Community Colleges Working for Texas

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1 Texas Association of Community Colleges 1101 Trinity, Suite 200 Austin, Texas / / (fax) Contact: Rey Garcia, TACC 512/ ; Editors/news directors: This study was released in Austin today, June 18, (Austin) Community colleges are working for Texas, producing significant returns for the state s economy, students, and taxpayers, according to a study released today by the Texas Association of Community Colleges. The study reached three major conclusions: community colleges stimulate the state s economy, community colleges generate a return on the government s investment, and community college increase the earnings potential of their students. Those conclusions were reached from a new statewide economic impact study, titled The Socioeconomic Benefits Generated by 50 Community College Districts in Texas and conducted by CCBenefits, Inc. for the Texas Association of Community Colleges (TACC). The study was funded by Houston Endowment Inc. and the 50 community college districts. Economists Kjell Christophersen and Henry Robison collected information for Fall 2000 from all 50 public community college districts in Texas. Community colleges are stimulating the state s economy by $13.5 billion. This is explained by two activities, according to Rey García, TACC s executive director. The colleges payrolls and the multiplier effect of those payrolls account for $1.9 billion in the state s economy. Additionally, the value of past college students working in the state, using their enhanced skills to get higher paying jobs, adds an additional impact of $11.6 billion. According to Christophersen and Robison, The earnings explained by the colleges are equal to that of roughly 351,530 jobs. Both state and local government invest a significant sum of money in community colleges, and they receive a significant return on their investment, explained TACC president Bill Crowe. Community colleges return the investment in the form of higher wages for their students and through avoided costs improved health, reduction in crime, and reduced welfare and unemployment. Measured broadly, taking into account all of the earnings of community college students and the avoided costs, state and local governments are getting a return of $18 for every dollar invested over the next 30 years, said Crowe. Even if measured from a narrow perspective, taking into account only the increased tax revenue attributable to community college students and the avoided costs, state and local (more)

2 governments receive a return of $3 for every dollar invested, concluded Crowe. According to Christophersen and Robison, the rate of return is 15.9 percent and the payback period is 8.2 years. Christophersen and Robison also noted that because of the work of the community colleges the State of Texas will benefit from $276.3 million worth of avoided costs per year, broken down as follows: $31.0 million in annual dollar savings from a reduction in health related absenteeism. $52.3 million in annual dollar savings from fewer smokers. $33.8 million in annual dollar savings from fewer alcohol abusers. $72.1 million in annual dollar savings from reduced crime. $15.2 million in annual dollar savings from reduced victim costs. $21.4 million in dollar earnings from people employed rather than incarcerated. $14.1 million in annual dollar savings from fewer people on welfare. $36.4 million in annual dollar savings from fewer people drawing unemployment benefits. Community college students in Texas invest money in their education. They receive excellent returns on their money, and they recover and surpass their costs in a relatively short period of time, explained García. From an investment standpoint, the community college students will, on average, enjoy a 26.1 percent rate of return on their investments of time and money, which compares favorably with the returns on other investments like stocks and bonds. For every dollar the student invests in community college education, the student will receive $9.05 in higher future earnings over the next 30 years or so, explained Christophersen and Robison. The payback period, the time needed to recover all costs, is 5.8 years. CCBenefits has conducted field tests for the study at more than 160 community colleges throughout the United States; the organization uses economic theories, functional relationships, and national and local education-related data for its analyses and conclusions. We take data collected from individual community colleges and translate the information into common-sense cost-benefit and investment terms, said Christophersen. Our model provides relief from the all-too-common advocacy analyses that inflate benefits, underestimate costs and, as a result, discredit the process of assessing the impact of higher education and community colleges. TACC s García summarized the study: The results demonstrate that investing in Texas community colleges is sound, based on a number of perspectives. They enrich the lives of students and reduce the demand for taxpayer-supported services. And finally, community colleges contribute to the vitality of both local and state economies and to the education of its citizens. For a copy of the study consult the TACC web page ( # # #

