Download Economic Impact Summary - Cecil County Government

Economic Impact Analysis of the Publicly Funded K-12 Education
in Cecil County and the Eastern Shore of Maryland
Executive Summary
Prepared by BEACON at Salisbury University
The Public School Systems (grades Pre-K through 12) of the Eastern Shore of Maryland provide a wide array of
benefits to the residents of each of the counties. In addition to the educational services provided to the students of
the county, the expenditures of the school system provide a significant economic impact in the county and region.
The average return on investment (local economic impact compared to taxpayer investment) of the public school
systems on the Eastern Shore was approximately 35% for 2011. The return on investment for the county’s
investment (the total economic impact compared to local funding) was approximately 135%. This means that for
every $1.00 spent and retained in the county from the public school system’s operating budget there is an additional
$1.35 of spending in the county. When examined as a region the return on investment of the nine county public
school systems is approximately 92%. Furthermore, every direct job of the public school system in the county is
associated with another .5 jobs in the local economy.
The public school systems also provide value beyond what can be quantified including quality of life benefits. A
number of national studies have examined the economic and societal benefits of publicly provided Pre-K–12
education beyond the immediate educational outcomes for the students. A meta-analysis of these studies indicates
that the benefits of publicly provided Pre-K–12 education reach well beyond the students and their parents. The
scope and magnitude of these economic and societal benefits of publicly provided Pre-K–12 education seem to be
significantly greater than what many residents realize. In this report, we examine three different types of economic
and societal benefits:
1. Type 1 Benefits (Obvious Tangible Benefits);
2. Type 2 Benefits (Not-So-Obvious Tangible Benefits);
3. Type 3 Benefits (Intangible Benefits).
To estimate the economic impact (Type 2 Benefits) of the public school systems, the IMPLAN software package
(produced by the Minnesota IMPLAN Group, Inc) is utilized. The economic impact of the public school systems
manifests itself through two channels: 1) the annual impact from operations of the school systems and 2) the impact
generated by the percentage of the employees’ payroll spent locally. The public school systems in each of the nine
counties impact both their respective county and the larger Eastern Shore region. The following table shows the
annual estimated economic and employment1 of the Cecil County public school system, as well as, that of all nine
Eastern Shore county public school systems2.
Cecil County
Eastern Shore Region
Economic Impact
$ 160,746,094
$ 1,525,917,600
Employment Impact
3,254
17,878
The public school system of Cecil County, Maryland generates an estimated economic impact in the county and
region much greater than the cost of operations. Beyond the services and programs whose impacts can be
quantified are those services that impact the quality of life of county residents.
Type 1 Benefits:
The most obvious Type 1 benefit is the impact of publicly provided Pre-K-12 education is the income boost
graduates receive as they improve their level of education and their education outcomes. Using the Eastern Shore
1
Jobs as reported by IMPLAN include all full-time, part time, and temporary positions. The total employment impact includes
those employees that are currently employed by the school systems and the additional jobs supported in the local economy.
2
The impact on the region is greater than the sum of the impacts in the individual counties due to a portion of the money spent
in each county leaking out elsewhere in the nine county region.
Average Median Income and Educational Attainment Statistics in a statistical model, we estimate that the Eastern
Shore counties operate at an aggregate 28% deficit compared to the Maryland average. This means that at current
levels of spending, Eastern Shore graduates will enjoy 28% less on average in lifetime earnings that the “Average”
Maryland graduate will. Further, using a simple economic model, we can state that for every 2% increase in annual
spending (within an additional spending range of 0-25%), the Eastern Shore graduates’ average lifetime earnings
will increase by 1%. Conversely, for each 2% decrease in annual spending the average lifetime earnings will
decrease by 1%. These increases/decreases will, over time, lead to increases/decreases in the total tax base of each
jurisdiction because of the direct correlation between total income and property values. Both total jurisdictional
income and property taxes can be expressed as a function of the total jurisdictional income. The following table
displays the annual Type 1 benefits for the county and the region.
Cecil County
Eastern Shore Region
Type 1
$12.2M
$65.5M
Type 2 Benefits:
These benefits are sometimes overlooked by the general public, and especially those public policy decision-makers
who see publicly provided Pre-K–12 education as a major cost item in the state and local budgets. These are the
benefits derived from the public expenditures churning in the local economy through the employment of those
involved in the public education enterprise, the expenditures that support the private sector vendors to the education
enterprise, and the various induced economic, employment, and fiscal impacts. These benefits alone result in a
positive return on the taxpayers’ investment in publicly provided Pre-K–12 education. These benefits are
calculated through the use of the “Social Accounting Matrix” data for each county, provided by the Minnesota
IMPLAN Group, and a series of Input/Output models using the IMPLAN Software platform for estimating
economic and employment impacts. These benefits are quantified as the economic and employment impacts seen
above.
Type 3 Benefits:
The Type 3 Benefits that go beyond the direct and obvious benefits of publicly provided Pre-K–12 education
include the ability of the jurisdiction to attract and/or retain families with skilled and/or professional workers who
are net wealth creators. The table below displays the annual Type 1 and Type 3 benefits for the county and the
region.
On the Shore, some of these benefits include:
Quality-of-Life measures that push parents to use school quality as a residential location factor;
Quality-of-Life issues that transcend location and extend into a “Sense of Well Being” for parents who
believe high quality public education is essential to the success of their child’s transition from high school
to higher education or the labor market;
Property value enhancements attributable to the presence of good local public schools;
Productivity enhancements in local businesses due to quality Pre-K–12 education;
Business, economic, workforce, and community enhancements due to increases in the number of postsecondary institution graduates in a jurisdiction due to quality Pre-K-12 education.
Cecil County
Eastern Shore Region
Type 3
$47.3M
$279.3M
These benefits assume the presence of good quality education in each jurisdiction. However, it is also clear that if
spending levels drop precipitously, each and every one of these benefits would decline, equally precipitously.