The Economic Value of SUNY Westchester Community College JUNE 2O23 Main Report
2 3 Preface 5 Executive summary 6 Economic impact analysis 8 Investment analysis 10 Introduction 12 Chapter 1: Profile of SUNY Westchester Community College and the economy 14 SUNY WCC employee and finance data 16 The Westchester County economy 19 Chapter 2: Economic impacts on the Westchester County economy 22 Operations spending impact 25 Student spending impact 27 Alumni impact 32 Total SUNY WCC impact 34 Chapter 3: Investment analysis 35 Student perspective 44 Taxpayer perspective 49 Social perspective 54 Chapter 4: Conclusion 56 Appendices 56 Resources and references 64 Appendix 1: Sensitivity analysis 69 Appendix 2: Glossary of terms 72 Appendix 3: Frequently asked questions (FAQs) 75 Appendix 4: Example of sales versus income 76 Appendix 5: Lightcast MR-SAM 81 Appendix 6: Value per credit hour equivalent and the Mincer function 84 Appendix 7: Alternative education variable 85 Appendix 8: Overview of investment analysis measures 89 Appendix 9: Shutdown point 92 Appendix 10: Social externalities Contents
3 Preface Lightcast is a leading provider of economic impact studies and labor market data to educational institutions, workforce planners, and regional developers in the U.S. and internationally. Since 2000, Lightcast has completed over 3,000 economic impact studies for educational institutions in three countries. Along the way, we have worked to continuously update and improve our methodologies to ensure that they conform to best practices. The present study reflects the latest version of our model, representing the most up-to-date theory for conducting human capital economic impact analyses. Among the most vital departures from Lightcast’s previous economic model is the conversion from traditional Leontief input-output multipliers to those generated by Lightcast’s Multi-Regional Social Accounting Matrix (MR-SAM). Though Leontief multipliers are based on sound theory, they are less comprehensive and adaptable than MR-SAM multipliers. Moving to the more robust MR-SAM framework allows us to increase the level of sectoral detail in the model and remove any aggregation error that may have occurred under the previous framework. This change in methodology primarily affects the regional economic impact analysis provided in Chapter 2. The multi-regional capacity of the MR-SAM also increases the accuracy with which we calculate the statewide labor and non-labor multipliers used in the investment analysis in Chapter 3. Another major change in the model is the replacement of John Parr’s development index with a proprietary mapping of instructional programs to regional industries. The Parr index was a significant move forward when we first applied it in 2000 to approximate the industries where students were most likely to find employment after leaving their institution. Now, by mapping the institution’s program completers to detailed regional industries, we can move from an approach based on assumptions to one based on the actual occupations for which students are trained. The new model also reflects changes to the calculation of the alternative education variable. This variable addresses the counterfactual scenario of what would have occurred if the institution did not exist. Those students that would have obtained a similar education elsewhere and worked in the region, regardless of the institution under analysis, are excluded from the impact. The previous model measured the distance between institutions and the associated differences in tuition prices to determine the change in the students’ demand for education. In the current model, we assume 15% of
4 the institution’s students would find alternative education opportunities and remain in or return to the region. A sensitivity analysis of this adjustment is presented in Chapter 4. This model also reflects several changes related to how the investment analysis results are calculated for students, taxpayers, and society. The primary change was extending the estimated amount of time it takes workforce development students to find employment after leaving college. Previously, it was assumed that 100% of these students would find employment immediately after leaving the institution. In order to reflect the job market more accurately, that number has been reduced to 25%, so we now estimate that only 75% of students find employment within two years of leaving their institution. This model, as with previous versions, has various external data inputs which reflect the most current economic activity and data. These data include (but are not limited to): the taxpayer discount rate; the student discount rate; the consumer savings rate; the consumer price index; national health expenditures; state and local industry earnings as a percent of total industry earnings; income tax brackets and sales tax by state; and unemployment, migration, and life tables. All data sets are maintained quarterly, although most updates occur only once a year. These and other changes mark a considerable upgrade to the Lightcast economic impact model. Our hope is that these improvements will provide a better product for our clients – reports that are more transparent and streamlined, methodology that is more comprehensive and robust, and findings that are more relevant and meaningful to today’s audiences. While this report is useful in demonstrating the current value of SUNY Westchester Community College (SUNYWCC), it is not intended for comparison with SUNYWCC’s previous study conducted by Lightcast in 2009. Due to the extent of the changes to Lightcast’s model since 2009, differences between results from the 2009 study and the present study do not necessarily indicate changes in the value of the college. Lightcast encourages our readers to approach us directly with any questions or comments they may have about the study so that we can continue to improve our model and keep the public dialogue open about the positive impacts of education. A Note on Comparing Studies It is important to note that the changes outlined above represent important improvements to our methodology, ultimately providing more accurate and robust results. However, these changes make it difficult to directly compare past studies to the current study, with the effectiveness of the comparison decreasing as the age of the previous study increases. Additionally, in general Lightcast discourages comparisons between individual institutions and between educational systems since many factors, such as regional economic and political conditions, institutional differences, and student demographics are outside of the institution’s control. Finally, every institution is unique, meaning the results and types of impact or investment measures are tailored to the specific institution or educational system.
