Andrew Coulson writes at Cato@Liberty about the regulation that invariably accompanies public education funding. He predicts that regulation will catch up with charter schools and halt their progress. He sums up his opinion thus:

If you want to know what charter schools will look like in a generation or so, just look at the public school status quo.

I agree that money brings state directives with it (which is why I’m surprised by this call for state funding of private schools on the Panama City Renaissance School blog) but I think charters will have a lasting effect on the U.S. education market. By the time new regulations are written, charters will have changed people’s expectations about what schools are like, and there won’t be any going back to the one-size-fits-all schoolhouse.

In districts where charter and traditional public schools compete, parents are becoming comfortable with the idea that they don’t have to send their kids to a school based on geography. They can choose a school based on academic specialty or other preferences. (And in cases where parents do want to send their children to the closest school, that school could turn out to be a charter.) Charter school parents also know that if the school disappoints them, they can go right back to the traditional district.

As choices flourish, I think we’ll see children learning from different kinds of schools in the same day. A child might attend a charter school, take an online course through a traditional district in the afternoon, and then head to a private tutoring center for homework help.

Unions may influence contracts at charter schools, but they won’t change the fact that parents choose charters, combine them with other options, and can also choose to leave — characteristics of charters that are just as important as the structure of their contracts. And online charter schools are so different from brick-and-mortar schools that traditional teachers union procedures won’t always be applicable to them. Unions won’t be able to turn online schools into traditional ones no matter how much they tinker with contracts, which is why they’d like to shut down the online schools in Oregon.

The Federal Transit Administration is designating $7 million for Metro operations in St. Louis, so it can increase bus services that were cut because of the lack of funding.

This federal aid is only a temporary fix for the costly Metro system. Metro has a government-subsidized monopoly that is siphoning taxpayer money: In its 2008 annual report, the Metro system earned $63.5 million in revenue while expending $307 million — operating at a $243.4 million loss, about 4/5 of its cost.

Public transit provides a great service to cities and urban areas, and usually cannot be operated on a cost level. However, there are ways to make transit more cost-effective. Wendell Cox’s study of Denver transit shows a great example of a more efficient transit system that used private competition. By having private companies bid for subsidies from the government, the government saved significantly. (Denver saved over $100 million yearly after 10 years, about 40 percent of the initial cost.)

Instead of applying federal Band-Aids that do not fix the problem, we should apply the principles of competition. Federal aid and tax increases (like the upcoming vote in 2010) are only temporary solutions.

To read more about Show-Me Institute’s different takes on the Metro system, look at David Stokes’ testimony to Metro’s Board of Commissioners and these op-ed articles.

When you introduce choice and competition into the education market, people with a vested interest in traditional districts don’t take it lying down. (I’m not referring to teachers’ unions alone; almost anyone who can gain from waste and mismanagement, including local farmers, will fight against reforms tooth and nail.)

With that in mind, I’m following events in Oregon to see whether choice will survive there. Portland is ending its practice of 30 years that allowed families to choose public schools outside their neighborhoods. Students will still be able to attend magnet schools, of which there are 15 in total, counting both elementary and high schools. (Two new magnet schools are set to open under the district plan.)

I can’t tell how the changes will affect language immersion programs. These programs take place in regular district schools, but draw students from throughout Portland. It would be great if they could be converted to magnets. However, a few extra magnets won’t offset all the choices that will disappear when intradistrict enrollment ends.

The other education policy debate playing out in Oregon involves online charter schools. Both the Oregon House and Senate have approved a moratorium on online schools. The bills would require that no new online schools open this year, and that enrollment in the existing ones has to stay the same. The ostensible reason for this moratorium is to give regulators time to think about online schools, but how would a few more students signing up prevent regulators from doing that? And, given that most states have online schools (through charters, districts, or state departments of education) it doesn’t make sense to say that Oregonians are rushing into uncharted territory and must be stopped for their own good.

I look forward to finding out how Oregonians react to these attempts to restrict their educational options.

