a partnership of Massachusetts public higher education institutions The Impact of the Five EdLink Institutions on the

Transcription

1 a partnership of Massachusetts public higher education institutions C R E A T I N G The Impact of the Five EdLink Institutions on the O P P O R T U N I T Y, Economy of Essex County, Middlesex County P A R T N E R I N G F O R and the Commonwealth of Massachusetts P R O S P E R I T Y : M A Y

2 :: TABLE OF CONTENTS :: Executive Summary Introduction Part One: The EdLink Institutions as an Enterprise Sources of revenue The EdLink institutions as employers Purchasing and construction Payments of local taxes and fees Student and visitor spending Adding it all up: The combined impact of institutional, student and visitor spending Part Two: Human Capital and Educational Opportunity EdLink enrollment and student characteristics Preparing students for the future EdLink alumni: an asset to the region s economy Expanding access to higher education Expanding opportunity: adult education and workforce development Expanding opportunity: partnerships with local schools Part Three: Research that Drives Economic Growth Research at the University of Massachusetts Lowell Research at other EdLink institutions Part Four: Supporting the Development of New and Small Businesses Technology transfer and business development Incubating new businesses in Lowell and Salem Faculty and alumni as entrepreneurs Supporting small business development Educating tomorrow s entrepreneurs Part Five: Partners in Revitalization Revitalizing downtown Lowell Investing in Lawrence Revitalizing the North Shore s communities Part Six: EdLink and the Future of Northeast Massachusetts The EdLink Institutions:

3 :: EXECUTIVE SUMMARY :: In 2006, the leaders of five public higher education institutions Middlesex Community College, Northern Essex Community College, North Shore Community College, Salem State College and the University of Massachusetts Lowell established the EdLink partnership. EdLink s members have undertaken a variety of joint initiatives in areas such as work force development, bachelor s degree completion, partnerships with local government and coping with climate change. The five institutions that make up the EdLink consortium contribute to the economy of Northeast Massachusetts in several ways as major enterprises in their own right; by expanding educational opportunity and developing human capital among the region s residents; through basic and applied research; by supporting the development of new and small businesses; and by participating in the revitalization of the region s older cities. Moreover, as both the region and the Commonwealth confront a prolonged and worsening economic downturn, the five EdLink institutions represent a vitally important resource both for mitigating the recession s immediate impact and for helping the region and its residents prepare for the next round of economic growth. This report analyzes the EdLink institutions collective economic impact in Essex and Middlesex counties and in the Commonwealth of Massachusetts. :: THE EDLINK INSTITUTIONS :: AS AN ENTERPRISE The EdLink institutions are significant enterprises in their own right employers of local residents, purchasers of goods and services from local businesses and sponsor of construction projects. As Table 1 shows, taking into account the institutions direct spending and its indirect (or multiplier ) effects, and the direct and indirect effects of spending by students and visitors, we estimate that the EdLink institutions generated: $1.2 billion in economic activity throughout Massachusetts, including $887 million in Essex and Middlesex counties. Table 1: Economic impact of all Edlink Institutions on Essex and Middlesex Counties, and Massachusetts, FY 2007 ($millions) Essex & Middlesex Counties Massachusetts Indirect/ Indirect/ Direct Induced Total Direct Induced Total Payroll $261.5 $191.7 $453.2 $261.5 $338.6 $600.1 Benefits Purchasing & Construction Student & Visitor Spending TOTAL IMPACT $534.5 $352.4 $886.9 $567.4 $645.6 $1,213.0 In fiscal year 2007, the EdLink institutions generated about $507 million in revenues 54 percent of which came from sources other than state or local government. Spending by the five institutions, their students and visitors in fiscal year 2007 generated about $5.24 in economic output in Massachusetts for every dollar of state and local appropriations and grants received. In fiscal year 2007, the EdLink institutions spent $61.6 million with vendors and contractors located in Essex and Middlesex counties and another $41.8 million paid to companies located elsewhere in Massachusetts. Off-campus spending by students at the five institutions also contributes to the local economy. We estimate that in fiscal year 2007 about $166 million in student spending on living and incidental expenses was attributable to their attendance at these institutions. In addition, in fiscal year 2007, visitors to the colleges and the University spent approximately $4.0 million with local vendors in Middlesex and Essex counties. 1

4 :: THE EDLINK INSTITUTIONS :: AS EMPLOYERS In addition to the people the EdLink institutions employ directly, they also generate jobs through the purchase of goods and services from regional and state businesses, student spending and through investments in construction. As Table 2 shows, taking into account the direct and indirect effects of institutional spending, we estimate the EdLink institutions generated: 11,538 FTE jobs throughout Massachusetts, including 8,131 FTE jobs in Essex and Middlesex Counties. Table 2: The EdLink institutions total employment impact in Essex and Middlesex Counties, and in Massachusetts (FTE) Essex & Middlesex Counties Massachusetts Direct college & university employment 4,117 4,117 Employment with EdLink institutions suppliers and contractors 637 1,067 Jobs generated through multiplier effect 1,544 3,688 Jobs supported by off-campus student and visitor spending 1,833 2,666 TOTAL 8,131 11,538 In the fall of 2006, the five institutions had 6,159 full and part-time employees (4,117 FTE). Their combined payroll totaled more than $261 million. About 79 percent of the institutions employees lived within Essex or Middlesex county. Another 8 percent lived elsewhere in Massachusetts. In addition to regular employees, the EdLink institutions employed 2,400 students in a variety of part-time on-campus jobs. Taking the multiplier effect into account, EdLink institutions spending on payroll, benefits, purchasing and construction directly and indirectly generated an additional 4,000 jobs in Essex and Middlesex counties and 7400 jobs throughout Massachusetts. :: HUMAN CAPITAL AND :: EDUCATIONAL OPPORTUNITY Human capital is widely recognized as one of most important determinants of economic growth and development.the five EdLink institutions contribute to the region s human capital by educating residents of the North Shore, Merrimack Valley and Middlesex county communities, as well as other students who come to the region to take advantage of their programs. In the fall of 2006, the five institutions enrolled 43,218 students in degree and for-credit certificate programs. The majority of EdLink students come from Northeast Massachusetts. More than 88 percent of students enrolled in associate degree and for-credit certificate programs at the three community colleges were residents of either Middlesex or Essex county. At Salem State and the University of Massachusetts Lowell, about 75 percent of all undergraduates and 64 percent of all graduate students came from Middlesex or Essex county. Just as most EdLink students come from Northeast Massachusetts, the majority of its graduates make their homes in the area. Of the institutions 192,280 alumni, 112,981 about 59 percent live in Essex or Middlesex county and 21 percent live elsewhere in Massachusetts. One of the most significant contributions the EdLink institutions make to the region is increasing the earnings power of its graduates. If we assume that without the EdLink institutions, half of their alumni who live in the two counties would not have had an opportunity to earn a degree, and if we take as a guide the $27,123 difference between the earnings of high school and four-year college graduates and the $12,596 difference between the earnings of high school graduates and those with associate degrees then we can estimate that in 2006 the degrees held by EdLink institutions alumni living in Essex and Middlesex counties increased aggregate income in the counties by approximately $1.1 billion. Through the EdLink community colleges, residents of (and employers in) Northeast Massachusetts have access to an array of college-based workforce development programs that is unmatched in any of the Commonwealth s six other regions.among the state s fifteen community colleges, Middlesex, Northern Essex and North Shore together accounted for 43 percent of total statewide enrollment in non-credit workforce development courses about 39,600 students. All five EdLink institutions have developed extensive partnerships with elementary and secondary schools in the region aimed at strengthening local schools, expanding educational opportunities for young residents of northeastern Massachusetts and helping high school students make the transition to college. 2

