How can policymakers revitalize downtowns?

Last summer, I moved from Northeast Minneapolis to the West 7th neighborhood in Saint Paul. For many people, the Twin Cities often get lumped together as one unit, but there are some important differences between them. 

The city of Minneapolis plows alleys, Saint Paul does not. Minneapolis is part of Hennepin County which includes the surrounding suburbs while Saint Paul’s Ramsey County just contains the city. Ask people who live here though, and one thing that is sure to come up is the difference between the downtowns.

Downtown Minneapolis is much busier than downtown Saint Paul for many reasons. One simple reason is that Minneapolis is the larger city of the two, with over 100,000 more residents than Saint Paul. Also, Minneapolis is home to more of the metro’s pro sports teams (football, basketball and baseball against Saint Paul’s hockey and soccer teams). 

Depending on who you ask, you might begin to get the impression that downtown Saint Paul (and Minneapolis for that matter) is on the verge of collapse. I would argue that the truth is not so dire. 

My home is about a mile and a half from downtown. I like to walk there with my dog along the river to go to a couple of breweries when the weather is nice. During hockey season, I try to make my way for a few games if I can. 

Anyone who goes to downtown Saint Paul for something will tell you that it can get extremely crowded. Getting a table in a restaurant around the Xcel Energy Center* before a Wild game is just as hard as finding one before a Timberwolves game in Minneapolis. After the game, the bars around the arena get just as crowded as people wait for the crowds to dissipate in order to find an easier ride home. 

The biggest challenge facing downtown Saint Paul is how it operates when nothing is going on. 

Right now in Saint Paul, the future of the downtown is a major talking point. A big reason for this is that since 2020, many of the office buildings that historically brought workers into downtown are sitting vacant. If you walk through downtown on a Wednesday at 1:00 pm, you probably won’t see many people at all. 

Because this is a mayoral election year, lots of policy ideas have been tossed about for how to address this. There are lots of policies being discussed, but I wanted to talk about one particular idea that I haven't really considered before. 

Saint Paul is Minnesota’s capital, and home to a lot of state offices. One idea that people have been mulling over is trying to work with the state government to bring their workers back to downtown instead of having them work from home. 

This type of idea is more focused on reinvigorating the existing infrastructure of downtown, though it certainly wouldn’t fill every office building. 

I think this is interesting because I don’t think there is anything wrong with organizations deciding they want to work in an office space. We live in a world now where that is a feature rather than an expectation of certain professions, but if an employer decides that provides value to their business greater than the cost of rent, then they should require people to come into the office. 

This situation with state workers is a little more interesting. Instead of the state deciding if the cost of rent and worker dissatisfaction is worth the additional efficiency benefit, they can consider the broader social benefits of having office space occupied downtown. I don’t know if this tradeoff is worth it, but it is interesting to think about the idea of public employees using where they work as a policy tool to benefit certain areas. 

*Now called the Grand Casino Arena. Old habits die hard.

Are “Strong Towns” the answer to the North American economic development problem?

Last week, I had back-to-back presentations at two conferences: the Health Policy Institute of Ohio’s Health Policy Summit and the Iowa Bike Summit. I hadn’t given a talk since the Spring, and the first two I got after five months of not speaking were at two different conferences within 24 hours of each other on two opposite sides of the Midwest.

I conducted a workshop on cost-benefit analysis at the Health Policy Summit at 2pm, then flew out from John Glenn International Airport in Columbus at 9pm on Thursday, landing in Des Moines a little before midnight. But my conference was not in Des Moines, it was in Cedar Falls, Iowa, a charming town in Northeast Iowa two hours from Des Moines. So I rented a car and drove for two hours so I could try to get some rest before my presentation at noon.

While on the way, I needed to listen to something to get me in the mindset for the Bike Summit, where I would be presenting on our work on the economic impact of cycling at the county level in Iowa. I listened to a couple podcasts. One was an interview with a cyclist who had participated in a couple 200-mile single day rides (what is up with cyclists and self-punishment?). I then listened to a podcast reviewing and explaining different tire pumps hosted by engineers that went about 12 feet over my head.

After that, as my eyes were sagging trying to make the last hour to Cedar Falls, I threw on an audiobook of a book called Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity. I had heard about this as a book that presents an alternate approach to understanding how North American cities developed over the past seventy years and explaining how reworking local patterns of development can lead to more sustainable communities.

