July 1, 2010

Will BTOP Funding Create More Florida College Grads?

By Katherine Waldron

The federal government’s push to bring broadband to everyone is in full swing. With the final round of the Broadband Technology Opportunities Program (BTOP) applications submitted to Department of Commerce’s NTIA and the USDA’s RUS in late March, the first several billion dollars committed to pushing broadband out to the last of the unwired homes and anchor institutions in the United States has begun.

“There are tax benefits to be realized when increasing the number of college graduates.”

It’s no secret Florida’s educational system has ranked near the bottom for many years, and the state’s ability in this economic environment to make aggressive improvements is challenged. Seeking a way to make a difference, one group of educational leaders teamed to submit a BTOP application this past March. The result was “Florida SmartNet,” a partnership led by the Foundation for Florida’s Community Colleges that includes all of the Sunshine State’s 28 community colleges, and many of the independent colleges and universities as well as all 26 Florida PBS stations.

The basic concept behind this project is to tie the higher-educational institutions and the PBS stations into one high-speed network with a minimum interconnection speed of 1 GB. Performance improvement would be realized through the creation of new application solutions, including on-demand remote learning, sharing of courses, decreased administrative costs through shared costs and increased course availability for students. This could result in an increase in Florida’s educational level and graduation count estimated to be 5 percent per year — translating into an expanded college pool of 3,270 students per year or 130,800 job-years (3,270 x 40 years) during a 40-year career.

The anticipated monetary benefit to the state will be enormous, as there are tax benefits to be realized when increasing the number of college graduates. According to the U.S. Census Bureau and the Internal Revenue Service, a college graduate earns an average of $58,866 annually compared with high-school-only workers, who earn an average of $33,419 annually. The tax contribution attributable to these two levels of education is substantial, with annual payments of $13,762 and $7,053 per person, respectively.

Applying the income-earned and taxes-paid differentials to a single incremental graduate resulting from the Florida SmartNet project, additional individual income of $25,447 and tax revenue of $6,709 are created annually. Multiplying these amounts by the incremental graduates from a single year of operation under Florida SmartNet creates $83.2 million in income (3,270 graduates x $25,447) and $21.9 million in tax revenue (3,270 graduates x $5,300). In other words, within the first five years of this project, an estimated $1.25 billion in new wealth will be created and will generate $329 million in new tax revenue — just from graduates with bachelor’s degrees alone.

While paying for itself, Florida SmartNet also will deliver the indirect societal benefits resulting from a better-educated community, including reduced crime rates, a lower payout of unemployment compensation and welfare, and the indirect wealth created through economic multipliers applied to this more highly educated core of income growth.

This is an application that will have a transformative impact at many levels, becoming a pattern for other states to follow.

Katherine Waldron is CEO of Waldron and Associates, with offices in Florida and Washington, D.C. Contact her at Katherine@waldronandassociates.net.