5 :: RESEARCH THAT DRIVES :: ECONOMIC GROWTH Research at the EdLink institutions contributes to the economic vitality of the region and the state by attracting outside funding into the region, through collaborative research programs, that directly enhance the competitiveness of local businesses, and by providing a venue for research and innovation which can lead, directly or indirectly, to the creation of new businesses. In fiscal year 2007, research spending at UMass Lowell totaled $27.5 million an increase of 13 percent since Federal research funds accounted for about 75 percent of this total; state and local support accounted for 7 percent; and corporate, foundation and other sources for 18 percent. UMass Lowell s research enterprise has notable strengths in a number of areas of basic and applied research that are relevant to the continuing development of the region s economy. UMass Lowell has developed partnerships with Massachusetts companies, both large and small, in industries as diverse as microelectronics, advanced materials, atmospheric sciences, and biomanufacturing. These partnerships help Massachusetts companies enhance their overall competitiveness. Salem State s Northeastern Massachusetts Aquaculture Center, located at Cat Cove, includes facilities for both research and teaching on aquaculture. NEMAC s research focuses on the biology of regionally significant shellfish and finfish, techniques for increasing yields and the environmental impact of aquaculture. The Center s facilities are also used in the College s aquaculture degree program, and for a variety of community education programs. The Lab s researchers have also worked with more than 20 Massachusetts communities on bivalve restoration and enhancement projects. The Public Policy Institute at North Shore Community College, founded in 2005, conducts research, community outreach and education on issues of importance to the communities of the North Shore. Recent topics addressed by the Institute have included prevention of youth violence, workforce development, and the North Shore s aging population. At Northern Essex Community College, the Institute for Community and Workforce Development conducts applied research aimed at improving community and workforce development policies and programs in the Merrimack Valley. Research topics during the past few years have included analyses of the growing Latino business community in Lawrence, home buying and homeownership in immigrant communities in Lawrence and Lowell, and reasons for relatively low rates of retention among Latino community college students. :: SUPPORTING THE :: DEVELOPMENT OF NEW AND SMALL BUSINESSES The EdLink institutions have focused resources on new and small business development in the region. UMassLowell has been active in promoting and supporting the transfer of new technologies from University labs to companies interested in using these technologies for commercial purposes. Between 2005 and 2007, the number of invention disclosures at UML the first step in the process of commercializing a new technology increased from 20 to 30. UMass Lowell faculty, students and graduates have contributed to the creation and growth of new businesses in the Merrimack Valley and elsewhere in Massachusetts. Companies such as Konarka Technologies, Metabolix, Venture Technologies and Scandius Biomedical are representative of the kinds of businesses that will play a central role in the region s future growth. In 1998, the University of Massachusetts Lowell opened a business incubator, the Commercial Venture Development Center, located in the Wannalancit Mill, a renovated 1850 s-era textile mill located near the University's campus. In the ten years since the incubator opened, firms in the incubator have raised more than $95 million in venture capital. Recent graduates of the incubator facility include Axiom Valuation Solutions, Lowell-based Konarka Technologies, and Tyngsboro-based eskill. 3

