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Extending In-State Tuition to Undocumented Immigrants
 

Extending In-State Tuition to Undocumented Immigrants

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Policy Analysis of North Carolina House Bill 1183 ...

Policy Analysis of North Carolina House Bill 1183

Over the past five years, ten states have implemented legislation extending in-state tuition rates to undocumented immigrants. While the policies have experienced low participation rates and been subject to legal challenge, they remain a valid alternative in the void created by lack of federal action regarding this growing segment of the United States population. Introduced in April 2005, North Carolina House Bill 1183 (HB1183) proposed offering in-state tuition rates within the UNC and North Carolina Community College systems to those undocumented immigrants meeting specified good-faith eligibility requirements.

This analysis projects the initial program participation to be 432 students (0.4 percent of the total university and community college population) and recommends implementation based on projected net social benefits of $118,208 in the first program year. Projected net social benefits for a five-year analysis period (2007-2011) are $800,167. In addition, substantial secondary benefits of personal income ($2.8 billion) and state tax revenue ($197 million) would be realized should HB1183 or similar legislation be passed and signed into law.

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    Extending In-State Tuition to Undocumented Immigrants Extending In-State Tuition to Undocumented Immigrants Document Transcript

    • Extending In-State Tuition to Undocumented Immigrants: Policy Analysis of North Carolina House Bill 1183 by Robert Brown Stromberg Policy Analysis Project School of Public and International Affairs North Carolina State University December 2006Advisor: Dr. Ryan C. Bosworth, Department of Public Administration
    • Extending In-State Tuition to Undocumented Immigrants: Policy Analysis of North Carolina House Bill 1183 Table of Contents Executive Summary ……………………………………..... iv Background ……………………………………………….. 1 Standing and Outcomes ……………………………...…… 1 Data Difficulty ……………………………………...…….. 2 North Carolina Hispanic Population Growth ……..……... 3 Eligible Population ………………………………...……... 4 Program Participation ……………………………...……... 7 Experience in Other States …………………….……… 8 University vs. Community College ………………..…. 10 Marginal vs. Average Cost ……………………………. 11 Program Costs ……………………………………...……. 11 Program Benefits …………………………………........… 12 Primary Benefits: Willingness-to-Pay ………….……. 13 Secondary Benefits: Income and Taxes ……….…….… 14 Sensitivity Analysis ……………………………………… 16 Recommendation………………………………..….….… 17 References………….…………………………………...…18 About the Author……………………………………...…. 21©2006 RBS ii
    • Extending In-State Tuition to Undocumented Immigrants: Policy Analysis of North Carolina House Bill 1183List of Tables1. Projected US and NC Population Growth 2000-20302. NC High School Graduates and UNC System Undergraduate Enrollment 1998-20033. Projected NC High School Graduates and UNC System Undergraduate Enrollment 2007-20114. Undocumented Population 2006 and Other State Program Participation 2001-20055. Projected NC Program Participation 2007-20116. Projected UNC System vs. NC Community College Program Participation 2007-20117. Projected One and Five-Year Program Implementation Costs 2007-20118. Average UNC System and NC Community College Tuition and WTP 2005-069. Projected One and Five-Year Direct Program Benefits 2007-201110. Projected One and Five-Year Program Implementation Costs 2007-2011: Upper and Lower Bound Included11. Projected One and Five-Year Program Benefits 2007-2011: Upper and Lower Bound and Net Social Benefits Included©2006 RBS iii
    • Extending In-State Tuition to Undocumented Immigrants: Policy Analysis of North Carolina House Bill 1183Executive Summary Over the past five years, ten states have implemented legislation extendingin-state tuition rates to undocumented immigrants. While the policies haveexperienced low participation rates and been subject to legal challenge, theyremain a valid alternative in the void created by lack of federal action regardingthis growing segment of the United States population. Introduced in April 2005,North Carolina House Bill 1183 (HB1183) proposed offering in-state tuitionrates within the UNC and North Carolina Community College systems to thoseundocumented immigrants meeting specified good-faith eligibility requirements.This analysis projects the initial program participation to be 432 students (0.4percent of the total university and community college population) andrecommends implementation based on projected net social benefits of $118,208in the first program year. Projected net social benefits for a five-year analysisperiod (2007-2011) are $800,167. In addition, substantial secondary benefits ofpersonal income ($2.8 billion) and state tax revenue ($197 million) would berealized should HB1183 or similar legislation be passed and signed into law.©2006 RBS iv
