The Loudoun County Public Schools (LCPS) FY10 operating budget is $147 million more than what has been needed to keep pace with enrollment growth and inflation since the housing bubble revenue bonanza began in FY01.

Because Loudoun was once the fastest growing county in the nation, the standard excuse for the ballooning school budget was always explosive enrollment growth, but Table 1 shows that the school budget has grown by a factor of enrollment growth and nearly double the rate of inflation.  In reality, it was non-growth costs such as maintaining a golden employee benefits package, very generous employee raises, and rising employee-to-student staffing ratios that led to a fat budget.  See our article, “LCPS Spends Too Much on Salaries and Benefits” for details.

Only in the past two years has fiscal restraint been forced upon LCPS thanks to the collapse of the housing market, yet the school system escaped the difficult FY10 budget process relatively unscathed.  There were no reductions in staff, no salary cuts, no furloughs, and only slight reductions to the nearly $200 million spent on an outdated benefits package that would bankrupt most private sector companies (Just look at the American auto industry).  Given the current economic climate and crushing homeowner tax burden, there should have been more cuts.

Table 2 shows that over $1.1 billion could have been saved this decade through a fiscally responsible policy of limiting budget growth to a rate of enrollment growth and inflation.  All of those superfluous annual funding increases have compounded over the years into a budget that Loudoun homeowners cannot afford.

How much is enough?

Every year, taxpayers are astounded by how much more money LCPS Superintendent Ed Hatrick asks for.  For instance, in FY09 he asked for $110 million more than FY08, which was a 15.6% increase when enrollment growth was only 5.5%.  The question is: how much does he really need to operate a quality school system?  What happened in the FY09 budget process may shed some light on the controversy.

Dr. Hatrick presented an $801 million operating budget to the School Board for FY09.  Much to his objection, the School Board trimmed it down to $794 million.  Then the county administrator presented his proposed budget to the Board of Supervisors with $771 million in school operating funding (plus another $10 million for bus and computer leases).  The BOS voted to trim another $26 million, for a final appropriated operating budget of $745 million – half the increase Dr. Hatrick originally sought.  In response, Dr. Hatrick and the School Board complained the cuts were too deep and would negatively impact the quality of education.

But when the FY09 school year began last summer and the revenue projections for FY10 looked bleak, Dr. Hatrick directed his staff to implement additional savings.  According to a news release from LCPS, they were able to cut costs by another $20 million.  Not bad considering he was operating with $55 million less than he originally claimed he needed!  It appears he only needed about a third of the increase he asked for.

To be sure, there is no limit to how much money a school system can spend.  Class sizes can be reduced, salaries raised, benefits sweetened, staffing levels beefed up, more programs and wiz-bang technology implemented, etc.  From FY01 to FY08, there were only token reductions to budget requests that were growing at nearly triple the enrollment growth rate.  The money was there, thanks to the housing boom, and it was spent!

Comparing LCPS Spending to Other School Systems

LCPS often publishes per pupil expenditure comparisons for selected DC area schools, which may leave the impression that Loudoun is a bargain.  Table 3 is a more complete list from the latest Virginia Department of Education Superintendent’s Report, where Loudoun ranks fourth in the state.  At the top of the list are 2 school systems - Arlington and Alexandria – that spend far more than any other school system in Virginia and can be considered anomalies.  In short, they spend so much simply because they can.  It is a great example of how public schools spending has no limit.  Both localities have a massive commercial tax base and the number of school-age children is a smaller percentage of the population than other localities, which enables them to spend a lot and still keep their tax rate low - Arlington is currently at 87.5 cents, Alexandria 90.3 cents.  No other locality in Virginia has that luxury.

The major factor in comparing expenditures of northern Virginia schools is the proximity to the core of the metropolitan area.  The cost of operations rises the closer to DC a locality is, mainly because the higher cost of housing and commuting requires schools to offer higher pay.  Fairfax County, with many schools inside the beltway and housing values 15% higher than Loudoun, has a higher cost of operations than outer counties.  Adjusted for locality costs, Fairfax actually spends less per pupil than Loudoun.

