How To Build New Schools Without Cutting Programs or Raising Taxes
This is a recent blog entry with the Bluegrass Institute for Public Policy Solutions (BIPPS). You can read more about BIPPS by visiting www.BIPPS.org
How To Build New Schools Without Cutting Programs or Raising Taxes
By Joel Peyton
Lawmakers spend every legislative session pondering how much money Kentucky schools need. Invariably, some proposals involve cutting unneeded programs while others discuss improvements that would require taxpayers to reach deeper into their pocketbooks.
A politically palatable way exists to enable legislators to raise more money for K-12 education during the 2006 legislative session without threatening current programs or increasing taxes. Lawmakers could eliminate the requirement that workers on school-construction projects be paid “prevailing wages,” which are usually high above market earnings.
Kentucky taxpayers shelled out more than $361 million (of which $164 million reflect labor costs) to cover new school-construction expenditures in 2004. Without the prevailing-wage mandate, total school-construction costs would have declined by 11 percent to around $329 million, and labor costs would have decreased to only $136 million. Prevailing-wage requirements escalated labor costs alone for Kentucky’s school-construction projects by 21 percent in 2004 (1). Eliminating prevailing-wage requirements would not only lower school-construction costs by increasing the number of bids offered on projects, the savings incurred could also provide revenue to meet other vital needs. Had Kentucky schools not been required to pay prevailing wages on construction projects last year, the savings of $28 million could have been used to buy classroom necessities such as computers and textbooks that always seem to be in short supply.
The present statutory requirement to pay above-market wages results in unreasonable prices for new school buildings and limits school districts from constructing new facilities.
For example, original estimates for a new high school in Belfry placed the price tag at around $18 million. However, the Lexington Herald-Leader reported that the project ended up costing around $32 million – an average of $44,400 for each of the 720 students enrolled in the school.
Belfry Superintendent Frank Welch told the newspaper that Kentucky’s prevailing-wage law contributed to the dramatic cost inflation. Welch lamented that prevailing wage is “killing the school business.” The superintendent is correct in his assessment that the state’s current prevailing-wage statute damages both schoolchildren and taxpayers. 2. The Kentucky Department of Education Division of Facilities Management estimates that a total of $211 million could have been saved on school-construction projects between 1999 and 2004 had prevailing-wage not been required. Such savings would likely have resulted in more schools being built and less talk about the need for tax increases.
Prevailing-wage laws needlessly impose a burden on Kentucky’s taxpayers and schoolchildren by driving up the cost – while reducing the number of – school-construction projects. Rather than spending hard-earned tax dollars to pay above-market wages to construction workers, Kentucky should abolish prevailing wage and invest the millions saved into our children’s educational future.
– Joel Peyton is a research analyst for the Bluegrass Institute, Kentucky’s free-market think tank.
1. Estimated education prevailing-wage costs are based on a 2001 Legislative Research Commission Report (No. 304, 12/13/01 pp. 58.) Education-construction costs with and without prevailing wages are based on a 2004 Kentucky Department of Education Division of Facilities Management prevailing wage analysis.
2. “Wage law blamed for ballooning cost of schools” by Lee Mueller, Lexington Herald-Leader, Aug. 14, 2005Download PDF
The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.
How To Build New Schools Without Cutting Programs or Raising Taxes
By Joel Peyton
Lawmakers spend every legislative session pondering how much money Kentucky schools need. Invariably, some proposals involve cutting unneeded programs while others discuss improvements that would require taxpayers to reach deeper into their pocketbooks.
A politically palatable way exists to enable legislators to raise more money for K-12 education during the 2006 legislative session without threatening current programs or increasing taxes. Lawmakers could eliminate the requirement that workers on school-construction projects be paid “prevailing wages,” which are usually high above market earnings.
Kentucky taxpayers shelled out more than $361 million (of which $164 million reflect labor costs) to cover new school-construction expenditures in 2004. Without the prevailing-wage mandate, total school-construction costs would have declined by 11 percent to around $329 million, and labor costs would have decreased to only $136 million. Prevailing-wage requirements escalated labor costs alone for Kentucky’s school-construction projects by 21 percent in 2004 (1). Eliminating prevailing-wage requirements would not only lower school-construction costs by increasing the number of bids offered on projects, the savings incurred could also provide revenue to meet other vital needs. Had Kentucky schools not been required to pay prevailing wages on construction projects last year, the savings of $28 million could have been used to buy classroom necessities such as computers and textbooks that always seem to be in short supply.
The present statutory requirement to pay above-market wages results in unreasonable prices for new school buildings and limits school districts from constructing new facilities.
For example, original estimates for a new high school in Belfry placed the price tag at around $18 million. However, the Lexington Herald-Leader reported that the project ended up costing around $32 million – an average of $44,400 for each of the 720 students enrolled in the school.
Belfry Superintendent Frank Welch told the newspaper that Kentucky’s prevailing-wage law contributed to the dramatic cost inflation. Welch lamented that prevailing wage is “killing the school business.” The superintendent is correct in his assessment that the state’s current prevailing-wage statute damages both schoolchildren and taxpayers. 2. The Kentucky Department of Education Division of Facilities Management estimates that a total of $211 million could have been saved on school-construction projects between 1999 and 2004 had prevailing-wage not been required. Such savings would likely have resulted in more schools being built and less talk about the need for tax increases.
Prevailing-wage laws needlessly impose a burden on Kentucky’s taxpayers and schoolchildren by driving up the cost – while reducing the number of – school-construction projects. Rather than spending hard-earned tax dollars to pay above-market wages to construction workers, Kentucky should abolish prevailing wage and invest the millions saved into our children’s educational future.
– Joel Peyton is a research analyst for the Bluegrass Institute, Kentucky’s free-market think tank.
1. Estimated education prevailing-wage costs are based on a 2001 Legislative Research Commission Report (No. 304, 12/13/01 pp. 58.) Education-construction costs with and without prevailing wages are based on a 2004 Kentucky Department of Education Division of Facilities Management prevailing wage analysis.
2. “Wage law blamed for ballooning cost of schools” by Lee Mueller, Lexington Herald-Leader, Aug. 14, 2005Download PDF
The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.
posted by CincinnatiLibertarian at 3:40 PM
0 Comments:
Post a Comment
<< Home