Analysis of the Return on Investment and Economic Impact of Education

Analysis of the Return on Investment and Economic Impact of Education T H E E C O N O M I C V A L U E O F M O N R O E C O M M U N I T Y C O L L E G E

November 2016

Analysis of the Return on Investment and Economic Impact of Education T H E E C O N O M I C V A L U E O F M O N R O E C O M M U N I T Y C O L L E G E

November 2016

EXECUTIVE SUMMARY

Executive summary

Monroe Community College (MCC) creates value in many ways. The college plays a key role in helping students increase their employability and achieve their individual potential. It provides students with the skills they need to have a fulfilling and prosperous career. Further, it supplies an environment for students to meet new people, increase their self-confidence, and promote their overall health and well-being.

The value of MCC influences both the lives of students and also the county economy. The college serves a range of industries in Monroe County, supports local businesses, and benefits society as a whole in New York from an expanded economy and improved quality of life. The benefits created by MCC even extend to the state and local government through increased tax revenues and public sector savings. The purpose of this study is to investigate the economic impacts created by MCC on the business community and the benefits that the college generates in return for the investments made by its key stakeholder groups—students, taxpayers, and society. The college serves Monroe County. The following two analyses are presented: • Economic impact analysis • Investment analysis All results reflect student and financial data for Fiscal Year (FY) 2014-15. Impacts on the county business community are reported under the economic impact analysis. Results are measured in terms of added income. The return on investment to students, taxpayers, and society are reported under the investment analysis. Both analyses are described more fully in the following sections.

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Economic impact analysis

MCC promotes economic growth in Monroe County in a variety of ways. The college is an employer and buyer of goods and services, and the living expenses of students benefit local businesses. In addition, MCC is a primary source of education to Monroe County residents and a supplier of trained workers to Monroe County industries.

OPERATIONS SPENDING IMPACT MCC is an important employer in Monroe County. In FY 2014-15, the college employed 1,805 full-time and part-time faculty and staff. Of these, 89% lived in Monroe County. Total payroll at MCC was $107.8 million, much of which was spent in the county for groceries, rent, dining out, clothing, and other household expenses. MCC is itself a large-scale buyer of goods and services. In FY 2014-15 the college spent $52.7 million to cover its expenses for facilities, professional services, and supplies. MCC added $145.6 million in added income to the county during the analysis year as a result of its day-to-day operations. This figure represents the college’s payroll, the multiplier effects generated by the spending of the college and its employees, and a downward adjustment to account for funding that the college received from state and local sources. The $145.6 million in added income is equivalent to supporting 2,316 jobs. IMPACT OF STUDENT SPENDING Around 16% of students attending MCC originated from outside the county in FY 2014-15, and some of these students relocated to Monroe County to attend MCC. These students would not have come to the county if the college did not exist. In addition, a number of in-county students would have left the area for other education opportunities if not for the existence of MCC. While attending the college, these relocator and retained students spent $34.7 million to purchase groceries, rent accommodation, pay for transportation, and so on. A significant portion of these expenditures occurred in the county, generating $12.4 million in added income in the county economy during the analysis year, which is equivalent to supporting 225 jobs.

TABLE 1: Impacts created by MCC in FY 2014-15

ADDED INCOME

JOBS

$145.6 million 2,316

Operations spending impact

$12.4 million 225

Student spending impact

$737.3 million 10,155

Alumni impact

$895.2 million 12,696

Total impact

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FIGURE 1: MCC alumni working in-county today

ALUMNI IMPACT The education and training MCC provides for county residents results in the greatest impact. As shown in Figure 1, since the college was established, students have studied at MCC and entered the county workforce with new skills. Today, thousands of former students are employed in Monroe County. During the analysis year, past and present students of MCC generated $737.3 million in added income for the county. This figure represents the higher earnings that students earned during the year, the increased output of the businesses that employed the students, and the multiplier effects that occurred as students and their employers spent money at other businesses. This $737.3 million in added income is equivalent to supporting 10,155 jobs. TOTAL IMPACT The overall impact of MCC on the local business community during the analysis year amounted to $895.2 million in added income, equal to the sum of the operations spending impact, the student spending impact, and the alumni impact. The $895.2 million in added income was equal to approximately 2.0% of the gross regional product (GRP) of Monroe County. By comparison, this contribution that the college provides on its own slightly larger than the Accommodation & Food Services industry in the region. The total impact is also expressed in terms of the jobs supported by the added income; they are calculated by jobs-to-sales ratios specific to each industry. Overall, the $895.2 million impact supports 12,696 jobs. A portion of the total $895.2 million is broken out into an industry-by-industry impact ordered by added income. Table 2 outlines the top industries impacted by MCC. Because industries have different jobs-to-sales ratios, the associated jobs supported by the MCC impact differ by industry. Nonetheless, these are impacts that would not have been generated without the college’s presence.

