Author Archives: James A. Bacon

Another Useless Educational Metric

local_pass_vs_SOL2by James A. Bacon

We have documented in previous posts that there is only a weak correlation between the amount of money a Virginia school district spends per pupil and educational achievement as measured by the pass rates on Standards of Learning tests. But there are other ways to make the same point.

Our Lynchburg correspondent Jim Weigand has brought to my attention the publication of a report  based on 2015 data comparing the Required Local Effort (RLE) for Virginia’s localities and what the school districts actually spend on K-12 education.

For those of you not conversant with educratese, RLE represents the minimum expenditure required to meet the state’s “Standards of Quality,” an assessment of inputs such as the ratio of teachers and staff to the number of students. By comparing RLE to actual local expenditures, the VDOE report calculates the amount of a jurisdiction’s own tax dollars (as opposed to state and federal dollars) that it spends above and beyond the minimum requirement.

As the chart above shows, school districts vary widely in how much fiscal effort they devote to funding their schools — from 7% above the rock-bottom minimum in Patrick County to 284% of the minimum for the town of West Point. And what is the payoff for that extra spending? We compared the RLE percentage with average SOL scores for the 2014-2015 school year for each school district.

SOL_pass_rate

As can be seen in the scatter graph above, there is almost no correlation at all. The R² measure of correlation is less than 5%.

Does that mean the extra money is wasted? Not necessarily. Some school districts may be spending more money because they have a higher percentage of students who are handicapped, economically disadvantaged or speak English as a second language. But the graph is a pretty good sign that dumping more money into schools to meet or exceed the Standards of Quality is not an effective strategy.

Instead of blindly plowing more money into Standards of Quality, perhaps money should be steered to schools with more at-risk students. Or perhaps we could study what the successful schools are doing differently from the less successful schools and try to replicate the secret sauce. Or perhaps we could do almost anything but what we’re doing now.

To see the numbers for all localities in Virginia, click here.

Domenech Claims about Clean Power Plan Detract from Serious Debate

domenech

Doug Domenech

by James A. Bacon

There is a principled conservative-libertarian argument to be made against the Obama administration’s Clean Power Plan (CPP), which would compel Virginia’s electric utilities to cut CO2 emissions by 32% from 2005 levels by 2030. Unfortunately, Doug Domenech, Secretary of Conservation and Natural Resources during the McDonnell administration, didn’t make it in a Sunday column in the Richmond Times-Dispatch. Indeed, by building his argument around at least three propositions that are either unsubstantiated or just plain wrong, he may have damaged the credibility of Clean Power Plan critics.

In the spirit of charity, let’s start with what Domenech gets right. He argues that the Clean Power Plan might be unconstitutional. I agree. A serious argument can be made that the Environmental Protection Agency (EPA) usurped Congressional authority by classifying  carbon-dioxide, a chemical essential to life, as a pollutant that can be regulated under the Clean Air Act. Twenty-seven states are suing the EPA on those grounds in a case that will be decided by the U.S. Supreme Court. Until the high court rules, the constitutionality remains in limbo.

Domenech also argues that the Clean Power Plan will do little to effect climate change. Implementation of the plan will reduce projected global temperature increases by 0.018 degrees Celsius by the year 2100 and slow the rise in sea levels by the thickness of two sheets of paper. That’s for the entire U.S. The impact of Virginia’s adherence to the plan will be too small to measure. Even the EPA has conceded this reality, but argues that the U.S. cannot persuade other countries to restructure their energy economies unless the U.S. moves aggressively to decarbonize its own.

Domenech also raises a legitimate question: How much will the Clean Power Plan cost rate payers? Given that the plan calls for phasing out coal-fired power plants, the cost of which is already built into the rate base, and replacing them with gas, nuclear, wind or solar, which must be paid for anew, there are reasonable grounds to believe that the plan will drive up electricity costs here in Virginia.

However, he cites (without naming the source) a study by the American Coalition for Clean Coal Electricity which concludes that electricity rates will increase annually by 14% annually, or roughly 150% over 11 years. That forecast is an extreme outlier. The State Corporation Commission has estimated that Dominion Virginia Power electric rates could increase 20%, while environmentalists have argued, on the implausibly low side, that electric rate increases will be so negligible that, when combined with energy-conservation measures, Virginians will actually pay lower electric bills. Perhaps the most disinterested and credible source, PJM Interconnection, says that the final cost will depend on the particular regulatory regime Virginia chooses and, thus, is impossible to determine at this time.

