Trump vs the NFL: America’s Theater of the Absurd Continues

by Donald J. Rippert

Unnecessary dumbness. This week President Trump went to Alabama to campaign for Republican Senate candidate Luther Strange. Perhaps in homage to the candidate’s surname, Donald Trump decided to voice his opinions about the NFL players who protest something or other by kneeling during the national anthem. During his speech in “the heart of Dixie” the Donald went on a tirade against the NFL players. Rather than simply expressing his disagreement with the protesters Trump returned to his usual bombast by urging NFL owners to, “Get that son of a bitch off the field right now, he’s fired. He’s fired!” Listening to Trump’s statements, I suspect that he would escalate a child’s game of tiddlywinks into an armed confrontation if he could only figure out a way to do so. But was he wrong?

Return fire. As has become customary in American politics the reaction to President Trump’s intemperate comments was a barrage of intemperate comments. Rodger Goodell, the vastly overcompensated commissioner of the NFL, slammed Trump’s “divisive” comments claiming the commentary showed a “disrespect for the NFL”. Goodell’s musings leave me to wonder why Trump’s statements were any more divisive than overpaid children refusing to stand for the national anthem or why a league owned by billionaires that puts on a weekly spectacle that maims and kills its players deserves any respect in the first place.  Zach Brown, a Redskins linebacker and usually one of the more intelligent NFL players, tweeted, “Trump stay in ur place… football have nothing to do wit u smh”. Really Zach? The president is somehow out of his place criticizing players who don’t stand for the national anthem? Zach, you graduated from the University of North Carolina. That’s the best you can do?

Employees and employers. Putting aside Donald Trump’s childish need to use profanity in making a statement – does he have a point? Should the owners prohibit players from kneeling or sitting during the national anthem? While NFL players clearly have a right to their opinion NFL owners also have a right to enforce rules in the workplace. I would expect to be summarily dismissed from my job if I took advantage of a public speaking opportunity regarding cloud computing to launch into a tirade against the unfairness of America. There’s a time and place for everything, and my employer doesn’t pay me to express my political opinions on the job. As an NFL fan I don’t have any interest in the political opinions of people who garner attention because they are big and/or can run fast. In a similar vein I would pass on the opportunity to pay to watch a football game played by the authors and commenters on this blog.

The boys and girls in blue. As far as I can tell the kneeling NFL players are protesting the behavior of American law enforcement officers toward minorities. It’s hard to know for sure since the kneelers seem to lack the willingness or ability to articulate their presumed grievances. I wonder what would happen if all the law enforcement officers in those NFL stadiums decided to protest the protesters by simply walking out. Would the courageous multi-millionaires who kneel during the national anthem still play the game if the thin blue line that separates them from 80,000 rabid, hard drinking fans disappeared?

Bacon bits. I urge Jim Bacon to formally invite the NFL’s players to submit guest columns on this blog. They can take the opportunity to describe how horribly unfair life has been to them. In the meantime, I think I’ll skip watching this week’s NFL games. Dan Snyder doesn’t need any more of my money anyway. I’ll use the time instead to visit my father’s grave-site at Arlington National Cemetery.

A Reminder that the James River is Richmond’s Greatest Asset

Laura and I ate lunch today at the Conch Republic at Rocketts Landing and enjoyed the perfect temperature, delightful breeze and wonderful views while seated outside on the deck. Rocketts, a residential-retail development retrofitted from old industrial acreage just south of the Richmond city line, didn’t exist when I moved to Richmond three decades ago. But it’s thriving now — and it serves as a great example of how this metro area has changed for the better.

The Capital Trail, which leads to Williamsburg, is visible in the photo above. It wasn’t as busy as Arlington’s biking trail along the Potomac, but we did see many dozens of bikers. We also saw kayakers and recreational boaters on the river today. The Richmond Rowing Club’s crew team puts its sculls into the water nearby as well. Biking, hiking, kayaking, rowing and motor boating — those are amenities that people value when they decide where to live. They comprise the soft infrastructure of the 21st-century knowledge economy. For a long time, Richmond didn’t have it. At last it does.

