05/18/2007: "Closing the Gaps and Opening the Gates"
Research has consistently noted that higher education is of great benefit to both individuals and society. Unfortunately, Texas lags most states in key education-related statistics.
To name just a few. The percentage of the state’s population with less than a high school education is substantially higher than for the US as a whole. Texas is also far behind most states in the proportion of persons with bachelor’s and graduate degrees. While the segment of the Texas workforce with bachelor’s degrees has been growing lately, the pace is still less than that of other large states which are competitive for major new business activity.
In October 2000, a new strategy was implemented to improve the situation. Created by the Texas Higher Education Coordinating Board (THECB) with strong support from various educational, business, and political entities, the approach was named “Closing the Gaps.” The overall plan is to close the educational gaps within the state as well as those that exist between Texas and other states. The four areas addressed in this plan involve student participation, student success, excellence, and research.
The initiative is a well-grounded and realistic assessment of the importance of improving Texas’ higher education attendance, graduation rates, and research participation. Measurable milestones have been incorporated into the program to achieve the needed outcomes.
Recently, my firm, The Perryman Group, was asked to assess the benefits of achieving the goals embodied in “Closing the Gaps” with particular focus on economic gains that would occur as a result of the THECB program.
In general, benefits of increasing participation in higher education endeavors include improved health and financial prospects for individuals and a more productive workforce, as well as less demand for social services. Gains from a more educated populace promote long-term economic development, and enhanced research activity spawns new and innovative advances in multiple arenas.
Our study focused on the overall gains associated with improving higher education attainment from the perspective of the Texas economy. With regard to the benefits of achieving the goals of the “Closing the Gaps” initiative, special attention was given to the incremental increases over and above those that would occur under normal or “baseline” conditions with respect to participation, completion, and research. The analysis examined these net effects over time, accounting for gains in income, output, and productivity, plus reductions in social costs, returns on enhanced research, and economic development emerging from a more educated workforce.
What we discovered was quite impressive, particularly with regard to the fiscal impact of “Closing the Gaps.” The endeavor will generate sufficient State revenues to nearly cover the outlays required for its operation through 2015. By 2030, however, the initiative will have provided more than $85.3 billion (in constant dollars) as well as $73.5 billion in receipts to local governments.
With full implementation by 2015, the annual gains per dollar of cumulative State outlays include $11.92 in total spending, $4.77 in gross state product, and $3.02 in personal income. By 2030, the stimulus per dollar reaches $46.36 in expenditures, $18.41 in output, and $11.54 in income. When all public (state and local) and private costs are considered, the annual economic returns per $1 of expenditures by 2030 are estimated to be $24.15 in total spending, $9.60 in gross state product, and $6.01 in personal income.
Although Texas is projected to achieve healthy economic expansion if current trends continue, the payoff to reaching the objectives of the “Closing the Gaps” endeavor is enormous. By 2030, it includes annual gains (in 2006 dollars) of $489.6 billion in total spending, $194.5 billion in gross state product, and $121.9 billion in personal income.
With regard to wage and salary employment, successful completion of the “Closing the Gaps” program will result in an additional 308,635 permanent jobs by 2015 and, by 2030, some 1.02 million new workers beyond what would be expected under normal gains. The net gains in employment will be spread over every region in the state.
Thus, it is easy to see that generating a more educated workforce will be highly advantageous for the state in terms of gross product as well as employment. In addition, “Closing the Gaps” will increase the capacity of Texas to create and attract emerging industries, enhance the state’s productivity and competitiveness, and generate synergies with other strategic advantages enjoyed by the state. Furthermore, it will reduce social costs associated with an uneducated citizenry, enable the state to move to the forefront of workforce quality and research output, and provide impressive returns to the state on the commitment of public resources.
Most important of all, however, is that reaching the goals of “Closing the Gaps” will improve the lives and “Open the Gates” of opportunity for millions of Texans from all socioeconomic backgrounds and promote a better quality of life in thousands of communities across the state. It is difficult to imagine a more noble and worthwhile endeavor.