The Economic Value of Harford Community College
Harford Community College influences both the lives of its students and the county economy.
Harford Community College creates a significant positive impact on the business community and generates a return on investment to its major stakeholder groups—students, taxpayers, and society. Using a two-pronged approach that involves an economic impact analysis and an investment analysis, this study calculates the benefits received by each of these groups. Results of the analysis reflect fiscal year 2022-23.
Harford Community College creates value in many ways. The college plays a key role in helping students increase their employability and achieve their individual potential. The college draws students to the county, generating new dollars and opportunities for Harford County. Harford provides students with the education, training, and skills they need to have fulfilling and prosperous careers. Furthermore, Harford is a place for students to meet new people, increase their self-confidence, and promote their overall health and well-being.
Harford influences both the lives of its students and the county economy. The college supports a variety of industries in Harford County, serves county businesses, and benefits society as a whole in Maryland from an expanded economy and improved quality of life. Additionally, the benefits created by Harford extend to the state and local government through increased tax revenues and public sector savings.
This study measures the economic impacts created by Harford on the business community and the benefits the college generates in return for the investments made by its key stakeholder groups—students, taxpayers,and society. The following two analyses are presented.
Economic Impact Analysis
Harford promotes economic growth in Harford County through its direct expenditures and the resulting expenditures of students and county businesses. The college serves as an employer and buyer of goods and services for its day-to-day operations. The college’s activities attract students from outside Harford County, whose expenditures benefit county vendors. In addition, Harford is one of the primary sources of higher education to Harford County residents and a supplier of trained workers to county industries, enhancing overall productivity in the county workforce.
Investment Analysis
All results reflect employee, student, and financial data, provided by the college, for fiscal year FY 2022-23. Impacts on the Harford County economy are reported under the economic impact analysis and are measured in terms of added income. The returns on investment to students, taxpayers, and society in Maryland are reported under the investment analysis.
Operations Spending Impact
Harford adds economic value to Harford County as an employer of county residents and a large-scale buyer of goods and services. In FY 2022-23, the college employed 867 full-time and part-time faculty and staff, 76% of whom lived in Harford County. Total payroll at Harford was $38.4 million, much of which was spent in the county for groceries, mortgage and rent payments, dining out, and other household expenses. In addition, the college spent $25.3 million on expenses related to facilities, supplies, and professional services.
Harford’s operations spending added $42.7 million in income to the county during the analysis year. This figure represents the college’s payroll, the multiplier effects generated by the in-county spending of the college and its employees, and a downward adjustment to account for funding that the college received from county sources. The $42.7 million in added income is equivalent to supporting 901 jobs in the county.
Student Spending Impact
Around 16% of credit students attending Harford originated from outside the county in FY 2022-23, and some of these students relocated to Harford County to attend Harford. These students may not have come to the county if the college did not exist. In addition, some in-county students, referred to as retained students, would have left Harford County if not for the existence of Harford. While attending the college, these relocated and retained students spent money on groceries, accommodation, transportation, and other household expenses. This spending generated $5.5 million in added income for the county economy in FY 2022-23, which supported 95 jobs in Harford County.
Alumni Impact
The education and training Harford provides for county residents has the greatest
impact. Since the establishment of the college, students have studied at Harford and
entered the county workforce with greater knowledge and new skills. Today, thousands
of former Harford students are employed in Harford County. As a result of their education
from Harford, the students receive higher earnings and increase the productivity of
the businesses that employ them. In FY 2022-23, Harford alumni generated $278.6 million
in added income for the county economy, which is equivalent to supporting
3,519 jobs.
Total Impact
Harford added $326.8 million in income to the Harford County economy during the analysis year, equal to the sum of the operations spending impact, the student spending impact, and the alumni impact. For context, the $326.8 million impact was equal to approximately 2.2% of the total gross regional product (GRP) of Harford County. This contribution that the college provided on its own is nearly as large as the entire Accommodation & Food Services industry in the county.
Harford’s total impact can also be expressed in terms of jobs supported. The $326.8 million impact supported 4,515 county jobs, using the jobs-to-sales ratios specific to each industry in the county. This means that one out of every 31 jobs in Harford County is supported by the activities of Harford and its students. In addition, the $326.8 million, or 4,515 supported jobs, stemmed from different industry sectors. For instance, among non-education industry sectors, the spending of Harford and its students and the activities of its alumni in the Health Care & Social Assistance industry sector supported 476 jobs in FY 2022-23. If the college did not exist, these impacts would not have been generated in Harford County.
Investment Analysis
An investment analysis evaluates the costs associated with a proposed venture against its expected benefits. The analysis presented here evaluates Harford as an investment from the perspectives of students, taxpayers, and society in Maryland. As with the economic impact analysis, this analysis considers only FY 2022-23 activities.
Student Perspective
In FY 2022-23, Harford served 6,349 credit and 7,251 non-credit students. In order to attend the college, the students paid for tuition, fees, books, and supplies. They also took out loans and will incur interest on those loans. Additionally, students gave up money they would have otherwise earned had they been working instead of attending college. The total investment made by Harford’s students in FY 2022-23 amounted to a present value of $44.8 million, equal to $16.3 million in out-of-pocket expenses (including future principal and interest on student loans) and $28.5 million in forgone time and money.
