Time to Disinvest in Higher Education?

Richard Vedder: heretic

Richard Vedder, director of the Center for College Affordability and Productivity, suggests that the United States might be overinvested in higher education. We might be spending billions of dollars as a society on activity of marginal value.

Arguably, one of the most important functions of higher education in America is signalling to employers that a given individual is intelligent, industrious, and otherwise employable. Many students learn few job-relevant skills in college, Vedder writes in Forbes. As an alternative to spending four years in college, he suggests giving students tests certifying to skills and competencies demanded by employers.

Government subsidies and private philanthropy have prevented a healthy disinvestment in higher education from occurring,” he says. “Few colleges ever fail. … America could use the failure of at least 500 colleges over the next decade to assist in needed resource allocation.”

“If we were to spend, say, one-third less than we do on colleges,” Vedder writes, “we would lose relatively little output from declining labor productivity, and if those savings were invested in other productive ways, we likely on balance would be materially ahead of where we are today.”

(Hat tip: Dwayne Lunsford.)

Bacon’s bottom line: If Americans want to enjoy college as a luxury good — going to frat parties, cheering at football games, participating in late-night dormitory bull sessions, taking classes on obscure topics that will do them absolutely no good in the real world — and if parents want to pay for that activity, well, it’s a free country. People can do what they like.

But should public policy be blindly subsidizing millions of Americans to partake of the residential campus experience? What is the justification for state and federal government subsidies for higher education, if not to prepare Americans to participate in the workplace? There is a compelling public interest creating economic opportunity for all. There is no compelling public interest in immersing students in 18th-century English novels or the tenets of Tibetan religion.

Governors as Heroic Champions of the Economy

Ed Gillespie. Photo credit: Associated Press

Writing in the Richmond Times-Dispatch today, Bart Hinkle takes Republican gubernatorial candidate Ed Gillespie to task for asserting that he’s going to shape a “dynamic economy that creates jobs” in contrast to the anemic economy under the tutelage of Democrat Terry McAuliffe. As Hinkle correctly observes, a governor’s actions have a limited impact on a state’s economy. Gillespie’s claims are as empty as those of McAuliffe, who takes credit for having overseen the creation of thousands of jobs during his administration.

When the federal government accounts for 30 percent of the state’s GDP, there is nothing that a governor of any partisan or ideological stripe can accomplish in three or four years to offset cuts to the defense, intelligence and homeland security sectors. As for the corporate-investment deals announced by the Virginia Economic Development Partnership, to which every Virginia governor since time immemorial has attached himself, rare has been the instance in which a governor’s involvement proved decisive.

What governors can do is promote public policy that creates a more favorable business climate. Gillespie has some good ideas on that score — modernize the outdated tax code, repeal outdated regulations, and foster entrepreneurship and small business formation. But let’s be realistic. A case can be made that reforming the tax code could give a modest boost to Virginia economic growth, but Virginia’s tax code is business friendly already and any gains would be incremental. As for the repealing-outdated-regulations trope, every governor campaigns against red tape. But very few have the stomach for tackling the regulations backed by powerful constituencies that truly do stifle job creation, such as occupational licensing and the Certificate of Public Need.

As McAuliffe has said repeatedly, and as I have emphasized on this blog, tens of thousands of jobs are going unfilled in Virginia because companies cannot find employees with the skills to fill them. The job of equipping Virginians with  the requisite skills falls to the public sector, both K-12 schools and higher education. If a governor truly wants to be known as a “jobs” governor, he will it make his No. 1 priority to make government get better at its core mission of educating and training its citizens.

Government can do other important things, such as enabling the evolution of the built environment toward more cost-efficient human settlement patterns and creating a transportation system to serve it. To my mind, this would entail a market-driven shift to an Uber-flavored “smart growth” future. As in so many areas, the biggest obstacle is outdated regulations, particularly zoning codes. I blogged about that topic for years, but I despair that it is too esoteric for most of the voting population to understand, which means that it’s too esoteric for elected officials to care about.

