July 24, 2014

Charter Schools – More Bang For The Buck!


Whether it is chips at the grocery store or miles per gallon, it’s always good to get more for less. This is especially true in education. That is why a new report by the School Choice Demonstration Project at the University of Arkansas is so important. A team of researchers, led by Patrick Wolf, Ph.D., calculated the return on investment of public charter schools. In other words, they looked to see if charter schools are providing more bang for the buck. It turns out they are.

Charter schools throughout the country, and especially in Missouri, spend less per student than traditional public schools. Charter schools, on average, also outperform their traditional counterparts. By combining these facts, the researchers calculated that the productivity advantage for charter schools in math and reading was 40 and 41 percent, respectively.

So, what do you call it when you get better outcomes for less money? I call it a big win for students, parents, and taxpayers.

July 23, 2014

St. Louis Taxicab Commission Giveth With One Hand, Taketh With The Other

The St. Louis Metropolitan Taxicab Commission (MTC) has long stifled competition in the name of customer safety. The MTC controls market entry, tells cab and sedan businesses how they can operate, and sets prices. When Lyft launched in Saint Louis, MTC officials claimed they needed to shut down the app to protect customer safety, despite Lyft’s extensive insurance policy, background checks, and vehicle inspections. Now, with Uber preparing to launch in Saint Louis, the MTC is at it again, proposing more regulations to shut out competition.

Yesterday, the MTC approved changes to the taxicab code that would ostensibly allow a company such as Uber (although not Lyft) to operate in Saint Louis. The MTC altered the section of the code concerning premium sedans, which previously were quite onerous, with the implication that Uber can now pursue a license as a premium sedan company. Previously, premium sedans were required to bear written placards with the names of their customers, premium sedan companies could not start a business with fewer than three sedans, and (critically) sedans had to contract services at least 60 minutes in advance of pickup. The MTC voted to remove or relax these restrictions.

While some restrictions are gone, other competition-stifling regulations remain. Sedan companies still must obtain a Certificate of Convenience and Necessity (CCN) for $2,500, essentially asking companies to prove that Saint Louis needs cab service. Furthermore, the MTC still requires that each individual vehicle be licensed as a vehicle for hire (in Uber’s or Lyft’s cases, a premium sedan) with all the controls the MTC places on the appearance and operation of such vehicles.

While Uber might be able to operate with the code changes, it would be severely limited by regulations that the MTC plans on addingFirst, the MTC is still considering making sedans charge a minimum fare of $25 per trip, although the final decision on this takes place later this month. This essentially limits Uber to its premium, black car service. Second, all sedans now have to pay a permit renewal fee of $500 per year. That is more than double the current cost of renewal for sedans and almost five times the fees required for cabs. Uber has cried foul, correctly calling these practices anti-competitive.

The restrictions on sedans in the taxicab code never had much to do with safety, and it is good to see the MTC repeal some of these regulations. However, the additions for a minimum fee for sedan services and onerous renewal requirements have no safety merit whatsoever. Their only possible purpose is to prevent Uber or Lyft from operating an on-demand, cheap vehicle service that might compete with existing taxicabs. Once again, the MTC has shown its true mission is not customer safety or satisfaction, but rather control over the Saint Louis taxi industry.

July 22, 2014

Show Me Better (Part 2): Certificate Of Need And Access To Care

One of the benefits of free markets is their ability to match buyers with sellers. Potential customers assess the supply of goods and services, the parties agree to the prices, and, generally speaking, purchases are efficient – delivering comparable value to both parties.

Unfortunately, Missouri’s certificate of need (CON) program may be erecting barriers to the market functioning efficiently when matching care providers and care consumers. A recent working paper by the National Bureau of Economic Research examined how hospital entry deregulation in Pennsylvania affected the market for cardiac revascularization. Because Pennsylvania eliminated its CON program in 1996, economists were able to compare clinical outcomes before and after the program’s repeal — the ideal conditions by which to conduct an experiment. The researchers found that “free-entry improves the match between underlying medical risk and treatment intensity” and “improved access to care.”

Another study conducted in the same state, on the same topic, found that the post-deregulatory market did a better job at matching the appropriate procedure to the appropriate risk level. After deregulation, better doctors also saw an influx in demand for their services.

Removing the CON program in Pennsylvania empowered patients to attain better care from better doctors. Certainly, a market uninhibited by cumbersome regulations does a better job at matching the right patient to the right procedure, performed by a better doctor, than a nine-member regulatory board. Missouri could follow Pennsylvania’s lead in doing away with the micromanagement and creating a system conducive to competition and innovation.

