Southwest Tennessee Community College has $126.6 million impact on the Mid-South
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State reaps $6.90 for every dollar invested in the college in 2016-2017 according to new economic impact study.
September 27, 2018 – Results of an economic impact study released today reveal Southwest Tennessee Community College added $126.6 million in annual income to the Mid-South economy in 2016-2017, supporting nearly 2,500 jobs.
Southwest serves over 13,000 credit and noncredit students annually.
The flow of spending through the college, our students and alumni has a significant and positive effect throughout the community, President Tracy D. Hall said.
But these numbers capture only a small part of what Southwest contributes to Memphis and surrounding communities. Our biggest impacts are educating residents and serving as a workforce development engine and pipeline.
Operations Spending Impact
Study results show that Southwest creates a positive net impact on the regional economy and generates a positive return on investment for students, taxpayers, and society. During the analysis year, Southwest spent $41.4 million on payroll and benefits for 1,126 full-time and part-time employees, and spent another $39.6 million on goods and services to carry out its day-to-day operations. The net impact of operations spending by the college in the Mid-South during the analysis year was approximately $70.2 million in added income, which is equivalent to supporting 1,529 jobs. “When our employees spend their paychecks, they’re buying homes, groceries, and other goods that support local jobs and in turn create income for those business owners and workers,” President Hall said.
Student Spending Impact
Around 4% of students attending Southwest originated from outside the region and relocated to the Mid-South. In addition, a number of students would have left the region if not for Southwest. These relocated and retained students spent money on groceries, transportation, rent, and so on at regional businesses. The expenditures of relocated and retained students during the analysis year added approximately $11.2 million in income to the Mid-South economy.
Since 2000, students have studied at Southwest and entered or re-entered the workforce with newly-acquired skills. Today, thousands of these former students are employed in the Mid-South. These former students receive higher wages thanks to their education at Southwest, and the businesses that employ them are similarly more productive. The impact of former students currently employed in the regional workforce amounted to $45.1 million in added income during the analysis year, an economic boost similar to hosting the World Series eight times. This figure represents the higher earnings that students earned during the year, the increased output of the businesses that employed the students.
Study results indicate Southwest is an outstanding investment for students, taxpayers and society as a whole, with returns on investment exceeding those of the stock market.
A Southwest education is an excellent investment for students. Graduates with an associate degree earned $11,600 more a year than those with a high school diploma. That’s $8.70 in annual lifetime earnings for every dollar they invest in a Southwest education. This corresponds to an annual rate of return of 21.2 percent.
Taxpayers benefit, too. Taxpayers provided $33.5 million of state and local funding to Southwest during FY 2016-17. In return, they will receive an estimated present value of $46.5 million in added tax revenue stemming from the students’ higher lifetime earnings and the increased output of businesses. This means that for every tax dollar invested in the college, taxpayers reaped $1.40 in added taxes and public sector savings and Tennessee will accrue an average of $6.90 in benefits and social savings.
Tennessee as a whole spent an estimated $70.9 million on educations obtained at Southwest in FY 2016-17. This includes the college’s expenditures, student expenses, and student opportunity costs. In return, the state of Tennessee will receive an estimated present value of $481.6 million in added state revenue over the course of the students’ working lives. Tennessee will also benefit from an estimated $4.5 million in present value social savings related to reduced crime, lower welfare and unemployment, and increased health and well-being across the state.
Southwest experienced a 10 percent boost in enrollment in fall 2017 after 7 consecutive years of decline and increased the number of credentials awarded in May 2018 by 26 percent over the previous year. The college projects a 2.2 percent increase in this fall’s enrollment over last year.
Emsi conducted the research study using detailed revenue and expenditure data from 2016 to determine how much income, how many jobs, and how much state and local tax revenue are generated as a result of Southwest spending in the Mid-South. Emsi is a labor market research firm that assesses the impact of Colleges and Universities on the regional economy and the benefits generated by the college for students, taxpayers, and society. They provide data to professionals in higher education, economic development, workforce development, talent acquisition, and site selection. Read the full economic report on Southwest’s Impact901 website.