3 Fact Sheet: Economic Impact of Texas 50 Community College Districts What role do the 50 community college districts in Texas play in the statewide economy? Business sales in the state are $34,182.0 million larger, and labor income is $13,470.7 million larger due to the past and present operations of these 50 community colleges. The benefits of a robust economy translate into job and investment opportunities, increased business revenues, greater availability of public funds, and an eased tax burden. Texas 50 CC districts stimulate the economy The combined operating budgets of the CC districts amounted to $2,138.7 million in fiscal 2000, of which $1,635.0 million (76%) was spent in Texas on wages, salaries and supplies. The colleges employ 24,514 full-time and 27,032 part-time faculty and staff. They paid faculty and staff wages of $1,241.1 million in fiscal For every $1 paid by the colleges in wages and salaries, there is another $0.52 in wages and salaries generated off the campuses in the state economy this is the commonly known multiplier effect. The activities of the 50 CC districts encourage new business, assist existing business, and create long-term economic growth. The colleges enhance worker skills and provide customized training to businesses and industries. It is estimated that the present-day Texas workforce embodies over million credit and non-credit hours of past and present CC training. CC skills embodied in the present-day workforce increase the output of industries in the State of Texas economy where the former students are employed by $14, million. Associated multiplier effects (sometimes called indirect effects) in other industries increase sales by $17, million. CC-acquired skills from current and former students increase wages and salaries in State of Texas by $5,292.6 million directly, and by another $6,287.9 million indirectly in fiscal Leveraging taxpayer dollars State taxpayers allocated $1,327.3 million in support of Texas 50 CC districts in fiscal For every dollar appropriated by state and county government, college spending alone generated $1.42 in wages and salaries in the state. For every dollar appropriated by the taxpayers in fiscal 2000, student earnings will increase by an average of $0.90 per year, every year through the rest of their working lives. Likewise, for every state dollar appropriated, Texas will see social savings of $0.21 per year, every year (i.e., reduced incarceration and health care expenditures, reduced expenditures on unemployment and welfare, and reduced absenteeism). CCs generate returns on government investments Taxpayer support for the CCs in fiscal 2000 will be fully recovered in 8.2 years, in the form of higher tax receipts (from increased student wages) and avoided costs (e.g., from reduced public expenditures on incarceration). Accounting for increased tax receipts and avoided costs; the state taxpayers will see a rate of return of 15.9% on their fiscal 2000 support for the CCs. CCs increase individuals earning potential 1,060,174 credit and non-credit students attended the 50 colleges in fiscal 2000, 72% were employed full- or part-time while attending. 95% of the students stay in-state and contribute to the state s economy after they leave the college. Studies demonstrate that education increases lifetime earnings. The average annual earnings of students with a 1-year certificate is $24,628, or 80.8% more than someone without a high school degree or GED, and 16.0% more than a student with just a high school diploma. The average earnings of someone with an Associate Degree is $28,960, or 112.6% more than someone without a high school degree or GED, and 36.4% more than a student with just a high school diploma or GED. After leaving the college, the average student in the Texas CC system will spend 37.2 years in the workforce. The student who leaves with a twoyear college degree will earn $287,315 more than someone with just a high school degree or GED. Over their next 37.2 years in the workforce, the average student s lifetime earnings will increase $20 for every education dollar invested (in the form of tuition, fees, books, and forgone earnings from employment). Students in the Texas CC system enjoy an attractive 26.1% rate of return on their educational investment, and recover all costs (including wages foregone while attending) in 5.8 years.

4 Texas Association of Community Colleges 1101 Trinity, Suite 200 Austin, Texas / / (fax) Facts About Texas Community Colleges There are 50 community college districts in Texas. 95% of the state's population is in a community college service area. All Texas community colleges are open admission institutions. A locally elected board of trustees governs each community college district. Community colleges are the largest sector of higher education in Texas. Fall 2001 enrollment in semester length classes was 461,236 students. Enrollment figures more than double when non-semester courses are considered and student enrollment is reported for the entire academic year. During the academic year, 1.06 million students (unduplicated headcount) were enrolled in community and technical colleges. The average age for a community college student is 26. Female students comprise 57% of the enrollment at community colleges. 70% of the freshmen and sophomores in Texas public higher education enroll in community colleges; 75% of the minority freshmen and sophomores attend a Texas public community college. Community college students reflect the ethnic diversity of Texas: Community college enrollment: 55% White, 28% Hispanic, 11% African American, 6% Other Texas population: 59% White, 27% Hispanic, 12% African American, 2% Other (over)

