Tag Archives: James A. Bacon

More Lazy Thinking about the Higher-Ed Affordability Crisis

Image credit: Center for Budget and Policy Priorities

So, I was reading this op-ed piece in Inside NoVa by David S. Kerr, an instructor at Virginia Commonwealth University, in which he took the Republican supermajority in the General Assembly to task for slashing state support for higher education, increasing tuition levels, and rising student indebtedness. Then I got to the following paragraph:

States from New York to Nebraska have increased direct support to their university systems. State universities are a point of pride, particularly so out west, and states believe in supporting them–even in some of the reddest of red states. Virginia, however, as measured on a per student basis, has progressively cut state support for universities.

I wondered if that was an accurate portrayal. After Googling around, I found a recent report by the left-of-center Center on Budget and Policy Priorities, which published the chart above. As it turns out, New York cut higher-ed spending per student between 2008 and 2017 only 2.0%, and Nebraska increased spending by 0.2%. But thirty other states have cut higher-ed spending more than Virginia. Kerr isn’t telling the whole story.

Then he goes on:

Also, costs have gone up. They have to. Buildings wear out and technology needs to be updated. All sorts of scientifically based curricula require new, expensive equipment. There are also various administrative requirements, mandated by the state and the federal government, that the schools have to pay for. At the same time, faculty and non-faculty employees need to be competitively paid.

Oh, gee, costs have gone up. What that settles it. Just throw up your arms because there’s nothing else  you can do. But someone forgot to tell Mitch Daniels. The former Indiana Governor took the helm at Purdue University in January 2013 vowing to make the public university more affordable.

After a 36-year string of increases, Purdue commenced a series of tuition freezes in 2013 that will last through the 2018-19 academic year. Daniels streamlined purchasing. He sold redundant property, reduced the cost of rental storage by half, and mended used office furniture. The university cut room and board costs by 5%. A partnership with Amazon.com slashed the cost of textbooks 31% on average. Thanks to these and other initiatives, Purdue student borrowing has dropped 37%.

As for those employees who “need to be competitively paid,” let me tell you how that works. Virginia colleges benchmark their faculty pay against that of institutions in other states and say, “We’ve got to raise pay to stay competitive.” This year the State Council of Higher Education for Virginia is recommending $84.3 million in extra state support (no guarantee it will get it) to keep faculty salaries competitive. Of course, higher-ed systems in other states are benchmarking as well, and they’re pushing for the same salary increases. And so the merry-go-round spins and spins.

Here in the Old Dominion, there’s still plenty of slack in the system. Universities can squeeze business process costs. They can cut administrative staff. They can curtail costly athletic programs. They can demand that faculty members teach more and publish less. They can harness online learning to provide classes at other institutions. They can utilize data analytics to spot struggling students and provide them the tutoring and mentoring they need to graduate on time.

Admittedly, cuts to state support in higher ed hasn’t made the job of Virginia colleges and universities any easier but the industry is rife with opportunity for cost cutting. The General Assembly bears a share of the blame for the higher-ed affordability crisis, but to pretend the problem starts and ends there is intellectually dishonest.

Another Arcane Obstacle to Solar Power

Virginia Comptroller David Von Moll

Some of the barriers to solar energy in Virginia are tucked away in the bowels of state government and the byzantine rules by which it operates.

One obstacle, since resolved, was a state rule granting solar projects an 80% tax exemption from property taxes under the guise of pollution control equipment. One would think the tax break would improve the economics of solar projects, but through a circuitous set of linkages involving the calculation of the Composite Index used in distributing state education dollars (described here) local governments would lose tax revenue from solar deals, which discouraged them from granting the necessary zoning and permitting approvals.

Jim Pierobon, writing in Southeast Energy News, has identified another obscure regulation: “An accounting rule, as interpreted by the Virginia Comptroller, effectively prevents Virginia from using a financing option used by many local governments: contracting through long-term power-purchase agreements (PPAs) with third parties to buy electricity.”

In a solar PPA, a third party project developer owns the solar farm and contracts to sell electricity to buyers such as universities or state agencies that are unable to take advantage of solar tax credits. Without the credits, many solar projects do not pencil out, and will be never be built. Writes Pierobon:

The Comptroller currently interprets a PPA to be a lease of capital equipment, and thus a debt owed by the state. Under that scenario, solar developers don’t own the electricity that they supply. That means a developer cannot claim the existing 30% federal Investment Tax Credit.