    • Extending In-State Tuition to Undocumented ImmigrantsBackground Introduced in April 2005 in the North Carolina General Assembly wasHouse Bill 1183 (HB1183). This legislation would have extended in-state tuitionbenefits to undocumented immigrants in the State of North Carolina. The benefitwould have applied to universities in the University of North Carolina (UNC)system as well as to the North Carolina (NC) Community College system. Inorder to qualify under HB1183 (hereafter referred to as the “program”), studentswere required to meet the following criteria: 1) receive a NC high school diploma,2) attend school in NC four consecutive years, and 3) file an affidavit with therespective university or community college affirming the student has applied forlegal immigrant status (General Assembly, 2005). Program participants wouldhave remained ineligible for state as well as federal financial aid. Similar legislation has been implemented in ten other states. Beginning withTexas in 2001, California and Utah followed in 2002. The next year, programsbegan in Illinois, New York, Oklahoma and Washington. Kansas and NewMexico followed in 2004 and 2005 and Nebraska became the tenth state toextend the benefit upon implementing legislation in 2006. The alternatives forthis analysis are “go” and “not go.” Undocumented immigrants are currentlyrequired to pay out-of-state tuition rates in NC and are barred from admission atsome institutions. The eligibility criteria set out above has been tested and set byprecedent in other states. It is unlikely to be altered in any NC legislation.Standing and Outcomes For this analysis, standing is only granted to those directly impacted by theproposed program: participating students and the State of North Carolina. Whileall NC residents, the business community and student families would be indirectlyaffected by the program, they do not inform the selection of measurable costs andbenefits. Likewise, the analysis considers only two direct outcomes: one cost andone benefit. The cost of the program is determined utilizing the average cost tothe State of North Carolina of educating one student. While marginal cost would©2006 RBS 1
    • Robert Brown Stromberghave been preferable, data was not available. However, for mature systems the sizeof those in NC, marginal cost is likely significantly lower than average cost. Inthat case, program costs would actually be much lower than those projected in thisanalysis. The program benefit is derived from individual gain realized byparticipating students defined as the difference between Willingness-to-Pay(WTP) and the in-state tuition rate they are able to take advantage of as a resultof the program.Data Difficulty The difficulty in acquiring adequate data from which to project costs andbenefits is without doubt the primary obstacle to reliably analyzing the program.However, there have been multiple studies on the United States (US)undocumented immigrant population in recent years, most notably those by thePew Hispanic Center and the Urban Institute. In addition, the Frank HawkinsKenan Institute of Private Enterprise at the University of North Carolina’s(UNC) Kenan-Flagler Business School published an exhaustive report on theeconomic impact of the NC Hispanic population. These and other studiesprovided adequate information for program analysis. The primary data necessary to project program costs and benefits are: 1) NCtuition rates, 2) NC per student expenditures, 3) WTP of the student population,and 4) size of the participating student population. Tuition rates are documentedand accessible. Data on NC spending per university student is available, butrequires translation based on overall spending ratios to arrive at differentiatedestimates for university and community college students. WTP of the studentpopulation is ideally obtained from survey data which is currently unavailable.Therefore, this analysis utilizes a crude estimate based on in- and out-of-statetuition rates. The size of the participating student population is impossible toperfectly project. However, current research on the total size of the NCundocumented population in addition to the experience of other states havingpreviously implemented similar programs provide sufficient data to confidently©2006 RBS 2
    • Extending In-State Tuition to Undocumented Immigrantsproject program participation. The following sections detail the methodologyused to quantify program costs and benefits.North Carolina Hispanic Population Growth The Hispanic population is projected by the US Census Bureau to grow 37.4million or 105 percent between 2000 and 2030 (1.2 million or 2.4 percentannually) in the US as a whole (see Table 1). North Carolina total populationgrowth is projected to be 4.2 million or 51.9 percent (140,000 or 1.4 percentannually) over the same period while projected total US population growth is 82.2million or 29.2 percent (2.74 million or 0.858 percent annually). Given theseprojections, the North Carolina population—and therefore its Hispanicpopulation—can be expected to grow at an annual rate 1.63 times that of thenational average (1.4 ÷ 0.858 = 1.63). (US Census Bureau, 2004, 2005)Table 1: Projected US and NC Population Growth 2000-2030 2000 2005 2010 2020 2030US Total 281,421,906 295,507,134 308,935,581 335,804,546 363,584, 435US Hispanic 35,622,000 - 47,756,000 59,756,000 73,055,000NC Total 8,049,313 8,702,410 9,345,823 10,709,289 12,227,739NC Hispanic 383,465 542,653 615,236 884,776 1,211,749NC Hispanic - 172,559 244,193 276,856 398,149 545,287UndocumentedNote: From US Census Bureau 2004, 2005. Italicized numbers are estimates derived from combining USCensus Bureau projections and the methodology described in the narrative above and below. NC Hispanic –Undocumented number is 45 percent of NC Hispanic number for each year as per Kasarda and Johnson,2006. According to Pew Hispanic Center, 2006, the North Carolina undocumented Hispanic population isbetween 300,000 and 400,000. Subsequently, this analysis projects growth of the Hispanic population inNorth Carolina at an annual rate of 1.63 times the national rate. Therefore,growth for the period between 2000 and 2030 is projected to be 828,284 or 316percent (27,609 or 3.9 percent annually) arriving at a total Hispanic population of©2006 RBS 3