Executive summary This report assesses the impact of SUNY Westchester Community College (SUNY WCC) on the county economy and the benefits generated by the college for students, taxpayers, and society. The results of this study show that SUNY WCC creates a positive net impact on the county economy and generates a positive return on investment for students, taxpayers, and society.
6 Executive summary During the analysis year, SUNY WCC spent $94.4 million on payroll and benefits for 1,264 full-time and part-time employees, and spent another $24.1 million on goods and services to carry out its day-to-day operations. This initial round of spending creates more spending across other businesses throughout the county economy, resulting in the commonly referred to multiplier effects. This analysis estimates the net economic impact of SUNYWCC that directly accounts for the fact that state and local dollars spent on SUNY WCC could have been spent elsewhere in the county if not directed towards SUNY WCC and 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 SUNY WCC. This analysis shows that in fiscal year (FY) 2021-22, operations and student spending of SUNYWCC, together with the enhanced productivity of its alumni, generated $585.6 million in added income for the Westchester County economy. The additional income of $585.6 million created by SUNY WCC is equal to approximately 0.6% of the total gross regional product (GRP) of Westchester County. For perspective, this impact from the college is as large as nearly a third of the entire Transportation & Warehousing industry in the county. The impact of $585.6 million is equivalent to supporting 5,837 jobs. These economic impacts break down as follows: The additional income of $585.6 million created by SUNY WCC is equal to approximately 0.6% of the total gross regional product of Westchester County. Economic impact analysis WES TCHES T ER COUNTY, NEW YORK
7 Executive summary Operations spending impact Payroll and benefits to support SUNYWCC’s day-to-day operations amounted to $94.4 million. The college’s non-pay expenditures amounted to $24.1 million. The net impact of operations spending by the college in Westchester County during the analysis year was approximately $109.6 million in added income, which is equivalent to supporting 1,363 jobs. Student spending impact Some students are residents of Westchester County who would have left the county if not for the existence of SUNYWCC. The money that these students, referred to as retained students, spent toward living expenses in Westchester County is attributable to SUNY WCC. The expenditures of retained students in the county during the analysis year added approximately $10 million in income for the Westchester County economy, which is equivalent to supporting 108 jobs. Alumni impact Over the years, students gained new skills, making them more productive workers, by studying at SUNYWCC. Today, thousands of these former students are employed in Westchester County. The accumulated impact of former students currently employed in the Westchester County workforce amounted to $466.1 million in added income for the Westchester County economy, which is equivalent to supporting 4,367 jobs. Important note When reviewing the impacts estimated in this study, it is important to note that the study reports impacts in the form of added income rather than sales. Sales includes all of the intermediary costs associated with producing goods and services, as well as money that leaks out of the region as it is spent at out-of-region businesses. Income, on the other hand, is a net measure that excludes these intermediary costs and leakages and is synonymous with gross regional product (GRP) and value added. For this reason, it is a more meaningful measure of new economic activity than sales.
8 Executive summary 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 SUNY WCC 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 college, which they will pay back over time. While some students were employed while attending the college, 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 $48.1 million in present value student costs. In return, students will receive a present value of $195.9 million in increased earnings over their working lives. This translates to a return of $4.10 in higher future earnings for every dollar that students invest in their education at SUNY WCC. The corresponding annual rate of return is 16.4%. Taxpayer perspective Taxpayers provided $71.2 million of state and local funding to SUNY WCC in FY 2021-22. In return, taxpayers will receive an estimated present value of $84.1 million in added tax revenue stemming from the students’ higher lifetime earnings and the increased output of businesses. Savings to the public sector add another Investment analysis
