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%
50%
40%
30%
20%
10%
0%
52%
38%
25%
11%
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:
Why Integrating High School with College Makes Sense and How to Do It, 2007.
2
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 needbased 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’ NeedBased 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 longterm 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
Total Annual Debt Service
Source: Loop Capital Markets analysis for ISAC
2013
2014
2015
Total Annual Tax Revenue
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 LowIncome 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
Annual Tax Revenue with Comm College
2015
2016
2017
2018
2019
2020
Annual Tax Revenue No Comm College
15
2007 NIU Study Finds Comparable Pattern of Earning
Increases from Community College Completion
30,000
A
v
e
r
a
g
e
Average Annual Earnings for 1995 Program
Completers
25,000
E
a
20,000
r
n
i
n
A
15,000
n g
n s
u
10,000
a
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 Analysis
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
than 35
years old
Men over
35 years
old
Women less Women over
than 35
35 years old
years old
Just Showing-up Effect
1.9%
2.6%
(2.0%)
1.9%
One Academic Year of
CC Credits
7.3%
7.2%
14.6%
11.3%
One Academic Year of
Technically-oriented
vocational or academic
courses
9.7%
10.0%
28.1%
21.9%
3.3%
6.5%
5.1%
One Academic Year of All 4.7%
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
“[I]t is worthwhile for the
federal government to
invest in federal student
aid if the per-student
cost is less than about
$57,000.”
Net Present Value of College
Degree and Federal Income
Tax, 2005
Added
Value
Work-Life
Earnings
Federal
Income
Tax
Bachelor’s
v. High
School
$519,261
$56,681
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