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New report demonstrates Northeast’s economic impact on the region

New report demonstrates Northeast’s economic impact on the region

NORFOLK, Neb. – New data confirms that Northeast Community College has a major economic impact on the 20 counties in its service area and beyond.

A study for the College by the data analytics firm Lightcast confirms that Northeast’s total impact was $226.8 million in added income or 3,200 jobs supported to its 20-county service area’s economy during the 2020-21 fiscal year. One out of every 34 jobs in the Northeast service area are supported by activities of the College and its students. The total effect for 2020-21 amounted to approximately 2.3% of the Northeast service area’s total gross regional product.

“The results of this study demonstrate that Northeast creates value from multiple perspectives,” said Stephen Poole, economist for Lightcast. “The college benefits regional businesses by increasing consumer spending and supplying a steady flow of qualified, trained workers to the workforce. Northeast enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential.”

Additionally, Poole said Northeast Community College benefits state and local taxpayers through increased tax receipts and a reduced demand for government-supported social services while the institution benefits society as a whole in Nebraska by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students.

The report looked at Northeast through an economic impact analysis and an investment analysis. The economic impact is classified in three categories: operations spending, student spending impact and alumni impact.

Northeast’s day-to-day operations spending added $41.7 million in income to the region during the analysis year in the form of payroll to 543 full-time and part-time employees who spent their income across the region. 

Approximately 35% of credit students attending Northeast came from outside the region with some of these students relocating to the Northeast service area. In addition, some in-region students, referred to as retained students, would have left the service area for other educational opportunities if not for Northeast. These relocated and retained students spent a cumulative $3.4 million on groceries, mortgage and rent payments, and other living expenses at regional businesses.

Poole indicated the alumni impact stands out among the three economic analysis groups. He said Northeast’s alumni effect is very special as it is unique to higher education. 

“Every business has an operations spending impact, but only higher education, for the most part, is creating human capital,” he said. “The education students receive at Northeast Community College means they will have higher future earnings for their entire working lives. Additionally, the businesses they work for will be more productive, and thus, more profitable.” 

Based on increased earnings for alumni who are still living and working in the Northeast service area, the segment added $181.7 million to the region, supporting 2,553 jobs. The average associate degree graduate from Northeast will see an increase in earnings of $9,100 each year compared to a person with a high school diploma or equivalent working in Nebraska.

The investment analysis of the report was performed at the state level and looked at a return on investment in three key investing groups: student perspective, taxpayer perspective and social perspective. 

Between direct and indirect costs, Northeast students cumulatively invested $35.6 million into their education in the analysis year. In return, they will receive higher wages for the rest of their working lifetimes - $215.2 million. Poole said this is a rate of return of 27.9%. 

"The comparison we like to use is to the US stock market. On a 30-year average, the US stock market tends to vary between 9.9-10.1% rate of return,” Poole said. At 27.9%, it means an investment in an education at Northeast Community College has over twice the rate of return as a comparable investment in the US stock market.”  

The report shows Northeast generates more in tax revenue than it takes in. Benefits to taxpayers consist primarily of taxes that state and local governments will collect from the added revenue created in Nebraska. 

Taxpayers invested $47 million in Northeast in 2020-21. In return, constituents will benefit from added tax revenue, stemming from students’ higher lifetime earnings and increased business output, amounting to $50.4 million. A reduced demand for government-funded services in Nebraska will add another $4.1 million in benefits to taxpayers.

"For your institution, taxpayers are getting a return of 1.2 or for any given dollar taxpayers invest in your institution you’re handing them back $1.20. This means that not only is Northeast Community College repaying the taxpayers through their investment, but the taxpayers are also directly benefitting for that investment.”   

Finally, society as a whole in Nebraska benefits from the presence of Northeast - from an increased economic base in the state and increased business output. Poole said these social benefits equal a present value of $616.7 million.

"This gives a benefit/cost ratio of 7.0 or for any given dollar invested in Northeast Community College, the economic base of Nebraska grows by $7 over the course of students working lives. Fundamentally, it increased the economic base of your state.”

Dr. Leah Barrett, president of Northeast Community College, said the report confirms the impact Northeast has on meeting its mission of ensuring students are successful in meeting their educational goals and addressing workforce demands in the region.

"This is data we share to create an institutional profile that tells our story to our elected officials, economic development professionals and others who are interested in our existing businesses and attracting new business and industry across our 20-county service area. The report reinforces the crucial role Northeast Community College plays in the economic vitality of northeast and north central Nebraska.”