Gross vs. Net in College Tuitions

How expensive are Virginia colleges and universities compared to their peers in other states? The cost of attendance, including tuition, fees, room, board, books and supplies at four-year public Virginia colleges and universities in the 2016-17 school year averaged $26,904 — only a hair higher than the national average. This data is taken from a presentation by legislative fiscal analyst April Kees to the Senate Finance Committee this morning.

That chart above shows the sticker price for a year of college education. Lower-income students don’t pay the full freight. They receive big breaks in the form of financial aid from the state, Uncle Sam, and the institutions themselves. So, if your family generates income of $20,000 to $29,999 a year (2014-15 year numbers), your net cost of attendance drops considerably, as seen here in this chart comparing four Virginia institutions:

You get a ginormous break if you attend the College of William & Mary (CWM), which has the market power to jack up the tuition to raise more money for financial aid. You even get a hefty discount if you attend Radford University, the University of Virginia-Wise, or Virginia Tech (VT).

The massive redistribution of wealth provides major heartburn to Virginia’s upper middle class, which tends to pay the full tuition. In theory, the means-testing can be justified on the grounds that a college education provides an avenue of upward social mobility for poor and working-class Virginians who could not afford to attend otherwise.

The New Look of Virginia High School Grads, Circa 2030

Lots of good data coming out of the retreats of the House and Senate appropriations committees yesterday and today… The chart above appeared in a presentation by April Kees, legislative fiscal analyst, to the Senate Finance Committee.

By 2030, whites will constitute a bare majority of high school graduates in Virginia. The percentage of blacks will shrink slightly, while percentages of Asians and Hispanics will soar.

Bacon’s bottom line: This is what college administrators are talking about when they allude to a challenging demographic future. The percentage of Hispanic students graduating from high school and populating the potentially college-bound population will grow by six percentage points, offsetting the seven-point decline in the percentage of whites. Insofar as whites tend to come from more affluent families, to attend better schools and to be better academically prepared than Hispanics, colleges are bracing for student bodies that need more remedial work and financial assistance.

On the other hand, Asian students tend to come from more affluent households and to be better prepared academically than all other ethnic groups, including whites. They could prove to be a mother lode for institutions looking for students with high SAT scores and no need of financial assistance.

Northam Appoints Layne as Virginia CFO

Gov.-elect Ralph Northam (right) congratulates Aubrey Layne for his appointment as Secretary of Finance. (Photo credit: Richmond Times-Dispatch)

In an important signal of how he plants to govern, Governor-elect Ralph Northam announced yesterday his appointment of Transportation Secretary Aubrey Layne as his Secretary of Finance. Layne will replace Ric Brown, who is retiring after serving three consecutive governors in the office.

Layne, an administrator with a non-partisan, technocratic bent, works well with Democrats and Republicans alike. He served on the Commonwealth Transportation Board (CTB) during the McDonnell administration, and then was recruited by Governor Terry McAuliffe to oversee the commonwealth’s transportation agencies. According to Virginia Public Access Project data, he has contributed to Democrats, Republicans and independents over the years.

Layne made his mark as a pragmatic administrator willing to delve into the public policy thickets. He spent much of his first year as transportation secretary digging out of controversial public-private partnerships set up during the McDonnell administration while he had served on the CTB. He canceled the U.S. 460 tolled highway between Suffolk and Petersburg after it became clear that the project could not obtain a federal wetlands permit. He also reworked the terms of the multibillion-dollar Downtown-Midtown Tunnel project in Hampton Roads.

After putting out fires, Layne was heavily involved in rewriting legislation governing public-private partnerships. Then, under the framework of the new law, he implemented a partnership to upgrade the Interstate 66 transportation corridor in a process relatively free of angst and controversy. Also under Layne, the Virginia Department of Transportation implemented a scorecard for measuring and prioritizing proposed road and highway projects. The purpose of the scorecard was to base transportation investments on objective criteria relating to congestion, safety, the environment and economic development rather than politics.

