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Economic Impact Study Shows Value of PCC to District Economy

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Portland Community College’s recently completed economic impact study details a dynamic financial force affecting residents and businesses throughout the 1,500-square-mile Portland Community College district.

The study, conducted by the Applied Economics Research Group at Portland State University, outlines the economic contributions made by PCC’s three campuses, four training centers, and the college administrative services operations. PCC operates in all or parts of five Northwest Oregon counties — Clackamas, Columbia, Multnomah, Washington and Yamhill. It enrolls more students than any other college in the state.

The study demonstrates that last year Portland Community College pumped $194 million into the district economy and created an additional 2,408 full-time jobs in its communities for district residents. PCC spending also generated $71 million in personal income in its district.

"Portland Community College is seen as a strong contributor to the quality of life in the Portland-metro area with affordable and accessible education," said PCC President Dan Moriarty. "For 37 years, we have been known as the door that opens wide to higher education and training and better jobs for hundreds of thousands of district residents. This study goes a step further. It underscores the direct and pervasive financial impact — and value — PCC has for the people in the district."

"At a time when our state has demanded outcomes and asked for limits on education spending," he added, "this study helps share PCC’s positive economic contributions to our district economy, over and above the educational opportunities we provide for so many people."

The financial impact is more than two times the annual PCC operating budget of $94 million. It is three and one-half times greater than the $56 million paid in state and local taxes for PCC’s operation.

The study examines the short-term financial impact PCC’s has on its district economy. The impact is derived from looking at the dollars that flow within the economy from institution, employee and student spending. While there are many other factors that contribute to the overall impact PCC has on district residents, the report concentrates on the short-term economic impact, stating that it "makes no attempt to estimate the impact of many of PCC’s other benefits, like open access to education, community outreach and improving the quality of life in the region."

A multiplier or "ripple effect" is applied to a best estimate of three categories of spending: college operations, take-home pay of college employees, and student cost-of-living expenses, excluding tuition and fees. (Adjustments were made to reflect only a portion of full-time student spending and housing costs since a large number of PCC students are part-time.)

The three categories total $136 million in expenditures. The multiplier effect is then calculated by using a specialized software assessment tool, IMPLAN, and U.S. Department of Commerce models. IMPLAN is widely used by industries and groups to gauge economic impact.

The $136 million in spending in turn generates $194 million in additional revenues for the district economy. Another multiplier reveals that 2,408 jobs are added to the local economy. A further look at PCC’s impact shows that for every $1 spent by PCC, an additional 83 cents is generated in district sales of goods and services.

For every $1 of personal income associated with PCC spending, an additional 87 cents in personal income is realized by district residents. And for every job associated with PCC spending, .88 full-time jobs are added to the district economy.

"The study shows that Portland Community College is a powerful economic agent in the metro region," says Thomas Potiowsky, co-director of the AER Group who conducted the study for PCC. "But its greatest value is the payback in an educated and financially successful citizenry, who in turn pay taxes and contribute in many significant ways to the regional economy."

Portland Community College served nearly 86,000 students last year in a district population of 898,000 residents. The college employed 5,700 full- and part-time faculty and staff who pay $3.2 million in state taxes, $2.6 million in-district. College revenues are derived from state taxes, 61 percent; tuition and fees, 25 percent; and the remainder from local property taxes and federal and private grants. It is estimated that the cost of educating a PCC student is $4,412, according to the state Office of Community College Services.

Portland Community College graduates of two-year programs earn, on an average, $650 or 26 percent more each month than high-school graduates, according to 1995 U.S. Census Bureau data.

Jennifer Shawcross, M.S., a member of the Applied Economics Research Group at PSU, collaborated with Potiowsky on this study.

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