9 Executive summary estimated $12.5 million in benefits due to a reduced demand for government-funded social services in New York. For every tax dollar spent educating students attending SUNY WCC, taxpayers will receive an average of $1.40 in return over the course of the students’ working lives. In other words, taxpayers receive an annual rate of return of 2.1%. Social perspective People in New York invested $140.3 million in SUNY WCC in FY 2021-22. This includes the college’s expenditures, student expenses, and student opportunity costs. In return, the state of New York will receive an estimated present value of $910.6 million in added state revenue over the course of the students’ working lives. New York will also benefit from an estimated $18.7 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 SUNY WCC, an average of $6.60 in benefits will accrue to New York over the course of the students’ careers. For every tax dollar spent educating students attending SUNY WCC, taxpayers will receive an average of $1.40 in return over the course of the students’ working lives. Lightcast gratefully acknowledges the excellent support of the staff at SUNYWestchester Community College in making this study possible. Special thanks go to Dr. Belinda Miles, President, who approved the study, and to Yelizaveta Adams, Ed.D., Assistant Dean of Institutional Research, Planning, and Effectiveness; Naomi Dogani, Assistant Director of Institutional Research, Planning, and Effectiveness; Jonathan Reyes, Senior Research Analyst, Institutional Research, Planning, and Effectiveness; Joseph Phillips, Ed.D., Research Analyst, Institutional Research, Planning, and Effectiveness; and Peter Lillo, Program Specialist, who collected much of the data and information requested. Any errors in the report are the responsibility of Lightcast and not of any of the above-mentioned individuals. Acknowledgments
10 Executive summary SUNY Westchester Community College (SUNY WCC), established in 1946, has today grown to serve 15,417 credit and 6,943 non-credit students. The college is led by Dr. Belinda Miles, President. The college’s service region, for the purpose of this report, is Westchester County. While SUNY WCC affects the county in a variety of ways, many of them difficult to quantify, this study considers the college’s economic benefits. The college naturally helps students achieve their individual potential and develop the knowledge, skills, and abilities they need to have fulfilling and prosperous careers. However, SUNYWCC impacts Westchester County beyond influencing the lives of students. The college’s program offerings supply employers with workers to make their businesses more productive. The college, its day-to-day operations, and the expenditures of its students support the county economy through the output and employment generated by county vendors. The benefits created by the college 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 SUNY WCC as a whole on the county economy and the benefits generated by the college for students, taxpayers, and society. The approach is twofold. We begin with an economic impact analysis of the college on the Westchester County 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 Westchester County 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 college’s day-to-day operations, 2) impact of student spending, and 3) impact of alumni who are still employed in the Westchester County workforce. The second component of the study measures the benefits generated by SUNYWCC for the following stakeholder groups: students, taxpayers, and society. For students, we perform an investment analysis to determine how the money spent by students Introduction SUNY WCC impacts Westchester County beyond influencing the lives of students.
11 Executive summary 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 college 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 New York 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 SUNY WCC; 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.
Profile of SUNY Westchester Community College and the economy Chapter 1:
13 Chapter 1: Profile of SUNY Westchester Community College and the economy SUNY WESTCHESTER COMMUNITY COLLEGE (SUNY WCC) is a comprehensive two-year college located on 218 magnificent, forested acres in Valhalla, southern New York. Established in 1946 as part of the State University of New York system, SUNY WCC has a rich history of serving students and community members through flexible course offerings in relevant, in-demand fields. Focusing on Westchester County, the college offers a variety of associate’s and certificate degree programs, as well as transfer, vocational, and community-based courses. In FY 2021-22, SUNYWCC served 15,417 credit and 6,943 non-credit students. SUNY WCC provides exceptional educational opportunities in a variety of formats, including online and in-person options. With more than 80 degree and certificate program offerings, SUNYWCC’s flexible learning models make it easy for students to explore their interests and gain valuable skills. The college’s diverse program offerings include Business Technologies, Communications and Media Arts, Cybersecurity, Engineering Science, Nursing, and more. In addition, SUNY WCC offers a robust assortment of continuing education classes such as industry-recognized workforce development training and personal enrichment classes designed to meet the needs of adult learners and the community. SUNYWCC is also a vital asset to regional employers. Besides offering broad opportunities to screen and hire potential workers through internships, job fairs, and on-campus recruitment and career panels, the college also adds highly-trained and knowledgeable human capital to the local workforce and provides customized counseling and the most up-to-date vocational training programs to regional employers at the Westchester Educational Opportunity Center. Through building strong partnerships with businesses and organizations interested in upskilling and professional development of their existing or prospective workers, SUNY WCC continuously contributes to community well-being and fosters local economic prosperity. With more than 80 degree and certificate program offerings, SUNY WCC’s flexible learningmodelsmake it easy for students to explore their interests and gain valuable skills.