Student Achievement Not Commensurate with Funding Increases

With Loudoun per-pupil expenditures increasing at a faster rate than the state average and neighboring Fairfax County this decade (Figure 1), Loudoun taxpayers should expect commensurate gains in achievement.  But SAT scores - a key measure of student achievement and a major college admissions factor - have actually improved less than both the state average and Fairfax County.  It is not surprising that Loudoun has always scored higher than the state average, simply because of demographics.  Both Loudoun and Fairfax have a very high percentage of college-educated parents and median family income is among the highest in the nation.  Parents, as the primary educators, expect their children to apply themselves and are very involved in their academics.  Loudoun has increased per-pupil expenditures by an exorbitant $6,303, or 88%, in the past eight years for only a 10 point (out of a possible 1,600) gain in SAT scores (Figure 2)!

What is perplexing is that Fairfax students score so much higher than Loudoun students, even though Loudoun attained spending parity six years ago.  Loudoun even teaches to the test by spending $650,000 a year on 10 SAT preparation instructors.  Why do Fairfax taxpayers appear to be getting a better return on their investment?  Other DC area schools with higher SAT scores than Loudoun are Montgomery and Howard Counties in Maryland; Arlington County and Falls Church City in Virginia.

In another measure of education quality, Loudoun high schools are not ranked as highly as other northern Virginia high schools in the latest Newsweek Magazine national rankings (Table 4).  Even Clarke County, which spends considerably less money on education, has a high school in the top-100.

Loudoun County Public Schools (LCPS) spends an excessive amount of money on its employees.  In Fiscal Year (FY) 2009, $652,168,072 million was appropriated for salaries and benefits - representing 88% of the operating budget.  During every budget debate, the issue of fair and competitive pay is brought up.  Salaries are well publicized, but school bureaucrats try not to mention the excellent - and very costly - benefits package or the 76 days of annual leave teachers get.  This article will examine all forms of employee compensation and show that LCPS compensation is beyond fair.

Salary increases outpacing inflation

School employees have received very generous raises throughout this decade. Figure 1 shows the historical increase in the licensed teacher salary scale.  Both the entry level and maximum salaries have increased 43% since FY 2000.  Inflation was 29% during that time period.  In addition to salary scale increases, all teachers earn a step increase for each year of satisfactory performance.  Those increases have averaged roughly 3% a year.  A teacher hired in FY 2000 at the minimum salary, having earned a step increase every year, would have received a salary increase of $24,415, or 82%!  To be sure, teacher raises have been much higher than what professional employees in the private sector (at least those lucky enough to still have a job!) have received this decade.

Historical salary data for administrators was not available in the WABE reports, but the FY 2009 administrator salary scale ranges from $68,402 to $147,894!

A benefits package second to none

Benefits costs have skyrocketed.  For FY 2009, LCPS appropriated $188,474,808 for employee benefits compared to $463,693,264 for salaries.  For every dollar of salary, LCPS pays an additional 41 cents for benefits!  Just in case you are looking for benefits costs in the budget, LCPS avoids using the word benefits and simply refers to the category as fringe costs.  The average teacher benefits cost (see figure 2) has increased 84% since FY 2000!  Health insurance has increased a staggering 139%.

To be fair, health insurance premiums have risen a lot in recent years, but comparing what LCPS pays to what other employers pay (Table 1) would suggest that LCPS is paying too much.  In fact, LCPS rates are 46% higher for employee-only coverage and 38% higher for family coverage.  The LCPS employer share is $4,610 more for family coverage and $2,353 more for employee only coverage.  With 8,527 full-time equivalent employees, it is estimated LCPS could save somewhere in the range of $20 to $30 million by switching to an insurance plan more in line with what other employers offer!

