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J U LY 2 0 2 0The Economic Value ofIvy Tech Community College MuncieEXECUTIVE SUMMARY
IV Y Tech Community College Muncie (Ivy Tech Muncie) creates value inmany ways. The campus plays a key role in helping students increase theiremployability and achieve their individual potential. The campus retains students in the region, generating new dollars and opportunities for the MuncieM U N C I E CA M P U S S E R V I C E R E G I O NCampus Service Region. Ivy Tech Muncie provides students with*the education, training, and skills they need to have fulfilling andprosperous careers. Furthermore, Ivy Tech Muncie is a place forstudents to meet new people, increase their self-confidence, andIvy Tech Muncie influencespromote their overall health and well-being.both the lives of its studentsIvy Tech Muncie influences both the lives of its students and theand the regional economy.regional economy. The campus supports a variety of industries inthe Muncie Campus Service Region, serves regional businesses, andbenefits society as a whole in Indiana from an expanded economyand improved quality of life. The benefits created by Ivy Tech Muncie even extendto the state government through increased tax revenues and public sector savings.This study measures the economic impacts created by Ivy Tech Muncie onthe business community and the benefits the campus generates in return forthe investments made by its key stakeholder groups—students, taxpayers, andsociety. The following two analyses are presented:Economic impact analysisInvestment analysisAll results reflect Ivy Tech Muncie employee, student, and financial data, provided by Ivy Tech Community College, for fiscal year (FY) 2018-19. Impacts onthe Muncie Campus Service Region economy are reported under the economicimpact analysis and are measured in terms of added income. The returns oninvestment to students, taxpayers, and society in Indiana are reported underthe investment analysis.*For the purposes of this analysis, the Muncie Campus Service Region is comprised of the following counties:Delaware and Henry.Introduction 2
Economic impact analysisIvy Tech Muncie promotes economic growth in the Muncie Campus Service Region through its direct expenditures and the resulting expendituresI M PAC T S C R E AT E D B Y I V Y T E C HM U N C I E I N F Y 20 1 8 -19of students and regional businesses. The campus serves as an employer andbuyer of goods and services for its day-to-day and construction operations.The campus’ activities retain students in the Muncie Campus Service Region,whose expenditures benefit regional vendors. In addition, Ivy Tech Muncie isa primary source of higher education to the Muncie Campus Service Region 17 millionOperations Spending Impactresidents and a supplier of trained workers to regional industries, enhancingoverall productivity in the regional workforce.Operations spending impact 9.5 millionConstruction Spending ImpactIvy Tech Muncie adds economic value to the Muncie Campus ServiceRegion as an employer of regional residents and a large-scale buyerof goods and services. In FY 2018-19, the campus employed 334 fulltime and part-time faculty and staff, 62% of whom lived in the Muncie Campus 1.2 millionStudent Spending ImpactService Region. Total payroll at Ivy Tech Muncie was 13.8 million, much of whichwas spent in the region for groceries, mortgage and rent payments, dining out,and other household expenses. In addition, the campus spent 10.4 million onday-to-day expenses related to facilities, supplies, and professional services. 59.8 millionAlumni ImpactIvy Tech Muncie’s day-to-day operations spending added 17 million in incometo the region during the analysis year. This figure represents the campus’ payroll, the multiplier effects generated by the in-region spending of the campusand its employees, and a downward adjustment to account for funding thatthe campus received from regional sources. The 17 million in added incomeis equivalent to supporting 375 jobs in the region.Construction spending impactIvy Tech Muncie invests in construction each year to maintain itsfacilities, create additional capacities, and meet its growing educa- 87.5 millionTOTAL IMPACT– OR –1,505JOBS SUPPORTEDtional demands. While the amount varies from year to year, thesequick infusions of income and jobs have a substantial impact on the regionaleconomy. In FY 2018-19, Ivy Tech Muncie’s construction spending generated 9.5 million in added income, which is equivalent to supporting 181 jobs.Student spending impactSome in-region students, referred to as retained students, wouldhave left the Muncie Campus Service Region if not for the existenceof Ivy Tech Muncie. While attending the campus, these retainedEconomic impact analysis3
