Actual LCPS enrollment for the 2011-2012 school year fell short of the forecasted 66,266 students.  According to the LCPS web site, actual September 30th, 2011 enrollment was only 65,668 students. This is good news because it could indicate that the surge in enrollment from Loudoun's high-growth years, from approximately 1993 to 2006, is finally tapering off.  As the following graph shows, LCPS enrollment growth has remained steady, even though the number of building permits issued has plunged.

Up until 2006, the number of building permits issued was greater than the increase in public school enrollment.  That was to be expected, because there is an average of about .6 students per residential unit, countywide.  Why has enrollment outpaced permits the past 5 years?  Our analysts have a few theories about that.

It is a fact that Loudoun attracted a lot of young couples during the high-growth years.  Many were families that already had school-age children.  Other families had young children not yet old enough to enter school.  Then there were couples who did not have children, but planned to in the future.  Many children of those new families are just now entering public schools, years after their houses were built.  Thus, the full demand for school seats from a typical new development does not materialize until many years after it is built out.

Another factor could be a declining residential vacancy rate.  Some houses built during the housing boom were for investment purposes, not the owner's primary residence.  The owners planned to rent those houses, but rental demand was weak for a long time and many of those houses sat vacant.  Now the rental market is strong and vacancy rates are low.  Many of those new renters have enrolled children in public schools.

At some point in the near future, enrollment growth should taper off.  Children in families that moved here during the high-growth years will start graduating and many couples will become empty nesters, while birth rates will drop as the population ages.  Annual enrollment growth should once again dip below building permits issued.  If the permit counts remain at current levels, it will mean substantially less need for new schools in the future!

Is HS-8 even necessary?

Enrollment projections indicate more high school seats will be needed in the Ashburn area soon, but does that mean an expensive new high needs to be built?  1,600 seats could have been provided by expanding 4 existing Ashburn/Leesburg schools to a capacity of 2,000 or more seats.  The BOS appropriated $280,000 for a study, but the School Board declined the study and returned the funding because they had no interest in expanding schools to 2,000 or more seats.  

It is astonishing that in these austere times, when taxpayers can't afford a $110 million high school, that the School Board would not even consider all viable options.  Many school districts turn to adding on to existing schools rather than having to buy new land and build a costly new facility.  In fact, even LCPS has an 200-set addition scheduled for Freedom high school for only $4.3 million.  That's $21,500 a seat compared to $68,750 a seat for HS-8.  The School Board was okay with that addition because it would bring capacity up to 1,800 students.  What they really have a problem with is going to 2,000 or more.  When Fairfax builds a new high school, the capacity is 2,500 seats.  In Prince William, it's 2,200.  Why has Loudoun never embraced larger high schools?  It's economic reality in large metro area school districts.

 

• There is an average on 1 child in public schools per residential unit,
• The real property tax is the only source of local revenue available to the county,
• All revenue is from local sources.

• LCPS enrollment is at 66,266 and there are over 110,000 residential units in the county,
• The county collects revenue from dozens of taxes and fees other than the real property tax,
• The county receives a significant amount of revenue from the state and federal government, which is generally based on population or public schools enrollment.  LCPS receives aid for every new pupil they must educate.

Others point to increased expenditures while ignoring all the revenue the new residents were contributing and the alarming increase in per-capita/pupil spending.  Some even point to the tax rate in Fairfax County back in their high-growth years, even though a tax rate in and of itself says nothing about the tax burden on residents.  In order to get a clearer picture of the situation the county was in, the following table provides some key statisitcs from the years of highest budget, taxes and population growth from FY 2000 to FY 2008.

 

The tax rate would have been only 56.2 cents and the average homeowner tax bill would have risen by only 50%, not 156%.  That is because county would have needed $251 million less in real property taxes by FY 2008!  

The next table shows the revenue sources for the county general fund.      

 

The BOS has little control over how much revenue they collect from most of these sources.  For instance, much of the state aid is based on formulas, such as the local composite index.  The exception is the real property tax.  So if the BOS wants to spend a lot more money, the major funding source will have to come from real property tax revenue.  Raising per-pupil spending by 82%, and per-capita spending by 60% required large increases in the average homeowner tax bill.  

The next table shows the amount of spending above what was required to keep pace with population/pupil growth and inflation.

The total is a staggering $1.75 billion over the past 12 years!  Was there a good reason for spending this much money on operations or should some the overspending been used to pay cash for capital projects or used to lower the tax rate? 

