HIGHER EDUCATION AS AN INVESTMENT

3

Private Returns• Higher education provides considerable value to:

– the economies where educated individuals work/live

– society in general– individual earnings are strongly related to

educational attainment– average annual earnings of individuals with a

bachelor’s degree are more than 75% higher than earnings of a high school graduate

– earning differential is increasing over time

Source: Productivity and Prosperity Project, Arizona State University, W.P. Carey School Business. 2005.

The Value of Higher Education: Individual and Societal Benefits. 3

Societal Returns• Greater educational attainment results in

enhanced worker productivity, which translates into higher output and incomes

• Regions with higher proportions of college graduates include lower crime rates, greater and more informed civic participation, and improved performance across a host of socioeconomic measures

Source: Productivity and Prosperity Project, Arizona State University, W.P. Carey School Business. 2005. The Value of Higher Education: Individual and Societal Benefits.

4

Mean Annual Earnings by Age and Educational Attainment in the U.S.

Age Group

Educational Attainment

H.S. Graduate and GED

Some College

Associate’s

Bachelor’s

Master’s

Professional

Doctoral

25-34$25,922 $29,719 $32,453 $44,067 $48,034 $75,454 $63,370

35-44$31,303 $37,923 $40,353 $58,551 $70,288 $123,190 $98,133

45-54$33,545 $40,254 $42,944 $66,686 $81,659 $136,657

$117,965

55-64$30,224 $39,215 $40,811 $56,243 $73,498 $135,713 $92,502

65+$20,981 $26,251 $27,373 $39,749 $51,636 $75,360 $71,282

Source: U.S. Department of Commerce, Census Bureau, Income in 2005 by Educational Attainment: 2006

5

Mean Annual Earnings by Age and Educational Attainment in

ArizonaEDUCATIONALATTAINMENT

AGE GROUP

25-29 30-34 35-39 40-44 45-49 50-54 55-59

Postgraduate $56,331

$69,010

$75,577

$71,611

$72,251

$73,088

University Graduate

$38,509

$46,714

$56,968

$60,790

$57,499

$55,693

$59,320

Some College $28,813

$32,678

$38,359

$40,276

$40,222

$41,931

$41,919

High School Graduate

$26,599

$27,904

$31,417

$32,587

$33,672

$34,401

$34,678

Some High School

$23,313

$24,898

$25,610

$26,387

$29,218

$27,289

$27,017

Source: U.S. Department of Commerce, Census Bureau, 2000 Census Public Use Micro Data Sample

6

The Array of Higher Education Benefits

Source: Institute for Higher Education Policy. 1998. Reaping the Benefits, Defining the Public and Private Value of Going to College. Washington, D.C.: Institute for Higher Education Policy

