Moving two USDA research institutions from Washington, D.C., to the Kansas City area won’t save taxpayers money, as officials have promised, but will wind up costing more, according to a report from an association of government and academic economists.
The analysis, conducted by the Agricultural and Applied Economics Association (AAEA), states that Secretary of Agriculture Sonny Perdue’s decision to move hundreds of Economic Research Service (ERS) and National Institute of Food and Agriculture (NIFA) employees to Kansas City this fall would actually cost taxpayers between $37-$128 million.
Secretary Perdue released the final relocation details last week, projecting a $300 million savings to taxpayers over 15 years.
The AAEA economists, including two former ERS administrators, criticized USDA for overstating the costs of keeping ERS and NIFA in the capital region while failing to account for lost value of employees who choose to retire or resign rather than move. Analysts also criticized USDA for not making the full cost-benefit-analysis available to the public.
The debate over Secretary Perdue’s ERS and NIFA relocation proposal has been growing in intensity since it was announced last fall. Many members of Congress, along with science and research advocates, have criticized the move. Some Congressional leaders, particularly those representing Kansas and Missouri, have supported Secretary Perdue.
Both agencies’ employees voted overwhelmingly to unionize and join the American Federation of Government Employees (AFGE) in the last two months.
One of the criticisms of the AAEA is that USDA didn’t consider other cost-saving measures that could have kept the agencies in the capital region.
“The USDA calculated real estate savings by comparing the cost of staying in current commercial property in the National Capital Area with the cost of moving to commercial property in Kansas City,” the report says. “The analysis ignored the option of moving to cheaper real estate in the Washington, DC, area.”
USDA owns three buildings in the capital region already, AAEA said in the analysis, and the agency neglected to evaluate the option of eliminating rental payments altogether by moving employees into existing available space.
AAEA criticism of USDA’s projections also included lost value of research by employees. AAEA estimates that between 50-to-70% of ERS and NIFA employees would choose to retire or quit rather than move.
“Because the number of departing employees is so large (250–400) and because most are highly skilled Ph.D. holders, we further assume that USDA will be able to rehire only one quarter of them per year and that the replacement employees will take approximately four years to reach the level of expertise and research productivity of the researchers they replace. Employees who do move suffer a 25 percent reduction in productivity during their first year as they buy and sell homes, find new schools and places of worship, and adjust to new settings,” AAEA wrote.
AAEA’s “bottom line” estimate is that U. S. taxpayers stand to lose from the ERS and NIFA relocation.
“Using the conservative baseline that the agencies stay in market-priced leased space in the National Capital Region and that 50 percent of current ERS and NIFA employees opt to relocate, the overall net loss to taxpayers comes to $83 million ($37 million in constant 2019 dollars). The less conservative assumptions that the agencies are housed in USDA-owned space and that only 25 percent of employees choose to relocate results in a $182 million net loss to taxpayers ($128 million in constant 2019 dollars),” the report concluded.