47 Chapter 3: Investment analysis factors (besides education) that influence individual behavior. We then multiply the marginal effects of education times the associated costs of health, crime, and income assistance.36 Finally, we apply the same adjustments for attrition, alternative education, and the shutdown point to derive the net savings to the government. Total government savings appear in Figure 3.2 and sum to $12.5 million. Table 3.3 displays all benefits to taxpayers. The first row shows the added tax revenues created in the state, equal to $84.1 million, from students’ higher earnings, increases in non-labor income, and spending impacts. The sum of the government savings and the added income in the state is $96.6 million, as shown in the bottom row of Table 3.3. These savings continue to accrue in the future as long as the FY 2021-22 student population of SUNY WCC remains in the workforce. Return on investment for taxpayers Taxpayer costs are reported in Table 3.4 and come to $71.2 million, equal to the contribution of state and local government to SUNY WCC. In return for their public support, taxpayers are rewarded with an investment benefit-cost ratio of 1.4 (= $96.6 million ÷ $71.2 million), indicating a profitable investment. Given that the stakeholder in this case is the public sector, we use the discount rate of 0.2%, the three-year average of the real treasury interest rate reported by the Office of Management and Budget for 30-year investments. However, due to the recent volatility of the Treasury interest rate, U.S. inflation rate, and amount of government economic incentives, it is more reasonable to look at the benefit-cost ratio than the internal rate of return. A benefit-cost ratio greater than 1.0 indicates a good public investment since the taxes from SUNY WCC student higher earnings and reduced government expenditures not only recover taxpayer costs but grow New York’s tax base. 36 For a full list of the data sources used to calculate the social externalities, see the Resources and References section. See also Appendix 10 for a more in-depth description of the methodology. A benefit-cost ratio of 1.4 means SUNY WCC is a good public investment since the taxes from SUNY WCC student higher earnings and reduced government expenditures not only recover taxpayer costs but grow New York’s tax base.
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