Alumni retired, unemployed, and migrated since attendance Alumni actively employed in-county today since attendance + + + + + = 29+33+37+40+43+45 +4+11+21+27+35+100 Year of Graduated 1985 1990 1995 2000 2005 2010 2014 Total

TABLE 2: Top industries impacted by MCC

TOTAL INCOME (MILLIONS)

JOBS

$121.4 2,166 Health Care & Social Assistance $101.0 706 Manufacturing $84.8 797 Professional & Technical Services $73.3 1,079 Management of Companies & Enterprises $65.9 599 Government, Non-Education $448.8 7,348 All other industries $895.2 12,696 Total impact

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Investment analysis

FIGURE 2: Higher earnings by education level at career midpoint in New York 22+29+38+58 $21,500 $28,600 $38,000 $57,700 0+ +29+38 Less than high school High school Associate’s Bachelor’s Source: Emsi complete employment data.

Investment analysis is the process of evaluating total costs and measuring these against total benefits to determine whether or not a proposed venture will be profitable. If benefits outweigh costs, then the investment is worthwhile. If costs outweigh benefits, then the investment will lose money and is considered unprofitable. This study considers MCC as an investment from the perspectives of students, taxpayers, and society. The backdrop for the analysis is the entire New York economy.

STUDENT PERSPECTIVE In FY 2014-15, MCC served 28,580 credit students and 4,261 non-credit students. In order to attend college, students paid for tuition, fees, books, and supplies. They also gave up money that they would have otherwise earned had they been working instead of attending college. The total investment made by MCC’s students in FY 2014-15 amounted to $170.9 million, equal to $38.8 million in out- of-pocket expenses plus $132.1 million in forgone time and money. In return for their investment, MCC’s students will receive a stream of higher future earnings that will continue to grow through their working lives. As shown in Figure 2, mean earnings levels at the midpoint of the average-aged worker’s career increase as people achieve higher levels of education. For example, the average associate degree completer from MCC will see an increase in earnings of $9,400 each year compared to someone with a high school diploma or equivalent. Over a working lifetime, this increase in earnings amounts to an undiscounted value of approximately $432,400 in higher earnings. The present value of the higher future earnings that MCC’s students will receive over their working careers is $748.7 million. Dividing this value by the $170.9 million in student costs yields a benefit-cost ratio of 4.4. In other words, for every $1 students invest in MCC in the form of out-of-pocket expenses and forgone time and money, they receive a cumulative of $4.40 in higher future earnings. The average annual rate of return for students is 16.0%. This is an impressive return, especially when compared to the 10-year average 7.2% return to the US stock market (Figure 3).

TAXPAYER PERSPECTIVE MCC generates more in tax revenue than it takes. These benefits to taxpayers consist primarily of taxes that the state and local government will collect from

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FIGURE 3: Student rate of return

the added revenue created in the state. As MCC students earn more, they will make higher tax payments. Employers will also make higher tax payments as they increase their output and purchase more supplies and services. By the end of the FY 2014-15 students’ working careers, the state and local government will have collected a present value of $397.5 million in added taxes. Benefits to taxpayers consist of the savings generated by the improved lifestyles of students and the proportionally reduced government expenditures. Education is statistically correlated with a variety of lifestyle changes that generate taxpayer savings across three main categories: 1) health, 2) crime, and 3) unemployment. Improved health habits lower the students’ demand for national health care services. Students are also less likely to commit crimes, so the demand for law enforcement and criminal justice services is reduced (study references are available in the main report). Students are also more employable, so the demand for welfare and unemployment benefits, such as earnings assistance and welfare benefits, is reduced. For a list of study references to these statistical benefits, please contact the college for a copy of the main report. All of these benefits will generate a present value of $21.7 million in savings to state and local taxpayers. Total benefits to taxpayers equal $419.2 million, equal to the sum of the added taxes and public sector savings. Comparing this to the taxpayer costs of $84.8 million—equal to the funding that MCC received from the state and local government during the analysis year—yields a benefit-cost ratio of 4.9. This means that for every $1 of public money invested in MCC, taxpayers receive a cumulative value of $4.90 over the course of the students’ working lives. The average annual rate of return is 14.8%, a solid investment that compares favorably with other long-term investments in both the private and public sectors (Figure 3). SOCIAL PERSPECTIVE Society as a whole within New York benefits from the presence of MCC in two major ways. The first and largest benefit that society receives is an increased state economic base. As discussed in the previous section, the higher student earnings and increased business output occurs across the state. This raises prosperity in New York and expands the economic base for society as a whole. Benefits to society also consist of the savings generated by the improved lifestyles of students. Similar to the taxpayer section above, education is statistically correlated with a variety of lifestyle changes that generate social savings. Note that these costs are avoided by the consumers, and are distinct from the costs avoided by taxpayers outlined above. Health savings include avoided medical costs associated with smoking, alcoholism, obesity, drug abuse, and mental disorders. Crime savings include reduced security expenditures and insurance administration, lower victim costs, and reduced

16.0%

9.1%

7.2%

Avg. Annual Return

Average Return for Rental Landlord*

Stock Market 10-year Average Return**

for MCC Students

* RealityTrac’s Q3, 2014 ** Forbes’ S&P 500, 1994-2014.

