Jefferson Policy Journal

Farmers Score Win with Insecticide Decision

Posted on April 12, 2017 by matt ohern

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Mark March 28, 2017, on your calendar. The USDA and the U.S. EPA have been engaged in an epic dispute regarding the use of chlorpyrifos. The insecticide is used on at least 40,000 farms in the U.S. and on 50 different types of crops. If you read The New York Times story on the insecticide you would conclude that EPA scientists were merely protecting the health of young children and farm workers. The New York Times suggested EPA’s science had been rejected. The news article made no effort to review the powerful arguments made by USDA against EPA banning the use of chlorpyrifos.
Powerful new forces at USDA brought agriculture’s arguments to Mr. Pruitt’s attention and based on USDA arguments, the new EPA Administrator rejected the views from EPA staff. Mr. Pruitt last Wednesday evening declared “We need to provide regulatory certainty to the thousands of American farms that rely on chlorpyrifos, while protecting human health and the environment.” He said, “By reversing the previous administration’s steps to ban one of the most widely used pesticides in the world, we are returning to using sound science in decision-making – rather than predetermined results.”
All of agriculture owes an enormous debt of gratitude to Dr. Sheryl Kunickis, director of the USDA Office of Pest Management Policy. She summed up the importance of the March 28 decision saying, “it means that this important pest management tool will remain available to growers, helping to ensure an abundant and affordable food supply for this nation.” Kunickis and her team, in comments filed by USDA, obliterated EPA’s arguments to ban chlorpyrifos.
A few examples:
EPA proposed to revoke all tolerances for the insecticide chlorpyrifos. Kunickis and USDA declared EPA used overly conservative assumptions to calculate exposure to chlorpyrifos. USDA said EPA’s population adjusted dose led to higher exposure to chlorpyrifos “…which leads to the mistaken conclusion that chlorpyrifos as it is currently used, is unsafe.” USDA argued that the drinking water risk assessment used by EPA overestimated exposure because of removal of the insecticide at a treatment facility. EPA apparently made the assumption that chlorpyrifos would always be used at the highest application rate and on all possible crop acres. USDA said this approach was “…overly conservative and could be refined.” I would suggest the information shouldn’t be refined but it should be declared false because it does not represent fact.
Another devastating fact apparently ignored by EPA and The New York Times “[T]he USDA Pesticide Data Program (PDP) has sampled groundwater and drinking water for chlorpyrifos, including at school and daycare wells, for the past 15 years. No chlorpyrifos was detected in hundreds of water samples in 2010-13 at the parts per trillion level. USDA suggests that PDP water data be used in the chlorpyrifos analysis instead of the overly conservative modeling estimates.”
On top of using models, EPA said it did not have enough data and it used what is known as a default 10X FQPA safety factor which means you have a number and you lower it by ten times. The purpose of the safety factor is to account for uncertainties. USDA pointed out the enormous amount of data available and such a safety factor is simply inappropriate for chlorpyrifos.
EPA and its experts used epidemiological data. USDA claimed EPA’s studies were federally funded and the data should be made available. At the time USDA commented EPA had not nor would not release the data. Several pages of the USDA January 5, 2016, comments obliterate EPA’s science arguments. USDA outlines for EPA what a valuable tool chlorpyrifos is for farmers and the loss of the product would have major negative impacts on our production capacity and the economic stability of farms. Not an issue EPA concerns itself with. Several crops were highlighted. EPA was advised that chlorpyrifos is the only insecticide for cotton which has an adequate efficacy to prevent boll damage and damage from cotton aphids. For non-citrus tree fruit chlorpyrifos is critical to control tree-boring insects. Without chlorpyrifos there would be a 100% loss of the plantings. Other tree-boring insects must be controlled in stone fruit such as peaches. For some of these insects chlorpyrifos “…is the only effective option for control of borers in cherry and peach. There are no alternatives.” In citrus, chlorpyrifos is the only effective control for ants. USDA’s comments rely on science.
Result: Win for USDA and farmers.
(This article first ran in Farm Futures on April 3, 2017)
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Coal Ash Scare – Real or Not?