14 Chapter 1: Profile of SUNY Westchester Community College and the economy SUNY WCC employee and finance data The study uses two general types of information: 1) data collected from the college and 2) county economic data obtained from various public sources and Lightcast’s proprietary data modeling tools.1 This chapter presents the basic underlying information from SUNY WCC used in this analysis and provides an overview of the Westchester County economy. Employee data Data provided by SUNY WCC include information on faculty and staff by place of work and by place of residence. These data appear in Table 1.1. As shown, SUNY WCC employed 495 full-time and 769 part-time faculty and staff in FY 2021-22. Of these, all worked in the county and 62% lived in the county. These data are used to isolate the portion of the employees’ payroll and household expenses that remains in the county economy. Revenues Figure 1.1 shows the college’s annual revenues by funding source – a total of $137.2 million in FY 2021-22. As indicated, tuition and fees comprised 20% of total revenue, and revenues from local, state, and federal government sources comprised another 78%. All other revenue (i.e., auxiliary revenue, sales and services, interest, and donations) comprised the remaining 2%. These data are critical in identifying the annual costs of educating the student body from the perspectives of students, taxpayers, and society. Expenditures Figure 1.2 displays SUNY WCC’s expense data. The combined payroll at SUNY WCC, including student salaries and wages, amounted to $94.4 million. This was equal to 75% of the college’s total expenses for FY 2021-22. Other expenditures, including operation and maintenance of plant, depreciation and interest, and purchases of supplies and services, made up $31.3 million. When we calculate the impact of these expenditures in Chapter 2, we exclude expenses for depreciation and interest, as they represent a devaluing of the college’s assets rather than an outflow of expenditures. Students SUNY WCC served 15,417 students taking courses for credit and 6,943 non-credit students in FY 2021-22. These numbers represent unduplicated student headcounts. The breakdown of the student body by gender was 54% female and 46% male. The breakdown by ethnicity was 67% students of color, 28% white, and 5% unknown. 1 See Appendix 5 for a detailed description of the data sources used in the Lightcast modeling tools. Figure 1.2: SUNY WCC expenses by function, FY 2021-22 Operation and maintenance of plant 9% Depreciation and interest 6% Employee salaries, wages, and benefits 75% Source: Data provided by SUNY WCC. All other expenditures 10% 75+66+99+1010+U$125.7 million Total expenditures Table 1.1: Employee data, FY 2021-22 Full-time faculty and staff 495 Part-time faculty and staff 769 Total faculty and staff 1,264 % of employees who work in the county 100% % of employees who live in the county 62% Source: Data provided by SUNY WCC. Figure 1.1: SUNY WCC revenues by source, FY 2021-22 Local government* 22% All other revenue 2% * Revenue from state and local government includes capital appropriations. Source: Data provided by SUNY WCC. 20+2626+3030+2222++22+U$137.2 million Total revenues Federal government 26% State government* 30% Tuition & fees 20%
15 Chapter 1: Profile of SUNY Westchester Community College and the economy The students’ overall average age was 27 years old.2 An estimated 80% of students remain in Westchester County after finishing their time at SUNY WCC, another 18% settle outside the county but in the state, and the remaining 2% settle outside the state.3 Table 1.2 summarizes the breakdown of the student population and their corresponding awards and credits by education level. In FY 2021-22, SUNYWCC served 1,596 associate degree graduates and 111 certificate graduates. Another 10,708 students enrolled in courses for credit but did not complete a degree during the reporting year. The college offered dual credit courses to high schools, serving a total of 3,002 students over the course of the year. The college also served 3,712 basic education students and 2,613 personal enrichment students enrolled in non-credit courses. Non-degree seeking students enrolled in workforce development programs accounted for 618 students. We use credit hour equivalents (CHEs) to track the educational workload of the students. One CHE is equal to 15 contact hours of classroom instruction per semester. In the analysis, we exclude the CHE production of personal enrichment students under the assumption that they do not attain knowledge, skills, and abilities that will increase their earnings. The average number of CHEs per student (excluding personal enrichment students) was 5.1. 2 Unduplicated headcount, gender, ethnicity, and age data provided by SUNY WCC. 3 Settlement data provided by SUNY WCC. Table 1.2: Breakdown of student headcount and CHE production by education level, FY 2021-22 Category Headcount Total CHEs Average CHEs Associate degree graduates 1,596 13,129 8.2 Certificate graduates 111 700 6.3 Continuing students 10,708 52,004 4.9 Dual credit students 3,002 12,992 4.3 Basic education students 3,712 19,448 5.2 Personal enrichment students 2,613 12,983 5.0 Workforce development students 618 2,903 4.7 Total, all students 22,360 114,160 5.1 Total, less personal enrichment students 19,747 101,177 5.1 Source: Data provided by SUNY WCC. Estimate of average CHEs per personal enrichment student represents an average between basic education and workforce development student values.