This Illustration Of Missouri Pension Enhancements Says It All


Today, the Show-Me Institute released a new case study by Robert Costrell, professor of economics and education policy at the University of Arkansas. His paper, “Teacher Pension Enhancement In Missouri: 1975 to the Present,” illustrates how state lawmakers have consistently enhanced retirement benefits for teachers. These enhancements have helped create the system we have today, which has an incredible spike in benefits around a teacher’s 25th year and many other flaws.

For more information about pensions, I encourage you to check out our “Missouri Government Pension Fast Facts.”









July 21, 2014

Amendment 7: The Tax That Keeps On Taxing

According to current projections, the proposed Missouri Amendment 7, or 0.75-cent transportation sales tax, would raise $5.4 billion for roads, bridges, and other projects over the next 10 years. The Missouri Department of Transportation (MoDOT) has been active in promoting a list of those projects, showing how it would spend the largess. But what is less publicized is that many projects on that list receive the sales tax funds contingent on local governments also bringing money to the table. In many cases, projects approved for state sales tax money require local governments, and their taxpayers, to provide tens or even hundreds of millions of additional dollars.

Take the example of the Saint Louis area. The City of Saint Louis is set to get $25 million for a streetcar that goes from downtown to the Central West End. That might not be such a bad deal, if it were not contingent on Saint Louis coming up with an additional $271.5 million to complete the plan. The sales tax will also provide $40 million to the city for bus rapid transit, but only if Metro can come up with an additional $40 million. In return for $20 million for an I-64/22nd St. Parkway interchange (mostly to the benefit of the Northside Redevelopment Project), the city and developers have to provide an additional $8.9 million. All told, in return for $270 million in state sales tax money, the City of Saint Louis has to find an additional $323 million from other funding sources. That’s $1,016 for every man, woman, and child living in the city.

The story is similar in Kansas City. The city will get $144 million for the streetcar, contingent on it finding the rest of the half billion needed to make the project happen. While Kansas Citians have long been aware of, and been familiar with plans to fund, the streetcar, this is not so for other projects. Kansas City will receive $24 million for a bike path from Pleasant Hill to Kansas City, if it can find $48 million locally. For those counting, that’s a $72 million bike path. Altogether, projects that the sales tax would fund require $459 million in additional funding from the Kansas City area.

The result of these policies is that after taxes have gone up statewide, purportedly to save our “crumbling” highways, local governments may have to increase taxes even further to secure funding for projects on MoDOT’s list. Amendment 7 is the tax that keeps on taxing.

Show Me Better: Assessing Certificate Of Need In Missouri

One of the most obvious examples of a massive government burden on our health care system is the Affordable Care Act (Obamacare), but Obamacare does not have a monopoly on onerous government regulations in Missouri. In fact, some state-run regulatory programs, such as certificate of need (CON), may also play a role in increasing the cost of care and decreasing access to care for some of the state’s neediest patients.

A certificate of need is a legal document the state issues to allow a health care provider to expand, modify, or construct certain health care facilities. In Missouri, a nine-member committee reviews applications for certificates of need and administers them in accordance with its own rules. For example, last year, the Lafayette Health Center received a CON to construct a new $40 million hospital. Based on the committee’s rules, Lafayette likely paid the review committee a hefty $40,000 application fee.

One of the original purposes of the program was to guarantee health care access by limiting competition in a particular region. Proponents assert that, with less competition, the likelihood of a hospital going out of business will be reduced, hopefully ensuring a sufficient level of care for citizens near the health care provider. Yet, empirical evidence suggests that CON programs neither control costs nor improve health outcomes. Indeed, they may actually hamper access to care and patient choice, at least under some circumstances.

If the certificate of need law could be hurting the people it was intended to help, should it be reformed? Abandoned? These questions are central to why we, as Missourians, ought to take a serious look at the necessity and efficacy of the state’s CON program. In future posts, I will review how CON regulations impact health care costs, access to care, and clinical outcomes.

July 18, 2014

Op-ed: Proposed Amendment 7 Is Bad Policy

Today, the St. Louis Business Journal printed my commentary on why the proposed Amendment 7, which would implement a 0.75-cent sales tax to pay for Missouri’s roads, is bad policy.

The op-ed corrects some of the misconceptions that exist about Missouri’s highway system, particularly the idea that the state’s roads and bridges are “crumbling.” While Missouri’s transportation infrastructure can improve in many areas, the fact is that the highway system is in good shape whether you compare it to other states or simply the condition of Missouri’s roads 10 years ago. There is no crisis that should scare Missouri voters into supporting a policy that is destructive and inequitable.