We have two pieces published in the Springfield News-Leader today. First, Dr. Joseph Haslag has an op-ed about why Springfield should transition its pension fund to a defined contribution plan instead of its current defined benefit plan. While most private entities have already moved to the former, most public entities still maintain the latter, and in Springfield it has resulted in an enormous funding gap.

Also, the News-Leader published a letter to the editor by Dave Roland, about property rights and eminent domain.

Both pieces have generated a good deal of commentary online — most worthwhile, some less so.

Jim Winkelmann — who was mentioned recently on this blog for his pithy letter to the Post-Dispatch arguing against the Clayton smoking ban — has had another letter to the editor printed in that paper. This one addresses the contentious topic of bonuses for Missouri public pension managers.

I wrote about this topic before, contending that criticism of the bonuses didn’t make sense given that the fund was (at least on paper) not losing value as fast as the rest of the market. I am now reconsidering, given Winkelmann’s clever point that the MOSERS employees were the ones assigning value to the investments that they reported as having lost less value than the market.

Here is a relevant quotes from the letter:

The MOSERS website reports that its investment policy is to have 25% of the pension portfolio invested in “alternative investments” in the published annual report they are referred to as “limited partnerships”. Even though the balance sheet in the annual report uses the term “fair market value” assigned to these limited partnerships by definition there is no ready market for these investments. [...]

With no market for these limited partnerships where do these fair market valuations come from?

I ran into Winkelmann at lunch yesterday, and he commented to me that the problem is similar to that of assigning “market value” to a house appreciating or depreciating … before it’s sold. The fact is that the true market value of a thing is never the amount that you expect to receive — instead, it is the amount that somebody will actually pay.

I don’t agree with the argument that the MOSERS employees’ bonuses were unearned just because the plan lost money. However, the more subtle yet very relevant point that the MOSERS valuation was totally subjective, and assigned by the very people who stood to gain by inflating the number, smacks of perverse incentives.

Caitlin Hartsell’s recent blog entry discusses another recent news piece, this one in the Springfield News-Leader, about that lawyer who is suing small Missouri towns that he holds to be charging illegally high sales taxes. I already talked about this in terms of theory, so I thought I’d use this opportunity to discuss the issue a bit more practically.

Here’s what I think should happen:

Officials in the towns that are charging these contested additional sales taxes believe they are in the right, because they received a letter from the Missouri Department of Revenue telling them what they could charge. The law, in my thoroughly layman interpretation, is ambiguous. It would be wonderful if we had an unambiguous state law that would prevent the present conflict between small towns’ desire to tax sales above 1.5 percent and the threat of expensive judgments/settlements.

In the absence of that, I question whether sales tax rates above 1.5% is actually needed in these towns. Giving them the benefit of the doubt, they want tax revenues in order to provide needed services to their communities. Perhaps a better solution would be to reduce the number of taxing districts, so that the benefits of economies of scale can be realized. This possibility, which is one of the insightful prescriptions of David Stokes’ recent policy study of government in Missouri, could work as an alternative to higher sales tax rates.

At present, I am of two minds about the lawsuits. On one hand, lowering sales tax rates benefits consumers immensely. On the other, I worry about which avenues for funding these towns might undertake if the sales tax rug were suddenly pulled out from under them. I am not optimistic that cutting spending will be considered as an option.

A Farmington  lawyer, Tom Burcham, is suing southern Missouri towns that “tax stack” — a practice by which municipalities circumvent the state-mandated limit of an additional 1.5 percent in sales taxes by adding additional increases through referendum.

In the suits, Burcham and his clients seek damages and attorney fees, as well as for “illegal taxes” to be returned to the residents. He has won suits in Purdy and Iberia already, and has cases pending in six other cities.

While I admire the quest to lower taxes, I am unsure whether I agree with this particular method.

First, any money that Burcham wins in damages — which amounted to $20,000 plus attorney fees from Iberia, population 620 — comes from the town’s coffers. (He did donate to charity the money he has received so far, so one can’t accuse him of a get-rich-quick scheme, but, still, high damage awards aren’t easily accommodated by small town budgets.)

