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Putting a dollar value on college impact: A Colby College success story

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Colleges and universities drive the local economy in many ways.

As the grooming grounds of the thinkers, doers and creators of tomorrow, and the world’s innovation engine rooms, the contributions of higher education institutions to individuals, communities and national economies extend far beyond the classroom walls.

Within its hallowed hallways, the simple spark of an idea could turn into tomorrow’s life-changing invention. A lab researcher or student tinkering away in a lab could be on the cusp of the next big discovery that would go on to save thousands of lives.

Learning institutions were the first playgrounds of scrappy former upstarts like Microsoft’s Bill Gates, Facebook’s Mark Zuckerberg and Apple’s late founder Steve Jobs, to name a few. Today, these companies are the driving forces of the global internet economy, contributing to international policy and influencing the social order.

Colleges and universities are also massive employers of people, both directly and indirectly. Their activities provide and generate tens of thousands of employment opportunities both in on-campus roles and in jobs along the university supply chain.

Stretching past geographical boundaries, this supply chain is worth billions of dollars to a wide range of sectors from technology to healthcare, agriculture and beyond, propping up national GDPs and keeping the wheels of industry turning.

Domestic and international students, and their visitors, meanwhile, boost spending in local markets, unlocking new growth opportunities for local enterprises, and driving the local economy. 

To the economies they serve, higher education institutions contribute economic activity to the tune of billions of dollars. Yet, they are under greater pressure today to prove the value of their existence, as the evolving nature of the world of work raises questions on their continued ability to adequately fulfill their mission of economic mobility.

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Declining public confidence in college impact

Claims that education providers are ill-equipped to prepare learners for the jobs of tomorrow are putting a drag on the business of higher education which, like any other industry, is already contending with technological disruption.

Questions are also being raised on the relevance of campus education in the digital age, as online and blended learning options offer more varied and flexible alternatives to learners without the financial firepower to invest in taking up a course at university, whether domestically or abroad. 

The common argument goes that college education is too expensive for the returns it may or may not generate for learners. The US college debt crisis adds to this narrative, turning away some student prospects from pursuing a college degree.

Lest we forget, multiple other administrative stressors weigh on an institution’s prospect for survival. These include the need to upgrade its educational offerings to meet modern demands, from transforming pedagogy to investing in new IT systems and refitting old buildings with energy-saving features.

Surviving such a tough climate is difficult.

For this reason, the last few years have been particularly tumultuous for American higher education. A live tracker by Education Dive says 36 private colleges in the country have shuttered since 2016, while 37 public and private institutions have merged and 12 are in the process of consolidating administration. 

As higher education continues to operate in this tight, pressure-cooker situation, more such closures and mergers are expected to hit the sector, and the institutions most likely to be hurt are private for-profits.

Last year, Harvard Business School Professor Clayton Christensen famously predicted that half of all colleges and universities across the US were bound for bankruptcy in the next decade.

Though some have debunked this forecast as too far a stretch to be likely, the current trend of college closure suggests there may be other unforeseen forces that could plunge these institutions into financial ruin.

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The Colby College success story

In the city of Waterville, Maine, however, one institution is proving it possible to buck this trend. That institution is Colby College, a small 206-year old private liberal arts college that ranks among the top of its kind in the US.

An investment spree to the tune of nearly US$200 million over the last five years has the institution proving its worth to both city and state, cementing its place as the cornerstone of Maine’s economic success.

A few weeks ago, the college released a report detailing, down to the dollar value, exactly how much of an impact it has made to the community it serves.

“Five years ago we set out to invest, strategically and intentionally, in the college and the community to ensure the two would work in synergy to create a stronger Central Maine and a stronger Colby over time,” President David A. Greene explained.

“Recognising the importance of assessing whether that effort was bearing fruit, we sought an independent assessment of our investments over five years to see how they have made an impact.”

Colby College impact success story
How much does Colby College contribute to the local economy? Source: Shutterstock

The college enlisted the help of an independent team of Maine-based experts to conduct the impact analysis. These included economist Chuck Lawton, Ryan Wallace of the University of Southern Maine’s Maine Center for Business and Economic Research, and Michael Levert of Stepwise Data Research.

