Economic Impact Study
Southwestern Illinois College (SWIC) creates value in many ways. The college plays a key role in helping students increase their employability and achieve their individual potential. The college retains students in the region, generating new dollars and opportunities for District 522. SWIC provides students with the education, training, and skills they need to have fulfilling and prosperous careers. Furthermore, SWIC is a place for students to meet new people, increase their self-confidence, and promote their overall health and well-being.
SWIC influences both the lives of its students and the regional economy. The college supports a variety of industries in District 522, serves regional businesses, and benefits society as a whole in Illinois from an expanded economy and improved quality of life. Additionally, the benefits created by SWIC extend to the state and local government through increased tax revenues and public sector savings.
This study measures the economic impacts created by SWIC 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 are presented:
Conclusion & Full Report Download
All results reflect employee, student, and financial data, provided by the college, for fiscal year (FY) 2022-23. Impacts on the District 522 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 Illinois are reported under the investment analysis.
Economic Impact Analysis
SWIC promotes economic growth in District 522 through its direct expenditures and the resulting expenditures of students and regional businesses. The college serves as an employer and buyer of goods and services for its day-to-day and construction operations. The college’s activities retain students in District 522, whose expenditures benefit regional vendors. In addition, SWIC is one of the primary sources of higher education to District522 residents and a supplier of trained workers to regional industries, enhancing overall productivity in the regional workforce.
Operations Spending Impact
SWIC adds economic value to District 522 as an employer of regional residents and a large-scale buyer of goods and services. In FY 2022-23, the college employed 1,311 full-time and part-time faculty and staff, 81% of whom lived in District 522. Total payroll at SWIC was $47.8 million, much of which was spent in the region for groceries, mortgage and rent payments, dining out, and other household expenses. In addition, the college spent $54.3 million (excluding construction) on day-to-day expenses related to facilities, supplies, and professional services.
SWIC’s day-to-day operations spending added $50.5 million in income to the region during the analysis year. This figure represents the college’s payroll, the multiplier effects generated by the in-region spending of the college and its employees, and a downward adjustment to account for funding that the college received from regional sources. The $50.5 million in added income is equivalent to supporting 1,314 jobs in the region.
Construction Spending Impact
SWIC invests in construction each year to maintain its facilities, create additional capacities, and meet its growing educational demands. While the amount varies from year to year, these quick infusions of income and jobs have a substantial impact on the regional economy. In FY 2022-23, SWIC’s construction spending generated $4.6 million in added income, which is equivalent to supporting 53 jobs.
Student Spending Impact
Some in-region students, referred to as retained students, would have left District 522 if not for the existence of SWIC. While attending the college, these retained students spent money on groceries, accommodation, transportation, and other household expenses. This spending generated $4.7 million in added income for the regional economy in FY 2022-23, which supported 78 jobs in District 522.
Alumni Impact
The education and training SWIC provides for regional residents has the greatest impact. Since the establishment of the college, students have studied at SWIC and entered the regional workforce with greater knowledge and new skills. Today, thousands of former SWIC students are employed in District 522. As a result of their education from SWIC, the students receive higher earnings and increase the productivity of the businesses that employ them. In FY 2022-23, SWIC alumni generated $387.9 million in added income for the regional economy, which is equivalent to supporting 5,371 jobs.
Total Impact
SWIC added $447.7 million in income to the District 522 economy during the analysis year, equal to the sum of the operations and construction spending impacts; the student spending impact, and the alumni impact. For context, the $447.7 million impact was equal to approximately 1.5% of the total gross regional product (GRP) of District 522. This contribution that the college provided on its own is larger than the entire Agriculture, Forestry, Fishing & Hunting industry in the region. SWIC’s total impact can also be expressed in terms of jobs supported. The $447.7 million impact supported 6,816 regional jobs, using the jobs-to-sales ratios specific to each industry in the region.
This means that one out of every 46 jobs in District 522 is supported by the activities of SWIC and its students. In addition, the $447.7 million, or 6,816 supported jobs, stemmed from different industry sectors. For instance, among non-education industry sectors, the spending of SWIC and its students and the activities of its alumni in the Health Care & Social Assistance industry sector supported 1,277 jobs in FY 2022-23. If the college did not exist, these impacts would not have been generated in District 522.
Investment Analysis
An investment analysis evaluates the costs associated with a proposed venture against its expected benefits. The analysis presented here evaluates SWIC as an investment from the perspectives of students, taxpayers, and society in Illinois. As with the economic impact analysis, this analysis considers only FY 2022-23 activities.
Student Perspective
In FY 2022-23, SWIC served 13,734 credit and 2,194 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 SWIC’s students in FY 2022-23 amounted to a present value of $37.1 million, equal to $26.8 million in out-of-pocket expenses (including future principal and interest on student loans) and $10.4 million in forgone time and money.
In return for their investment, SWIC’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average SWIC associate degree graduate from FY 2022-23 will see annual earnings that are $6,500 higher than a person with a high school diploma or equivalent working in Illinois. Over a working lifetime, the benefits of the associate degree over a high school diploma will amount to an undiscounted value of $286,000 in higher earnings per graduate. The present value of the cumulative higher future earnings that SWIC’s FY 2022-23 students will receive over their working careers is $170.7 million.
The students’ benefit-cost ratio is 4.6. In other words, for every dollar students invest in SWIC in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $4.60 in higher future earnings. Annually, the students’ investment in SWIC has an average annual internal rate of return of 15.3%, which is impressive compared to the U.S. stock market’s 30-year average rate of return of 10.1%
Social Perspective
Society as a whole in Illinois benefits from the presence of SWIC 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 Illinois.
Benefits to society also consist of the savings generated by the improved lifestyles of SWIC 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, alcohol dependence, obesity, drug 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 SWIC equal a present value of $675.5 million. These benefits include $449.0 million in added student income, $168.0 million in added business income, $39.5 million in added income from college activities, as well as $19.0 million in social savings related to health, the justice system, and income assistance in Illinois. People in Illinois invested a present value total of $135.7 million in SWIC in FY 2022-23. The cost includes all the college and student costs.
The benefit-cost ratio for society is 5.0, equal to the $675.5 million in benefits divided by the $135.7 million in costs. In other words, for every dollar invested in SWIC, people in Illinois will receive a cumulative value of $5.00 in benefits. The benefits of this investment will occur for as long as SWIC’s FY 2022-23 students remain employed in the state workforce.
Summary of Investment Analysis Results
The results of the analysis demonstrate that SWIC is a strong investment for students and society. As shown, students receive a great return for their investments in an education from the college. From the taxpayer perspective, the benefits generated by the college and its students recover a significant portion of the costs borne by taxpayers and create a wide range of social benefits throughout Illinois.
Conclusion
The results of this study demonstrate that SWIC creates value from multiple perspectives‘
The college benefits regional businesses by increasing consumer spending in the region and supplying a steady flow of qualified, trained workers to the workforce. SWIC 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, SWIC benefits society as a whole in Illinois 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 SWIC, 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.