FIGURE 4: Present value of higher earnings and social savings in New York

1 + 99 + H $4.2 billion Higher earnings $61.3 million Social savings

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criminal justice system expenditures. Unemployment savings include the reduced employer contributions towards unemployment claims. For a list of study references to these statistical benefits, please contact the college for a copy of the main report. Figure 4 shows the present value of the higher earnings and social savings that will occur in New York over the working lifetime of the FY 2014-15 student population at MCC. Higher earnings amounts to a present value of $4.2 billion due to the increased lifetime earnings of students and associated increases in business output. Social savings amount to $61.3 million, the sum of health, crime, and unemployment savings in New York. Altogether, total benefits to society equal $4.2 billion (in present value terms). Society invested $305.2 million in MCC educations during the analysis year. This includes all expenditures by MCC, all student expenditures, and all student opportunity costs. For every dollar of this investment, society as a whole in New York will receive a cumulative value of $13.90 in benefits, equal to the $4.2 billion in benefits divided by the $305.2 million in costs. These benefits will occur for as long as MCC’s FY 2014-15 students remain employed in the state workforce. SUMMARY OF INVESTMENT ANALYSIS RESULTS Table 3 presents the results of the investment analysis for all three of MCC’s major stakeholder groups—students, taxpayers, and society. As shown, students receive great value for their educational investment. At the same time, the investment made by state and local taxpayers to the college creates a wide range of benefits to society and returns more to government budgets than it costs.

TABLE 3: Summary of investment analysis results

STUDENT PERSPECTIVE TAXPAYER PERSPECTIVE

SOCIAL PERSPECTIVE

$748,666 $170,913 $577,753

$419,155

$4,248,910

Present value benefits (thousands)

$84,790

$305,155

Costs (thousands)

$334,365

$3,943,756

Net present value (thousands)

4.4

4.9

13.9

Benefit-cost ratio

16.0%

14.8%

N/A

Rate of return

* The rate of return is not reported for the social perspective because the beneficiaries of the investment are not necessarily the same as the original investors.

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Conclusion

The results of this study demonstrate that MCC creates value from multiple perspectives. The college benefits local businesses by increasing consumer spending in the county and supplying a steady flow of qualified, trained workers into the workforce. It enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential. It benefits state and local taxpayers through increased tax receipts across the state and a reduced demand for government-supported social services. Finally, it benefits society as a whole in New York by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students.

ABOUT THE STUDY Data and assumptions used in the study are based on several sources, including the FY 2014-15 academic and financial reports from the college, industry and employment data from the U.S. Bureau of Labor Statistics and U.S. Census Bureau, outputs of Emsi’s Social Accounting Matrix model, and a variety of studies and surveys relating education to social behavior. The study applies a conservative methodology and follows standard practice using only the most recognized indicators of investment effectiveness and economic impact. For a full description of the data and approach used in the study, please contact the college for a copy of the technical report.

Economic Modeling Specialists International, a CareerBuilder company, is a leading provider of economic impact studies and labor market data to educational institutions, workforce planners, and regional developers in the U.S. and internationally. Since 2000, Emsi has completed over 1,200 economic impact studies for educational institutions in four countries. Visit www.economicmodeling.com for more information about Emsi’s products and services.

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Analysis of the Return on Investment and Economic Impact of Education T H E E C O N O M I C V A L U E O F M O N R O E C O M M U N I T Y C O L L E G E - D A M O N C I T Y C A M P U S

November 2016

EXECUTIVE SUMMARY

Executive summary

Monroe Community College-Damon City Campus (MCC-DCC) creates value in many ways. The campus plays a key role in helping students increase their employability and achieve their individual potential. It provides students with the skills they need to have a fulfilling and prosperous career. Further, it supplies an environment for students to meet new people, increase their self-confidence, and promote their overall health and well-being.

The value of MCC-DCC influences both the lives of students and also the county economy. The campus serves a range of industries in Monroe County, supports local businesses, and benefits society as a whole in New York from an expanded economy and improved quality of life. The benefits created by MCC- DCC even extend to the state and local government through increased tax revenues and public sector savings. The purpose of this study is to investigate the economic impacts created by MCC-DCC on the business community and the benefits that the campus generates in return for the investments made by its key stakeholder groups— students, taxpayers, and society. The campus serves Monroe County. The following two analyses are presented: • Economic impact analysis • Investment analysis All results reflect student and financial data for Fiscal Year (FY) 2014-15. Impacts on the county business community are reported under the economic impact analysis. Results are measured in terms of added income. The return on investment to students, taxpayers, and society are reported under the investment analysis. Both analyses are described more fully in the following sections.

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Economic impact analysis

MCC-DCC promotes economic growth in Monroe County in a variety of ways. The campus is an employer and buyer of goods and services, and the living expenses of students benefit local businesses. In addition, MCC-DCC is a primary source of education to Monroe County residents and a supplier of trained workers to Monroe County industries.