School employees have a defined-benefit pension plan through the Virginia Retirement System (VRS).  Every year, VRS sets the rate LCPS is required to pay.  For FY 2009, the rate is 9.89% of the base salary for all full-time instructional/professional personnel.  VRS also requires employees to contribute 5%; however, LCPS voluntarily pays the employee share at a cost to taxpayers of roughly $24 million a year!  In total, LCPS contributes 14.89% of an employee’s base salary towards their retirement!  What company contributes that amount these days?  Defined-benefit pension plans are rapidly disappearing in America and are being replaced by 401k plans that employees have the burden of managing.  In 2006, Verizon Communications, which employees several thousand workers at the Ashburn campus, discontinued its defined-benefit pension.  So did IBM.

LCPS has been successful in passing on almost all of their benefits cost increases to taxpayers.  Private sector companies do not have that luxury and thus have taken steps to reduce benefits costs in the form of higher health insurance deductibles and co-pays, higher employee contributions, elimination of benefits altogether, workforce reductions (RIFs), overseas outsourcing, lower wages, etc.  It has been a double-whammy for most taxpayers!

In addition to the aforementioned benefits, teachers receive 76 days of leave a year!  The contract is for 197 working days out of 260 weekdays in a year.  Within the contract, they receive 3 personal days and 10 days of sick leave.

Figure 3 sums up the generous compensation package LCPS offers its teachers.

Unbeatable job security

Teachers also enjoy an intangible benefit that is often overlooked:  the best job security of any profession.  Professionals employed in the private sector are constantly subjected to job losses from downsizing, overseas outsourcing, bankruptcies, etc.  When was the last time you heard of a teacher being fired for any of those reasons?  It rarely happens.  Any reductions in school staffing levels can almost always be accomplished through normal attrition.  There will always be a demand for competent teachers!

For the Loudoun homeowner: A crushing tax burden

While LCPS employees have faired very well since FY 2000, Loudoun homeowners have been paying for their prosperity through higher tax bills.  The average homeowner tax bill has increased from $1,850 in 1999 to $5,300 in 2008!  While the school board would like to offer the best compensation package, they cannot be bankrupting homeowners to do so.

It is past time to start reducing compensation costs, especially benefits.  Contact your school board members and supervisors and tell them no raises – COLAs or step increases - this year.  Tell them you support all of the health insurance policy changes (totaling $6.7 million in savings) in Dr. Hatrick’s list of tiered budget cuts.  Tell them that school employees should be paying their 5% share of the VRS retirement contribution.  Ask them to consider a budget that is fair and affordable for taxpayers.

The Loudoun County School Board announced during their June 23th meeting that they have authorized the installation of expensive artificial turf on the stadium fields of the new Woodgrove and Tuscarora high schools, currently under construction.  The Loudoun Times-Mirror quotes Tuscarora athletic director Derek Fenney on his new field, "It will be like having the Taj Mahal.  I'm opening a brand-new facility with the best of the best.  It's a win-win for Loudoun."  That's great, but such a luxury is not exactly a win for Loudoun taxpayers.  Our cost analysis indicates that each artificial turf field will cost taxpayers approximately $596,000 more than a traditional natural grass field.  At a time when Loudoun County faces a severe budget shortfall and schools will start charging students a $100 sports participation fee, this is not a fiscally responsible decision.

Initial Cost of Artificial Turf is High

The initial cost of constructing an artificial turf field is much higher than the cost of constructing a natural grass field.  Costs for both field types vary, and bids have not been submitted yet, but according to industry sources the cost of the average grass field is $3.75 per square foot, while the average artificial turf field costs $10 per square foot.  Assuming the average area of a football field is 80,000 square feet, it would cost $300,000 for a grass field and $800,000 for an artificial turf field.

