Community Colleges' Best Kept Secret Exposed! Richard F. Gillette P.E. copyright 1999/2000/2001 RF gillette inc.

Introduction l I am a trustee at William Rainey Harper Community College in Palatine, Illinois. l Harper’s campus is over 33 years old. l Increasing enrollment and technology have used all our space. l Our wet laboratories, culinary art kitchens and other spaces are obsolete. l In 1999 a facilities bond referendum was required.

Introduction, continued l We told the community our needs. l We broadcast our academic excellence. l We gave tours of the campus. l Local newspapers backed the referendum. l We touted the low referendum tax rate of only $26.52/year for a $100, house. l We held a referendum and lost! l Yes, we had an active anti-tax group.

Introduction, continued l I work as a Licensed Professional Engineer, I also have a MBA in Operations Research. l When I sell a capitol project, the first and most important question is, “What is the projected Return On Investment (ROI)?” l A savings account’s interest rate is its ROI. l Do any of you invest without asking about the interest rate and/or projected ROI?

Introduction, continued l We were asking our taxpayers to invest their money in the college without giving them any information on their return! l Many do not use a community college. l Do they have an incentive for higher taxes? l I therefore developed an economic model. l I was astonished, the return is astronomical! l I may have exposed our best kept secret.

Community Colleges are Money Making Machines l Considering property tax as the investment, Harper’s ROI appears to be over 1500%! l This is the in district ROI, total ROI higher! l What’s more the large ROI is not exclusive to Harper it appears to flow from all CCs. l Note: 1500% ROI is a large number. $1.00 invested at 1500% if compounded for 10 years would yield $1,099,511,628,000.00!

College economic impact is expressed by: l The stream of savings and earnings generated by present and past operations. Each year the community has increased wealth. due to these savings and earnings. l The present value of the future earnings generated by that years operations. For a community college, this net present value. can be viewed as ROI with respect to property.. taxes paid/invested during the same year.

Simplifying The Jargon Examples

ROI Equals Interest Rate 10% APY

Income From Annuity $100, per year income for life Income From Annuity $100, per year income for life

Manufacturing Investment

A Look Back A Look Forward l The stream of savings and earnings generated by present and past operations. Each year the community has increased wealth. due to these savings and earnings. l The present value of the future earnings generated by that years operations. For a community college, this net present value. can be viewed as ROI with respect to property.. taxes paid/invested during the same year.

Economic Model Presentation l The model is a simple spread sheet (Excel). l All assumptions are listed as notes. l As the ROI was astronomical even with unknowns, I used TBDs for missing info. l Model will be presented in small pieces. l There are no poor questions, ask as we go. l The total model fits on one 8.5” x 11” page.

The Spread Sheet Model

Savings

Earnings

Earnings, Continued

Model Bottom Line

Data Mining Looking At Data To Find Something New l One complaint we hear from our legislators is that CCs have a high drop out rate. l Illinois just instituted a panel to reduce it. l More completing their degrees is better. l The dropouts in the model had a larger economic impact than the graduates! l This is true when dropouts are greater than 121% of graduates!

Data Mining, continued l Our perceived failure, high dropouts may be our greatest success, many earning more. l 50% used for future mobility and mortality. l Illinois state data shows 90% of Illinois CC graduates stay in their district! l ROI “in Illinois” indicates that the state should fund higher, funding is paid back many times in sales, income & other taxes!

Summary l Community Colleges are, “Money Making Machines” l We should not be keeping it a secret. l Boards and Administrations should publicize this great accomplishment. l Do you and your taxpayers know your ROI? l Do your law makers know your ROI?

Blanket Permission l You have permission to use and reproduce the model, providing my copyright remains. l The Spread Sheet can be downloaded from saveccs.org. l Go to the “Interesting Links” sidebar and click on rois0201.xls l You will have to update it to now and your Community College’s data.

Thank You l It’s a great story to tell. We should be telling it. When we do; l Maybe anti-tax groups will be picketing community colleges to RAISE TAXES so their community can have more wealth! l In Nov we passed our Referendum!

Community Colleges $1.00 in >=====> $20.00 out