MAP Capital Investment Bonds Presentation to Higher Education Finance Commission September 23 2010 Students in Need Do Not Complete Colleg by zfd64145

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									                       MAP Capital Investment Bonds
Presentation to Higher Education Finance Commission
                                   September 23, 2010
Students-in-Need Do Not Complete College
                % Of Students Who Complete Within 12 Years Of Graduating 8th
                                 Grade By Income Quintile
60%                                                                                           52%
50%
                                                                                                                                38%
40%
30%                                                        25%
20%
                         11%
10%
 0%
                       Lowest                        2nd Lowest                    Top 3 (Average)                   Overall Average
                                                                 Income Quintiles


Source: Goldberger, Susan, “Doing the Math: What It Means to Double the Number of Low-Income College Graduates,” Minding the Gap:      2
Why Integrating High School with College Makes Sense and How to Do It, 2007.
Current Illinois Need-Based Grant Program Helps
Low-Income Students Attend School
 Since 1967, Illinois has provided grant assistance for
  low-income students through the Monetary Award
  Program (MAP)
 In FY 2009, 144,230 students received MAP grants
  totaling $384 million
      56,326 MAP grants totaling $57 million went to students
          attending community colleges, with an average award of
          $1,008 per student
 Critical factor in aligning workforce of the future to
   changing economic opportunities
 Source: ISAC Databook, 2009
                                                                   3
MAP Funding FY2011
•FY2011 MAP appropriation is $404 M (plus
S/LEAP)
•Additional MAP funds in FY2011 come
primarily from IIA - $4.5 million.
•MAP not impacted by 2% reserve
requirement
•MAP remains the 4th largest state need-
based aid program in the country


                                            4
Distribution of MAP Dollars




                              5
Applications and Number of Eligible Students
Continue to Rise while Funding is Level




                                               6
Good Investments Shouldn’t Lack for Capital
 MAP successful in helping students afford college
 Opportunity for state-funded expansion limited;
  need greatest in challenging economy
 Evaluate how much MAP recipients pay in state
  income tax revenue v. other low income taxpayers
 Findings: College has a good return on investment
  from individual and state tax perspective
 Good investments should not lack for capital
 ISAC Challenge: How to get capital for education
 ISAC Solution: Use capital markets to invest in
  people                                              7
Individual Return to Education: Lifetime Earnings
Are Greater for Those with More Education




Source: Georgetown University Center on Education and the Workforce, Help Wanted: Projections of Jobs and Education
Requirements through 2018, June 2010, Figure 5.6
                                                                                                                      8
       State Return to Education: Income Taxes
       Increase
                  Average Annual Illinois Income Tax Growth Greater for
                  Students Who Attend Community College than Other Low
                  Income Families

450
400
350
300
250
200
 150
100
            2010            2011           2012           2013   2014   2015   2016   2017   2018   2019

                               Projected Tax Revenue with Comm College Enrollment in 2010
                               Projected Tax Revenue from Low Income Families

Source: ISAC Analysis of Illinois Dept. of Revenue data
                                                                                                           9
Maintaining or Even Sustaining Illinois’ Need-
Based Program Is At Risk
 42,000 students eligible for MAP and who wanted to
  attend community college did not receive grants due to
  lack of funds in FY 09; only 28% actually enrolled
  without the MAP support
 Each year, more students apply for these limited
  dollars. So far in 2010, over 70,000 eligible community
  college students have been denied MAP since funds
  ran out
 Unlikely State will have resources in short- and long-
  term necessitating new, innovative approach
 Source: ISAC data collection and analysis
                                                        10
MAP Human Capital Investment Bonds
A New Paradigm in Funding
 $550 million in bonds over 5 years
 10-year bonds
 100,000 low-income community college students per
  year funded; up to 50,000 additional students per year
 $1,000 average MAP award
 More funds, available to more students




                                                           11
MAP Cap Bonds Are a Sound Investment
 Expands the number of low-income community
  college students receiving MAP by nearly 50,000
 Repays bonds with Illinois Income Tax revenue
  received from these MAP recipients
 Income Tax revenue exceeds debt service each year,
  with a minimum debt service coverage ratio of 1.85