Does School “Accreditation” Mean Anything in Virginia?

Here’s how K-12 accountability works in Virginia. School districts administer Standards of Learning (SOL) tests to measure school children’s mastery of basic skills and concepts. Schools that meet minimum state standards for student achievement — 75% adjusted pass rates for English, 70% for math, science, and history — are deemed to be accredited. Schools that fall short can be designated with a variety of partial accreditation classifications, and they must demonstrate that they are making progress. De-accreditation is a good stick for motivating schools. Although schools don’t lose money, they do lose status, endure the scorn of their communities, and suffer VDOE oversight and meddling.

Just one problem: Schools are motivated to improve their scores, which is not the same thing as improving the academic achievement of their students. The operative word in the paragraph above is “adjusted.” Schools must achieve adjusted pass rates.

Almost no one in the established Virginia media, to my knowledge, has tried to penetrate the logic of VDOE accreditation policies. I could never do it. I am not equipped cognitively or temperamentally to decipher the dense, inscrutable verbiage of VDOE regulations. Outside of the state and the school districts themselves, I know of only one man who has made the effort, and he is a lawyer accustomed to reading impenetrable prose: John Butcher, publisher of Cranky’s Blog.

This graph shows how much “adjusted” SOL scores improve over actual SOL scores. Graphic credit: Cranky’s Blog. 

The numbers for the 2016-17 school year have come out, and Butcher has been digesting them. In the graph at left taken from this post, he compares the actual scores on the 2017 math SOLs to the adjusted scores. In nearly every case, the adjusted scores improve — sometimes significantly so. Coincidentally (or not so coincidentally), large adjustments tend to kick in around the 70% pass mark — enough to shift a school scoring a 68 or 69 percent pass rate into 70+ territory.

As Butcher notes: “There are 37 schools with 69% math pass rates but only five with that adjusted rate.  The average adjusted rate for those 37 schools is 74%.”

How about that.

In a follow-up post, Butcher hones in on his home town, Richmond, and finds that adjustments pushed eight schools over the 70% mark for math SOLs. The average bump was four percentage points per school. One school, E.S.H. Greene Elementary, received a 26 percentage-point boost.

In yet another post, he drills down to the E.S.H. Greene data. Greene, with a largely Hispanic student body, has appallingly low SOL scores. But thanks to massive adjustments for English as a Second Language students, Greene is classified as accredited.

Concludes Butcher: “This official mendacity gives Greene bragging rights while failing to teach nearly half its students to read or reckon. … More fundamentally: Accreditation — or lack of it — is meaningless.”

Wakes Be Damned! The Potomac Needs a High-Speed Ferry!

The Waiheke Island ferry.

Many years ago my mother wearied of living in Washington, D.C., so she traveled to New Zealand to check out a nation that was blessed by natural beauty, governed by English common law, and poised to benefit from China’s economic boom. She happened upon Waiheke Island not far from Auckland, which had been inhabited mainly by hippies, artists and bohemians until that time. What stirred her interest as a real estate investment was the recent commencement of high-speed catamaran service between Waiheke and downtown Auckland, New Zealand’s primary business center. She purchased a little house on the island, and her thinking proved prescient. The catamaran service proved to be a popular mode for commuting, Auckland yuppies flooded the island, Waiheke enjoyed an economic boomlet, and her investment appreciated nicely in value.

When visiting my mother some 20 years ago, by necessity, I rode the Waiheke ferry. The vessel was commodious, and the trip was enjoyable. As a mode of travel, it was comparable to riding a train, and far preferable to driving a car. Ever since, the idea of commuting by ferry made sense to me, and I have always wondered why we don’t see more of it in Virginia.