students spent money on groceries, accommodation, transportation, and otherhousehold expenses. This spending generated 1.2 million in added incomefor the regional economy in FY 2018-19, which supported 31 jobs in the Muncie285100 64 51 29 25Campus Service Region.I V Y T E C H M U N C I E I M PAC T S B YINDUSTRY (JOBS SUPPORTED)ConstructionAlumni impactThe education and training Ivy Tech Muncie provides for regionalresidents has the greatest impact. Since its establishment, studentshave studied at Ivy Tech Muncie and entered the regional workforcewith greater knowledge and new skills. Today, thousands of former Ivy TechMuncie students are employed in the Muncie Campus Service Region. As aresult of their Ivy Tech Muncie educations, the students receive higher earnings and increase the productivity of the businesses that employ them. In FY2018-19, Ivy Tech Muncie alumni generated 59.8 million in added income forthe regional economy, which is equivalent to supporting 918 jobs.181Health Care & Social Assistance146Retail Trade82Manufacturing72Total impactIvy Tech Muncie added 87.5 million in income to the Muncie Campus ServiceGovernment, Non-EducationRegion economy during the analysis year, equal to the sum of the operationsand construction spending impacts, the student spending impact, and the alumni impact. For context, the 87.5 million impact was equal to approximately 1.6%of the total gross regional product (GRP) of the MuncieOne out of every 52 jobs in theCampus Service Region.Muncie Campus Service Region isIvy Tech Muncie’s total impact can also be expressed insupported by the activities of Ivy Techterms of jobs supported. The 87.5 million impact supported 1,505 regional jobs, using the jobs-to-sales ratiosMuncie and its students.specific to each industry in the region. This means thatone out of every 52 jobs in the Muncie Campus ServiceRegion is supported by the activities of Ivy Tech Muncie and its students. Inaddition, the 87.5 million, or 1,505 supported jobs, stemmed from differentindustry sectors. Among non-education industry sectors, Ivy Tech Muncie’sspending and alumni in the Construction industry sector supported 285 jobsin FY 2018-19. These are impacts that would not have been generated withoutthe campus’ presence in the Muncie Campus Service Region.Economic impact analysis4
Investment analysisAn investment analysis evaluates the costs associated with a proposed venture against its expected benefits. If the benefits outweigh the costs, then theinvestment is financially worthwhile. The analysis presented here considers IvyTech Muncie as an investment from the perspectives of students, taxpayers,and society in Indiana.Student perspectiveIn FY 2018-19, Ivy Tech Muncie served 3,568 credit and 167 non-creditS T U D E N T S S E E A H I G H R AT E O FRETURN FOR THEIR INVESTMENTIN IVY TECH MUNCIEstudents. In order to attend the campus, the students paid for tuition,fees, books, and supplies. They also took out loans and will incurinterest on those loans. Additionally, students gave up money they would have37 20 218.7%otherwise earned had they been working instead of attending college. The totalAverage annual return forIvy Tech Muncie studentsinvestment made by Ivy Tech Muncie’s students in FY 2018-19 amounted to apresent value of 17.3 million, equal to 8.4 million in out-of-pocket expenses9.9%(including future principal and interest on student loans) and 8.9 million inStock market 30-yearaverage annual returnforgone time and money.In return for their investment, Ivy Tech Muncie’s students will receive a stream0.8%of higher future earnings that will continue to grow throughout their workingInterest earned on savings account(National Rate Cap)lives. For example, the average Ivy Tech Muncie associate degree graduatefrom FY 2018-19 will see annual earnings that are 9,200 higher than a personwith a high school diploma or equivalent working in Indiana. Over a workingSource: Forbes’ S&P 500, 1989-2018. FDIC.gov, 6-2019.lifetime, the benefits of the associate degree over a high school diploma willamount to an undiscounted value of 386.4 thousand in higher earnings pergraduate. The present value of the cumulative higher future earnings that IvyTech Muncie’s FY 2018-19 students will receive over their working careers is 78.4 million.The average associate degree graduate from Ivy Tech Munciewill see an increase in earnings of 9,200 each year compared to aperson with a high school diploma or equivalent working in Indiana.44 586777 100 High schoolHigh schoolCertificateAssociateBachelor’s 21,100 27,800 32,400 37,000 48,200Source: Emsi employment data.Investment analysis5