6 University of Massachusetts Lowell, the City of Lowell, and Community Teamwork Inc., has operated the Lowell Small Business Assistance Center. During the past five years, the Center has served 1,487 clients, and helped 224 new businesses get started (about two-thirds of them in Lowell), resulting in the creation of 372 new jobs. Among clients who have started businesses, 45 percent were members of racial or ethnic minorities, and 38 percent were women. :: PARTNERS IN REVITALIZATION :: The EdLink institutions contribute to the Northeast Massachusetts economy through engagement with local community development and downtown revitalization efforts. The Enterprise Center at Salem State College s central campus provides space and assistance to new and expanding businesses in the North Shore. The Center s 53,000 square-foot building currently provides office space for 31 businesses that, in total, employ more than 100 people. The Enterprise Center also provides programs that enable the region s entrepreneurs, businesses, and venture capitalists to network and learn from one another. The Enterprise Center is a co-founder of the North of Boston Business Plan Competition and 128 Venture North, a networking group for technology entrepreneurs and investors north of Boston. Northern Essex Community College offers an Entrepreneurial Training Program, in which students create a business plan and work on the skills needed to implement it. The 20-week program consists of ten weeks of classroom training, one week of business plan presentations, and nine weeks of independent work and oneon-one consulting. Since 1992, Salem State College has operated the northeastern Massachusetts Small Business Development Center (SBDC). The Center offers one-on-one business counseling and runs a variety of workshops in Woburn, Beverly, North Andover, and Salem. During fiscal year 2007, the SBDC helped 52 companies secure more than $4.3 million in financing. Its business workshops attracted more than 1,000 participants. North Shore Community College offers an Entrepreneurship Certificate through the Institute for Corporate Training and Technology. The twelve week program includes all aspects of planning a new venture with classes in market analysis, strategic planning, management and marketing. Since 1998, Middlesex Community College, in partnership with the UMass Lowell has played a key role in revitalizing downtown Lowell, beginning with its participation in the redevelopment of Wannalancit Mills in the 1980 s. UML has been a major partner in the development of the Paul E. Tsongas Arena and LeLacheur Park, both of which are facilities used by the University and the local community for a variety of events. Since launching its Lowell campus in 1987, Middlesex Community College has played a role in revitalizing downtown Lowell through the acquisition, renovation and reuse of vacant buildings including the former Wang corporate training center and the former Federal post office by leasing additional space downtown and by bringing a steady stream of College employees and students downtown each day. For nearly twenty years, Northern Essex Community College has been an active participant in efforts to revitalize Lawrence a city hard-hit by the decline of the region s older industries. NECC opened its Lawrence campus in 1991, in a building previously occupied by the Prudential Insurance Company; and subsequently leased additional space nearby. Salem State College has been active in redeveloping former industrial land in central Salem. In 1997, Salem State purchased the 37.5-acre site of a GTE Sylvania light bulb factory that closed in 1990 to construct its Central Campus. The campus s major buildings include Building One, which includes the Bertolon School of Business; the Enterprise Center, located in a 53,000 square-foot building that was adapted from an existing building on the site; and 452-bed residence hall, which allowed the College to increase the number of students living on-campus by about 50 percent when it opened in Since it opened its Lynn campus in 1986, North Shore Community College has been an anchor for the City s continuing revitalization. NSCC brings about 420 faculty and staff and more than 3,000 students into the downtown area every week and provides a center for community activity. The College helped the City develop its Waterfront Master Plan and will provide a key physical link between the City s downtown and its waterfront. 4

7 As government, businesses and institutions in Northeast Massachusetts seek to mitigate the impact of the recession and to ensure that the region s residents and businesses are prepared to participate from the next round of economic growth the EdLink institutions role in the region s economy is likely to become even more important than it is today. This is so for several reasons. With more than 6,000 full- and part-time employees and a total regional impact of more than $887 million, the five EdLink institutions together constitute a significant regional enterprise. And while they are by no means immune to the effects of the recession or the Commonwealth s financial problems they are an important source of stability for the local economy. This is especially true in older cities across Northeast Massachusetts that have been hard-hit by previous waves of economic change, and have since been striving to reinvent themselves. Major capital projects that the five institutions are planning could also ease the impact of the recession in these communities, creating nearly 1,000 person-years of work in construction and related industries during the next several years. The five institutions (and in particular, the region s three community colleges) are an important source of support for workers displaced or threatened either by the recession or by longer-term economic change. Their workforce development programs offer a wide array of options for acquiring knowledge, skills and credentials that can help workers succeed in a tough job market. And by providing customized training for their employees, the colleges can also help companies throughout the region improve productivity, enhance the services they provide to customers and develop the capabilities they need to survive and thrive in a changing market. The Edlink institutions are also helping to provide a foundation for the next round of growth for example, through: Programs of basic and applied research, including research partnerships with companies throughout the region; Programs that support the creation and growth of new businesses, including incubator programs at UMass Lowell and Salem State; Initiatives aimed at supporting the growth of the region s creative economy; Degree and certificate programs that prepare students for careers in many of the industries that are likely to drive the region s future growth; and Their collective capacity to address the full range of regional educational needs, from job training and associate s degrees, through bachelor s degree and the Ph. D. As Northeast Massachusetts seeks both to rebuild its economy and to expand the opportunities available to its residents, the five Edlink institutions will collectively be among the region s most important assets. 5

8 :: INTRODUCTION :: At the end of 2008, the Northeast Massachusetts region faced some daunting economic challenges. Like the rest of Massachusetts and the nation, the greater Boston metropolitan area (of which the region is a part) was in the midst of a prolonged and worsening recession. Between October 2007 and October 2008, the region had seen virtually no growth in employment; and most economists were predicting greater job losses in For Middlesex and Essex counties, the economic situation at year s end seemed particularly precarious. Even before the current downturn began, neither had ever fully recovered from the recession of Between 2001 and 2007, average monthly payroll employment in the two counties fell by 3.8 percent a loss of more than 44,000 jobs. Most of the losses were concentrated in the region s manufacturing sector; between 2001 and 2007, employment in manufacturing declined by 25 percent. 900,000 Figure 1: Payroll employment, Essex and Middlesex counties, , , , , , , , , , , , Middlesex County 298,189 Essex County The problems that the region is wrestling with are serious, but they are not totally unfamiliar. While they might differ in detail, the challenges the region faces today are not all that different from those it has been confronting for the last several decades. What economist Joseph Schumpeter called the perennial gale of creative destruction driven by technological innovation, global integration, changing business practices and new consumer demands continues to reshape the region s economy. Established industries are disrupted and decline new ones emerge and grow. A major recession intensifies the process accelerating the decline or restructuring of some of the region s older industries, but in the long run also freeing up resources and creating opportunities for the growth of new ones. Just as they have had in the past, the educational institutions of Northeast Massachusetts have a vital role to play in responding to challenges confronting the region s economy. Higher education is an important industry in its own right a major employer, buyer of goods and services from local companies and sponsor of construction projects. Moreover, colleges and universities tend to be less sensitive to the business cycle than many other industries; in fact, demand for higher education often increases during recessions. They can thus have a stabilizing effect on the local economy. Even more important in the long run, however, is the role that higher education plays in helping Northeast Massachusetts respond to the challenge of change. Colleges and universities help the region s residents acquire the knowledge and skills they need to succeed in an ever-changing economy and through research, technology transfer and support for the development of new and small businesses, they help to provide a foundation for future growth. The five public educational institutions that are members of EdLink (described below) hold a particularly important place in the region s economy. Collectively the five institutions Middlesex Community College, Northern Essex Community College, North Shore Community College, Salem State College and the University of Massachusetts Lowell are the leading provider of educational opportunity for the region s residents, both those just graduating from high school and older working adults. UMass Lowell is the region s only public research university; and all of the institutions support in a variety of ways development of the new and small businesses on which the region s future depends. A map showing the EdLink institutions campuses and other facilities is shown in Figure 2 (next page). 6