Why the state Comptroller, David Von Moll, interprets PPAs to be capital leases is a unclear to many solar developers. Neither he nor his office responded to requests for comment.

The McAuliffe administration had planned to do 25% of the installed solar capacity in state facilities as third-party PPAs, but were told by the Department of Accounts that the state could not enter into long-term PPAs.

“We’ve been trying to educate [Von Moll and his staff] as much as possible. We’re just not there yet. It’s incredibly frustrating,” said Hayes Framme, Deputy Secretary of Commerce and Trade. “State governments work certain ways to make their decisions. It’s our job to try to convince them otherwise.”

To be fair to Von Moll, there is a thin and tenuous line between solar PPAs and solar leases. Here’s how Energy Sage describes the difference:

While the terms “solar lease” and “solar PPA” are used interchangeably on this page, and are very similar in practice, there is a key difference between the two. With a solar lease, you agree to pay a fixed monthly “rent” or lease payment, which is calculated using the estimated amount of electricity the system will produce, in exchange for the right to use the solar energy system. With a solar PPA, instead of paying to “rent” the solar panel system, you agree to purchase the power generated by the system at a set per-kWh price.

Von Moll, who has worked in various positions in the Department of Public Accounts for 22 years, oversees the state’s financial management and internal control policies. He may be part of the executive branch, but it appears that he doesn’t knuckle under to pressure from the governor’s office. Whether that’s a sign of rock-ribbed integrity or pure bull-headedness, I’ll let readers render judgment.

Here Comes the Energy Cloud

A quick data point… Navigant Research, a business intelligence firm, is hosting a  webinar on “Technology Trends at the Grid Edge.” The proposition of the webinar:

The transition to the Energy Cloud—where energy markets become more distributed, clean, and intelligent—is speeding up. Utilities must adapt to this transformation to capture the value in new distributed energy resources (DER) and transactive energy markets. Until recently, the smart grid conversation was focused on hardware: smart grid technologies, smart meters, and in-home Internet of Things (IoT) devices. The industry is now shifting toward the next level of maturity on the technology adoption cycle: utilities have deployed smart meters; networks are digital; and utilities are experimenting with smart home technologies. The next challenge is how to extract value from the data generated by IoT devices while protecting critical infrastructure.

Utilities will increasingly turn to platforms to manage increasing volumes of IoT devices—and these platforms will be delivered by ecosystems of technology vendors.

Two of the speakers work for Intel, the chip designer and manufacturer. Intel is pouring vast resources into building its Internet of Things (IoT) business, of which the electric grid is an important component. Advances in sensors, smart meters and algorithms will make it possible to re-invent the architecture of the electric distribution grid from one-way electricity flows to multiple-way flows, making it easier to integrate renewable energy sources. The distributed grid — or the energy cloud, if you like — is coming. Public policy leaders need to wake up and figure out what it portends for Virginia.

If I thought I could understand the content, I’d sign up. But I know the limits of my intelligence.

Virginia Air Getting Cleaner

Good news is hard to find these days, so let’s celebrate what crumbs we can find: Virginia’s air is the cleanest it has been in years, the Department of Environmental Quality has announced. States the press release:

For years now, the trend for air quality in Virginia has been one of steady improvement. Pollutants such as ozone, nitrogen oxides, sulfur dioxide, carbon monoxide and particles have shown consistent declines for 20 years or more. Emissions of these pollutants in Virginia have decreased by almost 60 percent in the past 20 years. This has happened in the face of increased demand for electricity and many more vehicles on Virginia’s highways.

Twenty years ago, the ozone health standard was 120 parts per billion, and dozens of Virginia localities failed to meet it. Since then, the standard has been strengthened to 70 parts per billion. Yet only on four days this summer, the season of peak ozone, did ozone readings surpass the tighter limits, and even then exceedances were limited to four localities.

Ozone is an important pollutant to control because it is commonly said to be a cause of asthma, a health issue that affects millions of Americans. States the Environmental Protection Agency: “Although the data are inconsistent, some epidemiological studies suggest that long-term exposure to ozone could play a role in the development of asthma.” There is greater scientific certainty that high ozone levels create health issues for people who already have asthma.