In any case, overhauling K-12, higher ed, transportation and land use cannot be accomplished in a single gubernatorial term. It is the project of a generation, which means it requires a broad social consensus. We need to abandon the idea of governors (or presidents) as heroic champions who can single-handedly revive ailing economies. They can’t. They need to concentrate on what they can do.

Should Lawmakers Cap College Tuition Increases?

Now for something totally different — the first poll in the 14-year history of Bacon’s Rebellion!

I would say that I offer this poll in response to popular demand, but that would be misleading. No one but Bacon’s Rebellion‘s skeptic-in-chief, Larry Gross, AKA LarrytheG, has been agitating for polls. Moreover, I know that I will catch unmitigated grief for biasing the results by the way I frame the poll questions, thus creating another set of headaches for myself! But I plunge ahead in the conviction that polls will increase reader engagement. Indeed, I would go one step further and invite readers to compose their own poll questions and responses. I will happily consider them.

Accordingly, I have concocted the following in response to Larry’s challenge in a comment on the previous blog post to address the following topic:

It goes without saying, please vote only once. If I find evidence of cheating, I will have to search for a poll that restricts voters to those who register with the blog, which makes it more laborious for readers to participate, and it means I’ll be spending more time on technology/administrative tasks at which I am incompetent and less time writing blog posts for all the world to enjoy.

Update: I encourage you to elaborate upon the reasons for your vote in the comments section.

Virginia Higher Ed Faces Legislative Backlash

Virginia higher ed, and the University of Virginia in particular, are facing toughest General Assembly scrutiny in twenty years.

Virginia higher ed, and the University of Virginia in particular, are facing toughest General Assembly scrutiny in twenty years.

Frustration with Virginia’s higher education establishment boiled over during a press conference in the state Capitol building this morning as 15 senators and delegates from both political parties expressed their intention to curtail tuition hikes at public colleges and universities.

Legislators have introduced some 20 bills so far in the 2017 session addressing affordability and access at Virginia universities, and they expect more will be filed. A primary source of concern is how the state’s elite institutions are steering millions of dollars into financial aid to out-of-state students even as Virginians find the cost of attendance increasingly unaffordable.

Del. Tim Hugo, R-Centreville, a graduate of the College of William & Mary, decried the high percentage of out-of-state students at his alma mater. Referring tongue-in-cheek to William & Mary as “the College of New Jersey-Williamsburg campus,” he said, “We need more in-state students.”

The University of Virginia is spending $20 million to $30 million in scholarships for out-of-state students, said Del. Dave Albo, R-Springfield. He found that dispensation ironic given the fact that “for years we were told we needed out-of-state students to fund the schools.”

Another source of resentment was the accumulation of large financial reserves, particularly at the University of Virginia. UVa had cobbled together a $2.2 billion “strategic investment fund,” expected to generate $100 million a year in investment returns, even as the board of visitors raised tuition aggressively and lobbied for more state support.

The press conference followed the release of a poll released yesterday by Partners 4 Affordable Excellence @ EDU, a group created to fight runaway college tuition hikes (and a sponsor of this blog). That poll of registered Virginia voters found that a large majority overwhelmingly believe that the cost of college attendance is too high and support greater transparency of university budgets and decision-making.

Dr. James V. Koch, a former president of Old Dominion University and president of Partners 4 Affordable Excellence, opened the event with a review of data. Since 2000, he said, the Consumer Price Index had increased 35.2%. Over that same period the national Higher Ed Price Index had jumped 52.9%. In Virginia, the cost of in-state tuition and fees had shot up even faster, even as incomes have stagnated. The number of work-hours that it took a Virginian earning the median hourly wage to pay average tuition and fees for a four-year college increased from 227 in 2001-2002 to 438 this year.

Bills before the General Assembly would cap the percentage of out-of-state students at 25% at Virginia higher ed institutions, forbid colleges from using in-state tuition revenues to pay for financial aid, restrict the amount of out-of-state tuition that could be applied to financial aid, and limit tuition increases to the rate of inflation, among other measures.

