March 6, 2015

What Teachers’ Unions Could Learn from Koufax and Drysdale

After the Los Angeles Dodgers won the 1965 World Series, Sandy Koufax and Don Drysdale, the two great stars of the Dodgers’ pitching staff, jointly negotiated their contracts for the next season. In effect, Koufax and Drysdale formed a pact—a voluntary mini-union, if you will—hiring a Hollywood lawyer to present their demands. Koufax ended up getting $125,000 and Drysdale $110,000, which was quite a bit of money for a Major League player back in 1966.

Sandy_Koufax_1961-248x300Reviewing the literature on collective bargaining recently reminded me of this little bit of baseball history. The Missouri National Education Association (MNEA), one of Missouri’s teachers’ unions, published a pamphlet arguing that successful collective bargaining requires an “exclusive representative” who negotiates a contract on behalf of all employees, whether or not all employees want to join the union. I pointed out in a recent post that a teachers’ association need not represent all of the teachers in a school district in order to effectively represent its members. The Koufax-Drysdale holdout illustrates this point.

DrysdaleIt would have been absurd for Koufax and Drysdale to force the rest of the team into their mini-union. More importantly, forcing everyone to accept representation from the same negotiator would be wrong. If another member of the Dodgers’ pitching staff would have refused representation from Koufax and Drysdale, it would have been his choice to make.

MNEA could learn a thing or two from the Koufax-Drysdale holdout. Rather than forcing every teacher in a school district to accept representation from their organization and negotiating a contract on behalf of all teachers, MNEA could seek to represent teachers in a members-only capacity. Members-only representation is where a union only represents its own members and neither forces nonmembers to pay fees nor forces them to accept a contract the union negotiates. Members-only agreements allow workers the freedom to choose whether or not to be represented by a union. They also give unions the freedom to withhold services from nonmembers.

The Koufax-Drysdale holdout is just one example suggesting that there are alternative ways for groups of employees to bargain with their employers. These alternatives can be as effective as exclusive representation—and they can be done in a way that fosters individual freedom.

March 5, 2015

Domes, Development, and Downtown Saint Louis

A couple weeks ago, I filmed a video in the Bottle District, just north of the Edward Jones Dome, in which I talked about how unlikely it is that a new football stadium will spark urban regeneration. The area north of the existing dome illustrates the fact that being near a football stadium is certainly no guarantee of development. The economic literature supports this observation.

Some, however, have criticized this characterization and claim that Washington Avenue developments (and downtown growth in general) are examples of regeneration that can be tied to a football stadium cum convention center.

The idea that the Edward Jones Dome has led to a rebirth of Saint Louis is mistaken for a number of reasons. First, the success of downtown can be overstated, and should be taken in context. Consider the changes in population density in Saint Louis City as a whole from 2000 to 2013:

stl-2000-2013v2

 

As the census data above illustrate, the city’s population density has been falling in general, as the city shrinks to a few core neighborhoods. While the areas within one mile of the Edward Jones Dome did add population from 2000 to 2013, the total magnitude of the increase is small (4,475 residents) and represents growth from a very small base. In 2010, Saint Louis had the 18th largest metro area population, but it had only the 88th greatest population within one mile of city hall.

Even if one sees the modest growth (in an abnormally under-populated downtown) as major progress, it is a stretch to attribute that growth to the Edward Jones Dome. While it was an expensive project ($280 million in 1992 dollars), development has not radiated from the Dome, as the empty Bottle District can attest. Most of the growth in population is further west along Washington Avenue, likely due to the extensive use of tax subsidies in the area, not the Dome. Incentives from 1999 to 2011 within one mile of the Dome are shown along with population density changes from 2000 to 2013 below:

ejd

As we have written before, pushing development downtown via subsidies and lopsided public investment has been the consistent strategy of city hall. All told, from 1999 to 2011, more than $472 million in tax credits have been awarded within a mile of the Edward Jones Dome. With a total population growth just under 4,500 residents, that’s more than $100,000 in tax credits per resident gained.