One knotty issue eluded Layne’s technocratic touch: the Washington Metro. Severely under-funded over the years, the Metro commuter rail system needs $1.5 billion a year more over the next ten years to address maintenance backlogs and other issues that have led to deteriorating safety, on-time service and ridership. But Virginia shares power in the governing authority with Maryland, Washington, D.C., and the federal government, which gives the state limited leverage to effect reform.

Layne will have his hands full as finance secretary. While the short-term budget outlook has brightened this year and next, Virginia faces immense long-term challenges dealing with an ever-growing Medicaid budget, massive unfunded pension liabilities, intense clamoring for more money for K-12 schools, higher-ed, and mental health, among other priorities, and the continued unwinding of various gimmicks used to balance the budget in the last recession.

What’s more, if Northam pushes to expand Virginia’s Medicaid program under the authority of the Affordable Care Act, he undoubtedly will look to Layne to find the state’s 10% share to finance the expansion. Layne could be jumping from the frying pan into the fire.

Air Board Approves Carbon Caps for Electric Utilities

The Virginia Air Pollution Board unanimously approved today regulations to reduce carbon from electric utilities by 30% between 2020 and 2030. The rule also will link Virginia to the Regional Greenhouse Gas Initiative (RGGI), which will allow Virginia utilities to swap carbon allowances with power companies in other states.

The vote “will make this Commonwealth a leader in the global fight to cut carbon and promote clean energy technologies,” said Governor Terry McAuliffe in a prepared statement. “This will allow us to achieve carbon reductions in the most innovative and cost-effective way possible with minimal impact on customer bills.”

Virginia is uniquely vulnerable to the threat of climate change and many of our residents are already experiencing its impacts. We do not have the luxury of waiting for Washington to wake up to this threat – we must act now. I am proud that Virginia is joining states around the nation that are filling the void of leadership that President Trump has left on transforming the energy sector and protecting our environment. With these regulations, we will significantly cut carbon emissions, continue our state’s explosive growth in the clean energy sector, and set an example for leadership in Washington, other states, and the entire world.

The public comment period and on-going enactment process is expected to be lengthy, especially if lawsuits are filed challenging the legality of the regulations. McAuliffe’s statement was short on details on how the regional greenhouse initiative will work.

Here follow responses from various parties as they come in.

House of Delegates Republicans: “This is a clear attempt by Governor McAuliffe’s Administration to circumvent the appropriate legislative process to impose wide-ranging regulations that, simply put, will necessitate higher electricity prices and discourage businesses from investing in the Commonwealth,” said House Speaker-designee Kirk Cox.

“Democrats purport to be champions of the poor and working class, but this policy will lead to higher electric bills for families, small businesses, seniors, and the working poor,” said Majority Leader-designee Todd Gilbert. “It will directly hurt people already anxious about making ends meet and getting through a cold winter, but it sure will please Governor-elect Northam’s California billionaire donors.”

“The Air Pollution Control Board does not have the authority to promulgate regulations at the state level that exceed those at the federal level,” said Commerce & Labor Committee Chairman Terry Kilgore. “Today’s action is clearly inconsistent with Virginia law and a gross example of bureaucratic overreach.”

Dominion Energy Virginia. “We already are a low-carbon producer of energy, and have continued to work to lower emissions both in anticipation of future state or federal regulation and because it’s the right thing to do,” said Dominion spokesman David Botkins. “We have plans to build more than 5,200 megawatts of solar arrays in Virginia, extend the lifespan of our nuclear plants and have closed or converted coal-fired generation. While we haven’t yet had a chance to fully study the state’s draft proposal, we expect to fully meet whatever regulatory requirements that result. We’ll review today’s vote and participate in the public comment period in due course.”

Appalachian Power: “Appalachian Power is reviewing the proposed regulations. Given uncertainties in the ultimate Virginia carbon budget, allocations, and allowance pricing, we are unable to estimate the impact of the proposal on our customers at this time” said Apco spokesman John Shepelwich. “But the company will participate in the public notice and comment process to ensure any final rule, if/when/promulgated, will have the least impact possible on our customers.”