The students’ benefit-cost ratio is 4.5. In other words, for every dollar studentsinvest in Ivy Tech Muncie, in the form of out-of-pocket expenses and forgonetime and money, they will receive a cumulative value of 4.50 in higher futureearnings. Annually, the students’ investment in Ivy Tech Muncie has an averageannual internal rate of return of 18.7%, which is impressive compared to the U.S.stock market’s 30-year average rate of return of 9.9%.STUDENT PERSPECTIVE 78.4 millionPresent value benefits 17.3 millionPresent value costsTaxpayer perspectiveIvy Tech Muncie generates more in tax revenue than it takes. Thesebenefits to taxpayers consist primarily of taxes that the state government will collect from the added revenue created in the state. AsIvy Tech Muncie students will earn more, they will make higher tax payments 61.1 millionNet present valueBenefit-cost ratioRate of return4.518.7%throughout their working lives. Students’ employers will also make higher taxpayments as they increase theiroutput and purchases of goodsand services. By the end of the FY2018-19 students’ working lives,the state government will havecollected a present value of 22.1million in added taxes.Benefits to taxpayers will alsoFor every dollar of publicmoney invested in IvyTech Muncie, taxpayerswill receive a cumulativeconsist of savings generated byvalue of 1.60 over thethe improved lifestyles of Ivy Techcourse of the students’Muncie students and the corresponding reduced governmentworking lives.services. Education is statisticallyTAXPAYER PERSPECTIVE 23.7 millionPresent value benefits 14.8 millionPresent value costs 8.9 millionNet present valueBenefit-cost ratioRate of return1.64.2%correlated with a variety of lifestylechanges. Students’ Ivy Tech Muncie educations will generate savings in threemain categories: 1) healthcare, 2) crime, and 3) income assistance. Improvedhealth will lower students’ demand for national health care services. In addition,students will be less likely to interact with the criminal justice system, resulting in areduced demand for law enforcement and victim costs. Ivy Tech Muncie studentswill be more employable, so their reduced demand for income assistance suchas welfare and unemployment benefits will benefit taxpayers. For a list of studyreferences, contact Ivy Tech Community College for a copy of the college-widemain report. Altogether, the present value of the benefits associated with an IvyTech Muncie education will generate 1.6 million in savings to state taxpayers.Total taxpayer benefits amount to 23.7 million, the present value sum of theadded taxes and public sector savings. Taxpayer costs are 14.8 million, equalSOCIAL PERSPECTIVE 325.8 millionPresent value benefits 65.2 millionPresent value costs 260.6 millionNet present valueBenefit-cost ratioRate of return5.0n/a*to the amount of state government funding Ivy Tech Muncie received in FY* The rate of return is not reported for the social per-2018-19. These benefits and costs yield a benefit-cost ratio of 1.6. This meansspective because the beneficiaries of the investmentthat for every dollar of public money invested in Ivy Tech Muncie in FY 2018-19,are not necessarily the same as the original investors.Investment analysis6
taxpayers will receive a cumulative value of 1.60 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is4.2%, which compares favorably to other long-term investments in the publicand private sectors.Social perspectiveSociety as a whole in Indiana benefits from the presence of IvyTech Muncie in two major ways. Primarily, society benefits from anincreased economic base in the state. This is attributed to higherstudent earnings and increased business output, which raise economic prosperity in Indiana.Benefits to society also consist of the savings generated by the improved lifestyles of Ivy Tech Muncie students. As discussed in the previous section, education is statistically correlated with a variety of lifestyle changes that generate socialsavings. Note