"Green" Budget Tool
Sarah Stinger
Honorable Board and Commission representatives,
I join the others before me requesting Supervisor and School Board and Commission representatives investigate applying true life-cycle cost analysis of County facilities. Currently the cost to construct as well as the debt service for land acquisition/construction (and many other costs) are excluded from the operating costs of facilities. This “two bucket” mentality, (i.e., operating costs must remain separate from capital costs), totally misrepresents true costs of facilities.
For example, with schools, the cost per student to operate new facilities which bear significant debt service are misrepresented as less expensive to operate than older schools which have NO debt service. And for schools, there is a 3rd bucket which is also isolated from the other two, that 3rd bucket is the transportation budget. For example, the cost to transport students to school is not included in the operational budget for the school (and remarkably not considered during the site acquisition process for that school), such that a school with no walk zones and/or where students are bussed long distances, appear to have lower/equivalent operational costs as schools where many students can walk (w/w crossing-guards) or are located a short bus-ride away. Life-cycle cost analysis is the industry standard approach to evaluating facility costs. Therefore if Loudoun County really wants to see true costs to support the Commission’s directive to evaluate where efficiencies/savings can be realized, adopting that standard (life-cycle cost analysis) would provide useful information.
To clarify my point, I provide the following analogy to which most can relate - a family budget. Family budgets typically include payments for rent/mortgage, utilities, car and home maintenance, possibly car payments, insurance, etc….. Look more closely at the car budget. If a family’s budget allows, they may choose the option to buy a new car with or without high-end upgrades. There are other indirect costs like need now to take that car to the dealer (not their local mechanic) for required periodic maintenance. The alternative would be continued use or purchase of an older car realizing it may require more frequent maintenance but in doing so, they forego the loan cost as well as the higher insurance and tax payments that go along with new cars. The same goes for public facilities which are older, perhaps requiring more maintenance, but are far less expensive overall than new facilities. This is because the life cycle cost of new facilities bear the additional costs to acquire land, mitigate impacts, carry insurance, etc. And most importantly, these newer ones represent significant debt service to construct and furnish than their older counterparts, many of which are extremely highly functional and which provide additional capacity for the overall system. Capacity afforded by old ones which, if utilized to their fullest, would obviate or delay need for a more significant capital expense, based on life-cycle cost data.
An in the future, transportation costs will become increasingly significant. Schools with large boundary zones, and those located far from the most densely populated area of their zone, must carry higher long-term transportation costs than those which serve smaller geographic areas. In 2007, the cost to operate a LCPS school bus was approximately $5/mile. Therefore, especially with increasing fuel prices, these transportation costs MUST be part of the whole analysis.
Of course, there will always be those who have motivation to stimulate growth in currently underdeveloped (lower density) areas. They will prefer under-representing the cost of new large facilities located far from citizens served; and, understandably will be extremely resistant to adopting life-cycle cost accounting principles.
In the end, I believe most would agree, folks on tight budgets shouldn’t buy loaded gas-guzzling SUVs when a used, clean, well-maintained modest car will transport the family safely. If larger facilities are projected to be needed in the future in a particular area, plan to EXPAND existing facilities which likely already have a well-established community and transportation network in place. Be truly “Green” and recycle – don’t throw out just because facilities are too small/old to suit administrators who frankly have developed expen/excessive tastes and who therefore withhold/misrepresent costs in order to justify their ‘raze and replace’ agenda.
Thank you in advance for your pursuit of life-cycle cost accounting, particularly Board members as you continue important budget cutting measures, and all for your service to Loudoun County citizens/families,
Sarah Stinger SmallTownSchools |