Posted on April 12, 2017 by matt ohern

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Coal-fired power plant scrubbers now remove 80-90 % of airborne particulate, mercury, sulfur dioxide, nitrogen oxide and other pollutants. But that means “fly ash” and noncombustible residues (what we used to call clinkers) must be sent to landfills. That’s opened a new front for anti-energy activists, who use accidents, “detectable” pollutants in water, and scary stories about health threats to advance their agenda.
In 2008, a Tennessee Valley Authority earthen retainer dam near Knoxville ruptured, sending 5.4 million cubic yards of rain-soaked fly ash into a nearby river, lake and neighborhood. Twelve homes were damaged by the muck, which contained low levels of arsenic, cadmium and other metals. The TVA’s cleanup efforts were less than exemplary, as were its measures to prevent the accident in the first place.
Companies and regulators clearly must do more to prevent accidents and pollution – and more to educate people about the actual risks involved. With a new fly ash playbook being tested in North Carolina, Virginia and other states, as part of the war on coal and the keep-fossil-fuels-in-the-ground campaign, those informational efforts are vital.
Duke Energy operates 14 coal-fired electricity generating plants in North Carolina – and several large fly ash facilities. Like coal itself, the ash contains trace amounts of hexavalent chromium (chromium-6 or Cr-6) and other metals that can be toxic to humans in high doses. Blazing temperatures bond the vast majority tightly in glassy vitrified ash, and well maintained impoundments ensure that few seep out.
However, tiny amounts can still escape into nearby surface waters and groundwater. Highly sensitive scientific instruments can now detect parts per trillion – the equivalent of a few seconds in 3,300 years. In 2016, an NC state toxicologist ruled that metallic levels detected in surface and ground water around the state were dangerously high. He blamed ash from coal-fired power plants and persuaded Tar Heel health officials to send “do not drink” letters to several hundred families living near coal ash disposal sites.
In his view, there is “no safe level” for exposure to Cr-6, and the state should slash its allowable level from 100 parts per billion down to 0.07 ppb (1,428 times lower). Other health officials reviewed the scientific literature, determined that amounts detected pose no health risk, noted that Cr-6 often seeps from natural rock formations into surface and ground water, and rescinded the warning letters. But the resulting controversy continues, and the company, regulators and politicians are trying to resolve it.
Duke Energy and many health experts maintain that Cr-6 levels found near the ash facilities (and miles away, from natural sources) are far below what cause health risks. But it wants to assuage concerns among families closest to the ash facilities. So the company offered to provide alternatives to their well water, by giving them access to public water sources or installing state-of-the-art home filtration systems.
In January 2017, the NC Department of Environmental Quality (NCDEQ) granted preliminary approval to these company plans for homes within one-half-mile of a coal ash impoundment. Final approval is contingent on state health and environmental departments certifying that water provided via these systems meets “applicable” or “appropriate” standards for each location.
Now activists say Duke and other companies should move millions of tons of ash from multiple depositories. Not only would that involve hundreds of thousands of dump truck loads, millions of gallons of fuel, and huge trucks lumbering through towns and along back roads and highways. A far more basic question is: Take it where, exactly? Who would want it? Activists certainly offer no viable alternatives.
Companies previously proposed turning fly ash into cement blocks or gravel, for construction projects. Activists quickly nixed that option, even though it would involve virtually no contamination risks. It’s becoming increasingly apparent that the real reason for all the vocal consternation is that these agitators simply want to drive coal out of business. Indeed, the same unaccountable, silver-tongued agitators also detest natural gas-generated electricity … and drilling and fracking to produce the gas. They oppose nuclear energy, and even want hydroelectric dams and power plants removed. They claim to support wind and solar, by conveniently ignoring the huge downsides pointed out here, here, here, here and elsewhere.
