Saturday, September 26, 2009

Why Ending Effective Educational Programs Makes Terrible Economic Sense

by Nicole Ouellette


Recently, a local school district has closed off a computer technology program open to high school students. Their reasons cited were low enrollment. My old boss Chris wrote an excellent letter about his experience with the program in the local paper. It got me thinking, beyond the impact of one individual student, how do these programs effect the world beyond the classroom?

Schools exist to make productive members of society. And when you look into the data, a lot of these technical programs end up being pretty effective. They increase graduation rates and beyond that, students who go through these programs earn more money, have lower unemployment, and lower rates of substance abuse.

So subjectively, these programs are fantastic. But what is their actual return on investment, beyond preventing bad things from happening to teenagers?

Let's take my old boss Chris, a former student in a technological program. Chris is the IT Manager of a company that employs 60 people. Let's say he makes $50,000 a year (I have no idea if this is the case but it's a nice round number to work with.)

Money Invested In Chris:
Computer, used over 4 years: $2000
Misc. tech equiptment in addition to computer: $2000
Additional supplies (books, etc.): $1000
Teacher, 4 years salary: $160,000 (assuming $40,000/year)
Computer Tech Support (additional instructor, part time, four years salary): $60,000 (assuming $15,000/year)
Administrative costs (part time, four years salary): $60,000
Total Cost: $285,000 , Cost per Year: $71,250 (After four years, investment is zero)

Money Returned From Chris:
Taxes to Chris' salary (assuming $50,000 salary): $12,500/year
Money spent by Chris of his salary (assuming 25% of his salary goes into savings, 25% to taxes): $25,000/year
Volunteer hours (including Rotary, assuming 2 hours/week at value of $25/hour): $2,600
Total Money Back Into Economy Each Year: $40,100
Years To Pay Off Education Costs (Breaking Even): 7.09 years


So the technical program has not only paid himself off but made a 'profit' in eight years. Also, I assumed that Chris was using resources (including his teacher) exclusively when in actuality, costs would be shared by several students. I also assumed in my calculations a relatively high salary for teachers and a relatively low salary for Chris. I am also not counting how much it costs to treat some of the problems that are created when people do not have access to educational opportunities.

To be fair, maybe not all of Chris' classmates are equally productive. That said, looking at the graph, after an additional 7 years, Chris has put enough resources back into the economy for two people.

The point is technical education programs, from a purely objective standpoint, contribute to our economy, in addition to improving the lives of individual students.

So if your school is considering cutting back programs to save costs, I encourage you to fight it, especially if you are out of the educational community. Because as you can see, the cost of putting a productive member into society is relatively little compared to what society will get back.

Nicole, formerly in education, runs her own technology-related business and writes her blog at www.breakingeveninc.com/blog.

2 comments:

Downes said...

Though it may be true that this particular program makes a profit, so do most programs. Therefore, this program must be judged, not based on whether or not it makes a profit, but rather, based on whether or not it makes a greater profit than the same investment applied elsewhere in other programs. This your argument does not do.

OLAPLANTE said...

Excellent point, made by Downes. My gut feeling however, is that when they say a cut, they simply mean a cut. Which means this money is gone. Is that so?
On another note, I would like to say that, as much as American education is harassed, rightly and wrongly, the technical educational opportunities are special and not as common in other countries. People from other countries come to the US to learn about the amazing opportunities tech schools offer to the students who often don't feel quite right or adequate in the more academic classes.
While we can certainly improve on the model in some cases, the mere existence of such alternative programs affects kids and allows them to have a second chance at success.