Consider South Royalton, Vermont. Royalton, Vermont, has a hearty group of 2700 or so pleasant folks. South Royalton, one of its white flight suburbs, has less than a thousand. Hermit thrushes and maple trees there are a-plenty, but people are previous few.
It's one thing to close a law school in Boston or Los Angeles, where the local economy can fart and waddle onwards. But taking a major employer from a bucolic Vermont village is like stealing the axe from a lumberjack: something's getting cut, and it's likely not what was intended.
Researchers recently found that Vermont Law School had a $30 million impact on the state of Vermont in 2014. Vermont is the least economically-important state in the entire union, with a GDP of only $30 billion. That means that Vermont Law School, by its mighty can-do woodsy self, constitutes a tenth of a percent of this state's economy.
You're endangering Vermont, you rabid skunks.
As the report explains:
“The Vermont Law School ... has an economic impact on the state of Vermont economy far larger than what we would normally expect from an institution this size,” the report concludes. “The high proportion of in-state spending gives rise to an additional 245 jobs ... total personal income $19 million, and tax payments of approximately $3 million.”The school spent $15 million on personnel, and its students spent an additional $12.2 million in the local economy. With 550 students, that's about $22,000 per year per student.
For as much as scambloggers like to whine about law professor salaries, has it occurred to any of them that those expenses disproportionately benefit the surrounding community? Read the report: VLS has a much bigger economic impact on its community than expected. Why do you think that is? It's not all just the power of law to bring knowledge and efficiency to the local marketplace.
Now let's crunch some numbers so we can understand this alchemy in full:
Vermont had around 550 students. According to prior numbers, about 87% of them can be expected to debt finance a part of their legal education, and the average law school indebtedness of those students would be around $139,000. That means an annual indebtedness per debtor of $46,333. With 479 of the 550 students estimated to be taking out debt, that amounts to only about $22 million in federal loan money annually going to that area either in tuition to VLS or living expenses spent in the area.
According to its most recently available tax filings, VLS had about $36 million in functional expenses annually, about $7 million of which appears to be handing out grants/scholarships like a super-generous Pez dispenser of jurisprudential love. According to Moody's, its revenue for FY 2013 was around $28 million with projected further decline in FY 2014, with a "high dependence on student charges," although Moody's notes that the school is " developing new revenue streams by introducing new master's programs to boost enrollment, and seeking new grants and gifts."
So the federal government loans students $22 million or so to hike in the forest and think about legal positivism. Vermont Law School is able to add on $8 million more of economic benefit by turning a few million in tuition and grants into a few million hypothetical bonus dollars.
Examples of Vermont's positive economic impact aside from its students simply buying things in the local market would be the $1.94 million paid out to a core group of ten (10) officers and faculty members in FY 2012. These individuals turn around and spend money in the local community, and as they are public servants, one can bet it's being spent in the community itself rather than shoved into dormant retirement accounts or spent outside the state. I mean, sure, the school uses consultants and accountants from out of state, but no doubt its six-figure employees all stay local when purchasing goods and services.
Now, here's where the real magic comes in. Over time, those students who borrowed that money pay off that $22 million with income from their lucrative jobs as environmental attorneys plus interest. So over time, the United States makes a profit from propping up the local South Royalton economy! Literally everybody wins. Vermont, and particularly the Royalton area, get a $30 million shot to the economy, as well as the addition of invaluable local legal expertise. The United States (that's us!) makes money off student loan interest, and the debtors, I mean students, receive an expert legal education in the scenic woods of Vermont!
Put that on your fuckin' flapjacks!
Now, you might ask yourself questions, like:
- Why should we be in the business of using federal loans to prop up local economies on the backs of student loan debtors to attend an institution with a 54.5% employment score?
- Since the town isn't able to tax the non-profit school as much as a for-profit commercial enterprise, wouldn't it be a much greater economic impact to subsidize a real-life business to occupy that land?
- With PAYE/IBR/default, isn't there a good chance that $22 million isn't all going to be paid back? Were these federal liabilities factored into the analysis, or just ignored because it's not Vermont?
- Why does VLS's FY 2012 tax return show that Geoffrey Shields was working sixty hours a week when he retired in July of 2012 and had been suffering from non-Hodkin's lymphoma during that time?
- If the school is confident in its nonprofit mission, why would the school pay a consulting firm to do an economic impact study in the first place?
- Doesn't any institution that houses hundreds of bodies have an economic impact like this?
- Aren't economic impact studies commissioned by private parties usually just propaganda to advance a political or financial agenda, like that piffle that pro sports teams put out to justify cheating local governments?
- If VLS's revenue and enrollment are in decline, don't we have to adjust forward impact numbers significantly downward?
- Wouldn't it be better to subsidize an institution that makes something useful, as opposed to CLE packets, unread law reviews, and would-be environmental lawyers who practice family law?
- Wouldn't it be better to subsidize an institution that creates middle class jobs for local people rather than upper class jobs for imports who may get offers to leave?
- Wouldn't it be better to subsidize an institution that has a positive credit outlook rather than one that borrows from the state with a negative credit outlook?
- Wouldn't it be better to subsidize an institution that promotes permanent, year-round economic impact in the state?
- Aren't there simpler, more efficient ways of artificially propping up rural university towns than using the student debt / fourth-tier college / six-figure salary model?
- If you really want to support the area, couldn't you just cut every resident of the Royalton area an annual stimulus check and cut out all this other funny business and sell the building/land to a more taxable entity?