APCo has already reduced CO2 generation emissions in Virginia by 96% since the year 2005, he added.

Update: I normally get a slew of press releases from environmental groups, but nothing has arrived in my inbox on this. But in its story the Richmond Times-Dispatch quotes the Virginia Conservation Network as calling the draft regulation “a critical first step in addressing the threat of climate change and spurring investments in clean energy in Virginia.”

Climate change is one of the most pressing issues of our time, especially when it comes to its devastating impacts on Virginia’s most vulnerable communities. It is imperative that every level of government steps up to be a part of the solution.

How to Inconvenience Drivers and Punish Businesses for No Discernible Reason

Pulse construction on Broad Street — at a location where construction is actually occurring. (Photo credit: Richmond Times-Dispatch)

One of these days, when Richmond’s Pulse service is running buses up and down the Broad Street corridor, and investors are redeveloping properties around the transit stops, Richmonders will be really glad they have a bus rapid transit system. But until then, residents of the entire metropolitan area can be forgiven for roundly cursing the project.

Construction, which began in August 2016, is still ongoing. The contractor hopes to complete work by the end of the year. In the meantime, the city has closed off two lanes (one lane each way) from automobile traffic, significantly adding to the hassle factor of driving on the transportation artery.

This has been a pet peeve of mine from the very beginning. Miles of Broad Street are afflicted with traffic cones. That would be fine if construction work were actually occurring the full length of the corridor. But it’s not. Work appears to be occur, in a most desultory manner, only at a few locations at a time.

Now, I don’t expect anyone to lose any sleep over Henrico resident Jim Bacon incurring an additional five or ten minutes driving time. But the businesses lining the corridor do warrant consideration, and many of them have suffered a marked decline in business. Richmond City Councilwoman Kimberly Gray has proposed compensating those businesses from a $3.2 million pot of money set aside to reward the contractor, Lane Construction, as an incentive for early completion of the project. The prospects of early completion are fading rapidly, so the idea, it seems to me, does have merit.

Putting up with street construction is an inevitable hazard of living in the city — someone always seems to be patching asphalt, accessing water lines, laying cable — and businesses have to grin and bear it. But cordoning off two lanes along miles of Broad Street for nearly a year and a half seems mind-numbingly unnecessary. I can think of no reason why Lane Construction couldn’t close only those street segments it’s working on when it’s doing the work.

Virginia Department of Transportation contractors put down traffic cones when they’re doing work and pick them up when they’re not. Presumably in adherence to VDOT guidelines, they keep lanes open as much as they can. Why can’t Richmond do the same thing?

Gray could do the public a service by tracking down who in the city public works department approved a construction plan that so unnecessarily inconvenienced drivers and hurt local businesses.

Business As Usual in the Old Dominion: Gridlock, Greed and Confusion

After LaHood report, more squabbling over Metro’s future. In the wake of recommendations by former Transportation Secretary Ray LaHood, Virginia, Maryland and Washington, D.C., are edging toward compromises that would reform the ailing mass transit system’s governance system and shore up its financing. LaHood’s proposal to shrink the Metro board from six seats to five is drawing some bipartisan support, and legislation in Congress is being drafted, reports the Washington Post. But suburban jurisdictions in Virginia and Maryland, worried about losing their voice on the board, are unhappy with the plan. Also, while LaHood affirmed the need for an additional $500 million a year to work down a massive maintenance backlog, he did not propose how that massive sum might be funded — mainly because there is no consensus for a regional sales tax, the main proposal on the table. Also unaddressed is the not-insignificant matter that Metro really needs an additional $1.5 billion a year, not $500 million, to fix its problems.

