Ask A Researcher

November 2014

North Dakota's Tribal Colleges Contribute to State's Economy

Randal Coon is a research specialist with NDSU's Department of Agribusiness and Applied Economics. He presents results of a study that measures the impact of the five Tribal Colleges and their students on North Dakota’s economy.

Tribal colleges are higher education, minority-serving institutions, founded to provide post-secondary cultural-based educational opportunities on several of North Dakota’s Native American reservations. Tribal Community Colleges and Universities are fundamental to their communities, producing environments that foster Native American culture, languages, and rituals. They provide valuable post-secondary educational programs within some of the United States’ poorest rural areas. These institutions also serve as community resources and add hope to communities that they are home to. In addition to providing social benefits, Tribal Community Colleges and Universities contribute to and have a significant impact on an area’s economy. The economic value can be identified in direct and secondary economic impact of college and student expenditures, in addition to the value of a college education (e.g., lower unemployment, higher median annual earnings, and a higher total lifetime income). North Dakota is one of the homes to a number of these post-secondary institutions.

Q: Who are the Tribal Colleges in North Dakota?

A: There are five Tribal Colleges in North Dakota including Cankdeska Cikana Community College serving the Spirit Lake Reservation, Sitting Bull College serving the Standing Rock Reservation, Turtle Mountain Community College serving the Turtle Mountain Band of Chippewa, United Tribes Technical College based in Bismarck and serving multi-tribal members from across the United States, and Fort Berthold Community College serving the Three Affiliated Tribes (Mandan, Arikara, and Hidatsa). These five colleges comprise the North Dakota Association of Tribal Colleges (NDATC). The Tribal Colleges are relatively new to the state’s education system with United Tribes Technical College first offering classes in 1969.

Q: How do the Tribal Colleges contribute to the North Dakota’s economy?

A: In addition to educational opportunities for students, the Tribal Colleges have an economic impact on their state and local economies. These colleges make in-state expenditures for goods and services, hire employees to staff their institutions, and construct campus buildings for the purpose of providing educational opportunities. These expenditures by the colleges constitute the direct, or first-round economic effects. By applying multipliers to the direct impacts, secondary impacts can be estimated. In addition to that, student spending also contributes to the economy, because students make expenditures in the local economy for personal items, recreation, books, supplies, and room and board.

Research regarding the economic contribution of the Tribal Colleges in North Dakota was conducted by Randal Coon, Dean Bangsund, and Nancy Hodur of the Department of Agribusiness and Applied Economics at North Dakota State University. The research project was funded through a grant from the American Indian Higher Education Consortium (AIHEC). A report of the results, titled “Economic Contribution of North Dakota’s Tribal Colleges in 2012,” was released February 2013.

Q: How was the economic contribution of the Tribal Colleges estimated in the research project?

A: The basic data required for the analysis were the in-state expenditures by category for each of the five Tribal Colleges. Each individual Tribal College provided their FY2012 expenditures, employment, and student enrollment data. Data were aggregated (combined) and the analysis was performed at the North Dakota Association of Tribal Colleges level. In-state expenditures comprised the direct economic effects, and the North Dakota Input-Output Model was used to estimate the secondary economic effects. The North Dakota Input-Output Model consists of interdependence coefficients, or multipliers, that measure the level of business activity generated in each economic sector from an additional dollar of expenditures in a given sector. A sector is a group of similar economic units (e.g., the Retail Trade Sector is comprised by firms engaged in retail trade). The North Dakota Input-Output Model estimated the changes in total business activity for all sectors of the area economy resulting from the direct expenditures associated with the five Tribal Colleges’ operations. The increased business volumes were used to estimate secondary (indirect and induced) employment and tax revenues based on historic relationships.

Q: What were the direct and secondary economic effects of the Tribal Colleges?

A: Tribal Colleges’ expenditures (direct economic contribution) to North Dakota entities for FY2012 totaled $48.4 million (see Table 1). These expenditures were previously distributed through seven economic sectors: Construction; Communication and Public Utilities; Retail Trade; Finance, Insurance, and Real Estate; Business and Personal Services; Professional and Social Services; and Households. A small amount of expenditures were distributed to several other sectors of the economy.

Expenditures to the Households Sector (wages and salaries) were the largest of any sector, indicating the labor-intensive nature of educational institutions. When the North Dakota Input-Output Model multipliers were applied to the direct economic contribution, secondary effects were estimated to be $93.8 million in FY2012. The largest secondary effects occurred in the Households and Retail Trade Sectors, with $30.3 million and $30.4 million, respectively. Total economic contribution (direct plus secondary) totaled $142.3 million for FY2012. Total personal income (Households Sector) resulting from the Tribal Colleges’ expenditure amounted to $59.0 million and additional retail sales were estimated to be $35.3 million in FY2012. The five Tribal Colleges provide employment for 615 full-time and 209 part-time workers. Levels of business activity resulting from in-state expenditures would support an additional 392 full-time equivalent (FTE) secondary (indirect and induced) jobs in various sectors of the local and state economy. Also, these levels of business activity would lead to increased sales and use tax revenues of $1.6 million, personal income taxes of $885,000, and corporate income taxes of $231,000. In conclusion, in FY2012, the five Tribal Colleges made a measureable contribution to the local and state economies of North Dakota.

Q: What is the economic contribution of the students enrolled in the Tribal Colleges?

A: Student spending also creates an economic contribution in addition to that of the Tribal Colleges. Student spending included outlays for personal items, recreation, books, supplies, and room and board. Tuition and fees were excluded from student expenditures to avoid double counting. Estimates of student expenditures were available for each of the respective Tribal Colleges from the North Dakota Career Resource Network. For the 2011-2012 academic year, the 4,252 FTE students at the five Tribal Colleges had expenditures (direct economic contribution) of $15.9 million. These expenditures were divided between the Retail Trade and Finance, Insurance, and Real Estate Sectors of the economy. Similar to the Tribal colleges’ expenditure, the student expenditures were applied to the North Dakota Input-Output Model multipliers to estimate secondary economic effects. The second-round effects of student spending totaled $23.7 million, producing a total economic contribution of $39.6 million resulting from student outlays. The Retail Trade Sector was the recipient of the largest increase in business activity ($17.9 million) attributed to student spending. A large share of student spending would occur in the communities where the institutions are located, due to the nature of their purchases. Student expenditures were 32.9 percent of the Tribal colleges’ outlays in FY2012. Retail trade activity generated by student spending would result in $830,000 in sales tax revenues and $144,000 in personal income tax collections. Also, the business activity created from student spending would support 83 secondary (indirect and induced) jobs in the state. Clearly, the economic contribution made by the five Tribal Colleges and their students has had a significant effect on the local and North Dakota economies.

To see the full results from the “Economic Contribution of ND’s Tribal Colleges in 2012” Report, February 2013, go to: https://www.uttc.edu/news/story/img/042413_01a.pdf