The Economic Development Impact of Promise-type Programs

1. The Economic Development Impact of Promise-type Programs Dr. Janice Brown Executive Director, The Kalamazoo Promise Dr. Michelle Miller-Adams Visiting Scholar, W.E. Upjohn Institute June 25, 2009 * Presented at PromiseNet 2009, Denver

2. Our Goal Today: Participants will hear about and discuss how Promise-type programs uniquely contribute to regional economic development.* * This factor is what separates Promise-type programs from other scholarship approaches.

3. Factors Associated With Economic Development Impact Place-based Universal (or near-universal) Both factors must be present to signal an emphasis on economic development.

4. The Kalamazoo Promise Story It is about students. It is about economic development. It is about the community. It is about individuals, families, business, institutions and government. It is about the alignment of the above.

5. The Kalamazoo Promise:Learning, Living, Working, and Thriving Economic Development Student Support Urban Vitality Pre K-16 Education

6. Potential Economic Impacts • Short term • New money for schools • New school construction • Scholarship dollars that remain local • Increased # of households as families move in • Educated workers • Increase in housing values & construction • Increase in consumer spending

7. Potential Economic Impacts • Medium term • Increase in business activities • Long term • Creation of better-educated workforce • Population increase • Rise in tax base

8. Intangible Effects • Reputation and national profile • Community identity and morale • Catalyst for community engagement and alignment

9. The Bottom Line • The economic impact of a Promise-type program will depend on a community’s ability to leverage it through effective alignment and engagement. • Without community support and alignment, the program’s economic impact may be limited.

10. Assessing short-term impact • A Promise-type program increases the attractiveness of an area; however, households are hard to move. • Barriers: • Finding new jobs • Buying and selling a home • Familial obligations

11. Assessing short-term impact • Changes in the residential housing market may be small. • Many of the moves stimulated by the scholarship program will be within the metro area. • Jobs, family ties remain unchanged. • Housing prices remain relatively constant.

12. Assessing short-term impact • Consumer spending impact will be modest. Any increase will depend on: • Number of new (not intra-area) households • Partial spending of college savings; however: • Many households do not save for the college education of their children. • If the household does save (or plans to save), what is the scholarship worth?

13. What is the scholarship worth? • Depends on the scholarship’s net present value. Families must consider: • Likelihood of still living in the district by the time of their child’s high-school graduation • Likelihood of child attending a 2-year or 4-year program • Likelihood that scholarship will still exist and will keep pace with cost of tuition

14. Assessing medium-term impact • Increased business activity will depend on: • New consumer spending • New residents starting their own businesses • Expansion of existing firms • New firms attracted to the area • Critical factor is alignment -- the community’s ability to leverage the scholarship to enhance its profile and attract business investment

15. Assessing long-term impact • The quality of an area’s workforce is one of the most important factors determining its future success. Scholarship can: • Increase supply of educated, local college graduates • Increase attractiveness of community to educated workers, entrepreneurs, & families * Critical factor is business demand for educated workers.

16. Cost-benefit analysis • Benefits • Increased K-12 enrollment • Increased economic activity • Employment and income • New business start-ups, expansion • New consumer spending by existing and new residents • Resulting employment and income multiplier effects • Use of scholarship at local institutions • Fiscal benefits • Higher property, sales, and income tax revenues

17. Cost-benefit analysis • Costs • Direct cost of scholarship program will depend on: • District’s current and future graduation rates • Program requirements re: residency & enrollment • Tuition at eligible colleges and universities • Structure (first- v. last-dollar) • College retention rate of scholarship users • Additional program costs • Administration, marketing, evaluation, student support services (if included) • Fiscal costs to district • Marginal increase in the cost of instruction with expanded enrollment

18. W.E. Upjohn Institute activities • Products • Feasibility studies • Economic impact studies • Models / forecasts • The cost of a Promise-type program • Impact on school district enrollment and finances • Fiscal impact for city, county, or region • Net impact evaluation • Communities • Kalamazoo, Davenport, La Crosse, Toledo

19. The first comprehensive account of the Kalamazoo Promise, based on three years of research. Published by the W.E. Upjohn Institute for Employment Research, 2009.

20. For additional information:Kalamazoo Promise Research Web Sitehttp://www.upjohninstitute.org/Janice Brownjbrown@kalamazoopromise.comMichelle Miller-Adamsmiller-adams@upjohninstitute.org