University officials justify high enrollments of non-Virginians on the grounds that out-of-state students on average pay 160% of the tuition cost, in effect subsidizing Virginia residents. If lawmakers cut out-of-state enrollments, they will increase pressure on universities to jack up in-state tuition. Also, providing financial aid to some out-of-state students, they argue, is necessary to make attendance affordable for lower-income students and preserve socio-economic and racial diversity.

Del. Lionell Spruill, D-Chesapeake, was more concerned with helping poor, minority Virginia students. In Virginia, the percentage of students receiving Pell grants for low-income students is around 20%, the lowest rate in the nation, he said. The reason for the low participation, he explained, is that tuition, fees and other costs are so high in the Old Dominion that low-income students can’t afford to attend. Poor Virginian students should be first in line for student loans, he contended.

A similar argument was advanced by Del. Terry Kilgore, R-Gate City, who represents an district in far southwest Virginia. As unaffordable as costs are for a family in affluent, suburban Fairfax County, he said, they create an insurmountable barrier for many families in Appalachia.

While legislators at the press conference shared a common concern about the cost of Virginia higher ed, they indicated no agreement upon which bills to support. Indeed, the issue of financial aid may prove divisive. While Spruill and Kilgore focused on the need of their lower-income constituents, a disproportionate percentage of of whom rely upon financial aid, other lawmakers represented middle-class households who are tired of seeing some of their tuition money diverted to financial aid for others.

“The high tuition, high aid model is out of control,” said Sen. Bill DeSteph, R-Virginia Beach. Continue reading

Making School Vouchers Palatable to Democrats

School vouchers have brought about demonstrable improvements to students' educational achievement -- in some cases, but not all. How can we combined free choice with accountability?

School vouchers have brought about demonstrable improvements to students’ educational achievement — at some schools, but not all. How can we combined free choice with accountability?

The Richmond-based Commonwealth Institute (CI) has staked out a reasonable position on two school choice bills before the General Assembly this session. Rather than opposing school vouchers and health savings accounts out of hand, CI acknowledges that children, especially poor children, can benefit from alternatives to public school. But the center-left think tank insists upon holding private schools accepting taxpayer dollars as accountable as public schools.

Not all private schools are created equal. Some excel, far surpassing public schools in performance, while others can be described only as failures. “If the goal of school choice is to provide options for a high-quality education,” writes Chris Duncombe in CI’s Half Sheet blog, “then it makes sense to hold private schools receiving taxpayer dollars to the same standards as public schools.”

Two bills before the General Assembly — HB 1605 and SB 1243 — would create voucher-like educational savings accounts that would provide taxpayer dollars for families pursuing private education or home schooling. One way to hold hold private schools accountable to taxpayers is to adopt a policy practiced in some other states: If a private school falls short of accreditation standards, bar them from accepting vouchers the following year.

As a practical matter, if I understand the system correctly, that means private schools with voucher students will have to administer the Standards of Learning (SOL) exams. For a school to receive accreditation, a specified percentage of its students must rate proficient in the exams. That might well mean “teaching to the test,” which some private schools find objectionable. But unless someone suggests another means to hold schools accountable and weed out the inevitable fly-by-nights, meeting state accreditation standards may be the least bad option.

For Duncombe, a second issue is equity. The school vouchers would vary widely from locality to locality, dependent upon state Standards of Quality funds appropriated. “That means a family in Lee County would receive over three times as much as a family in Falls Church,” he says. “This variation is not based on the financial need of the family or the cost of pursuing private education in the area.”

(I’m not sure I see the objection here. A family in Lee County is already receiving three times as much state aid as a family in Falls Church. So, how would funding school vouchers on the same basis be any more inequitable?)

Duncombe’s third criterion is income eligibility: “A millionaire could get tax dollars to send their kid to private school, while a family who lacks the means to supplement the voucher with their own income would be left out.” His proposed solution would be to limit the benefit to households whose incomes are below 133% of free-and-reduced-price lunch eligibility — about $60,000 for a family of four.

