Analysis of the Return on Investment and Economic Impact of Education

and benefits to spending on industry outputs using national household expenditure coefficients supplied by Emsi’s national SAM. Approximately 89% of the people working at MCC live in Monroe County (see Table 1.1), and therefore we consider 89% of the salaries, wages, and benefits. For the other two expenditure categories (i.e., capital depreciation and all other expenditures), we assume the college’s spending patterns approximately match national averages and apply the national spending coefficients for NAICS 611210 (Junior Colleges). 7 Capital depreciation is mapped to the construction sectors of NAICS 611210 and the college’s remaining expenditures to the non-construction sectors of NAICS 611210. We now have three vectors of expenditures for MCC: one for salaries, wages, and benefits; another for capital items; and a third for the college’s purchases of supplies and services. The next step is to estimate the portion of these expenditures that occur inside the county. The expenditures occurring outside the county are known as leakages. We estimate in-county expenditures using regional purchase coefficients (RPCs), a measure of the overall demand for the commodities produced by each sector that is satisfied by county suppliers, for each of the approximately 1,100 industries in the MR-SAM

model. 8 For example, if 40% of the demand for NAICS 541211 (Offices of Certified Public Accountants) is satisfied by county suppliers, the RPC for that industry is 40%. The remaining 60% of the demand for NAICS 541211 is provided by suppliers located outside the county. The three vectors of expenditures are multiplied, industry by industry, by the corresponding RPC to arrive at the in-county expenditures associated with the college. See Table 2.1 for a break-out of the expenditures that occur in-county. Finally, in-county spending is entered, industry by industry, into the MR-SAM model’s multiplier matrix, which in turn provides an estimate of the associated multiplier effects on county labor income, non-labor income, the total income, sales, and jobs. Table 2.2 presents the economic impact of college operations spending. The people employed by MCC and their salaries, wages, and benefits comprise the initial effect, shown in the top row of the table in terms of labor income, non-labor income, the total added income, sales, and jobs. The additional impacts created by the initial effect appear in the next four rows under the section labeled multiplier effect. Summing the initial and multiplier effects, the gross impacts are $140.8 million in labor income and $28.4 million in non-labor income. This

7 See Appendix 1 for a definition of NAICS.

8 See Appendix 4 for a description of Emsi’s MR-SAM model.

TABLE 2.2: Impact of MCC operations spending, FY 2014-15

NON-LABOR INCOME (THOUSANDS)

LABOR INCOME (THOUSANDS)

TOTAL INCOME (THOUSANDS)

SALES (THOUSANDS)

JOBS

Initial effect

$107,552

$0

$107,552

$160,420

1,801

MULTIPLIER EFFECT

Direct effect

$7,378

$5,239

$12,617

$25,321

174

Indirect effect

$1,981

$1,481

$3,461

$7,283

49

Induced effect

$23,886

$21,661

$45,547

$75,110

603

Total multiplier effect

$33,244

$28,381

$61,626

$107,714

826

Gross impact (initial + multiplier)

$140,796

$28,381

$169,177

$268,133

2,627

Less alternative uses of funds

-$12,242

-$11,383

-$23,625

-$38,130

-311

Net impact

$128,554

$16,998

$145,552

$230,004

2,316

Source: Emsi impact model.

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