16 Chapter 1: Profile of SUNY Westchester Community College and the economy SUNY WCC primarily serves Westchester County in New York. Since the college was first established, it has been serving Westchester County by enhancing the workforce, providing local residents with easy access to higher education opportunities, and preparing students for highly-skilled, technical professions. Table 1.3 summarizes the breakdown of the county economy by major industrial sector ordered by total income, with details on labor and non-labor income. Labor income refers to wages, salaries, and proprietors’ income. Non-labor income refers to profits, rents, and other forms of investment income. Together, labor and non-labor income comprise the county’s total income, which can also be considered the county’s gross regional product (GRP). The Westchester County economy Table 1.3: Income by major industry sector in Westchester County, 2022* Industry sector Labor income (millions) Non-labor income (millions) Total income (millions)** % of total income Sales (millions) Other Services (except Public Administration) $1,480 $14,894 $16,375 16% $21,145 Finance & Insurance $8,022 $4,550 $12,572 13% $21,280 Professional & Technical Services $8,387 $2,726 $11,113 11% $18,741 Health Care & Social Assistance $8,157 $1,362 $9,519 9% $14,810 Government, Non-Education $4,685 $1,165 $5,849 6% $28,400 Retail Trade $2,815 $2,604 $5,418 5% $9,066 Real Estate & Rental & Leasing $3,299 $2,008 $5,306 5% $12,578 Wholesale Trade $1,916 $2,889 $4,805 5% $8,057 Government, Education $4,323 $0 $4,323 4% $4,996 Construction $3,174 $797 $3,971 4% $8,125 Information $1,419 $2,287 $3,706 4% $6,164 Manufacturing $1,840 $1,567 $3,407 3% $6,794 Management of Companies & Enterprises $2,304 $242 $2,546 3% $4,143 Administrative & Waste Services $1,881 $512 $2,393 2% $4,320 Accommodation & Food Services $1,190 $979 $2,169 2% $4,104 Utilities $392 $1,712 $2,103 2% $3,573 Transportation & Warehousing $1,330 $579 $1,908 2% $3,823 Arts, Entertainment, & Recreation $935 $569 $1,504 1% $2,370 Educational Services $1,106 $153 $1,259 1% $1,738 Agriculture, Forestry, Fishing & Hunting $34 $17 $52 <1% $105 Mining, Quarrying, & Oil and Gas Extraction $8 $18 $25 <1% $47 Total $58,696 $41,629 $100,325 100% $184,378 * Data reflect the most recent year for which data are available. Lightcast data are updated quarterly. ** Numbers may not add due to rounding. Source: Lightcast industry data 100 + 76 + 67 + 58 + 35 + 33 + 32 + 29 + 26 + 24 + 22 + 20 + 15 + 14 + 13 + 12 + 11 + 9 + 7 + 2 + 1
17 Chapter 1: Profile of SUNY Westchester Community College and the economy As shown in Table 1.3, the total income, or GRP, of Westchester County is approximately $100.3 billion, equal to the sum of labor income ($58.7 billion) and non-labor income ($41.6 billion). In Chapter 2, we use the total added income as the measure of the relative impacts of the college on the county economy. Figure 1.3 provides the breakdown of jobs by industry in Westchester County. The Health Care & Social Assistance sector is the largest employer, supporting 84,678 jobs or 13.5% of total employment in the county. The second largest employer is the Finance & Insurance sector, supporting 62,647 jobs or 10.0% of the county’s total employment. Altogether, the county supports 629,008 jobs.4 Table 1.4 and Figure 1.4 present the mean earnings by education level in Westchester County and the state of New York at the midpoint of the average-aged worker’s career. These numbers are derived from Lightcast complete employment data on average 4 Job numbers reflect Lightcast’s complete employment data, which includes the following four job classes: 1) employees who are counted in the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW), 2) employees who are not covered by the federal or state unemployment insurance (UI) system and are thus excluded from QCEW, 3) self-employed workers, and 4) extended proprietors. Figure 1.3: Jobs by major industry sector in Westchester County, 2022* Health Care & Social Assistance Finance & Insurance Real Estate & Rental & Leasing Professional & Technical Services Retail Trade Other Services (except Public Administration) Construction Government, Non-Education Administrative & Waste Services Accommodation & Food Services Government, Education Transportation & Warehousing Educational Services Arts, Entertainment, & Recreation Wholesale Trade Manufacturing Management of Companies & Enterprises Information Utilities Agriculture, Forestry, Fishing & Hunting Mining, Quarrying, & Oil and Gas Extraction * Data reflect the most recent year for which data are available. Lightcast data are updated quarterly. Source: Lightcast employment data 0 30,000 90,000 60,000 100+ 73+ 69+ 63+ 61+ 46+ 44+ 39+ 36+ 35+ 34+ 26+ 26+ 21+ 17+ 15+ 13+ 12+ 2+ 1+ 1
18 Chapter 1: Profile of SUNY Westchester Community College and the economy earnings per worker in the county and the state.5 The numbers are then weighted by the college’s demographic profile, and state earnings are weighted by students’ settlement patterns. As shown, students have the potential to earn more as they achieve higher levels of education compared to maintaining a high school diploma. Students who earn an associate degree from SUNY WCC can expect approximate wages of $47,700 per year withinWestchester County, approximately $9,600 more than someone with a high school diploma. 5 Wage rates in the Lightcast MR-SAMmodel combine state and federal sources to provide earnings that reflect complete employment in the state, including proprietors, self-employed workers, and others not typically included in regional or state data, as well as benefits and all forms of employer contributions. As such, Lightcast industry earnings-per-worker numbers are generally higher than those reported by other sources. Figure 1.4: Average earnings by education level at a SUNY WCC student’s career midpoint Table 1.4: Average earnings by education level at a SUNY WCC student’s career midpoint Education level County earnings Difference from next lowest degree State earnings Difference from next lowest degree Less than high school $29,900 n/a $29,800 n/a High school or equivalent $38,100 $8,200 $37,900 $8,100 Certificate $41,500 $3,400 $41,300 $3,400 Associate degree $47,700 $6,200 $47,500 $6,200 Bachelor’s degree $72,500 $24,800 $72,200 $24,700 Source: Lightcast employment data. Source: Lightcast employment data. < High school High school Certificate Associate Bachelor's $50K $40K $30K $20K $0 $10K 36 + 47 + 50 + 59 + 87 36 + 47 + 50 + 59 + 87 County earnings State earnings $60K $70K $80K
Economic impacts on the Westchester County economy Chapter 2: SUNY WCC impacts the Westchester County economy in a variety of ways. The college is an employer and buyer of goods and services. It attracts monies that otherwise would not have entered the county economy through its day-to-day operations, and the expenditures of its students. Further, it provides students with the knowledge, skills, and abilities they need to become productive citizens and add to the overall output of the county.
