Central Piedmont Community College
State of North Carolina
June 2011
The Economic Contribution
of
Economic Growth Analysis
Investment Analysis
Executive Summary
MECKLENBURG COUNTY MAP
INVESTMENT ANALYSIS
• For every dollar students invest in CPCC, they receive a cumulative $3.10 in higher future income (discounted) over the course of their working careers.
• North Carolina benefits from improved health and reduced welfare, unemployment, and crime, saving the public some $6.7 million per year.
• Taxpayers see a rate of return of 8.0% on their investment in CPCC.
ECONOMIC GROWTH ANALYSIS
• The net added income generated by CPCC operations ($78.1 million) and the spending of non-local students ($13.3 million) contributes a total of $91.4 million in income to the Mecklenburg County economy each year.
• The accumulated credits achieved by former CPCC students over the past 30 years translate to $826.7 million in added regional income each year due to the higher earnings of students and increased output of businesses.
Socioeconomic Impact Study
STUDY HIGHLIGHTSeconomic modeling specialists, inc. June 2011
The Economic Contribution of Central Piedmont Community College EXECUTIVE SUMMARY
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INTRODUCTION
How do the Mecklenburg County economy and the
state of North Carolina benefit from the presence of
Central Piedmont Community College (CPCC)?
In this study, EMSI applies a comprehensive model
designed to quantify the economic benefits of com-munity
and technical colleges and translate these into
common sense benefit/cost and investment terms. The
study includes two major analyses:
1. Investment Analysis: Treats education funding as
an investment, calculating all measurable returns
and comparing them to costs, from the perspec-tives
of students, taxpayers, and society as a
whole.
2. Economic Growth Analysis: Measures added income
in the region due to college operations, student
spending, and the accumulated skills of past and
present students still in the workforce.
The economic impact model has been field-tested to
generate more than 900 studies for community, techni-cal,
and further education colleges in the US, Canada,
the UK, and Australia. To see the full documentation
of the study, please contact the college.
THE RESULTS
Investment Analysis
Student Perspective
Benefits of higher education are most obvious from the
student perspective: students sacrifice current earnings
(as well as money to pay for tuition) in return for a life-time
of higher income. Compared to someone with a
high school diploma, associate’s degree graduates earn
$14,600 more per year, on average, over the course of
a working lifetime (undiscounted).
From an investment standpoint, CPCC students enjoy
a 13.0% rate of return on their investments of time
and money. This compares favorably with returns on
other investments, e.g., long-term return on stocks
and bonds.
The corresponding benefit/cost ratio is 3.1, i.e., for
every dollar students invest in CPCC education, they
receive a cumulative of $3.10 in higher future income
over their working careers. This is a real return that
accounts for any discounting that occurs during the
entire period. The payback period is 10.3 years.
Executive Summary
Average Earnings by Education
Level in Mecklenburg County
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
< HS
HS
Associate's
Bachelor's
June 2011
The Economic Contribution of Central Piedmont EXECUTIVE SUMMARY Community College
economic modeling specialists, inc.
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Social Perspective
From the perspective of society as a whole, the ben-efits
of education accrue to different publics. For
example, CPCC students expand the state’s economic
base through their higher incomes, while the busi-nesses
that employ them also become more produc-tive
through the students’ added skills. These benefits,
together with the associated ripple effects, contribute
an estimated $157.9 million in taxable income to the
North Carolina economy each year.
As they achieve higher levels of education, CPCC stu-dents
are also less likely to smoke or abuse alcohol,
draw welfare or unemployment benefits, or commit
crimes. This translates into associated dollar savings
(i.e., avoided costs) to the public equal to approxi-mately
$6.7 million annually. These are benefits that
are incidental to the operations of CPCC and accrue
for years into the future, for as long as students remain
active in the workforce.
Annual Benefits to North Carolina Public
Due To CPCC Students ($ Millions)
Added
income,
$157.9
Social
savings,
$6.7
To compare benefits to costs, we project benefits into
the future, discount them back to the present, and
weigh them against the $98.6 million that state and
local taxpayers spent in FY 2009-10 to support the
college. Following this procedure, it is estimated that
CPCC provides a benefit/cost ratio of 25.1, i.e. every
dollar of state and local tax money invested in the col-lege
today yields a cumulative of $25.10 in benefits
that accrue to all North Carolina residents, in terms of
added taxable income and avoided social costs.
