Economic Impacts of Utah Valley University’s Career and ...€¦ · information about CTE’s students, faculty and staff, and academic programs. Chapter 3 describes this study’s

Economic Impacts of Utah

Valley University’s Career and Technical Education Program

Fiscal Year 2010

Prepared by Jack Faucett Associates, Inc. January 21, 2014

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Acknowledgements

Jack Faucett Associates, Inc. (JFA) appreciates the kind support of the Utah Valley University (UVU) staff who oversaw this study. In particular, we thank Susan Thackeray, Director of the Career and Technical Education Department; Robert Loveridge, Director of Institutional Research and Information; Shannen Robson, Senior Research Analyst at Institutional Research and Information; Geoff Matthews, Associate Director - Reporting; and Troy James, Senior Accountant.

Content

Executive Summary ........................................................................................................................ 1 Chapter 1: Introduction ................................................................................................................... 2 Chapter 2: Background on UVU and CTE ..................................................................................... 3

2.1 Introduction to UVU ............................................................................................................. 3 2.2 Introduction to CTE .............................................................................................................. 4 2.3 CTE Student Profile .............................................................................................................. 4 2.4 UVU Faculty and Staff Profile .............................................................................................. 7

Chapter 3: Study Methodology and Overview of UVU’s Budgetary and Student Spending ......... 8 3.1 Overview of the Study Approach .......................................................................................... 8 3.2 Economic Impact Analysis Approach for the CTE Department Budgetary Expenditure ... 12 3.3 Economic Impact Analysis Approach for Student Expenditure ......................................... 12

Chapter 4: CTE’s Economic Impacts ........................................................................................... 14 4.1 Economic Impact of CTE’s Budgetary Expenditures ......................................................... 14 4.2 Economic Impact of CTE Student Spending ...................................................................... 16 4.3 Total Annual Economic Impact of CTE ............................................................................. 18 4.4 CTE’s Contribution to UVU’s Total Economic Impact ...................................................... 20

Chapter 5: Return on Investment .................................................................................................. 21 Chapter 6: Increased Earning Potential for Students .................................................................... 22

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Executive Summary

The purpose of this study is to estimate the economic impacts of the Utah Valley University (UVU) Career and Technical Education (CTE) on its service region and the State of Utah in the 2009-10 fiscal year. CTE’s service region is defined as Utah, Wasatch, and Summit Counties. The service region and state results are developed through independent quantitative processes and are not cumulative. UVU is the largest institution in the Utah System of Higher Education. During the 2009-10 academic year, almost 30,000 students attended the University. UVU offers master’s, bachelor’s, and associate’s degrees, as well as certificates and diplomas. CTE offers certificates and associate’s degrees in 35 programs, including computer science, building construction, aviation science, nursing, accounting, and hospitality management. During the 2009-10 school year the CTE program had 2,523 student majors and 12,824 students who participated in at least one CTE course offering. At graduation, 617 CTE awards were conferred. The major economic impacts of the CTE department in the 2009-10 fiscal year estimated in this report include:

• Over the 2009-10 Fiscal Year, the CTE program and its students spent over $42.6 million in direct expenditures.

• The $42.6 million in direct expenditures resulted in an estimated increase in output of $54.4 million at the service region level and $63.3 million at the state level.1

• Measured in terms of value-added, CTE’s total economic impact was $42.5 million at the service region level and $47.4 million at the state level.

• CTE involves 492 UVU faculty and staff members and supports an additional 791 full time equivalent jobs from the service region perspective and 795 full time equivalent jobs from the state perspective.

• CTE has a total tax impact of $8.6 million at the service region level and $8.8 million at the state level. These estimates include federal, state, and local taxes.

• Every dollar of federal government funding to the CTE program had a return on investment of $38.35 from the service region perspective and $42.81 from the state perspective.

• Every dollar the state government used to fund the CTE program produced a value added return on investment of $1.23 from the service region perspective and $1.37 from the state perspective.

• Every dollar of state government funding to the CTE program had a return on investment of $1.57 from the service region perspective and $1.83 from the state perspective.

• CTE provides an approximate increase (above a high school diploma) in lifetime earnings of $130,444 for those who earn a certificate and $280,136 for an associate degree holder.

• The expected aggregate increase (above a high school diploma) in lifetime earnings for CTE’s 2009-10 graduated cohort of students is $156 million.2

1 Value added is generally considered to be a better measure of wealth created by an activity than output. Output is a measure of the total value of all goods produced. Value added is a subset of output which measure the increase in economic value associated with the parts of the production process that take place within the region of study.

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Chapter 1: Introduction

The Career and Technical Education (CTE) department plays an important economic and social role in the community it serves. Not only does the department provide skilled workers to the local economy, but it, along with the rest of Utah Valley University (UVU) is a major employer and purchaser of goods and services from local businesses. This study attempts to identify the socio-economic impacts of the CTE department from a local perspective through quantitative and qualitative research. This chapter describes the objective of this study and the organization of the report. Study Objective The purpose of this study is to estimate the economic impacts of the UVU CTE department on the service region and State of Utah economy during the 2009-10 fiscal year. CTE’s service region is defined as Utah, Wasatch, and Summit Counties. Organization of the Report The remaining chapters in this report are described below. Chapter 2 provides general background information about UVU and CTE. The chapter includes information about CTE’s students, faculty and staff, and academic programs. Chapter 3 describes this study’s approach to estimating economic impacts, provides an overview of CTE’s budgetary expenditures and student spending. CTE department expenditures and student spending are two of the primary drivers of economic impacts associated with CTE. Chapter 4 provides an analysis on the impacts of CTE’s budgetary expenditures and its student spending. The chapter identifies the economic impacts of these expenditures at the service region and state levels. Chapter 5 provides a discussion about the increased earning potential of CTE graduates.