    • Robert Brown Stromberg1,211,749 or 9.9 percent of the total North Carolina population in 2030(compared with 4.8 percent in 2000). Projections for 2010 and 2020 aredetermined utilizing the same methodology. 2005 projections are based on theknown population in 2004 and the documented 7.2 percent annual increase from2000 to 2004. It is important to note that Hispanic population growth is projected to slowover time. While growth was at an annual rate of 17 percent between 1994 and2000 in North Carolina, it slowed to 7.2 percent between 2000 and 2004(Kasarda and Johnson, 2006). The US Census Bureau estimates national annualHispanic population growth at 3 percent between 2000 and 2010 (2.3 and 2percent for the following two decades respectively). This represents a significantlyreduced growth rate over time. It is therefore expected that the NC Hispanicpopulation growth rate will continue to decline for the remainder of the currentdecade. It should also be noted that projections beyond 2010 are of little consequencefor this analysis as federal legislation will likely intervene regarding theundocumented immigrant population by that time. However, it is important torecognize the increasing size and significance of the undocumented Hispanicpopulation in NC although this analysis will focus on benefits and costs andwithin only one and five-year timeframes.Eligible Population In order to determine the cost of such legislation, the size of the benefitingpopulation must be identified. Quantifying the number of undocumentedstudents who would take advantage of the in-state tuition benefit is a difficultexercise. However, with the help of U.S. Census Bureau data, historical data onthe number Hispanic graduates of NC high schools, the experience of other statesimplementing similar legislation and other studies on undocumented Hispanicimmigration provide the possibility of arriving at reliable estimates.©2006 RBS 4
    • Extending In-State Tuition to Undocumented Immigrants While the Hispanic population makes up 27.5 percent of total NCpopulation growth from 1990-2004, Hispanic enrollment accounts for 57 percentof NC public school (primary and secondary) enrollment growth between 2000and 2004. This is due in large part to a significant number of children only nowcoming of age as well as a higher birth rate among NC’s Hispanic population.From the Kasarda and Johnson 45 percent estimation, the undocumentedHispanic population makes up 12.4 percent of NC population growth and 25.7percent of enrollment growth in the periods referenced above. (Kasarda andJohnson, 2006) The size of the Hispanic high school student population has been welldocumented by UNC General Administration (see Table 2). Just as NCpopulation growth has exceeded that of the nation as a whole, so has the numberof high school graduates. However, while the number of graduates has increasedin recent years by a relatively high annual rate of 3.3 percent, the increase inHispanic high school graduates exceeds it more than fivefold. The number ofHispanic graduates has increased by an annual rate of 16.5 percent over the sameperiod. Again utilizing Kasarda and Johnson’s 45 percent estimation, it is alsopossible to show the approximate number of undocumented Hispanic high schoolgraduates each year (Kasarda and Johnson, 2006). UNC system-wideundergraduate enrollment is shown to indicate the relative size of theundocumented population. This percentage is important when contemplatingextending in-state tuition benefits to that population. In 2002, undocumentedHispanic high school graduates represented a mere 0.6 percent of the total UNCsystem undergraduate population. (University of North Carolina, 2003) Utilizing relevant percent increases for each student category from 1998 to2003 (see Table 2), this analysis makes projections for the following five years (seeTable 3). Both Hispanic and undocumented Hispanic students will make up anincreasing percentage of total NC high school graduates. While making up only1.5 and 0.7 percent respectively in 1998, this analysis projects that Hispanic andundocumented Hispanic students will account for 7.1 and 3.2 percent by 2011.©2006 RBS 5
    • Robert Brown StrombergHaving quantified the eligible population for the five year period of analysis,examination of in-state tuition program participation in other states alreadyimplementing legislation will enable us to estimate the number of students whowould likely take advantage of the NC tuition benefit.Table 2: NC High School (HS) Graduates and UNC System Undergraduate Enrollment 1998-2003 1998 1999 2000 2001 2002 2003 Annual Increase 2,227 orHS Graduates 64,148 66,403 67,521 70,494 73,054 - 3.3%Hispanic 202 or 956 1,083 1,290 1,580 1,763 -HS Graduates 16.5%Undocumented HS 91 or 430 487 581 711 793 -Graduates 16.5%Total UNC 3,443 orUndergraduate 127,940 129,375 130,671 135,567 140,331 145,153 2.6%EnrollmentNote: From University of North Carolina, 2003. Italicized Undocumented High School Graduates based on45 percent estimation from Kasarda and Johnson, 2006.Table 3: Projected NC Hispanic HS Graduates and UNC System Undergraduate Enrollment 2007-2011 2007 2008 2009 2010 2011 Annual Increase 2,979 orHS Graduates 85,930 88,766 91,695 94,721 97,847 3.3%Hispanic 797 or 3,783 4,407 5,135 5,982 6,969HS Graduates 16.5%Undocumented HS 359 or 1,702 1,983 2,311 2,692 3,136Graduates 16.5%Total UNC 4,313 orUndergraduate 159,548 163,696 167,952 172,319 176,799 2.6%EnrollmentNote: Projections based on sustained annual increase per category as documented for 1998-2003 in Universityof North Carolina, 2003. Italicized Undocumented High School Graduates based on 45 percent estimationfrom Kasarda and Johnson, 2006.©2006 RBS 6
