By Audrey Spalding
Show-Me Institute

With revenues down by about $1 million, the Saint Charles County Council met to debate the merits of granting $80,000 to market an airport expansion project that doesn’t fall within the county. The project is a proposed expansion of the Lambert–Saint Louis International Airport that would create a China hub in the hopes of increased international trade.

Developer Paul McKee, who put forward and completed the Winghaven development in Saint Charles County, has been a strong backer of the China hub expansion. McKee has said publicly that his latest project, a 1,500-acre redevelopment of the city of Saint Louis’ north side, hinges on Chinese business for many of the project’s promised 22,000 new jobs.

But county council members were skeptical when they held a work session on Monday to review the proposed county’s 2010 budget. Council member Cheryl Hibbeler brought up the issue first.

During 2009, she said, the county council allocated $37,500 for marketing of the China hub expansion. In 2010, the amount increased to $80,000, a significant amount of money for the county, with what she saw as no guarantee of a return.

“It basically boils down to finding enough to pay this one guy … to attract enough China business to Lambert,” she said.

The $80,000 is part of a $931,000 bill for annual marketing costs that the county, along with others, such as Saint Louis County, is considering paying. According to County Executive Steve Ehlmann, the marketing costs include not just salary for one man, but work to be done by a number of individuals working for a single marketing firm.

Oversight of how that money will be spent was another concern for Hibbeler.

“Who’s going to be deciding whether this $931,000 is really working?” she asked.

And, even then, she wondered aloud, what were the chances of the China hub coming to fruition, and bringing new jobs and business to the county? At one point, Hibbeler characterized the project as a “crapshoot.”

County Council Chairman Joe Brazil also questioned why the county should spend money on marketing the project. Brazil, who is critical of tax incentives and subsidies, asked whether the county could expect competitive bid reports and cost documentation if it granted the $80,000.

“I don’t know that you’re required to bid this,” Ehlmann responded.

In 2008, stemming from concerns about bids being awarded as political favors, the county auditor conducted a review of a few tax development districts (TDD) in Saint Charles County, including Winghaven. Of the five TDDs surveyed, all failed to adhere to a complete competitive bidding process. The Winghaven TDD was cited in the review because two of the project’s codevelopers were connected to contractors hired to do work for the development.

Ehlmann was the most vocal supporter of the budgeted marketing expense. The project, he said, has the support of the governor, the chamber of commerce, and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), and would bring spillover business to the county.

“If we don’t get this China trade, that’s where it will go, it will go to Chicago,” he said.

Other counties and municipalities weren’t asked to be a part of the project, Ehlmann said, but Saint Charles was invited to participate.

“I don’t think this is going to rise or fall [based on] whether we put our money in,” Ehlmann said. “The question is, do we want a seat at the table?”

After more debate about whether the county could spend the $80,000 elsewhere, council member Nancy Matheny suggested that the group reconsider the expenditure at a later date.

“As tight as we are, with no raises or anything else, it’s hard to allocate to something we don’t understand,” she said.

The council made no decision during its work session, and the $80,000 remained in the proposed 2010 budget. But, said Brazil after the work session, the council will likely vote on whether to strike the expenditure during the next few weeks.

By Audrey Spalding
Show-Me Institute

This year, the Saint Louis City Recorder of Deeds office, which oversees real estate licenses, has collected $20,729 in copy charges from people who printed documents from the privacy of their own home or business. The copies didn’t involve the use of any of the city’s paper or staff time, things for which governments usually charge copy costs.

For copies made by Recorder of Deeds staff, the office charges $3 for the first page and $2 per page for any additional pages.

Online access to the office’s database can be purchased, for a minimum of $75 per month. But if a person prints from that database after having purchased access, using a personal computer and printer, the same per-page charges apply.

At first glance, this pricing scheme appears to violate the state’s Sunshine Law, which outlines the types of records considered to be public documents and generally limits the copy fees that governmental bodies can charge.

According to state statute, copy costs “… shall not exceed ten cents per page for a paper copy not larger than nine by fourteen inches, with the hourly fee for duplicating time not to exceed the average hourly rate of pay for clerical staff of the public governmental body.”

But Daryl Hylton, assistant attorney general at the Missouri Attorney General’s office, said that after reviewing state statute, he concluded that the Recorder of Deeds Office can in fact charge for copies it didn’t make. The office has a special provision in state law that specifically states the fees the office can charge.