While the incidence and severity of asthma is tied to many things other than ozone, such as obesity and smoking, the trend to cleaner air in Virginia coincides with a decline in asthma-related fatalities. In fact, the rate of such fatalities in Virginia, once higher than the national average, was lower in 2010, the most recent year for which I could find data.

So, rejoice, people, political conflict may be driving us to despair, but life is getting better in many ways. The hundreds of billions of dollars invested in cleaning up smokestacks and auto exhaust is paying off.

SCHEV Wants $350 Million More for Higher Ed

SCHEV proposal would fund more for faculty recruitment and retention, financial aid, and building maintenance, among other priorities.

The State Council of Higher Education for Virginia (SCHEV) voted today to recommend a $352.4 million increase in state support for higher education in the next two years. Almost half the increase would be designated to faculty recruitment and retention, a top priority of Virginia’s higher-ed sector. Another $55 million would go to financial aid and student support programs.

To leaven the request, the council also recommended a tighter cap on student fee increases from 5% yearly to 3% yearly as well as a new mechanism to build up an institutional reserve fund.

“This is not a random request for more money,” said Marge Connelly, chair of SCHEV’s resources and planning committee. The budget is aligned with the strategic goals of the Virginia Plan for Higher Education, a blueprint for Virginia to attain the goal of best educated state in the nation by 2030.

The plan calls for extra funding of $112.9 million in fiscal 2018-19 and $186.2 million in fiscal 2020. Key spending categories include:

  • $84.3 million in General Fund money and $87.2 in non-general fund money (generated mostly by the institutions themselves) to promote faculty recruitment and retention.
  • $54.5 million for increased undergraduate and graduate financial aid.
  • $25.8 million for operation and maintenance of new facilities. As colleges and universities erect new buildings, SCHEV recommends setting aside 1% of the asset value for ongoing maintenance.
  • $21.6 million to comply with base adequacy guidelines for operating higher-ed institutions.
  • $16.2 million for the higher-ed trust fund relating to computers, lab equipment and research equipment.
  • $15.0 million for “student success” initiatives (to improve graduation rates).
  • $54.5 million in increased financial aid.

To address volatile state support, which is subject to cuts to offset budget shortfalls, some higher-ed officials had called for creation of something equivalent to the state’s “rainy day” fund that could be tapped to level spending. With the recommendations adopted today, SCHEV proposes allowing colleges and universities to create “institutional reserve funds” into which they could put unexpended appropriations. A SCHEV handout provides the justification:

By establishing an institutional reserve fund, an institution will be able to promote more efficient resource utilization, reduce sudden spikes in tuition, and foster more long-term planning, thereby increasing affordability for Virginia’s families.

SCHEV also urged the General Assembly to stick to its two-year budgets. In recent years, says the SCHEV handout, the “biennial budget exists in name only.”

A return to a two-year budget cycle could provide, at least minimally, for a more stable and predictable planning cycle for our public institutions. There is a clear and strong relationship between predictable state support and lower tuition increases. Affordable access to Virginia public higher education would be improved by returning to such a policy.

The only note of dissent during the budget discussions came from council members Minnis Ridenour and Stephen Moret. Ridenour said the measure would restrict the authority of boards of trustees. Moret suggested that the cap could lead to unintended consequences. Connelly defended the measure as needed to establish some “balance” against the council’s aggressive funding request.

Update: Michael Martz with the Richmond Times-Dispatch covered the SCHEV meeting as well, and his reporting contains detail that my posts did not.

Sabato to Colleges: Be Nicer to Republicans

Larry Sabato

If Virginia’s colleges and universities want to make inroads with the General Assembly, they might consider being more friendly to Republicans on campus, renowned University of Virginia political scientist Larry Sabato told the State Council of Higher Education for Virginia (SCHEV) today.

The United States is as polarized today as it was in the 1960s and 1970s, said Sabato, arguably the best known political scientist in the country, who had been invited to speak on any topic he chose. The difference is that in the ’60s and ’70s, the nation was polarized over issues such as Civil Rights and the Vietnam War. Today the country is divided by partisan loyalty. In the past the political parties allowed for a diversity of viewpoints on issues such as gun control. Today, he said, “You can’t find a Democrat who isn’t in favor of gun control and a Republican who is.”