But that’s nothing compared to two claims that are utterly unsupportable. As Virginia’s chief environmental regulator, Domenech should know better.

First, he gives DEQ and the private sector credit for reducing Virginia’s emissions of sulfur dioxide by 66%, nitrogen dioxide by 43% and carbon dioxide by 27% during the McDonnell administration between 2010 and 2014. “This was largely due to the efforts of the professionals at the Department of Environmental Quality and the actions of Virginia’s corporate citizens. … We were able to reduce CO2 27% without the heavy hand of the EPA.”

In truth, the hand of the EPA was very heavy indeed. In December 2011, about halfway through the McDonnell administration, the EPA finalized its Mercury and Air Toxics Standards, which regulated mercury and other toxic chemicals released into the air by coal combustion. The EPA rules cracked down on dirty coal emissions, forcing electric utilities to switch to other power sources, particularly natural gas, which emits roughly half the CO2 per unit of energy as coal. Much of the pollution reductions cited by Domenech came about as the power industry either anticipated and/or responded to the new standards by installing scrubbers or converting from coal to gas. For instance, Dominion converted two units at its Possum Point from coal to gas in 2013, and its entire Bremo plant from coal to gas in June 2014.

I was not covering the electric power industry back then, so I acknowledge the limitations of my knowledge. But if the EPA’s air toxic standards were not the driving force behind the decline in pollutants, what DEQ initiative was? Domenech provides no alternative explanation.

Secondly, Virginia’s former environmental chief blames the woes of Virginia’s coal industry on the Clean Power Plan: “With this EPA rule, we see the impacts on Virginia’s coal communities. Coal mines are being shut down, miners are losing their jobs, the dreams of coal families are being shattered, coal companies are filing for bankruptcy.” Even CSX and Norfolk Southern railroad profits are plummeting due to drops in coal volume.

That is stupefyingly, breath-takingly wrong. If he wants to blame government regulation, Domenech could plausibly cite the impact of the Mercury and Air Toxics Standards, which with the fracking revolution and low price of natural gas pushed electric utilities to scrap dozens of coal-fired power plants around the country or convert them to gas. No question, that wave of regulation sharply reduced demand for steam coal. On top of that, export markets for steam and metallurgical coal (used in steel making) also have collapsed. But to blame the Clean Power Plan, which hasn’t resulted yet in the shut-down of a single coal-fired plant, for the current condition of the coal industry just isn’t credible. If Domenech wants to make a connection between the Clean Power Plan and the coal industry, he could plausibly argue that the plan will demolish future demand for coal, that it will destroy any hope of a coal industry recovery, and that the economic woes we see in the coalfields today will become even more widespread. But that’s not the argument he makes.

Over and above questions about its constitutionality, the Clean Power Plan raises important issues for Virginians. The plan will engender complex trade-offs between costs to rate payers, the reliability of the electric grid and the environmental benefit of shifting to low-carbon or zero-carbon power sources. To what extent should we diversify our fuel sources? How rapidly will demand for electric power increase, how much new capacity should we build, and who will pay for that capacity if we build too much? To what extent should we purchase electricity in wholesale energy markets, and can we build enough electric transmission lines (which nobody likes) to accommodate the large-scale wheeling of power across state lines? What kind of grid is more resilient in the face of cyber-sabotage, terrorist attacks or natural calamities — the Big Grid vision of large power plants and large transmission lines, or a small-is-beautiful vision in which householders and businesses generate much of their own roof-top power?

These are the kinds of questions I’m asking at Bacon’s Rebellion. Conservatives and Republicans can either be part of a serious discussion or they can throw dust  in the air to distract the electorate. Sadly, the misinformation in Domenech’s op-ed is so easily debunked that it’s hard to take him seriously. Republican legislators would be well advised not to fall into the same trap.

Curse Thee, Demon Smart Meter!

Photo credit: Pew Charitable Trust

Photo credit: Pew Charitable Trust

Smart meters could be a key contributor to America’s evolution to an energy-efficient future. The devices measure gas and electricity consumption, helping consumers reduce energy consumption, save money and reduce the CO2 emissions implicated in global warming. The widespread use of smart meters could enable power companies to offer incentives for consumers to shift their electricity consumption away from periods of peak demand, thus cutting costs for everyone.

