Presenting the Socioeconomic Benefits of Suffolk County Community College

Reports Produced by CCbenefits, Inc.  PowerPoint Presentation  Main Volume (98 pages)  Fact Sheet (1 page)  Detailed Results (10 pages)  Executive Summary (6 pages)  Narrow & Broad Taxpayer Results (1 page)

Economic Region

Components of the Study 2. Investment Analysis 1. Regional Economic Development

Beginning with the Regional Analysis

Regional Economic Development What we measure:  To this we add impacts associated with past students still active in the local workforce.  Together, these measure the impact of the college relative to total earnings in the college service area.  We begin with the usual multiplier impacts due to college operations spending.

Colleges are similar to other local industries in that they spend money and employ people. College operations spending include direct earnings of faculty and staff, as well as the indirect earnings due to associated multiplier effects. 1. College Operations Spending College Operations Spending

 Direct earnings: SCCC employed980 full-time and1,712 part-time faculty and staff in FY This amounts to a total payroll of $101.0 million.  Indirect earnings:Faculty and staff wages and salaries add $52.3 million worth of income as they are spent in the local region.

In addition to college operations spending, we add the impacts (higher earnings) associated with students who have obtained their education at our college and are still active in the local workforce. 2. Past-Student Productivity Effects 1. College Operations Spending Past-Student Productivity Effects

 Direct Earnings: Past students contribute an estimated $527.8 million worth of added income per year to the regional economy after leavingSCCC.  Indirect Earnings: The estimated multiplier effect of past student earnings in other industries increase output by yet another $537.5 million.

Total Earnings in College Service Area This comprises all of the earnings in the defined economic region. This provides the backdrop for expressing the relative role of college operations spending and past student productivity effects in the local region. 2. Past-Student Productivity Effects 1. College Operations Spending 3. Total Earnings in College Service Area

Total Earnings in College Service Area  The defined economic region generated $27.6 billion in total earnings in FY2003.  Of this, the college operations spending and past student productivity effects accounted for $1.2 billion, or 4.4% of all regional earnings.

To Summarize… This comprises the total earnings in the defined economic region. Earnings $1,000 % of Total College Service Area

To Summarize… This is the salaries and wages of the college, expressed as a fraction of the region’s total earnings. Direct Earnings: Faculty and Staff Earnings $1,000 % of Total College Service Area

To Summarize… The multiplier is the sum of direct and indirect earnings divided by direct earnings. Indirect earnings stem from the action of multiplier effects. They occur as college salaries and operating expenditures ripple through the regional economy. Indirect earnings Direct Earnings: Faculty and Staff Earnings $1,000 % of Total College Service Area

To Summarize… We now add the direct earnings of past students still active in the local workforce. These students add value because of the education they obtained while attending college. Direct Earnings: Past Students Indirect earnings Direct Earnings: Faculty and Staff Earnings $1,000 % of Total College Service Area

To Summarize… Next we add the earnings indirectly explained by the actions of past students in the local economy. Indirect Earnings Direct Earnings: Past Students Indirect earnings Direct Earnings: Faculty and Staff Earnings $1,000 % of Total College Service Area

To Summarize… The total shows the extent to which the activities of the college impact the regional economy. Grand Total Direct Earnings: Past Students Indirect earnings Direct Earnings: Faculty and Staff Earnings $1,000 % of Total College Service Area Indirect Earnings

Investment Analysis Continuing with the

Investment Analysis Component  The return to taxpayers for their support Broad taxpayer perspective Narrow taxpayer perspective  The student benefits due to higher earnings What we measure:  A broad collection of external social benefits Medical savings Crime savings Welfare and unemployment savings

This figure shows the present value of increased future earnings as a direct result of the students’ education. Student costs consist of the tuition paid by the students and, most importantly, the opportunity cost of time (earnings foregone). Student Benefits Higher earnings = Student costs =

Benefit/Cost Ratio: The ratio of benefits over costs. A 1.5 ratio, for example, means that every dollar invested will return a cumulative $1.50 to the investor over the time period analyzed. Criterion for feasibility: The B/C ratio must be greater than or equal to 1. Benefit/Cost Ratio: Student Benefits Higher earnings = Student costs =

Rate of Return: the average earning power of the money used over the life of the investment. A 15% rate of return, for example, means that the revenues collected over time will equal the costs, plus generate a 15% return. Criterion for feasibility: the rate of return must exceed the returns from alternative uses of the same money. Rate of Return: Benefit/Cost Ratio: Student Benefits Higher earnings = Student costs =

Payback Period: This is the length of time needed from the beginning of the investment before the cumulative future revenues return all of the investments made. Payback Period: Rate of Return: Benefit/Cost Ratio: Student Benefits Higher earnings = Student costs =

Student Benefits Some Key Findings  Achieving anAssociate Degree from SCCC will increase earnings to $42,819 per year, or35.1% more than the average high school graduate.  An Associate Degree graduate will earn$452,509 more than someone with a high school diploma or GED over his or her future career.  Lifetime earnings will increase $6.58 for every dollar invested(tuition, fees, books, and foregone earnings).

Social Benefits The medical, crime and welfare/unemployment savings are avoided costs, i.e., the reduced burdens on employers and taxpayers. These external social benefits are generated annually as the education level of the workforce increases. Aggregate. Medical Savings Crime Savings Total Welfare/Unemployment Savings

The broad perspective: State taxpayers invest, but beneficiaries are widely dispersed (students, business community, society). We count all of the benefits regardless of to whom they accrue. Return to Taxpayers Taxpayers Costs = State Appropriations + Property Taxes Taxpayer Benefits = Higher Earnings + Social Benefits Broad Taxpayer Perspective Benefit/Cost Ratio:

Here we only count the “book revenues”—the monies actually returning to the state treasury. For example, as students increase their earnings, the state collects more sales, income, and property taxes. Return to Taxpayers Taxpayers Costs = State Appropriations + Property Taxes Taxpayer Benefits = More Taxes Collected + Social Benefits Narrow Taxpayer Perspective

Return to Taxpayers Note that for a public investment, the typical expectation is that the benefit/cost ratio be > 1 and that the rate of return be > 4%. As you can see, the results far exceed these expectations. Narrow Taxpayer Perspective Payback Period: Rate of Return: Benefit/Cost Ratio:

What does all this mean?

To Summarize… IT PAY$ BACK: IT PAY$ TO LEARN: IT PAY$ TO INVEST: TheSCCC regional economy is measurably stronger Taxpayers in theState ofNew York are measurably better off TheSCCC students are measurably better off