These proposals are not unreasonable. Duncombe is not taking a position of “Vouchers, hell, over my dead body.” He’s trying to address the criticisms of school vouchers in a substantive way — in effect, taking away the arguments who those who are inclined to accept school choice over their dead bodies. If these compromises are what’s necessary to win legislative approval, expand the sphere of choice, and empower parents, then I can live with them. With luck, the General Assembly and Governor Terry McAuliffe will decide they can live with them, too.

Justification for Electricity Rate Freeze Melting?

If the Trump administration repeals the Clean Power Plan, what justification is there for an electricity rate freeze in Virginia?

If the Trump administration repeals the Clean Power Plan, what justification is there for an electricity rate freeze in Virginia?

Is it time to reverse the rate freeze on electricity rates in Virginia? If President-elect Donald Trump revokes the Obama administration’s Clean Power Plan, Sen. Chap Peterson, D-Fairfax, author of SB 1095, thinks it would be.

Two years ago, no one knew what to make of the Clean Power Plan, an Environmental Protection Agency initiative that compelled electric utilities to reduce emissions of carbon-dioxide in the cause of fighting Global Warming. No one in the 2014 General Assembly session knew what the final regulations would look like or which of four broad regulatory options the Commonwealth of Virginia might adopt. If the plan required Dominion Virginia Power and Appalachian Power to close coal-fired power plants and replace generating capacity with gas, solar or nuclear, the utilities warned that rates could spike higher. On the other hand, the plan might not survive legal challenge.

At the time, it made sense to many legislators to freeze base electric rates until the dust settled. Since then, Trump has declared his skepticism of Global Warming, promised to roll back regulations hurting the coal industry, and nominated a new EPA chief who, as attorney general of Oklahoma, had filed suit to block the Clean Power Plan. However, it is not clear how quickly the plan, was implemented under a novel reading of the Clean Air Act after extensive administrative proceedings, could be repealed.

Peterson says it is time for a second look at the freeze. “You really can’t say, ‘Oh we have a federal government that’s trying to put coal out of business, so we need to give power plants a financial break.’ Sorry, that narrative doesn’t work anymore,” the Associated Press quotes him as saying.

Large industrial customers say the freeze could cost Dominion customers $2.4 billion in unnecessary payments by 2022, when the freeze expires, and Appalachian Power customers another $300 million. But Thomas Wohlfarth, a Dominion senior vice president, said those estimates are based on overly optimistic projections about the true cost of providing electricity.

Moreover, Wohlfarth said, Trump can’t just dispense with carbon regulations with the stroke of a pen. “We’re not of the opinion that carbon regulation is going to go away.”

Update: Well, well, this blog post had the shortest relevance of just about anything I’ve ever published on Bacon’s Rebellion. When I checked Richmond Sunlight a couple of hours ago, the bill was still alive. Now I have been informed that the bill died in the Senate Commerce and Labor Committee on a 12 to 2 vote.

Update: Peterson is vowing that “the fight isn’t over to stop excessive profits for regulated utilities.” In what may be the most quotable quote so far this session, he said: “If you use electricity in Virginia, you should want this bill. If you live in a teepee, you probably don’t care.”

Update: Yikes, the updates are flowing fast and furious. The rate freeze “has provided direct benefits to low-income seniors and military veterans through the expansion of Energy Share, and saved customers millions of dollars in costs while keeping Dominion’s rates well below the national average, which are lower now than before SB 1349 was passed,” said Dominion spokesman David Botkins.

“The broader issue of uncertainty around how EPA will regulate carbon is increasing, given the current Clean Power Plan may be replaced with an alternative that would then be subject to a new round of challenges,” Botkins said.

Poll: Virginians Unhappy with Runaway Tuition

A large majority of Virginia voters favor restricting tuition increases to the Cost of Living.

A large majority of Virginia voters favor restricting tuition increases to the Cost of Living. Source: Partners for Affordable Excellence poll

Virginia’s public colleges and universities have a big P.R. problem. Eighty-eight percent of Virginia voters think they are too expensive, according to a poll released this morning, and three quarters say they should not be allowed to increase tuition faster than the cost of living.