9 Figure 2: Map of EdLink institution campuses and facilities 495 Haverhill Campus Corporate & Community Education Center Lawrence Campus 95 UMass Lowell Lowell Campus ESSEX COUNTY Danvers Campus Cummings Center - Beverly Campus Bedford Campus The Career Place 95 Cat Cove Marine Facility Salem State College McGee Building - Lynn Campus MIDDLESEX COUNTY Edlink Colleges and Universities Miles 495 Middlesex Community College Northern Essex Community College North Shore Community College Salem State College Univ. of Massachusetts Lowell The five EdLink institutions have been actively and extensively involved in efforts to strengthen the economy of the region, to develop the skills of the region s workforce and to expand the opportunities for higher education available to its residents. In order to understand more clearly how the EdLink institutions contribute to the economic vitality of Northeastern Massachusetts, the five institutions that are members of the EdLink Consortium asked Appleseed a consulting firm with extensive experience in this area to assess the regional economic impact of the five institutions. This report presents the results of our analysis of the EdLink institutions economic impact. Part One of the report highlights the impact of the institutions as significant enterprises in their own right as employers and buyers of goods and services; Part Two describes the their role in developing the human capital on which the region s economy depends. Part Three discusses the institutions participation in research and Part Four discusses the institutions role in the development of new and small businesses. Part Five discusses the EdLink institutions involvement in the continuing revitalization of their local communities. Part Six discusses how the institutions impact on the region s economy could be even greater in the next few years. EdLink: A partnership for Northeast Massachusetts EdLink is a partnership that brings together the five public higher education institutions that are located in Northeast Massachusetts. Launched by an agreement among the leaders of the five institutions in 2006, EdLink seeks to join together to spark ideas and create positive solutions for sustainable regional economic development and cultural growth. Since 2006 EdLink s members have undertaken a variety of joint initiatives in areas such as work force development, bachelor s degree completion, partnerships with local government and coping with climate change. 7

10 :: PART ONE: THE EDLINK INSITUTIONS AS AN ENTERPRISE :: As this report will show, the five EdLink institutions contribute to the economic vitality of Northeast Massachusetts through their role in human capital development, in research, in the development and growth of new businesses and in the revitalization of the region s older cities. Higher education, however, is also a significant regional industry in its own right a major employer, a buyer of goods and services from local companies, and a sponsor of construction projects large and small. This part of our report analyzes the impact of the EdLink member institutions as, in effect, a collective regional enterprise. SOURCES OF REVENUE The five EdLink institutions generated $507 million in revenues in fiscal year 2007, more than half coming from sources other than the state. About 46 percent ($231 million) came from state and local appropriations and grants; 32 percent from tuition and fees; 12 percent from federal and private grants and contracts; and 10 percent from other sources. The EdLink institutions revenue distribution is shown in Figure 3. variety of part-time on-campus jobs. The combined payroll of the five institutions during 2006 totaled more than $261 million. As Figure 4 shows, 4,842 (79 percent) of the five institutions non-student employees lived either in Middlesex county or in Essex county. Another 490 (8 percent) lived elsewhere in Massachusetts. Figure 4: Combined employment by place of residence, Fall 2006 Rest of Mass % Outside Mass % Middlesex 2,075 34% Essex 2,767 45% Figure 3: Combined EdLink institution revenues, fiscal year 2007 (000 s) Federal & Private Grants $61,012 12% State & Local Grants $20,594 4% State & Local appropriations $210,767 42% Tuition & Fees $163,945 32% Other $51,124 10% By allocating spending on health benefits based on where employees live, we can estimate the impact of such spending. In 2007, the EdLink institutions spent about $41 million on health benefits for employees residing in Essex and Middlesex counties, and another $4.6 million for employees residing elsewhere in Massachusetts. We estimate that this spending directly supported 256 full-time equivalent jobs in Essex and Middlesex counties and 98 FTE jobs elsewhere in Massachusetts. O THE EDLINK INSTITUTIONS AS EMPLOYERS In the fall of 2006, the five EdLink institutions Middlesex Community College, Northern Essex Community College, North Shore Community College, Salem State College and the University of Massachusetts Lowell employed 6,159 people, including 3,126 who worked full-time and 3,033 part-time. 1 (If part-time employment is measured in terms of fulltime equivalents, or FTE s, full- and part-time employment at the five institutions in the fall of 2006 totaled 4,117 FTE s.) In addition to these regular employees, the five institutions employed 2,408 students in a 1 Part-time employment includes faculty, academic support services such as tutors and disability support, lab techs, enrollment services, library staff, various administrative support functions and all grant contracts. 8

