Franklin County Adult Education
2015 HISET and High School Diploma Cost Benefit Analysis
Prepared by Jeremy Demers (BA Business Economics at University of Maine Farmington)
It is widely acknowledged that capital spent on educational services is an investment
rather than an expense. Strategic investments in education yield nearly immediate returns that
will continue to pay dividends to the community for the the remainder of each student’s life. By
striving to create a more educated, and skilled labor force the staff of the Franklin County Adult
Education is working to make the county a more socially prosperous place to live. Their work
with the recently implemented HISET program has already began to achieve quantifiable
financial results for greater Franklin County. This report will examine the the direct financial
impacts of each additional HISET or high school diploma to the society. This will be done by
observing 4 directly measurable outcomes associated with earning a high school equivalent:
employment, wages, tax contributions, and incarceration rates. By quantifying the disparities in
these four variables a compelling point for the importance of a high school education (or
equivalent) is vividly painted. Final findings indicate that in 2015 alone Franklin County Adult
Education’s HISET and HS diploma programs generated $345,147.24 in social benefit for a
return on investment of 623%. Perhaps the most compelling aspect of this finding is that the
majority of these savings are directly injected into and circulated around the local economy.
The most recent data suggests that a non high school graduate (NHSG) in Franklin County has
an average earnings of $16,842.5 a year. Meanwhile the average income for their high school
graduate (HSG) counterparts is $23,474 annually.
Recent data clearly suggests that level of educational attainment has a drastic impact on rates
of unemployment. Unfortunately non high school graduates (NHSGs) have been left behind
during the economic recovery that has followed the 2008 recession. In 2014 15.4% of NHSGs in
the state of Maine were unemployed while only 6.4% of those with a diploma were unemployed.
This gap in levels of employment is a trend that has been growing as the need for an
increasingly educated and skilled labor force has grown.
Let us examine the disparities in average wages after we have adjusted for unemployment.
- An average NHSG in Franklin County makes $16,842.50 annually. By multiplying this
number by the rate of employed NHSGs we are able to estimate the average wage of
NHSGs including those who are unemployed.
- (NHSG%Employment*NHSG Average Earnings)=.846*$16,842.5=$14,248.76
Thus after accounting for unemployment the average NHSG earns $14,248.76 annually.
- An average HSG in Franklin County makes $23,474 annually. By multiplying this number
by the rate of employed HSGs we are able to estimate the average wage of HSGs
including those who are unemployed..
- (HSG%Employment*HSG Average Earnings)=.936*$23,474=$21,971.66
Here we find that after adjusting for unemployment the average HSG earns $21,971.66 on an
annual basis. By finding the difference between these two numbers we are able to discern that
on average a HSG in Franklin County makes $7,722.91 more than their less educated
- (HSG earnings-NHSG earnings)= $21,971.66-$14,248.76=$7,722.91
Differences in Tax Contributions
The fact that HSGs earn more than NHSGs means that they also contribute more to both local
and federal taxes. Using the earnings data explained above we are able to observe the average
difference in tax contributions between HSGs and NHSGs. The following tax numbers represent
a taxpayer filing as single with no children.
- After accounting for unemployment rates the average NHSG in Franklin County earns
$14,248.75. This individual contributes $1,673 in annual income taxes.
- After accounting for unemployment rates the average HSG in Franklin County earns
$21,971.66. This individual contributes $2,835 in annual income taxes.
- Difference in tax contribution after accounting for level of unemployment =
$2,835-$1,673= $1,162 increased tax contribution from HSGs.
HSGs in Franklin County pay an average of $1,162 more in annual income taxes than NHSGs.
It is no secret that the high costs of incarceration are displaced onto local taxpayers. According
to the Maine Department of Corrections the cost of incarcerating one prisoner per year in 2012
was $51,954. To better understand the social costs of this number it is beneficial to examine the
various cohorts of Maine’s prisons by their level of education. A study which tracked all inmates
in Maine from 2004-2012 indicated that:
- 6.5% of prisoners had some college experience
- 45.8% of prisoners had a diploma or GED
- 47.7% of prisoners had less than a highschool diploma
- while only 9.7% of Mainers have less than high school diploma
Using the most recent available data we may observe that in 2011 there were 2145 prisoners
incarcerated in the state of Maine. By multiplying this number by the % of prisoners by
educational attainment we are able to discover how many actual prisoners these percentages
relate to. Using this method data suggests that there are approximately 1023 inmates without a
high school diploma or equivalent and 1,122 inmates with at least a highschool degree.
- .477*2145=1023 inmates that are NHSGs
- .523*2145=1122 inmates with a diploma or higher
In 2015 the population of Maine was estimated to be 1,329,328. Of this population 20.7% are
under the age of 18, for this reason they will not be included in this portion of the analysis. After
controlling for the population that is under 18 Maine has an adult population of 1,054,157.
- 20.7% of mainers are under 18 (1,329,328*.207=275,171=children under 18)
- 1,054,157 Mainers are over 18 thus have had opportunities to earn at least a high school
Multiplying the adult population by the corresponding level of educational attainment reveals the
number of HSGs and NHSGs in the state. 89.8% of the over 18 population, or 946,633 people,
have attained at least a high school education. Meanwhile 10.2% of the over 18 population, or
107,524 people, have not achieved a high school diploma or equivalent.