    • Extending In-State Tuition to Undocumented ImmigrantsProgram Participation While ten states have implemented legislation extending in-state tuition toundocumented immigrants, only Texas has maintained complete accounting ofthose taking advantage of the program. This analysis relies heavily on the Texasdata while utilizing reporting from other states to arrive at an estimatedpercentage of eligible students likely to take advantage of an in-state tuitionbenefit in NC. It is clear from examining states already implementing legislation that initialprogram participation is low. For example, upon implementing legislation inKansas in 2004, anticipated participation was 370. However, only 30undocumented immigrant students took advantage of the program in its first year(Fischer, 2004). Similarly low initial participation numbers are seen in all stateswith legislation currently on the books (see Table 4).Table 4: Undocumented Population 2006 and Other State Program Participation 2001-2005 Undocumented ParticipationState 2001 2002 2003 2004 2005 Population PercentageTX 1,500,000 393 - - 3,704 - 0.036WA 225,000 - - 27 0.012UT 87,500 - - - 22 0.025NM 62,500 41 0.066KA 55,000 30 221 0.055Note: Total undocumented population numbers are averages of estimated ranges for 2006 from Pew HispanicCenter, 2006. Those taking advantage of in-state tuition are from Lewis, 2005. The 393 and 3,704 studentsindicated for TX are from Jaschik, 2005 and McGee, 2005. The 30 students indicated for KA is fromFischer, 2004. No data was obtained for CA (enacted in 2002), IL (2003), NY (2003), OK (2003), or NE(2006). Low initial participation is caused by three factors. First, there is a significantlack of information about programs as not all states actively advertise them topotential beneficiaries. Second, inherent in participating in a program aimed©2006 RBS 7
    • Robert Brown Strombergspecifically at undocumented immigrants is immigration status disclosure. While inmost cases unfounded, there is a fear of deportation which inhibits widespreadparticipation. In states where immigration status data is obtained, it is held by theindividual institution or state education organization and is not accessible by USImmigration and Naturalization Services or Homeland Security. The third andperhaps most important obstacle is the lack of access to financial aid faced byundocumented students. While in-state tuition is a significant benefit for program participants, most arestill unable to afford higher education due to their ineligibility for financial assistance.They do not qualify for federal financial aid and only qualify for state aid in three ofthe ten states offering in-state tuition: Texas, Oklahoma and Utah (albeit for onlyone aid program in Utah) (Fischer, 2004). At Central Washington University, forexample, “tuition is only 25 percent to 33 percent of the cost, with housing, food,books, fees and transportation accounting for most of the rest” (Iwasaki, 2003).Additionally, the cost of foregone wages prevents most from attending full-time.Experience in Other States This analysis projects initial program participation in NC based on theparticipation percentage of five states already implementing legislation: Texas,Washington, Utah, New Mexico and Kansas. Participation percentage is defined asthe number of students participating as a percentage of the total estimatedundocumented population for each state (see Table 4 above). Average participationpercentage for the five states analyzed is 0.039 percent. Applied to an estimatedundocumented population of 350,000 (Pew Hispanic Center, 2006) in NC, theanticipated program participation in 2006 is 137. Based on the same sample, lowerand upper bounds are 42 and 231 respectively. These projections are realistic within the context of the estimatedundocumented Hispanic high school graduation population (see Tables 3 and 4above), but are lower than projections made by advocates of pending legislation inMassachusetts. The Massachusetts Immigrant and Refugee Advocacy Coalition©2006 RBS 8
    • Extending In-State Tuition to Undocumented Immigrantsprojects initial program participation of 400 (Massachusetts Immigrant, 2006) or 0.2percent of the state’s estimated undocumented population of 200,000 (Pew HispanicCenter, 2006). This projection is undeniably conservative and high—most likely toavoid underestimating state costs in implementing legislation—but is a meaningfulprojection and informs estimates for NC program participation. The participation percentage in NC would likely be higher than the average ofthe five states analyzed above due to several factors. First, pending legislation hasbeen widely reported and debated (In-State Tuition, 2005; In-State Tuition Bill,2005; Tuition Bill, 2005; Cardenas, 2006). Also, as immigration became increasinglynationalized in the 2006 election year, the in-state tuition issue played a role in NCGeneral Assembly races (Devore, 2006; Willsie, 2006). As a result, theundocumented population is likely more aware of the program in Massachusetts andNC in 2007 than in Kansas in 2004, for example. Second, improved advocacy andSpanish language information networks increase the likelihood that eligible studentswill participate. A third factor determining participation is the amount of energy andresources the state invests in advertising the program. Texas, for example, increasedits participation percentage to 0.25 percent in 2004 (from 0.036 in 2001) in large partdue to full support and active state promotion of the program (Lewis, 2005). Therefore, this analysis will utilize the Massachusetts 0.2 participationpercentage cited above to arrive at an adjusted upper bound projection of 700program participants to be utilized in sensitivity analysis. The lower bound remains42. Subsequently, the average participation for 2006 is adjusted from 137 to 371(average of 700 and 42). Utilizing a 16.5 annual percentage increase (see Table 2above), this analysis projects program participation for the 2007 to 2011 period ofanalysis (see Table 5). It is important to note the annual increase of projectedprogram participants relative to the annual increase in overall UNC Systemenrollment. System-wide undergraduate enrollment is projected to increase annuallyby 4,313 (see Table 3 above). At an average projected annual increase of 85, programparticipation would make up less than two percent of annual enrollment growth.©2006 RBS 9
