COST-EFFECTIVENESS AND BENEFIT-COST ANALYSES OF ACCELERATED STUDY IN ASSOCIATE PROGRAMS (ASAP) OF THE CITY UNIVERSITY OF NEW YORK

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1 COST-EFFECTIVENESS AND BENEFIT-COST ANALYSES OF ACCELERATED STUDY IN ASSOCIATE PROGRAMS (ASAP) OF THE CITY UNIVERSITY OF NEW YORK Henry M. Levin Teachers College, Columbia University Center for Benefit-Cost Studies of Education (CBCSE) Emma García Economic Policy Institute CUNY-Policy Seminar New York City, October 31, 2013

2 WASTED RESOURCES 65 percent of year olds enroll in postsecondary education in U.S. Low completion rates. Among enrollees in 4 year college and university programs, only about half complete the degree in 6 years and only about 31% in public colleges. Among enrollees in 2 year community colleges, only about 20 percent complete the degree in 3 years. CBCSE Teachers College, Columbia University

3 MINORITY AND POOR Most minority and poor students in postsecondary education are in urban community colleges. Urban community colleges have percent completion rates. Poor efficiency in resource use. CBCSE Teachers College, Columbia University

4 WHY LOW COMPLETION RATES IN COMMUNITY COLLEGES Inadequate preparation. Need to work or support family. Costs of tuition fees, books, and transportation. Poor study skills. CBCSE Teachers College, Columbia University

5 ACCELERATED STUDY IN ASSOCIATE PROGRAMS (ASAP) City University of New York (CUNY) designed new program to increase and accelerate completion of associate degree within 3 years. Consolidated course schedule (morning or afternoon). Mandatory advisement and career development. Weekly ASAP Seminar to address academic and personal challenges. Free use of textbooks and free transportation. Remaining tuition balance paid by ASAP. CBCSE Teachers College, Columbia University

6 THREE YEAR STUDY CUNY data was used to construct a comparison group with the same admissions criteria as ASAP. Six community colleges in study. Student progress was studied over three years for both groups. At end of three years, 24.1 % of students in regular program had completed associate degree compared to 54.9 % for ASAP students. [by site]

7 IS INVESTMENT IN ASAP COST-EFFECTIVE? ASAP requires additional resources. ASAP has superior graduation rates. Is the additional investment justified? What is the additional cost? What is the additional cost per graduate? WHAT IS COST-EFFECTIVENESS OF ASAP? CBCSE Teachers College, Columbia University

8 HOW DOES THE INVESTMENT LOOK LIKE FROM A BENEFIT-COST PERSPECTIVE? Are there net benefits to taxpayer? Are there net benefits to student? CBCSE Teachers College, Columbia University

9 ADDITIONAL COSTS OF ASAP The cost analysis-method Costs calculated from allocations to both programs. Budgetary information for ingredients (partially following the Ingredients Method, Levin & McEwan, 2001) Regular program had three year cost of $29,500 per full-time equivalent student (fte). ASAP had additional three year cost of $19,800 for total cost of $49,400 per fte. ASAP cost 2/3 more per fte student. CBCSE Teachers College, Columbia University

10 Three-year Cost per FTE Fall 2006 ASAP Fall 2007 ASAP Group Comparison ASAP ASAP Total Group Supplement BMCC $27,272 $19,443 $46,715 Bronx $35,678 $21,259 $56,937 Hostos $46,170 $23,573 $69,743 Kingsborough $27,441 $20,341 $47,782 LaGuardia $29,715 $19,108 $48,823 Queensborough $31,185 $18,306 $49,491 Average per FTE $29,521 $19,837 $49,358 CBCSE Teachers College, Columbia University

11 COST-EFFECTIVENESS RESULTS ASAP Cost is 67 percent higher for 3 years. But 54.9 percent of ASAP students complete associate degree in three years compared to 24.1 percent of students in regular program. Cost per graduate is $63,700 for regular program and $57,300 for ASAP program, a savings of $6,400 per graduate (approx) or more than $6 million for 1,000 graduates. CBCSE Teachers College, Columbia University