I got about a third of the way through the book and I plan to listen to the rest of it so I may have different things to say about it when I am done with it. But even in the first third of the book, the author put so much that was worth talking about.

Charles Marohn, the author, is an engineer by trade, and this comes out in his writing. His approach is smart, systematic, and creative, but also suffers from reductionist historical takes. One of the themes Marohn leans on throughout the book is that community development before the second half the 20th century was “natural” and embodied a patient, thoughtful process of trial and error that better served human well-being than the top-down approach to development that became prominent in North America over the past 70 years.

A big claim Marohn makes is that economic development under the current model is built on unsustainable models of growth. If today’s infrastructure is only maintained by building more infrastructure to attract more tax base, which leads to the need for even more infrastructure than that to attract further tax base to finance that maintenance. Marohn’s critique here reminds me a lot of the critiques of Fernando Centeno, a policy analyst out of San Antonio who has written extensively about the drawbacks of the widespread model of “economic development” as it is practiced in the United States.

Both Marohn and Centeno argue that short-sighted goals have subsumed the larger public policy goals of economic development. Marohn argues that economic development as currently practiced falls into a “you win or we lose” dichotomy, where the public sector chips in with infrastructure and economic development incentives to attract economic development, ultimately taking the hit themselves if the development never materializes or dries up over a couple of decades.

His answer to this seems to be to get the public sector out of the economic development game, which is an interesting impulse. He seems skeptical of the ability of planners to direct economic development and instead thinks that incremental development based on decisions made by businesses and residents will lead to more sustainable development patterns.

He does not argue that there is no place for the public sector, however. He accepts the general consensus that the public sector has a place to play in providing infrastructure like roads and wastewater management. But he makes a bold claim, saying that the United States has too much infrastructure. He says infrastructure is considered an asset when it should be considered a liability: a responsibility of the public sector to maintain over time. He rails against the American Society of Civil Engineers, with their annual infrastructure report cards always saying the United States does not have enough infrastructure and always encouraging the public sector to build more…so civil engineers can have more work to do.

Marohn’s proposed criteria for evaluating infrastructure development is this: will the infrastructure lead to higher or lower net revenues for the municipality building them? He encourages the use of the word “profit,” saying cities should be trying to make more money than they take in, and saying that this framework will bring discipline to urban development that they currently lack.

Marohn is opinionated. He is thoughtful: he has put a lot of work into coming to the conclusions he has come to in his analysis. He still arrives at some conclusions a bit too quickly. Clearly the “model of economic development” that existed before the second half of the 20th century was by no means perfect. I think even more clearly, reducing the test for infrastructure to “maximizing the financial position of the city” ignores a key role of the public sector: to maximize social value. Say building a bridge will get people to work quicker and ambulances to elderly people’s homes faster. This will not necessarily lead to more money for the city, but it could lead to higher social value, which is a more important goal for a city than maximizing financial position. In short, sometimes a city will take a hit on an investment in their coffers in order to grow their economy, reduce poverty or inequality, improve health or education, or increase happiness.

That being said, I tend to agree with Marohn more than I disagree with him so far. Municipal government could do a lot more to discipline their development patterns. And a part of this has to be fiscal sustainability. As much as maximizing social value needs to be the north star for any public institution, managing fiscal risk is always going to be a part of that calculation. If cities can do more to manage fiscal risk over the long-term, it will help them make their communities a place where markets are dynamic, poverty and inequality are minimized, and the populace is educated, healthy, and happy.

How can Ohio turn its international student enrollment problem around?

With school in swing for the fall, enrollment numbers at Ohio’s colleges and universities are coming together.

While all of Ohio’s public universities saw an increase in enrollment, each university also saw a decline in international student enrollment.

Wright State University had the most modest decline in enrollment, losing 4.3% of its international students.

Bowling Green University and Cleveland State University, had the largest relative losses, each losing about a third of their international student enrollment.

Enrolling international students brings benefits to the state of Ohio.

International students usually pay “sticker price,” meaning the entirety of their tuition tends to go toward supporting the state system and providing education for other students.

International students also bring new perspectives to the classroom and student organizations, helping enhance the learning experience of students from Ohio and out-of-state students who may live in Ohio after college.