Forcing utility companies to spend billions relocating huge ash deposits to “lined, watertight landfills” (in someone else’s backyard) will bring no health or environmental benefits. But it will bankrupt companies, send electricity prices soaring, and hurt poor, minority and working class families the most.
If rates double from current costs in coal-reliant states like North Carolina and Virginia (9 cents per kilowatt-hour or less) to those in anti-coal New York or Connecticut (17 cents), families will have to pay $500-1,000 more annually for electricity. Hospitals, school districts, factories and businesses will have to spend additional thousands, tens of thousands or millions. Where will that money come from?
Virginia’s 665,000-square-foot Inova Fairfax Women’s and Children’s Hospital pays about $1,850,000 per year for electricity at 9 cents/kWh, but would pay $3,500,000 at 17 cents: a $1.6-million difference.
Will businesses have to lay off dozens or hundreds of employees, or close their doors? If they pass costs on to patients or customers, where will families find the extra cash? What will the poorest families do?
The war on coal, petroleum, nuclear and hydroelectric power is a callous, eco-imperialist war on reliable, affordable electricity, on jobs, and on poor and minority families. Policies that drive energy prices up drive people out of jobs, drive companies out of business, drive families into green-energy poverty.
Preventing ruptures and spills means selecting, building and maintaining the best possible ash landfill facilities. Safeguarding public water and health means properly addressing actual, proven toxicity risks.
The US Environmental Protection Agency and North Carolina set allowable Cr-6 limits at 100 ppb for drinking water (equivalent to 100 seconds in 33 years or 4 cups in 660,000 gallons of water). The state also applies a 10 ppb standard for well water. No one applies a 0.07 ppb standard (70 parts per trillion).
In 2015, the NCDEQ tested 24 wells two to five miles from the nearest coal plant or coal ash deposit; 20 had Cr-6 levels above 0.07 ppb but far below 100 ppb, underscoring its diverse origins. May 2016 tests could not even detect the chemical in Greensboro water, the News & Record reported.
A 2016 Duke University study found that hexavalent chromium is prevalent in many North Carolina surface and ground waters. Some comes from coal ash deposits, but much is leached from igneous and other rocks found throughout the Piedmont region of Virginia, the Carolinas and Georgia. Other health experts note that Cr-6 is found in 70% to 90% of all water supplies in the United States. Applying a 0.07 ppb would mean telling hundreds of millions of Americans not to drink their water!
Moreover, studies have found that Cr-6 in water is safe even at 100 ppb or higher. A 2012 paper in the Journal of Applied Toxicology concluded that regularly drinking water with 210 ppb of Cr-6 poses no health risks. (The real health problems involve airborne Cr-6.) ournal of Occupational and Environmental Medicine,US EPA and other studies buttress those findings.
Equally important, an ability to detect a substance does not mean it poses a risk. Cancer is certainly scary, but the risk of getting cancer is not the same as dying from it. And people routinely accept risks of dying from activities they happily engage in daily. For example, the National Safety Council puts the lifetime risk of dying in a motor vehicle crash at 1 in 113; that’s 8,850 times greater than the alleged lifetime risk of contracting cancer from 0.07 ppb Cr-6 in water. Drinking and smoking fall into the same category.
However, all too many people seem easily terrified by “detectable” levels of strange-sounding chemicals. 100% clean is not necessary, not possible, not found in nature and not a sound basis for public policy.
Coal and chemical controversies like these offer our nation, states and communities excellent opportunities to find novel solutions that recognize sound science, hidden agendas, often limited options, and undesirable repercussions of poorly informed policy decisions. Let’s hope they are up to the task.
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Gillespie tax plan makes good sense