2 More than 85 percent of UVU Alumni stay within the state after graduating, as reported on page 5 of the Fall 2009 UVU at a Glance, based on Alumni surveys.

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Chapter 2: Background on UVU and CTE

Chapter 2 provides background information about UVU and CTE. The chapter includes information about UVU and CTE’s students, faculty and staff, and academic programs. 2.1 Introduction to UVU UVU is a public, state university; its main campus is located in Orem, Utah. According to the University’s mission statement, “Utah Valley University is a teaching institution which provides opportunity, promotes student success, and meets regional educational needs. UVU builds on a foundation of substantive scholarly and creative work to foster engaged learning. The university prepares professionally competent people of integrity who, as lifelong learners and leaders, serve as stewards of a globally interdependent community.”3 The university offers 35 certificate/diploma programs, 66 associate degrees, 58 bachelor degrees, and master degrees in education, business, and nursing. In the 2010 Fall semester the school had an enrollment of 32,670 students.4 UVU began as a vocational school during World War II and, in the seven decades since, has evolved from a technical school to community college to state college and, finally, to comprehensive regional university. UVU’s key facts are summarized in Exhibit 2-1.

3 UVU website, “Mission Statement.” http://www.uvu.edu/president/mission/mission.html 4 UVU website, “Factbook 2010-2011.” http://www.uvu.edu/iri/factbooks/factbook1011.pdf

http://www.uvu.edu/president/mission/mission.html

http://www.uvu.edu/iri/factbooks/factbook1011.pdf

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Exhibit 2-1: Key Facts about UVU (Study Year 2009-10) Category Detail

Location (Main Campus) 800 West University Parkway Orem, Utah

Fall 2009 Student Headcount 28,765 Fall 2009 Student FTE 19,670 Fall 2009 Total Employees 4,664 (1,452 full time, 3,212 part time)

Degree Offerings

Master ‐ 3 Bachelor ‐ 58 Associate ‐ 66 Certificates and Diplomas ‐35

2009‐2010 Graduates 3,739 Athletics NCAA Division I, Great West Conference Basic Carnegie Classification Baccalaureate/Diverse Fields Elective Classification Community Engagement Accreditation Northwest Commission on Colleges and Universities

Source: UVU Factbook, 2009-10 & 2010-2011, http://www.uvu.edu/iri/factbooks/index.html 2.2 Introduction to CTE CTE programs at UVU are designed to prepare students for employment in high-demand and higher-paying career fields. The program offers Associates of Science, Associates of Applied Science, Diplomas, and Certificates in 35 programs. CTE’s program offerings include including computer science, building construction, aviation science, nursing, accounting, and hospitality management. CTE operates under the direction of the Assistant Vice President of Academic Affairs for Community College Programs. The CTE department helps develop the academic, career, and technical skills of secondary education students and provides them with career counseling services. 2.3 CTE Student Profile In the 2009 fall semester the CTE program had 2,523 students majoring in certificate and associate degree programs. University-wide, 12,824 students participated in at least one CTE course offering. The most popular CTE program majors are art and visual communications, pre-engineering, aviation science, emergency services, drafting technology, and business. Exhibit 2-2 provides information about CTE enrollment of majors by program.

http://www.uvu.edu/iri/factbooks/index.html

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Exhibit 2-2: CTE Enrollment by Program in the 2009 Fall Semester # Program Description Certificate Associate Program Total 1 Art & Visual Communications 10 353 363 2 Pre-engineering 352 352 3 Aviation Science 241 241 4 Emergency Services 62 145 207 5 Drafting Technology 172 172 6 Business 1 168 169 7 Culinary Arts 157 157 8 Early Care and Education 18 112 130 9 Automotive Technology 2 106 108 10 Building Construction 81 81 11 Electrical Automation & Robotics Technology 54 54 12 Digital Communications Technology 48 48 13 Diesel Mechanics Technology 2 43 45 14 Computer Science 43 43 15 Collision Repair Technology 43 43 16 Nursing 41 41 17 Construction Management 40 40 18 Paramedic 29 29 19 Accounting 3 26 29 20 Cabinetry & Architectural Woodwork 1 27 28 21 Dental Hygiene 25 25 22 Information Systems & Technology 24 24 23 Hospitality Management 18 18 24 Admin Information Support 17 17 25 Communication 14 14 26 Paralegal/Legal Assistant 9 9 27 Facilities Management 9 9 28 Criminal Justice 8 8 29 Building Inspection Technology 7 7 30 Technology 5 5 31 Programmer 3 3 32 Network Administration 2 2 33 Electronic and Computer Technology 1 1 34 Lineman Technology 1 1 35 Water and Wastewater Operations 0 TOTAL 133 2,390 2,523

Source: UVU Institutional Research & Information (IRI)

The CTE Department awarded 59 certificates and 558 associate’s degrees in the 2009-10 academic year. The program with both the most certificate and associate’s degree graduates was emergency services. The second most popular certificate program is early child care and education. The other associate’s programs with the most graduates were nursing, business, and

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building construction. Exhibit 2-3 provides information about CTE certificate and associate’s degree awards in academic year 2009-10 by program.