International students who come to Ohio for school are also more likely to stay in Ohio afterwards, helping to counteract Ohio’s “brain drain” problem by bringing qualified people from abroad to bolster Ohio’s workforce.

While national-level headwinds are hard to overcome, Ohio has some tools in its belt to attract international students.

Ohio could create a statewide tuition and internship initiative. This could use funds to create modest reductions in tuition in priority fields: think engineering, data science, and health.

This could be paired with an internship program where universities work with Ohio employers to hire international students and keep them on after graduation.

This could help bring in international students targeted towards filling holes in Ohio’s workforce, which would lead to higher earnings and more job creation in the state in the long run.

The state could also market its universities as a single destination, rather than 14 universities under different brands.

Ohio has amenities that should make the state an attractive destination for international students: affordable cities, safety, and job opportunities in lucrative fields such as healthcare, manufacturing, logistics, and technology.

Making Ohio’s offering clear could lead to, for instance, Miami University losing more international students to places like Ohio University and less places like Michigan State.

The state could invest in reducing bureaucratic friction for international students.

Standardized driver’s license or state ID rules could make it easier for international students to get identification that can connect them to other amenities in the state.

Statewide welcome centers at airports could give new international students a place to begin as they arrive in the state.

And providing legal and visa services across universities, the system could help support international students in dealing with an increasingly fickle federal Department of State.

Finally, the state can try to help students stay in Ohio after they graduate.

An H1-B bridge program with universities as sponsoring partners could help students transition into the working world.

Requiring JobsOhio to count international talent retention as a key performance metric could also encourage companies to retain international students in the state.

International students bring vibrancy, talent, and economic vitality to the state of Ohio.

For Ohio to stay competitive in a global economy, it needs to have a global workforce. Steps like this could help it do just that.

This commentary first appeared in the Ohio Capital Journal.

What would it cost to end unemployment in America?

Unemployment is a drain on social resources. Job loss is associated with future unemployment, long-term earnings losses, lower future job quality, declines in psychological and physical well-being, loss of self-acceptance, self-confidence, self-esteem, morale, life satisfaction, goal and meaning in life, social support, and sense of control, social withdrawal, family disruption, and lower levels of children’s attainment and well-being. When people lose their jobs, those effects ripple throughout their own lives and the lives of others.

While employment does not get the attention that indicators like education and health get in composite measures like the Human Development Index, other similar measures like the Social and Economic Rights and Freedoms Index put unemployment right beside these measures as a core social outcome.

So what would it take to end unemployment forever in America?

A policy option that some have put forth to end unemployment in the United States is a job guarantee. The basic idea behind a job guarantee is that anyone who wants a job in the United States will be able to get one employed in the public sector or through programs financed by the public sector. So anyone unemployed would be able to go to the government and find work if they wanted it.

So is this feasible? And what would this cost?

Well one way to get a handle on this is to see how many people are unemployed in the United States and what it would cost to employ them. While American Community Survey data is not available at the time of the writing of this blog post due to a federal government shutdown, we can use other sources of data to estimate unemployment in the United States.

According to Google’s reporting of data from the Bureau of Labor Statistics, unemployment has hovered between 5 and 7 million Americans since 2017, with the exception of the COVID-19 recession, when mass stay-at-home orders and mandated closing of public spaces skyrocketed the unemployed population in the United States to over 23 million. During the Great Recession, unemployment spiked to 15 million. Google also reports that the United States Census Bureau estimates the median individual income in 2023 was $39,982, or about $42,000 in 2025 dollars.

Assuming we want to provide employment at half the median income (a commonly-used threshold for the definition of poverty), that would mean providing jobs with an income of about $21,000 per person.

Under “standard” unemployment over the past few years, this would amount to about $100-150 billion in annual expenses to make unemployment voluntary in the United States. During the Great Recession, it would have risen to a little over $300 billion. Under the high-water mark of the COVID-19 recession, that number would have jumped to nearly $500 billion. That is high, but would have only represented about 20% of the $1.9 trillion American Rescue Plan that Congress passed during the COVID-19 recession to stabilize the economy.