Posted on March 30, 2017 by matt ohern

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Ed Gillespie, one of the candidates running for Governor this year, has proposed a major tax cut that makes a lot of sense.
Its key provisions would cut individual income taxes by 10 percent across the board over a three year period, and would accelerate reform of an antiquated system of local business taxes that now depresses economic growth and job formation.
The current tax rates were established in 1972 and have never been changed. The results are startling.
Low income Virginians pay a huge penalty because 45 years of inflation have not been reflected in our tax code. When the current income tax brackets were established, Virginians paid the lowest tax rate on their first $3,000. But if the brackets had been adjusted for inflation, the lowest tax bracket would apply to Virginians’ first $17,483.
The same is true at the highest tax bracket. In 1972, the top rate kicked-in at incomes over $17,000. If that highest bracket had been adjusted for inflation, the top rate would not be imposed until incomes exceeded $99,000. With inflation, everybody gets hurt.
The 10% tax cut proposed by Gillespie helps reduce this 45 year impact from inflation.
And the Gillespie tax cut will be paid for from the projected growth in the current state budget. No state program will have its current funding reduced under this plan.
The Gillespie tax plan was run through the sophisticated tax model developed for the Thomas Jefferson Institute. This model, known as a State Tax Assessment Modeling Program (STAMP), is unique to Virginia and has been used in the past with high marks from Republicans and Democrats. It was vetted in public meetings by two General Assembly business commissions.
The Thomas Jefferson Institute has promoted the idea of income tax cuts and the elimination of the anti-business taxes that have vexed our businesses for years – the BPOL tax which is a tax on gross revenues rather than profits, the Machine and Tool Tax that puts us at a significant disadvantage compared with states such as North Carolina, and the Merchants Capital tax which is a tax on inventory and one that many business avoid by moving assets to other counties without this tax on “inventory day.” We are proud that much of what we have promoted is in this plan by Ed Gillespie.
Our tax model projects that Gillespie’s proposed 10% income tax cut will create 53,000 more jobs than would otherwise be the case. That is 25% above what the state currently projects in job creation. New jobs increase the amount of goods and services purchased by our taxpayers. More goods purchased means more sales tax revenue for the state and localities. More jobs mean more people are paying income taxes.
An additional $304 million in business investment will also be generated under this plan. These investments will help create the additional 53,000 jobs.
This tax plan will create a stronger economy. More Virginians will find employment as the private sector grows and creates more jobs. This means Virginia can reverse the recent trend of dropping lower and lower on various business rankings.
And this tax cut will bring $1,285 a year in additional disposable income to the average household in our state from tax savings and the dynamic impact of the tax cut. Skeptics say this “is only $25 a week” in extra spending. But that $25 a week adds up as the annual $1285 clearly shows. This money will buy clothes, groceries, and will pay for more nights out at dinner and the movies.
The counties that now impose the unfair gross receipts tax (BPOL), Machine & Tool Tax, and the Merchants Capital Tax will be required to sunset those anti-business taxes within three years. They can renew these taxes or not after a full debate or choose alternatives to replace these anti-business taxes with something less onerous. Available alternatives will be determined by a group of experts in cooperation with the General Assembly.
The endorsements of this tax plan by top economists, the Virginia Chamber and leaders of key tax committees in the General Assembly show that these ideas have credibility by those who understand how taxes impact our business climate. And it is our business climate that must improve if Virginia is to once again be on the top, or near the top, of the various business rankings where we have been falling dramatically over the past few years.
If Virginia is to reverse its recent downward spiral in these business ratings and thus improve the private sector job environment, then this tax plan makes a lot of sense.
(This column is reprinted by from the Richmond Times Dispatch)
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Time to Call a Truce