Exhibit 2-3: CTE Certificate and Associate Degree Awards by Type in 2009-10

# Program Description Certificate AAS1 AA2 AS3 APE4 ASB5 ASN6 Program

Total 1 Emergency Services 29 50 24 103 2 Nursing 78 78 3 Business 1 4 48 15 68 4 Building Construction 1 53 6 60 5 Drafting Technology 20 22 42 6 Art & Visual Communications 2 7 3 26 38 7 Aviation Science 15 15 30 8 Accounting 3 1 20 24 9 Automotive Technology 2 16 3 21

10 Electrical Automation & Robotics Technology 15 2 17

11 Culinary Arts 14 14 12 Dental Hygiene 14 14 13 Communication 2 8 10 14 Early Care and Education 10 10 15 Pre-engineering 9 1 10 16 Paralegal/Legal Assistant 10 10 17 Digital Communications Technology 9 9 18 Collision Repair Technology 7 7 19 Computer Science 2 4 6 20 Criminal Justice 1 5 6 21 Paramedic 6 6 22 Diesel Mechanics Technology 1 4 5 23 Hospitality Management 5 5 24 Information Systems & Technology 1 3 4 25 Electronic and Computer Technology 3 1 4 26 Cabinetry & Architectural Woodwork 4 4 27 Lineman Technology 3 3 28 Facilities Management 3 3 29 Water and Wastewater Operations 2 2 30 Programmer 1 1 31 Network Administration 1 1 32 Building Inspection Technology 1 1 33 Construction Management 1 34 Admin Information Support 0 35 TOTAL 59 246 6 211 1 15 78 617

Source: UVU Institutional Research & Information (IRI) Note: 1 - Associate of Applied Science (AAS), 2 - Associate in Art (AA), 3 - Associate of Science (AS), 4 - Associate of Pre-

Engineering (APE), 5 - Associate of Science in Business (ASB), 6 - Associate of Science in Nursing (ASN)

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2.4 UVU Faculty Profile There are 492 faculty members involved with the CTE program during the 2009-10 school year. CTE classes are taught by professors and instructors from several departments at UVU. Some of these professors and instructors are fully dedicated to the CTE program, while some are affiliated with other departments but teach CTE students. For many of the faculty members, the CTE program provides high quality, well-paying jobs that would not otherwise exist in the service region. A profile of CTE’s faculty is provided in Exhibit 2-4.

Exhibit 2-4: CTE Faculty in 2009-10

College Department Full Time

Faculty Overload Part Time /

Adjunct AR AVC 14 4 39 BU ACC 12 0 3 BU LEGL 4 0 11 BU MGMT 11 0 26 ED ELED 16 2 15 HS COMM 9 1 25 SH DENT 4 1 2 SH ESCI 8 3 12 SH NURS 20 1 3 TC AT 10 0 8 TC AVSC 8 0 47 TC BTM 4 0 4 TC CA 7 0 6 TC CJLE 6 0 11 TC CSE 14 0 7 TC CT 8 0 6 TC DGM 12 0 29 TC EART 3 0 2 TC EGDT 7 0 5 TC ES 5 0 19 TC IST 7 0 11 Total 189 12 291

Source: UVU Institutional Research & Information (IRI)

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Chapter 3: Study Methodology and Overview of UVU’s Budgetary and Student Spending

UVU CTE budgetary expenditures and student spending are the primary drivers of the CTE program’s economic impacts on the service region and the state. The service region and state results are developed through independent quantitative processes and are not cumulative. Chapter 3 describes the study team’s approach to estimating the economic impacts of CTE’s budgetary expenditures and student spending. 3.1 Overview of the Study Approach This study employs a number of approaches and tools to assess the socioeconomic impacts of the CTE program on its students and the surrounding local community. IMPLAN, an industry leading economic input-output model used in a large number of recent university economic impact studies, was used to perform the economic impact analysis for this study. IMPLAN is the same economic impact model used in the UVU FY2010 economic impact study.5 Approach to Economic Impact Analysis Regional economic impact analyses are usually framed within the context of a “with” and “without” perspective. This means the economic impact of an institution is equal to the economic loss that would occur if the institution ceased to exist. The impact of an exogenous event, such as the operation of a university program like CTE, is defined and measured in terms of the differences between the state of the economy associated with the university program and its state without the program. In this case, the state of the economy associated with the university program, or the baseline scenario, is directly observable because the program is currently in operation. The economic impacts of the program are measured using IMPLAN regional purchasing coefficients that are specific to the state and local economy. These industry-specific coefficients are developed based on the study region’s socioeconomic factors such as population, labor force, economic activity, and consumer behavior. The hypothetical scenario to consider in this analysis is what the regional economy would be like without the CTE program. More specifically, the hypothetical scenario represents the economy of the state and local economy without the CTE’s budgetary expenditures and student spending directly related to attending the CTE program. This study uses two regions of analysis: the CTE program service region (Utah, Wasatch, and Summit Counties) and the State of Utah. The estimates of the economic impacts on these two regions of analysis will differ principally because the State of Utah includes a larger set of businesses and industries than the service region. IMPLAN is able to assess not only the direct effects of CTE budgetary and student expenditures, but also the indirect and induced effects of these expenditures. The sum of CTE’s direct, indirect,

5 Jack Faucett Associates, 2011, “Economic Impacts of Utah Valley University in Fiscal Year 2010”

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and induced effects equals the program’s total economic impact. The definitions of direct, indirect, induced, and total impacts are provided below:

• Direct impacts are estimates of actual CTE program expenditures and student spending. These initial expenditures and spending are applied to economic multipliers in the IMPLAN model to show how the study regions will respond economically to these economic activities.

