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The education bottleneck

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In July, I wrote an article for Seattle Business magazine about how low capacity in our state’s universities is leading to less graduates in high-demand employment sectors such as health care and engineering. Below is a very insightful response to my article from University of Washington electrical engineering professor John D. Sahr, outlining the huge return our state’s economy could see from investing more in these college programs.

“I have just read Steve Reno’s article in Seattle Business magazine.

I recently participated in the admissions process for UW Electrical Engineering for students who will enter our program in Autumn 2010. There were about 320 applications for admission, and we made 120 offers.  We expect about 95 to accept (a very high yield, indicating the strong demand for Electrical Engineering).

Before posing the following rhetorical question, let me add the factoid that retention (how many students who enter Engineering complete their degrees) is very high — 95 percent or better.

The interesting question is this: How many of the 200 students we turned down could have made it through our program? The answer is disheartening: all of them.

However, we recently had to lay off several instructors, staff, and take other cost cutting measures to keep our Electrical Engineering program solvent, and try to tackle the critical tradeoff between Quality and Quantity. This is not an abstract tradeoff, as we do have to preserve and defend our ABET accreditation.

The annual (UW) Budget for Electrical Engineering is about $7 million, while the total budget is closer to $25 million (when you include the external research funding). We have been generating over 170 B.S., 60 M.S. and 35 Ph.D. degrees each year, which results in about $15 million in new salaries each year, and factoring in a (modest) 20 year career, that $7 million investment drives a $300 million economic engine.

The sales tax generated by that $7 million investment generates about $15 million in new taxes.  The additional $22 million drives considerable additional economic activity (employing postdocs and grad students, procuring equipment, etc.), but I’ll ignore that funding stream completely.

That is an extremely conservative estimate based upon the salaries of brand new engineers, and counts for none of the ancillary benefits (the support staff around engineers, the intellectual property, the effect on property values, the property taxes, etc.). The actual value could easily be two or three times what I have suggested, given the salaries that experienced engineers draw.

Viewed in this light, society gets a return on investment that is something well north of 100 percent per year, by investing in UW Electrical Engineering. Anyone else who promised 100 percent per year ROI would be immediately suspect of a Ponzi scheme. But UW Electrical Engineering has been churning out the real goods for decades.

I understand that there are real difficulties in the state budget, and I realize that, at first blush, the UW may look expensive. But in fact, the UW is a terrific bargain, which is, alas, becoming less and less accessible to many, including the vanishing middle class.”

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Written by Steve Reno

August 4, 2010 at 6:44 pm

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