According to the Committee for a Responsible Federal Budget, there are a few policy options that could make a policy like this revenue neutral. They estimate reducing the military by 17% of its personnel would save $129 billion per year over the next ten years. They also estimate increasing the payroll tax by 1% would raise $151 billion per year. They estimate imposing an annual wealth tax of 2 percent on all net worth above $50 million and a 3 percent wealth tax on all net worth above $1 billion would raise $308 billion per year. Ending state and local tax deductions would save $104 billion per year. Increasing the corporate tax rate to 28% would raise $103 billion per year. A 5% value-added tax would raise $291 billion per year and a 10% across-the-board tariff would raise $239 billion per year. Of course they also report a range of smaller changes that could be combined to reach the $100-150 billion range.

Of course, this program becomes more expensive if you increase the pay. Making the program a median-wage program rather than 50% of the median wage increases costs to $200-300 billion per year.

These are not easy changes to make. They also are not impossible. Enacting a job guarantee could help ameliorate some of the costs of unemployment. It also could have spillover effects depending on the sorts of jobs that would be financed. Public service and care work such as elder and child care, community health outreach, education, and food security could help build human capital and promote health. Environmental and infrastructure projects like park and habitat maintenance and restoration, weatherization, local infrastructure, and renewable energy installation could enhance our natural and built environment. Community and cultural development like public art projects, historical preservation, library and museum support, and civic technology can enhance communities and instill civic pride. Public health and resilience work like contact tracing, emergency response support, and health education can help keep communities safe and healthy.

Programs could also be scaled to community needs. If needs are particularly high for a certain type of employment, wages can be increased in that job to make them more attractive to job seekers. Economists could estimate the social benefits of different jobs and use that as a basis for subsidization of jobs that create more social value.

The program could also be created as a federal-state share to promote more local buy-in and local control. If the federal government contributed 90% of the funds and the states contributed the remainder, that could bring an infusion of cash to states while still giving states a way to take part in the program and help defray federal costs.

Fiscal multipliers could rake back some of the costs of the program. By infusing millions of jobs into the economy that were not there before, people will have money in their pockets that then will be spent on goods and services in the community. The dynamic effects could reduce the overall costs of the program. On the other hand, administrative costs will tack on a little more to the costs of the program, though not likely all that much compared to the costs of paying employees. Also worth taking into account is benefits: beneficiaries would likely be placed on Medicaid, which could cause some expense, assuming they were not on it already.

There are other ways to slice the pie to estimate different numbers for this program, but a conservative program to end unemployment in the United States forever would cost about $100-150 billion in normal years, rising to $300-500 billion in recessionary periods. It is up to policymakers whether this would be worth the cost, but it is certainly not impossible.

What is the impact of universal benefits?

This week, Scioto Analysis released a new cost-benefit analysis of universal free school meals in Ohio. We found that providing free school meals to all children would result in a net benefit of over $500 million per year. This is somewhat surprising, because Ohio already provides free school lunches to low-income children. This type of expansion would directly benefit children who come from relatively more affluent families. 

If we make the broad assumption that universal school lunches would only impact families that have the resources to afford daily lunch on their own, then we might expect to see a different result. The reason for this is that this program would essentially serve as a cash transfer for these families, freeing up resources for them to spend on other things of their choosing. Assuming these families receive diminishing marginal benefits from this additional spending, it’s hard to imagine that we would see such positive results. 

However, our study finds that the children who receive free school lunch would still see significant improvements in their current health and future earnings. This suggests that some of the people who are not currently eligible for free school lunches still might need them.

It is a reasonable idea to take certain programs and target them towards the people we expect to benefit the most. We live in a world with real budget constraints that are important and we should maximize the efficiency of our public spending. However, we don’t necessarily know what groups will benefit the most from certain programs. 

Additionally, limiting access to social programs requires creating and enforcing enrollment requirements. This is the administrative sludge that is part of the cost of running any program. Stricter restrictions often come with more sludge, which can lead to less efficient outcomes. 

One of the benefits of universal programs is that they are relatively simple to administer. Everyone gets it, which minimizes the need to verify enrollment. There needs to be some administration in order to make sure people receive benefits and to make sure people don’t claim benefits multiple times, but those are simpler tasks than doing things like verifying income levels and residency. 

