joe cortright_opportunity dividend summit

The Fiscal Return on Education

Joe CortrightMarch 2010

Synopsis

RevenueExpenditure

A Thought Experiment

Revenue

Education & Income

Annual Household Adjusted Gross Income (AGI)

-

20,000

40,000

60,000

80,000

Less than HS High SchoolDiploma

1 to 3 Years ofCollege

4 Year Degreeor Higher

Source: American Community Survey, 2008

Oregon household income by education of household head, 2008

Distributions

Low Income High Income

HS DiplomaSome College

45.738.9

Taxes & Attainment

Educational Level of

Household Head Median AGI Tax Rate Total Tax

Less than HS 23,500 4.1% 1,000

High School Diploma 38,900 4.5% 1,800

1 to 3 Years of College 45,700 4.6% 2,100

4 Year Degree or Higher 64,800 4.8% 3,100

Most Taxes Come from Well Educated

Educational Level of Household HeadHouseholds Income Taxes

Less than HS 5.5% 1.8%

High School Diploma 24.5% 15.7%

1 to 3 Years of College 34.0% 29.0%

4 Year Degree or Higher 36.0%53.4%

Expenditure

Health Plan Percent on Oregon Health Plan, 2008

0.0%

5.0%

10.0%

15.0%

20.0%

Less than HS High SchoolDiploma

1 to 3 Years ofCollege

4 Year Degreeor Higher

Source: American Community Survey, 2008

Welfare Percent Receiving Welfare, 2008

0.0%1.0%2.0%3.0%4.0%5.0%

Less than HS High SchoolDiploma

1 to 3 Years ofCollege

4 Year Degreeor Higher

Source: American Community Survey, 2008

Unemployment Insurance

Percent receiving Unemployment Insurance, 2008

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%

Less than HS High SchoolDiploma

1 to 3 Years ofCollege

4 Year Degreeor Higher

Source: American Community Survey, 2008

Corrections Percent of Persons Incarcerated, 2008

0.0%0.5%1.0%1.5%2.0%2.5%3.0%

Less than HS High SchoolDiploma

1 to 3 Years ofCollege

4 Year Degreeor Higher

Source: American Community Survey, 2008

A Thought Experiment

What if?

What if we moved 10,000 people from the category “high school graduate” to the category “four year college graduate”?

What would be the effect on state revenues?

What would be the effect on state expenditures?

Revenues

Revenue Per 4 Year Degree Holder 3,100Revenue per High School Graduate 1,800Difference per household 1,300

Adjustment for Household Size.60Difference per person$800

Aggregate Gain: $8 million annually

Expenditures

Program Participants Cost Savings

Welfare -160 8,500 1,360,000Health Plan -490 5,000 2,450,000UI -660 4,250 2,805,000Corrections -151 17,000 2,567,000

Total 9,182,000

Net Gain

Moving 10,000 from HS Graduate to 4-Year College Degree would produce annual gains of

Revenue: $8 million added

Expenditure: $9 million saved

Net Gain: $17 million

The Fiscal Return on Education

Joe CortrightJanuary 2010