The Economic Impact of Fayette County Public School System On the County’s Regional Economy in FY 2011
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Authors
Reza Kheirandish
Ali Dadpay
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Type
Research Report
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Abstract
The county wide economic impact of the Fayette county Public School System that oversees 29 schools cannot be exaggerated in fiscal year 2010-11 (FY2011). Supervised by Fayette county Board of Education (FCBOE), there were 21,069 students enrolled in this school system, who regularly outperform their classmates both in the state and across the nation in ACT and SAT test average scores. Our analysis of the FCBOE operational budget in FY 2011 reveals that for every dollar spent by FCBOE, a spending of $1.68 was created in the county; that is, the total output effect corresponds to an incremental spending of 68 cents per dollar. Every job created by FCBOE is associated with 0.38 induced and indirect jobs in the immediate geographic area. Notably, for every one million dollars spent by FCBOE a total of 22.45 jobs have been created within Fayette county area, of which 16.2 jobs are created within the public school system and 6.2 jobs are created indirectly or through induced effect. The economic impact of the Fayette county Public School System, based on the available data from FY 2011, has produced:
$ 174,107,973 in direct output
$280,133,109 in gross regional product (total effect)
$180,650,759 in total labor income
3908 fulltime and part time jobs
The benefits include gains by both private and public sectors in Fayette county, GA. These economic impacts demonstrate the importance of Fayette county Public School System in the regional economy, making the public school system a pillar of Fayette county’s economic life. This report quantifies the economic benefits generated by FCBOE’s activities in the county. These benefits include increases in the employment in different sectors, revenue gained by different industries and the induced effects across the regional economy. We should emphasize that these are but a portion of total benefits generated by FCBOE, as our report does not cover the gains in the real estate market, or the value created at individual level by increasing the residents’ life time earnings, or the effect of more education on the healthier life style and decrease in the crime rate.
We analyzed the effects of a $20 million dollars budget cut in the form of employee compensation as a result of a hypothetical firm in the computer industry downsizing/leaving Fayette county. This hypothetical firm may do this for various reasons, one of which might be the expectation of a decline in the quality of school system as a result of the proposed budget cut in the school system, and in turn a lower quality of school graduates (therefore lower quality of potential pool of employees). We found that for every one dollar reduction in this hypothetical firm’s employees’ compensation, $3.2 in total output will be lost. Based on our calculations, the losses associated with a $20 million dollars budget cut in the form of employee compensation can be summarized as:
$-64,536,811.94 in total output
$-30,422,091.93 in gross regional product (total value added)
$-20,290,366.67 in total labor income
-399.91 fulltime and part time jobs
Given the large negative effect on the county’s economy, as portrayed above, any budget cut in the school system budget that may signal a lower quality of education to major employers in the county should be avoided. The economic indicators for Fayette county have outperformed the neighboring counties, state, and national averages and the high performing school system has certainly played a major role in this success. It is now up to the county’s leaders, policy makers, and politicians to aid the county keep its outstanding economic conditions and retain sustainable growth. Education and investment in human capital, as 1992 Noble Prize laureate Gary S. Becker always emphasize, is certainly one of the ways to ensure that future generations are able to enjoy a healthy economy with sustainable growth.