But a backlash against smart meters is picking up steam. Some say the data they convey over wireless networks can be hacked by criminals to target homes. Utilities say the fears are overblown, but 15 states now allow consumers to opt out of smart meter installations. Pew Charitable Trusts’ Stateline has the story here.

Good intentions are no match for the stubbornness and perversity of mankind.

— JAB

A Greater Role for Nurse Practitioners

nurse_practitionerby James A. Bacon

While Medicaid expansion may have been dead on arrival at the General Assembly this year, the Senate Education and Health Committee has been thinking of other ways to improve medical access for Virginia’s poor. One solution is to loosen the regulatory restrictions that limit the ability of nurse practitioners to handle routine medical cases without a physician’s supervision. Three bills passed by the committee would improve medical access by expanding the role for nurse practitioners.

Reports the Richmond Times-Dispatch:

  •  SB 369 would establish a pilot program in which nurse practitioners would practice without direct supervision of a physician in clinics in medically under-served or high-unemployment areas. The nurses would collaborate with physicians via tele-medicine, and would have authority to issue prescriptions.
  • SB 264 would allow a nurse practitioner to provide care for up to 120 days in the event that the physician overseeing the patient care team dies, retires, becomes disabled or no longer has a license.
  • SB 463 would authorize nurse practitioners certified as nurse midwives to practice without the requirement for collaboration and consultation with a patient care team physician.

By themselves, these measures will not solve the plight of Virginia’s uninsured population, which Medicaid expansion is meant to address, but they are a step in the right direction. Combined with other measures such as the rollback of Certificate of Public Need regulations and the expansion of primary-care clinics, Virginia can do a lot to ensure better access for the poor and near-poor without exposing taxpayers to the massive fiscal risk of expanding Medicaid.

Advocates of Medicaid expansion tend to overlook a critical point: Having access to health insurance is not the same as having access to primary care services. Because Medicaid tends to pay health care providers less than it costs them to provide a service, Medicaid patients are money losers. As a consequence, many primary-care physicians, who tend to be over stretched as it is, refuse to take Medicaid patients. The looming physician shortage makes it increasingly difficult for Medicaid patients to find a primary-care physician, which is why so many end up in the emergency room.

The U.S. health care system is an extraordinarily complicated organism, and its problems cannot be fixed by throwing money at it. By taking up the if-you-don’t-like-Medicaid-expansion-what’s-the-alternative challenge, Virginia can build a health care system that works better for all. These three bills are excellent examples of the kind of thinking we need. If Republicans win the White House in 2016 and succeed in their dream of dismantling Obamacare, we’ll be darn glad we chose this path.

The Small Business Route out of Poverty

Raheim Watson grew up in Harlem, New York, surrounded by drugs and violence but decided he wanted a different life when his son was born. He moved to Richmond in 2014, where he has purchased a home, the first one in his family to do so, and started his own business. His window washing business is focused on the residential and small-commercial market.

Raheim Watson grew up in Harlem, New York, surrounded by drugs and violence but decided he wanted a different life when his son was born. He moved to Richmond in 2014, where he has purchased a home, the first one in his family to do so, and, with help from UnBoundRVA, started his own business. His window-washing business is focused on the residential and small-commercial market.

by James A. Bacon

UnBoundRVA is my kind of anti-poverty initiative! The organization identifies people in low-income neighborhoods who have the potential to succeed as small business owners, and then provides them a year of training, advice and networking support as they develop a business plan.

Once the business models are in place, each hopeful business owner makes a pitch for startup capital from a collective pool of $100,000 in low-interest loans. UnBoundRVA then connects the businesses with partners who provide pro bono services in areas such as legal, accounting, marketing and banking.

UnBoundRVA made it into the news recently when the Richmond Times-Dispatch highlighted a $20,000 donation to the group by Pat Hull, the entrepreneur behind logistics apps Getloaded.com and Scoopmonkey.com. “Your dream may not be the next Google. But who cares, if you are supporting your family and creating jobs?”

The not-for-profit enterprise was founded by Sarah Mullens and Richard Luck, who met while teaching in the inner city as part of the Teach for America program. They saw a large number of talented individuals who weren’t pursuing a college track for reasons that had nothing to do with ability or work ethic. “We believe that potential is restricted by the forces of the poverty cycle, and that the human capital of these individuals is our nation’s greatest underutilized asset,” states the UnBoundRVA website.