To conduct the study, the team used the REMI model, forecasting baseline economic activity and measuring Colby’s inputs against that prediction to determine impact attributable to the college and its activities.

Here’s what they discovered.

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Billion-dollar returns

In total, the analysis found that across five years, Colby’s operations, investments, and visitor and student spending supported nearly US$1.5 billion in economic output across Maine, of which the majority—US$1.1 billion—occurred in the Greater Waterville region.

In 2018 alone, Colby’s presence supported US$305 million in sales to local businesses, more than 2,500 jobs and US$111 million in wages.

It also generated US$8.7 million in income, sales, and property tax revenue for the region. 

The college, as the second-largest private employer in the Kennebec/Somerset region, spent more than US$210 million on operational and capital expenditures in 2018, which flowed through nearly 1,000 Maine vendors.

Between 2014 and 2018, Colby invested an estimated nearly US$176 million in facilities, including US$33 million in downtown Waterville in efforts to drive economic activity to the city. In that same period, the college made approximately US$1.7 million in payments to and for the benefit of the city.

“The revitalisation in this area that’s been spearheaded by Colby is clearly driving an outsized economic, employment, and population growth in our community,” said Garvan Donegan, director of planning and economic development for the Central Maine Growth Council. 

“While we’re already seeing good signs of progress, including rising real estate values and a significant increase in real estate transactions downtown, what’s especially exciting is that this is just the beginning.

“In fact, the Growth Council is seeing an exceptional level of new leads from businesses that are interested in the Waterville area.”

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Creating brain gain

Probably among the most significant finding is that Colby’s activities are helping Waterville buck negative demographic trends related to the labour force, employment and population size.

Maine, the numbers say, is facing a demographic crisis. It ranks 45th in population growth compared to its sister states, with a death rate that exceeds its birth date. 

But since Colby embarked on its investment drive, Waterville’s numbers are seeing improvement.

The result of this is the creation of brain gain, instead of brain drain; rather than leave to seek opportunities elsewhere, 15 percent of Colby alumni (around 3,700 graduates), are working in Maine. More than 1,600 who came to Colby from out of state, meanwhile, have remained in Maine.

The report also found that across the five-year period, Colby contributed to a 31 percent increase in annual job growth across the region. Employment at Colby increased 19 percent while wages grew 24 percent, surpassing the average growth rate for the Somerset/Kennebec region (1 percent employment growth and 12 percent wage growth) and the state (4 percent employment growth and 17 percent wage growth). 

That the median age of these new hires in 2018 was 35 is a testament to the Colby College impact on retaining and attracting young talent to the city. For comparison, the median age of the Maine workforce is 44.

“While Colby has always been an economic driver in the region, this report shows that its impact has increased on several measures, from direct contributions to Waterville to attracting a talented new labour force to the state,” said Kimberly Lindlof, president and CEO of the Mid-Maine Chamber of Commerce. 

“The school is a vital economic engine for Maine, and its recent investments in our community are unprecedented. I haven’t seen this kind of growth and momentum in my 26 years with the chamber.”

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Looking beyond teaching & learning

Efforts by Colby College to revitalise and drive impact to Waterville are paying dividends to city folk. Local residents are seeing their home transform from a quiet backwater into a city buzzing with economic vibrancy.

“I think its perked up the downtown,” one resident tells News Center Maine when approached for comments.

“I see a lot more foot traffic. It doesn’t look like a bombed-out World War Two destruction anymore.”

Greene expects that the next three years will only see this transformation continue to grow, with effects expected to spill over and reach the rest of Maine state, in areas that have struggled to recover economically.

“It’s going to be a real destination for people,” he says of Waterville city.

To continue to drive impact, Colby College will keep working to stay ahead of the city and state’s growing needs, Greene adds. He hopes that the college’s partnerships with philanthropists, businesses and community groups can be used as a model of collaboration for other colleges and towns.

“It’s not just about having an anchor institution with resources,” Green said in Maine Public.

“There are many of our communities that have those, as well. It’s a matter of priority for those institutions to commit to supporting their communities in important ways.”

Learning institutions like colleges should take the lead in providing this support to the local economy, the college president said. 

He adds: “But in this state, we haven’t thought enough about the way that we support our colleges and universities… and think about them as essential to the future of this state.”