One would think that if a football stadium drew in residents, such subsidies would be unnecessary. There would be plenty of development north, south, east, and west of the stadium. Unfortunately, that’s not the case. And it’s not likely to be the case with a new riverfront stadium either, unless you consider a sea of parking to be development.

March 3, 2015

Nationwide Convention Business Declining

1024px-Las_Vegas_Paris_By_Night

There is little doubt that once the coming elections are over Kansas City leaders will start pushing for a convention hotel. The mayor has talked about it, and Star editorial writer Yael Abouhalkah champions it. When the GOP decided not to have their 2016 convention in Kansas City, those involved in the bid sought to blame a lack of hotel capacity.

According to CityLab, a think tank attached to The Atlantic Monthly magazine,

Over the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone. That boom hasn’t come cheap. In the last ten years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers.

“It’s a very, very, very competitive thing,” says Susan S. Gregg, managing editor of Association Conventions and Facilities magazine, one of a large number of trade publications devoted to the convention industry. “All these cities that are so competitive are constantly having to upgrade and expand and improve.”

So if Kansas City built a convention hotel it would just be the latest comer to an already crowded market. Worse off, the convention industry is shrinking. Again according to CityLab:

But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around. The actual number of conventions hosted in the U.S. has fallen over the last decade. Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.

Even Las Vegas, a leader in the industry, has yet to get back to its pre-recession peak. According to CalculatedRiskBlog, Vegas reports that

There were 39,668,221 visitors to Las Vegas in 2013, just below the record 39,727,022 visitors  in 2012.  The pre-recession high was 39,196,761 in 2007. Convention attendance was at 5,107,416 in 2013, still well below the record of 6,307,961 in 2006.
As the money spent on downtown Kansas City demonstrates, taxpayers need to be vigilant of big promises from developers and politicians. When it comes to convention hotels, the need is even greater.

February 26, 2015

The Great L.A. Gambit

chargers+raiders+stadium+rendering+9

The battle for the L.A. market is joined! According to NBCSanDiego, the Chargers are working with the Oakland Raiders. Their goal: a new stadium in the L.A. area (Carson, California, to be precise). Of course, their home cities can talk them out of it, for the right price.

It’s not shocking that teams other than the Rams might want to move to Los Angeles. L.A. is the country’s second largest media market, and with that comes a lot of TV money. However, still color me skeptical about the whole thing. I think (and I’m not alone) this is more of a ruse for the Chargers and the Raiders to extract sweetheart stadium deals from their home cities. The Chargers have been trying to get a workable proposal from San Diego for the past 14 years. They’ve even recently published some remarks to the San Diego stadium task force regarding what it wants in any new proposal. Needless to say, it’s quite a lot.

I think the Rams’ L.A. proposal is more serious. Why? Because of Stan Kroenke’s silence regarding the Rams’ latest proposal, or anything for that matter on what exactly he wants in order to stay in Saint Louis. The Chargers are giving San Diego an idea of what it is they’re looking for in a new stadium, Mr. Kroenke isn’t.

No matter the likelihood of the Chargers’ or the Rams’ proposals succeeding, I think that neither team should receive public subsidies. If billionaires want new stadiums, they should pay for them themselves. I don’t think taxpayers should get the bill, especially since there won’t be any economic return to them for doing so.

L.A. seems to be the place to go to for teams that can’t get a new stadium. Will policymakers be scared into throwing more money at teams in an attempt to prevent them from leaving? Maybe, but that doesn’t make it a good idea.

 

February 25, 2015

Changes to Macks Creek Law Making Their Way Through Missouri Legislature

Since the events in Ferguson last year, there has been an increasing push from across the political spectrum to do something about the way some Missouri municipalities use fines and fees to fund city government. Reports show that 20 municipalities in Saint Louis County, mostly clustered in North County, collect more than 20 percent of their revenue from fines and fees. Eight collect more than 30 percent, in possible violation of the less than rigorously enforced Macks Creek Law.

Munis_blog

Starting late last year, Missouri has finally started to see action to curtail the use of police forces as tax collectors. In August, the state launched an audit of four Saint Louis County municipalities, and in December the state attorney general sued 13 municipalities for failing to abide by Macks Creek Law.

