By Andrew Guevara
For the Show-Me Institute

On Wednesday, the state’s Department of Elementary and Secondary Education (DESE) presented its application for nearly $750 million in federal funding to the state Senate Committee on Education. The program, “Race to the Top,” is a federal competitive grant program that will distribute $4.35 billion to states for the purpose of education reform.

Of the $743 million the state has requested, $355 million will go directly to public school districts, Chris Nicastro, DESE Commissioner of Education, said. The bulk of the remainder, about $272 million, is set to pay for providing broadband Internet access to all of the state’s public school districts.

The 299-page application can be read online here.

The grant program is intended to encourage states to adopt standards and assessments that allow students to succeed, to build data systems that track student performance, to recruit and retain the most effective teachers, and to create programs that will help “turn around” lowest-achieving schools.

Interestingly, Nicastro said that the reforms outlined in DESE’s grant application would be put in place regardless of the amount of money awarded to the state.

“We do intend, with or without this grant, to use the work we’ve put in and the application as a framework for redesigning the department itself and for driving educational reform in Missouri over the next decade,” Nicastro said.

She continued, “we do believe the plan will serve as the catalyst to propel Missouri’s public education system into the Top 10, nationally and internationally, and that is our goal.”

Some of the following reforms have been outlined in the application:

• Adopting and implementing cross-state standards for curriculum and testing;
• giving MOBroadbandNow broadband Internet access to all school districts;
• developing web-based teacher quality databases to effectively monitor successful teaching practices;
• evaluating teacher performance based on student performance;
• developing assessment methods at the state level;
• creating teams to intervene quickly in failing schools;
• and, allowing the state education board to close failing charter schools.

During a brief question-and–answer period, senators mostly asked questions about how the proposed reforms would affect charter schools.

Sen. Scott Rupp (R-Wentzville), said he was concerned that DESE’s application didn’t remove the geographic limitations placed on charter schools, which can currently operate only in Kansas City and Saint Louis.

Others asked about how charter schools would report student academic performance.

“We’ve not been as we transparent about reporting the performance of charter schools as we should be,” Nicastro said. She added, however, that “Race to the Top” would make more information available, and would help make charter schools more accountable.

Nicastro was referring in part to legislative proposals that tweak charter school statutes, which DESE recently submitted to Missouri’s General Assembly.

By Andrew Guevara
For the Show-Me Institute

During the past month, Missouri tax revenues continued to fall short. According to Linda Luebbering, state budget director, revenues were down more than $170 million in December 2009, as compared to December 2008. The slide amounts to a 21.7-percent decrease.

Despite the most recent decline, state officials say they expect tax revenues to bounce back slightly during the next fiscal year.

A joint forecast made by the governor’s office, state budget leaders, and financial experts predicts a slight increase in general revenue collections for fiscal year 2011, above those in fiscal year 2010. According to that forecast, the Consensus Revenue Estimate (CRE), general revenue collections are expected to be $7.223 billion. This would be a decrease of $780 million from actual revenue collections from fiscal year 2008.

State revenues collected from individual income taxes, corporate income and franchise taxes, and sales and use taxes were all down in December by 26.5 percent, 13.5 percent, and 1.8 percent, respectively.

The only increase in revenue came from liquor sales, which saw a 10.25-percent increase. Liquor sales have generally remained stagnant or have increased during recent months, although beer revenues declined by 6.71 percent. (See a detailed spreadsheet here.)

In addition to the falling numbers for December, the general revenues for the 2010 fiscal year to date have declined 10.6 percent for the same time during the 2009 fiscal year, from $3.7 billion last year to $3.3 billion this year.

Legislators responsible for the state’s budget, such as Senate Appropriations Chairman Rob Mayer and House Budget Chairman Allen Icet, have repeatedly warned the state to prepare for reductions in spending in order to maintain a balanced budget. In recent months, officials have cut hundreds of millions from the state budget, and may soon cut more.

Gov. Jay Nixon will announce budget details for his fiscal year 2011 at the State of the State address on Jan. 20.

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

By Audrey Spalding
Show-Me Institute

A much-debated $8 billion development in the city of Saint Louis’ north side has been awarded $19.6 million in state tax credits. Those are in addition to city tax incentives, which could total up to $398 million.

The state’s Department of Economic Development has made public only a small portion of the development company’s application for the state tax credits. You can read those four cover pages here.

According to the cover pages, NorthSide Regeneration LLC has spent about $25 million to purchase property, and expects to spend $66 million to acquire additional properties. The company spends about $415,000 each year to maintain its properties, and interest costs are estimated to be about $1 million each year.

The rest of the application, department spokesman John Fougere said, is so large that it isn’t feasible to send it electronically. The remainder will be made available in a few days, he said, but only in the department’s Jefferson City office, where people can view and copy the additional documents.

Documents that haven’t been made available to the public yet include a breakdown of property acquisition costs, interest costs, a map of the development area showing where NorthSide-acquired properties are located, and a list of owner-occupied residences in the development footprint.

Those application documents could shed light on as-yet unanswered questions, such as where within the development area NorthSide has acquired most of its properties, and what it has paid so far to purchase properties. Records kept with the city’s Recorder of Deeds office are unclear — according to deeds of trust filed with the office, properties acquired by the developer were traded among various shell companies.

More interesting is the $66 million NorthSide says it plans to spend acquiring additional properties. Previously, Paul Puricelli, a lawyer for NorthSide, has said that the company has about 20 properties left to acquire, which, if true, would mean a much higher purchase price for the remaining properties.

CHALLENGES TO THE STATE TAX CREDITS

The $19.6 million in state tax credits are authorized by the Distressed Area Land Assemblage (DALA) Tax Credit Act, which allows large-scale developers in urban areas to collect up to $20 million each year in reimbursements for 50 percent of property acquisition costs and 100 percent of interest costs.

Two active critics of the development, Barbara Manzara and Keith Marquard, are the plaintiffs in a lawsuit that claims that the act is unconstitutional. From the lawsuit: “… the state provides public credit to prospective applicants to secure and pay for private investments, private property and does not serve a primarily public purpose because a direct private benefit is derived by the borrowers and investors to the detriment of the state.”

Paul McKee, the developer who put forward the north side redevelopment project, has repeatedly pointed to the dismal education, vacancy, and employment statistics in the area as evidence that development is needed, and will improve the area.

The lawsuit is set to be heard in Cole County Circuit Court on Jan. 27.