Pew Research Center research has found that the divisiveness is driven largely by negative emotions, Sabato said. “People hate the other party more than they like their own.” And hardly anyone is immune to the phenomenon. Scratch an independent, and the odds are he or she votes for either Democrats or Republicans ninety percent of the time.

Traditionally, higher education enjoyed the consensus support of Democrats and Republicans. Everyone bought into the goal of making college affordable and accessible. Then colleges got sucked into the culture wars. College employees tend to vote for and donate to Democrats in much larger numbers. Some college campuses became hostile to conservative speakers. In today’s polarized climate said Sabato, “Democrats support what they think is the prevailing ideology in higher ed and Republicans oppose what they think is the prevailing ideology.”

Republicans feel increasingly alienated from the higher ed community, he said. They feel universities are a “bulwark” of the Democratic Party. “You can’t have liberal after liberal after liberal as graduation speaker and be perceived as fair to both sides.” Universities should continue “speaking truth to power,” he said. But if they want a friendlier response in state legislatures, they should “reach out to the party that is not as represented.”

It doesn’t take much to reach out to Republican legislators, he said. Encourage more diverse perspectives on campus. Invite them to speak. He even invited Senator Ted Cruz to address his class, he said. “We’re not Berkeley.”

Time for Another Round of Higher-Ed Restructuring?

W. Taylor Reveley IV addressing SCHEV.

Longwood’s Taylor Reveley IV says Virginia’s elite universities should consider generating more revenue by admitting more out-of-state students.

The Commonwealth of Virginia faces chronic budget pressures — the growth of Medicaid, pension liabilities, and more — that will make it difficult for the General Assembly to bolster state support for higher education. W. Taylor Reveley IV, president of Longwood University, delivered those cautionary words to the State Council of Higher Education for Virginia (SCHEV) this morning shortly before it endorsed a committee recommendation to increase higher-ed spending by $350 million over the next two-year budget.

Perhaps it’s time for the state to consider another “restructuring” of the higher-ed system, Reveley suggested: Give leading universities more freedom to admit out-of-state students paying higher tuition, reduce state support for those institutions, and let the savings flow back to the other colleges and universities.

A legislative deal in 2005 gave Virginia universities more autonomy over procurement, IT, human resources, and other business processes in exchange for more accountability for achieving state goals. The legislation created three levels of autonomy, depending upon each college or university’s institutional capacity, Tier 1, Tier 2, and Tier 3. Only four institutions — the University of Virginia, the College of William & Mary, Virginia Tech, and Virginia Commonwealth University — have attained Tier 3 status with the most autonomy.

Reveley’s restructuring idea would create a “Tier 4” exempt from the state requirement that no institution enroll more than 25% of out-of-state students in their undergraduate student body. The percentage of out-of-state students at Virginia’s elite universities is a political football between the institutions and politicians. Universities like out-of-state students because they pay, on average, 163% of the tuition of in-state students, yielding more revenue. But General Assembly members are sensitive to constituent complaint of their children being displaced by out-of-state students.

Percentages based upon 206-2017 academic year numbers. (Click for more legible image.)

Admitting more out-of-state students could yield a “nine-figure” sum to reinvest in the higher-ed system, Reveley said. Rather than redistribute that sum between the other colleges and universities, the state could consider dedicating the funds an “investment pool” to advance a strategic aim such as advancing university research & development or (mentioned in a side chat with Bacon’s Rebellion) improving the graduation rate. Not only would reducing the number of college drop-outs prevent personal tragedies for students who spend thousands of dollars and drop out without receiving a degree or certification that would allow them to earn more and pay off the debt, it would enable colleges to award more degrees without the need to expand capacity at great public expense.

Most college presidents invited to address SCHEV council meetings use the opportunity to plug their institutions. Reveley took the opportunity instead to talk about the issue he says is “front and center” in higher education today — cost. Even adjusted for inflation, college is far more expensive today than it was in the 1960s and 1970s. “That same trend cannot repeat itself over the next two generations.”

Reveley drove home two other key points:

Personnel reform. Pore through university budgets, and you’ll find that 75% to 80% of the cost is tied to personnel, Reveley said. To some degree, he attributes higher-ed inflation to the phenomenon of “cost disease,” an affliction of labor-intensive economic sectors requiring lots of human interaction such as dentistry, teaching or the arts. It takes just as many people to play Beethoven’s 9th Symphony today as it did 100 years ago, he said. “I think that’s a lot of what’s driving the cost issue in higher ed.”

