March 20, 2015

New Video on Public Financing for NFL Stadiums

Recently, Reason released a video on public financing for stadiums. In it, they show how sports stadiums are bad public investments from an economic standpoint, which we have reported here many times. Check out the video and see the answer to the question: “Even though study after study has shown little to no economic benefit, why do cities continue to be so stupid when comes do building stadiums?”

Happy Sunshine Week!

cloud-143152_640

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

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

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

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

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

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

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

 

March 19, 2015

Righting the Wrongs of the Power & Light District

PowerLight_KCPLOne of the reasons Kansas City is on the hook financially for so much on the Power & Light District is its low assessment value. Back in 2009, Cordish, the project developer argued that the project’s value should be $12.3 million. Jackson County disagreed, and Cordish sued. According to Steve Vockrodt, then of the Kansas City Business Journal:

That [Cordish] valuation, which equates to an average of about $24 a square foot, is a far cry from Jackson County’s appraised value of $160 million, roughly $270 a square foot, which is what county officials say the district is worth for 2009, including Cosentino’s Downtown Gourmet Market.

“They said that $12 million was their number for 500,000 square feet when everything is completed,” said Jeph BurroughsScanlon, a Jackson County spokesman.

“We want to make sure we’re right on it,” said Curtis Koons, director of the county’s assessment department. “We just don’t feel $24 on a brand-new commercial venture is realistic.”

Vockrodt’s story went on to include a this statement on the City’s exposure to debt:

Kansas City Councilman Ed Ford said he was told by city attorneys that the Power & Light District’s dispute would not put the city on the hook financially.

“It looks like the city is not going to have a dog in the hunt on that,” Ford said.

Ford may have been talking about the lawsuit, but of course the city did have a dog in the hunt on the valuation. A low property tax assessment meant there would be less money required of Cordish (as taxes are not voluntary) to keep and apply toward their bond payments. And while, in a normal world, any bond shortfalls would be made up by the people making money off the project, Cordish is not a normal company and Kansas City is not a normal world.

In May 2015, Jackson County will again assess the value of the Power & Light District. Now that the facilities have been improved, will their value jump? After all, according to The Kansas City Star, things are booming:

[Cordish's executive director of the Power & Light District Nick] Benjamin thinks district revenues are likely to continue growing, as the district has finally reached 94 percent occupancy. More than 50 tenants, including 22 locally owned tenants, have 450,000 square feet of retail space leased.

If Jackson County argued in 2009 that the Power & Light District should be valued at $160 million, the valuation should be much higher now, given the high occupancy rates. A higher assessment will mean more taxes paid by Cordish. And while Cordish will get to keep these taxes, they will in effect be paying more toward their own bond debt, meaning a lower taxpayer subsidy from City Hall. Even a large increase in the valuation for Power & Light won’t result in a big savings for Kansas City, but it would be something.

It’s too late for city planners, political leaders or their attorneys to be considered geniuses for the disastrous Power & Light deal. But an aggressive effort to make sure Cordish is paying it’s fair share of property taxes to Jackson County would at least suggest that Kansas City leaders truly have learned a lesson.

School Choice and Bullying

‘If I went here, I would have enjoyed learning,’ said a prospective parent at the New City School in the north Central West End.

The response isn’t unusual. New City is a beacon of creativity in education. The private school is known for its academic prowess and unconventional atmosphere, where students call teachers by first names and climb to the tops of tree-house-like structures to use classroom computers.

new city

Of all the fascinating elements that make New City one of the top schools in Saint Louis, the most interesting feature is its students.

‘There’s no bullying here,’ said one of the sixth graders I interviewed. Several other students went on to explain that diversity education is taught early on—individuality isn’t just tolerated, it’s celebrated. In a time when bullying has progressed from the playground to the internet, the perspectives of New City School students are rare.

According to one study, bullying victims are two to nine times more likely to commit suicide, the third leading cause of death among young people.

Since bullying often occurs outside school property after hours, public school administrators can do little. Families who cannot afford to move or pay private school tuition are left without options.  This is close to the situation Las Vegas mother Natika Bird found herself in before her daughter took her own life in early March.

“She had been getting bullied for a long time, to the point where the happy, bubbly girl that I knew changed,” she said. “They hacked into her email and they created a Facebook page and they massacred her.”

Bird said she had discussed the situation with Clark County School District police.

“The school police told me because it was not on school campus and after hours, I needed to call the regular police. The regular police told me, ‘You need to call the school police,’” Bird said.