The Missouri Department of Transportation (MoDOT) does have a funding problem, but paying for highways based on how much people shop, instead of how much they drive, is unfair and economically unsound. A better solution is to raise the gas tax or implement tolls on major highways.

If You Haven’t Registered For Our July 31 Friedman Legacy Day Events, What Are You Waiting For?



For a number of years now, we have partnered with the Friedman Foundation for Educational Choice to celebrate the life and work of Nobel Prize-winning economist Milton Friedman. In his 1955 piece, “The Role of Government in Education,” he introduced the modern concept of the school voucher. He wrote:

Governments could require a minimum level of education which they could finance by giving parents vouchers redeemable for specified maximum sum per child per year if spent on “approved” educational services.

Parents would then be free to spend this sum and any additional sum on purchasing educational services from an “approved” institution of their own choice. The educational services could be rendered by private enterprises operated for profit, or by non-profit institutions of various kinds.

Later in his life, he became an even stronger advocate for empowering parents through school choice.

This year, in honor of his efforts to expand school choice, we are hosting two Friedman Legacy Day events.

The first is at 8:30 a.m. in Saint Louis at De La Salle Middle School. Mike McShane, a fellow at the American Enterprise Institute, joins us for an interesting discussion about private schools closing and re-opening as charter schools.

The second event is at 6:30 p.m. at the Kansas City Central Library. Economist Mark Skousen will share stories of his long friendship and debates with Milton Friedman.

We hope you will join us for at least one of these events. For more information, please visit the events tab on the Show-Me Institute website.


July 17, 2014

Are Missouri’s Highways And Bridges Crumbling?

Supporters of Amendment 7, the proposed 0.75-cent transportation sales tax, have increasingly begun to argue that Missouri’s roads and bridges are in desperate need of repair. Whether it’s an editorial in the St. Louis Business Journal, a radio host on KMOX, or a bus with a piece of bridge lodged in it, the message is the same: Missouri’s transportation infrastructure is “crumbling.” Presumably, if Amendment 7 does not pass, soon we will be living in the Missouri version of I am Legend. However, all the empirical evidence suggests that the opposite is the case.

ialPictured: Missouri’s Highway System – 8/6/2014

We have often commented that Missouri is “middle of the pack” in various state rankings. Not so with our state highway system. According to the Reason Foundation, our highway system is the eighth best in the nation, in part due to the good condition of our interstate highways and rural roads. The National Chamber Foundation has ranked our road quality seventh best in the nation, with only 6.3 percent of Missouri roads in mediocre or poor condition.

This is not surprising to those familiar with Missouri’s recent infrastructure expenditures. In the last 10 years, Missouri’s highway system added more lane miles while increasing the percentage of major highways in good condition to 88.5 percent and repairing a third of the state’s deficient bridges. And as transit supporters are wont to point out, Kansas City and Saint Louis hold first and second place on a list of cities with the most highway miles per capita. Missouri was able to perform so many projects in the last decade because it issued more than $3 billion worth of bonds and received more than $600 million from the federal Stimulus Act. That allowed the Missouri Department of Transportation (MoDOT) to implement the “Smoother, Safer, Sooner Road and Bridge Program” and the “Safe and Sound Bridge Improvement Program,” among other projects.

When we look at Missouri’s highway infrastructure today, the reasonable conclusion is that the system is in good condition, the best it has been in decades. While Missouri’s highway infrastructure has specific needs (I-70 rebuild, Broadway Bridge), by no definition is the system “crumbling.” MoDOT does have a funding problem, but there is time to select the right funding solution. There is no imminent crisis which would force us to accept an unfair, and economically unsound, transportation sales tax.

July 16, 2014

The Report The Airport Advisory Group Doesn’t Want You To See

Granted, that is a cliché title, but we can defend it. Twice, Show-Me Institute staff reached out to the Kansas City Airport Terminal Advisory Group (ATAG) about incorrect claims they were making in their presentations. We know from an open records request that they received our offer, considered it, and then ignored it while trying not to seem like they were ignoring it.

Dave Fowler, co-chairman of ATAG and a former managing partner at KPMG in Kansas City — one of the world’s largest auditing firms, — shockingly wasn’t ever concerned with the cost details. And whenever people provided financial information that did not align with the city’s talking points, it was dismissed. The affordability of the whole scheme was never seriously considered.