Another benefit of universal benefits is that they don’t leave behind any individuals who might benefit from a given program. This may sacrifice some efficiency if policymakers have a very good idea about what groups would receive the greatest marginal benefits, but overall it simplifies this targeting and reduces the risk of mistakes in the analysis process. 

One final benefit of universal programs is that they do not suffer from benefit cliffs. This is the phenomenon where an individual may be disincentivized from increasing their wage income because doing so would disqualify them from some benefit, lowering their overall income. Since everyone receives the benefit, there is no incentive to reduce work output to qualify for benefits.

Making public benefits universal is probably not a good strategy for every social program. Some programs are designed to address very specific problems in our society and would not make sense if they were given to everyone (e.g. unemployment insurance, disability insurance, etc.). However, our study shows that there are parts of our social safety net that would be efficient to expand through universal provision. Policymakers should consider evaluating more programs and seeing if they would benefit from becoming provided universally.

Blunt property tax measures could threaten Ohio community vitality

Last week, Ohio lawmakers overrode a governor’s veto, prohibiting schools from proposing emergency levies to maintain fiscal sustainability.

The reasoning used by lawmakers was that levies like these are a contributor to property tax burden in the state.

Supporters of the bill argued that even though these levies required a vote from the people who would be subject to the tax, that voters did not know what they were agreeing to. According to them, eliminating the tax would stop voters from being duped.

It’s an interesting argument, but not one with a lot of merit.

It seems that simply changing ballot requirements for transparency could have achieved the effect of solving the information asymmetry problem.

Now districts are down another tool for ensuring fiscal sustainability.

Why do schools need local fiscal tools like this?

Why not have schools more dependent on the state for funds and less so on the will of local voters?

In the extreme, why doesn’t Ohio follow the lead of Hawai’i and eliminate school districts altogether?

A classic paper by 20th century economist Charles Tiebout gives us a reason that we may want to preserve local fiscal tools like this.

Tiebout’s model of “Tiebout sorting” is built on the idea that people have choices about which jurisdiction they wish to live in.

Different local jurisdictions can provide different mixes of public goods and collect different levels of taxes to finance those goods. That means people can move to communities that provide them with their needs.

Certain communities in Ohio have high taxes, good schools, and safe streets, appealing to families with children.

Others have lower taxes and amenities like senior centers, which can appeal to people who are retirement-age.

Still others can have their taxes allocated toward things like safety in entertainment districts, appealing to young professionals.

Strategies like school finance equalization can make it easier to deal with equity issues — people who do not have the flexibility to move jurisdictions based on their public goods needs.

But overall, allowing communities to decide for themselves how much to raise for public goods and how to spend it allows for a diversity of communities that makes the state as a whole stronger.

In the 1970s, the state of California went through its own citizen-led property tax revolt.

Spurred by housing prices that had more than doubled from 1970-1978, voters passed a citizen initiative that fixed property taxes in place across the state, with only small changes allowed over time.

This has led to some problems.

Individuals and corporations have been given an incentive to sit on properties for decades without making improvements to the properties to avoid increases in property taxes.

Schools and local governments are not able to raise money at the rate of increases in costs.

This has been part of the policy landscape that has led to an exodus from the state over the past decade: things just don’t work there anymore.

Despite the troubles Ohio has had in its post-industrial era, the state still has a lot of positives.

Housing and energy costs are still low compared to the rest of the country, cost-of-living-adjusted poverty is below average statewide, and the state is still an attractive place for people to start businesses and raise families.

Blunt approaches to local government finance will only make it harder for communities to provide the range of lifestyles that will make the state economy dynamic decades into the future.

This commentary first appeared in the Ohio Capital Journal.

Scioto Analysis releases cost-benefit analysis of universal free school meals in Ohio

This morning, Scioto Analysis published a cost-benefit analysis to assess the potential impacts if the State of Ohio implemented a universal free school meals program for one year. A universal free school meals program in Ohio would use state funding to supplement existing federal school meals programs. We estimate that providing the option of free school breakfasts and lunches to all students in Ohio for one year would generate $356 million in social costs and $876 million in social benefits, resulting in net social benefits of $520 million. Specifically, we estimate that the program would require $300 million in direct costs and $56 million in tax inefficiencies known as the “marginal excess tax burden.” We estimate that the benefits would be: 

• $300 million: direct benefits to families, cafeteria staff, and food suppliers

• $5 million: economic value of time saved by parents who would have made breakfast at home but switched to school breakfast 

• $15 million: economic value of time saved by parents who would have packed lunches but switched to school lunch

• $4 million: reduced healthcare costs due to reduced obesity

• $552 million: students’ increased lifetime earnings as predicted by improved test scores, discounted to present-day value

There are several sources of uncertainty in our estimates, so we explore alternative inputs to our model through sensitivity analyses. The sensitivity analyses suggest that although the exact magnitude of benefits is highly uncertain, net benefits of universal free school meals in Ohio are likely to be positive.