From the statute: “For copying or reproducing any recorded instrument, except surveys and plats: three dollars for the first page and two dollars for each page thereafter.”

That provision alone doesn’t necessarily allow the office to charge for copying done remotely, but the last line of the Recorder of Deeds’ statute does, which states, “for all other use of equipment, personnel services and office space the recorder of deeds shall set attendant fees.”

Hylton said that, “equipment” can be interpreted to include copies made on outside equipment, using the office’s database.

The copy fees that the office charges bring in a good amount of the office’s approximately $2.5 million in annual expenditures. For 2008, the office collected nearly $450,000 from in-office and out-of-office copy fees, according to Donna Michaels, the supervisor of the office’s Cashier Department.

This year, the total is down to about $200,000.

Jean Maneke, a prominent Missouri attorney who specializes in Sunshine Law cases, said she hasn’t received any complaints about the Recorder of Deeds’ copy charge practice.

“I sued over the cost of an assessor’s database a few years ago and after some discovery, we agreed on a reasonable fee,” she wrote in an email. “That, plus the huge litigation last year over the Dept of Revenue’s database, are the only cases I’m aware of which have some comparable issues.”

FULL DISCLOSURE: During the course of obtaining data for a Policy Pulse investigative article, the Show-Me Institute was billed $450 in copying charges by the Saint Louis City Recorder of Deeds office, for printing documents from a Show-Me Institute computer to a Show-Me Institute printer.

By Audrey Spalding
Show-Me Institute

According to data posted on the federal government’s stimulus tracking website, Recovery.gov, stimulus dollars have created or saved more than 15,000 jobs in Missouri. But some of those jobs seem to be located in state congressional districts that don’t exist.

Missouri has nine congressional districts, which have been awarded the bulk of federal stimulus dollars and jobs. But, according to the data, six fictional districts were awarded $928,566 to create 8.5 jobs. The districts, jobs, and stimulus dollars spent are as follows:

• Five jobs were created in the the 14th district, at a cost of $617,848.
• Zero jobs were created in the 00 district, at a cost of $136,833.
• Zero jobs were created in the 31st district, at a cost of $74,542.
• Finally, 0.5 jobs were created in the 16th district, at a cost $28,453.

To see these numbers yourself on the Recovery.gov website, click here

There appears to be a problem with the federal government’s reporting system for stimulus money spent — and it’s nationwide. According to the website WatchDog.org, a total of $6.4 billion has been spent in 440 fictitious congressional districts.

The phony districts have bloggers, news organizations, and even elected officials crying foul.

In fact, on Thursday, the House Oversight and Government Reform Committee will hold a hearing on “how recovery act recipients spend their stimulus dollars.” Committee chairman Darrell Issa (R-Calif.) has called the data on the Recovery.gov site incomplete and incorrect.

But Ed Pound, director of communications for the Recovery Board, says that the real problem is human error.

“The recipients put in the wrong congressional district when they filed the reports with the government,” he said. “You’re going to see errors because this is raw data.”

Fictional congressional districts aren’t the only errors in the Recovery.gov data. Many Missouri recipients of federal stimulus funds, such as the University of Missouri–Rolla, neglected to report a description for their project or its status. Others left question marks.

Pound said that the Recovery.gov data is generated from reports filed by grant and contract recipients. After a 20-day verification period, during which federal agency employees check the reports made by grant and contract recipients, the reported data is posted to Recovery.gov.

But, Pound said, a federal agency can only tell a grant or contract recipient that its report is incomplete or inaccurate. Recipients are responsible for making the actual corrections.

“Only recipients can correct this,” he said.

According to Recovery.gov data, available at the site’s “data download center”, the following governmental agencies listed fictional congressional districts: Newton County, Crawford County, the Saint Louis Development Corporation, the Housing Authority of Aurora, the City Utilities of Springfield, the Hannibal Housing Authority, and Missouri Valley College.

By Audrey Spalding
Show-Me Institute

Nearly 40 local and statewide pension systems for public employees are underfunded, according to a report submitted on Tuesday to the Missouri legislature’s  Joint Committee on Public Employee Retirement (JCPER). The report is a detailed “watch list” that focuses on pension programs that have less than 70 percent of outstanding obligations (payments to retired employees) available.