Until now.

Joe Miller, a policy researcher at the Show-Me Institute, has compiled all the cost data and concluded that over 30 years, it would be cheaper to renovate the Kansas City International Airport (MCI) twice than to build a new $1.2 billion terminal. Add this analysis to the many other points we’ve raised about the environmental or competitive need for a new terminal and it becomes impossible to find any worthwhile reason to tear down one of the country’s finest airports.

Kansas City Schools Adopt CEE-Trust, Sort Of

In January 2014, Joe Robertson, of the Kansas City Star, wrote the following about the CEE-Trust proposal for Kansas City public school reform to the Missouri Department of Elementary and Secondary Education (DESE):

The plan caters to charter schools — public schools that operate independently of school districts. But they would not be charter schools. They would be accountable to the district’s Community School Office.

Funding would flow through the district, and the school operators would maintain high degrees of independence only as long as they met their performance agreements.

The central office would own and maintain the buildings, operate bus services for all the schools and coordinate a lottery-based enrollment process with a standard expulsion policy.

In a Feb. 8 Kansas City Star editorial titled “Don’t Embrace Experimental Overhaul,” the paper opposed the proposed reform:

Sustained board leadership has been a challenge for many charter schools in Kansas City. We also question whether a collection of independently run schools, some of which would enroll students through a lottery, would appeal to families looking at Kansas City as a place to live. Strong neighborhood schools in a stable district seem a more reliable option.

As for the latter question, we’ve already written about independently run schools attracting students. But on June 26, the same Star editorial board heralded the school district partnership with Academie Lafayette, writing:

An unprecedented agreement with the Academie Lafayette charter school shows an encouraging willingness to be innovative.

Plans call for the district and Academie Lafayette to start up a high school that would offer the rigorous international baccalaureate program. It would be housed at the Southwest Early College Campus at 6512 Wornall Road, and could open as early as the fall of 2015…

The move puts children and families first and represents a radical departure from the often tense relationships among traditional districts and the charter schools that states have set up as alternative public options.

The Star at first decries the “experimental overhaul” of CEE-Trust, but just months later champions “an unprecedented” “radical departure,” which seems to amount to exactly the same thing. They write that this new option “puts children and families first,” but in fact it only does so for children and families at one school. Why not everyone in the district? What is it about the children and families at Academie Lafayette that warrants special attention?

The Nanny State Of Nannies: Missouri’s New Day Care Regulations


Being a working mom isn’t easy — I know this because I am one. If the dark circles under my eyes aren’t evidence enough, my bank statement certainly is — day care is expensive. According to one guide, the average working parent spends $600 a month on child care (in cities, that number is closer to $1,000, and in rural communities, it is $350).

The federal government provides financial assistance to eligible parents through the Missouri Child Care Assistance program, regardless of whether or not the day care facility of choice is licensed. According to the St. Louis Post-Dispatch, 4,000 unlicensed day cares receive $38 million in federal funding per year. In order to continue receiving federal subsidies, Missouri must comply with new standards that the U.S. Department of Health and Senior Services set.

To do so, Missouri Gov. Jay Nixon signed Missouri House Bill 1831. Unlicensed child care providers who receive federal or state funding will now be regulated. Some of these regulations are beneficial (tuberculosis testing), while others seem redundant, such as compliance with building codes. Though regulations aimed at keeping children safe are laudable (yes, if there are indeed fire code exemptions for some child care providers, that should be changed), they may have unintended cost consequences.

According to child care director Latonda Moody, new regulations will negatively affect urban communities, including increasing day care costs. The regulations, she says, will incentivize choosing unlicensed child care providers at lower costs with or without government subsidies.

“If day cares have to raise their rates, their kids will be with people who shouldn’t be watching kids — unlicensed homes, unlicensed churches — or they’ll flat out quit their jobs,” Moody said.

Licensing-averse David Stokes, Show-Me Institute’s director of local government policy, agrees with Latonda’s perspective on rising costs.

“Even if you believe that increased licensing would increase child safety — a belief that is unproven — the changes would have the unintended consequence of driving some marginal number of people toward other alternatives,” Stokes said.

Remember, “unlicensed” facilities in Missouri do have to meet some standards. If you increase costs, some providers will really start offering services in the background with no standards.

We all want safe day care facilities for our children. My child’s safety is at the forefront of any decision I make, but I also understand what it means to have a budget. If increased regulation and licensing cause parents to choose “off-the-grid” day care facilities, then this issue should be further examined.

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