1. The Economic Impact of Guilford County Schools and the 2008 Bond Referendum Dr. Andrew Brod Center for Business and Economic Research Bryan School of Business and Economics University of North Carolina at Greensboro Email: AndrewBrod@uncg.edu Web: http://cber.uncg.edu April 2008

2. CBER is the main contact point at UNCG for economic-development research Contract research –Economic-impact analyses –Surveys –Industry profiles –Regional profiles –Econometrics, data mining… and more! Public education About CBER

3. What is Economic Impact? An activity (e.g. hiring or spending) begets more activity. –Which begets more activity, which begets more… –A chain reaction of hiring or spending –Add up all the chain reactions: a multiplier effect Three components of economic impact: –Direct: The initial activity –Indirect: Business-to-business linkages –Induced: Business-to-household linkages –Add these up to get the total economic impact

4. What is Economic Impact? Economic impact can be measured in various ways: –Final demand (akin to gross sales revenue) –Value added (akin to GDP, GSP) –Employment (total FT + PT, not FTE) –I’ll focus on final demand and employment Needed for this study: –Regional economic data from IMPLAN –Specific data and information from GCS, focusing on 2006-07 fiscal year

5. Sources of Economic Impact Three sources in this study: –GCS operations Subset: operations of academies –Improved educational outcomes since 2000 Lower drop-out rate Increase in college scholarships Increase in AP credits earned –School bonds 2000 and 2003 Projection of 2008, if approved Subset: contracts awarded to MWDBEs Fiscal impacts expressed in 2006 dollars

6. Impact Region Indicator Value Area (square miles) 650 Population 451,905 Employment 363,241 Number of Households 192,664 Total Personal Income (millions) $15,984 Average Income per Household $82,964 Guilford County, 2006 Source: 2006 IMPLAN data

7. Impact of GCS Operations InstitutionDirectIndirectInducedTotal GCS744.1215.7306.31,266.1 Academies10.32.63.716.6 Final Demand ($ millions) InstitutionDirectIndirectInducedTotal GCS10,5991,7463,03215,377 Academies1272136184 Employment (jobs) Note: Implied multiplier for GCS ops = 1.70

8. Improved Educational Outcomes Lower Drop-Out Rates: –Drop-out rates not the same as the graduation rates that have been in the news –Drop-outs have lower incomes, higher rates of unemployment, pay less taxes, etc. –Rate in 2000 = 5.97%, rate in 2006 = 2.99% Decline of 2.98 percentage points Implies 655 students did not drop out in 2006 –Economic impact via… Reduced Medicaid costs Reduced incarceration costs Other mechanisms not considered in this study

9. Improved Educational Outcomes Lower Drop-Out Rates: –Implies total savings in 2006 of $784,445 in Guilford County. –An implicit grant to county government, and hence to taxpayers –Money freed up for other uses Increased scholarships to GCS seniors: –Total in 2000 = $31.0 million; total in 2006 = $68.1 million –Increase of $37.2 million –Direct grant to households

10. Improved Educational Outcomes More AP credits earned –1,650 AP exams earned scores of 3+ in 2000 –3,897 AP exams earned scores of 3+ in 2006 Increase of 2,247 successful exams –3 college credits –Weighted average of 3 college credits (based on school types and GCS seniors’ choices) is $1,844 –Total implied savings = $4.1 million in 2006 –Implicit grant to households

11. Impact of Improved Outcomes OutcomeDirectIndirectInducedTotal Lower DO Rate0. 8-0.20.51.1 Higher Sch & AP41.36.26.053.6 Final Demand ($ millions) OutcomeDirectIndirectInducedTotal Lower DO Rate7-479 Higher Sch & AP2794171391 Employment (jobs)

12. Comprehensive Impact of GCS Sum of… –Impact of operations –Impact of lower drop-out rate –Impact of increased scholarships & AP credits In 2006-07… –Final-demand impact of $1.32 billion –Employment impact of 15,777 jobs Compares to other recent CBER EIAs: –MCHS, 2003: $1.48 billion, 16,322 jobs –Furniture Mkt, 2003: $1.07 billion, 13,038 jobs –UNCG, 2006: $1.22 billion, 13,520 jobs

13. Impact of Bonds Bonds: –2000: $200 million –2003: $300 million –2008: $412 million and $45 million (proposed) Impacts from construction, design, purchasing Contracts awarded to MWDBEs: –11.3% of contracts awarded in 2000 and 2003 bonds; goal of 12.5% for 2008 bonds Details: –All-in-one-year assumption –Subtract out land purchases –Fiscal impacts in 2006 dollars

14. Impact of Bonds BondDirectIndirectInducedTotal 2000209.446.554.7310.6 2003316.972.986.7476.5 2008: Total428.7103.7124.4656.8 2008: E.Guilford42.910.712.966.5 Final Demand ($ millions)

15. Impact of Bonds BondDirectIndirectInducedTotal 20001,8224505412,813 20032,8627148594,434 2008: Total3,9801,0271,2316,238 2008: E.Guilford411106127645 Employment (“job-years”)

16. Impact of Bonds: MWDBEs BondDirectIndirectInducedTotal 200014.03.74.522.1 200334.09.010.853.8 2008: Total47.312.715.375.4 2008: E.Guilford21.55.87.034.3 Final Demand ($ millions)

17. Impact of Bonds: MWDBEs BondDirectIndirectInducedTotal 20001483644229 200335789107554 2008: Total490126152769 2008: E.Guilford2235869349 Employment (“job-years”)

18. The Economic Impact of Guilford County Schools and the 2008 Bond Referendum Dr. Andrew Brod Center for Business and Economic Research Bryan School of Business and Economics University of North Carolina at Greensboro Email: AndrewBrod@uncg.edu Web: http://cber.uncg.edu April 2008