The Economic Value of WTAMU Main Report

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Appendix 7: Alternative Education Variable In a scenario where the university did not exist, some of its students would still be able to avail themselves of an alternative comparable education. These students create benefits in the region even in the absence of the university. The alternative education variable accounts for these students and is used to discount the benefits we attribute to the university. Recall this analysis considers only relevant economic information regarding the university. Considering the existence of various other academic institutions surrounding the university, we have to assume that a portion of the students could find alternative education and either remain in or return to the region. For example, some students may participate in online programs while remaining in the region. Others may attend an out-of-region institution and return to the region upon completing their studies. For these students – who would have found an alternative education and produced benefits in the region regardless of the presence of the university – we discount the benefits attributed to the university. An important distinction must be made here: the benefits from students who would find alternative education outside the region and not return to the region are not discounted. Because these benefits would not occur in the region without the presence of the university, they must be included. In the absence of the university, we assume 15% of the university’s students would find alternative education opportunities and remain in or return to the region. We account for this by discounting the alumni impact, the benefits to taxpayers, and the benefits to society in the region in Chapters 2 and 3 by 15%. In other words, we assume 15% of the benefits created by the university’s students would have occurred anyways in the counterfactual scenario where the university did not exist. A sensitivity analysis of this adjustment is presented in Appendix 1. Appendix 7: Alternative Education Variable 96
Appendix 8: Overview of Investment Analysis Measures The appendix provides context to the investment analysis results using the simple hypothetical example summarized in Table A8.1 below. The table shows the projected benefits and costs for a single student over time and associated investment analysis results. 50 TABLE A8.1: EXAMPLE OF THE BENEFITS AND COSTS OF EDUCATION FOR A SINGLE STUDENT 1 2 3 4 5 6 Year Tuition Opportunity cost Total cost Higher earnings Net cash flow 1 $1,500 $20,000 $21,500 $0 -$21,500 2 $0 $0 $0 $5,000 $5,000 3 $0 $0 $0 $5,000 $5,000 4 $0 $0 $0 $5,000 $5,000 5 $0 $0 $0 $5,000 $5,000 6 $0 $0 $0 $5,000 $5,000 7 $0 $0 $0 $5,000 $5,000 8 $0 $0 $0 $5,000 $5,000 9 $0 $0 $0 $5,000 $5,000 10 $0 $0 $0 $5,000 $5,000 Net present value $21,500 $35,753 $14,253 Internal rate of return Benefit-cost ratio Payback period (no. of years) 18.0% 1.7 4.2 Assumptions are as follows: • Benefits and costs are projected out 10 years into the future (Column 1). • The student attends the university for one year, and the cost of tuition is $1,500 (Column 2). • Earnings foregone while attending the university for one year (opportunity cost) come to $20,000 (Column 3). 50 Note that this is a hypothetical example. The numbers used are not based on data collected from an existing university. Appendix 8: Overview of Investment Analysis Measures 97
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AUGUST 2019 The Economic Value of W
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Executive Summary This report asses
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created by WTAMU is equal to approx
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Investment Analysis Investment anal
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Introduction West Texas A&M Univers
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CHAPTER 1: Profile of West Texas A&
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WTAMU employee and finance data TAB
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When using the Alumni Outcomes data
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The Texas Panhandle economy WTAMU s
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Table 1.4 and Figure 1.5 present th
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IN this chapter, we estimate the fo
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Operations spending impact Faculty
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the next four rows under the sectio
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non-labor income. This sums togethe
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ing impacts. Again, since construct
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of employees reported for each comp
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Calculating the increase in income
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the retained students, we estimate
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Alumni impact In this section, we e
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income is the difference between th
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Once these allocations are complete
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These impacts, stemming from spendi
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Page 47 and 48: their full earning potential that t
Page 49 and 50: Linking education to earnings Havin
Page 51 and 52: As shown in Table 3.2, the $44.6 mi
Page 53 and 54: Price Index), the corresponding nom
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Page 57 and 58: TABLE 3.3: PRESENT VALUE OF ADDED T
Page 59 and 60: Social perspective Texas benefits f
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Page 65 and 66: WHILE WTAMU’s value to the Texas
Page 67 and 68: Buss, Christian, Jeffrey Parker, an
Page 69 and 70: Jaeger, David A. and Marianne E. Pa
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Page 81 and 82: Economics Study of the allocation o
Page 83 and 84: Appendix 3: Frequently Asked Questi
Page 85 and 86: money” is called discounting and
Page 87 and 88: Appendix 5: Emsi MR-SAM Emsi’s MR
Page 89 and 90: Census’ Current Population Survey
Page 91 and 92: The matrices are built utilizing Em
Page 93 and 94: Appendix 6: Value per Credit Hour E
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Page 101 and 102: Appendix 9: Shutdown Point The inve
Page 103 and 104: Consider benefits now with referenc
Page 105 and 106: Appendix 10: Social Externalities E
Page 107 and 108: y education, gender, and ethnicity.
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