The number of public pensions that fall below the committee’s threshold more than doubled this year, from 19  in 2008 to 39 in 2009, said JCPER Executive Director Ronda Stegmann. Three statewide pension plans appeared for the first time on the committee’s watch list:

• The Missouri State Employee Retirement System (MOSERS), the pension fund for most state employees, including elected officials, is funded at 66 percent, with an investment loss of 19.32 percent
• The Public Education Employee Retirement System (PEERS), the pension fund for non-certificated public school employees, is funded at 61 percent, with an investment loss of 19.1 percent
• The Public School Retirement System of Missouri (PSRS), the pension fund for public school teachers and other certified school employees, is funded at 60 percent, with an investment loss of 19.55 percent

Despite the dire numbers, the committee’s watch list may just be that. While some critics have suggested in the past that public pensions are suffering because plans promise a defined set of benefits instead of taking in a defined set of contributions and doling out the earnings to retirees, the committee blamed the across-the-board losses to the current economic recession.

“Does inclusion on the watch list automatically mean that the benefit structure should be changed in some way?” asked Patricia Yaeger (D-Saint Louis).

“No,” Stegmann replied. “We certainly are not suggesting any impropriety.”

Some committee members even suggested that the funds may have bounced back a bit recently.

Committee Chairman Ward Franz (R-West Plains) said that his own retirement fund increased in value by about 18 percent during the last quarter, and asked whether that could be the case for some of the public pension plans.

“I believe that many of the plans have received double-digit investment growth,” Stegmann said.

The committee’s report, available for the first time online, can be read here.

By Audrey Spalding
Show-Me Institute

On Monday, a joint legislative committee tasked with planning out a 25-year-long, statewide strategy for Missouri’s electricity production and consumption met to consider the cost and availability of alternative forms of energy.

The committee, named the Joint Committee on Missouri’s Energy Future, was formed in 2009 under House Bill 734, legislation that also required appliances purchased with state money to comply with federal energy efficiency guidelines. By the end of the year, the joint committee must make a report to the General Assembly on state energy consumption, along with legislative recommendations.

A number of academics, state officials, and energy businessmen spoke on Monday about newer energy technologies such as geothermal heating, biomass, solar energy, natural gas, wind energy, and others. Many of those who testified mentioned ways the state government could use tax incentives or subsidies to encourage different forms of energy production.

Mark Templeton, director of the state department of natural resources, said that although Missouri has low electricity costs in comparison to other states, it has a low ranking in using energy efficiently. He said that not much is being done independently by private companies to improve that ranking, pointing out during the hearing that a small fraction, 0.05 percent, of Missouri electricity revenues are spent on improving energy efficiency.

Templeton’s suggestions for the committee were to introduce performance incentives in the natural gas sector, energy efficiency standards for new buildings, and other baseline requirements.

“We as a state may say we have a minimum standard for investing in energy efficiency,” Templeton said.

Rep. Ed Emery (R-Lamar), one of the more vocal committee members, quizzed Templeton, and others who recommended energy subsidies, at length about the role of government intervention. At one point, Emery abruptly asked Templeton to explain the role he thought central planners should have in energy production versus the one a competitive market should have.

“Whenever we do have something we want to put more central planning in, we label it a market failure,” Emery said.

Rep. Jerry Nolte (R-Kansas City), co-chairman of the committee, also tended to focus his questions on additional costs.

Indeed, arguments for different forms of alternative energies were made in financial terms, and the phrase “global warming” was rarely mentioned. Instead, many presenters spoke of the impending federal cap-and-trade legislation that is projected to increase traditional energy costs.

“Fossil fuels will cost more … we just know it’s inevitable,” said Dan Eberle, interim director of the Missouri Alternative and Renewable Energy Technology Center at Crowder College. The federal legislation would just hasten the increase in energy prices, he said.

“Currently, it is very difficult to locate an alternative form of energy that is more economically competitive than traditional forms of energy,” said Alan Marble, president of Crowder College. A better approach, Marble and others suggested, is to get more bang for every energy buck by supplementing traditional forms of energy with forms tailored to a specific purpose.

Shawn Xu, a research associate professor at the University of Missouri–Columbia, illustrated that method with his explanation of geothermal heating, a process by which pipes dug deep into the earth heat buildings in the winter and cool buildings in the summer. Geothermal heating doesn’t replace the need for traditional energy. However, Xu said, constructing buildings with the capacity for geothermal heating is a highly efficient way to heat and cool them, thus reducing overall energy costs.

