Executive summary
This report assesses the impact of Oregon’s community colleges on the state economy and the benefits generated by the colleges for students, taxpayers, and society. The results of this study show that Oregon’s community colleges create a positive net impact on the state economy and generate a positive return on investment for students, taxpayers, and society.
Economic impact analysis
During the analysis year, Oregon’s community colleges spent $757.2 million on payroll and benefits for 10,105 full-time and part-time employees and spent another $457.8 million on goods and services to carry out the colleges’ day-to-day and construction operations. This initial round of spending creates more spending across other businesses throughout the state economy, resulting in the commonly referred to multiplier effects. This analysis estimates the net economic impact of Oregon’s community colleges that directly accounts for the fact that state and local dollars spent on Oregon’s community colleges could have been spent elsewhere in the state if not directed towards the colleges. This spending would have created impacts regardless. We account for this by estimating the impacts that would have been created from the alternative spending and subtracting the alternative impacts from the spending impacts of Oregon’s community colleges.
This analysis shows that in fiscal year (FY) 2021-22, operations, construction, and student spending, together with the enhanced productivity of the colleges’ alumni, generated $9.6 billion in added income for the Oregon economy. The additional income of $9.6 billion created by Oregon’s community colleges is equal to approximately 3.3% of the total gross state product (GSP) of Oregon. For perspective, this impact from the colleges is as large as the entire Accommodation & Food Services industry in the state. The impact of $9.6 billion is equivalent to supporting 117,970 jobs. For 6 further perspective, this means that one out of every 22 jobs in Oregon is supported by the activities of the colleges and their students. These economic impacts break down as follows:
Operations spending impact
Payroll and benefits to support the colleges’ day-to-day operations amounted to $757.2 million. The colleges’ non-pay expenditures amounted to $380.8 million (excluding construction). The net impact of operations spending by the colleges in Oregon during the analysis year was approximately $769.8 million in added income, which is equivalent to supporting 9,894 jobs.
Construction spending impact
Oregon’s community colleges invest in construction each year to maintain facilities, create additional capacities, and meet growing educational demands. While the amount varies from year to year, these quick infusions of income and jobs have a substantial impact on the state economy. In FY 2021-22, the colleges’ construction spending generated $28.4 million in added income, which is equivalent to supporting 346 jobs.
Student spending impact
Around 6% of students attending Oregon’s community colleges originated from outside the state. Some of these students relocated to Oregon to attend the colleges. In addition, some students, referred to as retained students, are residents of Oregon who would have left the state if not for the existence of Oregon’s community colleges. The money that these students spent toward living expenses in Oregon is attributable to the colleges.
The expenditures of relocated and retained students in the state during the analysis year added approximately $177.5 million in income for the Oregon economy, which is equivalent to supporting 2,925 jobs.
Alumni impact
Over the years, students gained new skills, making them more productive workers, by studying at the colleges. Today, hundreds of thousands of these former students are employed in Oregon.
The accumulated impact of former students currently employed in the Oregon workforce amounted to $8.6 billion in added income for the Oregon economy, which is equivalent to supporting 104,806 jobs.
Investment analysis
Investment analysis is the practice of comparing the costs and benefits of an investment to determine whether or not it is profitable. This study evaluates Oregon’s community colleges as an investment from the perspectives of students, taxpayers, and society.
Student perspective
Students invest their own money and time in their education to pay for tuition, books, and supplies. Many take out student loans to attend the colleges, which they will pay back over time. While some students were employed while attending the colleges, students overall forewent earnings that they would have generated had they been in full employment instead of learning. Summing these direct outlays, opportunity costs, and future student loan costs yields a total of $499.2 million in present value student costs.
In return, students will receive a present value of $2.6 billion in increased earnings over their working lives. This translates to a return of $5.20 in higher future earnings for every dollar that students invest in their education at the colleges. The corresponding annual rate of return is 21.0%.
Taxpayer perspective
Taxpayers provided $834.3 million of state and local funding to Oregon’s community colleges in FY 2021-22. In return, taxpayers will receive an estimated present value of $1 billion in added tax revenue stemming from the students’ higher lifetime earnings and the increased output of businesses. Savings to the public sector add another estimated $89 million in benefits due to a reduced demand for government-funded social services in Oregon. For every tax dollar spent educating students attending the colleges, taxpayers will receive an average of $1.30 in return over the course of the students’ working lives. In other words, taxpayers enjoy an annual rate of return of 1.9%.
Social perspective
People in Oregon invested $1.5 billion in Oregon’s community colleges in FY 2021-22. This includes the colleges’ expenditures, student expenses, and student opportunity costs. In return, the state of Oregon will receive an estimated present value of $10.5 billion in added state revenue over the course of the students’ working lives. Oregon will also benefit from an estimated $198.8 million in present value social savings related to reduced crime, lower welfare and unemployment assistance, and increased health and well-being across the state. For every dollar society invests in Oregon’s community colleges, an average of $7.00 in benefits will accrue to Oregon over the course of the students’ careers.
Introduction
Oregon’s community colleges, the first established in 1949, served 122,424 credit and 64,752 non-credit students in FY 2021-22.
While Oregon’s community colleges affect the state in a variety of ways, many of them difficult to quantify, this study considers the colleges’ economic benefits. The colleges naturally help students achieve their individual potential and develop the knowledge, skills, and abilities they need to have fulfilling and prosperous careers. However, Oregon’s community colleges impact Oregon beyond influencing the lives of students. The colleges’ program offerings supply employers with workers to make their businesses more productive. The colleges, their day-to-day and construction operations, and the expenditures of their students support the state economy through the output and employment generated by state vendors. The benefits created by the colleges extend as far as the state treasury in terms of the increased tax receipts and decreased public sector costs generated by students across the state.
This report assesses the impact of Oregon’s community colleges as a whole on the state economy and the benefits generated by the colleges for students, taxpayers, and society. The approach is twofold. We begin with an economic impact analysis of the colleges on the Oregon economy. To derive results, we rely on a specialized Multi-Regional Social Accounting Matrix (MR-SAM) model to calculate the added income created in the Oregon 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 the colleges’ construction spending, 3) impact of student spending, and 4) impact of alumni who are still employed in the Oregon workforce.
The second component of the study measures the benefits generated by Oregon’s community colleges for the following stakeholder groups: students, taxpayers, and society. For students, we perform an investment analysis 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, the cost of interest incurred on student loans, 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 Oregon as a whole.
The study uses a wide array of data that are based on several sources, including the FY 2021-22 academic and financial reports from Oregon’s community colleges; industry and employment data from the Bureau of Labor Statistics and Census Bureau; outputs of Lightcast’s impact model and MR-SAM model; and a variety of published materials relating education to social behavior.
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