Taxpayer Perspective
Under the taxpayer perspective, only benefits that
accrue to state and local governments are counted,
namely, increased tax collections and reduced govern-ment
expenditures. For example, in place of increased
income, the taxpayer perspective includes only the
increased state and local tax receipts from those higher
incomes. Similarly, in place of overall crime, welfare,
unemployment and health savings, the taxpayer per-spective
includes only those that translate to actual
reductions in state and local government expenditures.
Note here that government often undertakes activities
wanted by the public, but which may be unprofitable
in the marketplace. This means that positive economic
returns are generally not expected from government
investments. From the taxpayer perspective, therefore,
even a small positive return (a benefit/cost ratio equal
to or greater than 1, or a rate of return equal to or
greater than the 3% discount rate used in the taxpayer
investment analysis) would be a favorable outcome.
For CPCC, the results indicate positive returns: a rate
of return of 8.0% and a benefit/cost ratio of 2.0 (every
dollar of state or local tax money invested in CPCC
today returns $2.00).
CPCC INVESTMENT ANALYSIS AT A GLANCE
Stakeholder Rate of Return Benefit/Cost Payback (Years)
Student perspective 13.0% 3.1 10.3
Social perspective NA 25.1 NA
Taxpayer perspective 8.0% 2.0 14.0
economic modeling specialists, inc. June 2011
The Economic Contribution of Central Piedmont Community College EXECUTIVE SUMMARY
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Economic Growth Analysis
CPCC affects the local economy in three ways: (1)
through its local purchases, including wages paid to
faculty and staff; (2) through the spending of students
who come from outside the region; and (3) through
the increase in the skill base of the local workforce.
These effects break down as follows:
College Operations Effect
CPCC creates income through the earnings of its
faculty and staff, as well as through its own operat-ing
and capital expenditures. Adjusting for taxes and
other monies withdrawn from the local economy in
support of CPCC, it is estimated that the Mecklen-burg
County economy receives a net of $78.1 million
in added labor and non-labor income due to CPCC
operations each year.
Student Spending Effect
Students from outside the region spend money for
room and board, transportation, entertainment, and
other miscellaneous personal expenses. These expen-ditures
create jobs and incomes for local businesses.
The spending of CPCC’s non-local students generates
approximately $13.3 million in added income in the
Mecklenburg County economy each year.
Student Productivity Effect
Every year students leave CPCC and join or rejoin
the regional workforce. Their added skills translate
to higher income and a more robust Mecklenburg
County economy. Based on CPCC’s historical enroll-ment
and credit production over the past 30-year
period, it is estimated that the accumulated contri-bution
of CPCC instruction received by former stu-dents
(both completers and non-completers) annually
adds some $826.7 million in income to Mecklenburg
County.
Total Effect
Altogether, the average annual added income due to
the activities of CPCC and its former students equals
$918.1 million. This is approximately equal to 1.4%
of the total Mecklenburg County economy.
CPCC ECONOMIC IMPACT ANALYSIS AT A GLANCE
Added Income
College operations effect $78,071,000
Student spending effect $13,287,000
Total spending effect $91,358,000
Student productivity effect $826,727,000
GRAND TOTAL $918,085,000
Total Added Income in Mecklenburg
County Due to CPCC ($ Millions)
CONCLUSION
The results of this study demonstrate that CPCC is a
sound investment from multiple perspectives. The col-lege
enriches the lives of students and increases their
lifetime incomes. It benefits taxpayers by generating
increased tax revenues from an enlarged economy and
reducing the demand for taxpayer-supported social
services. Finally, it contributes to the vitality of both
the local and state economies.
Spending
effect,
$91.4
Produc-tivity
effect,
$826.7
IMPACT of education
socioeconomic
ABOUT THE STUDY
This report summarizes the results from “The Economic
Contributions of Central Piedmont Community Col-lege”
detailing the role that the college plays in promot-ing
economic development, enhancing students’ careers,
and improving quality of life. Data sources include,
but are not limited to, 2009-10 academic and financial
reports from the college, industry and employment data
from the U.S. Bureau of Labor Statistics, earnings and
demographic data from the U.S. Census Bureau, and a
variety of studies and surveys relating education to social
behavior.
Contact Us:
EMSI
1187 Alturas Dr.
Moscow, ID 83843
(866) 999-3674
www.economicmodeling.com