    • Robert Brown StrombergTable 5: Projected NC Program Participation 2007-2011 2006 2007 2008 2009 2010 2011 Annual IncreaseLower Bound 42 49 57 66 77 90 10Average 371 432 504 587 683 796 85Upper Bound 700 816 950 1,107 1,289 1,502 160Note: Based on sustained 16.5 annual percentage increase as documented in Table 2 above. Italicized 2006numbers are included only as a baseline from which to project 2007-2011 participation. See Table 10 belowfor sensitivity analysis including Lower and Upper Bound participation projections.University vs. Community College In addition to anticipating overall program participation, benefits and costsof pending legislation are heavily dependent on the number of students enrollingin university as opposed to community college. The experiences of Kansas andTexas give good indication of the percentage of students participating in each typeof higher education. In 2004, of the 30 participants in Kansas, 22 were enrolled intwo-year—or community college—programs (27 percent university). Likewise, 25percent of Texas participants enrolled in universities (Fischer, 2004). Therefore,based on Table 5 above, this analysis utilizes the average—26 percent—inprojecting NC university versus community college enrollment (see Table 6).Table 6: Projected UNC System vs. NC Community College Program Participation 2007-2011 2007 2008 2009 2010 2011 Annual IncreaseUNC System Lower Bound 13 15 17 20 23 3 Average 112 131 153 178 207 24 Upper Bound 212 247 288 335 391 45Community College Lower Bound 36 42 49 57 67 8 Average 320 373 434 505 589 67 Upper Bound 604 703 819 954 1,111 127Note: Based on Table 5 and subsequently broken down utilizing a 26:74 university to community collegeenrollment ratio. See Table 10 below for sensitivity analysis including Lower and Upper Bound participationprojections.©2006 RBS 10
    • Extending In-State Tuition to Undocumented ImmigrantsMarginal vs. Average Cost The cost of educating an undocumented immigrant is no different than thatof educating a fully documented NC resident. Therefore, data on the average costof educating a student is not difficult to understand or acquire. For this analysishowever, it is not the average cost which is ideally suited for analysis. Rather, themarginal cost, or the cost of educating one additional student, is the appropriatemeasure. This marginal cost is much more difficult to quantify. Neither UNCGeneral Administration nor North Carolina State University’s Planning andAnalysis department were able to provide marginal cost data. This has not been the case in Massachusetts, where legislation is alsopending. In a January 2006 press release, the Massachusetts TaxpayersFoundation stated that “Massachusetts education officials confirm that theirschools can accommodate these small numbers of additional students withoutincurring new costs.” While it is perhaps an exaggeration to say there are no newcosts, it is not difficult to imagine that adding 400 students (0.04 percent of thetotal) to a combined university and community college student population ofapproximately 980,000 would cost significantly less than the per student average.Alas, without marginal cost data, this analysis is forced to utilize average cost inestimating program costs. The marginal cost of higher education is in need ofadditional research.Program Costs Average cost, on the other hand, is easily identified. It is a simple function ofstate government higher education expenditures and the number of studentsenrolled. According to State Higher Education Executive Officers, the 2005average cost of educating one university student in NC was $6,995 (AmericanAssociation, 2006). Adjusted by NC’s 2000 to 2005 annual higher educationexpenditure increase of 4.1 percent (Center for the Study, 2006b), state fundingper university student in 2007 is projected to be $7,580.©2006 RBS 11
    • Robert Brown Stromberg This projection must be adjusted for community college as state funding perstudent is significantly lower for those students. State community collegeexpenditures represented 26.9 percent of the higher education total in 2005(Center for the Study, 2006a). Therefore, this analysis projects state funding percommunity college student in 2007 to be $2,039 (26.9 percent of $7,580).Utilizing program participation projections in Table 6 above, an annual perstudent expenditure increase of 4.1 percent, and a discount rate of 4.8 percent(Office of Management, 2006), this analysis projects the present value of one andfive-year program implementation costs at $1,501,440 and $10,289,492respectively (see Table 7). See Table 10 below for sensitivity analysis includinglower and upper bound participation projections.Table 7: Projected One and Five-Year Program Implementation Costs 2007-2011 2007 2008 2009 2010 2011 TotalPer Student 7,580 7,891 8,214 8,551 8,902UNC System 848,960 1,033,721 1,256,742 1,522,078 1,842,714 6,504,215Per Student 2,039 2,123 2,210 2,300 2,395Community College 652,480 791,879 959,140 1,161,500 1,410,655 4,975,654Total 1,501,440 1,825,600 2,215,882 2,683,578 3,253,369 11,479,869Total – Present Value 1,501,440 1,741,985 2,017,549 2,331,473 2,697,045 10,289,492Note: Numbers in dollars. Italicized annual increase per student cost projected utilizing 4.1 percent increase(Center for the Study, 2006b). University per student baseline from 2005 per student cost (AmericanAssociation, 2006). Community College per student baseline based on 26.9 percent of university per studentcost. Student numbers from Table 6. Total – Present Value based on 4.8 percent five-year discount rate(Office of Management, 2006). See Table 10 below for sensitivity analysis including Lower and UpperBound participation projections.Program Benefits The benefit of reduced tuition for state residents is undisputed. It is so widelyaccepted that all fifty states offer in-state tuition rates. Residents are more likely thannonresidents to remain in-state after graduation to work, therefore contributingpositively to the economy. It is a good investment to encourage them to acquire theirhigher education at home rather than elsewhere. While all college degree-holders©2006 RBS 12