Public schools have often addressed bullying through prevention campaigns and anti-bullying contracts, but sometimes, parents need other options. Bird’s daughter’s public school was not at fault for her death, but there should be a safety net for parents who have sought help and were told to look elsewhere.

School choice is that safety net. Though, New City School prides itself in attaining socioeconomic diversity by offering financial aid, choice is still limited for many children.

That all children should have the opportunity to enjoy learning without the fear of bullying is just another reason why Missouri should expand school choice.

March 18, 2015

In Support of An Outside Audit of Missouri’s Medicaid Program

HealthcareLast month we wrote about a state audit of the St. Joseph School District that turned up tens of millions of dollars in questionable stipends, given out over the course of a decade. Good government requires constant vigilance over how our officials spend taxpayer money; events in St. Joe underline that fact.

But the state’s school districts aren’t the only state programs that deserve a closer look from Missourians. So, too, does the state’s Medicaid program, and neighboring state Illinois serves as a good example. From the Wall Street Journal late last year:

The federal government requires states to do an annual audit of the Medicaid rolls to ensure that participants are eligible, but in most states few people are removed. Ms. Bellock wanted to use an outside, private firm, Virginia-based Maximus, to audit [Illinois's] 1.3 million Medicaid case files—which represents about 2.7 million individuals. The company has more extensive databases than the state and would likely identify more ineligible Medicaid beneficiaries.

Maximus recommended removing 249,912 cases by the end of February 2014, according to the state. By law, state employees had to review the recommendations and decide if cancellation is appropriate. The state removed 148,283 cases—about 234,000 individuals, as many cases represent families—from the Medicaid rolls.

Many of the removals suggested in Illinois were probably the product of expected churns in incomes; as people earn a little more money, they may no longer qualify for the Medicaid program. There’s nothing necessarily nefarious about that.

But whether people receiving benefits improperly are doing so because their incomes have recently changed or because they’re unambiguously defrauding the system, that doesn’t change the fact that the money has been misspent — and misspent needlessly. No one knows for sure if the same kind of waste that happened in Illinois is going on in Missouri, but that’s sort of the point; like in the St. Joseph School District and Illinois, the only way we can prevent future problems is with vigilance today.

Wasted money hurts the people Missouri is trying to help by siphoning off limited state resources, and that’s why Illinois’s third party eligibility verification framework, which appears to have effectively identified thousands of ineligible beneficiaries in the Land of Lincoln, is one Missouri may want to consider. Our state’s auditors deserve our immense appreciation for the work they do currently, but they don’t always have the resources or data to do some of the analyses some of these private vendors can do. As a supplement to our auditors’ work — and mark your calendar, because I don’t say this often — the state should think about following Illinois’s lead.

All Right Class, It’s Time For Your Pension Lesson

Money

At the Show-Me Institute we have written a number of times about Khan Academy, the online resource that seeks to provide a “free, world-class education for anyone, anywhere.” We have discussed how teachers are using Khan Academy to “flip the classroom.” Instead of having students do homework at home and lecturing at school, they have students watch Khan Academy videos at home and use class time to practice the skills they are learning.

So, I’m going to take a page from the ‘ol flipped-classroom routine and assign you a homework assignment – pensions. Sal Khan has created two videos that offer a great explanation of how defined-benefit pension plans work. In this first video, he shows how these plans can become dramatically underfunded.

In the second video, he uses the Illinois boondoggle of a pension system to provide a real world example. One of the amazing things he shows is that pension payments will soon surpass K-12 education funding.

Watch these videos to learn more about the pitfalls of defined-benefit pension systems. Then, connect with us in the comments section, on Twitter, or on Facebook to discuss more.

March 16, 2015

Florida Story Shows Risk of Conflating Medicaid Waivers With “Block Grants”

HealthcareEarlier this week I was asked by the Kansas City Star for my thoughts on a Medicaid expansion proposal being marketed as a “block grant” that’s currently circulating in the Missouri Senate. The problem? It’s not a block grant but rather a waiver, and I noted that as structured, the proposal could “guarantee Obamacare’s expansion but would not guarantee key reforms.”

The concern with waivers (Medicaid and otherwise) is their time limitations. When a waiver’s term expires, it’s up to the Federal government to determine whether that waiver will continue — and if the waiver continues, under what conditions.

Enter Florida.

The CMS will not renew a Medicaid waiver in Florida expiring at the end of June that provides more than $1 billion a year to help the state’s hospitals with uncompensated-care costs for low-income and uninsured patients. That may put additional pressure on Florida Republican leaders to consider expanding Medicaid to low-income adults under the Affordable Care Act.

