California s Economic Payoff

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1 California s Economic Payoff Report Authored by: Dr. Jon S)les, Dr. Michael Hout, & Dr. Henry Brady Ins)tute for the Study of Societal Issues, University of California, Berkeley Commissioned by: The Campaign for College Opportunity Released In Partnership With: The California Chamber of Commerce The California Civil Rights Coali)on

2 The Co-Releasers of the Report The Campaign for College Opportunity is focused on a single mission: to ensure that the next genera)on of California students has the chance to aiend college and succeed in order to keep our workforce and economy strong. The California Chamber of Commerce is a not- for- profit organiza)on commiied to helping California businesses survive and thrive while complying with complex laws and regula)ons, serving as an advocate and resource to it s more than 13,000 members. The California Civil Rights Coali)on is a statewide community of civil rights organiza)ons, ac)vists, educators, lawyers, and advocates represen)ng a wide range of issues and working as one to create a just and healthy society.

3 California s Demographics

4 College is important for individuals

5 Key Finding: Californians with a college degree will make $1.3 million dollars more and will spend less time in poverty than those with only a high school diploma over their lifetimes.

6 Less Education Means Less Economic Security

7 More Education Means Greater Earnings

8 Earnings of College Graduates Relative to High School Graduates (of the Same Ethnicity) Over 3 Decades

9 College yields high returns for the state

10 Key Finding: For every $1 California invests in higher education, the state will receive a $4.50 net return on investment.

11 Key Finding: For college completers, the return is $4.80 that s double the $2.40 in returns we see for those who don t obtain a degree.

12 Completion = Greatest Return on Investment

13 Key Finding: California would have to invest three times more in higher education before the state would fail to see returns on the original investment.

14 Investment Pays Off with Any Reasonable Discount Rate

15 Key Finding: Right now, past graduates of the University of California & California State University return $12 billion annually to the state.

16 CA Higher Education Pays for Itself California s Annual Tax Revenue from CSU & UC Graduates $12 billion

17 Key Finding: By the time a CSU or UC graduate reaches 38 years old, California s initial investment is repaid in full.

18 Defunding Higher Education: What are the Effects on College Enrollment? Hans Johnson Public Policy Institute of California

19 Context: California Needs More College Graduates n Projections for % of adults will have a bachelor s degree 41% of jobs will require a bachelor s degree n Shortfall of 1 million college graduates with a bachelor s degree n Additional shortfall of college graduates with an associate s degree or certificate 19

20 Context: Demand for College Is Increasing Share of high school graduates applying to and eligible for UC or CSU

21 Main Findings n Large cuts in general fund expenditures to higher education n Institutions have responded in multiple ways Increased tuition Enrollment management n Enrollment rates have declined

22 State Funding for Higher Education has Declined Higher education funding as a share of all general fund expenditures

23 State Funding Per Student Has Declined Sharply at UC and CSU

24 Colleges Have Reduced Expenses and Raised Tuition n Cut staff, courses, services n Increased tuition and fees n Engaged in enrollment management

25 Dramatic Increases in Tuition Tuition and Fees UC CSU

26 Tuition Increases Have Been Greater in California than in Other States UC Tuition and fees Tuition and fees Change Average for UC campuses $ 7,533 $ 11,305 50% Comparison campuses $ 6,899 $ 8,526 24% CSU Tuition and fees Tuition and fees Change Average for CSU campuses $ 3,494 $ 5,139 47% Comparison campuses $ 5,656 $ 6,708 19%

27 UC and CSU Have Adopted Policies to Limit Enrollment n At UC, increasing shares of students are referred to a campus that they did not choose n At CSU, 16 of 23 campuses are impacted Impacted Not impacted San Diego State Cal State Channel Islands Long Beach State Cal State Dominguez Hills San Francisco State Humboldt State Sacramento State Cal State Stanislaus

28 Enrollment Rates of Recent High School Graduates to UC and CSU Have Declined

29 Declines Have Been Experienced by All Ethnic Groups Enrollment rates of recent high school graduates to UC or CSU Latino White Asian African American % 20.3% 44.8% 19.7% % 19.9% 42.0% 19.3% % 18.6% 38.6% 15.7% % 16.9% 37.7% 13.7%

30 Declines Have Occurred at UC

31 And at CSU

32

33 Slight Increase at CCC s Does Not Make Up for Decline at UC and CSU

34 Where Are They Going? n No change in private college enrollment rates in California n Some are deferring college altogether n Increase in out-of-state enrollment

35 Lower College Enrollment Rates Mean Fewer College Graduates n Loss of 20,000 first time freshmen at UC and CSU n At current completion rates, that equates to 12,000 baccalaureates

36 What Should Policymakers Do? n Reinvest in higher education n Ensure higher education expenditures are focused Fund outcomes as well as enrollment n Find alternative ways to allow families to pay for college Deferred loans Set tuition programs n Realize that increased efficiencies will not make up for large disinvestments

37

38 Hourly wage by college major California workers, 2010 Source: 2010 ACS restricted to workers with 40+ weeks worked.

39 Unemployment rates by educational attainment Source: March CPS, all civilians in the labor force 39

40 At UC and CSU, Student Tuition has Become a Large Source of Revenue Source of revenue, per student

41 Moderator: Dr. Xavier De La Torre Superintendent of Schools Santa Clara County

42 Response Panel: Manny Barbara Vice President of Advocacy & Thought Leadership Silicon Valley Education Foundation Ron Gonzales President & CEO Hispanic Foundation of Silicon Valley Dennis Cima Senior Vice President Silicon Valley Leadership Group Kim H. Tran Policy Director Campaign for College Opportunity

43 Q & A:

44 Investment in education is critical to the ultimate success of California

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