20 Chapter 2: Economic impacts on the Westchester County economy IN THIS CHAPTER , we estimate the following economic impacts of SUNYWCC: 1) the operations spending impact, 2) the student spending impact, and 3) the alumni impact, measuring the income added in the county as former students expand the county economy’s stock of human capital. When exploring each of these economic impacts, we consider the following hypothetical question: Howwould economic activity change in Westchester County if SUNYWCC and all its alumni did not exist in FY 2021-22? Each of the economic impacts should be interpreted according to this hypothetical question. Another way to think about the question is to realize that we measure net impacts, not gross impacts. Gross impacts represent an upper-bound estimate in terms of capturing all activity stemming from the college; however, net impacts reflect a truer measure of economic impact since they demonstrate what would not have existed in the county economy if not for the college. Economic impact analyses use different types of impacts to estimate the results. The impact focused on in this study assesses the change in income. This measure is similar to the commonly used gross regional product (GRP). Income may be further broken out into the labor income impact, also known as earnings, which assesses the change in employee compensation; and the non-labor income impact, which assesses the change in business profits. Together, labor income and non-labor income sum to total income. Another way to state the impact is in terms of jobs, a measure of the number of full- and part-time jobs that would be required to support the change in income. Finally, a frequently used measure is the sales impact, which comprises the change in business sales revenue in the economy as a result of increased economic activity. It is important to bear in mind, however, that much of this sales revenue leaves the county economy through intermediary transactions and costs.6 All of these measures – added labor and non-labor income, total income, jobs, and sales – are used to estimate the economic impact results presented in this chapter. The analysis breaks out the impact measures into different components, each based on the economic effect that caused the impact. The following is a list of each type of effect presented in this analysis: The initial effect is the exogenous shock to the economy caused by the initial spending of money, whether to pay for salaries and wages, purchase goods or services, or cover operating expenses. 6 See Appendix 4 for an example of the intermediary costs included in the sales impact but not in the income impact.
21 Chapter 2: Economic impacts on the Westchester County economy The initial round of spending creates more spending in the economy, resulting in what is commonly known as the multiplier effect. The multiplier effect comprises the additional activity that occurs across all industries in the economy and may be further decomposed into the following three types of effects: The direct effect refers to the additional economic activity that occurs as the industries affected by the initial effect spend money to purchase goods and services from their supply chain industries. The indirect effect occurs as the supply chain of the initial industries creates even more activity in the economy through their own inter-industry spending. The induced effect refers to the economic activity created by the household sector as the businesses affected by the initial, direct, and indirect effects raise salaries or hire more people. The terminology used to describe the economic effects listed above differs slightly from that of other commonly used input-output models, such as IMPLAN. For example, the initial effect in this study is called the “direct effect” by IMPLAN, as shown in the table below. Further, the term “indirect effect” as used by IMPLAN refers to the combined direct and indirect effects defined in this study. To avoid confusion, readers are encouraged to interpret the results presented in this chapter in the context of the terms and definitions listed above. Note that, regardless of the effects used to decompose the results, the total impact measures are analogous. Multiplier effects in this analysis are derived using Lightcast Multi-Regional Social Accounting Matrix (MR-SAM) input-output model that captures the interconnection of industries, government, and households in the county. The Lightcast MR-SAMcontains approximately 1,000 industry sectors at the highest level of detail available in the North American Industry Classification System (NAICS) and supplies the industry-specific multipliers required to determine the impacts associated with increased activity within a given economy. The multi-regional capacity of the MR-SAM allows impacts to be measured in the region and state simultaneously, accounting for SUNYWCC’s activity in each area, as well as each area’s economic characteristics. In this analysis, impacts on the region include impacts from the college’s regional activity, as well as the indirect and induced multiplier effects that reach the region from the college’s activity in the rest of the state. For more information on the Lightcast MR-SAM model and its data sources, see Appendix 5. Lightcast Initial Direct Indirect Induced IMPLAN Direct Indirect Induced Net impacts reflect a truer measure of economic impact since they demonstrate what would not have existed in the county economy if not for the college.
