The Not So “Cool School” Initiative

By Michael Bastasch

The Oregon “Cool Schools” Initiative (House Bill 2960) directs the Oregon Department of Energy to provide zero to low-interest loans and grants to school districts for energy efficiency building improvements. Governor John Kitzhaber, the bill’s main proponent, argues that HB 2960 will create healthier, more energy efficient schools and create jobs. However, given the propensity of government to overestimate the benefits of its programs while completely understating the costs, the economic impacts of HB 2960 most likely will yield the opposite results of what Gov. Kitzhaber claims.

Luckily, Oregon has a case study in Washington State. Washington initiated a similar program in 2005, and the results were underwhelming. A recent report from the Washington Policy Center shows the costs of the program greatly outweighed the benefits. First, many of the new “green” schools actually used up to 52% more energy than predicted, and some were even less efficient than buildings that were decades old.

Second, most of the money that went to each school was spent on meeting the program’s guidelines and not to energy savings. For example, the Spokane School District spent $455,826 bringing Lincoln Heights Elementary up to the “green” requirements. Only $81,000 (18%) was spent on energy efficiency measures, while the rest (82%) was spent on meeting other requirements that didn’t yield any energy savings. In addition, estimates reveal that the payback time on these “green” improvements is about 43 years. Since virtually no school goes that long without making any changes, it is very likely that energy efficiency investments will never pay for themselves.

Third, student scores at these “green” schools were not significantly improved. In fact, student performance was 25% below what was promised by the Office of the Superintendent of Public Instruction in 2005. Moreover, academic performance was lower on average at “green” schools than at comparable schools in the same district, according to the State Board of Education’s Accountability Index. Students in these schools are actually performing worse and at a higher cost to Washington taxpayers.

Washington’s experiment should provide us with a lesson on why “green” projects such as these almost never pan out. Instead, Gov. Kitzhaber and other proponents of HB 2960 tout the popular phrase “job creation.” The question we should be asking is, job creation for whom and for how long? HB 2960 requires that schools receiving initiative funds only hire Oregon-based contractors and that district employees not perform work constituting over 5% of the project’s total cost.

Gov. Kitzhaber and his staff also claim that for every $1 million spent, 10 to 15 jobs will be created. How would spending approximately $67,000 to $100,000 per job add jobs to the economy, especially when these jobs are temporary? What the Governor does not mention is how many jobs will be lost for every “Cool Schools” job that is created. Basically, HB 2960 carves out a nice little temporary benefit for a small group of people at the expense of all Oregon taxpayers. What is ignored are the unseen costs to the overall economy, such as jobs not created had the funds been efficiently spent by individuals, and also the goods that those workers could have produced had resources been employed in different areas.

Washington’s “green” schools debacle should show Oregonian lawmakers that these types of endeavors are often fruitless and result in wasted tax dollars, lost jobs and misallocated resources. Why should Oregonians be forced to “invest” in an initiative where they will never see any returns or any noticeable long-run benefits? They shouldn’t, and legislators should consider the wider economic impacts of HB 2960 before blindly passing it.

Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.