In a regional labor market study commissioned by the Orange County Regional Consortium in collaboration with Lightcast, an updated Economic Impact Study has been released, featuring the South Orange County Community College District (SOCCCD) as an economic engine in Orange County, with a $2 billion impact on the local economy.
The study measured the economic impact created by SOCCCD on the business community and the benefits that Saddleback College and Irvine Valley College generate in return for the investments made by stakeholder groups, including students, taxpayers, and the greater community.
SOCCCD creates value in many ways and influences both the lives of students and the county economy. The colleges support a variety of industries in Orange County, serve county businesses, and benefit society as a whole in California from an expanded economy and improved quality of life. Additionally, the benefits created by SOCCCD extend to the state and local government through increased tax revenues and public sector savings.
This study measures the economic impacts created by SOCCCD on the business community and the benefits the colleges generate in return for the investments made by their key stakeholder groups—students, taxpayers, and society.
SOCCCD promotes economic growth in Orange County through its direct expenditures and the resulting expenditures of students and county businesses. The colleges serve as employers and buyers of goods and services for their day-to-day and construction operations. The colleges’ activities attract students from outside Orange County, whose expenditures benefit county vendors. In addition,
The colleges are primary sources of higher education to Orange County residents and suppliers of trained workers to county industries, enhancing overall productivity in the county workforce.
Total Impact
SOCCCD added $2.0 billion in income to the Orange County economy during the analysis year, equal to the sum of operations and construction spending impacts, the student spending impact, and the alumni impact. For context,
The $2.0 billion impact was equal to approximately 0.7% of the total gross regional product (GRP) of Orange County.
This contribution that the colleges provided on their own is nearly as large as the entire utilities industry in the county. The $2.0 billion impact supported 19,159 county jobs, using the jobs-to-sales ratios specific to each industry in the county. This means that
In addition, the $2.0 billion, or 19,159 supported jobs, stemmed from different industry sectors. For instance, among non-education industry sectors, the spending of SOCCCD and their students and the activities of their alumni in the Real Estate & Rental & Leasing industry sector supported 2,077 jobs in FY 2023-24. If the colleges did not exist, these impacts would not have been generated in Orange County.
Return on Investment Analysis Student perspective
In FY 2023-24, SOCCCD served 61,085 credit and 22,025 non-credit students. In order to attend the colleges, the students paid for tuition, fees, books, and supplies. They also took out loans and will incur interest on those loans. Additionally, students gave up money they would have otherwise earned had they been working instead of attending college. The total investment made by SOCCCD’s students in FY 2023-24 amounted to a present value of $188.4 million, equal to $43.4 million in out-of-pocket expenses (including future principal and interest on student loans) and $145.0 million in forgone time and money.
In return for their investment, SOCCCD’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average SOCCCD associate degree graduate from FY 2023-24 will see annual earnings $10,100 higher than a person with a high school diploma or equivalent working in California. Over a working lifetime, the benefits of the associate degree over a high school diploma will amount to an undiscounted value of $353,500 in higher earnings per graduate. The present value of the cumulative higher future earnings that SOCCCD’s FY 2023-24 students will receive over their working careers is $702.7 million.
The students’ benefit-cost ratio is 3.7. In other words, for every dollar students invest in SOCCCD in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $3.70 in higher future earnings. Annually, the students’ investment in SOCCCD has an average annual internal rate of return of 15.6%.
Return on Investment Analysis Social perspective
Society as a whole in California benefits from the presence of SOCCCD in two major ways. Primarily, society benefits from an increased economic base in the state. This is attributed to the added income from students’ increased lifetime
earnings (added student income) and increased business output (added business income), which raise economic prosperity in California. Benefits to society also consist of the savings generated by the improved lifestyles of SOCCCD students. As discussed in the previous section, education is statistically correlated with a variety of lifestyle changes that generate social savings. Note that these costs are avoided by the consumers but are distinct from the costs avoided by the taxpayers outlined above. Health care savings include avoided medical costs associated with smoking, obesity, substance abuse, and depression. Justice system
savings include avoided costs to the government and society due to less judicial activity. Income assistance savings include reduced welfare and unemployment claims.
Altogether, the social benefits of SOCCCD equal a present value of $4.6 billion.
These benefits include $2.5 billion in added student income, $1.1 billion in added business income, $918.1 million in added income from the colleges’ activities, as well as $53.2 million in social savings related to health, the justice system, and income assistance in California. People in California invested a present value total of $657.5 million in SOCCCD in FY 2023-24. The cost includes all the colleges and students’ costs.
The benefit-cost ratio for society is 6.9, equal to the $4.6 billion in benefits divided by the $657.5 million in costs.
In other words, for every dollar invested in SOCCCD, people in California will receive a cumulative value of $6.90 in benefits. The benefits of this investment will occur for as long as SOCCCD’s FY 2023-24 students remain employed in the state workforce.
Conclusion
The results of this study demonstrate that SOCCCD creates value from multiple perspectives. The colleges benefit county businesses by increasing consumer spending in the county and supplying a steady flow of qualified, trained workers to the workforce. SOCCCD enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential. The colleges benefit state and local taxpayers through increased tax receipts and a reduced demand for government-supported social services. Finally,
SOCCCD benefits society as a whole in California by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students.
Read the full SOCCCD report
Read the Irvine Valley College report
Read the Saddleback College report
Orange County Community Profile
As one of our key community partners, the Orange County Business Council (OCBC) serves as a trusted resource for information about the business community and local economy that contribute to our planning, advocacy, and outreach activities. The Orange County Community Indicators Report is one of several reports published by OCBC. Each year, the O.C. Community Indicators Report, developed in collaboration with CalOptima Health, Orange County Community Foundation, First 5 Orange County, and Orange County United Way, examines how the nation’s sixth largest county is doing in terms of education, infrastructure, health, income and the economy.
2024 Orange County Business Council - Economic Forecast