Economic impact of CLC

Businesses, taxpayers benefit from student investment
By Steve Waller, Public Information Specialist, Central Lakes College
How do Brainerd Lakes Area and the state of Minnesota benefit from the presence of Central Lakes College?
A recent comprehensive study by Economic Modeling Specialists Inc., Moscow, Idaho, offers data of the significant role CLC plays for not only graduates but taxpayers who benefit from a larger economy and lower social costs.
The study reports that the Brainerd Lakes Area receives approximately $27.1 million in net added income each year due to CLC operations and spending of non-local students.
The accumulated credits achieved by former CLC students over the past 30 years translate to $91.7 million in added regional income each year due to higher earnings of students and increased output of businesses.
“Benefits of higher education are most obvious from the student perspective,” said Dr. Suresh Tiwari, CLC vice president of academic and student affairs. “CLC students enjoy a 15.5 percent rate of return on their investment of time and money.
“This compares favorably with returns on other investments, such as long-term return on stocks and bonds,” Tiwari said of the data provided by the study.
According to the analysis of data acquired within the past two years, the corresponding benefit/cost ratio is 5.3. For every dollar students invest in CLC education, they receive a cumulative of $5.30 in higher future income over the course of their working careers.
This is a real return that accounts for any discounting that occurs during the entire period. The payback period is 9.7 years.
From the perspective of society as a whole, the benefits of education accrue to different publics. For example, CLC students expand the state’s economic base through their higher incomes, while the businesses that employ them also become more produc¬tive through the students’ added skills.
These benefits, together with the associated ripple effects, contribute an estimated $16.5 million in taxable income to the Minnesota economy each year.
As they achieve higher levels of education, CLC students are also less likely to smoke or abuse alcohol, draw welfare or unemployment benefits, or commit crimes. This translates into associated dollar savings (i.e., avoided costs) to the public equal to approximately $716,200 annually.
Taxpayers see a rate of return of 5.2 percent on their investment in CLC, the study reported. These are benefits that are incidental to the operations of CLC and accrue for years into the future, for as long as students remain active in the workforce.
Tiwari said the study shows that CLC affects the local economy in three ways:
1. Through its local purchases, including wages paid to faculty and staff;
2. Through the spending of students who come from outside the region;
3. Through the increase in the skill base of the local workforce.
The college creates income through the earnings of its faculty and staff, as well as through its own operating and capital expenditures.
“Adjusting for taxes and other monies withdrawn from the local economy in support of CLC,” Tiwari said, “the study estimates that the college’s service area economy receives a net of $22.4 million in added labor and non-labor income due to CLC operations each year.”
The report points out that students from outside the region spend money for room and board, transportation, entertainment, and other miscellaneous personal expenses.
“These expenditures create jobs and incomes for local businesses,” Tiwari said. “The off-campus spending of CLC’s non-local students gen¬erates approximately $4.8 million in added income in the CLC service area economy each year.”
Every year students leave CLC and join or rejoin the regional workforce. Their added skills translate to higher income and a more robust local economy.
“Based on CLC’s historical enrollment and credit production over a 30-year period,” Tiwari said, “it is estimated that the accumulated contribution of CLC instruction received by former students – both completers and non-completers – annually adds some $91.7 million in income to the CLC service area.”
According to the study, the average annual added income due to the activities of CLC and its former students equals $118.9 million. This is approximately equal to 2.3 percent of the total CLC service area economy.
The complete report can be found at www.clcmn.edu/general/
For more information about this study, contact Dr. Suresh Tiwari at stiwari@clcmn.edu