OPERATIONS SPENDING IMPACT MCC-DCC is an important employer in Monroe County. In FY 2014-15, the campus employed 218 full-time and part-time faculty and staff. Of these, 91% lived in Monroe County. Total payroll at MCC-DCC was $13 million, much of which was spent in the county for groceries, rent, dining out, clothing, and other household expenses. MCC-DCC is itself a large-scale buyer of goods and services. In FY 2014-15 the campus spent $6.3 million to cover its expenses for facilities, professional services, and supplies. MCC-DCC added $17.5 million in added income to the county during the analysis year as a result of its day-to-day operations. This figure represents the campus’s payroll, the multiplier effects generated by the spending of the campus and its employees, and a downward adjustment to account for funding that the campus received from state and local sources. The $17.5 million in added income is equivalent to supporting 279 jobs. IMPACT OF STUDENT SPENDING Around 7% of students attending MCC-DCC originated from outside the county in FY 2014-15, and some of these students relocated to Monroe County to attend MCC-DCC. These students would not have come to the county if the campus did not exist. In addition, a number of in-county students would have left the area for other education opportunities if not for the existence of MCC- DCC. While attending the campus, these relocator and retained students spent $3.6 million to purchase groceries, rent accommodation, pay for transportation, and so on. A significant portion of these expenditures occurred in the county, generating $1.3 million in added income in the county economy during the analysis year, which is equivalent to supporting 24 jobs.

TABLE 1: Impacts created by MCC-DCC in FY 2014-15

ADDED INCOME

JOBS

$17.5 million 279

Operations spending impact

$1.3 million 24

Student spending impact

$86.6 million 1,193

Alumni impact

$105.4 million 1,496

Total impact

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FIGURE 1: MCC-DCC alumni working in-county today

ALUMNI IMPACT The education and training MCC-DCC provides for county residents results in the greatest impact. As shown in Figure 1, since the campus was established, students have studied at MCC-DCC and entered the county workforce with new skills. Today, thousands of former students are employed in Monroe County. During the analysis year, past and present students of MCC-DCC generated $86.6 million in added income for the county. This figure represents the higher earnings that students earned during the year, the increased output of the businesses that employed the students, and the multiplier effects that occurred as students and their employers spent money at other businesses. This $86.6 million in added income is equivalent to supporting 1,193 jobs. TOTAL IMPACT The overall impact of MCC-DCC on the local business community during the analysis year amounted to $105.4 million in added income, equal to the sum of the operations spending impact, the student spending impact, and the alumni impact. The $105.4 million in added income was equal to approximately 0.2% of the gross regional product of Monroe County. The total impact is also expressed in terms of the jobs supported by the added income; they are calculated by jobs-to-sales ratios specific to each industry. Overall, the $105.4 million impact supports 1,496 jobs. A portion of the total $105.4 million is broken out into an industry-by-industry impact ordered by added income. Table 2 outlines the top industries impacted by MCC-DCC. Because industries have different jobs-to-sales ratios, the associated jobs supported by the MCC-DCC impact differ by industry. Nonetheless, these are impacts that would not have been generated without the campus’s presence.

Alumni retired, unemployed, and migrated since attendance Alumni actively employed in-county today since attendance + + + + + = 29+33+37+40+43+45 +4+11+21+27+35+100 Year of Graduated 1985 1990 1995 2000 2005 2010 2014 Total

TABLE 2: Top industries impacted by MCC

TOTAL INCOME (MILLIONS)

JOBS

$14.3 254 Health Care & Social Assistance $11.9 83 Manufacturing $10.0 94 Management of Companies & Enterprises $8.6 127 Professional & Technical Services $7.7 70 Government, Non-Education $53.0 868 All other industries $105.4 1,496 Total impact

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FIGURE 2: Higher earnings by education level at career midpoint in New York 19+25+35+50 $19,400 $25,400 $34,700 $50,300 0+19+25+35 Less than high school High school Associate’s Bachelor’s Source: Emsi complete employment data. 5

Investment analysis

Investment analysis is the process of evaluating total costs and measuring these against total benefits to determine whether or not a proposed venture will be profitable. If benefits outweigh costs, then the investment is worthwhile. If costs outweigh benefits, then the investment will lose money and is considered unprofitable. This study considers MCC-DCC as an investment from the perspectives of students, taxpayers, and society. The backdrop for the analysis is the entire New York economy.