PUBLIC PRIVATE

Increased Tax Revenue Higher-Salaries and Benefits

Greater Productivity Employment

ECONOMIC Increased Consumption Higher Savings Levels

Increased Workforce Flexibility Improved Working Conditions

Decreased Reliance on Government Financial Support

Personal/Professional Mobility

Reduced Crime Rate Improved Health/Life Expectancy

Increased Charitable Giving/Community Service

Improved Quality of Life for Offspring

SOCIAL Increase Quality of Life Better Consumer Decision Making

Social Cohesion Increased Personal Status

Improved Ability to Adapt to and Use Technology

More Hobbies, Leisure Activities

7

ARIZONA’S DEMOGRAPHIC GROWTH

Population GrowthYear

State of Arizona Maricopa County

PopulationPercent Increase

PopulationPercent Increase

2000 5,130,632 3,096,692

2001 5,295,929 3.1% 3,195,893 3.1%

2002 5,438,159 2.6% 3,293,441 3%

2003 5,577,784 2.5% 3,388,711 2.8%

2004 5,739,879 2.8% 3,498,587 3.1%

2005 5,939,292 3.4% 3,635,528 3.8%

2006 6,166,318 3.7% 3,768,123 3.5%

Source: United States Census Bureau9

Enrollment Projection Model Arizona’s State Universities

Projected Growth, 2000-2020Total

Students

% Increas

e

Scenario I: Substantial Change

167,149 56.8%

Scenario II: Most Likely

156,754 47.8%

Scenario III: Continuation of Current Trend

147,411 39.7%

Governor’s Task Force on Higher Education, 2000

Total Enrollment in Fall 2006 is 120,645

10

Projected Increases in ASU Enrollment

Institutional Analysis

11

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

85,000

90,000

95,000

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Fall 2007 = 64,394

Performance

First-Year Persistence Rates

First-Time, Full-Time Freshmen1985-2005 79%

67%

65%

67%

69%

71%

73%

75%

77%

79%

81%

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Fall Entering Cohorts

Source: ASU’s Institutional Analysis 13

Six-Year Graduation RatesFirst-Time, Full-Time Freshmen

1984-2000

56%

46%

40%

42%

44%

46%

48%

50%

52%

54%

56%

58%

60%

1984 1986 1988 1990 1992 1994 1996 1998 2000

Fall Entering CohortsSource: ASU’s Institutional Analysis 14

Five-Year Institutional Graduation Rates at Public and Private Four-Year Institutions

1986 - 2006

35

40

45

50

55

60

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Private

Total

Public

ASU

Source: ACT Institutional Data File

%

15

Investment

ASU Fund Source – 2003

$18.52%

$28.93%

$32.64%

$89.311%

$158.719%

$206.224%

$311.837%

State AppropriationsTuition & FeesGrants & ContractsAuxiliary EnterprisesPrivate GiftsTRIF (Prop. 301)Other

(in millions)

Total = $846 Million

17

ASU Fund Source – 2004

$22 2%

$47 5% $31

3%

$93 10%

$165 18%

$260 28%

$312 34%

State AppropriationsTuition & FeesGrants & ContractsAuxiliary EnterprisesPrivate GiftsTRIF (Prop. 301)Other

(in millions)

Total = $930 Million

18

ASU Fund Source – 2005

$22.6 2%

$42.2 5%

$52.3 5%

$99.7 9%

$189.4 18%

$302.129%

$335.932%

State AppropriationsTuition & FeesGrants & ContractsAuxiliary EnterprisesPrivate GiftsTRIF (Prop. 301)Other

(in millions)

Total = $1.044 Billion

19

ASU Fund Source – 2006

$368.6 31%

$349.4 30%

$211.4 18%

$68.3 6%

$106.7 9%

$45.6 4%

$22.1 2%

State AppropriationsTuition & FeesGrants & ContractsAuxiliary EnterprisesPrivate GiftsTRIF (Prop. 301)Other

(in millions)

Total = $1.172 Billion

20

ASU Fund Source – 2007 (unaudited)

$429.6 32%

$399.9 29%

$219.0 16%

$110.4 8%

$118.2 9%

$49.2 4%$31.6

2%

State AppropriationsTuition & FeesGrants & ContractsAuxiliary EnterprisesPrivate GiftsTRIF (Prop. 301)Other

(in millions)

Total = $1.358 Billion

21

ASU Fund Sources FY03-07(in millions)

0

100

200

300

400

500

2003 2004 2005 2006 2007

State Appropriations

Tuition and Fees

Grants & Contracts

Auxiliary Enterprises

Private Gifts

TRIF (Prop. 301)

Other

22

(unaudited)

General Fund as a Percentage of ASU’s Total Fund Sources

32%

37%34% 32% 31%

41%40%

47%

0

20

40

60

1979 1987 1995 2003 2004 2005 2006 2007

23

(unaudited)

Percentage of Total General Fund Invested in Arizona’s

Universities19%

7.0%

17%

6.1%

14%

5.6%

13%

5.2%

10%

4.4%

11%

4.7%

0

5

10

15

20

25

Percent ofGeneral Fund

Invested

FY79 FY87FY95 FY03 FY07FY08

Invested in AZUniversities

Invested in ASU

Source: Joint Legislative Budget Committee – General Fund Operating Spending, Fiscal Years 1979-2008

