Economic Impact Study

In FY 2021-22, VPCC served 8,987 credit and 1,320 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 VPCC’s students in FY 2021-22 amounted to a present value of $37.7 million, equal to $19.3 million in out-of-pocket expenses (including future principal and interest on student loans) and $18.5 million in forgone time and money.

In return for their investment, VPCC’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average VPCC associate degree graduate from FY 2021-22 will see annual earnings that are $13,500 higher than a person with a high school diploma or equivalent working in Virginia. Over a working lifetime, the benefits of the associate degree over a high school diploma will amount to an undiscounted value of $553.5 thousand in higher earnings per graduate. The present value of the cumulative higher future earnings that VPCC’s FY 2021-22 students will receive over their working careers is $284.4 million.

The students’ benefit-cost ratio is 7.5. In other words, for every dollar students invest in VPCC in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $7.50 in higher future earnings. Annually, the students’ investment in VPCC has an average annual internal rate of return of 24.7%, which is impressive compared to the U.S. stock market’s 30-year average rate of return of 9.6%.

VPCC 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 Virginia. As VPCC 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 2021-22 students’ working lives, the state and local government will have collected a present value of $63.3 million in added taxes.

Benefits to taxpayers will also consist of savings generated by the improved lifestyles of VPCC students and the corresponding reduced government services. Education is statistically correlated with a variety of lifestyle changes. The education that VPCC students receive will generate savings in three main categories: 1) healthcare, 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. VPCC 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 VPCC will generate $5.3 million in savings to state and local taxpayers.

Total taxpayer benefits amount to $68.6 million, the present value sum of the added tax revenue and public sector savings. Taxpayer costs are $20.1 million, equal to the amount of state and local government funding VPCC received in FY 2021-22. These benefits and costs yield a benefit-cost ratio of 3.4. This means that for every dollar of public money invested in VPCC in FY 2021-22, taxpayers will receive a cumulative present value of $3.40 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is 8.9%, which compares favorably to other long-term investments in the public sector

Society as a whole in Virginia benefits from the presence of VPCC in two major ways. Primarily, society benefits from an increased economic base in Virginia. 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 Virginia.

Benefits to society also consist of the savings generated by the improved lifestyles of VPCC 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. Healthcare 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 VPCC equal a present value of $829.1 million. These benefits include $574.9 million in added student income, $199.4 million in added business income, $40.9 million in added income from college activities, as well as $13.9 million in social savings related to health, the justice system, and income assistance in Virginia. People in Virginia invested a present value total of $86.5 million in VPCC in FY 2021-22. The cost includes all the college and student costs.

The benefit-cost ratio for society is 9.6, equal to the $829.1 million in benefits divided by the $86.5 million in costs. In other words, for every dollar invested in VPCC, people in Virginia will receive a cumulative value of $9.60 in benefits. The benefits of this. Investment analysis investment will occur for as long as VPCC’s FY 2021-22 students remain employed in the Virginia workforce.

The education and training VPCC provides for regional residents has the greatest impact. Since the establishment of the college, students have studied at VPCC and entered the regional workforce with greater knowledge and new skills. Today, thousands of former VPCC students are employed in the VPCC Service Region. As a result of their education from VPCC, the students receive higher earnings and increase the productivity of the businesses that employ them. In FY 2021-22, VPCC alumni generated $211.6 million in added income for the regional economy, which is equivalent to supporting 2,438 jobs.

VPCC adds economic value to the VPCC Service Region as an employer of regional residents and a large-scale buyer of goods and services. In FY 2021-22, the college employed 529 full-time and part-time faculty and staff, 72% of whom lived in the VPCC Service Region. Total payroll at VPCC was $20.5 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 $38.8 million on day-to-day expenses related to facilities, supplies, and professional services.

VPCC’s day-to-day operations spending added $29.8 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 $29.8 million in added income is equivalent to supporting 613 jobs in the region.

Some in-region students, referred to as retained students, would have left the VPCC Service Region if not for the existence of VPCC. While attending the college, these retained students spent money on groceries, accommodation, trans-portation, and other household expenses. This spending generated $5.5 million in added income for the regional economy in FY 2021-22, which supported 99 jobs in the VPCC Service Region.