A Micro Perspective www.bobp.biz

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ICROECONOMICS

ACROECONOMICS

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A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of different investments. To calculate ROI, the benefit
(return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
(Gain from Investment-Cost of Investment)
Basic formula is: ROI =
Cost of Investment
!!! Return on Investment and Economic Impact are two different measurements.

Type of Return
Return on Total Tax Dollars Invested for the entire system Macro
Macro Return on program cost within a school
Return on investment for companies using Career Tech services Macro
Return on investment for the student Micro

 Return on Investment and Economic Impact for Career
Tech programs has been an important topic in recent years. Much of the discussion has focused on attempting to show the macroeconomic impact of training programs to taxpayers, communities, and all stakeholders. These discussions are important and relevant, but the many facets and moving parts involved in macroeconomics often makes it difficult to make definitive conclusions about economic impact and concrete returns on investment.

 Microeconomics is about the direct impact of decisions to the individual . This presentation will focus on the micro, instead of the macro, impact to stakeholders and students using Career Tech programs.
In macroeconomics, the concern is the overall level or rate of economic activity, and the activities that that cause it to change. Microeconomics is concerned with choices among alternatives , and their impact on an individual.

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Daughter Lindsey: Typical successful student and perfect daughter. Finished college in four years with a degree and a certification that allowed her to be employed as a school teacher.
Son-in-Law Matt: Typical imperfect boy “who’s not really good enough for my daughter” but somehow convinced her marry him anyway. Started college, but fortunately dropped out with only one semester’s bills to pay. Was successful working at an $9 an hour sales job (plus some commissions), but decided to enroll in a Career Tech Machining program.
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Started August,
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On-The-Job Training by March, and
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Employed as a machinist by May.
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Lindsey’s investment: $12,487.50 per semester times 8 for a total of $99,900. (Not counting books, fees, and interest.)
Matt’s investment: $800 per semester times 2 for a total of
$1,600 dollars. (Matt did pay an additional $870 for tools and books.)
The Eye Opener: Perfect daughter Lindsey and that Matt kid did not qualify for financial aid for Matt’s education so they had to write a check for tuition and materials. After starting his job at $16.50 an hour and working overtime, his first check was about $1,350. Daughter said, “Dad, did you know Matt will earn almost all of his school cost back after working three weeks? Do you know how long I’ll have to work make back my educational cost?”
My Answer: “Yes dear, I’m still paying for your college.”

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At the same time my son-in-law was starting his new career, a leadership team at school was working on identifying and defining performance measures . This group met for several months and had lively and mostly constructive conversations.
The Holy Grail of performance measures was to find out how to gauge Economic Impact .
We made some progress, but the Grail is still elusive.

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Some performance measures can be determined based information we already collected
Some measure are important for internal planning
 Some performance measures must be extrapolated from information into reports
 Some measures might be important for potential customers

Job Placement
Continuing Education Placement
Cost Per Student
Enrollment
Retention/Completion
Academic Improvement
High School Graduation Rate
Satisfaction of Employers
Wage Rates
Student Satisfaction
Industry Certification Pass Rate
Info needed for economic impact
Info we already collected
Info we started collecting
Info we need to collect

The Game of Life taught us about choices… but it also taught us a little about luck.
A micro look at
ROI will focus on individual choices.

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Tuition Hours Time Total Projected Projected Hours Hours Required Dollar Return Dollar Return on
Cost Required Investment 1 Investment 2 Hourly Salary Annual Salary 3 To Recoup To Recoup Total on Tuition Tuition & Time
Tuition 4 Tuition and Time For First Year For First Year
$1,830 1050 $7,613 $9,443 $13.47
$28,017.60
135.86 701.00 $15.31
$2.97
From School Catalog
1 Hours of Training times minimum wage
Salary / (Tuition + Time)
Salary / Tuition
Tuition + Time / Hourly wage
2 Tuition plus Time Investment
4 Tuition / Hourly wage
From Wage Survey Report
3 Hourly Salary from Wage
Survey Report X 40 hours X 52 weeks in a year
Lindsey had been wrong. When you calculated the time investment in a training program, it took a little longer than three weeks to earn all the investment back.