- Approximately 946,633 HSG or greater in Maine (1,054,157*.898=946,633)
- Approximately 107,524 NHSG graduates over 18 in Maine(1,054,157*.102=107,524)
By dividing the NHSG population in prison by the over 18 NHSG population we find that
.9515%, or nearly one percent of the NHSG population in Maine is incarcerated.
- (NHSG population in prison/NHSG population in Maine)=(1023/107,524= .9515%) of
NHSGs are in Maine are incarcerated.
Similarly by dividing the HSG population in prison by the over 18 HSG population we find that
.1185% of HSGs in Maine are incarcerated
- (HSG population in prison/HSG population in Maine)=(1,122/946,633=.1185%)
This means that in Maine a NHSG is over 8X more likely to be incarcerated than their HSG
- .9515/.1185=8.0295 times more likely for a NHSG to be imprisoned than a HSG
Implications of Prison Findings
- By multiplying the portion of NHSGs who are incarcerated by the annual cost of
incarceration we find that a NHSG has a social prison cost of $493.34 a year.
- (proportion NHSG in prison*cost of prisoner per year)= .009515*51,954=$494.34
- By multiplying the portion of HSGs who are incarcerated by the annual cost of
incarceration we find that a HSG has a social prison cost of $61.57 a year.
- (Proportion HSG in prison*cost of prisoner per year)= .001185*51,954=$61.57
This data suggests that on average a NHSGs added cost to society from increased likelihood of
incarceration is $431.77 annually.
- ($494.34-$61.57= $431.77)
This powerful data clearly illustrates the correlation between educational attainment and
incarceration rates. Lack of sufficient education does not force citizens to become criminals, but
it does limit their opportunities to make a living wage legally.
Now we will compile the data collected above to draw macro conclusions concerning the socio
economic impacts of a high school equivalency.
- The financial benefit of one additional high school equivalency can be quantified as
- Prison social costs will be reduced by $431.77 per person a year.
- Average earnings will increase by $7721.91 per person a year.
- Tax contribution will increase by $1,162 per person a year.
- These three data points add to a combined $9,315.68 of increased economic potential
- This means that every additional high school equivalency has a total social benefit of
$9,315.68 a year.
- This number is conservative in that the additional income earned by HSGs is
mostly spent in the local economy where it continues to circulate amongst other
local businesses. This surplus that is spent locally is also taxed locally and will
help contribute to any upfront costs associated with educational programs.
By multiplying the NHSG population in Maine by $9,315.68 we find that the current added social
cost of all NHSGs in Maine is $1,001,659,176 a year.
- (NHSG population in Maine* cost per NHSG a year)=
Through the same technique we find that the current cost of all NHSGs in Franklin County,
Maine is $34,943,116 a year.
- (NHSG population in Franklin County*cost per NHSG a year)=
Benefits associated with Franklin CountyAdult Education’sHISET
and High SchoolDiploma Programs
Franklin County Adult Education’s HISET program is specifically targeted at generating the
social impacts described above as well as empowering individuals to make positive changes
that will impact their own lives. In 2015 Franklin County Adult Education assisted 24 students
obtain their HISET and helped 19 students acquire a high school diploma. The combined
operating budget of both the HISET and high school diploma programs totaled $55,427.
- 2015 budget for HISET (supplies, testing, wages, ect) = $51,920
- In 2015 Franklin County Adult Education assisted 24 students in obtaining their HISET
- 2015 budget for high school completion program (supplies, testing, wages, ect) = $3,507
- In 2015 Franklin County Adult Education assisted 19 students in obtaining high school
By multiplying the annual social cost of a NHSG by the number of HISET and diploma
completions then subtracting the annual budget from the total we find that in 2015 this program
alone generated $345,147.24 in social benefit.
- ((Cost of NHSG*number of HISET 2015)-(HISET and HS diploma annual budget))=
Combined return on investment for the HISET and high school diploma program can now be
calculated by dividing the economic impact it generates by the budget spent to execute the
program. The results are compelling; in 2015 Franklin County Adult Education’s HISET
department generated a return of 623%
- (Benefit generated/annual budget)=(345,147.67/55,427)=6.23
With a combined annual budget of $55,427 for the HISET and HS diploma programs and
$9,315.68 of social benefit for each additional graduate the program would only have to
graduate 6 students each year to generate enough social benefit to break even. After 6
graduates, the break even point, each additional graduate adds 16.8% to the program’s return
- $55,427/$9,315.68=5.95 annual graduates needed to “break even”
- $9,315.68/$55,427=16.8% increase in ROI for each graduate after “break even” point
In other words every $1 spent on the HISET program in 2015 generated $6.23 in returns to the
county via increased earnings, increased tax contributions, and decreased chance of
incarceration. These benefits extend beyond the short term and will continue to pay dividends
into the future as the community continues to reap the rewards of increased tax revenue each
year. The findings of this research clearly indicate that much is to be gained by empowering
motivated NHSGs with the resources to further their education and improve their lives and the
communities in which they live.
- Giovannini, Marina. 2013. Cost Benefit Analysis of High School Diplomas/GEDs