11 PURCHASING AND CONSTRUCTION In Fiscal Year 2007, EdLink members spent approximately $135.9 million on purchases of goods and services, excluding construction. Of this total, about $47.8 million (approximately 36 percent) was paid to vendors and contractors located in Essex and Middlesex counties, and another $37.3 million to companies located elsewhere in Massachusetts. Figure 5 shows the distribution of purchases by location of vendor. Figure 5: Combined purchasing by location of vendor, FY 2007 ($000s) Outside Mass. $50,867 37% Middlesex $29,381 22% Essex $18,379 14% Rest of Mass. $37,262 27% The five institutions also spent $24.3 million in on construction and major maintenance. About $13.8 million (57 percent) of that amount was paid to contractors located either in Middlesex county or Essex county; and nearly $4.5 million (19 percent) to contractors located elsewhere in Massachusetts. The money that EdLink institutions spend buying goods and services from Northeast Massachusetts businesses and contractors supports jobs at those companies. We estimate that in fiscal year 2007, payments made by the five institutions to businesses located in the two counties directly supported 382 full-time equivalent jobs. Payments to vendors and contractors located elsewhere in Massachusetts supported 331 additional FTE jobs. INVESTING IN INFRASTRUCTURE Over the next several years, the EdLink member institutions collectively plan to spend more than $300 million to expand and improve their facilities. Major projects now being planned include the following: At Middlesex Community College, a new, $24 million academic building on the College s Bedford campus; and a $10 million cultural and performing arts center in Lowell; At Northern Essex Community College, a new $24 million Allied Health and Technology Center in Lawrence; At North Shore Community College, a new $30 million academic building on the Danvers campus; At Salem State College, a new $106 million library and $55 million residence hall; and At UMass Lowell, the $80 million Emerging Technologies Innovation Center. Assuming that about 57 percent of their planned construction spending goes to contractors located in Essex and Middlesex counties, we estimate that the EdLink institutions collectively will directly generate at least another 987 person-years of employment in construction and related industries over the next several years. PAYMENTS OF LOCAL TAXES AND FEES As public institutions, EdLink members are generally exempt from paying state and local taxes. Nevertheless, their operations generate revenues for the Commonwealth and for local governments. During fiscal year 2007, the EdLink institutions collectively paid nearly $12 million in taxes and fees to the Commonwealth of Massachusetts including more than $10 million in state income taxes withheld from the salaries and wages of their employees and to local governments in the Northeast region. Payments made to the Commonwealth and local governments are shown in Table 3. Table 3: Tax and Fee Payments to Commonwealth of Massachusetts, FY2007 Tax or Fee Amount State income tax $10,721,704 Other state taxes or fees $ 455,141 Local taxes or fees $ 766,042 TOTAL $11,942,887 9

12 STUDENT AND VISITOR SPENDING Students off-campus spending on housing, food, entertainment, transportation and other needs also generates economic activity within Middlesex and Essex counties. Our analysis of student spending assumes that students enrolled at UMass Lowell and Salem State who come from outside the area are there specifically to attend those schools. We treat all their local living expenses and incidental expenses as attributable to their attendance at the institutions. In contrast, many of the students who are permanent residents of Middlesex and Essex counties would be living in the region whether or not they attended UMass Lowell, Salem State, or one of the community colleges. Others, if not for the opportunities afforded by the colleges would leave the area. We therefore attribute a portion of these students expenses to their attendance at the institutions. For part-time students, we further estimate that their attributable expenses are half those of full-time students. After adjusting for wages paid to student employees (which have already been included in our analysis of the impact of employee spending), we attribute $166.5 million in spending in Middlesex and Essex counties to students at the five institutions. We estimate this spending directly supported 1,120 FTE jobs in Middlesex and Essex counties. Through the multiplier effect, we estimate spending by students generated an additional 649 FTE jobs and $88.9 million in economic activity in Essex and Middlesex counties. We conducted a similar analysis for the state of Massachusetts, attributing to the institutions all living and incidental expenses by students who came from out-of-state to attend UMass Lowell and Salem State; and attributing a portion of all other students expenses to the institutions. After adjusting for student wages, we estimate that student spending indirectly and directly generated a total of $300 million in output and 2,642 FTE jobs in the Commonwealth. Visitors to the campuses of the EdLink institutions for events such as campus tours, conferences and athletic events also spend money locally. We estimate that in fiscal year 2007 visitors to the five institutions spent approximately $4.0 million in Middlesex and Essex counties. This spending directly supported about 40 full-time-equivalent jobs in local hotels, restaurants, retail stores and related businesses. Taking the multiplier effect into account, we estimate visitor spending directly and indirectly supported $6.3 million in economic activity and 64 jobs in Essex and Middlesex counties. 10

13 Adding it all up: The combined impact of institutional, student and visitor spending The jobs and economic activity generated by EdLink members spending for payroll, benefits, purchasing and construction are not limited to the direct impacts cited above. Some of the money that the institutions pay to their local suppliers and contractors is used to buy goods and services from other local companies; and the latter companies in turn buy goods and services from still other local businesses. The five institutions employees, and the employees of their suppliers and contractors, similarly use part of their earnings to buy a wide variety of goods and services housing, utilities, food, personal services and other household needs from local businesses; and the employees of those businesses do the same. Using a tool of economic analysis called an input-output model, we can measure these indirect and induced (or multiplier ) effects of the EdLink institutions spending. We estimate that in Middlesex and Essex counties, their collective spending on payroll, purchasing and construction in fiscal year 2007 directly and indirectly generated: $887 million in economic activity and 8,131 FTE jobs. Statewide (including Middlesex and Essex counties) the EdLink institutions spending directly and indirectly generated: $1.2 billion in economic activity in Massachusetts and11,538 FTE jobs. This means for every dollar of state and local appropriations and grants received, spending by the five institutions, their students and visitors generated about $5.24 in economic output in Massachusetts. Table 4: Economic impact of all Edlink Institutions on Essex and Middlesex Counties, and Massachusetts, FY 2007 ($millions/fte) Essex and Middlesex Counties Massachusetts Indirect/ Indirect/ Direct Induced Total Direct Induced Total Payroll Output $261.5 M $191.7 M $453.2 M $261.5 M $338.6 M $600.1 M Employment (FTEs) 4,117 FTE 1,110 FTE 5,227 FTE 4,117 FTE 2,522 FTE 6,639 FTE Benefits Output $41.0 M $29.1 M $70.1 M $45.6 M $52.9 M $98.5 M Employment (FTEs) 256 FTE 178 FTE 434 FTE 353 FTE 405 FTE 758 FTE Purchasing & Construction Output $61.6 M $40.4 M $102.0 M $103.4 M $108.9 M $212.3 M Employment (FTEs) 382 FTE 255 FTE 637 FTE 713 FTE 762 FTE 1,475 FTE Student & Visitor Spending Output $170.4 M $91.2 M $261.6 M $156.9 M $145.2 M $302.1 M Employment (FTEs) 1,160 FTE 673 FTE 1,833 FTE 1,353 FTE 1,313 FTE 2,666 FTE TOTAL IMPACT Output $534.5 M $352.4 M $886.9 M $567.4 M $645.6 M $1,213.0 M Employment (FTEs) 5,915 FTE 2,216 FTE 8,131 FTE 6,536 FTE 5,002 FTE 11,538 FTE 11