Enforcement of the existing Macks Creek Law is long overdue, but now a new state bill (SB 5) greatly strengthens the law. The bill would, within two years, bring down the total amount of general revenue a city could receive from fines and fees to 10 percent, excluding smaller cities outside of populous counties like Saint Louis. The bill makes it clear that any amended traffic fines would count toward that percentage. Furthermore, fines collected on Missouri interstates in excess of 5 percent of general revenue would also not be able to be collected by municipalities. As for enforcement, the bill makes it clear that municipalities have to provide an annual addendum to the state auditor regarding its compliance with the measure. Failure to comply triggers a vote for municipal disincorporation.

Some local officials claim that this law hurts municipalities, since the fines protect public safety. This argument falls flat because revenue collected in excess of SB 5’s provisions is simply remitted to the state, which in turn gives that money to the school systems in the county of the municipality in question. If police in local cities need to fine people to protect health and safety, they can still do so. But SB 5 takes away the narrow financial interests of the city government.

SB 5 passed the Missouri Senate and has now reached the house.

Kansas City Repays Money It Says It Cannot Take

renaultAbout a year ago, on February 13, 2014, Kansas City Mayor Sly James told radio listeners that the city cannot take money from the airport.

[Fees] that are generated at the airport stay in the airport, to take care of the needs of the airport. . . . The money from the airport can’t be used for streets and sewers and none of that. . . . Airport money stays with the airport. If you don’t spend it on the airport, it doesn’t get spent.

He repeated it in his State of the City address in 2014 and again when his Airport Terminal Advisory Group issued their report. In that report, the advisory group repeated the claim, asserting on page 15,

Another common misperception was that funds or profits from the Aviation Department (legally organized and maintained as a Kansas City Enterprise Fund) could be used by the City of Kansas City to fund other municipal purposes unrelated to Airport operation.

The problem is that none of this is true. The city borrowed money from the airport in 2010. Then, during this mayor’s tenure, the city renegotiated the debt to extend the life of the loan to 2016.

Need more? Look no further than page 179 of the mayor’s own Submitted Budget for FY 2015-16, which includes $500,001 for “Aviation Loan Repayment.”

KC FY2015-16 SubBudget

The mayor may have his own opinion on the airport, but he cannot have his own facts, much less two sets of facts.

February 23, 2015

Why Cities Are Bad at Bargaining With Sports Teams

1024px-Edwardjonesexterior

Don’t look now, but there’s a land rush for the Los Angeles pro football market. Saint Louisans will already be familiar with Stan Kroenke’s plan to move the Rams to a stadium in Inglewood. But now the San Diego Chargers and Oakland Raiders, unhappy that their localities are not coughing up public funds for new stadiums, are also publicizing a plan to move to L.A.

Three teams will not be playing in the Los Angeles metropolitan area, but it allows all three franchises to simultaneously frighten local politicians into spending public dollars on a stadium. From an owner like Stan Kroenke’s point of view, it’s a win-win scenario. If the NFL allows him to move the Rams, his team will instantly gain $1.5 to $2.5 billion in value. And if he can’t (or never wanted to), Missouri has already planned to fund half the costs of a new stadium without any negotiation at all.

For Missourians, local officials have essentially locked residents into two possibilities: 1) approve around $400 million in public dollars for a new stadium, or 2) lose the Rams. Of course, the Rams might move regardless and Kroenke might demand more than $400 million to stay, but that’s what comes from committing the state to half the costs as the opening offer.

This situation is a perfect example of how poorly local officials fare when they bargain for taxpayers against billionaire-owned sports franchises. Where Stan Kroenke can credibly appear ready to leave the Saint Louis market without firm public subsidies, local officials declare how necessary the Rams are to the state. While Kroenke can strengthen his position and fail to negotiate, local officials need to be seen as trying their hardest to make sure Saint Louis is an “NFL city,” even when that means negotiating against themselves.

In essence, Stan Kroenke can look at this like a business negotiation. But local politicians are not spending their own money and have to be concerned about portraying an image of effectiveness and bolstering civic pride, making them poor bargaining agents for regional economies.