Although it would be a nice gesture, agitating for the return of the disputed tax collections to citizens is infeasible — according to a Missouri Municipal League lobbyist, at least, who estimated such rulings would bankrupt the towns. Burcham has not yet convinced a town to refund the taxpayers directly, but he is still trying.

Another factor is that these projects were voted on in referendum by the public, and mainly fund projects like improved roads and fire stations. If a particular town decides to increase sales taxes to pay for a public works project, should the state be able to cap that rate? This becomes more complicated when one considers that the towns in question were following a 1999 Department of Revenue interpretation of the existing statutes — an interpretation with which Burcham disagrees.

Is this a laudable crusade for lower taxes, or a strategy that ultimately harms the very people it intends to help? Any thoughts?

Joe Knodell, opining in the Springfield News-Leader today, is hopeful about the progress of education reform in the state. Knodell, a former superintendent and current consultant for the Missouri Education Reform Roundtable Foundation, cites the recently passed Missouri Senate Bill 291 as a harbinger of future, serious discussion and action on education reform in Missouri.

S.B. 291 calls for the Joint Committee on Education to study open enrollment and how it would affect students. Were Missouri to adopt a system of open enrollment, families would no longer be confined to schools within their district boundaries and would be permitted to apply to the school districts of their choice. Knodell argues, and I agree, that students deserve schooling based not on arbitrary geographical lines but on where students would be best served. Open enrollment would introduce much-needed competition into the educational system, as schools and their districts fight to attract and retain students. When schools compete, students win.

S.B. 291 contains other stipulations, as well, ranging from support of charter schools to increased school transparency, as well as establishing virtual schools and a parents’ bill of rights — issues that the Show Me Institute has discussed since its inception. It’s heartening to see Missouri shift toward more and more measures that are rooted in competition and choice.

Combest pointed out this morning that the Post-Dispatch has run an article about the state auditor’s concern about the city of St. Louis paying for a set of nurses to serve three dozen Catholic and Lutheran schools. The audit revealed that this practice has been going on for about 20 years, and that it is part of a “‘memorandum of understanding’ between the Archdiocese of St. Louis and the Lutheran Elementary School Association.” It appears that this sort of public support is not being offered to any of the other private schools, and that the public schools have to pay for nursing services out of their own operating budgets. While it might be helpful to have some additional information regarding this program, it appears to be a plain violation of the Missouri Constitution as well as a potential violation of the First Amendment’s Establishment Clause.

Article I, section 7, of the Missouri Constitution reads:

[N]o money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, sect, or denomination of religion [...] and that no preference shall be given to nor any discrimination made against any church, sect or creed of religion, or any form of religious faith or worship.

Article IX, section 8, says:

Neither the general assembly, nor any county, city, town, township, school district or other municipal corporation, shall ever make an appropriation or pay from any public fund whatever, anything in aid of any religious creed, church or sectarian purpose, or to help to support or sustain any private or public school, academy, seminary, college, university, or other institution of learning controlled by any religious creed, church, or sectarian denomination whatever[.]

To be perfectly clear, these constitutional provisions are problematic in their design, because they were initially intended to discriminate against Catholics who, unhappy that their tax dollars were being devoted to public schools that promoted Protestantism and denigrated Catholicism, claimed it was only fair that they should get to use public funds to create their own schools. Incensed at the prospect of publicly funded Catholic schools, many states — including Missouri — adopted constitutional measures that would prohibit such a possibility. Thus, the basis for these provisions was religious discrimination, and one of the open questions in constitutional law is whether a state constitutional provision rooted in religious discrimination might itself be invalidated under the First Amendment.

But, as time has passed (and particularly as public schools abandoned the prayer, hymn-singing, and Bible readings that had previously been common), Missouri’s constitutional requirements have come to stand first for a more general principle that religious groups (and particularly religious schools) should never be given any special favors. Some Missouri Supreme Court cases suggest that the constitutional problem might evaporate if the city were to adopt a more general program that provided nursing services to all schools and their students, although Missouri courts have previously been willing to use these constitutional sections to eliminate even aid programs that made no distinction between public and private schools.