People have been kicking around the idea of ferries and water taxis on the Potomac River for more than a decade now, but for one reason or another, it never got off the ground. Likewise, people have talked about starting a ferry service in Hampton Roads — perhaps there’s one up and running — but I haven’t heard much about it. Clearly, there are obstacles to establishing such an enterprise, but hope springs eternal, and the idea is getting a new look in Northern Virginia.

Reports the Washington Post:

On Thursday, a 149-seat ferry made a test run from Occoquan Harbour Marina in Prince William to Fort Belvoir in Fairfax County, replicating the modern ferry experience with free WiFi, charging stations and onboard concessions. For riders, the best feature was the beautiful water scenery, traffic-free.

“Better than the bumper-to-bumper traffic of 95 and 395,” said Prince William County Supervisor Frank J. Principi (D-Woodbridge).

Principi, an enthusiastic backer of ferry service, spearheaded a day-long ferry summit Thursday that brought together more than 300 officials from the public and private sectors to discuss the vision for a system that would carry passengers from as far as Prince William and as near as Old Town Alexandria and National Harbor on the Maryland shore.

Officials say ferry service could be part of the solution to the notorious traffic congestion along the growing Interstate 95 corridor, and a way to take advantage of the Potomac River — or what some call the last unused highway in the Washington region.

A market analysis conducted for the Northern Virginia Regional Commission two years ago concluded that a that a viable market exists for commuter ferry services on the Occoquan, Potomac and Anacostia rivers. Ferries are widely used in New York, Seattle, and San Francisco? So, what’s the hold up in the Washington area?

Apparently, nothing can be done without an environmental impact statement, so Washingtonians are waiting for the results of an impact study. One issue is that high-speed ferries create big wakes — although new ship designs minimize the disturbance. Another is the impact of shore-side infrastructure such as passenger terminals, parking and lighting. Good grief! Surely those problems can be dealt with. In the immortal words of Larry the Cable Guy, “Let’s get ‘er done!”

Maybe Hampton Roads Isn’t the Second Most Vulnerable Metro After All

Norfolk flooding this past August. Photo credit: Virginian-Pilot.

Dave Mayfield, a reporter with the Virginian-Pilot, has frequently repeated the claim that Hampton Roads, after New Orleans, was the most vulnerable to sea level of rise major U.S. metropolitan areas. I’ve repeated that factoid on this blog — perhaps I picked it up from his writing, I can’t remember. Anyway, Mayfield began wondering about the scientific basis for that judgment. After digging into the matter, he discovered that Galveston, Texas, which is part of the Houston metropolitan area, is probably  more vulnerable…. depending on which metric you use to define vulnerability, which is another issue in itself.

Mayfield’s bottom line:

Sea level rise is too complicated a problem and each coastal area too unique to make truly reliable comparisons. So I’m going to resist calling Hampton Roads the third-most-vulnerable major metro area in the country, even with my new understanding.

I’m hoping that, by now, we all can accept that we’ve got a big problem, one that won’t easily be solved.

I respect anyone who questions his own assumptions, appreciates complexity, and is willing to revise his thinking. Good work, Mayfield!

Is a Washington-Baltimore-Richmond Mega-Region in Our Future?

The Boston-Washington corridor

In 2008 economic geographer Richard Florida argued in his book, “Who’s Your City?”, that the economic units that matter in understanding economic growth and development aren’t nation states, or states, or even metropolitan statistical areas. They are mega-regions — agglomerations of metropolitan areas that are increasingly bound to one another through business interactions. By Florida’s reckoning, the mega-region biggest in the United States and the second largest in the world is the Boston-Washington corridor, which extends as far south as Richmond and Hampton Roads.

I long thought of the idea of a mega-region as a meaningless abstraction — an academic concoction rather than a reflection of economic reality. Metropolitan areas, which describe definable labor markets, are the primary units of economic development. But two news stories today have forced me to consider the possibility that MSAs are not immutable if the will exists to transcend them.

