Education by the Numbers

By Jake Ludes III, Eva I. Kampits & Nadia Alam

 

PRINTER FRIENDLY VERSIONS:

MSWORD

ACROBAT

 

Why education is a smart investment in an uncertain economy

As a receding economy contributes to public anxiety about jobs and an uncertain financial future, education becomes a target of state and local cuts. Reducing education funding does not help solve economic woes, however. According to the most recent economic impact report of the New England Association of Schools & Colleges (NEASC), cuts in expenditures for K-12 education have a reverse effect: they slow the growth of education as an economic engine and harm the higher education community as students progress through the pipeline.

 

NEASC’s economic impact assessment, the only known study to explore the economic impact of New England K-12 schools and higher education institutions in combination, finds that investment in New England schools and higher education institutions reaps tremendous short-term returns to the regional market. Yet these short-term benefits are ordinarily overlooked by the public and even by elected officials. Perhaps this is inevitable since most studies and news features emphasize long-term returns in education investments, such as lower taxpayer spending on crime and welfare, higher personal wages and, in turn, a rise in state income. While the long-term returns to educational investment are undoubtedly significant, the short-term rewards are less frequently studied, and therefore not known or valued by most people.

 

Economic impact assessments typically highlight positive short-term returns from a given financial investment (e.g. job growth, increase in innovation, rise in inter-industry commerce, revenue growth for local businesses, etc.). It is for this reason that economic impact assessments are a useful tool for educational institutions. By shedding light on the immediate rewards brought about by educational investment, educational institutions can garner financial support from the public and elected leaders. After all, the education sector not only provides jobs to thousands of New Englanders; it also propels substantial inter-industry commerce through expenditures on a vast array of goods and services.

 

Perhaps the most notable finding from NEASC’s study is that the collective economic impact of accredited public and independent K-12 schools together with higher education institutions amounted to $114.7 billion in fiscal 2006 (the latest year that comprehensive audited school financial data are available). This is a significant increase from the previous study, which found that, just two years earlier, accredited educational institutions in the six-state region had an economic impact of $93.5 billion. Thus, in two years, the identifiable economic impact of our member schools, colleges and universities rose by $21 billion or 23 percent.

 

In the years ahead, NEASC anticipates that the economic impact of schools, colleges and universities and the subsequent ripple effects on employment will continue to expand, especially since higher percentages of the population are enrolling in postsecondary education and many of the region’s schools are aging, so significant amounts will be spent on construction, capital improvements and technology upgrades.

 

Indeed, educational spending has a significant impact on industries like construction, transportation, multimedia, sports, healthcare, publishing and others that supply goods and services to schools on a large scale. Analyzing data from the U.S. Census Bureau, NEASC found that expenditures on everyday K-12 school operation and maintenance amounted to more than $2.4 billion in fiscal 2006 white expenditures on instructional supplies were more than $525.6 million.

 

When education budgets are cut, a ripple effect hits other businesses that produce goods and services purchased by schools. A recent report issued by the Massachusetts Department of Education states per-student expenditures on instructional services have remained stagnant from 2002 to 2007, while inflation has risen. Insufficient investment in human capital has significant long-term consequences on growing a knowledge based economy. The strength of New England’s economy is unequivocally affected by the region’s investment in K-12 schooling because the preparedness of high school graduates impacts their performance in college and subsequently in the labor force.

 

In other words, we all gain when we invest in our educational institutions; we lose when we do not invest enough. As New England’s economy becomes ever more reliant on the knowledge capital of a college educated workforce, the need to have robust educational institutions through the K-through-postsecondary pipeline is more imperative than ever before.

 

Jake Ludes III is executive director and CEO of the New England Association of Schools & Colleges.  Eva I. Kampits is director at NEASC.  Nadia Alam is a research associate at NEASC.  Excerpted and reprinted with permission from the New England Journal of Higher Education.

 

Economic Impact of NEASC-accredited

Schools and Higher Education Institutions,

Fiscal Year 2006

·         Includes public and independent schools