STUDENT PERSPECTIVE In FY 2014-15, MCC-DCC served 3,947 credit students. In order to attend college, students paid for tuition, fees, books, and supplies. They also gave up money that they would have otherwise earned had they been working instead of attending college. The total investment made by MCC-DCC’s students in FY 2014-15 amounted to $18.5 million, equal to $4.5 million in out-of-pocket expenses plus $14 million in forgone time and money. In return for their investment, MCC-DCC’s students will receive a stream of higher future earnings that will continue to grow through their working lives. As shown in Figure 2, mean earnings levels at the midpoint of the average- aged worker’s career increase as people achieve higher levels of education. For example, the average associate degree completer from MCC-DCC will see an increase in earnings of $9,300 each year compared to someone with a high school diploma or equivalent. Over a working lifetime, this increase in earnings amounts to an undiscounted value of approximately $418,500 in higher earnings. The present value of the higher future earnings that MCC-DCC’s students will receive over their working careers is $67.3 million. Dividing this value by the $18.5 million in student costs yields a benefit-cost ratio of 4.0. In other words, for every $1 students invest in MCC-DCC in the form of out-of-pocket expenses and forgone time and money, they receive a cumulative of $4.00 in higher future earnings. The average annual rate of return for students is 15.1%. This is an impressive return, especially when compared to the 10-year average 7.2% return to the US stock market (Figure 3).

TAXPAYER PERSPECTIVE MCC-DCC generates more in tax revenue than it takes. These benefits to taxpayers consist primarily of taxes that the state and local government will

M O N R O E C O M M U N I T Y C O L L E G E - D A M O N C I T Y C A M P U S | E X E C U T I V E S U M M A R Y

FIGURE 3: Student rate of return

collect from the added revenue created in the state. As MCC-DCC students earn more, they will make higher tax payments. Employers will also make higher tax payments as they increase their output and purchase more supplies and services. By the end of the FY 2014-15 students’ working careers, the state and local government will have collected a present value of $40.3 million in added taxes. Benefits to taxpayers consist of the savings generated by the improved lifestyles of students and the proportionally reduced government expenditures. Education is statistically correlated with a variety of lifestyle changes that generate taxpayer savings across three main categories: 1) health, 2) crime, and 3) unemployment. Improved health habits lower the students’ demand for national health care services. Students are also less likely to commit crimes, so the demand for law enforcement and criminal justice services is reduced (study references are available in the main report). Students are also more employable, so the demand for welfare and unemployment benefits, such as earnings assistance and welfare benefits, is reduced. For a list of study references to these statistical benefits, please contact the college for a copy of the main report. All of these benefits will generate a present value of $2.5 million in savings to state and local taxpayers. Total benefits to taxpayers equal $42.7 million, equal to the sum of the added taxes and public sector savings. Comparing this to the taxpayer costs of $10.2 million—equal to the funding that MCC-DCC received from the state and local government during the analysis year—yields a benefit-cost ratio of 4.2. This means that for every $1 of public money invested in MCC-DCC, taxpayers receive a cumulative value of $4.20 over the course of the students’ working lives. The average annual rate of return is 12.9%, a solid investment that compares favorably with other long-term investments in both the private and public sectors (Figure 3). SOCIAL PERSPECTIVE Society as a whole within New York benefits from the presence of MCC-DCC in two major ways. The first and largest benefit that society receives is an increased state economic base. As discussed in the previous section, the higher student earnings and increased business output occurs across the state. This raises prosperity in New York and expands the economic base for society as a whole. Benefits to society also consist of the savings generated by the improved lifestyles of students. Similar to the taxpayer section above, education is statistically correlated with a variety of lifestyle changes that generate social savings. Note that these costs are avoided by the consumers, and are distinct from the costs avoided by taxpayers outlined above. Health savings include avoided medical costs associated with smoking, alcoholism, obesity,

15.1%

9.1%

7.2%

Avg. Annual Return for MCC-DCC Students

Average Return for Rental Landlord*

Stock Market 10-year Average Return**

* RealityTrac’s Q3, 2014 ** Forbes’ S&P 500, 1994-2014.

FIGURE 4: Present value of higher earnings and social savings in New York

1 + 99+ H $428.9 billion Higher earnings $6.6 million Social savings

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drug abuse, and mental disorders. Crime savings include reduced security expenditures and insurance administration, lower victim costs, and reduced criminal justice system expenditures. Unemployment savings include the reduced employer contributions towards unemployment claims. For a list of study references to these statistical benefits, please contact the college for a copy of the main report. Figure 4 shows the present value of the higher earnings and social savings that will occur in New York over the working lifetime of the FY 2014-15 student population at MCC-DCC. Higher earnings amounts to a present value of $428.9 million due to the increased lifetime earnings of students and associated increases in business output. Social savings amount to $6.6 million, the sum of health, crime, and unemployment savings in New York. Altogether, total benefits to society equal $435.5 million (in present value terms). Society invested $34.6 million in MCC-DCC educations during the analysis year. This includes all expenditures by MCC-DCC, all student expenditures, and all student opportunity costs. For every dollar of this investment, society as a whole in New York will receive a cumulative value of $12.60 in benefits, equal to the $435.5 million in benefits divided by the $34.6 million in costs. These benefits will occur for as long as MCC-DCC’s FY 2014-15 students remain employed in the state workforce. SUMMARY OF INVESTMENT ANALYSIS RESULTS Table 3 presents the results of the investment analysis for all three of MCC- DCC’s major stakeholder groups—students, taxpayers, and society. As shown, students receive great value for their educational investment. At the same time, the investment made by state and local taxpayers to the campus creates a wide range of benefits to society and returns more to government budgets than it costs.