First, the Greater Washington Partnership, created last year, has issued a vision statement for “the Capital Region” encompassing the Baltimore, Washington, and Richmond metropolitan statistical regions. Admittedly, that’s a far cry from a megalopolis stretching all the way to New York and Boston, but it’s a bigger than anything that exists now in Virginia or Maryland. The economy of the Capital Region, proclaims the organization’s website, is the third-largest in the United States and seventh largest in the world.

States the website: “By acting together, and focusing on super-regional solutions, we can overcome jurisdictional impediments, achieve solutions at a scale that is equal to the problems we face, and deliver new sources and engines of growth to achieve economic well-being and prosperity.”

In the Richmond Times-Dispatch today, Michael Martz quotes Dominion CEO Thomas Farrell, one of 21 corporate CEOs on the partnership’s board, as saying,  “The Greater Washington Partnership can make an impact on such pressing issues as transportation and talent, if those issues are addressed regionally.”

The overarching goal of the CEOs is to attract talent and promote innovation. A law of knowledge-economy economics, known as the agglomeration effect, is that larger regions exert greater gravitational pull on talent and corporate investment than smaller regions. The implication: Washington, Baltimore and Richmond are all stronger if they function as a single big region rather than three smaller regions. The incredible power of the agglomeration effect drives the growth of mega-regions, and it is the primary justification for building ties between neighboring regions.

Now, it’s one thing to proclaim a common identity, and another to achieve it. One can easily envision Washington and Baltimore as a single MSA because the entire swath of land between the two core cities has been filled in and developed. As a result, the labor markets of the two regions overlap to a significant degree. The same cannot be said of Washington and Richmond. But ties between Richmond and Washington, though tenuous, are emerging.

That brings me to the second news item. The Stephen Fuller Institute has just published a study, “Migration in the Washington Region: Trends between 2000 and 2015 and Characteristics of Recent Migrants.” The Washington region has a problem. While its population continues to grow as a result of foreign immigration and a surplus of births over deaths, the region has been leaking native-born citizens.

Between 2000 and 2015, Washington has experienced a net domestic migration to the Baltimore area of 77,000, and to the Hagerstown-Martinsburg area of 35,000. The number three and four recipients of Washington out-migration were Winchester (16,000) and Richmond (14,000). Charlottesville (4,000) was 15th largest recipient of domestic out-migrants. While downstate Virginia’s ties to the Washington region aren’t as strong as Maryland’s, they are still substantial. (Interestingly, Hampton Roads shipped a net 14,000 population to Washington over the same period, a pattern no doubt influenced by military ties between the two regions.)

When Washingtonians leave the metro area, by and large, they aren’t moving to New York, Boston or Philadelphia. Some are moving to retirement areas in Florida or the Eastern Shore, and a few to Charlotte and Raleigh. But the overwhelming majority are settling nearby — in the Baltimore, Hagerstown, Winchester and Richmond regions.

In other words, while the business CEOs speak grandiosely about pulling the three regions together, they aren’t trying to make something out of nothing. Below the radar screen, thousands of households making decisions of where to live and work implicitly recognize a commonality not reflected in government statistics.

If the political class buys in to the idea of a Baltimore-Washington-Richmond mega-region, the single-most important thing it can do is to knit the regions together with better transportation infrastructure. Saying this goes against my grain because I am suspicious of infrastructure mega-projects of all kinds, which invariably turn out to be boondoggles. But adopting the view of economic strategist rather than fiscal scold, I would say that top priorities would be: fixing the Washington heavy rail system, creating a higher-speed rail system from Richmond to Washington, and completing the extension of the Interstate 95 tolled express lanes to south of Fredericksburg. If we want to make a mega-region a reality, then we must invest in transportation infrastructure that enables people to move easily between the component regions.