Maintenance Costs

Natural grass does require more maintenance, but artificial turf is far from maintenance free.  Typical artificial turf maintenance includes grooming, debris removal, sterilization, infill addition and redistribution, repairing seams and other damaged areas.  Because of its heat absorption properties, which can cause dangerously high field temperatures on hot and sunny days, an artificial turf field must be watered before use.  Grass fields require mowing, aeration, pesticides, herbicides, fertilizers, over-seeding, irrigation and line painting.

Maintenance cost estimates vary widely.  Some sources claim grass costs up to $36,000 more per year, while other sources claim artificial turf can actually be more expensive.  For our cost comparison, we will use a midrange estimate of $20,000 more for grass fields.

Not included is the cost of replacing an artificial turf surface when it has exceeded its useful life of approximately 10 years.  Replacement and disposal (not recyclable) of the old turf runs about $7.15 a square foot, for a total cost of $572,000.

Cost Comparison

Artificial turf companies acknowledge that the initial cost of their product is much higher than natural grass, but they often claim the cost can be recouped through lower maintenance costs.  Such a sales pitch typically exaggerates grass field maintenance costs, understates artificial turf field maintenance costs and flat out ignores other costs.

Often ignored is the cost of financing an artificial turf field.  Constructing an athletic field is a capital expense almost always financed with bonds.  Assuming a 20 year bond at an interest rate of 5%, the extra $500,000 needed to construct an artificial turf field would cost taxpayers approximately $296,000 in interest payments.

The following table compares all costs for both natural grass and artificial turf football fields over the 10 year life expectancy of the artificial turf surface.

Is Artificial Turf "Greener" Than Natural Grass?

The School Board claims that using artificial turf will lower the school system's carbon footprint.  In reality, the opposite is likely true if they account for all carbon emissions from manufacturing to field maintenance.  It is often overlooked that manufacturing artificial turf is an energy-intensive process that emits a considerable amount of carbon dioxide.  Carbon emitting installation processes include:  Transporting several loads of material from the factory (the closest factory we have been able to locate is in Dalton, GA, nearly 600 miles away) to the site in tractor trailers that only get 6 mpg;  and quarrying, transporting and grading the 40,000 cubic feet of crushed stone for the field base.

Grass absorbs carbon dioxide and acts as a carbon sink, neutralizing emissions from mowers and other gas-powered maintenance equipment.  Artificial turf also requires the use of power machines for grooming and cleaning, but does not absorb one ounce of carbon dioxide.

An artificial turf field is impermeable and storm water runoff can be heavy.  The added expense of a dry pond may be required to mitigate environmental impacts.

Toll rates are going up for both Loudoun toll roads, with no end in sight.  The State Corporation Commission (SCC) approved a new rate schedule for the Dulles Greenway that would increase peak toll rates 60 cents by January 2012.  The MWAA has proposed raising the Dulles Toll Road (DTR) toll rates by 75 cents at the main toll plaza and 25 cents at exits by 2012 to help fund the Dulles Metrorail project.  As a result, a round trip on these roads during peak hours would cost a whopping $12.50, or up to $3,125 a year for daily commuters.

Make no mistake; a toll is a tax.  If the public must pay for infrastructure that the government normally provides free of charge, it is a form of taxation.  It is the responsibility of the Virginia Department of Transportation (VDOT) to construct and maintain public roads with existing revenue sources.  Toll road users pay the same road funding taxes as all other drivers; it is just that the Commonwealth has chosen to spend their money on a toll-free road somewhere else in the state and raise their taxes through tolls.  Next time you pay a toll remember that you already pay a fuel tax - 18.3 cents per gallon federal and 17.5 cents state, as well as a 2% sales tax in Northern Virginia - vehicle registration fees; a car sales tax fee; and a portion of the general sales tax to finance road construction and maintenance.

According to VDOT mileage tables, Virginia has 1,119 miles of free interstates and 140 miles of free urban expressways/freeways.  There are only 69 miles of toll roads, excluding the Chesapeake Bay Bridge/Tunnel, with the Dulles Greenway and Dulles Toll Road accounting for 26 of those miles.  A trip from Leesburg to the Beltway during peak hours currently costs $4.65, making it the most expensive stretch of toll road in Virginia.  Tolls are expected to rise to a combined $6.25 in 2012.