For more on school meals, see our blog posts on universal free school meals, the Community Eligibility Provision, the history of school meals, and school meals and student achievement.

Universal Free School Meals in Ohio: Costs, Benefits, and Policy Options

During the Covid-19 Pandemic, the U.S. federal government temporarily provided waivers for universal free school meals for students nationwide, meaning that all students could eat breakfast and lunch at school for free, regardless of household income. When those waivers ended in 2022, several states passed legislation to continue providing universal free school meals by supplementing federal school meal funding with state funding. Those states include California, Colorado, Maine, Massachusetts, Michigan, Minnesota, New Mexico, and Vermont. Ohio considered a bill to establish universal free school meals during the 2025 legislative session, but the bill did not pass. 

The debate over universal free school meals is a rich topic for economic policy analysis, as it sits at the intersection of education, health, and social safety net policy. This topic is also part of a broader debate about the advantages and drawbacks of universal versus targeted social safety net programs. Proponents argue that universal free school meals improve student learning and health, reduce the stigma associated with receiving free meals, and reduce schools’ administrative costs. Meanwhile, opponents argue that it is parents’ responsibility to feed their children and that the government should not provide meals to children whose families can afford those meals themselves. 

These debates caught our attention at Scioto Analysis as an excellent place to apply cost-benefit analysis. A cost-benefit analysis assesses the economic costs and benefits of a policy to determine whether it generates net economic gains for society. In a report published this week, I estimated the costs and benefits to Ohio residents if the State of Ohio were to provide universal free school meals. The economic costs to Ohio residents would be the direct cost of food and cafeteria staff, plus economic inefficiencies from higher taxes, known as the “marginal excess tax burden.” The economic benefits would be the value of free meals for students and wages for cafeteria staff (i.e., the flip side of the direct costs), reduced healthcare costs due to reduced obesity, time saved by families who would have otherwise prepared breakfast and lunch at home, and potentially increased lifetime earnings for students, as projected by improved test scores. There are also a variety of other benefits for Ohio residents that I discuss in the report, but do not monetize. I estimate that the total costs would be around $356 million and the total benefits would be around $876 million, resulting in net benefits of $520 million. As with any projection of the future in a complex social system, there is a high degree of uncertainty in these estimates. However, my sensitivity analyses suggest that even with a variety of different inputs and assumptions, universal free school meals would likely yield net positive economic benefits for Ohioans.

It may surprise many readers to learn that 62% of Ohio students in schools participating in the National School Lunch Program (nearly all public schools and many private schools) already have access to free school meals. Thus, the debate over universal free school meals in Ohio is about whether to expand access to the remaining 38% of students. Under the current system, students can access free meals through four different pathways. Using October 2024 data from the Ohio Department of Education and Workforce, I calculated the share of students covered by each pathway, expressed as a percentage of all Ohio students in schools participating in the National School Lunch Program: 

• 18% of students are eligible for free meals through the traditional means-tested National School Lunch Program and School Breakfast Program. Families can apply for free meals if their income is below a threshold, and many families are automatically granted access to free meals based on their enrollment in other social safety net programs like the Supplemental Nutrition Assistance Program (“food stamps”) and Temporary Assistance for Needy Families. 

• 3% of students are eligible for reduced-price meals through the traditional means-tested National School Lunch Program and School Breakfast Program based on household income, and they can receive those meals for free through a subsidy from the State of Ohio that was established by state law in 2023.

• 40% of students have access to free meals through their school’s enrollment in the Community Eligibility Provision, which provides federal funding for schools or districts to serve free meals to all students if a high percentage of the student population comes from low-income households. The Community Eligibility Provision became available nationwide in the 2014-2015 school year, and enrollment has expanded substantially over the years. Note that many, but not all, of these students would have had access to free meals under the traditional means-tested program if their school were not enrolled in the Community Eligibility Provision.

