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Study: OTC impacts economy by $212M

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As funding gets stretched for higher learning institutions amid shrinking budgets, it appears community colleges and universities have an option to combat declining support: flex their economic muscles.

Ozarks Technical Community College’s board of trustees received the results of a commissioned economic impact study in February that found the college contributes nearly $212 million a year to the local economy based on operations, student spending and graduate earnings.

“It shows the unique ability of a community college to affect the economic environment of a community or region,” OTC President Hal Higdon said of the study that examined its impact on the 12 counties in which the institution offers associate degrees and training for fields such as nursing.

The study was conducted by Moscow, Ind.-based Economic Modeling Specialists Inc. for $9,000 based on data from the 2008–09 school year, breaking down OTC’s annual economic impact as $168.6 million in alumni income, $31.6 million in operations and $11.6 million in local expenditures by students who reside outside OTC’s service area.

Tim Nadreau, a research economist with EMSI, said the company sends out surveys to schools to collect data such as enrollment figures, revenues, expenditures, demographics and service area information. It then uses public and private sources of data to determine the whole economic impact.

Nadreau described OTC’s impact as significant but said comparisons are sparse to other community colleges in their markets.

“The problem is we are looking at very different economies,” Nadreau said. “We might look at several counties here, while another analysis in Texas might only include one county.”

According to the report, OTC students enjoy a 16.6 percent average rate of return on their educational investment, recovering all costs, including tuition, fees and foregone wages, in 9.2 years. OTC associate degree graduates earn $35,400 on average at the midpoint of their careers – about 36 percent more than students with high school diplomas, the study said. “There are few things that you can spend as little on as us and get back as much return,” Higdon said, adding that the college plans on using the data to bolster its case for increased state funding. “You’ve got to feed the engine to make it go, and that’s going to need to happen for us to continue this momentum.”

Higdon said he expects the college to receive $9 million from the state in fiscal 2012, and he expects its overall budget to be $62 million. The state funding figure is down from $10.7 million this fiscal year and from $11.3 in fiscal 2010. He said OTC receives around $1,100 in state funds per full-time student – the least among Missouri Community College Association’s 12 member systems. Fiscal 2011 averages were slightly more than $1,200 per full-time student. Total local and state revenues per full-timers were $3,907 this fiscal year, and OTC was near the bottom in that category at $1,952.

Association Executive Director Zora Mulligan said funding for Missouri’s community colleges is divided based on an internally agreed upon funding formula that considers tuition, local tax rates, assessed values and state aid.

She said OTC’s funding is less per student than other community colleges, in part, because it draws from a larger local tax base – 15 taxing districts in the Springfield area – and it has the highest enrollment in the state.

Several states have performed statewide economic impact studies with EMSI including Texas and New York, according to Nadreau. Higdon said he’d like to see Missouri commission a study to determine the community college system’s impact statewide.
Mulligan said while she wasn’t aware of any studies conducted by other Missouri schools, she thinks they are a good idea, and would consider the statewide study.

“I think it’s a critical part of our advocacy effort in Jefferson City, being able to tell legislators the financial value that community colleges have,” Mulligan said. “I think it helps us make a better case when we are asking them to support our colleges with state revenue.”

Allen Kunkel, associate vice president for research and economic development at Missouri State University and director of the Jordan Valley Innovation Center, said the school might be more focused on economic development than ever with the millions of dollars it’s invested in JVIC and IDEA Commons. He said the university also is renovating the former Willow Brook Foods poultry facility into the Robert W. Plaster Center for Free Enterprise with a planned opening in mid-2012.

He said the university hasn’t hired a consultant to quantify its impact in recent years, but he felt it would be a wise use of resources.

“Whenever you are talking about public dollars and the state legislature, you always want to present an accurate picture of what kind of return on investment those dollars are making,” Kunkel said, adding that economic development is a good goal for higher learning institutions.

Nicki Donnelson, a spokeswoman for Missouri State, said the university hasn’t conducted an impact study since 1980.

Drury University President Todd Parnell said in an e-mail that Drury has not conducted an economic impact study, but he said its value to the larger community could be seen in efforts such as its work through the Center for Community Studies to promote sustainable economic growth in the state.[[In-content Ad]]

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