• Indirect impacts are the impacts of local industries buying goods and services from other local industries to facilitate direct impacts. The cycle of spending works its way backward through the supply chain. The indirect impacts are calculated by applying direct impacts (i.e. direct expenditures) to region-specific economic multipliers in IMPLAN.

• Induced impacts occur through re-spending of the portion of income received by workers producing the value added activity that occurs in the study regions due to the direct expenditure.

• Total impacts are the sum of direct, indirect, and induced impacts. The total “value added” impact is the most accurate measure of total economic impact. Value added is the difference between an industry’s total output and the cost of its intermediate inputs.

IMPLAN also provides important employment estimates such as jobs in the economy associated with delivering the final demand associated with a given level of direct expenditures and the labor income associated with these jobs. Additionally, IMPLAN provides a tax impact summary that shows the federal taxes and combined state and local taxes associated with the analyzed economic activities. IMPLAN does not provide a disaggregation of state and local tax impacts. IMPLAN measures federal tax and state and local tax impacts for the following five tax sources: (1) employee compensation, (2) proprietor income, (3) indirect business, (4) households, and (5) corporations. Exhibit 3-1 provides the definitions for the set of IMPLAN terms discussed above.

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Exhibit 3-1: Definitions of IMPLAN Outputs Employment refers to all full-time, part-time, and temporary positions throughout the economy that are needed, directly and indirectly, to deliver the final demand associated with the given level of expenditures. Labor income includes all forms of employment income, including employee compensation (wages and benefits) and proprietor income. Value added refers to the difference between total output and the cost of intermediate inputs. Value added equals gross output (sales or receipts and other operating income, plus inventory change) minus intermediate inputs (consumption of goods and services purchased from other industries or imported). It consists of compensation of employees, taxes on production and imports net of subsidies, and gross operating surplus. Value added is a measure of the contribution to GDP made by an individual producer, industry, or sector. Output refers to the value of industry production required to satisfy the given level of final-use expenditures. For manufacturers, output equals sales plus/minus change in inventory. For service sectors, output equals sales. For retailers and wholesalers, output equals the gross margin (not gross sales). Employee compensation refers to the total payroll cost of labor, including wage and salary, benefits (e.g., health, retirement, etc.), and employer paid payroll taxes (e.g., employer side of social security, unemployment taxes, etc.) Proprietor income consists of payments received by self-employed individuals and unincorporated business owners. This income also includes the capital consumption allowance and is recorded on Federal Tax form 1040C. Indirect business taxes include excise, sales, and property taxes, as well as fees, fines, licenses, and permits. Households tax impacts include income tax, property tax, estate and gift tax, fish/hunt tax, motor vehicle license, fees, and fines. Corporations tax impacts include corporate profits tax and dividends. Sources: IMPLAN website, “Glossary.” http://implan.com/V4/index.php?option=com_glossary&Itemid=12. “Using Social Accounts to Estimate Tax Impacts.” implan.com/V4/index.php?option=com_docma...id=135&Itemid=60.

http://implan.com/V4/index.php?option=com_glossary&Itemid=12

http://implan.com/V4/index.php?option=com_docman&task=doc_download&gid=135&Itemid=60

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Exhibit 3-2: Relationship between Expenditures, Output and Value Added

Why IMPLAN was used for this Study While there are a number of different input-output models, the IMPLAN model was selected due to its wide acceptance, its versatile functionality, the ease of interpretation of its results, and its use in the FY 2010 UVU economic impact study. IMPLAN has been used by over 250 colleges

Total Direct Expenditure - Imported Finished Goods and Services

Output

Output - All Other Inputs

Value Added

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and universities, including several of comparable size to UVU.6 Others universities that have used IMPLAN to perform economic impact studies include Tarleton State University in Texas, Chadron State College in Nebraska, and Jackson State University in Mississippi. 3.2 Economic Impact Analysis Approach for the CTE Department Budgetary Expenditure The CTE department’s budgetary expenditures for FY2010 were used to estimate the department’s expenditures. The budget information was provided by the UVU Institutional Research and Information Office. The CTE department’s budget based on federal and state funding was about $35.8 million in FY2010. JFA evaluated the economic impact of the CTE budgetary expenditure on goods and services in 64 expense categories (such as instructional supplies, computer software, and insurance). The research team matched each of these expense codes to one or several comparable industry codes in the IMPLAN model. IMPLAN is able to model economic activity in 440 industries. 3.3 Economic Impact Analysis Approach for Student Expenditure Student spending represents another source of economic impacts to the local region. This portion of the study discusses how the IMPLAN model was used to assess the economic impacts of student spending based on the estimated cost of attendance for students in the CTE program. The major student spending categories used in this study are based on the UVU Department of Financial Aid’s estimates for tuition and fees, room and board, books and supplies, transport, and personal expenses.