24

Public Pac-10 Tuition Comparison

25

ASU U of A

Cal UCLA Oregon

OSU Washington

WSU

2000 2,259 2,259 4,047 3,678 3,810 3,561 3,639 3,530

2001 2,344 2,344 4,047 3,683 3,819 3,654 3,761 3,658

2002 2,486 2,486 4,091 4,230 4,071 3,987 3,984 3,898

2003 2,585 2,585 3,829 3,702 4,824 4,371 4,636 4,520

2004 3,593 3,593 5,250 5,298 5,079 4,944 4,968 4,836

2005 4,064 4,064 5,956 6,028 5,670 5,319 5,286 5,154

2006 4,404 4,487 6,512 6,504 5,805 5,442 5,610 5,506

2007 4,686 4,754 6,654 7,142 5,970 5,643 5,985 5,887

2008 4,969 5,037 7,164 7,710 6,174 5,910 6,385 6,290

44,63747,086

49,98052,265

53,873

59,06860,541

30,98132,460 33,089 33,807 34,018 34,237 34,023 34,268

17,107 17,057 17,189 16,389 16,794 16,628 17,489 18,281

56,900

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

ASU

UA Main

NAU

FTE Student Enrollment

Notes: Actual enrollments are per Fall Semester 21st Day, as listed on ABOR Enrollment History report. 2007-08 UA Main enrollment is preliminary. UA Main FTE Resident Student Enrollment includes Nursing, Pharmacy and Health Related Profession students, but not Medical students.

26

2,449

5,343

7,628

15,904

1,4792,108

3,287

(50) 82(718)

(313) (479)

382

9,236

14,431

12,263

2,826

3,037 3,256 3,042

1,174

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

ASU

UA Main

NAU

Cumulative Change in FTE Student Enrollment

Notes: Actual enrollments are per Fall Semester 21st Day, as listed on ABOR Enrollment History report. 2007-08 UA Main enrollment is preliminary. UA Main FTE Resident Student Enrollment includes Nursing, Pharmacy and Health Related Profession students, but not Medical students.

27

$8,723

$7,969 $7,956

$10,080

$6,546

$8,800

$8,111

$6,779

$7,268

$7,154

$6,334

$6,039$5,966

$6,239

$8,117

$9,039

$8,353

$7,800

$7,357

$7,773

$6,772$6,761

$6,565$6,615

$5,500

$6,500

$7,500

$8,500

$9,500

$10,500

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

ASU

UA Main

NAU

General Fund per FTE Student

Notes: Actual enrollments are per Fall Semester 21st Day, as listed on ABOR Enrollment History report. 2007-08 UA Main enrollment is preliminary. UA Main FTE Resident Student Enrollment includes Nursing, Pharmacy and Health Related Profession students, but not Medical students. General Fund amounts listed include reductions for mid-year cuts made in FY02 & FY03, otherwise initial GF appropriations, not including TRIF. FY07 amounts shown net of one-time appropriations. FY08 GF amounts shown net of Phoenix Biomedical campus one-time funding. Funding for the Research Infrastructure Lease-Purchase Payments is included. FY06, FY07 & FY08 UA Main General Fund amounts net of AZ Cooperative Extension ($10,184,100 for FY06, $12,069,300 for FY07, and $11,728,500 for FY08 as per JLBC Appropriations Report.)

28

($489)

($934)

($923)

$1,357

$156 $145

$843

($1,229)($1,301)

($114)

($1,029)

($606)

($767)

$316

($370)

($754)

$742

$1,158

$2,184

($51) ($159)

-$1,500

-$1,000

-$500

$0

$500

$1,000

$1,500

$2,000

$2,500

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

ASU

UA Main

NAU

Cumulative Change in General Fund per FTE Student

29

Notes: Actual enrollments are per Fall Semester 21st Day, as listed on ABOR Enrollment History report. 2007-08 UA Main enrollment is preliminary. UA Main FTE Resident Student Enrollment includes Nursing, Pharmacy and Health Related Profession students, but not Medical students. General Fund amounts listed include reductions for mid-year cuts made in FY02 & FY03, otherwise initial GF appropriations, not including TRIF. FY07 amounts shown net of one-time appropriations. FY08 GF amounts shown net of Phoenix Biomedical campus one-time funding. Funding for the Research Infrastructure Lease-Purchase Payments is included. FY06, FY07 & FY08 UA Main General Fund amounts net of AZ Cooperative Extension ($10,184,100 for FY06, $12,069,300 for FY07, and $11,728,500 for FY08 as per JLBC Appropriations Report.)