Furthermore, a large majority of voters said they want greater transparency into university budgets, and responded that university trustees should put the interests of students, families and taxpayers before the ambitions of university administrators.

The poll of 600 registered voters was conducted in early January by Public Opinion Strategies and Lake Research Partners. The underwriter was Partners 4 Affordable Excellence @ EDU, a sponsor of this blog. Founded in response to the rising cost of college attendance, the organization’s mission is to bring about change at America’s premier public research universities “in ways that maintain or enhance academic excellence and result in affordable tuition.”

Traditionally, the public policy debate in Virginia over higher-ed affordability and accessibility has revolved around the level of financial aid provided by state government. Universities defend higher tuitions as a justifiable response to reductions in state support. A recent report to the State Council for Higher Education in Virginia (SCHEV) found that cuts accounted for about half the increase in tuition over the past 20 years and about 14% of the total Cost of Attendance (which encompasses student fees, room, board and other costs as well as tuition).

Re-framing the debate, the Partners poll focused on policies within the control of universities, such as the percentage out-of-state students, financial aid, administrative waste, the prestige arms race, and, specifically, the University of Virginia’s accumulation of $2.2 billion in “unspent money” in its Strategic Investment Fund. (See poll results and pollsters’ commentary here.)

“This is the first in-depth look at voters’ views on an issue of critical importance to the state’s economic well-being,” said James V. Koch, president of Partners 4 Affordable Excellence and a former president of Old Dominion University. “When it comes to economic growth, Virginia has trailed the nation for the last six years. How we change the narrative can’t be viewed in a vacuum, and making higher education more affordable can lead to more jobs and improve Virginia’s economic vitality.”

“This poll confirms what many of us have thought for years — college costs are out of control and there is a clear link between affordability and economic success of every Virginia family,” said Helen Dragas, Partners board chair and former rector of the University of Virginia.

While the out-of-control escalation of the Cost of Attendance is not on a par with K-12 education, job creation and even traffic congestion among voter’s top concerns, it is “a strong second-tier priority” with 23% of those polled ranking it No. 1 or No. 2, the pollsters concluded. That scoring placed college affordability somewhat lower than crime & drugs but significantly higher than the environment, recreation areas & open space.

On the positive side, 84% of voters classified Virginia higher-ed institutions as “among the best” in the country. On the other hand 75% described them as too expensive.

The poll also found strong support for requiring at least 75% of the state’s undergraduate students be Virginia residents. Sixty percent of voters agreed with that proposition. Although Republicans were most likely to agree (71%), a majority of independents (61%) and Democrats (51%) went along as well. That finding can be construed as good news for Del. Dave Albo, R-Springfield, who has submitted a bill, HB 1410, this session that would require 75% of the undergraduates at all but three state universities to be comprised of Virginians. If enacted, the bill would impact the three institutions with out-of-state enrollments exceeding 25%: the University of Virginia, the College of William & Mary, and James Madison University. Continue reading

Invest in Virginia Workers, Not Corporate Subsidies

Replace economic-development incentives with workforce training.

Replace economic-development incentives with workforce training. Photo credit: Richmond Times-Dispatch

(The Richmond Times-Dispatch published my op-ed this morning.)

The Virginia Economic Development Partnership (VEDP), once one of the most respected economic development teams in the country, has been taking it on the chin. A year ago, a Chinese company bilked the partnership for a $1.4 million incentive payment in a deal that never transpired. The scandal prompted the departure of VEDP’s CEO and sparked a legislative inquiry that unearthed “systemic deficiencies” in its management.

In December, Gov. Terry McAuliffe proposed reforms to improve oversight of incentives, which amounted to $384 million over the past decade. Among his recommendations: Create new divisions within VEDP, one to administer the incentive programs and another to audit VEDP activities and report the findings directly to its board of directors.

I have a simpler idea. Instead of adding new layers of bureaucracy, eliminate the incentives altogether and use the money for workforce training.

