Letter to the editor – John Berg

To the Editor,

Having finished reading GreeneCountyNewsOnline letters to the editor regarding the school bond issue I would like to get my two cents worth in.

Previous letters to the editor have tried to present their opinions and uninformed economic analysis as fact. Starting a paragraph with the word FACT all in capital letters does not make it such without the supporting documentation and associated calculations. Let’s go through these opinions one at a time and apply verifiable facts.

How will this expenditure affect the education of our children? To date no one has claimed that this proposed expenditure will revolutionize education as we know it, so our only recourse is to view historical data on how additional per capita expenditures affect educational outcomes. If one reads “Does Spending More on Education Improve Academic Achievement?” (www.heritage.org), we find that between 1970 and 2005 per student expenditures (constant dollars) has escalated from $4,060 in 1970 to $9,266 in 2007 with no improvement in reading scores. Iowa per student spending in 2000 was $5,122 and $8,688 in 2015 (“Historical per Pupil.pdf” on  www.legis.iowa.gov), while SAT scores were flat to slightly declining over this period and through 2014 (“State Educational Trends Academic Performance and Spending over the Past 40 Years” Object.cato.org). Finally, is one expected to believe that the current facilities for performing arts and a gym are somehow limiting students’ ability to play an instrument, act on stage or excel at school sports?

Is this expenditure necessary to accommodate or attract future residents and a limiting factor for population growth? Many posted letters reference current growth Greene County is experiencing. Greene County has historically lost population and jobs, from 1970 to 2013 the population declined from 12,716 to 9,139. During the same period total employment went from 5,930 to 5,346 (headwaterseconomics.com/tools/economic-profile-system auto-generated report, Greene County Iowa, socioeconomic measures). Looking forward, growth rates are projected to be -0.49% from 2010 to 2015 and -0.43% from 2015 to 2020 annual compounded rates (http://iowa.hometownlocator.com/ia/greene/). I think we need to applaud all the government and non-government organizations working for economic growth in Greene County for at least reducing the hemorrhaging to a trickle.

Will the proposed school improvements be a magnet to attracting new residents, businesses, and curtail the current population decline? The most important aspect of selecting a school system for children is expected educational outcome. Greene County School District (GCSD) has a blended grade level reading and math proficiency rate of 47.8% and 48.6%, while school districts within commuting distance of Greene County, Gilbert, Ames, and Johnston have rates of 70.7% and 78.7%, 69.6% and 72%, 67.5% and 78% respectively (http://www.iowalive.net/honestavgreadingrank.htm and http://www.iowalive.net/honestaveragemathrank.htm ). With these current proficiency scores, a state of the art gym, performing arts center and geothermal heating would not sway my decision to enroll my children at GCSD.

What is the true cost of this project? I have yet to see a true cost of this project to the community and cannot find data on the specifics of the proposed bond issue: term of the bond, payment of bond placement costs, though rate has been estimated at 4%. Totaling the known costs: $20 million bond fund, diversion of the $2.8 million PPEL fund (physical plant and equipment levy), and$8 Million interest (assuming 20 year term at 4% interest) , the real estate property taxpayers will be on the hook for a mere $30.8 million.

Is there a better use for this money? From a business person’s point of view how do we evaluate the relative value of this investment versus other potential investments? We calculate a rate of return (ROI) in years based on savings and revenue generated by the investment. Previous letters to the editor and information from the school board suggests a potential savings once this project is complete of $400,000 per year. For fun let’s throw in another $100,000 for savings from the lauded geothermal system for a total savings of $500,000 a year. No source has suggested any potential revenue outside of an occasional state tournament or band competition. Therefore, calculations are based on savings alone. $30.8 million divided by $500,000 equals little less than 62 years ROI for this investment. Since money is a scarce commodity we should consider better uses for this money not only in the public sector but the private sector as well. This money would be better spent if left in the private sector by business, buying machine tools, with an ROI of 1 to 4 years, capital projects like West Central COOP Soy Processing with a probable ROI of 1 to 5 years, or even home owners insulating their homes or upgrading their heating/cooling systems with a likely 3 to 7 year ROI.

Can the community afford this expenditure? Only the impact of this bond issue on our county farmers since they pay $4,159,328 of the expected 2015/2016 total property tax revenue to Greene County of $5,107,906 will be addressed. Unlike a previous letter to the editor, that confused gross income with net profits, I’ll use the ISU Estimated Cost of Crop Production in Iowa -2015 Corn following Soybean Spreadsheet (http://www.extension.iastate.edu/agdm/crops/html/a1-20.html) which assumes 180 bushel per acre yield, ISU’s estimated input costs and capital equipment amortization of $761 per acre, and a sell price of $3.50 per bushel. Using the same calculation as in the Riley Online article of only costing farmers $2.55 per acre for this bond fund, the conclusion should have been, when you are losing $131 per acre you’ll hardly notice the additional $2.55 in losses.

In conclusion, our efforts in the school should be focused on increasing test scores and preparing our students for future careers in a high technology world where math, science, and written communication will be increasingly important. Bankrupting our farmers in an economy where soft commodity prices are expected through 2025 should NOT be on the list of important county objectives. The most important objective should be to encourage current and future industries, through low taxes, skilled and educated workers (coming from GCSD), and a stable business climate to invest their hard earned money in projects that generate a reasonable ROI and as a consequence create high paying and high value added jobs that are the true engine of economic growth for Greene County.

Please direct questions to “Stop the Bond: Invest in the Whole Community” or email me at john.berg [at] bergautomation [dot] com

John H. Berg, Rippey

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