Posted on March 28, 2017 by matt ohern

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As an undergraduate political science major, the grounds upon which a Supreme Court Justice should be considered was made clear to me in my Constitutional Law course: Integrity, experience, temperament, and intelligence. One thing not to be judged was politics. Not to be asked were “How would you rule if …” questions. Those types of queries would politicize an independent judiciary.
Then came Robert Bork.
Opposition attacks on Bork began within 45 minutes after his nomination when Senator Ted Kennedy took to the Senate floor to claim Bork would force women “into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids …” Fact checkers have long since demonstrated that none of it was true, and New York Times reporter Ethan Bronner has declared “Kennedy’s was an altogether startling statement. He had shamelessly twisted Bork’s world view …”
Writing in The Washington Post, retired U.S. district judge James Robertson recently noted that three decades ago he had led a team of young lawyers opposing Bork’s nomination, doing what might be called “opposition research.”
Today, Robertson says, “I regret my part in what I now regard as a terrible political mistake…. the treatment of Bork touched off a Thirty Years’ War on judicial appointments. We have politicized the judicial confirmation process far beyond historical norms and undermined public confidence in the judiciary.”
Indeed. And it has gotten worse with every passing year. It ratcheted up when then Senate Minority Leader Harry Reid argued that “Nowhere does it say the Senate has a duty to give presidential nominees a vote,” following it up (along with then-Senator Barack Obama) with an attempted filibuster of Justice Samuel Alito. And it happened again when Republicans took Reid at his word and refused to consider Obama’s nomination of Merrick Garland.
Now, Senate Minority Leader Chuck Schumer, responding to overtly political pressure from his liberal base, has promised a filibuster against Gorsuch. If necessary, Republicans will celebrate the 100th anniversary of cloture by ending it and the requirement for a three-fifths majority for Supreme Court nominees, moving on to approve Gorsuch.
But at what cost?
Of Gorsuch, Robertson notes, “Judge Neil Gorsuch is superbly well-prepared and well-qualified to serve as an associate justice of the Supreme court. There is no real dispute about that. … Does his record support the label ‘extremist’? Certainly not. ‘Ideologue’? No. ‘Conservative’? Yes, of course – but elections do have consequences.”
But these are exactly the words used by Gorsuch opponents. Senator Diane Feinstein calls Gorsuch an “extremist.” Senator Al Franken called his opinions “absurd.” Other liberal leaders use the words “dangerous”, “ideologue” and “radical.” In other words, deploy every political distortion and smear available as if negative TV ads were being devised.
Where once we demanded Supreme Court Justices exercise intelligent analysis of the facts, Senate liberals oppose Gorsuch because he refuses to say how he would vote on hypothetical cases – before the facts are even known.
The effect of all this is devastating in the long run: Lower court Judges will increasingly decide cases not on the evidence, precedent, and law but on the politics. Those who trim to the political winds will be rewarded. And an increasing politicization of the Supreme Court will lower even further public belief that the Court decides objectively.
Lloyd Cutler, White House counsel to President Clinton made the same point to the Senate Judiciary Committee when he testified “to make ideology an issue in the confirmation process is to suggest that the legal process is and should be a political one. That is not only wrong as a matter of political science; it also serves to weaken the public confidence in the courts.”
Fifteen years ago, an attorney in private practice noted this degradation of the judicial confirmation process when he wrote, “Politicians and pressure groups on both sides declare that they will not support nominees unless they hew to their own partisan creeds,” he continued. “When a favored candidate is voted down for lack of sufficient political sympathy to those in control, grudges are held for years, and retaliation is guaranteed.”
The author? Neil Gorsuch, who now must bear the weight of those grudges … and the retaliations.
Elected officials love to proclaim their actions as non-partisan, and Virginia Senators Tim Kaine and Mark Warner now have an opportunity to back up those claims with actions. Both can play a major role in reversing this trend of judicial confirmation partisanship. Regardless of their vote on Gorsuch himself, they can claim the mantle of non-partisanship by voting for cloture and allowing a vote on the merits.
They can be among the first to call a truce to the War on judicial appointments.
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Probing the Limits of Tuition Hikes at VCU

