Community college ROI: Southwest generates more tax revenue than it consumes

By Published: October 23, 2018 7:04 AM CT

When president Tracy D. Hall heard confidence was lacking in Southwest Tennessee Community College, she did not rely on the success stories of her students, she commissioned a study to prove it.

Southwest commissioned the $15,000 economic impact study to combat a negative perception in the community that taxpayers are not getting a return on their investment.

“Students are coming out of Southwest career ready. That’s the impact we knew we were making and now we have the numbers to prove it,” Hall said.

The study was conducted by Emsi, a labor market research firm based out of Moscow, Idaho, which used revenue and expenditure data from 2016 to determine how much income, how many jobs, and how much state and local tax revenue is generated as a result of Southwest.

In fiscal year 2016-2017, state and local taxpayers paid $33.5 million to keep Southwest up and running. In return, they will receive an estimated $46.5 million in added tax revenue from graduates’ higher earnings and the increased business output over their careers.

So, for every tax dollar invested in the college, taxpayers reaped $1.40 in additional taxes and public sector savings and Tennessee will accrue an average $6.90 in added state revenue.

“The study is more than a feel-good, but how does (Southwest) change their lives and make an impact on the community,” Hall said. “They have a career, a salary and can be self-sufficient as opposed to the impact on society when it is the opposite, where they rely on public resources to survive. Community college is spanning that gap.”

Historically, Southwest has tried to communicate the improved quality of life that’s provided through higher education. Typically, through student anecdotes. Now, Hall plans to take that message a step further.  

“Education takes students from where they are to where they want to be. It takes them out of poverty. We have been communicating (Southwest’s) impact on people’s lives,” Hall said. “We are now going to also communicate the message of quantifying that value to the community, regional economy, workforce and return on investment for students.” 

But Hall will be the first to admit, the local community college has had its challenges.

As Hall was preparing to take over as president in 2015, she received a report from former Southwest president Nate Essex. The report was an environmental scan of internal and external stakeholders who felt the college was of value, but it needed a lot of work.

“Processes were broken,” Hall said. “It was hard for students to enter and easy for them to leave. We had to take a hard look at what we were doing in the lives of our students, but also if we were making as great an impact in the community as we could.”

“Education takes students from where they are to where they want to be. It takes them out of poverty. We have been communicating (Southwest’s) impact on people’s lives. We are now going to also communicate the message of quantifying that value to the community, regional economy, workforce and return on investment for students.” 
Tracy D. Hall, Southwest Tennessee Community College president

Two years ago, Southwest joined Achieving the Dream, a national education reform network of more than 220 colleges, to begin to “redesign, reinvent and reset” its processes and procedures to be more student-centered.   

The call to action came as enrollment was dropping, even after the launch of state education benefits such as Tennessee Promise, which provides two years of tuition-free attendance to any of the state’s 13 community colleges or 27 colleges of applied technology.

After seven consecutive years of declining enrollment, in the fall of 2017 Southwest saw a 10 percent increase in student enrollment. While numbers aren't final yet, Southwest projects a 2.2. percent increase in fall 2018 enrollment.  

In May of 2018, Southwest awarded 26 percent more credentials than the previous year, with the achievement gap between African-American and Latino students to white students beginning to close.

“We are excited about the quick wins,” Hall said. “We know we are on the right path. We have a lot of work to do.”  

Part of the negative public perception was that of the community college being “less than” or only for students who cannot succeed anywhere else.

But that’s part of the beauty of community college.

“Wherever they are in their lives, (students) can come to us if they are having academic challenges,” Hall said. “Or they aren’t able to be accepted to any other college. (Southwest) can help them become self-supporting and help them contribute to Memphis and the region.”   

About 96 percent of Southwest students are from Memphis and remain in Memphis upon graduation, helping to strengthen the local workforce.

Graduates receive the greatest return on investment, earning an additional $8.70 in income, or more than 21 percent, for every $1 invested in a Southwest education.

Southwest serves more than 13,000 credit and noncredit students each year and employs more than 1,100 full-time and part-time employees. It added more than $126 million in annual income to the Mid-South economy in 2016-2017, the Emsi report shows.  

Southwest plans to use the economic impact study to improve the community college’s public perception and engage stakeholders in deeper conversations.

To read the entire study, visit Southwest’s Impact901 landing page at www.southwest.tn.edu/impact901.

<strong>Southwest Tennessee Community College President Tracy D. Hall</strong>

Southwest Tennessee Community College President Tracy D. Hall


Michelle Corbet

Michelle Corbet

Michelle Corbet covers business for The Daily Memphian. Prior to, she was a reporter at the Memphis Business Journal. A native Memphian and University of Memphis graduate, Michelle covered business in Conway, Arkansas after college. Michelle got her start covering business as an intern at The Commercial Appeal.

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