One more thing. If Virginians want to become part of an economically competitive mega-region, they need to cast aside traditional resentments between Northern Virginia and the Rest of Virginia, NoVa and RoVa. Legislators must transcend their parochialism and prioritize projects of regional value, even if it means deferring local needs, in the expectation of everyone gaining something greater in return.

Consumer Group Calls for Scrapping North Anna 3

 

 

 

Dominion Energy may have declared a “pause” in the development of a third nuclear unit at its North Anna Power Station, but a consumer advocacy group says that’s not good enough. It’s time to shut down the project permanently.

“Dominion needs to kill North Anna to protect rate payers,” said Irene Leech, president of the Virginia Citizens Consumer Council (VCCC). Critics have estimated that the project will cost roughly $19 billion, which would make it the most expensive power plant ever built in Virginia by a factor of ten or more. “If Dominion doesn’t do it, the SCC (State Corporation Commission) should intervene.”

Leech made her comments while introducing Dr. Mark Cooper, senior fellow for economic analysis, Institute for Energy and the Environment, at Vermont Law School, in a media conference call. Cooper, who had predicted the recent cancellation of the V.C. Summer nuclear plant in South Carolina after massive construction cost overruns, filed testimony with the SCC today on behalf of the VCCC in regards to Dominion’s 2017 Integrated Resource Plan.

“Dominion’s recently announced decision to suspend development of North Anna 3 is welcome, but long overdue and not as decisive as it should be,” Cooper said. “The Commission should order North Anna 3 removed from the IRP and refuse to allow any cost recovery associated with the development of North Anna 3 other than through the normal rate-making process, in which the utility demonstrates that it is the least cost option and useful to ratepayers.”

While acknowledging that the nuclear plant is extremely expensive, Dominion has argued that the utility should preserve the nuclear option to cope with a worst-case regulatory scenario restricting carbon-dioxide emissions. In its integrated resource plan, the company explores six scenarios. In one of them, Plan H, Dominion would be have to cut carbon emissions 7% compared to a 2012 baseline by 2030, compelling the closure of up to four coal-fired units at its Mecklenburg and Clover power stations, and making it impossible to make up the lost base capacity with natural gas. The plan contemplates 5,760 megawatts of new solar capacity, but solar output is intrinsically variable. That would leaves nuclear as the only option when the sun didn’t shine, the company has said. The company would not need to build the nuclear plant under any other regulatory scenario.

While some observers assume that Dominion hit the pause button on North Anna 3 because of horrendous construction cost overruns at plants in South Carolina and Georgia, spokesman David Botkins says the company made the decision more than a  year ago. Regulatory uncertainty made it prudent to put the project on hold but not to spike it. The Clean Power Plan, which orders states to impose CO2 emissions on their electric utilities, is not dead. Its legality is tied up in the federal court system, and the McAuliffe administration is moving ahead with his own low-carbon plan for Virginia. The company has not made the decision to build the nuclear unit but thinks it worthwhile, after spending roughly $600 million to obtain a Combined Operating License (COL), to keep the option open.

Given the momentum of technology, Cooper argued, there is no chance of nuclear becoming economically viable. “Nuclear construction costs escalate relentlessly, driven by complexity,” he said. “Nuclear is the most expensive way imaginable to reduce carbon emissions. It’s a bad investment. I have wind, solar, and energy efficiency in hand today at a third of the cost of North Anna 3. I want to get [nuclear] off the table.”

The United States electric system is transitioning “to flexible, small-scale, renewable, distributed” energy sources like rooftop solar. Meanwhile investments in energy efficiency and demand-management strategies are holding down growth in electricity consumption, Cooper said. The ability to store large volumes of electricity in batteries will make it possible to overcome the problem of volatile energy output.