Spending priorities: operations or capital? 

According to the Adopted FY 2008 Budget, the county will end the FY 2008 with $1,174,900,637 in tax supported debt and $198 million in new debt issued during the year.  Annual debt service is $141 million and of that amount, $52 million is for interest on the general obligation bonds.  That is a substantial amount of money being wasted every year.  In a county with tremendous growth forecast for decades, $100 to $200 million in new capital facilities are needed just about every year.  It does not make much sense to borrow money and pay interest charges above a certain amount.  For instance, if the county did not have any debt, the $141 million it would have paid in debt service could be used to pay cash for most of the $198 million cost of new capitial facilities and only $57 million would need to be financed.  Issuing bonds makes sense for localities that have periodic capital needs, because the cost can be spread out over many years.

The per-capita/pupil spending levels attained by FY 2008 were unaffordable.  There has been a correction the past three budget cycles where spending rates have become more affordable and as a result, the average homeowner tax bill has only increased by $262 over the past four years, even though there are 12,000 more students enrolled in LCPS!

Clearly, there was an overemphasis on operations spending in a misguided effort to outspend neighboring localities and not enough cash funding applied towards the new capital facilities needed in a growing county.  Now the county is saddled with high debt and bond interest payments.

Conclusion

The large increase in per-capita/pupil has been the main driver of higher taxes in Loudoun County.  As further proof, other Northern Virginia localites that were built-out decades ago saw their homeowner tax bills rise at about the same rate as Loudoun's did, as shown in the following graph.  Prince William County had the slowest rate of increase, even though they were growing and added 20,000 pupils to their school system from FY 2000 to FY 2008.  The major difference is that they only increased per-pupil spending by 55%, compared to Loudoun's increase of 78%.   Loudoun caught up to Fairfax  in FY 2008, in part because Fairfax only increased per-pupil spending by 63%.

 

 

 

A recent CNN Money article found that Loudoun County experienced the 2nd highest job growth in the nation from 2000 to 2010.  The article did not provide details of what type of jobs were created, but the Census of Employment & Wages (CEW) report published by the Virginia Employment Commission does.  The annual reports show that from 1999 to 2009, Loudoun added nearly 53,000 jobs!

How were all those jobs created?  Are they well-paying jobs?  Fortunately, the CEW report can provide some insight because it breaks out job count by NAICS industry code and reports average weekly wages.  Loudoun has jobs in over 100 different NAICS categories.  The following table lists some of the major job growth categories, while summarizing all other categories. 

 

 

All of the job categories listed are essentially businesses that serve the general residential population.  As the population grew, a large market (nearly 143,000 new residents last decade, according to the 2010 census) was created for these businesses.  The new residents need a variety of retail stores, grocery stores, pharmacies, home improvement stores, department stores, gas stations, restaurants (fast food and fine dining), etc.  They need professional services, such as doctors, dentists, lawyers, realtors, etc.  They need trade services, such as plumbers, carpenters, auto mechanics, landscapers, etc.   

These types of businesses and jobs always accompany residential growth and typically make up 10-20% of the real property tax base.  The job growth for most of these categories nearly mirrors the population growth.  Would all the strip malls and professional buildings that sprang up over the past 10 years be here without the new housing developments?  Unlikely, without the market those developments provided.

The growth in local government jobs (119%) was one of the strongest job growth categories and far outpaced population growth (84%).  This was primarily due to an increase in staffing levels.  For instance, Loudoun County Public Schools had 127 full time employees per 1,000 students in 1999, but that grew to 145 FTEs per 1,000 students in 2009.  It was also one of the main drivers of higher taxes last decade.  Incumbent politicians can definitely take credit for that job growth!

All other job categories combined grew only 37%.  The CEW report shows that the average weekly wage has increased by just 5% in the past 10 years.  These statistics are indicators that Loudoun has failed to attracted enough corporations, government contracting firms and other class A businesses in recent years to significantly expand the share of the commercial tax base, which would lower the tax rate, and provide residents with more high-paying jobs.   

More needs to be done to promote economic development.  It is the major issue during the 2011 election and most supervisor candidates are claiming they will bring more businesses to Loudoun County.  Loudoun Taxpayers for Accountable Government encourages all voters to grill these candidates on the details of their plans.  Many don't really have much of a plan, but there are a few that have very good plans and appear to be very qualified for the task.