Posted on March 28, 2017 by matt ohern

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Virginia Commonwealth University is pondering a tuition increase of between 3% and 5% — over and above a 2.8% increase for the current academic year — to compensate for an $8 million reduction in state appropriations and a 3% salary raise authorized by the General Assembly, reports the Richmond Times-Dispatch.
Meanwhile, the university plans to hire a firm to recruit more international students to bolster revenue with lucrative out-of-state tuition payments. (The total cost of attendance for an out-of-state student is about $19,000 higher than for an in-state student).
If the VCU board of visitors OKs the tuition hike, Virginians will get to observe an interesting experiment in higher-ed economics — how high can a second-tier university push tuition before diminishing enrollment? Is there an upper bound to the cost of attendance at which point students say, “No more!”?
VCU has increased its tuition aggressively over the past decade. By the 2015-16 academic year, the Richmond university had the second highest in-state cost of attendance of any public, four-year institution in the state: $26,700. That was higher than the University of Virginia’s and second only to the College of William & Mary’s. Likewise, VCU’s out-of-state cost of attendance, at $48,500, was the third highest. (I draw these numbers from the SCHEV’s higher education database.)
Two Virginia universities with stellar national reputations, the University of Virginia and the College of William & Mary, arguably have the latitude to boost their tuition & fees should they choose to do so. Perceived as near-Ivy League in quality, they likely could get away with charging near-Ivy League prices. Virginia Tech is not quite in the same league, but its undergraduate engineering school is one of the top rated in the country, so the institution probably has some pricing leeway, especially considering that its cost of attendance is lower than the state average.
Although VCU has a rising reputation among state universities, it has not reached the rarefied atmosphere where it can charge top dollar. Demand for a VCU education is more “elastic,” meaning that students are more sensitive to price increases. Here’s my question: Will higher prices at VCU push down enrollment by discouraging students from applying?
The chart below compares VCU to two peer institutions — big research universities located in large metropolitan areas — George Mason University and Old Dominion University — and adjusts the sticker price by the amount of financial aid provided.

“Financial aid per student” was derived by dividing total in-state financial aid by total in-state undergraduate enrollment. All numbers are for undergraduate students.
VCU is not a bargain: Its net cost of attendance per year is almost $2,500 higher than George Mason’s and about $11,000 higher than Old Dominion’s.
Now consider that VCU draws from a less affluent demographic base than, say, UVa or W&M. Sixty-eight percent of its students graduate with debt. Indeed, 29% of VCU students receive federal Pell grants reserved for lower-income students. Needless to say, these students are highly price sensitive.
How much in higher expenses can VCU’s less-affluent demographic absorb? At what point will enrollment numbers start declining? VCU’s board of visitors seems determined to probe the outer limit.
The economics of admitting international students are different. Let’s start with the cost of attendance.

