D'oh
Last week I wrote about a possible revenue source for school infrastructure improvements at the Department of Energy. The DOE is guaranteeing loans for green projects through its Loan Programs Office, and there’s $40 billion left over from the 2009 crisis that Biden oversaw. I thought maybe our school district could get one of these loans and fix its buildings.
Turns out the answer is no, but I learned a couple things when looking into it.
School vs. electricity
Since I’ve been looking at school funding over the last year, I developed a contact at the finance department at the School District of Philadelphia. Now when I think I’ve found a way to finance the $4.5 billion infrastructure problem in the schools, I shoot them an email and ask if it’d work.
In this case, my contact told me the school district can’t get a loan guaranteed by the DOE because the district doesn’t ‘sell’ anything whose revenues could pay back the loan and its interest.
The DOE loans go to private companies that do green projects. The companies complete the project and generate revenues to pay the loan back. But it’s not just about being public or private. In some cases, these loans have gone to public energy authorities.
To see why a school district is different, think about your bills.
If you pay utility bills, you know that they come every month. You’re paying for electricity. A public utility generates that electricity and sells it to you. The power is a thing they produce and for which you pay when you pay your bill. The public utility gets revenue from the bills, so there is a dedicated stream of money coming back from its sales.
Schools are a different story. Public schools, yes even charters, are funded through property taxes (and other kinds of taxes too). I own a home. Every year I get a bill for the taxes the district collects. But the district isn’t producing something that I use and then charges me for it. The tax isn’t a bill. There aren’t revenues generated by usage but rather a tax rate determined by city government.
So the district and the energy utility are very different. Since the district only has tax revenues it can’t get a loan from the DOE for an infrastructure project. It’s not selling anything whose revenues could go back to paying the loan.
If every time a student learned something and the fact that they knew it benefited me, like my electricity, then the district could charge me a bill for this service. But education doesn’t work that way because it’s a public good.
I find this sort of frustrating because the district does sell something when it issues bonds for capital expenditures. It sells a fixed-income opportunity for bondholders. So why can’t the district get a loan for infrastructure on these grounds? I didn’t ask my contact because it’s a cheeky socialist question that gets at the absurdity of this whole structure (this is what I want to do a big research project on next). But still.
Grant me this, Biden
Maybe there’s a path here? For instance, it could work if a private green company, one that specializes in zero emissions HVAC and building retrofits, partnered with the school district. The company would be the borrower and be responsible for the loan, but it would have to bill the district.
I’d assume that this bill would be lower given the loan from the DOE, but we’re sort back where we started again: where would the district get the money to pay the company for the project?
Sigh.
My contact said we need grants for public infrastructure, period. When it comes to a district getting a loan, it’s just too complicated. But when it comes to grants we can’t look to the state. We can’t look to the city.
We have to look to the federal government…which just got infiltrated by a bunch of insurrection tourists hell bent on taking seditious selfies. Guess we’ll just have to hope that the Biden administration creates an infrastructure program and that the district can take advantage.