Even when there is no threat of a team leaving a lucrative market, pro teams can still reap public subsidies by threatening to move to different municipalities in the metro area. While it might not hurt the Chicago regional economy one bit if the Bears played in Rosemont (a nearby suburb), it would hurt the city’s tax revenue as recreation dollars flow to a different part of the region. Whether the team’s option is moving across the country or the county, pro franchises almost always have the best alternative to a negotiated agreement vis-à-vis local governments.

The best bargaining tool local officials can have is a skeptical voter base that understands that pro franchises do not create economic development or urban regeneration. Residents can vote against public dollars for entertainment venues. That constrains the local officials and sends a clear message to the NFL that Saint Louis is a great sports market, not a great mark.

February 21, 2015

Ditching City Hall: A Kansas City Development Story

Kansas City has a low population density for a city its size. How low? According to the Census Bureau, Kansas City had a population of around 2 million in 2010, making it the 29th largest city in the United States by metro population. However, in terms of population density, Kansas City had roughly 2,326 residents per square mile, making it the 129th densest city in the country, just ahead of Poughkeepsie, N.Y. (population 670,000).

In terms of population distribution, only around 216,000 residents live less than five miles from city hall, whereas the average city of Kansas City’s metro population has close to 400,000 residents living within the first five miles. Cincinnati, the 27th largest city by total metro population, has more than double the total population density of Kansas City within the first two miles outside of city hall, with just over 316,000 residents living within five miles of its city hall.

kc_dens

 

Kansas City’s low population near its city hall results in low population density at the city core. Similar to Saint Louis, Kansas City’s average population density is lower within two miles of its city hall than it is slightly further away from downtown, as the map below demonstrates:

map_kc_dens

Also like Saint Louis, the story of Kansas City’s development is actually one of decreasing density. Aside from the area right around city hall, Kansas City’s core (within eight miles of city hall) lost both population and population density on average between 2000 to 2010. Steady population growth only accrued in the city center and in low-density areas further than eight miles from city hall.

Map_kc_denchange

Many individual areas close to downtown are doing well. However, much like Saint Louis, those gains are outweighed by losses in other areas equidistant from Kansas City’s downtown. Furthermore, they are decreasing in precisely the areas where residents most rely on transit.

These types of population movements are not exclusive to Kansas City. City governments (especially Kansas City) often spend hundreds of millions adding amenities and subsidizing development downtown. And while the most visible parts of the city show modest improvement, structural problems in the city’s competitiveness and broad economic forces continue to erode population in traditionally poor, working-class, and middle-class neighborhoods.

Whether city hall can alter these trends is debatable. What is not contested is that, despite some increased density right downtown, Kansas City has a comparatively low population density that shows little evidence of rapid, or for that matter any, increase. When it comes to providing public services that depend on high densities to function efficiently, like transit, if the city plans under the pretense that it is as dense and centralized as, say, Cincinnati, it may end up providing worse service to the vast majority of residents, even as it favors certain sections of the city.

February 20, 2015

Shock and Audit: St. Joseph School District Out Tens of Millions Because of Staff “Stipends”

Missouri has seen its share of boondoggles. To name a few in recent years, Moberly was taken in on a $39 million sucralose scam that downgraded the city’s credit rating, left bondholders hanging, and resulted in jail time for one of the masterminds. In Kansas City, officials had to settle with a developer for millions over the failed Citadel redevelopment project, which saw criminal prosecutions of its own.

Now enters the St. Joseph School District. As reported by the St. Joseph News-Press:

“We went back about eight years and found there was over $25 million worth of stipends either not approved, unauthorized or improper. That $25 million worth of stipends is what we found to be problematic,” [State Auditor Tom Schweich] told the crowd inside the Oak Grove Elementary School commons area.

Since there was not full documentation going back further than 2001, Mr. Schweich added, that number could be in excess of $40 million paid out in stipends over that period.

“That is a startling amount of money,” he said, followed by a collective groan from the audience.