Exhibit 3-3: UVU CTE Student Cost of Living Estimates for FY 2010 Tuition & Fees

Room & Board

Books & Supplies Transport Personal

Expenses $4,584 $3,300 $1,371 $2,103 $1,703

Source: UVU Department of Financial Aid, “Cost of Attendance.” Only student spending in the local region that is uniquely attributable to student participation in the CTE program is considered in this analysis. Based on the student cost of living estimates, the research team constructed a detailed average spending profile for students to enter into the economic impact model. The spending profiles were designed to measure additional spending in the UVU service region that would not have occurred if the CTE program were not in existence. For example, if a current CTE student would attend another program in the service region if UVU did not exist, his or her spending on books and supplies would simply be spent at a different institution within the local region. Also, if a CTE student who is from the local service region were not enrolled in the program, he or she would still spend money on room, board, transportation, and personal expenses. For this reason, the student profile for this analysis includes the following spending:

6 IMPLAN website, “Clients.” http://www.implan.com/V4/index.php?option=com_content&view=article&id=64&Itemid=25

http://www.implan.com/V4/index.php?option=com_content&view=article&id=64&Itemid=25

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• Spending on books and supplies for any students who would not have otherwise attended

a college or university in the service region. • Room and board for students who are from outside of the service region. • Transportation for students who are from outside of the service region. • Personal expenses for students who are from outside of the service region.

The research team worked with the UVU Institutional Research & Information (IRI) Office to derive reasonable assumptions regarding the percentage of students who would not have otherwise attended a similar program in the service region. Information regarding the proportion of students originating from the service region was taken from the 2009-10 UVU Factbook.7 The research team estimated the total additional spending on room and board, books and supplies, transportation, and personal expenses for CTE students. Tuition is not included in the total, as this represents a transfer from students to UVU and counting both tuition and CTE expenditures would lead to double counting. The research team was able to link the student spending categories to the 440 industry categories used in the IMPLAN model to perform the economic impact analysis.

7 UVU website, “Factbook 2010-2011.”

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Chapter 4: CTE’s Economic Impacts

Chapter 4 provides an assessment of the impacts of the CTE program’s budgetary expenditures and student spending. The chapter examines the economic impacts of these expenditures and spending at the service region and state levels. The bullets below summarize the overall economic impacts of CTE found in this study:

• Over the 2009-10 Fiscal Year, the CTE program and its students spent over $42.6 million in direct expenditures.

• The $42.6 million in direct expenditures resulted in an estimated increase in output of $54.4 million at the service region level and $63.3 million at the state level.8

• Measured in terms of value-added, CTE’s total economic impact was $42.5 million at the service region level and $47.4 million at the state level.

• CTE involves 492 UVU faculty members and supports an additional 791 full time equivalent jobs from the service region perspective and 795 full time equivalent jobs from the state perspective.

• CTE has a total tax impact of $8.6 million at the service region level and $8.8 million at the state level. These estimates include federal, state, and local taxes.

The following sections provide detailed information on these impacts. 4.1 Economic Impact of CTE’s Budgetary Expenditures In most instances the impacts of CTE program spending from the state perspective are larger than the impacts from the service region perspective. This is because the smaller the geographic region of analysis, the more likely the goods and services purchased in a specific location came from outside that location and less likely they had value added to them within the local region. To illustrate the point, all the goods and services purchased by the CTE program come from and have value added to them somewhere in the world. Some portion of those goods and services come from the U.S., a smaller portion come from the State of Utah, and an even smaller portion come from the UVU service region. The total increase in output in the service area related to CTE program expenditures in the 2009-10 fiscal year was about $48.7 million from the service region perspective. This level of activity is associated with a total economic impact in terms of value added of about $38.9 million from the service area perspective. The total output and value added from the state perspective are $56.5 million and $43.2 million, respectively. UVU’s program expenditures support about 724 and 720 jobs per year when the impacts are considered from the service region and state perspective, respectively. The service region level economic impacts of CTE budget expenditures are summarized in Exhibit 4-1. The economic impacts are summarized by direct, indirect, induced, and total impacts.

8 Value added is generally considered to be a better measure of wealth created by an activity than output. Output is a measure of the total value of all goods produced. Value added is a subset of output which measure the increase in economic value associated with the parts of the production process that take place within the region of study.

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Exhibit 4-1: Service Region Economic Impacts of CTE Expenditures (Thousands $) Impacts Direct Indirect Induced Total Direct Expenditure $35,839 NA NA $35,839 Output $31,415 $1,288 $16,034 $48,738 Total Value Added $28,578 $728 $9,613 $38,938 All Other Inputs $2,837 $560 $6,403 $9,800 Employment* 543 12 168 724 Labor Income $24,416 $467 $5,283 $30,165 Employee Compensation $24,061 $373 $4,555 $28,989 Proprietors Income $355 $93 $728 $1,176 Other Property Type Income $3,789 $205 $3,285 $7,280 Indirect Business Taxes $373 $56 $1,045 $1,475

Notes: * All values in thousands $ except employment is in number of job years Labor Income = Employee Compensation + Proprietors Income Total Value Added = Labor Income + Other Property Type Income + Indirect Business Taxes All Other Inputs = Output - Total Value Added Totals may not be additive due to rounding

The state-level economic impacts of CTE expenditures are summarized in Exhibit 4-2.