22 Chapter 2: Economic impacts on the Westchester County economy Faculty and staff payroll is part of the county’s total earnings, and the spending of employees for groceries, apparel, and other household expenditures helps support county businesses. The college itself purchases supplies and services, and many of its vendors are located in Westchester County. These expenditures create a ripple effect that generates still more jobs and higher wages throughout the economy. Table 2.1 presents college expenditures for the following three categories: 1) salaries, wages, and benefits, 2) operation and maintenance of plant, and 3) all other expenditures, including purchases for supplies and services. Also included in all other expenditures are expenses associated with grants and scholarships. Many students receive grants and scholarships that exceed the cost of tuition and fees. The college then dispenses this residual financial aid to students, who spend it on living expenses. Some of this spending takes place in the county, and is therefore an injection of new money into the county economy that would not have happened if SUNY WCC did not exist. In this analysis, we exclude expenses for depreciation and interest due to the way those measures are calculated in the national input-output accounts, and because depreciation represents the devaluing of the college’s assets rather than an outflow of expenditures.7 7 This aligns with the economic impact guidelines set by the Association of Public and Land-Grant Universities. Ultimately, excluding these measures results in more conservative and defensible estimates. Operations spending impact Table 2.1: SUNY WCC expenses by function (excluding depreciation & interest), FY 2021-22 Expense category In-county expenditures (thousands) Out-of-county expenditures (thousands) Total expenditures (thousands) Employee salaries, wages, and benefits $94,406 $0 $94,406 Operation and maintenance of plant $9,217 $2,464 $11,681 All other expenditures $4,938 $7,440 $12,378 Total $108,561 $9,904 $118,465 Source: Data provided by SUNY WCC and the Lightcast impact model.
23 Chapter 2: Economic impacts on the Westchester County economy The first step in estimating the multiplier effects of the college’s operational expenditures is to map these categories of expenditures to the approximately 1,000 industries of the Lightcast MR-SAMmodel. Assuming that the spending patterns of college personnel approximately match those of the average U.S. consumer, we map salaries, wages, and benefits to spending on industry outputs using national household expenditure coefficients provided by Lightcast national SAM. All SUNY WCC employees work in Westchester County (see Table 1.1), and therefore we consider all of the salaries, wages, and benefits. For the other two expenditure categories (i.e., operation and maintenance of plant and all other expenditures), we assume the college’s spending patterns approximately match national averages and apply the national spending coefficients for NAICS 903612 (Colleges, Universities, and Professional Schools (Local Government)).8 Operation and maintenance of plant expenditures are mapped to the industries that relate to capital construction, maintenance, and support, while the college’s remaining expenditures are mapped to the remaining industries. We now have three vectors of expenditures for SUNY WCC: one for salaries, wages, and benefits; another for operation and maintenance of plant; and a third for the college’s purchases of supplies and services. The next step is to estimate the portion of these expenditures that occur inside the county. The expenditures occurring outside the county are known as leakages. We estimate in-county expenditures using regional purchase coefficients (RPCs), a measure of the overall demand for the commodities produced by each sector that is satisfied by county suppliers, for each of the approximately 1,000 industries in the MR-SAM model.9 For example, if 40% of the demand for NAICS 541211 (Offices of Certified Public Accountants) is satisfied by county suppliers, the RPC for that industry is 40%. The remaining 60% of the demand for NAICS 541211 is provided by suppliers located outside the county. The three vectors of expenditures are multiplied, industry by industry, by the corresponding RPC to arrive at the in-county expenditures associated with the college. See Table 2.1 for a break-out of the expenditures that occur in-county. Finally, in-county spending is entered, industry by industry, into the MR-SAM model’s multiplier matrix, which in turn provides an estimate of the associated multiplier effects on county labor income, non-labor income, total income, sales, and jobs. Table 2.2 presents the economic impact of college operations spending. The people employed by SUNY WCC and their salaries, wages, and benefits comprise the initial effect, shown in the top row of the table in terms of labor income, non-labor income, total added income, sales, and jobs. The additional impacts created by the initial effect appear in the next four rows under the section labeled multiplier effect. Summing the initial and multiplier effects, the gross impacts are $111.8 million in labor income and $19.1 million in non-labor income. This sums to a total impact of $130.8 million in total added income associated with the spending of the college and its employees in the county. This is equivalent to supporting 1,479 jobs. 8 See Appendix 2 for a definition of NAICS. 9 See Appendix 5 for a description of Lightcast’s MR-SAM model.