12 Cost per Graduate: Over Three Years [by site] Average cost per graduate Cost per Graduate in Each Cohort Comparison ASAP Cost Saving per ASAP Graduate $63,656 $57,297 $6,359 CBCSE Teachers College, Columbia University

13 COST-EFFECTIVENESS- OTHER RESULTS ASAP retained more of the students (students with educational disadvantages are more likely to drop out) Beneficial, even if don t get the degree (Kane & Rouse 1995). Students quickly dropped out of the regular program After 3 semesters, 80 percent of FTEs who started under ASAP were enrolled. Only 57 percent of FTEs in the regular program were retained Cooling out function (Clark 1960; Karabel 1972)

14 FTE per Semester as a Percentage of FTEs in the 1 st Semester Compari son Group ASAP Group 1st semester 2nd semester 3rd semester 4th semester 5th semester 6th semester CBCSE Teachers College, Columbia University

15 ASAP IS MORE COST-EFFECTIVE But, is ASAP a good taxpayer investment? Benefit-Cost Study. More education: Increases income and tax revenues. Reduces crime and public cost of criminal justice. Reduces public assistance costs. Reduces public health costs. CBCSE Teachers College, Columbia University

16 BENEFIT-COST ANALYSIS Method: Present Value of lifetime benefits, at age 23 Discount rate: 3.5 percent When available, using data representative of New Yorkers CBCSE Teachers College, Columbia University

17 DATA REQUIREMENTS Requires detailed data from many state and local sources For example: Additional income. Additional federal, state, and city income taxes. Additional sales and property taxes. Reductions in public health, criminal justice, and public assistance expenditures. CBCSE Teachers College, Columbia University

18 Expressed as Present Value Typical student begins community college at age 20. Graduates in three years at age 23. All costs and benefits adjusted to present value at age 23 with 3.5 percent discount rate. Allows comparison of costs and benefits to obtain net benefits. CBCSE Teachers College, Columbia University

19 TOTAL FISCAL BENEFITS TO TAXPAYER FOR EACH ADDITIONAL GRADUATE (age 23) Per Additional Associate Degree Total Public (Taxpayer) Benefits $205,514 Tax Revenues From Income (*) $145,567 Property and Sales Taxes $19,833 Savings-Health Expenditures-Public (*) $5,026 Savings-Welfare and Public Assistance (*) $5,956 Savings-Criminal Justice (*) $29,132 In constant 2010 dollars.

20 Distribution of fiscal benefits Tax Revenues from income (a) Property and Sales taxes Savings-Health expenditures-public Savings-Welfare and public assistance Savings-Criminal Justice 3% 14% 2% 10% 71%

21 BENEFITS AND COSTS TO TAXPAYER PER GRADUATE Comparison Group (regular program) Benefits per additional graduate $205,514 Institutional costs per graduate $65,884 Net benefits per graduate $139,630 Benefit-Cost Ratio 3.1 ASAP Cohort Benefits per additional graduate $205,514 Institutional costs per graduate $59,302 Net benefits per graduate $146,212 Benefit-Cost Ratio 3.5 In constant 2010 dollars.

22 TAXPAYER BENEFITS FOR 1,000 ENROLLMENTS Total Net Benefits per 1,000 Enrollees ~ $ 46 MILLION

23 TOTAL BENEFITS TO STUDENT (age 23) Age-Earnings Profiles by Educational Attainment AA HS $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Difference NPV (AA-HS) Additional Earnings (*) 324,142 In constant 2010 dollars.

24 BENEFITS AND COSTS TO STUDENT PER DEGREE Comparison Group (regular program) After-tax Income Benefits $158,742 Direct student costs and foregone income (*) $20,996 Net benefits $137,746 Benefit-Cost Ratio 7.6 ASAP Cohort After-tax Income Benefits $158,742 Direct student costs and foregone income (*) $13,062 Net benefits $145,680 Benefit-Cost Ratio 12.2 In constant 2010 dollars.