Good business if you can get it. (Alternative headline: First, kill all the lawyers.) Richmond has emerged as the preferred venue for bankruptcy trials, reports the New York Times. Toys “R” Us, Gymboree, a West Virginia coal company, and a Pennsylvania fracking company all have filed in the U.S. Bankruptcy Court there. The federal district court’s so-called rocket docket resolves cases swiftly. Also, precedents in the court’s legal record make it easier for companies to walk away from union contracts. But perhaps the biggest draw is the ability of bankruptcy lawyers to charge outrageous fees — as much as $1,745 per hour. Lawyers advising troubled companies, writes the newspaper, tend to gravitate toward courts that approve higher fees.

Dazed and confused — but mostly confused. A state review of the police response to the chaotic white nationalist protest in Charlottesville in August describes a confused command structure, a breakdown in communication, and uncertainty among officers about the “rules of engagement” with protesters, reports the Richmond Times-Dispatch. The review, led by James W. Baker, a consultant with the International Association of Chiefs of Police, did not address whether or not police were ordered to “stand down” in the face of escalating violence between white supremacists and leftists. Nor did it assign responsibility for the confusion to anyone in the Charlottesville city administration.

Virginia Could Get Its Own Clean Power Plan

Would the Chesterfield Power Station get the axe under new state carbon emission rules? (Photo credit: Richmond Times-Dispatch)

Terry McAuliffe’s days as governor of Virginia are rapidly drawing to a close, but proposed carbon-dioxide regulations working through the administrative process could prove to be his most lasting legacy. If adopted, the rule would cap carbon emissions at large power plants in 2020 and then require 3% reductions annually for 10 years, reports the Richmond Times-Dispatch.

After convening a working group more than a year ago to develop recommendations on cutting power plant emissions, McAuliffe signed an executive order in May directing the Department of Environmental Quality to prepare the regulations. The State Air Pollution Control Board is expected to vote on the measure Thursday.

The regulations will be tied to the Regional Greenhouse Gas Initiative (RGGI), a cooperative including nine other states in the Mid-Atlantic and New England. The regional initiative will allow power companies to purchase carbon allowances from one another. The regional approach allows utilities in one state to purchase offsets from utilities in other states that might be able to reduce carbon output more cheaply.

DEQ models indicate that Virginia’s rule could increase the wholesale cost of electricity by about 7% by 2030, although the actual impact on consumers should be lower, say backers of the rule. In other states, expanded energy efficiency programs have offset the higher electricity rates with lower consumption with the result that electric bills are no higher.

While Attorney General Mark Herring has rendered the opinion that the state air board has the power to regulate carbon under its existing authority, others disagree. Air board regulations prevent it from enacting regulations more stringent than federal requirements, Jay Holloway, a partner with Williams Mullen, told the Times-Dispatch.

Republicans also have problems with the rule, arguing that it will weaken the Virginia economy. John Whitbeck, Republican Party chairman, accused McAuliffe of catering to liberal votes in Iowa and New Hampshire for his presidential bid.

Dominion Energy has remain notably silent as the carbon-cap proposal has wended its way through the system. “We already are a low-carbon producer of energy, and have continued to work to lower emissions both in anticipation of future state or federal regulation and because it’s the right thing to do,” said Dominion spokesman David Botkins.

The carbon-cap initiative ties back to the debate over the electricity rate freeze. Critics have lambasted Dominion for the freeze, which arose from fears of the impact of the Obama administration’s proposed Clean Power Plan. Dominion agreed to keep its base rates fixed, which has locked in excess profits for the first couple of years, in exchange for taking the risk of asset write-downs if the federal carbon regulations forced the utility to close one or more of its coal-fired power plants. The Trump administration is rolling back the Clean Power Plan, so Dominion critics say the freeze is no longer justified. But Dominion countered that the McAuliffe initiative still could compel a reduction in carbon emissions, and that the company still is at financial risk.

Bacon’s bottom line: The point that intrigues me is the argument that a 7% increase in electricity rates would not harm Virginia consumers because, by adopting energy efficiency measures, they would offset the higher rates with lower consumption. Voila! With this new alchemy, we can impose regulations that cost hundreds of millions of dollars to comply with, and miraculously, everybody wins and nobody loses! 