    • Extending In-State Tuition to Undocumented Immigrantstypically have higher incomes than those without, the difference among theimmigrant population is even more pronounced. In Massachusetts, for example,immigrant college graduates “earn twice as much as their counterparts with just highschool diplomas” (Massachusetts Taxpayers, 2006). As secondary support, this analysis will examine the potential individual andstate benefits of increased income and associated externalities. However, the primarybenefit utilized for analysis will be the direct benefit to the students projected toparticipate in the program. That benefit is derived from the tuition reduction and thefinancial gain realized by participants and their families as a result of that reduction.Primary Benefits: Willingness-to-Pay While it may seem that the benefit realized by program participants is simplythe difference between out-of-state and in-state tuition rates, it is not. Were allprogram participants currently paying out-of-state rates, the benefit of the programwould indeed be that difference. However, most if not all potential participants arenot paying any rate. The actual benefit for students participating is determined by thedifference between their willingness-to-pay (WTP) for education and the in-statetuition rate. Without extensive survey data, it is difficult to quantify the WTP ofpotential program participants. Some will be willing to pay the in-state rate andnothing more while others may be willing to pay an amount just below the out-of-state rate. Therefore, this analysis will utilize the average of the two rates as theaverage WTP of program participants in 2005: $8,540 for program participantsentering the UNC system and $4,210 for those attending community college (seeTable 8).Table 8: Average UNC System and NC Community College Tuition and WTP 2005-06 (in dollars) In-State Out-of-State Difference WTPUNC System 3,424 13,656 10,232 8,540NC Community College 1,330 7,090 5,760 4,210Note: Averages from University of North Carolina, 2006. WTP derived from the average of both tuition rates.©2006 RBS 13
    • Robert Brown Stromberg Program benefits are determined by the difference between a student’s WTPand the in-state rate: $5,116 per student entering the UNC system and $2,880 forcommunity college in 2005. Total annual benefits are subsequently derived in thesame manner as program costs in Table 7 above, by multiplying the per studentbenefit by the number of participants. Utilizing program participation projectionsin Table 6 above, an annual increase of 4.1 percent, and a discount rate of 4.8percent (Office of Management, 2006), this analysis projects the present value ofone and five-year program benefits to be $1,619,648 and $11,089,659 respectively(see Table 9). Utilizing the average participation level, direct program benefitsexceed program costs. The net social benefit (NSB) of the program is $118,208and $800,167 for one and five-year periods respectively. See Table 11 below forsensitivity analysis including lower and upper bound participation projections.Table 9: Projected One and Five-Year Direct Program Benefits 2007-2011 2007 2008 2009 2010 2011 TotalPer Student 5,544 5,771 6,008 6,254 6,511UNC System 620,928 756,041 919,213 1,113,257 1,347,710 4,757,149Per Student 3,121 3,249 3,382 3,521 3,665Community College 998,720 1,211,863 1,467,862 1,778,024 2,158,779 7,615,267Total 1,619,648 1,967,904 2,387,075 2,891,281 3,506,509 12,372,416Total – Present Value 1,619,648 1,877,771 2,173,419 2,511,923 2,906,898 11,089,659Note: Numbers in dollars. Italicized annual increase per student cost projected utilizing 4.1 percent increase(Center for the Study, 2006b). Per student benefit derived from difference between WTP and in-state tuitionrate (North Carolina, 2006). Student numbers from Table 6. Total – Present Value based on 4.8 percentfive-year discount rate (Office of Management, 2006). See Table 11 below for sensitivity analysis includingLower and Upper Bound participation projections.Secondary Benefits: Income and Taxes As mentioned above, there are many societal benefits to be gained fromincreasing the number of college graduates among the state population. First andforemost, increased earnings yield increased state tax revenues. In addition, it hasbeen shown that college graduates are less likely to utilize expensive social services©2006 RBS 14
    • Extending In-State Tuition to Undocumented Immigrantsand more likely to participate in the community and the economy (MassachusettsImigrant, 2006). The latter two benefits are very difficult to quantify. However,increased income as a result of a college education has been widely studied anddocumented and its benefits can be easily quantified. According to a 2005 Arizona State University study, lifetime earnings for acollege graduate are $1,268,698 greater than those of a high school graduate (Hill,Hoffman and Rex). Utilizing a 65 to 100 ratio from the same study, thoseattending community college will realize increased lifetime earnings of $824,829.Based on participation projections in Table 6 above, extending the in-state tuitionbenefit to undocumented immigrants for only one year would produce more than$406 million in additional earnings over the lifetime of participants. Based on a 7percent individual income tax rate (NCDOR, 2006), the State of NC wouldtherefore gain more than $28 million in additional tax revenue.Table 10: Projected One and Five-Year Program Implementation Costs 2007-2011: Upper and Lower Bound Included 2007 2008 2009 2010 2011 TotalUNC System Per Student 7,580 7,891 8,214 8,551 8,902 Lower Bound 98,540 118,365 139,638 171,020 204,746 732,309 Average 848,960 1,033,721 1,256,742 1,522,078 1,842,714 6,504,215 Upper Bound 1,606,960 1,949,077 2,365,632 2,864,585 3,480,682 12,266,936Community College Per Student 2,039 2,123 2,210 2,300 2,395 Lower Bound 73,404 89,166 108,290 131,100 160,465 562,425 Average 652,480 791,879 959,140 1,161,500 1,410,655 4,975,654 Upper Bound 1,231,556 1,492,469 1,809,990 2,194,200 2,660,845 9,389,060Total Lower Bound 171,944 207,531 247,928 302,120 365,211 1,294,734 Average 1,501,440 1,825,600 2,215,882 2,683,578 3,253,369 11,479,869 Upper Bound 2,838,516 3,441,546 4,175,622 5,058,785 6,141,527 21,655,996Total – Present Value Lower Bound 171,944 198,025 225,737 262,480 302,760 1,160,946 Average 1,501,440 1,741,985 2,017,549 2,331,473 2,697,045 10,289,492 Upper Bound 2,838,516 3,283,918 3,801,918 4,395,035 5,091,330 19,410,717Note: Numbers in dollars. Italicized annual increase per student cost projected utilizing 4.1 percent increase (Centerfor the Study, 2006b). University per student baseline from 2005 per student cost (American Association, 2006).Community College per student baseline based on 26.9 percent of university per student cost. Student numbersfrom Table 6. Total – Present Value based on 4.8 percent five-year discount rate (Office of Management, 2006).©2006 RBS 15