But it’s not the only thing. Virginia’s public higher-ed system operates according to civil service-like rules that were put into place to give government employees protections against wholesale replacement by new governors. Pork barrel politics is not an issue for colleges and universities. But the protections make it difficult to fire, reward and motivate employees, Reveley said. “It’s tough to exhort the troops when you can’t reward the ones who have worked their hearts out.”

Over and above the civil service rules, colleges and universities have a “dozen different flavors of employee.” These classifications creates conflict and hinder the ability to move people within the organization. While Reveley did not identify specific reforms, he said he would like to see a personnel system that resembled large not-for-profit organizations in the private sector.

Career prep. Reveley has been an outspoken voice in Virginia defending the virtue of a liberal arts education over career-prep degrees. Colleges play a critical role in preserving democracy and building civil society by teaching students how to engage with ideas and participate in organizations, he said. A liberal arts education “is not just a luxury good,” he told SCHEV. If career-prep is the goal, there may be less expensive ways to achieve the goal than sending students to four-year colleges.

Reveley is not the only person in Virginia to suggest another round of higher-ed restructuring. SCHEV staff had suggested the idea of increasing out-of-state enrollment to raise revenue and redirect state support to other institutions. Minnis Ridenour, a former Virginia Tech COO and a SCHEV board member, told the council he has discussed the idea with senior people at Tier 3 institutions, and that they are thinking it over. But Reveley is the first university president (to my knowledge) to publicly endorse the idea. He also is the first to suggest dedicating the freed-up revenue to a specific strategic goal rather than parceling it out among all the colleges and universities.

If higher-ed institutions want to run with the idea, they had better move quickly, said SCHEV chairman Heywood Fralin. There is little time to work out the details of any enabling legislation before the General Assembly session starts in January.

Now That’s Something to Brag About!

I’m just back from the meeting of the State Council of Higher Education for Virginia (SCHEV), and I had to share this tongue-in-cheek observation by W. Taylor Reveley IV, president of Longwood University, which he made during a presentation to the council. I couldn’t transcribe fast enough to provide exact quotes, but it went something like this:

In Virginia, we’re blessed with the greatest system of higher education in the country. The United States is widely acknowledged to have the best system of higher ed in the world. And there is no known extra-terrestrial life. Ergo, Virginia has the best system of higher education in the universe!

I don’t know if such a claim is backed by the data, but I like the way Reveley thinks.

Virginia Job Trends — Positive but Fuzzy

Image source: Richmond Times-Dispatch

The Richmond Times-Dispatch ran a striking chart in its Sunday edition contrasting the growth rate for different metropolitan statistical regions in Virginia. The main thrust of the article was to show that the Richmond region, after years of sub-par job creation, is growing smartly these days, creating almost as many jobs over the past 12 months as Northern Virginia. Indeed, if you adjust for the fact that Northern Virginia has roughly twice the population, Richmond’s performance is all the more remarkable.

(If you infer that Richmond has an inferiority complex regarding Northern Virginia, you’re right. As a Richmonder, I confess that it feels really good to sport a stronger economy, even if only for a brief moment in time.)

While the Times-Dispatch did not dwell on the point, the chart reinforces a post I made a couple of months ago pointing out that Hampton Roads is the main drag on Virginia’s economy this year.

As is my wont, I began playing with the numbers. I wondered how non-metropolitan Virginia was faring. By non-metropolitan Virginia, I’m referring to the mill towns and truly rural counties where the economy is thought of as moribund. Non-metro Virginia appears in the gray hatched area below — mostly Southside Virginia, the far Southwest, the western mountains, and the Chesapeake Bay.

I started with the fact that, according to the data in the chart, Virginia created a net 34,000 jobs between September 2016 and Sept. 2017. I netted out the job gains and losses for the metropolitan areas shown in the chart and got a gain of 14,800 jobs that could be attributed to non-metro Virginia. That number suggests, in defiance of all anecdotal evidence to the contrary, that Virginia’s small towns and rural areas are experiencing the biggest job-creation boom of all.