High-potential individuals in the current class, which will finish in June, are pursuing businesses in the following areas: clean-up services for construction projects, a mobile auto detailing service, a professional house organizing and redesign service, vegan cookies, and a mobile virtual reality gaming experience.

Bacon’s bottom line: Give a man a fish, you feed him for a day. Teach him how to fish, and you feed him for his life. In contrast to so many leftist-inspired “social justice” programs that don’t even feed a man for a day — they teach him to march and protest until someone gives him a fish — UnBoundRVA teaches people to fish. It may not provide a systemic cure for poverty, a goal that has eluded this nation despite the expenditure of trillions of dollars in public and philanthropic anti-poverty programs over the years, but it can make a tremendous difference to the people whose lives it touches.

If you want to address the “root causes” of poverty, you have to change the lives of people one individual at a time. UnBoundRVA does that.

That said, it’s not clear from the website if UnBoundRVA is a cost-effective way to address poverty. The program has an annual budget of $268,000, supporting a staff of four full-time employees and one part-time. How many people does it help with that annual investment? According to the website, UnBoundRVA collects the names of individuals interested in starting their own business, enrolls twelve candidates in a six-week workshop and selects the five most promising for a one-year program of business support. The website does not say how many times it runs through this cycle each year. If only once, not so good. If eight or nine times, helping 40 or more people, that’s more defensible. One thing I do believe: It’s a model worth trying.

IG of the Day: Virginia GINI

Source: Virginia Public Access Project

Source: Virginia Public Access Project

Where is income inequality in Virginia the most severe? College towns like Blacksburg, Charlottesville and Harrisonburg, and poor, rural mill-town jurisdictions like Danville and Grayson, Halifax and Greensville Counties.

Where is inequality in Virginia least evident? In the Washington suburbs and a broad swath of rural counties in eastern Virginia.

That’s the insta-analysis of a map published by the Virginia Public Access Project, which shows the GINI coefficient, a measure of income inequality, for Virginia localities based on 2012 data. (Hat tip: Tim Wise.)

— JAB

Threading the Needle on Long-Term Debt

Virginia_tax_supported_debt

Graph credit: Virginia Debt Capacity Advisory Committee

by James A. Bacon

Virginia has more than tripled its tax-supported debt over the last decade, according to the December 2015 report of the Debt Capacity Advisory Committee, but the state still has enough capacity to support the issuance of another $603 million per year in added debt in Fiscal years 2016 and 2017 without undermining its AAA bond rating.

Long-term debt is necessary to pay for long-lived assets such as public buildings, university facilities and transportation projects, but higher debt payments, a fixed expense, make it difficult to respond to economic downturns and address other budgetary needs. It has been Virginia’s policy to limit debt payments to 5% of blended revenues.

While other states have been somewhat constrained in their borrowing in recent years, Virginia has continued to add to its debt. Net Tax-Supported Debt (NTSD) as a percentage of personal income increased to 2.8% — higher than the national median and 19th highest among the states.

debt_comparisons

Graph credit: Virginia Debt Capacity Advisory Committee

Against this backdrop, Governor Terry McAuliffe has proposed issuing $2.43 billion in bonds for higher-ed R&D initiatives, Virginia ports, corrections, state parks and the environment. Assuming the bond issuances are staggered over four years, they would soak up the state’s projected added bond capacity over that period.

Complicating matters, McAuliffe has an appetite for even more spending that requires long-term financing. The administration’s signature transportation initiative is a $2 billion upgrade to Interstate 66, a key transportation artery in Northern Virginia. The project as currently envisioned is dependent upon highly unpopular tolls and toll-backed debt to finance the project. Unless offset by the maturation of old transportation debt, issuing bonds for the project could accentuate the crowding out of other priorities. As the committee report states:

Currently, debt service on debt paid by the TTF (Transportation Trust Fund) exceeds 5% of TTF revenues. Accordingly, to the extent the 5% measure is exceeded, capacity derived from the general fund is being utilized. This does not mean that general fund dollars are supplementing debt service payments on TTF debt; rather, it means that capacity derived from the general fund is being used to keep overall capacity for all tax-supported debt under the 5% target.

The General Assembly money committees have more than budgets to discuss this year.