Virginians have long had a love-hate relationship with economic development incentives, viewing them as an ugly necessity for competing with other states, most of which offer subsidies and tax breaks to lure corporate investment. The Old Dominion was one of the first states to make incentives contingent upon the recipient meeting benchmarks for dollars invested and jobs created. If a company fails to keep its promises, the state will claw back its payments.

But there’s a bigger problem that tighter administration of state incentive programs cannot solve: There is no way to tell if subsidies and tax breaks actually work.

Site location in the United States has evolved into a racket. When a corporation decides to expand, it typically hires a site consultant to scout the ideal location. It is common practice to narrow down the choice to two or three localities in different states and then to set them bidding against one another to offer the sweetest incentive package.

So many states dangle subsidies, grants, tax breaks and other kinds of bribes that companies would be negligent to not try to extract the biggest, fattest concession possible.

The trouble is that economic developers are bidding in the dark. The VEDP can make educated guesses, but it has no way of knowing exactly how much money it will take to sway a particular corporation to invest in Virginia, no way of knowing whether it gave away too much, indeed no way of knowing if a company would have invested in Virginia without an incentive package at all.

As it happens, the timing is perfect to re-think incentives. The VEDP board has hired Steven Moret, Louisiana’s former economic development chief and a superstar in the field, to run the organization. Key to his success was FastStart, a program he built into one of the nation’s premier workforce development initiatives. Moret should be given the resources to replicate the program in Virginia.

Once upon a time, VEDP had a respectable job-training program, which it offered as a perk to companies investing in the state. But the Virginia Jobs Investment Program (VJAP) has undergone considerable restructuring and reorganization over the past 20 years, and not to its benefit.

Between 2010 and 2014 it shrank from 16 operational and support personnel to six. While Louisiana was building a best-in-class workforce development initiative, Virginia was dismantling its own.

In an era of abundant capital and near-zero interest rates, reputable corporations can easily and cheaply borrow the money they need to expand. A much tougher task is finding a skilled workforce.

Many communities are out of the running for a wide range of economic development projects because their workers lack industry-specific skills. In Martinsville, for instance, the 6.8 percent unemployment rate is higher than almost anywhere in the state, yet in November local companies were complaining that they were having difficulty filling some 1,325 job openings.

If local companies can’t find the workers they need, what chance does Martinsville have in attracting out-of-state industry?

Addressing the jobs-skills mismatch is arguably the greatest economic challenge facing Virginia today. If a corporation can’t find the workers it needs, it won’t consider a community no matter how big the incentives.

Virginia’s colleges, community colleges and universities can do most of the heavy lifting on education and training, but they are not equipped to provide a fast-response, turnkey workforce solution like Louisiana’s FastStart program.

While the General Assembly ponders how to reform VEDP, it also needs to re-think the state’s economic-development incentives: Virginia needs to emphasize workforce development over subsidies and tax breaks.

Given the state’s current budget constraints, the most logical pot of money to fund a program like FastStart is the Commonwealth’s Opportunity Development Fund. We can continue doling out payola to out-of-state corporations or we can invest in Virginia’s workers, likely with a better result. It’s not a difficult choice.

Chesterfield Finds $83 Million Unfunded Liabilities

Somehow Chesterfield County schools missed $83 million in unfunded liabilities until late last year.

Somehow Chesterfield County schools missed $83 million in unfunded liabilities until late last year.

Our society is riddled with unfunded liabilities. Nowhere is the magnitude of short-term thinking more egregious than the federal government. As case in point, the U.S. military has put off maintenance and repairs to the point where we don’t have the money for the military we have, much less the military we would like to have.

“The Department of Defense “has breathtaking liabilities — as much as $88 billion a year — that ought to be addressed before procuring a single additional plane, ship, or tank,” says Tom Spehr, as quoted by Robin Beres in her Richmond Times-Dispatch op-ed today.

But Virginians can’t get sanctimonious. Not only do we have the example of Petersburg to to keep us humble, we now hear of scandalous inattention to hidden liabilities afflicts one of Virginia’s most populous jurisdictions — and one with the reputation, no less, of being exceptionally well run.