TABLE 3: Summary of investment analysis results

STUDENT PERSPECTIVE TAXPAYER PERSPECTIVE

SOCIAL PERSPECTIVE

$74,597 $18,455 $56,142

$42,745 $10,190 $32,555

$435,540 $34,589 $400,951

Present value benefits (thousands)

Costs (thousands)

Net present value (thousands)

4.0

4.2

12.6 N/A

Benefit-cost ratio

15.1%

12.9%

Rate of return

* The rate of return is not reported for the social perspective because the beneficiaries of the investment are not necessarily the same as the original investors.

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M O N R O E C O M M U N I T Y C O L L E G E - D A M O N C I T Y C A M P U S | E X E C U T I V E S U M M A R Y

Conclusion

The results of this study demonstrate that MCC-DCC creates value from multiple perspectives. The campus benefits local businesses by increasing consumer spending in the county and supplying a steady flow of qualified, trained workers into the workforce. It enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential. It benefits state and local taxpayers through increased tax receipts across the state and a reduced demand for government-supported social services. Finally, it benefits society as a whole in New York by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students.

ABOUT THE STUDY Data and assumptions used in the study are based on several sources, including the FY 2014-15 academic and financial reports from the college, industry and employment data from the U.S. Bureau of Labor Statistics and U.S. Census Bureau, outputs of Emsi’s Social Accounting Matrix model, and a variety of studies and surveys relating education to social behavior. The study applies a conservative methodology and follows standard practice using only the most recognized indicators of investment effectiveness and economic impact. For a full description of the data and approach used in the study, please contact the college for a copy of the technical report.

Economic Modeling Specialists International, a CareerBuilder company, is a leading provider of economic impact studies and labor market data to educational institutions, workforce planners, and regional developers in the U.S. and internationally. Since 2000, Emsi has completed over 1,200 economic impact studies for educational institutions in four countries. Visit www.economicmodeling.com for more information about Emsi’s products and services.

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M O N R O E C O M M U N I T Y C O L L E G E - D A M O N C I T Y C A M P U S | E X E C U T I V E S U M M A R Y

FACT SHEET The Economic Value of Monroe Community College | November 2016

Monroe Community College (MCC) creates a significant positive impact on the business community and generates a return on investment to its major stakeholder groups—students, taxpayers, and society. Using a two-pronged approach that involves an economic impact analysis and an investment analysis, this study calculates the benefits to each of these groups. Results of the analysis reflect Fiscal Year (FY) 2014-15.

IMPACT ON BUSINESS COMMUNITY

IMPACTS CREATED BY MCC IN FY 2014-15

During the analysis year, MCC and its students added $895.2 million in added income to the Monroe County economy, approximately equal to 2.0% of the county’s total gross regional product. By comparison, this impact from the college is slightly larger than the Accommodation & Food Services industry in the region. The economic impacts of MCC break down as follows: Operations spending impact • MCC employed 1,805 full-time and part-time employees in FY 2014-15. Payroll amounted to $107.8 million , much of which was spent in Monroe County to purchase groceries, clothing, and other household goods and services. The college spent another $52.7 million to support its day-to-day operations. • The net impact of college payroll and expenses in Monroe County during the analysis year was approximately $145.6 million in added income. Impact of student spending • Around 16% of students attending MCC originated from outside the county. Some of these students relocated to Monroe County. In addition, a number of students would have left the county if not for MCC. These relocator and retained students spent money on groceries, transportation, rent, and so on at county businesses. • The expenditures of relocator and retained students during the analysis year added approximately $12.4 million in added income to the Monroe County economy.

ADDED INCOME

JOBS

$145.6 million 2,316

Operations spending impact

$12.4 million 225

Student spending impact

$737.3 million 10,155

Alumni impact

$895.2 million 12,696

Total impact

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STUDENT RATE OF RETURN

Alumni impact • Over the years, students have studied at MCC and entered or re-entered the workforce with newly-acquired skills. Today, thousands of these former students are employed in Monroe County. • The accumulated contribution of former students currently employed in the county workforce amounted to $737.9 million in added income during the analysis year. RETURN ON INVESTMENT TO STUDENTS, TAXPAYERS, AND SOCIETY Student perspective • MCC’s FY 2014-15 students paid a total of $38.8 million to cover the cost of tuition, fees, and supplies. They also forwent $132.1 million in money that they would have earned had they been working instead of learning. • In return for the monies invested in the college, students will receive a present value of $748.7 million in increased earnings over their working lives. This translates to a return of $4.40 in higher future earnings for every $1 that students invest in their education. The average annual return for students is 16.0% . Taxpayer perspective • In FY 2014-15, state and local taxpayers in New York paid $84.8 million to support the operations of MCC. The net present value of the added tax revenue stemming from the students’ higher lifetime earnings and the increased output of businesses amounts to $397.5 million in benefits to taxpayers. Savings to the public sector add another $21.7 million in benefits due to a reduced demand for government-funded services in New York. • Dividing benefits to taxpayers by the associated costs yields a 4.9 benefit- cost ratio, i.e., every $1 in costs returns $4.90 in benefits. The average annual return on investment for taxpayers is 14.8% . Social perspective • The economic base in New York will grow by $4.2 billion over the course of the students’ working lives. Society will also benefit from $61.3 million in present value social savings related to reduced crime, lower unemployment, and increased health and well-being across the state. • For every dollar that society spent on MCC educations during the analysis year, society will receive a cumulative value of $13.90 in benefits, for as long as the FY 2014-15 student population at MCC remains active in the state workforce.