“Startling” is an understatement. The questionable stipends account for, on average, over $3 million each of the last eight years that could have gone toward substantive and proper investments in the education of St. Joseph’s children. Instead, according to the News-Press, it appears the money went to a wide array of cronyistic efforts,

including $45 for a Sam’s Club membership for [Superintendent Dr. Fred] Czerwonka, $1,500 for a painting for [Chief Operating Officer Rick] Hartigan’s office and $7,650 in free Internet service for 16 individuals, including an individual the district claimed they did not know.

In the auditor’s words, the stipends operated much like a “slush fund.” Throw in $3.4 million in overpayments from the state to the district because of inaccurate reporting and a swath of closed district meetings that should have been open to the public, and you have the makings of a full-blown scandal in northwest Missouri. It remains to be seen whether criminal action will be taken in the matter, but that seems to be very much on the table at this point.

Frequent readers of this blog know about our positions on transparency (for) and cronyism (against), so I won’t belabor those policy prescriptions in light of the district’s failures. The sheer magnitude of the district’s blackbox behavior is a better argument for vigilance and reform of state and local government than my words alone could offer.

It also goes without saying (though I’ll say it anyway) that “per pupil spending” remains a meaningless statistic, a fact emphasized here. How much you spend “on” a student doesn’t matter if the line items are $1,500 on administrators’ art, rather than $1,500 on the art department.

And yes, there will be many important story lines that will be worth talking about as the district’s actions are fully vetted, but one story line that has to remain front and center is how shameful it is that it took more than a decade for these problems to fully come to light—and the risk that St. Joseph’s scandal is just the canary in the coal mine statewide. That this school district was insulated so long from critical oversight makes me wonder whether similar behaviors might be taking place in one of the other 519 districts (!) in the state . . . and we simply don’t know it yet.

More to the point: If Missouri’s school districts are going to tell the state they have funding problems, then it’s fair for the state and the taxpayers to take a fresh look at how each district spends, or misspends, the state’s tax dollars. That is especially true in light of St. Joseph’s present troubles.

Education funding should be for the children, not for the districts, and it’s time district books were cracked open and thoroughly reviewed. For the state to deliver a quality education for our kids, it needs to hold every district accountable not only to stop problems like this from happening again, but also to ensure that they’re still not happening someplace else.

Teachers’ Union Gets Collective Bargaining Wrong

IMG_5945_Last week someone forwarded me this pamphlet from the Missouri National Education Association (MNEA) on collective bargaining for teachers. It’s a well-put-together brochure that explains the MNEA’s position on a pretty complicated issue. While I applaud the union for producing a primer on an area of public policy I think most people do not know a whole lot about, I take issue with a few of the points they make.

1. The MNEA’s pamphlet argues that the only way for teachers to successfully achieve an enforceable labor agreement is when one union acts as the exclusive representative of all the teachers subject to the labor agreement. This requirement is nowhere to be found in the constitution. It was not mentioned by the Missouri Supreme Court when it created collective bargaining rights for teachers in 2007. And the Missouri Supreme Court failed to mention the necessity of exclusive representation in any further decisions.

Furthermore, there are school districts in Missouri, such as Hillsboro and Warren (see below), where the school district has a labor agreement with multiple teachers’ unions. The fact that both the Missouri State Teachers Association and the MNEA already represent teachers in multiple multi-party labor agreements proves that a single exclusive representative is unnecessary.

2. The MNEA’s pamphlet suggests that collective bargaining through an exclusive representative is a democratic process that results in fair representation for all teachers subject to the labor agreement. Ordinarily, once a government union obtains the privilege of acting as the exclusive representative for employees, it never has to run for re-election. There’s hardly anything democratic about a representative winning a lifetime appointment after a one-time election.

Worse still, when one union wins the privilege to act as the exclusive representative for a group of government employees, other employee groups often lose out. We’ve seen this with both teachers and police.

3. The pamphlet fails to mention the history of teacher collective bargaining in Missouri. Instead, it simply alludes to a couple of Missouri Supreme Court cases in the late 2000s. In fact, the Missouri Supreme Court imposed collective bargaining on teachers in those cases. Prior to 2007, the courts had long held that the Missouri Constitution did not give government unions the right to collectively bargain with the government. Indeed, when collective bargaining language was added to the Missouri Constitution, collective bargaining with the government was seen as impossible and potentially unconstitutional.