Exhibit 4-2: State-Level Impacts of CTE Expenditures (Thousands $) Impacts Direct Indirect Induced Total Direct Expenditure $35,839 NA NA $35,839 Output $32,405 $2,315 $21,784 $56,503 Total Value Added $29,194 $1,288 $12,749 $43,231 All Other Inputs $3,211 $1,027 $9,035 $13,272 Employment* 499 19 202 720 Labor Income $24,696 $803 $6,944 $32,442 Employee Compensation $24,304 $691 $6,141 $31,154 Proprietors Income $392 $112 $784 $1,288 Other Property Type Income $4,032 $392 $4,461 $8,885 Indirect Business Taxes $467 $93 $1,344 $1,904


The federal, state, and local tax impacts of CTE budgetary expenditures were also examined from the service region and state perspective. A tax impact is the estimated amount of tax revenue generated for the federal, state, and local governments. Five categories of taxes were examined: employee compensation, proprietor income, indirect business, household, and corporation tax. CTE budgetary expenditures result in $5.54 million of federal tax impacts from the service region perspective. That value increases to $5.82 million when the state perspective is considered. The CTE expenditures result in $2.17 million in state and local taxes from the service region perspective and $2.05 million in state and local taxes from the state perspective. Accordingly, total CTE expenditure impacts on federal, state, and local taxes are $7.71 million

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from the service region perspective and $7.87 million from the State perspective. The service region level tax impacts of CTE with regard to program expenditures are summarized in Exhibit 4-3.

Exhibit 4-3: Service Region Tax Impacts of CTE Expenditures

Taxing Agency

Tax

Employee Compensation

Proprietor Income

Indirect Business

Tax Households Corporations Total

Federal Government $3,468,166 $66,079 $196,743 $1,518,879 $292,501 $5,542,349 State and Local Gov. $4,816 $0 $1,284,243 $877,915 $0 $2,166,974 Total $3,472,982 $66,079 $1,480,986 $2,396,793 $292,501 $7,709,323

The state-level tax impacts of CTE with regard to university expenditures are summarized in Exhibit 4-4.

Exhibit 4-4: State-Level Tax Impacts of CTE Expenditures

Taxing Agency

Tax


Proprietor Income

Indirect Business



4.2 Economic Impact of CTE Student Spending Over the 2009-10 fiscal year, CTE students spent about $6.7 million in direct expenditures in the local economy. This level of economic activity is associated with an increase in total output in the local service region of $5.6 million and an increase in value added of $3.6 million. The respective total economic impact from the state perspective is about $6.8 million in output and $4.2 million per year in value added. CTE student expenditures support about 67 full time equivalent jobs in the service region and about 75 full time equivalent jobs in the state. These jobs provide $2.1 million in employee compensation in the service region and about $2.4 million in the state. The service region level economic impacts of CTE with regard to student spending are summarized in Exhibit 4-5.

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Exhibit 4-5: Service Region Economic Impacts of Student Spending (Thousands $) Impacts Direct Indirect Induced Total Direct Expenditure $6,716 NA NA $6,716 Output $3,627 $877 $1,122 $5,626 Total Value Added $2,394 $495 $675 $3,562 All Other Inputs $1,233 $382 $447 $2,064 Employment* 48 8 12 67 Labor Income $1,463 $279 $370 $2,113 Employee Compensation $1,230 $228 $319 $1,779 Proprietors Income $233 $48 $51 $333 Other Property Type Income $615 $182 $231 $1,025 Indirect Business Taxes $316 $34 $74 $424

Notes: * All values in thousands $ except employment is in number of job years Labor Income = Employee Compensation + Proprietors Income Total Value Added = Labor Income + Other Property Type Income + Indirect Business Taxes All Other Inputs = Output -Total Value Added Totals may not be additive due to rounding

The state-level economic impacts of CTE student spending are summarized in Exhibit 4-6. Like the service region impacts, the state-level economic impacts can also be disaggregated by direct, indirect, induced, and total impacts.

Exhibit 4-6: State-Level Impacts of State Student Spending (Thousands $) Impacts Direct Indirect Induced Total Direct Expenditure $6,716 NA NA $6,716 Output $3,868 $1,365 $1,613 $6,846 Total Value Added $2,476 $783 $946 $4,205 All Other Inputs $1,392 $582 $668 $2,642 Employment* 48 12 15 75 Labor Income $1,436 $437 $514 $2,387 Employee Compensation $1,217 $381 $455 $2,054 Proprietors Income $219 $56 $59 $334 Other Property Type Income $709 $287 $331 $1,327 Indirect Business Taxes $334 $59 $100 $490


The federal, state, and local tax impacts of CTE student spending were also examined from the service region and state perspective. The same tax categories as the CTE department expenditure analysis were examined to measure student spending tax impacts (i.e., employee compensation, proprietor income, indirect business, household, and corporation tax). CTE student expenditures result in $436,290 of federal tax impacts from the service region perspective. That value is $490,089 when the state perspective is considered. Student expenditure results in $430,733 in state and local taxes from the service region perspective and $454,957 in state and local taxes from the state perspective. Accordingly, student expenditure impacts on federal, state, and local

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taxes are $867,022 from the service region perspective and $945,046 from the state perspective. The service region level tax impacts of CTE with regard to student spending are summarized in Exhibit 4-7

Exhibit 4-7: Service Region Federal, State & Local Tax Impacts of Student Spending

Taxing Agency

Tax


Proprietor Income

Indirect Business


Federal Government $212,760 $18,620 $56,446 $107,260 $41,205 $436,290 State and Local Gov. $296 $0 $368,442 $61,994 $0 $430,733 Total $213,056 $18,620 $424,885 $169,257 $41,205 $867,022

The state-level tax impacts of CTE with regard to student spending are summarized in Exhibit 4-8. These impacts are disaggregated by the same categories as the service region level impacts.