Since 2005, Florida has had a Section 1115 Medicaid waiver establishing a low-income funding pool to aid the state’s hospitals. The state has received between $1 billion and $2 billion annually to support safety net providers.

To have genuine block grant Medicaid reform at the state level, the Medicaid laws would first have to change at the Federal level. Short of that, states and their Medicaid programs will always be subject to having the policy rug pulled out from under them. Florida is seeing this firsthand with a waiver that existed long before Obamacare passed but whose continued existence may hinge on implementation of Obamacare’s Medicaid expansion.

It’s good to hear politicians at least give lip service to a substantive change to Medicaid, but if little more than lip service is all that can be guaranteed in the Medicaid reform discussion, then Missouri taxpayer: beware. A waiver may look like a carrot, but it can easily be used like a stick. Just ask Florida.

Until flexibility in state reform is enshrined in Federal law with unambiguous block granting language, enduring and dynamic Medicaid reforms will be little more than a policy mirage. Unfortunately, a request for a waiver under Obamacare simply doesn’t cut it if long-term, state-based and patient-centered Medicaid reform is going to ever be a reality in the Show-Me State.

October 21, 2014

Chart Correction on Show-Me Institute Essay

An astute reader brought our attention to an error in one of our charts. The chart in question was in the foreword that I co-wrote with David Stokes to Professor Howard Wall’s essay discussing the negative effects of earnings taxes on city population and employment growth. There was an error in calculating one of the averages. The corrected chart is below:

Wall Chart 1e

Instead of losing population between 1990-2000, the cities without an earnings tax gained population over that period. This new result strengthens Professor Wall’s conclusion that earnings taxes negatively impact a city’s growth.

July 7, 2014

St. Louis Taxicab Regulations Needlessly Stifle Innovation

Auto IconIn a recent editorial in the Post-Dispatch, the co-owner of a St. Louis area cab company cautions us to remember, when talking about Lyft and Uber, that cab companies can innovate too. While this claim is surely true, the editorial goes on to argue that the heavy regulation imposed on the taxicab market in St. Louis is justified because it protects and benefits customers. These claims are not backed by the evidence.

Opponents of taxicab regulation argue that regulatory bodies like the St. Louis Taxicab Commission (MTC) stifle innovation, but that does not mean they stamp it out completely. Some St. Louis cab companies have begun using apps and other technology to improve service. But small, bureaucratically approved technological improvements do not make the St. Louis taxicab industry innovation friendly.  The MTC controls how many cabs there are, how they operate, and what they charge. That leaves little room for new business models and little incentive for innovative practices.

The editorial itself talks about how innovative cab companies can be while openly bashing innovative pricing practices, like peak pricing, tacitly supporting regulations to stop them.  The author states:

“Cab fares are public and never change. Cab drivers don’t jack up prices in times of high demand.”

Peak pricing for cabs makes perfect sense for both companies and customers. It incentivizes more cabs to drive during times of peak demand and pushes customers to travel during less busy times. That better matches cab supply with demand. And, as many St. Louisans learned on New Year’s Eve, an expensive cab that will give you a ride is better than a cheap cab that decided to stay home. A shallow understanding of innovation and market forces runs throughout the editorial and likely explains why so few St. Louisans can rely on prompt taxi service.

If we believe the author, taxi regulations are all about safety. Suspending the issuance of new taxi permits? All about safety. Requiring that prospective taxi companies provide proof that there’s enough demand for more taxis? All about safety. Requiring a commercial address with 24/7 operations? All about safety. Set pricing? Safety. Barring airport cabs from serving the city? Safety. Dress code? Of course, safety.

The fact is that most of the MTC’s regulations have nothing to do with safety and everything to do with protecting existing cab companies. And while there’s little doubt that innovative taxi entrepreneurs would be able to compete with Lyft or Uber absent the MTC, why bother when you can keep competition out under the guise of protecting the consumer?

July 1, 2014

What’s in a name?

Normandy rose

That which we call an unaccredited school by any other name would perform as well.  William Shakespeare spoke of roses, but his four-century-old logic applies to Normandy Schools Collaborative’s “nonaccredited” status.  The Missouri State Board of Education’s decision to give Normandy a “nonaccredited status” allowed the Board to take control of operations.  It essentially gave the district a do-over, but left many with questions concerning the legality of subsequent decisions:

  1. Can the Missouri State School Board set a tuition ceiling?
  2. Can receiving schools reject transfer students?
  3. Can Normandy prohibit new students from transferring?