Either the anecdotal evidence is deceiving or the data is wrong. I think the data is wrong, or perhaps missing vital context. The Times-Dispatch attributed the information to the Virginia Chamber Foundation, and I have no doubt that the reporter transcribed the information accurately. Unfortunately, in the time available to me, I could not track down the original source on the Chamber website, so I hit a dead end.

I went to the federal Bureau of Labor Statistics, the most authoritative labor market source I could find. These numbers reflect 12-month job growth from August 2016 to August 2017 — one month earlier than the Chamber data.

These data confirm that Hampton Roads is a drag on the economy. But the region’s economy is in slow-growth mode, not shrinkage mode, which is some consolation. It also confirms that, for a brief shining moment, Richmond is leading the pace in Virginia job creation. Hoo ah! Unfortunately, the Washington data from this source is for the metropolitan area as a whole, not just Northern Virginia, so the job-creation rate should be regarded as only a rough proxy.

Regarding the Washington/Northern Virginia economy, it is natural to assume that tight federal spending is to blame. And perhaps it is. But there’s more to the story. Northern Virginia has an extremely low unemployment rate. In fact, in certain sectors, there is a labor shortage. Consider this Virginia Employment Commission data on where the job openings are (based on online advertising):

Fairfax County — 40,605
Richmond — 11,850
Arlington — 9,899
Loudoun — 8,898
Norfolk — 5,595
Virginia Beach — 5,439
Alexandria — 5,187
Henrico — 4,441
Prince William — 4,014
Albemarle — 3,410

Obviously, there’s a strong correlation between total jobs advertised and the population of the locality. But the numbers indicate that Northern Virginia has nearly 70,000 job openings right now. A worker shortage could be the main constraint on growth, not a weak economy. The data also show that the City of Richmond is cooking with gas — the city and the larger region lost a decade reinventing itself, but the efforts finally seem to be paying off. Finally, for all of Hampton Roads’ job woes, Norfolk and Virginia Beach are still hiring.

Cville Ranks 3rd Nationally In Happiness. If Only We Knew Why.

Thanks to the intrusion of outsiders bent upon confrontation, Charlottesville has become synonymous in the public discourse with hate and discord. It’s a bum rap. In a recent survey of the happiest metros in the United States, C-ville ranked third, behind Boulder, Colo., and Santa Cruz, Calif.

The study by National Geographic and the Gallup organization established 15 metrics—from healthy eating and learning something new every day to civic engagement, financial security, vacation time, and even dental checkups—that signal happiness. The National Geographic Gallup Special/Blue Zones Index draws on nearly 250,000 interviews conducted with adults from 2014 to 2015 in 190 metropolitan areas across the U.S.

In happier places, locals smile and laugh more often, socialize several hours a day, have access to green spaces, and feel that they are making purposeful progress toward achieving life goals, writes the National Geographic’s George Stone. The happiness index tracked factors that are statistically associated with doing well and feeling well, including feeling secure, taking vacations, and having enough money to cover basic needs.

The National Geographic article is frustratingly short on specifics about what makes Charlottesville happy, noting no more than the following in its photo cutline: “Along the foothills of the Blue Ridge Mountains, Charlottesville, Virginia, has ample opportunities for getting outdoors between visits to Monticello and the University of Virginia—both listed as World Heritage sites.”

I’d like to know what makes Charlottesville such a happy place, but the details aren’t available anywhere online that I could find. It also would be helpful to know if the data is drawn from just the city of Charlottesville, from Charlottesville and Albemarle County, or from the Charlottesville metropolitan area, which includes the outlying counties of Fluvanna, Greene and Nelson.

The photograph above, taken from the National Geographic article, shows Charlottesville’s downtown mall, which is an enjoyable place to spend time. And Cville is, of course, home to the University of Virginia, with all the assets that it has to offer. Those two iconic features, along with Monticello, are the first to come to mind when people think “Charlottesville” (well, when they aren’t thinking about white supremacist rallies). But Nelson County, which is part of the metro area, is the location of the Wintergreen resort community, which is a fabulous place in its own right.

All this is a long way of saying, yeah, it’s cool that Charlottesville is ranked No.3 in the National Geographic’s happiness index, but the published data doesn’t give us public policy wonks much to work with in teasing out what makes Cville residents happy and what lessons might be gleaned for other Virginians.