Exhibit 4-8: State-Level Federal, State & Local Tax Impacts of Student Spending

Taxing Agency

Tax


Proprietor Income

Indirect Business


Federal Government $240,979 $20,033 $65,847 $109,793 $53,437 $490,089 State and Local Gov. $857 $0 $425,055 $29,045 $0 $454,957 Total $241,836 $20,033 $490,902 $138,839 $53,437 $945,046

4.3 Total Annual Economic Impact of CTE The total economic impact of CTE equals the sum of university expenditure impacts and student spending impacts. CTE’s total service region level economic impacts are summarized in Exhibit 4-9. From the service region perspective, the total annual economic impact of CTE is $54.4 million in terms of output, and $42.5 million in terms of value added. Additionally, CTE budgetary and student expenditures support about 791 full time equivalent jobs in the service region.

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Exhibit 4-9: Service Region Economic Impacts of CTE Expenditures and Student Spending (Thousands $)

Impacts Direct Indirect Induced Total Direct Expenditure $42,556 NA NA $42,556 Output $35,043 $2,165 $17,156 $54,364 Total Value Added $30,973 $1,223 $10,288 $42,500 All Other Inputs $4,070 $941 $6,850 $11,864 Employment* 591 20 180 791 Labor Income $25,879 $746 $5,653 $32,277 Employee Compensation $25,291 $601 $4,873 $30,768 Proprietors Income $588 $142 $779 $1,509 Other Property Type Income $4,404 $388 $3,516 $8,305 Indirect Business Taxes $689 $90 $1,119 $1,899

Notes: * All values in thousands $ except employment is in number of job years Labor Income = Employee Compensation + Proprietors Income Total Value Added = Labor Income + Other Property Type Income + Indirect Business Taxes All Other Inputs = Output -Total Value Added Totals may not add up due to rounding

CTE’s total state level economic impacts are summarized in Exhibit 4-10. The total annual economic impact of CTE on the State of Utah is about $63.3 million in terms of additional output, $47.4 million in terms of additional value added in the state. CTE budgetary expenditures and student spending also support about 795 full time equivalent jobs in the state.

Exhibit 4-10: State Level Region Economic Impacts of CTE Expenditures and Student

Spending (Thousands $) Impacts Direct Indirect Induced Total Direct Expenditure $42,556 NA NA $42,556 Output $36,273 $3,680 $23,397 $63,349 Total Value Added $31,670 $2,071 $13,695 $47,436 All Other Inputs $4,602 $1,609 $9,702 $15,913 Employment* 548 31 217 795 Labor Income $26,132 $1,240 $7,458 $34,830 Employee Compensation $25,521 $1,072 $6,596 $33,208 Proprietors Income $611 $168 $843 $1,622 Other Property Type Income $4,741 $679 $4,792 $10,212 Indirect Business Taxes $801 $152 $1,444 $2,394


CTE’s total federal and state and local tax impacts on the service region are summarized in Exhibit 4-11. CTE budgetary expenditure and student spending led to about $6.0 million in federal tax impacts and $2.6 million in state and local tax impacts. CTE’s total tax impact on the service region is about $8.6 million per year.

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Exhibit 4-11: Service Region Level Tax Impacts of CTE Expenditures and Student Spending

Taxing Agency Tax


Proprietor Income

Indirect Business Tax Households Corporations Total


CTE’s state level tax impacts are summarized in Exhibit 4-12. From the state perspective, university expenditure and student spending result in about $6.3 million in federal tax impacts and $2.5 million in state and local tax impacts per year. In total, CTE has an annual tax impact of about $8.8 million on the State of Utah.

Exhibit 4-12: State-Level Tax Impacts of CTE Expenditures and Student Spending

Taxing Agency

Tax


Proprietor Income

Indirect Business



4.4 CTE’s Contribution to UVU’s Total Economic Impact The CTE program makes a significant contribution to UVU’s total economic impact. UVU’s economic impact in FY2010 in terms of value added was about $333.7 million on the service region level and $373.9 million on the state level. Measured in terms of output, UVU’s economic impact in FY2010 was about $458.7 million on the service region level and $534.4 million on the state level. CTE accounts for 12.74 percent of UVU’s total value added impact at the service region level and 12.69 percent at the state level. CTE accounts for 11.85 percent of UVU’s total output impact at the service region level and 11.85 percent at the state level. A summary of CTE’s contribution to UVU’s economic impact is provided in Exhibit 4-13.

Exhibit 4-13: CTE’s Contribution to UVU’s Total Economic Impact

CTE Value

Added CTE

Output UVU Value

Added UVU

Output

Percent of UVU's

impact on total value added due

to CTE

Percent of UVU's

impact on total output

due to CTE Service Region $42,499,609 $54,363,538 $333,700,000 $458,700,000 12.736% 11.852% State $47,435,840 $63,349,158 $373,900,000 $534,400,000 12.687% 11.854%

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Chapter 5: Return on Investment

The return on investment of federal and state grants that support the CTE program is a useful measure of the value of the CTE program. The return on investment can be calculated by dividing the value added economic impact of the CTE program by the level of state and federal funding. Both the federal and state return on investment ratios can be assessed against the full economic impact of the program because they are not contingent on one another. The economic impact of the CTE program, measured in terms value added economic activity in the economy, is about $42.5 million at the service region level and $47.4 million at the state level. According to the UVU Institutional Research & Information office, the CTE program received about $1.1 million in federal funding and $34.6 million in state funding in FY2010. Accordingly, every dollar the federal government used to fund the CTE program had a value added return on investment of $38.35 from the service region perspective and $42.81 from the state perspective. Every dollar the state government used to fund the CTE program produced a return on investment of $1.23 from the service region perspective and $1.37 from the state perspective. The economic impact of the CTE program, measured in terms output in the economy, is about $54.4 million at the service region level and $63.3 million at the state level. Accordingly, every dollar the federal government used to fund the CTE program had a return on investment of $49.06 from the service region perspective and $57.17 from the state perspective. Every dollar the state government used to fund the CTE program produced a return on investment of $1.57 from the service region perspective and $1.83 from the state perspective.