Judging by the net cost measure for out-of-state students, VCU looks somewhat more competitive than for in-state students. Although its sticker price is higher than GMU’s and ODU’s, the net cost of attendance after adjusting for financial aid is a little lower than GMU’s. On the other hand, it remains significantly more expensive than ODU.
According to the Times-Dispatch, VCU had 1,600 foreign students enrolled last fall, with the largest groups coming from Saudi Arabia and China. These students are highly desirable from a revenue perspective because they pay out-of-state tuition, in effect creating a profit for the university — according to a statewide rule of thumb, they pay roughly 60% more than they cost to educate. But international students aren’t committed to Virginia. They are motivated to shop around internationally for the best educational value.
The VCU board is considering hiring a recruiting firm to land more international students. Here’s the trick: Typically such firms receive 80% to 90% of the student’s first-year payments. (It’s not clear from the T-D account if that is 80% to 90% of tuition or the total cost of attendance, which includes fees, room, board, textbooks and other expenses.) Payments of that magnitude would cut sharply into any surplus revenues VCU would derive from the students.
The VCU board faces hard decisions — decisions it didn’t ask for. But the choice to close the shortfall by raising tuition instead of cutting spending is fraught with risk. If higher tuition leads to a decline in enrollments, VCU may not get the revenue boost it’s looking for. In a worst-case outcome, further revenue declines could start a vicious cycle. Buckle your seat belts!
Virginia Commonwealth University is pondering a tuition increase of between 3% and 5% — over and above a 2.8% increase for the current academic year — to compensate for an $8 million reduction in state appropriations and a 3% salary raise authorized by the General Assembly, reports the Richmond Times-Dispatch.
Meanwhile, the university plans to hire a firm to recruit more international students to bolster revenue with lucrative out-of-state tuition payments. (The total cost of attendance for an out-of-state student is about $19,000 higher than for an in-state student).
If the VCU board of visitors OKs the tuition hike, Virginians will get to observe an interesting experiment in higher-ed economics — how high can a second-tier university push tuition before diminishing enrollment? Is there an upper bound to the cost of attendance at which point students say, “No more!”?
VCU has increased its tuition aggressively over the past decade. By the 2015-16 academic year, the Richmond university had the second highest in-state cost of attendance of any public, four-year institution in the state: $26,700. That was higher than the University of Virginia’s and second only to the College of William & Mary’s. Likewise, VCU’s out-of-state cost of attendance, at $48,500, was the third highest. (I draw these numbers from the SCHEV’s higher education database.)
Two Virginia universities with stellar national reputations, the University of Virginia and the College of William & Mary, arguably have the latitude to boost their tuition & fees should they choose to do so. Perceived as near-Ivy League in quality, they likely could get away with charging near-Ivy League prices. Virginia Tech is not quite in the same league, but its undergraduate engineering school is one of the top rated in the country, so the institution probably has some pricing leeway, especially considering that its cost of attendance is lower than the state average.
Although VCU has a rising reputation among state universities, it has not reached the rarefied atmosphere where it can charge top dollar. Demand for a VCU education is more “elastic,” meaning that students are more sensitive to price increases. Here’s my question: Will higher prices at VCU push down enrollment by discouraging students from applying?
The chart below compares VCU to two peer institutions — big research universities located in large metropolitan areas — George Mason University and Old Dominion University — and adjusts the sticker price by the amount of financial aid provided.
“Financial aid per student” was derived by dividing total in-state financial aid by total in-state undergraduate enrollment. All numbers are for undergraduate students.
VCU is not a bargain: Its net cost of attendance per year is almost $2,500 higher than George Mason’s and about $11,000 higher than Old Dominion’s.
Now consider that VCU draws from a less affluent demographic base than, say, UVa or W&M. Sixty-eight percent of its students graduate with debt. Indeed, 29% of VCU students receive federal Pell grants reserved for lower-income students. Needless to say, these students are highly price sensitive.
How much in higher expenses can VCU’s less-affluent demographic absorb? At what point will enrollment numbers start declining? VCU’s board of visitors seems determined to probe the outer limit.
The economics of admitting international students are different. Let’s start with the cost of attendance.
Judging by the net cost measure for out-of-state students, VCU looks somewhat more competitive than for in-state students. Although its sticker price is higher than GMU’s and ODU’s, the net cost of attendance after adjusting for financial aid is a little lower than GMU’s. On the other hand, it remains significantly more expensive than ODU.
According to the Times-Dispatch, VCU had 1,600 foreign students enrolled last fall, with the largest groups coming from Saudi Arabia and China. These students are highly desirable from a revenue perspective because they pay out-of-state tuition, in effect creating a profit for the university — according to a statewide rule of thumb, they pay roughly 60% more than they cost to educate. But international students aren’t committed to Virginia. They are motivated to shop around internationally for the best educational value.
The VCU board is considering hiring a recruiting firm to land more international students. Here’s the trick: Typically such firms receive 80% to 90% of the student’s first-year payments. (It’s not clear from the T-D account if that is 80% to 90% of tuition or the total cost of attendance, which includes fees, room, board, textbooks and other expenses.) Payments of that magnitude would cut sharply into any surplus revenues VCU would derive from the students.
The VCU board faces hard decisions — decisions it didn’t ask for. But the choice to close the shortfall by raising tuition instead of cutting spending is fraught with risk. If higher tuition leads to a decline in enrollments, VCU may not get the revenue boost it’s looking for. In a worst-case outcome, further revenue declines could start a vicious cycle. Buckle your seat belts!
(This article originally appeared in Bacon’s Rebellion on March 23, 2017)
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