Economic Impact Study
Executive Summary
This report examines the economic impact of Lees-McRae College on the Town of Banner Elk, Avery County, and Western North Carolina. The purpose of this report is to detail the ways in which Lees-McRae College contributes both directly and indirectly to the local economy.
Western North Carolina
In the 2007-2008 fiscal year, Lees-McRae College contributed $48 million to the area. The College, its employees, students, and its visitors were responsible for $37.5 million. Alumni contributed $5.8 million in increased earnings and $3.2 million in social benefits due to positive lifestyle choices. Lees-McRae made net contributions of $1.4 million to the treasuries of the Banner Elk and Avery County governments and $132,000 in community service activities. 1,572 alumni reside in Western North Carolina.
Banner Elk Town Government
In 2007 the Town of Banner Elk gained a net benefit of $50,000 from the presence of Lees-McRae College. This report finds that Lees-McRae produced 30.3% of the Town’s revenues, and only accounted for 28.6% of the Town’s expenditures.
Avery County Economy
Lees-McRae College contributed $15.4 million to the Avery County economy in 2007. One of every $15 spent in the County was a result of the College’s presence. There are 357 alumni residing in Avery County. Studies show that College educated residents enhance the quality of life for any community. LMC provides indirect benefits to Avery County.
Avery County Government
Taking into account the cumulative contributions of Lees-McRae College, the County government gained a net benefit of $1.4 million from the presence of the College. Lees-McRae produced 7.7% of Avery County revenues, yet only accounted for 2.9% of the County’s expenditures. Thus the County government enjoyed a 4.8% net benefit from the presence of the College.
The benefits of the College can be seen in other ways:
Impact on Jobs
The College provided excellent employment opportunities for the area: it and its subcontractors employed 201 full-time people and was responsible for creating 525 other new jobs in Western North Carolina.
Conclusion
Lees-McRae College provides numerous advantages for Banner Elk, Avery County, and Western North Carolina.
The College offers education for area residents whose lifestyles and earning capacities are measurably enhanced by its programs.
The College’s presence also generates many economic opportunities for local government and businesses.
The College attracts students and visitors from elsewhere and therefore brings in substantial dollars from outside Western North Carolina.
The Town and the Region report net revenues from the College’s presence.
These economic advantages, coupled with the additional cultural benefits the College offers, attest to the significant contribution of Lees-McRae College to Banner Elk and Western North Carolina.
Methods used in the study
Western North Carolina Economy
This portion of the report was based on the classic University impact method developed by Caffrey and Isaacs, Estimating the Impact of a College or University on the Local Economy. American Council on Education: Washington D.C., 1971.
Lees-McRae College Area
Alexander, Alleghany, Ashe, Avery, Buncombe, Burke, Cabarrus, Caldwell, Catawba, Cherokee, Clay, Cleveland, Davidson, Davie, Forsyth, Gaston, Graham, Guilford, Haywood, Henderson, Iredell, Jackson, Lincoln, Macon, Madison, McDowell, Mecklenburg, Mitchell, Polk, Rockingham, Rowan, Rutherford, Stokes, Surry, Swain, Transylvania, Watauga, Wilkes, Yadkin and Yancey Counties.
Lees-McRae College Community
This group includes the College, its employees, students, alumni, visitors, and the local firms who do business with them.
Direct and Secondary Impacts
The impacts of the Lees-McRae College community are divided into direct and secondary impacts. These and other associated terms are explained below:
- Direct Impact -- The initial impact on the local economy due to spending by Lees-McRae, its employees, students, visitors, and alumni.
- Secondary Impact -- Changes in other industries as they respond to the new demands made by Lees-McRae community spending.
- Total Impact -- the sum of the Direct and Secondary Impacts.
Multiplier
The ratio of Total Impact to Direct Impact. (Multiplier = Total Impact/Direct Impact). A multiplier of 2.50 means that for every $1.00 of direct spending an additional $1.50 is generated in secondary spending.
Multipliers tend to be higher for industries located in large urban areas, because more of the spending by the industry stays within the area. Smaller, rural areas and individual urban counties generally have lower multipliers, because industries must use firms outside the area for supplies and services.
Out of Region Students
The Economic Impact of an organization on a region is derived from its ability to attract new money to Western North Carolina or to prevent funds from leaving it.
The Economic Impact of a college comes from its ability to attract students from other parts of the country and from retaining local students who would otherwise have attended college elsewhere.
It is important to note that only revenue from Lees-McRae students originating from outside Western North Carolina was counted when determining the Lees-McRae Economic Impact.
Student Spending
This is based on expected costs for student living expenses, calculated in accordance to accepted standards.
Visitor Spending
This is based on interviews with Lees-McRae College and community authorities.
Alumni Earnings
The principal economic value of a college degree lies in the difference between the average earnings of a college graduate versus that of a high school graduate. This was calculated in the following manner: the number of alumni by gender, graduation year, and degree was multiplied by the average annual earnings for each category. The average annual income for high school graduates for each category was then subtracted. This process showed the additional earnings gained from a college education. Alumni employed by Lees-McRae were not counted. Had they been included this figure would be even higher.
Lees-McRae College Alumni Impact
Fifty percent of the increased earnings of Lees-McRae alumni in Western North Carolina were included in this report. This assigned some of the responsibility for alumni earnings to the College and left some credit to other factors; for example, that these individuals could have received their degree from any of a number of other institutions and this could have contributed to their earning potential.
Social Benefit Impacts
This is the benefit of reduced alcoholism, incarceration, unemployment, and welfare because of the choices made by Lees-McRae alumni who live in the area. Lower social costs reduce expenditures of businesses and governments.
New Jobs
Included are jobs at Lees-McRae and new jobs at other firms and organizations generated by the purchases of the College, its employees, students and visitors.
Town of Banner Elk Government
This is based on a widely accepted method developed by EconImpact LLC using principles of revenue contribution and service use by community groups.
Avery County Government
This is based on a widely accepted method developed by EconImpact LLC using principles of revenue contribution and service use by community groups.
Contribution and Usage Rates
For each community group, federal, state, and local averages were used to calculate revenue contribution and service use. Rates for government functions were provided by the Town of Banner Elk.
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