Exhibit 5-1: Return on Investment (ROI) Analysis Service Region State CTE and Student Expenditure $42,555,527 $42,555,527 Value Added Impact $42,499,609 $47,435,840 Output $54,363,538 $63,349,158 Federal Funding $1,108,144 $1,108,144 State Funding $34,609,279 $34,609,279 Federal ROI (Value Added) $38.35 $42.81 State ROI (Value Added) $1.23 $1.37 Federal ROI (Output) $49.06 $57.17 State ROI (Output) $1.57 $1.83

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Chapter 6: Increased Earning Potential for Students

This study uses a variety of tools to examine CTE’s impact on the UVU service region and on the State of Utah. One way in which the CTE program contributes to the economy is by helping its graduates to obtain better paying employment over the course of their lives than they might otherwise have been able to do without more education. The average annual salaries for different levels of education in Utah are summarized in Exhibit 6-1.

Exhibit 6-1: Average Annual Salaries for Different Levels of Education in Utah Level of Education Average Annual

Salary Observations

Less than High School Degree $11,089 1,668 High School Degree $17,464 4,740 Some College or Certificate $21,358 5,690 Associate Degree $25,595 1,679 Bachelor Degree $36,535 3,455 Master or Professional Degree $58,019 1,377 Ph.D. $77,823 231 Any Graduate Study Beyond Bachelor Degree $60,864 1,608

Source: U.S. Census Bureau, American Community Survey 5% PUMS, 1 year estimates, 20099 This increase in annual income associated with higher educational attainment may contribute to a significant improvement in lifetime earnings for CTE graduates. A certificate or associate degree is associated with an approximate increase in lifetime earnings (compared to a high school graduate) of $130,444 for those who earn a certificate and $280,136 for an associate degree holder. For the 2010 CTE graduating class, this represents a total of about $156 million over their lifetime. The increase in expected lifetime earnings is calculated in a multistep process:

• First, data about the average annual salary for graduates by level of education for the State of Utah was obtained from the U.S. Census Bureau American Community Survey for 2009. For the purposes of this study, a UVU certificate is considered comparable to the U.S. Census Bureau’s “some college” category.

• Second, the marginal benefit of each level of educational attainment was calculated. The marginal benefits of a certificate and associate degree are measured against a high school diploma.

• Third, each graduated student is assumed to work until the age of 63. The average age at program completion of a CTE certificate holder is 29.5 years old. The average age of a CTE associate degree graduate is 28.5 years old. Using these graduation and retirement age estimates, a CTE program education is associated with an approximate increase in lifetime earnings of $130,444 for those who earn a certificate and $280,136 for an associate degree holder.

9 For more information on this data set please refer to the U.S. Census Bureau’s American Fact Finder website at: http://factfinder.census.gov/home/en/acs_pums_2009_5yr.html

http://factfinder.census.gov/home/en/acs_pums_2009_5yr.html

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• Fourth, the marginal income benefit estimate was multiplied by the number of CTE graduates by degree level in the 2009-10 academic year.

• Finally, UVU’s IRI Office estimates that 95 percent of CTE students would not attend another university in the absence of CTE. Thus, the $16416 million value in increased aggregate student earnings over their lifetime, is reduced by 5 percent to achieve a final estimate of $156 million. The $156 million represents CTE’s unique contribution to the expected lifetime earnings of its 2009-10 graduates.10

The result of these calculations of CTE’s contribution to its students’ lifetime earnings is summarized in Exhibit 6-2. The columns follow the steps described above sequentially.

Exhibit 6-2: UVU CTE’s Contribution to the Lifetime Earnings of its Graduates Highest Level of Educational Attainment

Average Annual Salary*

Marginal Annual Improvement of Earnings over High School Diploma

Marginal Improvement of Lifetime Earnings per Student

Number of Certificates / Degrees Granted in 2009-10

Improvement of Aggregate Student Earnings per Year

Improvement of Aggregate Student Earnings over Lifetime

Improvement of Aggregate Student Earnings over Lifetime for Students who Would Not Attend A Similar Program Without CTE

High School Diploma $17,464 NA NA NA NA NA NA

Certificate $21,358 $3,894 $130,444 59 $229,746 $7,696,193 $7,311,383 Associate Degree $25,595 $8,131 $280,136 558 $4,537,098 $156,315,652 $148,499,870

TOTAL NA NA NA 617 $4,766,844 $164,011,845 $155,811,253 * Source: U.S. Census Bureau, American Community Survey, 5% PUMS, 1 year estimates

10 More than 85 percent of UVU Alumni stay within the state after graduating, as reported on page 5 of the Fall 2009 UVU at a Glance, based on Alumni surveys.

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Economic Impacts of Utah Valley University’s Career and ...€¦ · information about CTE’s students, faculty and staff, and academic programs. Chapter 3 describes this study’s