union cycle

The first path of influence is through national and state political activity. At both levels, teachers’ unions make contributions to candidates that are likely to represent their platforms. The NEA, for example, takes strong positions on national education issues such as Common Core and school choice.

Unions also back issues at the state level—the Missouri NEA is reported to have donated $20,000 to campaign against Amendment 3, an initiative to end teacher tenure in Missouri, while it’s PAC, the Committee in Support of Public Educators, raised almost $90,000. Although there is money spent on the opposite side, monetary contributions are not the only way teachers’ unions influence policy.

Involvement in school board elections is the second route of influence. In Missouri, teachers’ unions have the right to collectively bargain with school administrations. These agreements include a range of items such as workplace rules, teachers’ compensation, and personnel decisions. According to union guru Myron Lieberman, collective bargaining was initially seen as a check on the power of school boards, who are democratically elected by residents within a school district.

However, a study by Stanford Political Scientist Terry Moe showed that within the 253 school districts examined unions supported school board candidates in 92 percent of the districts,”made phone calls in 97 percent, campaigned door-to-door in 68 percent, and provided mailings and publicity in 94 percent.”

If Moe’s study holds true in Missouri, then teachers’ unions have influenced school board elections, helping to elect candidates with similar views—nine Missouri school boards have passed resolutions against Amendment 3.

Through these two paths, the teachers’ union cycle perpetually strengthens itself. By limiting the power of parents, influencing the hand of local school district officials, and mobilizing state and national efforts to keep the status quo, the teachers’ union is able to protect the people the system was designed to serve—teachers.

Protecting the interests of teachers is not necessarily a bad thing. The problem is that within the teachers’ union cycle the interests of teachers often outweigh the needs of students.


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