Economic Impact Study Shows L&C a Great Investment for Students, Taxpayers and the State of Illinois
A recent economic impact study focused on the contributions of Lewis and Clark Community College to its students, district residents and the State of Illinois revealed that the college is a great investment for all three stakeholder groups and a leading contributor to the regional economy. The study results also demonstrated a significant increase in Lewis and Clark’s regional impact since the last study results were released in 2011.
The results of the study, conducted by Economic Modeling Specialists International (EMSI) – a third party research firm from Moscow, ID – demonstrate that L&C creates value from multiple perspectives.
“L&C benefits local businesses by increasing consumer spending in the region and supplying a steady flow of qualified, trained workers into the workforce,” the report states. “It enriches the lives of students by raising their lifetime incomes and helping them achieve their individual potential. The college also benefits society as a whole in Illinois by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students. And, the college benefits state and local taxpayers through increased tax receipts across the state and a reduced demand for government-supported social services.”
The overall impact of L&C on the local business community during the analysis year (FY 2012-2013) amounted to $338.5 million, or 4.6 percent of the region’s Gross Regional Product. These figures were an increase over 2011 results of $248 million annually – the equivalent of a 3.8 percent GRP (up 36 percent from 2011 to 2013). College operations and student spending accounted for $32.3 million. The report revealed that the greatest impact results came from the education and training L&C provides for local residents. L&C former students generated $306.2 million in added income in the region. This figure represents the higher wages that students earned during the year, the increased output of the businesses that employed the students, and the multiplier effects that occurred as students and their employers spent money at other businesses.
“We are pleased to see that our students’ higher earned wages make up the largest part of this impact we have on the gross regional product,” L&C President Dale Chapman said. “The results are a testament to the quality academic programs and workforce training opportunities offered by Lewis and Clark, keeping people employed and raising the standard of living for the region. The success of our offerings is directly related to the economic well-being of the region.”
Aside from operating as an economic impact engine for the region, Lewis and Clark is also seen as a good investment for students, local taxpayers and the state.
Students who graduate with an associate’s degree from L&C can expect to see an additional $7,100 in annual earnings over someone with a high school diploma or equivalent. Over a working lifetime, this increase in earnings amounts to an undiscounted value of approximately $291,100 in higher income.
“When you consider the average cost for full time attendance at L&C for a year is approximately $3,000, you can see why the investment a student makes when choosing to attend Lewis and Clark can be paid back within their first year of employment after graduation,” Chapman said.
The report found that for every $1 a student invests in their L&C education, they receive a cumulative of $7.20 in higher future wages. The average annual rate of return for students is 28.5 percent. These figures in 2011 were $6 and 17.4 percent.
“When you think about the fact that most savings accounts accrue an annual one percent return, you can see why a return of nearly 30 percent is so impressive,” Chapman said.
L&C is also a good investment, as taxpayers can expect to receive $2.40 in cumulative value for every $1 of public money invested into the college. This represents an average annual rate of return of 6.4 percent – another solid investment that compares favorably with long-term investments in both the private and public sectors. In 2011, these figures were $1.70 and 6 percent.
“Much of the savings to taxpayers can be accounted for by the graduates who earn more, and therefore pay more taxes,” Chapman said. “Additionally, as these students are educated and become more employable, their need for social services such as welfare and unemployment drastically decreases, resulting in additional savings for taxpayers.”
EMSI calculated the total benefits to taxpayers during the analysis period was $87 million, compared to the actual cost to taxpayers of $36.6 million, which resulted in the 6.4 percent rate of return for taxpayers.
“Essentially what we have learned from this analysis is that students receive great value for their educational investment at a time when the rising cost for education at four-year institutions and private, for-profit colleges makes attending college seem unattainable to many first generation and underserved student populations,” Chapman said. “Community colleges, and particularly Lewis and Clark, are a fantastic investment for students looking to attain higher earnings without a large capital investment that will equate to burdensome student loans in the future. Additionally, the investment made by state and local taxpayers in the college creates a wide range of benefits to society and returns more to government budgets than it costs. This analysis shows a true win for L&C students, local taxpayers and the state.”
Chapman added that all too often, educational institutions are seen as tax burdens.
“The findings from this report indicate that if Lewis and Clark were not in existence, then taxes would have to be raised by at least 4.6 percent to make up for the economic impact the college has on the district,” he said. “We are hopeful that all parties – students, taxpayers and the state of Illinois – recognize that Lewis and Clark is not only a great investment, but an economic recovery engine that is helping drive the region and its constituents.”
To view the full study, executive summary or the study fact sheet, visit www.lc.edu/economicimpact.
About the Study
EMSI utilized data and assumptions for the study based on several sources, including the 2012-2013 academic and financial reports from the college, industry and employment data from the U.S. Bureau of Labor Statistics and U.S. Census Bureau, outputs of EMSI’s Social Accounting Matrix (SAM) model, and a variety of studies and surveys relating education to social behavior. The study applies a conservative methodology and follows standard practice using only the most recognized indicators of investment effectiveness and economic impact. For a full description of the data and approach used in the study, please visit the L&C website to view the full technical report.
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