Fueling our economy
In city halls, at chambers of commerce and on editorial pages, when people worry about what keeps Minnesota’s economy strong, it is worth remembering how colleges and universities — including private nonprofit ones — play an important role.
Consider Saint Paul, with five nonprofit colleges calling it home, the biggest concentration in the state. Add in the presence of public colleges and universities and Jonathan Sage-Martinson, the city’s director of planning and economic development, says he describes the city as a college town. He praises the impact of these higher education institutions as major employers, with many of those employees living in Saint Paul and contributing to the city’s property tax base.
In fact, looking statewide at non-government employers, the 17 institutions in the Minnesota Private College Council are together the 10th largest employer in the state. With more than 13,800 employees, private nonprofit colleges have a few more employees than U.S. Bancorp and a bit fewer than UnitedHealth Group.
Source: Employment from the 2015 Minneapolis/St. Paul Business Journal
* Combined employment of the 17 member colleges.
But beyond employment counts, higher education institutions make a one-of-a-kind contribution that strengthens the region, Sage-Martinson noted. Colleges and universities prepare the future workforce.
“We have a lot of great employers who, for example, buy from local suppliers. But higher education has a unique talent acquisition and preparation role,” Sage-Martinson said. “It is one of the reasons why Saint Paul and Minneapolis have diverse economies that have continued to develop in a strong way.”
Considering private nonprofit colleges specifically, this group of 17 institutions awards almost 10,000 bachelor’s degrees a year — about the same number as the U of M and the MnSCU system. And in key areas ranging from nursing to math to foreign languages, private nonprofit colleges are punching above their weight, awarding a larger share of the degrees earned. But as business leaders have long noted, along with specific skills, employers want to hire people who are well-rounded, curious and able to solve problems — all of which goes to the heart of the liberal arts education that these institutions provide.
In their hometowns, when staff members from private nonprofit colleges are talking about economic impact, they sometimes bring up differences among types of institutions — and the greater “efficiency” of the nonprofit private colleges.
“I think for this preparation of the future workforce, we’re doing it in a significantly shorter period of time than are public institutions,” said Linda Brown, vice president for finance and treasurer, Concordia College. “Whether you look at a four-year or six-year graduation rates, Concordia College like other Minnesota Private College Council members, prepares this workforce in a more efficient timeframe and I think that that is important as well."
Local conversations, statewide figures
Local conversations about economic impact often focus on specific dollars and cents. “There are the traditional things like purchasing, direct spending and employment,” said Fred Rogers, vice president and treasurer at Carleton College. While different institutions may report these out differently, the colleges contribute data to a statewide report that the Minnesota Private College Council releases every other year. The most recent report notes that private nonprofit colleges had expenditures of $1.5 billion, gross payroll expenditures of $860 million and payroll taxes of over $28 million.
Capital expenditures are also significant, reaching over $80 million, according to the Council report. There had been a drop in costs related to building projects compared to previous years. But given what she’s heard about institutions’ new projects, Brown said she was confident that figure would be significantly higher in the near future.
And then there are ancillary expenditures from parents, students and other visits. While the Council’s report doesn’t apply a multiplier to estimate these expenditures, this is a significant factor in local conversations. Consider the Bemidji area, Brown said, where many of Concordia College’s well known Concordia Language Villages are located. The steady stream throughout the summer of families coming to the area to drop off and pick up their children makes a real difference in terms of hotel stays, meals and other purchases.
Yes, the consideration of direct and indirect expenditures matters for the colleges and their communities. But the larger contribution to keep in mind, Rogers said, is the role our colleges play in educating students.
“The bigger issue is that our role, our purpose, is to educate students,” Rogers said. “When people ask me about economic development, I say we’re in the business of identifying and developing talent. We bring in students and hire really smart faculty and staff who come and stay and have careers, in ways that they wouldn’t if we weren’t here.”
And many of the students at private nonprofit colleges are coming from outside of the state — about 2,700 each year. (That compares to about 2,100 at the U of M and 1,700 at MnSCU universities.) While the share of undergraduates from outside of Minnesota drawn to private nonprofit colleges varies by institution, it averages out at 33 percent from other states and 4 percent from other nations. We know that more than two-thirds of our recent grads, regardless of their home state, choose to stay in Minnesota — adding to the quality of the workforce.
As Minnesota State Demographer Susan Brower has detailed, “attracting smart, hard-working innovators to the state — and keeping the ones we already have — will become more important than ever in the decades to come.” One of the concerns she has described is that as the baby boomer generation continues to leave the labor force, our state’s need for migration will increase if we want to grow and shore up labor force needs.
“So the Minnesota Private Colleges are a huge importer of net talent. And you can’t really put a price on that,” Rogers said. “Without much subsidy by the state we are educating a large number of Minnesota students and we’re doing a lot to bring in students and talent from the rest of the world. This is a huge asset for the future of our state as a whole, enhancing the quality of life we can enjoy together.”