Teachers’ unions, like the MNEA, may now collectively bargain with the government. However, this is not some long-established right. The court created teacher collective bargaining law only eight years ago. Whether you consider this an activist decision or the product of a living constitution, the law is still in flux. There is no reason for the MNEA to assume that principles used in the private sector, such as exclusive representation, have a necessary place in collective bargaining with the government.

February 18, 2015

Ditching City Hall: A Saint Louis Development Story

We’ve said it on this blog many times before: Saint Louis has low population density. The population is widely spread among multiple counties in Missouri and Illinois, with a much-reduced core city and growing population and employment centers far away from downtown.

We have shown census tracts representing Saint Louis’ population distribution before. However, a different way to view the data is to consider metro population within certain distances from a central point (in this case city hall), allowing easier city-to-city comparisons. When we compare Saint Louis to cities of similar population, we observe that the city has abnormally low population density in its core. According to 2010 Census figures, Saint Louis had the 18th largest MSA population (2,812,896), but only the 31st largest population within 10 miles of city hall. For example, compared to Baltimore, with a slightly smaller population than Saint Louis (2,710,489 in 2010), Saint Louis has a larger metro area but much lower densities close to the city center.

Presentation1

In fact, the area within a mile of the Saint Louis city hall has a lower population density (5,020 per square mile) than most of the rest of the city. This is atypical among peer cities, which have their highest densities downtown (averaging 9,000 per square mile). The map below shows population density in Saint Louis in concentric one-mile rings radiating from city hall:

Distance_from_city_hall_final

In addition, contrary to the narrative of a rebounding core, the city’s population density fell most in Saint Louis City from 2000 to 2010, as the map below demonstrates:

Pecentage change Pop_dens

Population did increase in certain neighborhoods in the central corridor and in the heart of downtown Saint Louis. And the growth downtown is somewhat misleading because of the incredibly low base it grew from: in 2000, the population density less than one mile from the courthouse was a mere 3,870 persons per square mile. And in the city as a whole, notable neighborhood gains are more than made up for by loses in areas to the north, south, and east of those improving neighborhoods. Looking at the region as a whole, outside of the heart of downtown, population density only showed steady growth in areas further than 25 miles away from city hall.

Saint Louis’ low population density and abnormal population distribution has important implications for the provision of public services. For example, when the type of service provision relies on density (such as with transit), it may be better for the city to model its service on other cities with similar densities rather than ones with similar MSA population totals. In addition, the pretense that Saint Louis’ downtown is (or should be) the dense economic engine of the region that drives much of regional planning may be inappropriate and result in misaligned public services.

However, the abnormal situation of Saint Louis’ downtown is also a reason to hope. Other cities show that there is a market for downtown living, and perhaps if the officials focus on safety and service instead of big-bang projects, organic growth will take hold. Or maybe they’ll build a new football stadium instead.

February 16, 2015

Balance Through Transparency – Part 3

I previously wrote about the problems with overly adversarial government labor relations. This wasn’t to say that a cozy relationship between government and government unions is always a good thing either.

Fox-HenAnother firefighter I spoke with, who wished to remain anonymous, seemed to think the situation in the Saint Louis region was much worse. He told me that at more than one fire protection district the board routinely asks shop stewards for permission to make personnel decisions. According to him, the union packs fire district boards and management positions with people who answer to the union, which, in effect, gives the union control over the management.

Undoubtedly, the union representing firefighters in Saint Louis County, IAFF Local 2665, has another perspective to contribute. It has not yet responded to any of my requests for comment, but I believe there are multiple sides to this story, and I look forward to hearing from them.

It can be tricky to find the right balance in government labor relations. On the one hand, industrial strife leaves citizens dependent on, and paying for, shoddy government services. On the other hand, too cozy a relationship between a government and a government union yields a “fox in the henhouse” situation, where taxpayers get fleeced by a private entity with exclusive control of a government entity. The trick is to find balance. And the best way to achieve balance is to open up the process to the public and let Brandeis’s policeman sort things out.

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