But, if the city of St. Louis has forged a special deal to provide Catholic and Lutheran schools — and only Catholic and Lutheran schools — with nursing support, as the auditor’s report suggests, the city would certainly seem to be impermissibly playing favorites among religious groups.

From this article in the L.A. Times, it looks like Green Dot has somewhat improved a troubled California high school. If progress continues, I’m sure other cities will consider handing over problematic schools to charters.

Charter management can help existing schools by bringing in new staff and updating policies. But, ideally, charter schools should start from scratch. That way, charters are free to try radically new approaches. A charter that takes over a high school has to make do with tweaking a flawed model.

Besides, charters that move into existing schools don’t have to advertise to parents like those that are built from the ground up. That may be easier from the charter’s point of view; unfortunately, it doesn’t spur competition between schools or match students to schools based on their interests and learning styles. Green Dot has divided the Los Angeles high school into several academies in the same building, but that’s a far cry from a competitive market.

Despite voting down a similar proposition two and a half years ago, Kirkwood residents will again in November face a decision of whether to ban smoking in public places, the Post-Dispatch reports.

Opposition to the ban is summed up well within the article:

Mike Duffy, a restaurant owner and president of the Kirkwood restaurant association, declared the ban “is not good for the citizens of Kirkwood. Citizens vote with their money to go to restaurants,” he said. “If they don’t want to go to a place (that allows smoking), they will go someplace else.”

To read previous Show-Me Institute discussions about smoking bans, look at these blog posts, or Show-Me Institute policy analyst Dave Roland’s testimony about a similar ban before the Clayton City Council.

I generally prefer the actions of a representative republic over those of a direct democracy. Yesterday’s Kansas City Star had a sound article about the recently failed mayoral recall, and then dove into the larger questions of referendums, petitions, and recalls. The article explains:

Direct democracy — the ability of citizens to enact and overturn laws and representatives through initiative, referendum and recall petitions — has been a fixture of Missouri politics for a century and is deeply embedded in Kansas City’s charter, its governing document.

St. Louis County’s charter is pretty open to these things as well. St. Louis city’s rules are crazy, though, if you remember the spat of recall elections a few years back during which recalls were being used as nothing more than a weapon to continue fighting a losing campaign. (Not every recall during that period was unjustified, though, in my opinion.)

Perhaps I am being inconsistent, because I readily admit I love the Hancock Amendment and its requirements for voting on most tax increases. But for the most part, I support allowing elected officials to make decisions and then having the voters judge those decisions at the next election. Recalls should be saved for misconduct, and time spent working for initiative petitions would be better spent, in my opinion, convincing legislators to introduce and support those same proposals. If that fails, convince new people to run for office on a platform of those proposals. If that fails, maybe you need to admit that nobody likes your stupid idea.

Some of my erstwhile allies in the article do a pretty good job of changing my own opinion, however:

“I think the legislative process at its best is far superior to the initiative process,” said Bob Stern of the Center for Governmental Studies in Los Angeles, a group proposing major reforms in the state’s initiative and referendum procedures.

In a recent study — which refers to voters as government’s fourth branch — Stern’s group found that initiative petitions “are frequently too long and complex. … Voters frequently struggle to make informed decisions.”

With friends like these … I guess you have to really love government to envision it “acting at its best,” and I bet legislators “struggle to make informed decisions,” too. How many officials actually read the stimulus bill? And voters are the dumb ones?

What I don’t like is the ease of putting new laws on the ballot, like they have in California. New laws should be hard to enact, with checks and balances, not just put on the ballot because some group has enough funding to pay signature gatherers. (A practice that should be legal, by the way, just not encouraged.)

While I prefer letting legislators do, or better yet, not do, their jobs, I agree it is important to keep the options of petitions, recalls, etc. available. I think their mere presence has a positive impact, especially in controlling the most unethical behaviors. Some times the petition process has been crazy, and sometimes it has been outstanding. I am sure it has a higher batting average than legislators themselves, but I still think it should be used as a check and balance, not the primary way we make decisions.