that these costs are avoided by the consumers but are distinct fromthe costs avoided by the taxpayers outlined above. Healthcare savings includeavoided medical costs associated with smoking, alcohol dependence, obesity,drug abuse, and depression. Savings related to crime include reduced securityexpenditures and insurance administration, lower victim costs, and reducedexpenditures by the criminal justice system. Income assistance savings includeSOCIAL BENEFITS IN INDIANAFROM IVY TECH MUNCIESocial savings 7.5 million98 2 P98 325.8 millionTotal benefitsto societyAdded income 318.3 millionreduced welfare and unemployment claims. For a list of study references, contact Ivy Tech Community College for a copy of the college-wide main report.Altogether, the social benefits of Ivy Tech Muncie equal a present value of 325.8 million. These benefits include 318.3 million in added income throughstudents’ increased lifetime earnings and increased business output, as well as 7.5 million in social savings related to health, crime, and income assistance inIndiana. People in Indiana invested a present value total of 65.2 million in IvyTech Muncie in FY 2018-19. The cost includes all the campus and student costs.The benefit-cost ratio for society is 5.0, equal to the 325.8 million in benefitsdivided by the 65.2 million in costs. In other words, for every dollar investedin Ivy Tech Muncie, people in Indiana will receive a cumulative value of 5.00in benefits. The benefits of this investment will occur for as long as Ivy TechMuncie’s FY 2018-19 students remain employed in the state workforce.Summary of investment analysis resultsThe results of the analysis demonstrate that Ivy Tech Muncie is a strong investment for all three major stakeholder groups—students, taxpayers, and society.As shown, students receive a great return for their investments in an Ivy TechMuncie education. At the same time, taxpayers’ investment in Ivy Tech Munciereturns more to government budgets than it costs and creates a wide range ofsocial benefits throughout Indiana.Investment analysis7
ConclusionThe results of this study demonstrate that Ivy TechMuncie creates value from multiple perspectives. Thecampus benefits regional businesses by increasingconsumer spending in the region and supplying a steadyflow of qualified, trained workers to the workforce. IvyTech Muncie enriches the lives of students by raisingThe results of this study demonstratethat Ivy Tech Muncie creates valuefrom multiple perspectives.their lifetime earnings and helping them achieve theirindividual potential. The campus benefits state taxpayers through increased tax receipts and a reduced demand for governmentsupported social services. Finally, Ivy Tech Muncie benefits society as a wholein Indiana by creating a more prosperous economy and generating a variety ofsavings through the improved lifestyles of students.About the studyData and assumptions used in the study are based on several sources, including the Ivy Tech Muncie FY 2018-19 academic and financial reports from IvyTech Community College, industry and employment data from the U.S. Bureauof Labor Statistics and U.S. Census Bureau, outputs of Emsi’s Multi-RegionalSocial Accounting Matrix model, and a variety of studies and surveys relatingeducation to social behavior. The study applies a conservative methodologyand follows standard practice using only the most recognized indicators ofeconomic impact and investment effectiveness. For a full description of thedata and approach used in the study, please contact Ivy Tech Community College for a copy of the college-wide main report.Emsi is a labor market analytics firm that integrates data from a wide variety of sources to serve professionals in highereducation, economic development, workforce development, talent acquisition, and site selection. Emsi is a leading providerof economic impact studies and labor market data to educational institutions in the U.S. and internationally. Since 2000,Emsi has completed over 2,000 economic impact studies for institutions across three countries. For more informationabout Emsi’s products and services, visit www.economicmodeling.com.Introduction8
Muncie students are employed in the Muncie Campus Service Region. As a result of their Ivy Tech Muncie educations, the students receive higher earn-ings and increase the productivity of the businesses that employ them. In FY 2018-19, Ivy Tech Muncie alumni generated 59.8 millionin added income for