In Chesterfield County, school officials are grappling with massive unfunded liabilities for a supplementary teacher retirement benefit. Under the program, teachers can retire then get re-hired under the program working part-time, temporary jobs similar to their pre-retirement work. As incentive, they get a lucrative supplement to their normal Virginia Retirement System benefits.

In 2014, reports the Times-Dispatch, unfunded liabilities were found to be $58.7 million. Now they are $83 million.

Here’s the amazing part. The T-D quotes Donald Wilms, president of the Chesterfield Education Association, as being shocked when he learned of the program’s underfunding for the past five years. “Teachers were continually told that the program isn’t going away. So I think it was natural to assume that the program was healthy,” he said. “Nobody told you it was in danger.”

Nobody, that is, except for MGT America, which provided an efficiency review of Chesterfield schools in 2010 (!!!) and noted that the  supplemental retirement plan faced a large unfunded liability in the next few years as Baby Boomer teachers began retiring. “The increased number of participants will dramatically increase the cost of this program,” warned the report.

Somebody wasn’t paying attention.

Forget the federal government. Let Donald Trump and Congress worry about that. Here in the provinces, we need to worry about how we handle our own business. Do other school systems have supplemental retirement programs like Chesterfield’s? How many other unfunded liabilities, the existence of which lurk deep within Comprehensive Annual Financial Statements, are ticking time bombs? Is anyone paying attention?

You’ve Heard of Unfunded Pension Liabilities. Unfunded Infrastructure Liabilities Are Huge, Too

Lafayette, La., like many other U.S. cities, is running a huge hidden deficit in the form of backlogged infrastructure maintenance. Charles Marohn, founder of the Strong Towns movement, has done a brilliant job of illuminating the time bomb ticking away in municipal budgets around the country. This week he has honed in on Lafayette, a midsize city of about 125,000. His tale probably could apply to many Virginia localities.

In “The Real Reason Your City Has No Money,” he lays out the problem:

Lafayette had the written reports detailing an enormously large backlog of infrastructure maintenance. At current spending rates, roads were going bad faster than they could be repaired. With aggressive tax increases, the rate of failure could be slowed, but not reversed. The story underground was even worse. Ironically, this news had historically been the rationale for building even more infrastructure (theory: this is a problem that we’ll grow our way out of). …

When we added up the replacement cost of all of the city’s infrastructure — an expense we would anticipate them cumulatively experiencing roughly once a generation — it came to $32 billion. When we added up the entire tax base of the city, all of the private wealth sustained by that infrastructure, it came to just $16 billion. This is fatal. …

The median house in Lafayette costs roughly $150,000. A family living in this house would currently pay about $1,500 per year in taxes to the local government of which 10%, approximately $150, goes to maintenance of infrastructure (more is paid to the schools and regional government). A fraction of that $150 – it varies by year – is spent on actual pavement.

To maintain just the roads and drainage systems that have already been built, the family in that median house would need to have their taxes increase by $3,300 per year. That assumes no new roads are built and existing roadways are not widened or substantively improved. That is $3,300 in additional local taxes just to tread water.

That does not include underground utilities – sewer and water – or major facilities such as treatment plants, water towers and public buildings. Using ratios we’ve experienced from other communities, it is likely that the total infrastructure revenue gap for that median home is closer to $8,000 per year.

Freaking out? We haven’t even talked about schools and unfunded pension liabilities yet.

Can we find the information in local government’s Comprehensive Annual Financial Reports to make these same calculations ourselves? I don’t know. But every local government officials are living in La La Land if they can’t calculate the unfunded maintenance backlogs for their community.

There is a solution to the problem, by the way, but it isn’t raising taxes, and it isn’t unleashing infrastructure spending in Washington — it’s changing the land- and infrastructure-intensive pattern of development commonly called suburban sprawl. A few localities in Virginia get it. But most will have no appetite to make the necessary changes until they reach a Lafayette-level of desperation. Too bad.