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Roger Marolt: Roger This

Roger MaroltThe Aspen TimesAspen, CO, Colorado

We’re $1! Whoops. Why do they put that dollar sign right next to the pound sign on a keyboard? It’s like fat finger meets Freudian slip. Let me try again. We’re #1!In case you missed it, U.S. News & World Report ranked Aspen High School as the best in Colorado and 59th in the United States out of more than 22,000 public high schools it examined. So what does this measure? Well, for starters it measures what has already occurred, and – as they say in the investment world – past performance is no guarantee of future returns. Now, I don’t mean to diminish the accomplishment. It’s incredible. It shows that our community has been committed to excellence in education. We have outstanding faculty, fabulous facilities, committed families and, of course, motivated students.There is a point that needs to be made about this, though. There are good students, caring families and great teachers everywhere. What is the catalyst that brings it all together to make a remarkable school? We’ll get back to this in a minute.First, though, I want to talk about the people our great schools benefit. The kids obviously reap the rewards of first-class classes. It can be argued convincingly that students’ families benefit, too. How about society in general? That’s always the trigger to get everyone behind the program, isn’t it? Maybe, but I’m not into indirect today. So, really, the people who benefit most from quality education are students and their parents, right?Wrong! The people who benefit most directly and immediately from great schools are property owners and people in real estate and related businesses – in other words, almost everyone else in Aspen. Forget the precious children for a moment. Let’s talk cha-ching!Don’t believe me? I have the Chiodo, Hernadez-Murillo, Owyang study “Nonlinear Effects of School Quality on House Prices,” published in the May-June 2010 Federal Reserve Bank of St. Louis Review, to back me up on this. What have you got? OK, then, listen up: According to the findings, the relationship between real property values and school quality is “substantially large” and nonlinear.”Big deal,” you say with a shrug. “That’s irrelevant to Aspen. We are not like other places. We have moguls in all fields in our mogul fields. We hardly need good schools to boost property values.”Let me suggest one thing about this kind of thinking: It’s dead wrong. It turns out that the good-school effect is more pronounced in highly desirable, wealthy communities like Aspen. This is what they mean by the “nonlinear” relationship they proved in the analysis.Basically, when the supply of homes is severely restricted, like here, the demand for better schools has a greater influence on valuations, not less. Think of it this way: If there is abundant land around a great school, you simply build more houses for all the people who want to live near it, and prices aren’t that affected. In case you didn’t notice, we don’t have an oversupply of buildable lots in Aspen.Let’s use real numbers to see what could happen to our economy if the local schools slip in quality. According to the study, a drop in quality from having the local school in the top 2 percent to being merely in the top 16 percent in an affluent, desirable community like Aspen would result in a predicted overall plunge of 9 percent in local real property values. In Pitkin County in 2009, the total value of all real estate was appraised at $35.7 billion. A 9 percent drop would shave off more than $3.2 billion of equity. For you Realtors keeping score on the MLS, that’s more than a $193 million drop in potential commissions. A correlative correction in income to builders, architects, lawyers, and column writers in a real estate-driven economy is harder to quantify, but you can bet it would be significant, too. It turns out that great schools are not just for overzealous parents trying to get their kids into Ivy League colleges anymore.Getting back to the catalyst I referred to above that brings students, teachers and communities together to create great schools – it’s money. And things have changed since the U.S. News rankings looked at Aspen High back in ’10. School financing has gone on an extended sabbatical. What’s left of state funding is set up to basically make all schools equal. To keep our schools great and thus our property values up, we need extra investment in education more than ever! Every business and property owner in town should be knocking on the doors of the Aspen Education Foundation with checkbooks in hand. The Aspen Board of Realtors should collect all the money it is now saving on lawn signs and give it to the school district. It’s not just about the kids. It’s about our livelihoods and the preservation of home equity, too. You can take that to the bank! Literally.

Roger Marolt is convinced that you have to spend money on schools to make money. Contact him at roger@maroltllp.com.


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