Southeastern has economic impact of $1 billion
Tuesday, May 2, 2023
by: Tonya Lowentritt
HAMMOND – Southeastern Louisiana University’s economic impact across the region
is more than $1 billion annually, according to a new study conducted by Lightcast,
a company that provides colleges and universities with labor market data that help
create better outcomes for students, businesses, and communities.
Lightcast measured the economic impacts created by Southeastern on the business community and the benefits the university generates in return for the investments made by its key stakeholder groups – students, taxpayers, and society. The results reflect employee, student, and financial data from Southeastern for fiscal year 2021-22, 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 showed that the university’s impact supports more than 15,500 jobs, and spending by the university’s more than 13,000 students accounted for an approximate $19.6 million impact. In addition, the study analyzed non-economic factors such as cultural, education and business-related outreach projects.
“This report on the economic and community impacts of Southeastern highlights our multi-faceted role in serving the people who live throughout our region,” said Southeastern President John L. Crain.
For Southeastern, spending includes a $144.2 million impact of university operating expenditures, $2.3 million from construction projects, $2.2 million in research spending, $29.6 million in spin-off company impact from the Southeastern Business Center and its collaboration with entrepreneurs and small business, $2.5 million in visitor spending, $1 million volunteerism impact, and an alumni impact of $815.3 million.
In terms of investment analysis from the student perspective, Southeastern served 16,478 students who paid for tuition, fees, books and supplies. They also took out loans and will incur interest on those loans, as well as forfeited earnings they could have made instead of attending school. The total investment made by Southeastern’s students was $144.6 million, equal to $74.9 million in out-of-pocket expenses and $69.7 million in forgone time and money.
In return for their investment, Southeastern students will receive a stream of higher future earnings that will continue to grow throughout their working lives. The average Southeastern graduate will see annual earnings that are $22,500 higher than a person with a high school diploma or equivalent working in Louisiana. The study found that over a working lifetime, the benefits of the bachelor’s degree over a high school diploma will amount to an undiscounted value of $1 million in higher earnings per graduate.
The students’ benefit-cost ratio is 5.3. For every dollar students invest in Southeastern in the form of out-of-pocket expenses and forgone time and money, they receive a cumulative value of $5.30 in higher future earnings. Annually, the students’ investment in Southeastern has an average annual internal rate of return of 15.6%, which is greater than the U.S. stock market’s 30-year average rate of return of 10.5%.
The study found, from the taxpayer perspective, that Southeastern generates more in tax revenue than it takes. The benefits to taxpayers consist primarily of taxes that the state and local government collect from the added revenue created in the state.
Education is statistically correlated with a variety of improved lifestyle changes. The educations that Southeastern students receive generate savings in three main categories – healthcare, justice system, and income assistance. Altogether, the present value of the benefits associated with an education from Southeastern generates $15.2 million in savings to state and local taxpayers.
Total taxpayer benefits amount to $88.6 million, the present value sum of the added taxes and public sector savings. Louisiana taxpayers provided $29.5 million, equal to the amount of state and local government funding Southeastern received. The benefits and costs yield a benefit-cost ratio of 3.0. For every dollar of public money invested in Southeastern, taxpayers received a cumulative present value of $3 over the course of the student’s working lives. The average annual internal rate of return for taxpayers is 7.6%, which compares favorably to other long-term investments in the public and private sectors.
From the social perspective, the study found that society as a whole in Louisiana benefits from the presence of Southeastern in two major ways. Primarily, society benefits from an increased economic base in the state. This is attributed to added income from students’ increased lifetime earnings (added student income) and increased business output (added business income), which raise economic prosperity in Louisiana.
Altogether, the social benefits of Southeastern equal a present value of $2.8 billion. The benefits include $1.9 billion in added student income, $600.5 million in added business income, $164.2 million in added income from university activities, as well as $169.8 million in social savings related to health, crime, and income assistance in Louisiana. People in Louisiana invested a present value total of $260.4 million in Southeastern, which includes all university and student costs.
The benefit-cost ratio for society is 10.9, equal to the $2.8 billion in benefits divided by the $260.4 million in costs. In other words, for every dollar invested in Southeastern, people in Louisiana will receive a cumulative value of $10.90 in benefits.
As one of the area’s largest employers, Southeastern’s economic contributions are obviously very visible, Crain said.
“Beyond that,” he said, “are the fundamental contributions Southeastern makes to develop an educated citizenry, a workforce prepared for today’s knowledge-based economy, and numerous cultural, creative and other resources that contribute to our quality of life and the wellbeing of our region. No price tag can be placed on these contributions.”
A complete copy of the report will be available online at southeastern.edu/impact.