With toll roads being such a small percentage of the total roads in the Commonwealth, it raises a basic tax fairness issue.  The majority of motorists get free use of roads, while a handful of motorists in certain localities must pay.  Loudoun is the only county in Northern Virginia that is not connected to the Beltway by a toll-free expressway.  Is it fair that commuters in Fairfax and Prince William Counties can use I-66 or I-95 for free, but commuters in Loudoun must pay $12.50 in tolls to use the Dulles Greenway and DTR?  The Metro Orange Line was extended out to Vienna in 1986, but there were no toll plazas set up on I-66 to pay for it.

In addition to higher tolls, the Dulles Metrorail project will also require a local property tax hike to pay for Loudoun's share of the construction cost, which has ballooned to $252 million.

The Dulles Toll Road and the Dulles Metrorail Project

The DTR was opened in 1984 and quickly exceeded usage projections - so much so that VDOT was making a profit on the original toll rates of 50 cents at the main toll plaza and 25 cents at the exit ramps.  The toll rates remained constant for 21 years and DTR was still running a surplus when the rates were increased in 2005 to help finance the Dulles Metrorail construction.  According to a press release from VDOT, $41 million in toll revenues were generated in FY 2004, of which $12.2 million went to bond payments, $15 million to operating expenses and $750,000 to maintenance reserves.  That left a surplus of $13 million!

From the beginning, the funding allocation of the Dulles Metrorail project was promoted to the public as 50% federal, 25% Commonwealth of Virginia, 25% local (Table 1).  The Commonwealth funds were to be a combination of DTR toll revenue and VDOT funds from the Transportation Act of 2000.  As the cost of the project escalated to the current price tag of $5.25 billion, the federal government - probably leery of another "Big Dig" magnitude cost overrun - had serious doubts about funding this project and now only plans to provide $900 million, or 17% of the cost (Table 2).  The Commonwealth of Virginia will contribute $275 million and the local share remains at 25%.  That means the original amount expected to be financed by tolls has increased from somewhere around $790 million at the $3.5 billion price tag to $2.9 billion at the $5.25 billion price tag!  DTR users were never expected to shoulder that much of the burden.

Table 1

Table 2

In November of 2008, Virginia Governor Tim Kaine transferred control of the DTR (note that it is still owned by the Commonwealth) to the Metropolitan Washington Airports Authority (MWAA) - an un-elected body run by 13 appointed board members, only 5 of whom were appointed by the Governor of Virginia.  Now the MWAA is free to set DTR toll rates as high as they want without the fear of voter backlash.

The Dulles Toll Road has been paid for.  Normally, when toll road construction bonds are paid off, the toll booths are torn down.  That is what happened in the case of the Richmond-Petersburg Turnpike and the Virginia Beach-Norfolk Expressway.  But the DTR is now a source of revenue - a cash cow - that the MWAA does not want to give up.  They intend on not only continuing the “tolls”, but steadily raising them every year to finance the Dulles Metrorail project construction.  According to the MWAA financing plan, it will take another 44 years of tolls to pay for the Dulles Metrorail on top 25 years of toll collections already!  This is not a toll; it’s a tax.  The MWAA needs to post signs at the toll plazas that clearly indicate what the “tolls” will be used for.

The MWAA plans to finance the Dulles Metrorail construction through the issuance of zero-coupon bonds.  Unlike conventional bonds or mortgages, these bonds provide no periodic interest payments, which result in substantially higher interest payments when the bonds reach maturity.  The MWAA plan will lead to a mountain of debt that will take over 44 years to pay off and require a one-way through toll rate of $8.75 by 2025.  Bond interest payments could total up to $15 billion!  Most of the future toll revenue will be used to pay interest.

