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Reports aim for figure on colleges’ value

Northeastern’s return is estimated at 2 for 1

By Mary Carmichael
Globe Staff / July 7, 2012
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How much is a college worth?

Phrased another way, for every dollar society puts into a school — either through direct government funding or by granting tax-exempt status — how much public benefit is realized?

It is a deceptively simple question that has defied an easy answer. But as tuitions rise and the economy drags, there is a newly keen desire, especially in a college town like Boston, to measure higher education’s overall return on investment.

Two new reports give the task a try. The first looks at the input side of the equation, using Northeastern University as a case study. It shows that in fiscal year 2011 the school received at least $181.7 million in public support. Northeastern has said it provides at least twice that in community benefits each year.

The second report, focusing on the University of Massachusetts system, finds that for every dollar invested, the community — in this case, the state — ultimately gets about two back in the form of job creation, facilities for public use, and other benefits.

Both reports were born out of a concern that there were too few firm numbers backing up the near-universal belief that higher education is good for ­society at large.

Educators caution that even reports like the new ones do not tell the full story about the role of colleges and universities.

“These analyses usually fail to account for the original purpose of higher education: to create educated citizens for a democracy, in addition to social and economic mobility,” said Lawrence Bacow, the former Tufts University president who is now a scholar at the Harvard University Graduate School of Education. “And there’s a tendency to look only at things that are easy to measure.”

But calls for such studies will continue as the economy continues to lag, said Richard Vedder, an Ohio economist who has used similar analyses to start a national discussion on whether private universities should be tax-exempt.

“People used to just buy into the notion that higher ed has positive spillover effects,” ­Vedder said. “But now they’re saying: ‘Show me. Tell me what the effects are.’ ”

Attempts to quantify the value of higher education gained credence about a decade ago, when cities began to lean more heavily on their nonprofit institutions for money. In Boston, that took the form of Mayor Thomas M. Menino’s voluntary program of payments in lieu of property taxes, launched in 2009.

As part of of the so-called ­PILOT arrangement, schools had to estimate in dollars how much good they were providing to local communities. Such calculations were a new ­endeavor for the schools, said Hugh O’Neill, a consultant who conducted a similar study for Harvard, published in 2009.

“When we started, there had really been no effort at Harvard to track community engagement,” he said. “It was more work than anyone anticipated up front.”

The authors of the new ­report on Northeastern, which will be published within the month by the Tellus Institute, a Boston think tank, said they too had to do a tremendous amount of work to get their figures.

Their goal, however, was different than that of the PILOT calculators. They were tracking not how much benefit a university provides its community but how much it receives, in both tax exemptions (about $94.4 million for 2011 in Northeastern’s case) and government funds such as research grants, contracts, and financial aid payments (about $87.3 million).

The trouble with such an analysis is that it is very hard to account for the subtler benefits of being tax-exempt, said ­Joshua Humphreys, one of the report’s authors.

Some data are not publicly available. The new report, for instance, does not account for the fact that Northeastern pays no excise tax on the cars it owns.

The report was commissioned partly to make the point that more data on university ­finances should be public, said Wayne Langley, higher education director of SEIU Local 615, which paid for the work. The union represents workers at many local colleges and wants the schools to disclose more information about finances than currently ­required by law.

“Whenever public money is involved, there should be a public accounting of how it is used,” Langley said. “Without data, there can’t be a rational discussion.”

Universities say that they ­already disclose enormous amounts of financial information on federal and state forms and that their contributions to society are immeasurable.

“To attempt to quantify them in this way is like trying to count stars on a clear summer night,” said Michael Armini, senior vice president for external affairs at Northeastern.

Rich Doherty, president of the Association of Independent Colleges and Universities in Massachusetts, said the benefits of higher education should be so obvious as to render new, number-heavy analyses unnecessary.

“The overwhelming majority of residents already realize that Massachusetts is a much better place in which to live and learn because of our colleges,” he said.

The other new report, on UMass, where its authors are based, also sprang from a ­desire to bring solid statistics to an argument that has typically featured few, said Max Page, a professor who lobbies for better funding of public higher education in Massachusetts.

Policymakers have long promoted the idea that the state may reap as much as an eightfold return on investing in higher education, he said.

While the 2-to-1 ratio suggested by the report is smaller than that, Page noted it is based on facts and thus can be taken more seriously.

“Education should be a right,” Page said. “I’m not saying we should invest in it primarily because it’s good for the economy. But if people are saying it is good for the economy, it helps to have more than just the assertion. And we didn’t have clear, confident numbers until now.”

Mary Carmichael

can be reached at

mary.carmichael@globe.com. Follow her on Twitter

@mary_carmichael.

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