24 Chapter 2: Economic impacts on the Westchester County economy The $130.8 million in gross impact is often reported by researchers as the total impact. We go a step further to arrive at a net impact by applying a counterfactual scenario, i.e., what would have happened if a given event – in this case, the expenditure of in-county funds on SUNY WCC – had not occurred. SUNY WCC received an estimated 39% of its funding from sources within Westchester County. This portion of the college’s funding came from the tuition and fees paid by resident students, from the auxiliary revenue and donations from private sources located within the county, from state and local taxes, and from the financial aid issued to students by state and local government. We must account for the opportunity cost of this in-county funding. Had other industries received these monies rather than SUNYWCC, income impacts would have still been created in the economy. In economic analysis, impacts that occur under counterfactual conditions are used to offset the impacts that actually occur in order to derive the true impact of the event under analysis. We estimate this counterfactual by simulating a scenario where in-county monies spent on the college are instead spent on consumer goods and savings. This simulates the in-county monies being returned to the taxpayers and being spent by the household sector. Our approach is to establish the total amount spent by in-county students and taxpayers on SUNY WCC, map this to the detailed industries of the MR-SAM model using national household expenditure coefficients, use the industry RPCs to estimate in-county spending, and run the in-county spending through the MR-SAM model’s multiplier matrix to derive multiplier effects. The results of this exercise are shown as negative values in the row labeled less alternative uses of funds in Table 2.2. The total net impact of the college’s operations is equal to the gross impact less the impact of the alternative use of funds – the opportunity cost of the county money. As shown in the last row of Table 2.2, the total net impact is approximately $103.5 million in labor income and $6.1 million in non-labor income. This sums together to $109.6 million in total added income and is equivalent to supporting 1,363 jobs. These impacts represent new economic activity created in the county economy solely attributable to the operations of SUNY WCC. The total net impact of the college’s operations is $109.6million in total added income, which is equivalent to supporting 1,363 jobs. Table 2.2: Operations spending impact, FY 2021-22 Labor income (thousands) Non-labor income (thousands) Total income (thousands) Sales (thousands) Jobs supported Initial effect $94,406 $0 $94,406 $118,465 1,264 Multiplier effect Direct effect $5,185 $2,354 $7,539 $14,155 54 Indirect effect $1,105 $500 $1,605 $3,070 11 Induced effect $11,073 $16,207 $27,281 $41,819 150 Total multiplier effect $17,362 $19,062 $36,424 $59,043 215 Gross impact (initial + multiplier) $111,768 $19,062 $130,830 $177,508 1,479 Less alternative uses of funds -$8,260 -$13,000 -$21,260 -$38,461 -116 Net impact $103,508 $6,062 $109,570 $139,047 1,363 Source: Lightcast impact model.
25 Chapter 2: Economic impacts on the Westchester County economy In-county students contribute to the student spending impact of SUNYWCC; however, not all of these students can be counted towards the impact. Only those students who were retained, or who would have left the county to seek education elsewhere had they not attended SUNY WCC, are measured. Students who would have stayed in the county anyway are not counted towards the impact since their monies would have been added to the Westchester County economy regardless of SUNY WCC. While there were 13,697 students attending SUNY WCC who originated from Westchester County (excluding personal enrichment students and dual credit high school students), not all of them would have remained in the county if not for the existence of SUNY WCC. We apply a conservative assumption that 10% of these students would have left Westchester County for other education opportunities if SUNYWCC did not exist.10 Therefore, we recognize that the in-county spending of 1,370 students retained in the county is attributable to SUNY WCC. These students, called retained students, spent money at businesses in the county for everyday needs such as groceries, accommodation, and transportation. The average costs for students appear in the first section of Table 2.3, equal to $13,900 per student. Note that this table excludes expenses for books and supplies, since 10 See Appendix 1 for a sensitivity analysis of the retained student variable. Student spending impact The total impact of student spending is $10 million in total added income and is equivalent to supporting 108 jobs.
26 Chapter 2: Economic impacts on the Westchester County economy many of these costs are already reflected in the operations impact discussed in the previous section. We multiply the $13,900 in annual costs by the 1,370 students who were retained because of SUNY WCC and lived in-county but off campus. This provides us with an estimate of their total spending. The off-campus spending of retained students generated gross sales of $19 million, as shown in the bottom row of Table 2.3. Estimating the impacts generated by the $19 million in student spending follows a procedure similar to that of the operations impact described above. We distribute the $19 million in sales to the industry sectors of the MR-SAM model, apply RPCs to reflect in-county spending, and run the net sales figures through the MR-SAMmodel to derive multiplier effects. Table 2.4 presents the results. The initial effect is purely sales-oriented and there is no change in labor or non-labor income. The impact of retained student spending thus falls entirely under the multiplier effect. The total impact of student spending is $5.4 million in labor income and $4.6 million in non-labor income. This sums together to $10 million in total added income and is equivalent to supporting 108 jobs. These values represent the direct effects created at the businesses patronized by the students, the indirect effects created by the supply chain of those businesses, and the effects of the increased spending of the household sector throughout the county economy as a result of the direct and indirect effects. Table 2.3: Average student costs and total sales generated by retained students in Westchester County, FY 2021-22 Room and board $9,700 Personal expenses $2,377 Transportation $1,823 Total expenses per student $13,900 Number of students retained 1,370 Gross retained student off-campus sales $19,038,830 Source: Student costs and wages provided by SUNYWCC. The number of retained students who lived in the county off campus while attending is derived by Lightcast from the student origin data and in-term residence data provided by SUNY WCC. The data are based on credit students. Table 2.4: Student spending impact, FY 2021-22 Labor income (thousands) Non-labor income (thousands) Total income (thousands) Sales (thousands) Jobs supported Initial effect $0 $0 $0 $19,039 0 Multiplier effect Direct effect $3,254 $2,764 $6,019 $10,533 65 Indirect effect $975 $825 $1,800 $3,269 21 Induced effect $1,128 $1,029 $2,157 $3,759 22 Total multiplier effect $5,358 $4,618 $9,976 $17,562 108 Total impact (initial + multiplier) $5,358 $4,618 $9,976 $36,601 108 Source: Lightcast impact model.
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