“Think about your laptop, tablet, or cell phone. Ten years ago … the battery life was an hour. Now it’s ten hours. They’re making huge progress in energy storage,” Cooper said. Meanwhile, solar + batteries can increase generating capacity in increments rather than in one a big chunk when the nuclear plant comes online. Utilities talk about solar plants sitting idle at night or under cloudy skies. Large swaths of the electrical infrastructure, such as combustion turbine plants that run only during periods of peak demand, spend much of their time idle as well. Nuclear isn’t cost competitive now, and it never will be, he said.

Putting the North Anna 3 project on hold is not an adequate response, Cooper said. The General Assembly allowed Dominion to capture $570 million from rate payers to defray the cost of obtaining the North Anna 3 operating license. That sum has economic value. Assuming rate payers could earn 3% annually on that money, the opportunity cost amounts to almost $300 million over ten years. Even with the project on hold, said Cooper, “rate payers are bearing a burden.”

Dominion thinks of the North Anna 3 option as a form of insurance policy. “As has been shown throughout history, forecasts change over time,” says a prepared Dominion statement. “Fuel diversity is a key component of any energy plan. Our customers enjoy some of the lowest rates in the United States, due in large part, to the safe, reliable, clean and dependable nuclear units at Surry and North Anna.”

“The [Combined Operating License] is good indefinitely, and, while no decision has been made to build it, we could make a decision to move forward with it if business conditions change,” said Richard Zuercher, spokesman for Dominion Energy’s nuclear power operations. “We would not do so, however, without authorization from the State Corporation Commission.”

Uh, Oh, Metro Needs Another $9.5 Billion

Washington Metro General Manager Paul J. Wiedefeld has been pushing for $15.5 billion in additional contributions from participating states and localities over the next 10 years, including $500 million in dedicated funding, to make the ailing commuter rail system safe and reliable.

That request has set off serious jockeying between Maryland, Washington, D.C., and Virginia over who should pay how much, and which reforms the Metropolitan Washington Area Transit Authority (MWATA) must make before anyone trusts it with more money.

But at a recent MWATA board meeting, reports the Washington Post, Chairman Jack Evans enumerated $9.5 billion in anticipated needs not covered in Wiedefeld’s $15.5 billion figure.

Wiedefeld’s proposal “will only keep us where we are right now, which is not a good place to be,” Evans said. “What the region does, what the elected leadership, the business [community does] — they will seize on the easiest approach. So when he put out the number ‘500,’ everybody seized on ‘500,’ which gets you to $15 billion — which gets you to where you are today. Nobody wants to be where we are today.”

“We’re asking for the wrong number,” he said. “I think it was a mistake on behalf of the GM . . . to ask for the lower number.”

Bacon’s bottom line: Well, you have to appreciate Evans’ honesty. No one wants to hear that revitalizing the Metro will cost an astonishing $25 billion, not a mere $15 billion. As Virginians discuss how they will find their multibillion-dollar share of the Wiedefeld proposal, they should be acutely aware that they would be meeting only the Metro’s most urgent needs — “nonnegotiable” safety and system upgrades. They to ask themselves, will $15.5 billion be enough, or will it just paper over the problems?

Metro is “too big to fail.” Its collapse would throw the Washington region’s transportation system into turmoil, with endless repercussions for the economy and economic development. For instance, the Washington region would be an attractive location for the Amazon second headquarters in many ways, but the company is sure to ask itself, does it want to locate 50,000 employees in a region whose commuter rail system is falling apart and a proposed $15 billion fix merely preserves a deficient status quo?

Metro must be salvaged. But Virginia needs to hang tough and demand comprehensive management, labor, and governance reforms before coughing up hundreds of millions of dollars a year for a bail-out that may not accomplish much.

McAuliffe Hires Consultants to Pursue Amazon Deal

Governor Terry McAuliffe has hired McKinsey & Co. to help Virginia localities build the best possible packages to recruit Amazon’s second headquarters, reports the Virginian-Pilot. The state plans to pay the consultant more than $1 million, while state regions will chip in hundreds of thousands of dollars more.

