Southwest Economic Impact Study Fact Sheet

JUNE 2018

FACT SHEET

The Economic Value of Southwest Tennessee Community College

Southwest Tennessee Community College (Southwest) creates a significant positive impact on the business community and generates a return on investment to its major stakeholder groups—students, taxpayers, and society. Using a two-pronged approach that involves an economic impact analysis and an investment analysis, this study calculates the benefits received by each of these groups. Results of the analysis reflect fiscal year (FY) 2016-17.

IMPACTS CREATED BY SOUTHWEST IN FY 2016-17 ADDED INCOME

JOBS

$70.2 million

1,529

Operations spending impact

$11.2 million

297

IMPACT ON BUSINESS COMMUNITY During the analysis year, Southwest and its students added $126.6 million in income to the Mid-South1 economy, approximately equal to 0.2% of the region’s total gross regional product (GRP). Southwest’s impact supported 2,457 jobs in FY 2016-17.

The economic impacts of Southwest break down as follows: Operations spending impact •

Payroll amounted to $41.4 million, much of which was spent in the Mid-South to purchase groceries, clothing, and other household goods and services. The

Student spending impact

$45.1 million

632

Alumni impact

$126.6 million

Southwest employed 1,126 full-time and part-time employees in FY 2016-17.

college spent another $39.6 million to support its day-to-day operations.

•

The net impact of college payroll and expenses in the Mid-South during the analysis year was approximately $70.2 million in income.

Student spending impact

2,457

•

Around 4% of credit students attending Southwest originated from outside the region. Some of these students relocated to the Mid-South. In addition, a number of students would have left the region if not for Southwest. These

Total impact

relocated and retained students spent money on groceries, transportation, rent, and so on at regional businesses.

•

The expenditures of relocated and retained students during the analysis year added approximately $11.2 million in income to the Mid-South economy.

1

The Mid-South is comprised of Shelby and Fayette Counties.

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4220+ 2 STUDENT RATE OF RETURN

Alumni impact •

21.2%

•

Over the years, students have studied at Southwest and entered or re-entered the workforce with newly-acquired skills. Today, thousands of these former students are employed in the Mid-South.

The impact of former students currently employed in the regional workforce amounted to $45.1 million in added income during the analysis year.

RETURN ON INVESTMENT TO STUDENTS, TAXPAYERS, AND SOCIETY

10.1%

0.8%

Average Stock Market Interest Annual 30-year Earned on Return for Average Savings Southwest Annual Account Students Return* (National Rate Cap)**

Student perspective •

•

* Forbes’ S&P 500, 1987-2016. ** FDIC.gov, 7-2017.

For every $1 spent by…

cover the cost of tuition, fees, supplies, less residual aid. They also forwent $3.5 million in money that they would have earned had they been working instead of learning.

In return for the monies invested in the college, students will receive a present value of $69.8 million in increased earnings over their working lives. This translates to a return of $8.70 in higher future earnings for every dollar that students invest in their education. The average annual return for students is 21.2%.

Taxpayer perspective •

STUDENTS

Southwest’s FY 2016-17 students paid a total present value of $4.5 million to

In FY 2016-17, state and local taxpayers in Tennessee paid $33.5 million to support the operations of Southwest. The net present value of the added tax

$8.70

revenue stemming from the students’ higher lifetime earnings and the increased output of businesses amounts to $46.5 million in benefits to taxpayers. Savings to the public sector add another $1 million in benefits due to a reduced demand

Gained in lifetime earnings for STUDENTS

for government-funded services in Tennessee.

•

Dividing benefits to taxpayers by the associated costs yields a 1.4 benefit-cost ratio, i.e., every dollar in costs returns $1.40 in benefits. The average annual return

TAXPAYERS

on investment for taxpayers is 3.2%.

$1.40 Gained in added taxes and public sector savings for TAXPAYERS

Social perspective •

The economic base in Tennessee will grow by $481.6 million over the course of the students’ working lives. Society will also benefit from $4.5 million in present value social savings related to reduced crime, lower unemployment, and increased health and well-being across the state.

SOCIETY •

$6.90

For every dollar that society spent on Southwest FY 2016-17 educations, society will receive a cumulative value of $6.90 in benefits, for as long as the FY 2016-17

Gained in added state revenue and social savings for SOCIETY

student population at Southwest remains active in the state workforce.

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