16.0%

9.1%

7.2%

Avg. Annual Return

Average Return for Rental Landlord*

Stock Market 10-year Average Return**

for MCC Students

* RealityTrac’s Q3, 2014 ** Forbes’ S&P 500, 1994-2014.

For every $1 spent by…

STUDENTS $4.40 Gained in lifetime earnings for STUDENTS

TAXPAYERS $4.90 Gained in added state revenue and social savings for TAXPAYERS

SOCIETY $13.90 Gained in added taxes and public sector savings for SOCIETY

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FACT SHEET The Economic Value of Monroe Community College-Damon City Campus | November 2016

Monroe Community College-Damon City Campus (MCC-DCC) creates a significant positive impact on the business community and generates a return on investment to its major stakeholder groups—students, taxpayers, and society. Using a two-pronged approach that involves an economic impact analysis and an investment analysis, this study calculates the benefits to each of these groups. Results of the analysis reflect Fiscal Year (FY) 2014-15.

IMPACT ON BUSINESS COMMUNITY

IMPACTS CREATED BY MCC- DCC IN FY 2014-15

During the analysis year, MCC-DCC and its students added $105.4 million in added income to the Monroe County economy, approximately equal to 0.2% of the county’s total GRP. This impact from the campus is slightly larger than the Accommodation & Food Services industry in the region. The economic impacts of MCC-DCC break down as follows: Operations spending impact • MCC-DCC employed 218 full-time and part-time employees in FY 2014-15. Payroll amounted to $13 million , much of which was spent in Monroe County to purchase groceries, clothing, and other household goods and services. The campus spent another $6.3 million to support its day-to-day operations. • The net impact of campus payroll and expenses in Monroe County during the analysis year was approximately $17.5 million in added income. Impact of student spending • Around 7% of students attending MCC-DCC originated from outside the county. Some of these students relocated to Monroe County. In addition, a number of students would have left the county if not for MCC-DCC. These relocator and retained students spent money on groceries, transportation, rent, and so on at county businesses. • The expenditures of relocator and retained students during the analysis year added approximately $1.3 million in added income to the Monroe County economy.

ADDED INCOME

JOBS

$17.5 million 279

Operations spending impact

$1.3 million 24

Student spending impact

$86.6 million 1,193

Alumni impact

$105.4 million 1,496

Total impact

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STUDENT RATE OF RETURN

Alumni impact • Over the years, students have studied at MCC-DCC and entered or re-entered the workforce with newly-acquired skills. Today, thousands of these former students are employed in Monroe County. • The accumulated contribution of former students currently employed in the county workforce amounted to $86.6 million in added income during the analysis year. RETURN ON INVESTMENT TO STUDENTS, TAXPAYERS, AND SOCIETY Student perspective • MCC-DCC’s FY 2014-15 students paid a total of $4.5 million to cover the cost of tuition, fees, and supplies. They also forwent $14 million in money that they would have earned had they been working instead of learning. • In return for the monies invested in the campus, students will receive a present value of $74.6 million in increased earnings over their working lives. This translates to a return of $4.00 in higher future earnings for every $1 that students invest in their education. The average annual return for students is 15.1% . Taxpayer perspective • In FY 2014-15, state and local taxpayers in New York paid $10.2 million to support the operations of MCC-DCC. The net present value of the added tax revenue stemming from the students’ higher lifetime earnings and the increased output of businesses amounts to $40.3 million in benefits to taxpayers. Savings to the public sector add another $2.5 million in benefits due to a reduced demand for government-funded services in New York. • Dividing benefits to taxpayers by the associated costs yields a 4.2 benefit- cost ratio, i.e., every $1 in costs returns $4.20 in benefits. The average annual return on investment for taxpayers is 12.9% . Social perspective • The economic base in New York will grow by $428.9 million over the course of the students’ working lives. Society will also benefit from $6.6 million in present value social savings related to reduced crime, lower unemployment, and increased health and well-being across the state. • For every dollar that society spent on MCC-DCC educations during the analysis year, society will receive a cumulative value of $12.60 in benefits, for as long as the FY 2014-15 student population at MCC-DCC remains active in the state workforce.

15.1%

9.1%

7.2%

Avg. Annual Return for MCC-DCC Students

Average Return for Rental Landlord*

Stock Market 10-year Average Return**

* RealityTrac’s Q3, 2014 ** Forbes’ S&P 500, 1994-2014.