Pardon my skepticism. The carbon-reduction rule may be justified (if you buy into the more alarmist predictions of the global warming movement) but let’s not pretend there is no cost to consumers. Yes, it’s true, business and homeowner investments in energy efficiency can counter the higher rates. But someone has to pay for those investments!

Will a Conservative Backlash Hit Higher-Ed in the Pocketbook?

Left-wing protest at the University of California-Berkeley.

Two weeks ago, University of Virginia political scientist Larry Sabato urged Virginia colleges and universities to be friendlier to Republican legislators. His motives were pragmatic. If higher-ed wants more money from state taxpayers, it might behoove colleges and universities to not treat members of the majority party like lepers when they set foot on college campuses.

Sabato identified a big problem for higher-ed — a problem that came into sharp focus with an important op-ed piece in today’s Wall Street Journal. In that essay, John M. Ellis, a professor emeritus of German literature at the University of California-Santa Cruz, argues that higher-ed “is close to the end of a half-century process by which the campuses have been emptied of centrist and right-of-center voices. … More than half of the spectrum of political and social ideas has been banished from the classrooms.”

Whereas in 1969, there were overall about twice as many left-of-center as right-of-center faculty, today, the ratio is more like 10 to one. And in the humanities and social science departments — history, English, and political science — the share of left-of-center faculty already approaches 100%.

Ellis laments the impact of increasing philosophical-political conformity in academia on the quality of thought.

Well-balanced opposing views act as a corrective for each other: The weaker arguments of one side are pounced on and picked off by the other. Both remain consequently healthier and more intellectually viable. But intellectual dominance promotes stupidity. As one side becomes numerically stronger, its discipline weakens. The greater the imbalance between the two sides, the more incoherent and irrational the majority will become.

What we are now seeing on the campuses illustrates this general principle perfectly. The nearly complete exclusion of one side has led to complete irrationality on the other. … Campus radicals have lost the ability to engage with arguments and resort instead to the lazy alternative of name-calling: Opponents are all “fascists,” “racists” or “white supremacists.”

Extremism and demagoguery win out. Physical violence is the endpoint of this intellectual decay — the stage at which academic thought and indeed higher education have ceased to exist.

Beyond lamenting the decay in thought, Ellis makes the connection to parents and taxpayers. “The public pays huge sums, both through tuition and taxation, to educate young people, and except in STEM subjects, most of that money is being wasted. Those who pay the bills have the power to stop this abuse of higher education if they organize themselves effectively. (My emphasis.)

Bacon’s bottom line: Millions of Americans regard higher education in the United States as hostile to their values and political views. Millions of Americans send their children off to college, fearing that they will be inculcated with those antithetical values, and they do so only because they perceive that getting a “college education” is the only pathway for their children into the middle class. Increasingly, they resent paying sky-high tuition, and they resent subsidizing the their childrens’ brainwashers with taxpayer dollars. Given the circumstances, how can anyone be surprised if public colleges and universities find eroding popular support for taxpayer subsidies? Only someone warmly encased in an ideological cocoon — like an institution of higher education — could fail to see the obvious.

In today’s hyper-polarized political and cultural environment, Republicans and conservatives increasingly view higher-ed as the enemy — which, in fact, it often is — many in higher-ed see Republicans and conservatives as the enemy! Thus, we see in Congress a Republican move to tax the income of the biggest private college/university endowments, which is seen as a subsidy for liberal-progressive institutions. Meanwhile, in statehouses across the country, legislators have been slashing state support for public higher ed.

Here in Virginia, we must bear in mind that John Ellis is part of the California system of higher education which arguably has the most leftist orientation of any system in the country. The shut-down of conservative voices that occurs in California campuses does not occur in Virginia — not yet. (Unless you count the drowning out of ACLU lawyer Claire Gastanaga at the College of William & Mary, in which case the phenomena has reached Virginia.) The political orientation of Virginia faculty and administrators is assuredly far to the left of the population generally. What we, as members of the public, do not know is the degree to which that is so. Are Virginia institutions as intolerant as California institutions, just more quietly so? My sense, based on anecdotal data, is that a somewhat broader spectrum of views prevails. But I have no hard evidence to back that up.