• 1% of students have access to free meals through their school’s enrollment in Provision 2. Provision 2 allows schools to claim meal reimbursements based on the percent of students who are eligible for free and reduced-price meals, and to provide free meals to all students rather than only to students who are eligible under means testing. Provision 2 is typically only financially viable if a high percentage of a school’s students are already eligible for free school meals. This is an older program that is less commonly used now that the Community Eligibility Provision is available. Again, many, but not all, of these students would have had access to free meals under the traditional means-tested program.

The figure below, which comes from my cost-benefit analysis, displays these percentages.

Percent of students with each school meal access pathway in Ohio, among students at schools that participate in the National School Lunch Program

Based on the available research about the health, educational, and economic benefits of universal free school meals for students of all incomes—even those who are already eligible for free meals through existing programs—I believe universal free school meals are a worthwhile investment for Ohio. However, I also recognize that this is a tough issue politically, as lawmakers are wary of increased spending, especially for a program that would provide free meals to children from middle- and high-income families. 

If Ohio’s leaders want to expand access to free school meals in lower- and middle-income schools without providing universal free school meals in all schools, an intermediate policy option would be to provide state subsidies to help more schools and districts enroll in the Community Eligibility Provision. As described above, the Community Eligibility Provision allows schools or districts with a high percentage of low-income students to provide free meals to all students. Eligibility for the Community Eligibility Provision is based on a school’s or district’s “identified student percentage,” which means the percent of students who are automatically certified to receive free school meals due to participation in other social safety net programs. Schools or districts with an identified student percentage of at least 25% are eligible to participate. However, the federal government only provides enough funding to cover 1.6 times the identified student percentage, so schools or districts with an identified student percentage less than 62.5% are responsible for providing their own funding to cover free meals for some of their students. If the State of Ohio provided subsidies to schools and districts with identified student percentages between 25% and 62.5%, that would make it financially feasible for more schools to participate in the Community Eligibility Provision, thus allowing more schools to offer free meals to all students and increasing Ohio schools’ ability to leverage federal funding through the Community Eligibility Provision. The State of Ohio could also provide resources to help schools and districts with implementation of the Community Eligibility Provision.

Whether through universal free school meals or through subsidies to support increased enrollment in the Community Eligibility Provision, Ohio has an opportunity to make nutritious meals a reliable part of more children’s school days, thus supporting students’ learning today and strengthening Ohio’s economy tomorrow.

For more on school meals, see our blog posts on the Community Eligibility Provision, universal free school meals, the history of school meals, and school meals and student achievement.

How will the government shutdown affect the states?

On October 1st, 2025, the federal government entered its first federal government shutdown since 2018 after lawmakers failed to reach an agreement on a recent spending bill. The government shutdown comes after disagreements about Medicaid cuts and tax breaks could not be resolved by Congressional leaders. Many Democratic lawmakers aimed to reverse Medicaid cuts from President Trump and extend tax credits for healthcare plans purchased through the marketplaces established by the Affordable Care Act, while many Republican lawmakers opposed the reversals, indicating they would cost taxpayers more than 1 trillion dollars. The government shutdown will suspend many federal services and furlough thousands of federal employees.

As of October 1st, neither side shows any signs of budging. Warnings of a government shutdown have been on the radar for weeks as the White House informed agencies to prepare for large-scale firings of federal workers. All federal agencies maintain contingency plans in case a government shutdown occurs. In advance of the current shutdown, the Office of Management and Budget instructed agencies to modify those contingency plans and increase provisions for reducing agency workforces if a shutdown were to happen, particularly those that are “not consistent with the President’s priorities.” Compared to previous shutdowns, this language is much more aggressive and could include permanent layoffs instead of just temporary furloughment. This additional guidance may result in more severe impacts for workers and communities than in the past, depending on how long the shutdown lasts and if permanent reductions in agency workforces occur. 