In return for their investment, Harford’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average Harford associate degree graduate from FY 2022-23 will see annual earnings that are $9,100 higher than a person with a high school diploma or equivalent working in Maryland. Over a working lifetime, the benefits of an associate degree over a high school diploma will amount to an undiscounted value of $364,000 in higher earnings per graduate. The present value of the cumulative higher future earnings that Harford’s FY 2022-23 students will receive over their working careers is $210.1 million.
The students’ benefit-cost ratio is 4.7. In other words, for every dollar students invest in Harford in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $4.70 in higher future earnings. Annually, the students’ investment in Harford has an average annual internal rate of return of 17.9%, which is impressive compared to the U.S. stock market’s 30-year average rate of return of 10.1%.
Taxpayer Perspective
Harford generates more in tax revenue than it receives. These benefits to taxpayers consist primarily of taxes that the state and local government will collect from the added revenue created in the state. As Harford students will earn more, they will make higher tax payments throughout their working lives. Students’ employers will also make higher tax payments as they increase their output and purchases of goods and services. By the end of the FY 2022-23 students’ working lives, the state and local government will have collected a present value of $53.4 million in added taxes.
Benefits to taxpayers will also consist of savings generated by the improved lifestyles of Harford students and the corresponding reduced government services. Education is statistically correlated with a variety of lifestyle changes. The education that Harford students receive will generate savings in three main categories: 1) health care, 2) justice system, and 3) income assistance. Improved health will lower students’ demand for national health care services. In addition, costs related to the justice system will decrease. Harford students will be more employable, so their reduced demand for income assistance such as welfare and unemployment benefits will benefit taxpayers. For a list of study references, contact the college for a copy of the main report. Altogether, the present value of the benefits associated with an education from Harford will generate $8.4 million in savings to state and local taxpayers.
Total taxpayer benefits amount to $61.8 million, the present value sum of the added tax revenue and public sector savings. Taxpayer costs are $39.7 million, equal to the amount of state and local government funding Harford received in FY 2022-23. These benefits and costs yield a benefit-cost ratio of 1.6. This means that for every dollar of public money invested in Harford in FY 2022-23, taxpayers will receive a cumulative present value of $1.60 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is 3.3%, which compares favorably to other long-term investments in the public sector.
Social Perspective
Society as a whole in Maryland benefits from the presence of Harford in two major ways. Primarily, society benefits from an increased economic base in the state. This is attributed to the added income from students’ increased lifetime earnings (added student income) and increased business output (added business income), which raise economic prosperity in Maryland.
Benefits to society also consist of the savings generated by the improved lifestyles of Harford students. As discussed in the previous section, education is statistically correlated with a variety of lifestyle changes that generate social savings. Note that these costs are avoided by the consumers but are distinct from the costs avoided by the taxpayers outlined above. Health care savings include avoided medical costs associated with smoking, obesity, substance abuse, and depression. Justice system savings include avoided costs to the government and society due to less judicial activity. Income assistance savings include reduced welfare and unemployment claims. For a list of study references, contact the college for a copy of the main report.
Altogether, the social benefits of Harford equal a present value of $660.7 million. These benefits include $426.1 million in added student income, $174.5 million in added business income, $43.1 million in added income from college activities, as well as $17.0 million in social savings related to health, the justice system, and income assistance in Maryland. People in Maryland invested a present value total of $96.2 million in Harford in FY 2022-23. The cost includes all the college and student costs.
The benefit-cost ratio for society is 6.9, equal to the $660.7 million in benefits divided by the $96.2 million in costs. In other words, for every dollar invested in Harford, people in Maryland will receive a cumulative value of $6.90 in benefits. The benefits of this investment will occur for as long as Harford’s FY 2022-23 students remain employed in the state workforce.
Summary of Investment Analysis Results
The results of the analysis demonstrate that Harford is a strong investment for all three major stakeholder groups—students, taxpayers, and society. As shown, students receive a great return for their investments in an education from Harford. At the same time, taxpayers’ investment in Harford returns more to government budgets than it costs and creates a wide range of social benefits throughout Maryland.
Conclusion
The results of this study demonstrate that Harford creates value from multiple perspectives.
The college benefits county businesses by increasing consumer spending in the county and supplying a steady flow of qualified, trained workers to the workforce. Harford enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential. The college benefits state and local taxpayers through increased tax receipts and a reduced demand for government-supported social services. Finally, Harford benefits society as a whole in Maryland by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students.
About the Study
Data and assumptions used in the study are based on several sources, including the
FY 2022-23 academic and financial reports from Harford, industry and employment data
from the U.S. Bureau of Labor Statistics and U.S. Census Bureau, outputs of Lightcast’s
Multi-Regional Social Accounting Matrix model, and a variety of studies and surveys
relating education to social behavior. The study applies a conservative methodology
and follows standard practice using only the most recognized indicators of economic
impact and investment effectiveness. For a full description of the data and approach
used in the study, please contact the college for a copy of the main report.