    • Robert Brown StrombergSensitivity Analysis Based on student participation upper and lower bounds identified in Table 6above, this analysis performs sensitivity analysis in order to determine outcomesfor a range of participation projections. For a detailed explanation of how thesevalues were chosen, see the Program Participation section above. Lower boundprogram costs for one and five-year periods are projected to be $171,944 and$1,160,946 respectively. Upper bound costs are $2,838,516 and $19,410,717 (seeTable 10 above). Lower bound program benefits for one and five-year periods are$184,428 and $1,251,869. Upper bound benefits are $3,060,413 and $20,922,048.Program benefits exceed costs across the range of projected program participationand net social benefits are greatly increased by higher participation projections(see last row of Table 11 below).Table 11: Projected One and Five-Year Direct Program Benefits 2007-2011: Upper and Lower Bound and Net Social Benefits Included 2007 2008 2009 2010 2011 TotalUNC System Per Student 5,544 5,771 6,008 6,254 6,511 Lower Bound 72,072 86,570 102,135 125,085 149,746 535,607 Average 620,928 756,041 919,213 1,113,257 1,347,710 4,757,149 Upper Bound 1,175,328 1,425,512 1,730,283 2,095,175 2,545,675 8,971,972Community College Per Student 3,121 3,249 3,382 3,521 3,665 Lower Bound 112,356 136,456 165,726 200,688 245,568 860,795 Average 998,720 1,211,863 1,467,862 1,778,024 2,158,779 7,615,267 Upper Bound 1,885,085 2,284,021 2,769,997 3,358,880 4,072,030 14,370,012Total Lower Bound 184,428 223,026 267,861 325,773 395,314 1,396,401 Average 1,619,648 1,967,904 2,387,075 2,891,281 3,506,509 12,372,416 Upper Bound 3,060,413 3,709,533 4,500,280 5,454,055 6,617,704 23,341,985Total – Present Value Lower Bound 184,428 212,811 243,886 283,029 327,715 1,251,869 Average 1,619,648 1,877,771 2,173,419 2,511,923 2,906,898 11,089,659 Upper Bound 3,060,413 3,539,630 4,097,481 4,738,443 5,486,081 20,922,048Net Social Benefits Lower Bound 12,484 90,923 Average 118,208 800,167 Upper Bound 221,897 1,511,331Note: Numbers in dollars. Italicized annual increase per student cost projected utilizing 4.1 percent increase (Centerfor the Study, 2006b). Student numbers from Table 6. Total – Present Value based on 4.8 percent five-yeardiscount rate (Office of Management, 2006). Net Social Benefits are derived from Total – Present Value of benefitsminus Total – Present Value Costs (see Table 10 above).©2006 RBS 16
    • Extending In-State Tuition to Undocumented ImmigrantsRecommendation As shown in Table 11, net social benefits are positive for both one and five-year analysis periods for the entire range of projected program participation. Inother words, costs incurred by the State of NC to provide in-state tuition toundocumented immigrant students are less than the benefits received by thosestudents. This finding is not surprising. As indicated above, the rationale behindproviding a reduced tuition rate is the same for this growing population as it is forNC residents generally. This finding is also supported strongly by secondary program impacts. TheState of NC stands to gain $28 million in additional tax revenue as a result of justone year of program implementation. Over the entire five-year analysis period, theState would gain more than $197 million in tax revenue over the lifetime ofparticipating students. Total lifetime benefits to program participants would bemore than $406 million and $2.8 billion respectively for one and five-year periods. While these gains would be mitigated to some degree by remittances to thecountry-of-origin, the secondary benefits portend potential gains for NC on ascale far greater than that of program costs and benefits. It is estimated thatbuying power in the undocumented population is reduced by 20 percent due toremittances (Kasarda and Johnson, 2006), yet incomes would be taxable in full.While not quantified in this analysis, the additional gains realized from increasedbuying power, economic and civic participation as well as a decreased need forsocial services would only increase the societal benefit of the program. Therefore,in order to achieve maximum societal benefit, undocumented immigrants shouldbe encouraged to seek higher education and be provided the benefit of in-statetuition (if meeting the eligibility requirements of HB1183) to NC universities andcommunity colleges.©2006 RBS 17
    • Robert Brown StrombergReferencesAmerican Association of State Colleges and Universities. (2006). State Budget and Tuition: North Carolina. Retrieved November 18, 2006 from http://www.aascu.org/state_budget/nc.htmCardenas, Jose. (2006, October 16). Grass roots groups challenge illegals: Since immigration reform has stalled in Congress, the focus has become local. St. Petersburg Times. St. Petersburg, FL. Retrieved October 30, 2006 from http://www.sptimes.com/2006/ 10/16/Tampabay/Grass_roots_groups_ch.shtmlCenter for the Study of Education Policy. (2006). Appropriations of state tax funds for operating expenses of higher education, fiscal years 2004-05 and 2005-06 in North Carolina. Illinois State University, Grapevine. Retrieved November 16, 2006 from http://www.grapevine.ilstu.edu/North_Carolina_ 06.htmCenter for the Study of Education Policy. (2006). Table 4: Tax appropriations for higher education, by state, FY96, FY01, FY02, FY03, FY04, FY05, and FY 06, and average annual percent changes in state tax appropriations for higher education, by state, FY01 through FY06. Illinois State University, Grapevine. Retrieved November 16, 2006 from http://www.grapevine.ilstu.edu/ table4_06.htmDevore, Linda. (2006, November 29). Did Glazier have an epiphany? The Fayetteville Observer. Retrieved November 29, 2006 from http://www.fayobserver.com/blog/comments?bid=32&eid=2901Fischer, Karen. (2004, December 10). Illegal Immigrants Rarely Use Hard-Won Tuition Break. The Chronicle for Higher Education, 19.General Assembly of North Carolina. (2005, April 12). House Bill 1183: Access to Higher Education and a Better Economic Future. First Edition. Retrieved October 15, 2006 from http://www.ncga.state.nc.us©2006 RBS 18