By Dain Fitzgerald

The state Department of Elementary and Secondary Education (DESE) is proposing new regulations for Missouri’s 40 charter schools. The proposal tweaks and makes some additions to the existing state statute that governs charter schools. Specifically, it would allow the State Board of Education (SBE) to intervene if a charter school is failing, would require a school to submit an accountability plan along with the initial charter school proposal it presents to a sponsor, and would also require charter schools to establish baseline student performance during a charter’s first year, using test scores to monitor student academic performance.

The bills outlining these changes will be pre-filed by the Missouri General Assembly on Dec. 1.

Mark Van Zandt, general counsel for DESE, said the proposal will “give charter sponsors the tools they need for effective operations.”

He said that the SBE currently lacks the ability to intervene when a charter school is failing. The proposed legislation, he said, redresses this by granting the SBE authorization to outline charter school standards, and, if necessary, to withhold a portion of a charter school’s funding.

The full legislation, which includes additional proposals for non-charter public schools, can be viewed here.

Cheri Shannon, executive director of the Missouri Charter Public School Association (MCPSA), said she didn’t see any problem with the proposed legislation, and that it seemed it would only increase standards for charter schools.

“I’m OK with it,” she said. “I believe the state board should be active and take whatever statutory action that they need to take for failing traditional schools and failing charter schools. The goal is quality.”

The SBE already has the power to override the operations of failing public schools not given independent status. This power would be extended to charter schools should the legislation be approved, with the goal of improving schools that are “failing academically” or becoming “financially insolvent.” Although Van Zandt said he believes intervention by the SBE is not an option of first choice, he said it is necessary to help guarantee efficacy in the improvement of charter school operations.

So far, five charter schools in Missouri have been closed down because of academic, financial, or operation issues, Shannon said. This spring, two more in Saint Louis will close, as well, bringing the total to seven charter school closings during the past decade.

According to Van Zandt, the inspiration for allowing the SBE the ability to close failing charter schools stems from a U.S. Department of Education (USDOE) report released in 2007, titled “Supporting Charter School Excellence Through Quality Authorizing.”

The report is a comprehensive study of what were considered to be the best examples of high-quality charter school authorizers from across the United States, including those in California, Minnesota, New York, and Massachusetts. Van Zandt said that DESE hopes to reproduce the success of those charter school authorizers in Missouri. The USDOE report is available here.

The National Association of Charter School Authorizers has given its support to the proposal, as have multiple in-state charter sponsors, Van Zandt said.

As outlined in the proposal, state and local funding may be withheld from charter school sponsors that fail to spend at least 90 percent of their sponsorship funds on sponsorship programs or as a direct investment in schools, that neglect to adhere to best practices in the hiring process, or that are lax in contract oversight, performance evaluations, and the monitoring of compliance.

Such withholding of funds will not take place in the case of sponsorship by a school board or by the SBE itself.

According to the proposal, potential opponents of the legislation’s implementation may include charter school operators themselves, because of the way in which the bill seeks to modify deadlines for evidence of school performance.

By Andrew Guevara
For the Show-Me Institute

State tax revenue collections continue to fall short. For October 2009, collections were down 14 percent compared with October 2008, falling from $514.8 million to $442.7 million, according to State Budget Director Linda Luebbering. A spreadsheet detailing the most recent tax collections is available here.

State revenues collected from corporate income and franchise taxes, sales and use taxes, and individual income taxes were all down, by 26.2 percent, 24.4 percent, and 8.6 percent, respectively.

The declines are in addition to the already waning numbers that were seen in September, when the state made its first-quarter report for the fiscal year, and announced that total collections were down nearly 10 percent in comparison to the first quarter of the previous fiscal year. With the additional shortfall in October, total collections are now down 10.8 percent. The decline seen so far is much less rosy than the revenue projects used in the state budget, which anticipated a 1-percent growth in tax collections.

In response to the continued decline in state tax revenues, Gov. Jay Nixon made $200 million in budget cuts during late October, an amount that comes to about 1 percent of the state’s total budget.

Contrary to the decreasing trend, tax collections from liquor sales were up 6.5 percent for October, and 7.6 percent for the year so far.

Andrew Guevara is a student at the University of Missouri-Columbia.