5 Texas Community College Districts Alamo Community College, San Antonio Alvin Community College, Alvin Amarillo College,Amarillo Angelina Community College, Lufkin Austin Community College, Austin Blinn College, Brenham Brazosport College, Lake Jackson Central Texas College, Killeen Cisco Junior College, Cisco Clarendon College, Clarendon Coastal Bend College, Beeville College of the Mainland, Texas City Collin County Community College, Plano Dallas County Community College, Dallas Del Mar College, Corpus Christi El Paso Community College, El Paso Frank Phillips College, Borger Galveston College, Galveston Grayson County College, Denison Hill College, Hillsboro Houston Community College, Houston Howard College, Big Spring Kilgore College, Kilgore Laredo Community College, Laredo Lee College, Baytown McLennan Community College, Waco Midland College, Midland Navarro College, Corsicana North Central Texas College, Gainesville North Harris Montgomery Community College, Houston Northeast Texas Community College, Mt Pleasant Odessa College, Odessa Panola College, Carthage Paris Junior College, Paris Ranger College, Ranger San Jacinto College, Pasadena South Plains College, Levelland South Texas Community College, McAllen Southwest Texas Junior College, Uvalde Tarrant County College, Fort Worth Temple College, Temple Texarkana College, Texarkana Texas Southmost College, Brownsville Trinity Valley Community College, Athens Tyler Junior College, Tyler Vernon College, Vernon Victoria College, Victoria Weatherford College, Weatherford Western Texas College, Snyder Wharton County Junior College, Wharton

6 The Socioeconomic Benefits Generated by 50 Community College Districts in Texas Kjell A. Christophersen & M. Henry Robison CCBenefits, Inc. Community Colleges Stimulate the Texas Economy Total Economic Impact: $13.5 billion The 50 community college districts account for $1.9 billion in the Texas economy. The 50 community college districts account for an additional $11.6 billion in wages and salaries generated by former students. 1

7 Texas Public Community Colleges Generate a Return on the Government s Investment Broad Analysis: $18 for every dollar invested by state and local government over the next 30 years. Narrow Analysis: $3 per dollar invested. Taxpayers see a book rate of return of 15.9% on their annual investment and recover all investments in 8.2 years. The State of Texas benefits from improved health and reduced welfare, unemployment, and crime, saving the public $276.3 million per year. Texas Public Community Colleges Increase the Earnings Potential of Their Students For every dollar a student invests in community college education, the student will receive $9.05 in higher future earnings over the next 30 years. Average Rate of Return on Investment in a Community College Education: 26.1%. Payback period: 5.8 years (time needed to recover costs) 2

8 The Socioeconomic Benefits Generated by 50 Community College Districts in Texas Kjell A. Christophersen & M. Henry Robison CCBenefits, Inc. Community Colleges Stimulate the Texas Economy Total Economic Impact: $13.5 billion The 50 community college districts account for $1.9 billion in the Texas economy. The 50 community college districts account for an additional $11.6 billion in wages and salaries generated by former students. 1

9 Texas Public Community Colleges Generate a Return on the Government s Investment Broad Analysis: $18 for every dollar invested by state and local government over the next 30 years. Narrow Analysis: $3 per dollar invested. Taxpayers see a book rate of return of 15.9% on their annual investment and recover all investments in 8.2 years. The State of Texas benefits from improved health and reduced welfare, unemployment, and crime, saving the public $276.3 million per year. Texas Public Community Colleges Increase the Earnings Potential of Their Students For every dollar a student invests in community college education, the student will receive $9.05 in higher future earnings over the next 30 years. Average Rate of Return on Investment in a Community College Education: 26.1%. Payback period: 5.8 years (time needed to recover costs) 2

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