Study quantifies Northwest Arkansas Community College's economic impact

BENTONVILLE -- Society receives an average of $9.60 in benefits for every dollar invested in Northwest Arkansas Community College over the course of the college students' working lives, according to the findings of a recent economic impact study.

The study also found the college's students receive an additional $3.20 in future income for every dollar they pay for their education, a 13.2 percent annual rate of return. Taxpayers get back an average of $5.40 over the course of the students' careers in return for every dollar they invest, a 14.4 percent annual rate of return.

Northwest Arkansas Community College economic value

Some facts from the economic impact study conducted on the college, based on the 2013-14 school year:

• The college employed 783 faculty and staff members, 93 percent of whom lived in Northwest Arkansas.

• Students spent a total of about $14.6 million on tuition and fees and $6.6 million on books and supplies.

• An estimated 92 percent of students remain in the college’s service area after finishing their time at the school; another 3 percent settle outside the region but remain in Arkansas.

• Alumni are responsible for generating $109.6 million for the economy, the equivalent of 1,904 jobs.

Source: Economic Modeling Specialists International

Evelyn Jorgenson, college president, heralded the results of the study that was completed last month by Economic Modeling Specialists International, an Idaho-based firm.

"It's great news for us," Jorgenson told the Board of Trustees last week.

The firm produced an 82-page report filled with data, analysis and charts for the college. The study is based on academic and financial information from the 2013-14 school year.

The study and report took nearly four months to complete, according to Anna Brown, an economist and one of four employees at the firm involved in the project.

Exactly how the college stacks up against its peers in terms of economic impact is hard to pinpoint given differences among institutions in things such as regional economies and missions, Brown wrote in an email.

"I can say that NWACC's results were very strong compared to other studies we have done, with all returns being positive," Brown wrote.

The firm completed a similar economic impact study last year for the American Association of Community Colleges. That study found community college students receive $3.80 in higher future wages for every dollar they spend on their education, a rate of return of 17.8 percent; taxpayers nationally receive $5.80 for each dollar paid, a 14.3 percent return rate.

As for the Northwest Arkansas Community College study, the $9.60 in benefits for society for each dollar invested takes into account an estimated $140 million the state spent on education at the college, $55 million the college spent, $6 million in student expenses and $78.5 million in student opportunity costs, according to the report.

"Opportunity costs" refers to the benefits forgone from declining an alternative path; for example, those attending college forgo earnings they would have received had they chosen instead to work full-time.

In return, the state of Arkansas will receive an estimated present value of $1.3 billion in added state income over the course of the students' working lives. Arkansas also will benefit from an estimated $41.4 million in present value "social savings" related to reduced crime, lower welfare and unemployment, and increased health and well-being across the state, according to the report.

The report provides graphs showing the rates of alcohol and drug dependence, mental distress, obesity and unemployment are all lower among people with college degrees than those who have not gone to college.

Jorgenson said the study report would be shared with state legislators. The Legislature determines how much money the schools get each year.

State Rep. Dan Douglas, R-Bentonville, said Friday he hadn't heard about the report yet, but was interested in seeing it.

"We always like to know the money we are spending is making a difference," Douglas said. "(The report) would show hopefully it is making a difference and is a wise investment."

He added that he views such studies with a bit of skepticism, however, considering they are paid for by the institutions being studied and therefore typically show positive results.

The college's foundation paid for the study, according to Steven Hinds, the college's director of public relations and marketing.

The report probably will give legislators a more favorable view of the college, but won't necessarily lead to more funding, Douglas said.

"The state's budget is so tight, I don't know if anyone will get any increase in funding," he said.

State Rep. Greg Leding, D-Fayetteville, said he thinks the college adds "incredible value" to the region and its economy. He believes legislators will pay attention to the study.

"I don't think there's ever such a thing as too much information," Leding said. "You do want to make sure you're getting information from credible sources."

As for whether it might influence state funding to the college, he said, "It just has to do with what we have to work with. I hope legislators invest more in higher education."

The college received 27 percent of its revenue from the state government and 28 percent from the federal government in fiscal 2014. The rest came mostly from local government, tuition and fees, according to the report.

Economic Modeling Specialists International analyzed the economic contributions of 10 of the state's 22 two-year colleges -- including Northwest Arkansas Community College -- in 2006. The time had come to have another study done, Hinds said.

In addition to sharing the report with legislators, the college will share the report with the community, Hinds said.

"It will be useful should the college begin a fundraising campaign," he said.

Such a campaign is likely to begin next year as the college seeks money to build its Washington County Center next to Arvest Ballpark in Springdale.

NW News on 11/15/2015

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