The most recent government shutdown in 2018 lasted 34 days and was the longest shutdown in history. While most economic losses from government shutdowns can be recouped, the Congressional Budget Office estimates that the nearly 5 week shutdown in 2018 resulted in about $3 billion of forgone economic activity that could not be recovered, which was equivalent to approximately 0.02 percent of annual GDP in 2019. If the current shutdown persists similar to the shutdown in 2018, we could see similar or worse economic consequences due to potentially higher layoffs and pre-existing poor economic conditions in state and local communities.

While federal government shutdowns primarily affect federal services and employment, these impacts ripple through state and local communities. The shutdown is expected to place 750,000 workers on unpaid leave, and for areas with high concentrations of federal employees, local economies will suffer. The unpaid leave for federal workers will result in a major loss of income, which will likely lead to lower consumer spending in local economies.  

If the shutdown is prolonged, many services that are provided by the federal government but administered by state and local governments will be strained. All non-essential discretionary services will be suspended, while essential services will continue to function. However, some essential services, such as WIC, SNAP, Medicaid, Medicare, and disaster relief programs may experience staffing shortages or run out of federal funding. Staffing shortages and lack of funding would lead to interruptions in services that millions of Americans rely on, many of which will turn to state and local governments to bear the cost of distressed social services.

On October 1st, federal funding authorization expired for some mandatory programs such as Medicare and TANF. Once federal funding runs out, state and local governments usually dip into their own contingency funds to bolster social safety net programs. Once the federal government returns to regular operation, they typically reimburse state governments for the expenses they incurred. However, as political tensions grow higher, many legal experts have less certainty about when and if federal reimbursements will come in. If states continue to fund the discretionary programs that may see budget cuts in the very spending bill that caused the shutdown, the federal government may be hesitant to provide reimbursements. Congress would decide on a case-by-case basis whether or not to reimburse state governments.

The government shutdown puts state and local policymakers in a tight spot as political tensions grow and threats to federal spending continue. The natural inclination of most state and local policymakers would be to continue funding the programs that millions of Americans rely on as the status of the federal government remains in limbo, but what happens if Congress refuses to reimburse state and local governments after the shutdown ends? State and local governments may see themselves enter worse financial situations, especially as funding for these programs remains at risk.

AI is changing the way we think. What can public policy do about it?

I’ve been thinking a lot about AI models and suggestion algorithms recently, and how public policy relates to them. Specifically, I’ve been thinking about how these things change the way we think. 

I believe there is a public policy problem that we need to address: as suggestion algorithms and AI models become more ubiquitous, they are replacing more types of human decision making. Some of this is more trivial, such as suggestions about what movies to watch or what music to listen to. This becomes more concerning when these models make more important decisions like what news to read, or what information we should take away from a dataset. 

This is a public welfare issue because the type of suggestions these models make are impacted by the data that they are trained on and the specific objective they are trained to achieve. 

Take the example of a social media suggestion algorithm that is designed to keep the user engaged with the product. This algorithm is going to make individuals engage more with social media than they might optimally like to, which creates a negative internality.

This idea relies on an assumption that some people might disagree with: that these models prevent people from making rational decisions. You could argue that a rational economic actor can take in the suggestions given by these models and decide what the appropriate amount of consumption is. I think there is sufficient evidence to suggest that people are not behaving rationally when faced with suggestions from statistical models, but I’ll acknowledge that it may be possible to come up with a reasonable counterargument.

If we accept that suggestion algorithms and large language AI models create negative internalities by guiding people towards decisions that are not in their best interests, then we can try and figure out what we can do about it. 

The economic solution I find the most interesting would be to tax the consumption of products that rely on these types of models. We’ve written in the past about Pigouvian Taxes, and solving this type of market failure is exactly what they could be good for. 

One challenge of this approach with these technologies specifically is that most people aren’t paying to use these services. Policymakers would have to come up with some new ways of quantifying use and taxing it accordingly. 

So far, I’ve been talking about suggestion algorithms and massive AI models interchangeably. This is because the real problem I think policymakers need to address is the fact that human decision making is being increasingly replaced by technological decision making. I’ve so far only mentioned cases where this leads to negative internalities, but there are many cases where these exact same models are making massive improvements for society, like helping identify cancer. I don’t know what the solution to this is.

Despite this identification challenge, policymakers are going to need to start addressing these models head on. Like it or not, they are changing the way our world works rapidly, and it is extremely important that we come together and decide how we want to interact with these new kinds of models.