For every $1 spent by…

STUDENTS $4.00 Gained in lifetime earnings for STUDENTS

TAXPAYERS $4.20 Gained in added state revenue and social savings for TAXPAYERS

SOCIETY $12.60 Gained in added taxes and public sector savings for SOCIETY

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Analysis of the Return on Investment and Economic Impact of Education T H E E C O N O M I C V A L U E O F M O N R O E C O M M U N I T Y C O L L E G E

November 2016

MAIN REPORT

Contents

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35

ACKNOWLEDGMENTS

C H A P T E R 4 : SENSITIVITY ANALYSIS Alternative education variable / 35 Labor import effect variable / 36 Student employment variables / 36 Discount rate / 37

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EXECUTIVE SUMMARY Economic Impact Analysis / 4 Investment Analysis / 5

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39

INTRODUCTION

C H A P T E R 5 : CONCLUSION

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C H A P T E R 1 : PROFILE OF MONROE COMMUNITY COLLEGE AND THE ECONOMY

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Resources and References

46

Appendix 1: Glossary of Terms

48

Appendix 2: Frequently Asked Questions (FAQs)

MCC employee and finance data / 7 The Monroe County economy / 10

50

Appendix 3: Example of Sales versus Income

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Appendix 4: Emsi MR-SAM

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C H A P T E R 2 : ECONOMIC IMPACTS ON THE MONROE COUNTY ECONOMY Operations spending impact / 13 Student spending impact / 15 Alumni impact  / 17 Total impact of MCC / 20

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Appendix 5: Value per Credit Hour Equivalent and the Mincer Function

57

Appendix 6: Alternative Education Variable

58

Appendix 7: Overview of Investment Analysis Measures

61

Appendix 8: Shutdown Point

22

C H A P T E R 3 : INVESTMENT ANALYSIS Student perspective / 22 Taxpayer perspective / 27 Social perspective / 29 Conclusion / 34

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Appendix 9: Social Externalities

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M O N R O E C O M M U N I T Y C O L L E G E | M A I N R E P O R T

Acknowledgments

Emsi gratefully acknowledges the excellent support of the staff at Monroe Community College in making this study possible. Special thanks go to Dr. Anne M. Kress, President, who approved the study, and to Todd Oldham, Vice President of Economic Development and Innovative Workforce Services and Elina Belyablya, Interim Assistant Director of Institutional Research, who collected much of the data and information requested. Any errors in the report are the responsibility of Emsi and not of any of the above-mentioned individuals.

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M O N R O E C O M M U N I T Y C O L L E G E | M A I N R E P O R T

Executive Summary

This report assesses the impact of Monroe Community College (MCC) on the county economy and the benefits generated by the college for students, taxpayers, and society. The results of this study show that MCC creates a positive net impact on the county economy and generates a positive return on investment for students, taxpayers, and society.

ECONOMIC IMPACT ANALYSIS

the alternative impacts from the spending impacts of MCC. This analysis shows that in Fiscal Year (FY) 2014- 15, operations spending of MCC, together with the spending from its students and alumni, generated $895.2 million in added income to the Monroe County economy. The additional income of $895.2 million created by MCC is equal to approximately 2.0% of the total gross regional product (GRP) of Monroe County, and is equivalent to supporting 12,696 jobs. For perspective, this impact from the college is slightly larger than the Accommodation & Food Services industry in the county. These economic impacts break down as follows: Operations spending impact Payroll and benefits to support day-to-day operations of MCC amounted to $107.8 million. The net impact of operations spending toward the college in Monroe County during the analysis year was approximately $145.6 million in added income, which is equivalent to supporting 2,316 jobs. Student spending impact Around 16% of students attending MCC originated from outside the county. Some of these students relocated to Monroe County to attend MCC. In addition, some students are residents of Monroe County who would have left the county if not for the existence of MCC. The money that these students spent toward living expenses in Monroe County is attributable to MCC.

During the analysis year, MCC spent $107.8 million on payroll and benefits for 1,805 full-time and part-time employees, and spent another $52.7 million on goods and services to carry out its day-to-day operations. This initial round of spending creates more spending across other businesses throughout the county economy, resulting in the commonly referred to multiplier effects. This analysis estimates the net economic impact of MCC that directly takes into account the fact that state and local dollars spent on MCC could have been spent elsewhere in the county if not directed towards MCC and would have created impacts regardless. We account for this by estimating the impacts that would have been created from the alternative spending and subtracting

IMPORTANT NOTE When reviewing the impacts estimated in this study, it’s important to note that it reports impacts in the form of added income rather than sales. Sales includes all of the intermediary costs associated with producing goods and services. Income, on the other hand, is a net measure that excludes these intermediary costs and is synonymous with gross regional product (GRP) and value added. For this reason, it is a more meaningful measure of new economic activity than sales.

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M O N R O E C O M M U N I T Y C O L L E G E | M A I N R E P O R T