That information, which I haven’t seen reported anywhere else, comes from Virginia Beach Mayor Will Sessoms, who has committed Virginia Beach to the long-shot endeavor. The project, which could entail the investment of $5 billion and creation of 50,000 jobs, is attracting interest from metropolitan regions across North America. The deadline for submitting proposals is Oct. 19.

Sessoms said he expects economic developers in the Richmond and Northern Virginia regions also to avail themselves of the consulting services. Virginia regions will chip in $300,000 to $400,000 for the work product. Virginia Beach will pay $200,000 of the Hampton Roads region’s share. The City of Norfolk is participating as well.

Aside from available land, great parks and recreation, a strong arts scene, the ocean, solid schools, and a high quality of life, Sessoms said the city has something that most others don’t: access to transoceanic cables that will deliver faster Internet speeds. A new trans-Atlantic cable linking Virginia Beach to Spain will go live next year. Said Sessoms: “We have a cable that is going to allow people to communicate faster than anywhere else in the world.”

Are Virginia Colleges Deferring Maintenance?

Source: State Council of Higher Education for Virginia

According to calculations of the State Council of Higher Education for Virginia (SCHEV), the replacement value of the buildings and grounds of Virginia’s public colleges and universities totals $12.2 billion. And according to the National Association of College and University Business Officers (NACUBO), institutions should plan for an annual reinvestment rate of between 1.5% and 3.5% of that replacement value to offset wear, tear and depreciation.

The Commonwealth established a maintenance reserve program in 1982 to provide funding for facility repairs that are not addressed in the institutions’ operating budgets and are too small to quality for bond financing. Examples might be roof repairs, boiler and chiller replacements, or major electric system upgrades.

Over the past 10 years, the Commonwealth has chipped in about $75 million per year to the maintenance reserve program, according to a report (page 212) submitted Monday to the SCHEV Resources and Planning Committee. That contribution has fallen consistently short of the 1% guideline ($120 million this year) that SCHEV recommends. As of 2011, the cumulative shortfall had grown to $501 million, and this year the state kicked in only l$63.2 million for higher-ed maintenance. 

Instead of funding the maintenance reserve out of operating revenue, the state addressed the condition of colleges’ buildings and grounds by making two state bond issues for new construction. Those outlays did improve the condition of college and university buildings and grounds. But the effect since FY 2009, states the SCEHV report, has been to change the funding source for the maintenance reserve program from the general fund to bond proceeds.  “As a result, the state bond funding for new construction, renovation and deferred maintenance is constrained by the annual debt capacity.”

As Finance Policy Director Dan Hix reminded SCHEV at its monthly board meeting today, the state has little capacity this year to issue new debt without jeopardizing its AAA bond rating. While some money may be available for higher-ed capital projects, he said, it won’t be much.

The practical consequence of state funding policy, Hix said, has been to compel colleges and universities either to generate their own maintenance funds by raising tuition or to simply put off maintenance projects. He offered no estimate of the size of the deferred maintenance liability.

Bacon’s bottom line: The Commonwealth of Virginia is constitutionally mandated to submit balanced budgets. But as I have blogged in the past, there are many forms of hidden deficit spending. One is unfunded pensions. Another is deferred maintenance. I was unaware before today that there was an issue with the condition of colleges’ buildings & grounds. But I’m not surprised. Deferring maintenance is one of the oldest fiscal tricks in the books — I lay odds that the practice dates back to Nebuchadnezzer and the Hanging Gardens of Babylon. Given the stress of higher-ed finances, no one would be surprised that it occurs here in Virginia as well.

While we have a sense of how much the state has short-changed its colleges and universities, we don’t know how many institutions sucked it up and found the money to conduct needed maintenance projects, and how many put off the spending for the next guy to worry about. Perhaps that’s an issue that boards of visitors could dig into. If not, maybe the bond rating agencies will find the practice of interest. One way or another, Virginia’s higher-ed system could be building up a big hidden liability.