Analysis of the Return on Investment and Economic Impact of Education: The Economic Value of Washington's Community and Technical Colleges. Main Report

Washington's Community and Technical Colleges (the colleges) serve 305,087 credit and 95,890 non-credit students. The colleges' service region, for the purpose of this report, consists of Washington State. This report assesses the impact of the colleges as a whole on the state economy and the benefits generated by the colleges for students, taxpayers, and society. The approach is twofold. The study begins with an economic impact analysis of the colleges on the Washington economy. To derive results, a specialized Multi-Regional Social Accounting Matrix (MR-SAM) model is used to calculate the added income created in the Washington economy as a result of increased consumer spending and the added knowledge, skills, and abilities of students. Results of the economic impact analysis are broken out according to the following impacts: (1) impact of the colleges' day-to-day operations; (2) impact of student spending; and (3) impact of alumni who are still employed in the Washington workforce. The second component of the study measures the benefits generated by the colleges for the following stakeholder groups: students, taxpayers, and society. For students, an investment analysis was performed to determine how the money spent by students on their education performs as an investment over time. The students' investment in this case consists of their out-of-pocket expenses and the opportunity cost of attending the colleges as opposed to working. In return for these investments, students receive a lifetime of higher earnings. For taxpayers, the study measures the benefits to state taxpayers in the form of increased tax revenues and public sector savings stemming from a reduced demand for social services. Finally, for society, the study assesses how the students' higher earnings and improved quality of life create benefits throughout Washington as a whole. The results of this study show that the colleges create a positive net impact on the state economy and generate a positive return on investment for students, taxpayers, and society. The following are appended: (1) Washington's Community and Technical Colleges; (2) Glossary of Terms; (3) Frequently Asked Questions (FAQs); (4) Example of Sales versus Income; (5) Emsi MR-SAM; (6) Value per Credit Hour Equivalent and the Mincer Function; (7) Alternative Education Variable; (8) Overview of Investment Analysis Measures; (9) Shutdown Point and (10) Social Externalities. A list of resources and references is included.