    • Extending In-State Tuition to Undocumented ImmigrantsHill, Kent, Hoffman, Dennis and Rex, Tom R. (2005, October). The Value of Higher Education: Individual and Societal Benefits. L. William Seidman Research Institute, Arizona State University. Retrieved November 24, 2006 from http://www.wpcarey.asu.edu/seid/In-State Tuition Bill Misses Key Legislative Deadline. (2005, June 7). WRAL. Retrieved October 23, 2006 from http://www.wral.com/news/4577833/ detail.htmlIn-State Tuition for Illegal Immigrants. (2005, April 14). NC Spin. Retrieved November 26, 2006 from http://www.ncspin.com/scratchlog_archive_comments.php?id=00085Iwasaki, John. (2003, October 30). Tuition Break has Surprise Beneficiaries: Undocumented Students often Unaware of Benefit. The Seattle Post- Intelligencer, A1.Jaschik, Scott. (2005, July 25). College for Illegal Immigrants. Inside Highere Ed.Kasarda, John D. and Johnson, Jr., James H. (2006, January). The Economic Impact of the Hispanic Population on the State of North Carolina. Frank Hawkins Kenan Institute of Private Enterprise. Kenan-Flagler Business School. The University of North Carolina at Chapel Hill.Lewis, Raphael. (2005, November 9). In-State Tuition Not a Draw for Many Immigrants. The Boston Globe, A1.Massachusetts Immigrant and Refugee Coalition. (2006). Access to Higher Education. Retrieved November 30, 2006 from http:// www.miracoalition.org/issues/state/higher-educationMassachusetts Taxpayers Foundation. (2006, January 5). Massachusetts Public Colleges Would Gain Millions of Dollars from Undocumented Immigrants. Retrieved November 28, 2006 from http://www.masstaxpayers.org/data/pdf/ bulletins/MTF%20News%20Release%20Undocumented%20Immigrants.PDFMcGee, Patrick. (2005, July 24). More illegal immigrants in colleges; Enrollment has increased ninefold since the state allowed them to pay lower tuition. The Houston Chronicle, B6.©2006 RBS 19
    • Robert Brown StrombergNCDOR: North Carolina Department of Revenue. (2006). Tax Rate Schedule. Retrieved November 27, 2006 from http://www.dornc.com/taxes/individual/ rates.htmlNorth Carolina State University. (2006, September 8). Summary of Enrollment: Fall 2002 - Fall 2006. University Planning & Analysis. Retrieved November 18, 2006 from http://www2.acs.ncsu.edu/UPA/enrollmentplan/summary% 202004.xlsOffice of Management and Budget. (2006, January). Discount Rates for Cost- Effectiveness, Lease Purchase, and Related Analysis. Executive Office of the President of the United States. Retrieved November 29, 2006 from http:// www.whitehouse.gov/omb/circulars/a094/a94_appx-c.htmlPew Hispanic Center. (2006, April 26). Estimates of the Unauthorized Migrant Population for States based on the March 2005 Current Population Survey: Fact Sheet. Retrieved November 15, 2006 from http://www.pewhispanic.orgTuition Bill Stumbles: A Proposal to Grant In-State Tuition to Qualifying Illegal Immigrants Meets Powerful Opposition, Despite the Merits of Offering Hope for a Better Future. (2005, April 27). Editorial. Greensboro News & Record.University of North Carolina. (2003, November 13). Fall 2003 Enrollment Report. The University of North Carolina Office of the President. Chapel Hill, NC: UNC. Retrieved November 22, 2006 from http:// intranet.northcarolina.edu/docs/assessment/reports/Fall_2003_Enrollment_ Report_(11-13-03).pdfUniversity of North Carolina. (2006, April). Statistical Abstract of Higher Education 05-06: Research Report 1-06. Figure 13: Ranges of Combined Tuition and Required Fees Charged to Undergraduate Students in North Carolina Colleges and Universities, 2005-06. Chapel Hill, NC: UNC. Retrieved November 21, 2006 from http://www.northcarolina.edu/ content.php/assessment/reports/abstract-current.htm©2006 RBS 20
    • Extending In-State Tuition to Undocumented ImmigrantsUS Census Bureau. (2004, March 18). US Interim Projections by Age, Sex, Race, and Hispanic Origin. Table 1a. Projected Population of the United States, by Race and Hispanic Origin: 2000 to 2050. Retrieved October 13, 2006 from http://www.census.gov/ipc/www/usinterimproj/US Census Bureau. (2005, April 21). State Interim Population Projections by Age and Sex: 2004 – 2030. Table 7: Change in total population for regions, divisions, and states: 2000 to 2030. Retrieved October 13, 2006 from http://www.census.gov/population/www/projections/projectionsagesex.htmlWillsie, Lucie. (2006, October 22). Democratic incumbent Underhill, Republican Speciale differ on taxes, education. Sun Journal. New Bern, NC. Retrieved October 24, 2006 from http://www.newbernsj.com/SiteProcessor.cfm? Template=/GlobalTemplates/Details.cfm&StoryID=30579&Section=LocalAbout the AuthorRobert Brown Stromberg received his BA from Duke University in 1998, goingon to work for many years in the non-profit arts community in North Carolina.In 2000, he founded the Durham Association for Downtown Arts (DADA) andpresented local artists for several years in Durham. Most recently having studiedimmigration and global policy in the School of Public and International Affairs atNorth Carolina State University, Robert will graduate in December 2007 with aMaster of International Studies.Contact: (919) 449-4092, rstromberg@alumni.duke.edu©2006 RBS 21