These questions stem from the transfer law’s wording regarding unaccredited schools.   The law refers to a “district not accredited”.  According to the state board, Normandy’s new unclassified status of “nonaccredited” is somehow different than “unaccredited” (even though, non is Latin for not, non making this up).  Because of the new classification, schools like Francis Howell decided not to allow transfer students to return.   Using the same rationale, Normandy Schools Collaborative might not receive extra money from the 2015 state budget.  The additional funding is earmarked for intensive reading instruction and pre-K programs, programs meant to help low-performing, unaccredited schools like Normandy.

Normandy has a history of low-performance—low-achievement, high drop-out rates, and low college readiness.  If the goal of the state Board of Education is to give Normandy students access to high-performing, quality schools, calling the district by another name is not the answer.

June 30, 2014

Don’t Forget the Streetcar is Bad Policy

The $500 million Kansas City streetcar expansion plan is back in the news. With the August 5th election on the streetcar’s proposed transportation development district drawing near, media outlets have exploded with anecdotes on the development potential of the streetcar and stories on the city’s (possibly illegal?) public information campaign. But whether the city’s plan to provide door-to-door information on the streetcar directly ahead of the election is legal or not, no one should forget the incredible waste and dubious benefits of a streetcar system.

  • Mass Transit GraphIncredible waste: months ago, we pointed out that Kansas City could buy and operate 100 buses serving 130 miles of routes for the same price as the Kansas City streetcar expansion plan. While critics might claim that buses cannot be compared with streetcars (they can), the basic math is unchallenged. Streetcars, which provide only limited service improvement over buses, are many times more expensive and incredibly restricted in their range.
  • Dubious benefits: Streetcar supporters must have a hard time keeping a straight face when they claim that streetcars have any transportation benefit. Instead they rely on the argument that these projects bring billions in development. The evidence on this proposition is anecdotal at best, as cities with streetcars have heavily subsided surrounding development. Kansas City is already pushing ahead in this tradition, with anecdotes about new developments that are not so believable on closer inspection, and a raft of subsidies at the ready.
  • Everyone will be paying: Even though supporters freely admit that a streetcar is a development scheme limited to a small section of Kansas City, everyone else still gets to pay for it. After all, building a half billion dollar streetcar line can be financially difficult. The proposed transportation development district’s 1% sales tax and new property taxes will cover less than half of the streetcar’s total cost. The rest will come from the federal government, Kansas City residents outside the TDD, and if the proposed 0.75% statewide transportation sales tax passes, the whole state.

Streetcar supporters often make groundless statements about illusive millennials and streetcar economics, but they do make perfect sense when they say that now is a “once-in-a-generation opportunity with the streetcar project.” That’s because once the shine is off the new rails and promises of citywide transformation are unfulfilled, the streetcar will be seen for what it is: just another transit system. Another transit system that is as slow as a bus, but ten times the price. Perhaps that explains the rush to get as much money as possible, as quickly as possible.

 

June 18, 2014

Missouri State Board Of Education Robs Students Of Educational Opportunities

educational larceny

 

Larcenist is a strong word to call someone, but that is exactly what Missouri Sen. Maria Chappelle-Nadal (D-Dist. 14) called parents attempting to secure a good education for their children. The senator, who has otherwise been good on the transfer issue, was referring to parents who moved into the Normandy School District to take advantage of the transfer program, which allowed them to send their children to better schools outside the district. “I think it’s educational larceny for people to move into a community from another community just so they can attend another school,” Chappelle-Nadal said.

The Missouri State Board of Education seems to agree. Earlier this week, the board voted to revoke the transfer right of any individual who was not enrolled in the Normandy School District the year before the transfer law went into effect. Now, more than 130 students who benefited from transferring to higher-performing schools have had that right stripped away.

Among the list of bad decisions the state board has made recently, this is among the worst.

First, I find it highly unlikely that 130 students moved into the district with the intent purpose of taking advantage of the transfer program. Most likely, many already lived in the district, but paid to send their children to private schools or they relocated for various other reasons. This was the case for Diane McCrary and Connie Holtrop. You can read their story in this excellent piece by Elisa Crouch.

Nevertheless, let’s imagine that some families did move to the Normandy School District simply to take advantage of the transfer program. They did not violate any law. They simply made a decision to put their kids into better schools.

Now these families have had that opportunity stripped away because it was good for the district’s bottom line. If any educational larceny has occurred, it took place when the State Board of Education robbed these students of the opportunity to attend good schools.

 

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