14 :: PART TWO: HUMAN CAPITAL AND EDUCATIONAL OPPORTUNITY :: Human capital the accumulated knowledge, skills and experience of a city s, a region s or a nation s work force is widely recognized as one of most important determinants of economic growth and development. aside from climate, skill composition may be the most powerful predictor of urban growth. This is both a boon to the skilled cities that have done spectacularly well over the past two decades, and a curse to the cities with less skilled workers 2 For individual workers, education has long been recognized as one of the keys to higher earnings. As Figure 6 shows, the average annual earnings of Massachusetts residents with some college or an associate degree were about 67 percent higher in 2007 than the average for residents with only a high school diploma; and the average earnings of those with a bachelor s degree were 144 percent higher than the average for high school graduates. Figure 6: Annual earnings by educational attainment, State of Massachusetts residents 19 and older, 2007 Associate s Degree $31,426 Some College $24,494 High School Diploma $18,830 Bachelor s Degree $45,953 Graduate Degree $66,623 -$ $10K $20K $30K $40K $50K $60K $70K The economic benefits of higher education, however, go beyond its impact on the incomes of those who earn degrees. Research conducted over the course of several decades has shown that an increase in the percentage of a region s workers who have college degrees increases the productivity of the entire regional workforce, and the average income of all workers. 3 Enrico Moretti, for example, has found that a 1 percentagepoint increase in the supply of college graduates in a metropolitan area increases the average wages of high school drop-outs by 1.9 percent, those of high school graduates by 1.6 percent; and those of college graduates by 0.4 percent. 4 In a recent paper published by the Federal Reserve Bank of New York, Jaison Abel and Todd Gabe similarly found that a one percentage point increase in the proportion of residents with a college degree is associated with a 2.3 percent increase in metropolitan-area GDP per capita. 5 The implications of these and similar studies are clear investments in human capital are critical to the growth of urban and regional economies. The EdLink member institutions contribute to the developments of the region s human capital in multiple ways, including: Associate degree programs that prepare students for transfer to bachelor s degree programs; Associate degree programs that prepare students for direct entry into employment; Bachelor s degree programs that prepare students for higher-skilled, better-paid jobs and for further education; Graduate and professional degree programs; Certificate programs (both degree and non-degree) that help working adults increase their earning power or prepare for new careers; Programs that help aspiring students prepare for and succeed in college; and Partnerships with local elementary and secondary schools, and programs that expand opportunities for individual students. EDLINK ENROLLMENT AND STUDENT CHARACTERISTICS In the fall of 2006, 43,218 students were enrolled in degree and forcredit certificate programs at the five institutions, including: 21,379 in associate degree and for-credit certificate programs at the community colleges; 4,656 in undergraduate and graduate certificate programs at Salem State College and the University of Massachusetts Lowell; 14,208 in bachelor s degree programs; and 2,975 in graduate degree programs. 2 Edward Glaeser and Albert Saiz, The Rise of the Skilled City, Harvard Institute of Economic Research, December 2003, p.42. ( 3 James Rauch, Productivity Gains from Geographic Concentrations of Human Capital: Evidence from the Cities, Journal of Urban Economics, vol. 34, pp ; Edward Glaeser and Albert Saiz, op cit, p Enrico Moretti, Social Returns to Human Capital, NBER Reporter: Research Summary, Spring Jaison Abel and Todd Gabe, Human Capital and Economic Activity in Urban America, Federal Reserve Bank of New York, staff report no. 332, July 2008, pp

15 Most students who enroll at the EdLink institutions come from Northeast Massachusetts. In the fall of 2006: More than 88 percent of students enrolled in associate degree and for-credit certificate programs at the three community colleges were residents of Middlesex or Essex counties and 5 percent came from elsewhere in Massachusetts. At Salem State College and the University of Massachusetts Lowell, 75 percent of all undergraduates came from Middlesex or Essex counties, and 18 percent came from elsewhere in Massachusetts. 64 percent of all graduate students at Salem State and UMass Lowell came from Middlesex or Essex counties, and 24 percent came from elsewhere in Massachusetts. A map showing the enrollment in the five EdLink institutions, by the ZIP code of each student s permanent address is shown below. Figure 7: Map showing enrollment in EdLink institutions, by permanent address of student Enrollment or more 13

16 Figure 8 shows the enrollment of students at the five EdLink institutions by permanent address in fall Figure 8: Combined Enrollment for Middlesex, Northern Essex and North Shore Community Colleges Unreported 29 0% Outside Mass. 1,560 7% Rest of Mass. 1,002 5% Essex County 10,756 50% Middlesex County 8,032 38% Combined Undergraduate Enrollment for Salem State College and UMass Lowell Outside Mass. 1,041 7% Rest of Mass. 2,688 18% Essex County 5,655 38% Middlesex County 5,461 37% Combined Graduate Enrollment for Salem State College and UMass Lowell Essex County 1,569 32% Outside Mass % Rest of Mass. 1,169 24% Middlesex County 1,584 32% O O PREPARING STUDENTS FOR THE FUTURE All five EdLink institutions offer programs designed to prepare students for careers in the industries that are vital to the health of the region s economy today, and that will shape its future. All three community colleges offer programs designed to prepare students for transfer to fouryear colleges in fields that typically require bachelor s degrees, as well as programs that provide students with the skills and knowledge they need to start their careers in jobs that typically don t require a four-year degree. For example: Middlesex Community College offers an associate degree in computer science that is designed to prepare students for transfer into bachelor s degree programs a field that is critically important to the region s fast-changing information technology sector. Middlesex offers both an associate degree program and an eightcourse certificate program in biotechnology, aimed at preparing students for careers in one of the region s most important growth industries. By focusing on fundamentals in math and science, Northern Essex Community College s engineering science program puts students on a direct path toward transferring to a 4-year engineering degree program. Northern Essex also offers an associate degree in business management with a concentration in hospitality. The hospitality program, which prepares students for careers in the region s tourism industry, has been among the fastest-growing at NECC, with enrollment growing by 127 percent between 2001 and North Shore Community College offers two options for associate's degrees as an occupational therapy assistant: a standard twoyear program and an accelerated program that can be completed in three semesters. Graduates of both programs can take advantage of an official transfer agreement with Salem State College's combined BS/MS program in occupational therapy. North Shore's food science & safety program is the only such associate's degree program in New England, and is approved by the United States Department of Agriculture's Food Safety and Inspection Service. In the spring of 2008, 19 students graduated from the Energy Utility Technology Certificate program, a collaborative effort of North Shore, Middlesex, and Quinsigamond community colleges, National Grid, and the U.S. Department of Labor. The program was designed to meet the region s need for utility workers, training them to work on power lines, meters and electrical substations. Salem State College and the University of Massachusetts Lowell similarly offer both undergraduate and graduate programs that prepare students for careers in many of the region s leading industries. 14