Tuition Hours Time Total Projected Projected Hours Hours Required Dollar Return Dollar Return on
Cost Required Investment 1 Investment 2 Hourly Salary Annual Salary 3 To Recoup To Recoup Total on Tuition Tuition & Time
Tuition 4 Tuition and Time For First Year For First Year
Private Security ROI
$354 40 $290
Certified Nurse Aide ROI
$279 96 $696
PLC Programmer ROI
$350 40 $720
$644
$975
$1,070
$11.09
$8.50
$19.00
$23,067.20
$17,680.00
$39,520.00
31.92
32.82
18.42
58.07 $65.16
114.71 $63.37
56.32 $112.91
$35.82
$18.13
$36.93
A & P Aviation Mechanic ROI
$6,952 1575 $11,419 $18,371
Welding ROI
$1,830 1050 $7,613 $9,443
$22.00
$13.47
$45,760.00
$28,017.60
316.00
135.86
835.03
701.00
$6.58
$15.31
$2.49
$2.97

Tuition Hours Time Total Projected Projected Hours Hours Required Dollar Return Dollar Return on
Cost Required Investment 1 Investment 2 Hourly Salary Annual Salary 3 To Recoup To Recoup Total on Tuition Tuition & Time
Tuition 4 Tuition and Time For First Year For First Year
Matt’s ROI
$7,613 $10,083 $17.00
$35,360.00
145.29 593.09 $14.32
$3.51
$2,470 1050
Lindsey’s ROI*
$26,400 2040 $14,790 $41,190 $15.50
$32,240.00
1,703.23 2,657.42 $0.22
-$0.22
Accountant ROI
$26,400
Dentist ROI
2040
$240,000 4080
$14,790
$29,580
Dental Hygienist ROI
$26,400 2040 $14,790
$41,190
$269,580
$114,690
$29.66
$70.64
$32.81
$61,692.80
$146,931.20
$68,244.80
890.09
3,397.51
3,044.80
1,388.74
3,816.25
3,495.58
$1.34
$0.61
$0.68
$0.50
-$0.55
$0.60
Undecided ROI
$124,875 2550 $18,488 $143,363 $12.00
$24,960.00
10,406.25 11,946.88 -$0.80
-$0.83

1st Year
Return for
Tuition & Time
Per Year
Impact
5 Year
Return for
Tuition & Time
Private Security ROI
$22,423.20
$7,987.20
$114,692.00
Certified Nurse Aide ROI
$16,705.00
PLC Programmer ROI
$2,600.00
$87,425.00
$38,450.00
$24,440.00
$196,530.00
A & P Aviation Mechanic ROI
$27,389.25
$30,680.00
$210,429.25
Welding ROI
$18,575.10
$12,937.60
$130,645.50
Per Year Impact calculated by taking annual salary minus annual minimum wage salary.

1st Year
Return for
Tuition & Time
Per Year
Impact
5 Year
Return for
Tuition & Time
Matt’s ROI
$25,277.50
$20,280.00
$166,717.50
Lindsey’s ROI
-$8,950.00
$17,160.00
$78,820.00
Accountant ROI
$20,502.80
$46,612.80
$226,084.00
Dentist ROI
Dental Hygienist ROI
-$122,648.80
$131,851.20
$195,496.00
$27,054.80
$53,164.80
$258,844.00
Undecided ROI
-$118,402.50
$9,880.00
-$161,925.00

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Does not factor long-term earning potential
Does not consider previous learning and experiences
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 Training and education is still only a part of the puzzle related to student success in a career
 A person’s pay is not the only indicator to success and fulfillment
BUT
It does show a correlation between tuition cost , time investment , and wage rates
It does give a student more information to make intelligent educational choices
It does give policy makers comparisons to make program decisions and could help students make better decisions for their future

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Students can be successful in a many ways.
We need to be brutally honest when we provide career counseling.
Do we need to talk about educational ROI for students?
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More Questions contact:
Bob Perry bobp@gctech.edu
Marty Lewis martyl@gctech.edu