Ellis suggests that those who pay the bills might “get organized” in protest. So far, I have seen no sign of a broad-based movement emerging here in Virginia. Boards of trustees rubber stamp administrative initiatives. Supine alumni think little beyond the next tailgate party. No one questions the conventional pieties. But university leaders had better beware. But if the general population ever becomes as hostile to higher education as denizens of higher education are hostile to the general population, political support for state funding could deteriorate faster than you can say, “safe space.”

More Money for What?

by John Butcher

The tug-of-war between the School Board and City Council over school funding enters a new era of speculation: Will the recent election results produce more funds for Richmond schools?

That overlooks the more fundamental question: What is the School Board doing with all the money it now is spending?

The most recent data from VDOE are from 2015-16. Here, from that year, are the per-student disbursements by division for Richmond, three peer divisions, and the state average for school divisions. I’ve left out the sums for facilities, debt service, and contingency reserve.

The largest single cost for schools is salaries, so it’s no surprise that Richmond’s excess of $3,051 per student mostly went to the instruction category.

Expressing the Richmond data as differences from the state number, we get:

Or, multiplying those differences by the Richmond enrollment of 21,826:

Multiplying the $3,051 Richmond total excess by the 21,826 enrollment gives the excess Richmond expenditure total: $66.6 million.

We can account for some of that.

The 2016 average salary in Richmond was $51,263 vs. the state average of 56,320. That is, Richmond saved $11.3 million vs. the state average by underpaying its teachers.

At the same time, Richmond has a lot more teachers than average:

At the average salary of $51,263, that comes to an extra cost of $18.5 million.

Combining those data leaves Richmond with an excess cost v. the division average of $59.4 million.

This overlooks the question of what those extra teachers are doing for the RPS students.  To judge from the SOL scores, it’s more a question of what they are doing to the students. Continue reading

Bacon Bits: Film Flam, State Workers, Fun & Games with Chicago Debt

Yummmm. So tasty.

Film incentives a money loser for state. Incentives for producing films in Virginia doubled under the McAuliffe administration, reaching $14.3 million in 2015-2016 and totaling $43 million over five fiscal years. But Virginia’s film industry has returned about 20 cents for every dollar it received in tax credits and 30 cents for every dollar in grants over the five-year study period, according to testimony yesterday before the Joint Legislative Audit and Review Commission (JLARC). Legislative auditors concluded that 95% of the productions would not have been filmed in the state were it not for the credits, reports the Richmond Times-Dispatch.

State employment compensation needs reform. Compensation for the state’s 105,000 employees is “nearly equivalent in value” to that of private-sector employees in Virginia. Although salaries lag the private sector by about 10%, the state makes up the difference with generous health insurance policies. The compensation package does have challenges, however, hiring employees in the fields of health care, health and safety inspection, public safety, and information technology, finds a new JLARC report. “State employee salaries could be more strategically managed if they were … prioritized for jobs that exhibit the most pressing workforce challenges.”

Boomergeddon watch: Chicago. Despite $36 billion in public pension debt, a prospect of $550 million in budget deficits over the next three years, and a reliance upon the state of Illinois, the budget of which also is in a shambles, Chicago just issued a AAA-rated bond. How is this possible? Chalk it up to creative financial engineering. The city is selling off its right to receive sales-tax revenue from Illinois to a separate public corporation, which will issue new bonds backed by those funds. This securitization insulates bondholders from the city’s finances. Chicago is using the proceeds to pay off old, higher-coupon paper, so it will ease its interest burden for a while. However, writes financial blogger John Rubino, “since [the city] runs a chronic deficit, it will soon be back in the market to borrow more, at which point it will have to pay up – since those AAA bonds are siphoning off so much money. Then the downward spiral will resume, with no more tricks available to delay the inevitable.”