17 Combining computer science with the physical sciences, the University of Massachusetts Lowell offers a Bio/cheminformatics program. The program is available to undergraduates through the mathematics, computer science, biology and chemistry departments and to graduate students at the masters and doctoral level. The program prepares students not only for the use of computer-based tools for biology and chemistry data analysis, but also for developing new tools. UMass Lowell's energy engineering master's degree is a multidisciplinary program that combines faculty and courses in the Mechanical Engineering Department and the Chemical and Nuclear Engineering Department. The program offers two degree options: solar engineering and nuclear engineering the only nuclear engineering program in the region. In 2007, UMass Lowell began offering doctoral degrees in engineering. The University offers both a research-oriented Ph.D. in engineering, and a D.Eng. degree that is more oriented toward industrial design and management. Doctoral degrees are available in chemical, civil and environmental, computer, electrical energy, mechanical and plastics engineering. Salem State College s degree program in geographic information systems (GIS) is the only one of its kind on the East Coast, and develops geo-scientists who are proficient in the acquisition, analysis and use of spatial information. The College also offers a master s degree in GIS, with a special criminal justice track for practioners who wish to work in the growing field of crime mapping and analysis. Salem State College offers several programs to help to address the shortage of skilled nurses in the region. At the undergraduate level, SSC offers an RN to BSN program, which allows RNs to obtain their bachelor s degrees in as little as 3 semesters. (The program is also available on the campus of Northern Essex Community College.) The College also offers an LPN to BSN program, which allows licensed practical nurses to obtain a bachelor s degree and sit for the RN licensing exam. At the graduate level, Salem State College offers a joint master s degree in nursing (MSN) and MBA program that trains nurse managers for leadership roles in the health care industry. The graduate program is designed for working nurses and the program can be completed in evening courses in 3? years. Salem State College is also the only public college in New England to offer a Bachelor of Science degree in fire science administration and has the only accredited social work program including both bachelor s and master s degrees-at a public institution in Massachusetts. Salem State s MBA program one of only a few offered in Essex County offers three specialization areas, including marketing, operations and decision sciences, and personal financial planning. EDLINK ALUMNI: AN ASSET TO THE REGION S ECONOMY Just as most students at EdLink institutions come from communities in Northeast Massachusetts, 80% of them make their homes in the area after they graduate. Based on data received from each institution, of the 192,280 alumni (those who have received a degree or certificate from the institutions), 112,981 about 59 percent live in Essex or Middlesex county and 21 percent live elsewhere in Massachusetts. The distribution of alumni is shown in Figure 9. Figure 9: EdLink alumni, by place of residence Outside Mass. 39,289 20% Rest of Mass. 40,009 21% Essex County 62,977 33% Middlesex County 50,004 26% We can further illustrate the concentration of EdLink alumni in Northeastern Massachusetts by mapping the ZIP codes where they reside. As Figure 10 shows, most EdLink alumni reside in the northeastern part of the state. (see next page) 15

18 Figure 10: EdLink alumni in Massachusetts, by ZIP code of residence Number of Alumni ,000 1,001-3,000 3,001 or more The education that the EdLink institutions provide has a cumulative impact on the region s store of human capital and on the earning power of its residents. Without these five institutions, of course, some of their alumni would have instead attended other colleges, whether in the region or elsewhere. Nevertheless, it seems clear that without the five insitutions, many residents although we cannot definitively say how many would have found it difficult to earn associate s degrees, bachelor s or graduate degrees. To illustrate this impact: If we assume that without the EdLink institutions, half of their alumni who live in Middlesex and Essex counties would not have had the opportunity to earn degrees, and If we take as a guide the $12,596 difference between the earnings of high school graduates and those earning associate s degrees cited above and the $27,123 difference between the annual earnings of high school graduates and those with four-year degrees; We then can estimate that the knowledge and skills acquired at the EdLink institutions by their alumni living in Middlesex and Essex increased aggregate income in the two counties in 2007 by about $1.1 billion. For Northeast Massachusetts, the bottom line is clear the education that the EdLink institutions provide adds to the region s productivity and competitiveness, and to the earning power of its residents. EXPANDING ACCESS TO HIGHER EDUCATION Expanding access to higher education is, as noted above, central to the mission of public colleges and universities. All five EdLink institutions contribute in multiple ways toward the achievement of this goal. The Northeast region s three community colleges play a central role in the expansion of educational opportunity. By law, all Massachusetts high school graduates are eligible to enroll at any of the state s community colleges; and for many students especially those from low-income families these colleges represent the most attractive and affordable option. Many of those who seek to enroll in the community colleges, however, are not ready for college-level academic work. All students are required to take a standardized placement test; those who do not meet minimum requirements are required to take developmental courses specifically designed to help them develop the skills they will need to succeed in their studies. About 80 percent of all first-time community college students take at least one developmental course. Several of the EdLink community colleges are participants in special programs aimed at enhancing students chances for success. Northern Essex is one of only four community colleges in Massachusetts and one of 83 in fifteen states nationwide that is participating in the Achieving the Dream initiative. Achieving the Dream is a multi-year program that focuses on students who face significant barriers to success 16