25 BENEFIT-COST From a B-C perspective: ASAP is a highly productive investment From a policy perspective: ASAP s effectiveness is highly superior to the conventional program Other considerations: Externalities (general equilibrium effects) Mobility (do graduates stay in area?) Educational success in non-fiscal terms (e.g. transfers). Experimental evaluation (Scrivener, Weiss & Sommo, 2012) and scale up. CBCSE Teachers College, Columbia University

26 Thank You Henry Levin Emma García CBCSE Teachers College, Columbia University

27 ANNEX

28 Table 1: Associate Degree Completion in Three Years [back] Fall 2006 ASAP Comparison Group Initial enrollment Number of graduates % Completed Fall 2007 ASAP Group Initial enrollment Number of graduates % Completed BMCC Bronx Hostos Kingsboro ugh LaGuardia Queensbor ough Total 1, , Average completion rate per student CBCSE Teachers College, Columbia University

29 Table 5 Cost per Cohort (all FTEs) and per Graduate: Over Three Years [back] Cost for Each Cohort Comparison ASAP Number of Graduates Compariso n ASAP Cost per Graduate in Each Cohort Compariso n ASAP Cost Saving per ASAP Graduate BMCC $6,008,986 $6,195, $52,710 $47,295 $5,416 Bronx $903,849 $3,745, $90,385 $64,586 $25,799 Hostos $938,790 $2,879, $58,674 $70,239 ($11,565) Kingsborou gh $5,483,627 $7,722, $45,697 $51,485 ($5,788) LaGuardia $4,224,483 $6,186, $64,007 $58,361 $5,646 Queensbor ough $7,468,808 $6,994, $70,460 $51,813 $18,648 Average cost per graduate $63,656 $57,297 $6,359 Average cost per graduate-proportioned to enrollment $6,576

30 Lifetime Earnings, City, Property and Sales Taxes by Educational Attainment. Breakdown by Gender and Ethnicity (Present Value at Age 23 at 3.5 Percent Discount Rate) HS [back] Federal Income Tax Liability after all Credits State FICA Income (OADSI & Tax HI, Liability Employee after all & Credits Employer) By Type of Tax Total City Income Property Tax Tax (Net) NYC Sales Tax NY State Sales Tax Total High School Completer s Total 45,749 23,614 97,970 26,788 7,522 15,977 15, ,303 Male 70,413 33, ,880 33,052 9,281 19,712 19, ,313 Female 23,339 13,995 74,343 20,327 5,708 12,124 11, ,736 White 71,071 33, ,246 33,152 9,310 19,772 19, ,819 Black 42,506 22,149 94,361 25,801 7,245 15,388 15, ,554 Hispanc 34,734 18,670 86,715 23,710 6,658 14,141 13, ,509 Other 30,353 16,934 81,543 22,296 6,261 13,298 13, ,738

31 Lifetime Earnings, City, Property and Sales Taxes by Educational Attainment. Breakdown by Gender and Ethnicity (Present Value at Age 23 at 3.5 Percent Discount Rate) AA [back] Federal Income Tax Liability after all Credits State Income Tax Liability after all Credits FICA (OADSI & HI, Employee & Employer ) By Type of Tax Total City Income Tax (Net) Propert y Tax NYC NY State Sales Sales Tax Tax Total High Associate Degree Total 106,319 45, ,564 40,348 11,330 24,064 23, ,703 Male 143,330 56, ,734 47,230 13,263 28,169 27, ,150 Female 83,449 37, ,764 35,481 9,964 21,161 20, ,061 White 141,502 56, ,693 47,219 13,260 28,162 27, ,093 Black 99,773 42, ,815 38,776 10,889 23,126 22, ,955 Hispanic 86,956 39, ,057 36,381 10,216 21,698 21, ,659 Other 89,391 38, ,562 35,883 10,077 21,401 21, ,891

32 Lifetime Earnings, City, Property and Sales Taxes: Comparison by Educational Attainment. Breakdown by Gender and Ethnicity (Present Value at Age 23 at 3.5 Percent Discount Rate) [back] High School Associate Associate versus High School Total 233, , ,400 Male 306, , ,837 Female 161, , ,325 White 307, , ,274 Black 222, , ,401 Hispanic 198, , ,150 Other 183, , ,152