The MWAA has turned the DTR into a cash cow and expects drivers from Loudoun and western Fairfax to finance a rail system that most of them will never use, but will benefit the MWAA by giving Dulles International Airport a competitive edge over other airports, such as BWI.

Dulles Metrorail is a regional project that will benefit everyone.  Why should the DTR users be required to pay for more than half the cost?

Metrorail Operating Costs

The Washington Metropolitan Area Transit Authority (WMATA) operates both the Metrorail and Metrobus service.  The agency is heavily subsidized and will receive over half of their FY 2009 funding - $1.022 billion - from government subsidies.

Metro currently has 106.3 miles of track and 86 stations - 29.47 miles and 20 stations in Virginia.  The Silver Line adds 23.1 miles of track and 11 stations.  Expect subsidies from Virginia to go up considerably once the Silver Line is operational and for the first time, Loudoun County will have to start contributing.

Riding the Metrorail will not be cheap.  According to the current fare formula, the 31 mile trip to the Metro Center station in downtown DC could cost up to $8.46.  The 17 miles from Ashburn to Tysons Corner could cost up to $5.10.  Expect parking fees similar to the Vienna Metro Station - $4.50 for a full day.

The Dulles Greenway

After the DTR was opened in 1984, the next infrastructure improvement needed in Northern Virginia was an extension of the DTR to Leesburg to relieve traffic congestion in fast-growing Loudoun County.  In 1988, the road construction was proposed.  However, state funding was supposedly tight at the time, even though Governor Gerald Baliles had pushed through a massive tax increase in 1986, which raised the fuel tax - one of the key components of VDOT funding.  Another source of funding could have been the toll revenue surplus from the DTR.

There were also doubts as to whether VDOT could deliver the road as fast the public (or developers) wanted it.  The Highway Corporation Act of 1988 paved the way for a private company to build the road - the first private road built in Virginia since 1816.  With state funding in doubt, the Toll Road Corporation of Virginia (TRCV) eventually built the road, which opened in 1995.

Several studies showed that private ownership of the road would cost the public 2 to 3 times more than a VDOT built and maintained road, for the following reasons:

• Capital costs. The government can issue tax-free bonds at a much lower interest rate than open market rates,
• Taxes. As a private corporation, TRIP II, the current owner of the Greenway, must pay taxes.  The Greenway website says they paid $3.1 million in local real property taxes alone in 2007,
• Dividends paid to investors. TRIP II is in this business to make a profit.  Who can blame them?  Like any corporation, their stockholders demand a return on their investment.

The toll rates for a VDOT road were expected to start at $1.00 to $1.50 and remain constant until the bonds were paid off.  TRCV initially charged $1.75 and planned to raise rates as high as $3.25 by 2010.  The Highway Corporation Act of 1988 allows for generous toll increases based on the Consumer Price Index plus one percent and other factors.  Compounded over decades, these allowable increases can lead to very high toll rates.

The privatization of the Dulles Greenway was a failed experiment.  The evidence would suggest that building and maintaining roads is one of the few businesses the government should be involved in.  Let's hope it is another 172 years before a privately owned road is built in the Commonwealth.

Easing the Tax Burden for Dulles Toll Road Users

Expect toll rates to keep going up and eating into more and more of your disposable income!  There are some fair ways to ease the financial burden being placed on DTR users.

All commuters to Tysons Corner should benefit from reduced traffic congestion because of Metrorail service, not just the commuters arriving from the DTR.  Therefore, they need to contribute to this project as well.   Toll plazas should be set up on the Rt. 123 and Rt. 7 exits off of the Beltway and I-66 Toll Road Connector.

Also, toll plazas should be set up on the Dulles Access Road (DAR).  Now that the main purpose of the DTR tolls is to finance the Metrorail construction, is there any good reason why everyone using that corridor should not pay?  Passengers to the airport via the Metro will pay fares, so why should the DAR users not pay tolls?  Airport passengers can still use the DAR to avoid congestion, as well as others with official airport business, but they all should pay their fair share.