                                                    12
             Annual Tax Revenue from MAP Cap I Recipients
             Exceeds the Amount Needed to Pay for Bonds
90,000,000

80,000,000

70,000,000

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

         -
                          2011                         2012   2013           2014        2015

                          Total Annual Debt Service           Total Annual Tax Revenue


      Source: Loop Capital Markets analysis for ISAC                                            13
Appendix I
Other studies find similar returns to higher education
 investment as ISAC/DOR Analysis




                                                         14
         Total Illinois Income Tax Revenue for Taxpayers
        Attending Community College Exceeds Other Low-
                          Income Taxpayers
160,000,000

140,000,000

120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

         -
              2010    2011     2012      2013      2014   2015    2016     2017      2018      2019   2020
                Annual Tax Revenue with Comm College      Annual Tax Revenue No Comm College



                                                                                                             15
     2007 NIU Study Finds Comparable Pattern of Earning
     Increases from Community College Completion
                      Average Annual Earnings for 1995 Program
         30,000
                                    Completers
 A
 v       25,000
 e
 r E
 a a
         20,000
 g r
 e n
   i
 A n     15,000
 n g
 n s
 u
 a       10,000
 l


          5,000
                        1            2             3            4            5    6          7         8   9   10
                                                        Years Following Community College Completion
Source: NIU, The Economic Impact of Illinois Community Colleges, May, 2007


                                                                                                                    16
         NIU and ISAC Analysis Find Similar Impact from
         Community College
                 Economic Impact of Community College
                 NIU 2007 Analysis v. ISAC 2010 Analysis
                 Percent Change in Earnings/Taxes Paid
18.00%

16.00%

14.00%

12.00%

10.00%                                                         ISAC

8.00%

6.00%
                                              NIU
4.00%

2.00%

0.00%
           1     2         3         4         5         6            7       8      9   10

                                    Years Following Community College
                     Average Annual Earnings for Program Completers, 1995 % Growth
                     Tax Growth Rate with cc Enrollment in 2010
                                                                                              17
Displaced Workers’ Earnings Increase After
Attending Community College
                               Percentage of Earnings Increase by Age and Gender

                                                 Men less                    Men over                Women less Women over
                                                 than 35                     35 years                than 35    35 years old
                                                 years old                   old                     years old
Just Showing-up Effect                           1.9%                        2.6%                    (2.0%)               1.9%
One Academic Year of                             7.3%                        7.2%                    14.6%                11.3%
CC Credits
One Academic Year of                             9.7%                        10.0%                   28.1%                21.9%
Technically-oriented
vocational or academic
courses
One Academic Year of All 4.7%                                                3.3%                    6.5%                 5.1%
Other Credits

 Source: “Do Displaced Workers Benefit from Community College Courses? Findings from Administrative Data and Directions
 for Future Research, Louis Jacobson, Robert LaLonde, Daniel Sullivan, Hudson Institute Center for Employment Policy,
 October, 2005 http://ssrn.com/abstract=1020996                                                                                   18
Analysis of Census Data Finds Positive Federal
Income Tax Return to College Completion
                                                             Net Present Value of College
“[I]t is worthwhile for the                                  Degree and Federal Income
                                                             Tax, 2005
  federal government to                                     Added        Work-Life    Federal
  invest in federal student                                 Value        Earnings     Income
  aid if the per-student                                                              Tax
                                                            Bachelor’s   $519,261     $56,681
  cost is less than about                                   v. High
  $57,000.”                                                 School


Source: Mark Kantrowitz, “The Financial Value of a Higher
   Education, NASFAA Journal of Student Financial Aid,
   Vol 37, No1, 2007




                                                                                                19
Appendix II
Details on MAP Program




                         20
MAP Eligible Awards




                      21
MAP Eligibles by Region




                          22
MAP Recipients by Region




                           23
MAP Coverage of Tuition and Fees at Public
Universities has Decreased Since 2002




                                             24
MAP Coverage of Tuition and Fees at Community
Colleges has Decreased Since 2004




                                                25
Effective Maximum MAP Award and Tuition and Fees,
1980-Present




                                                    26

								
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