33 Lifetime Public Health Expenditures, by Educational Attainment (Present Value at Age 23 at 3.5 Percent Discount Rate) [back] 12 Years of Education (HS) 2 years of College (Associate) Total Public Expenditures 20,111 15,085 By source of payment: Medicare 6,878 6,431 Medicaid 10,222 5,257 VA 1,270 1,309 TRICARE Other Federal Sources Other State and Local Sources Other Public

34 Lifetime Welfare Income, by Educational Attainment (Present Value at Age 23 at 3.5 Percent Discount Rate) [back] High School Associate Welfare Income $2,221 $1,441 Supplemental Security Income $4,698 $3,013 Housing Subsidy $236 $134 Food Stamps $6,030 $2,779 Unemployment Compensation $3,884 $3,746 Total $17,069 $11,113

35 Lifetime Crime Costs, by Educational Attainment (Present Value at Age 23 at 3.5 Percent Discount Rate) [back] HS Associate Total $41,857 $12,725 Correction $11,391 $3,463 Judicial and Legal $14,908 $4,532 Police Protection $15,558 $4,730

36 Lifetime Earnings by Educational Attainment. Breakdown by Gender, and Ethnicity (Present Value at Age 23 at 3.5 Percent Discount Rate), [back] HS Associate Associate minus HS Total 640, , ,142 Male 790,064 1,128, ,919 Female 485, , ,229 White 792,455 1,128, ,260 Black 616, , ,153 Hispanic 566, , ,887 Other 532, , ,784

37 Total Costs Per Graduate, Comparison Group and ASAP Group: Breakdown per Constituent (Student), for Three Years [back] Total Compariso Total ASAP n Fall 2006 Compariso n Group Fall 2007 ASAP Group Total Cost for the Student $20,996 $13,062 Institutional Cost per Graduate-Student $1,569 $0 Average Tuition $9,403 $11,112 Average Financial Aid ($7,834) ($8,384) Other Financial Assistance (only ASAP) $0 ($2,728) Net Forgone Earnings $13,062 $13,062 Earnings HS graduates Working Full Time $28,515 $28,515 Earnings HS graduates Enrolled in Public Institutions ($15,453) ($15,453) Textbooks and Transportation $6,365 $0

38 Sources Personal income NYC NY State National Source Others ACS Income tax ACS NBER Taxsim NYC sales tax bases ACS 05-10; Aggregate general sales tax revenues in NYC are (between 2005 and 2010) are available on Sales tax available on: Fiscal df/stats/stat_excise/taxab history; Revenue and Spending since 1980; Tax revenues. le_sales_and_purchases_ march2009_february2010.pdf. Levin, H., C. Belfield, P. Muennig and C. Rouse (2007), Property tax ACS 05-10; City of New York- Department of Finance, Office of Tax Policy (personal income tax) ACS 05-10; Aggregate Personal Income-nettax revenues in NYC are available Other city taxes on: Fiscal history; Revenue and Spending since 1980; Tax revenues Public Health ACS MEPS-2008 Public Assistance Crime ACS ACS (living in gq=institutionalized) NLSY-97 (%ever arrested; consumption of drugs, marijuana; %in prison) Levin, H., C. Belfield, P. Muennig and C. Rouse (2007),

39 Proportion of CUNY s Associate Graduates Currently Residing in New York State and New York City by Graduation Year, (in Percentages) NY State NY City Total

40 TAXPAYER BENEFITS FOR 1,000 ENROLLMENTS Comparison Cohort (regular program) Graduates Net Benefits per Graduate $139,630 Total Benefits to Taxpayer $33,678,756 ASAP Cohort Graduates Net Benefits per Graduate $146,212 Total Benefits $80,211,903 Total Net Benefits per 1,000 Enrollees ~ $ 46,000,000 In constant 2010 dollars.

41 Reports are available at: CEA: content/uploads/2013/06/levin-asap-cost- Effectiveness-Report_092412_FINAL-5.pdf BCA: port_final_ pdf Center for Benefit-Cost Studies in Education, Teachers College, Columbia University. CBCSE Teachers College, Columbia University