19 in higher education; it seeks to effect changes in policy and practice at the participating institutions aimed at helping these students succeed. The program is funded at the national level by the Lumina Foundation, and by local foundations in each of the participating communities. NECC s strategies for meeting the goals of the program include: Expanding tutoring and instructional support programs; Expanding orientation and college-success programs for first-time students; A comprehensive case management approach to advising; and Curriculum alignment and other forms of collaboration with local high schools, aimed at improving students preparation. North Shore Community College is one of only 19 institutions nationwide, and the only Massachusetts College, to have been designated a Learning College through the Breaking Through Initiative. The initial project targeted Spanish-speaking incumbent workers in home-based childcare. It has since expanded to include a Certified Nurse Assistant/Home Health Aide program serving Lynn residents All of the EdLink institutions also offer services and participate in programs aimed at helping community college students make the transition to fouryear colleges. For example, Lowell Connections, a joint effort of Middlesex Community College and the University of Massachusetts Lowell, aims to help students who have applied for transfer to the University, but have not yet met all of the university s requirements. The program combines academic advising, specialized coursework, and opportunities for students who are completing their courses at MCC to begin participating in student activities at the University. EXPANDING OPPORTUNITY: ADULT EDUCATION AND WORKFORCE DEVELOPMENT In addition to degrees and for-credit certificates, the EdLink institutions offer a wide variety of community education and career training programs. The great majority of these programs are designed to help area residents build their skills and increase their earning power, and help businesses meet their workforce needs. For residents of the region who need to develop basic skills, all three community colleges offer adult basic education programs, such as literacy training, GED preparation and English language instruction. The three colleges also offer non-credit career training programs that help prepare working adults for jobs in a wide range of industries. For example: North Shore Community College's Corporate and Community Education division has partnered with Gatlin Education Services to provide non-credit online career training courses in high demand areas such as project management, financial management for health care providers, and Six Sigma quality assurance methods. Northern Essex Community College has been working to ensure that veterans returning from war have housing and work options. The College is working with the Haverhill Chamber of Commerce on veterans affairs and has designed training programs for returning veterans and their families. NECC now employs veterans service agents at both the Lawrence and Haverhill campuses. With private grant funding, North Shore Community College has established a Veterans Services program. The program provides transitional services to current and prospective veterans and their families including outreach, career and academic advising, financial counseling and cohort learning communities. Northern Essex s Corporate & Community Education Center occupying part of a formerly vacant Alcatel-Lucent plant in North Andover includes 22 classrooms, five computer labs and two conference areas. The Center has allowed the College to expand significantly its workforce development and customized corporate training programs. Middlesex Community College offers a non-credit training program in radio frequency identification (RFID) technology. The program includes a general introduction to the technology, as well as courses on RFID systems and site planning. Middlesex Community College also offers non-credit certificate programs in fields such as project management, web design, digital photography and technical writing. 17

20 HELPING JOB-SEEKERS AND EMPLOYERS IN NORTHERN MIDDLESEX COUNTY Under a contract with the Metro North Regional Employment Board (the agency that administers Workforce Investment Act services in twenty cities and towns north and west of Boston), Middlesex Community College has since 1997 managed The Career Place, a one-stop workforce services center located in Woburn. The Career Place provides a range of services for both jobseekers and employers. For those seeking work, or to advance their careers, TCP provides skills assessments, workshops on topics such as resume-writing and interviewing, computer skills training, job search assistance and referrals to education and training programs. About 80 percent of the individual clients served by TCP are displaced workers those who have had significant work experience in the past, but are now unemployed. Other clients include recent high school graduates and welfare recipients. For employers, TCP provides help in filling vacant positions with qualified applicants, as well as information and workshops on topics such as changes in federal and state labor laws, privacy requirements, and working with employees with disabilities. In fiscal year 2007, The Career Place provided services to 7,897 jobseekers, and placed 2,601 in jobs, with starting wages averaging $21.48 per hour. TCP also provided services to 713 area companies. Through the EdLink community colleges, residents of (and employers in) Northeast Massachusetts have access to an array of college-based workforce development programs that is unmatched in any of the Commonwealth s six other regions. Among the state s fifteen community colleges, Middlesex, Northern Essex and North Shore together accounted for 43 percent of total statewide enrollment in non-credit workforce development courses about 39,600 students. All of the EdLink member institutions also offer customized training programs for local businesses both large and small. Examples of Northeast Massachusetts companies that have used these services are listed in Table 5. Company American Science and Engineering Analog Devices Axcelis Technologies Danvers Savings Bank Gillette Holy Family Hospital Keyspan The Lahey Clinic Lowell General Hospital M/A Com Medtronic Peabody Essex Museum Weston Sampson Raytheon Symmetricom Toxikon Verizon Table 5: Selected companies using EdLink institutions to provide employee training Location Billerica Norwood Beverly Danvers Andover Methuen Waltham and Lowell Burlington Lowell Lowell Danvers Salem Peabody Andover Beverly Bedford Marlboro EXPANDING OPPORTUNITY: PARTNERSHIPS WITH LOCAL SCHOOLS The central role that human capital plays in determining whether cities and regions flourish or falter economically has implications not only for higher education, but for elementary and secondary schools as well. The quality of elementary and secondary schools, and the educational opportunities available to students in these schools, can have a profound impact on the region s economy. All five EdLink institutions have long been involved in efforts to enhance the quality of elementary and secondary education in the region, and to provide new opportunities for its young residents. All five begin working with students during their high school years and even earlier to provide opportunities for learning, to orient them towards continuing their education beyond high school, and to help them acquire the skills they will need to do so successfully. For example: Salem State s School of Education requires that all students working toward degrees in education complete student teaching assignments at one of the College s four laboratory schools the Salem State Pre-School, the Horace Mann School, the Saltonstall School (all in Salem), or the Ford School in Lynn or at another 18