The Living Classrooms Foundation, which includes Living Classrooms and the National Historic Seaport of Baltimore, generates nearly $120 million in annual output in Maryland each year and supports over 1,820 full-time jobs.   Of these totals, $104 million and 1,760 jobs are generated in Baltimore City, where the lion's share of Foundation services is provided.   The Foundation also generates $43.2 million in personal income for Baltimore City residents each year, enough to support 1,363 households earning Baltimore's median household income.   Finally, the Foundation generates approximately $20 million in annual tax receipts of which the State of Maryland or local governments within Maryland collect $8.3 million.

The enormity of these figures comes as little surprise since the Foundation directly touches upon two of the industries that drive Maryland's economy: educational services and tourism.   By providing several avenues of interactive learning and by helping to preserve and market Maryland's maritime heritage, the Foundation generates value by supplying ready and demanding markets.   In particular, the Foundation serves as a much-needed complement to the Baltimore City Public School System, which is working simply to provide a basic curriculum to its students.   By supplying after-school and summertime opportunities for young people, the Living Classrooms Foundation is able to deliver educational experiences that help local students develop more comprehensive skill sets than they otherwise would.

The Foundation also directly supports neighborhood revitalization through Project SERVE.   Given the aging and deterioration of Baltimore's housing stock, the Foundation is addressing an important local need, and this report has measured the economic impacts of the Foundation along this dimension.

Moreover, by promoting heritage tourism, the Living Classrooms Foundation is helping to support a burgeoning local tourism industry that has experienced substantial development over the past several years, including in hotel development, restaurant openings and museum expansions.   The continued role of the Living Classrooms Foundation in supporting 16 key local attractions will help sustain Baltimore's tourism momentum as well as provide another set of educational opportunities for Baltimore residents and tourists alike.

Indeed, it may be the case that the economic impact estimates provided in this report represent an understatement of total impact.   Because of the need to remain within the four corners of standard economic impact models, certain less quantifiable impacts were excluded.   What exactly is the impact of turning a young person's life around?   It has been estimated that putting a young person on the straight and narrow, an outcome associated with the Fresh Start Program among others, can save the state an average of $800,000 in expenses related to incarceration, persistent unemployment, substance abuse, medical expenditures and other related costs.   This report does not attempt to quantify these impacts because of their speculative nature.   Still, it is clear that such impacts exist even if they cannot be factored into a standard economic impact model.   

The Fresh Start Program was recently honored by the U.S. Department of Labor as one of the top ten programs of its kind in the country.

Analysis Objective

The purpose of this analysis is to estimate the economic benefits generated by the Living Classrooms Foundation.   This study is intended to enlighten policymakers, the local business community, and other interested parties with respect to the breadth and depth of the endeavors undertaken by the organizations that comprise the Living Classrooms Foundation.  

Living Classrooms Foundation Background

Founded in Baltimore City in 1985, the Living Classrooms Foundation is a not-for-profit organization targeting the needs of underserved and at-risk youth in Baltimore City.   The Living Classrooms Foundation prepares at-risk youth for the working world through exposure to nontraditional forms of education.  

The outcomes associated with Living Classrooms operations are twofold.   First, the Living Classrooms Foundation enhances the social well being of the City's disadvantaged youth population by providing youths with marketable skills.   A subsequent, more quantifiable outcome achieved by these programs is the enhancement of the City's residential and tourism appeal.  

The Living Classrooms Foundation is comprised of two main initiatives, including the Living Classrooms programs (e.g., Project SERVE and Fresh Start ), and the National Historic Seaport of Baltimore.   Each program performs the dual function of providing learning experiences for inner city youth while serving as an effective economic development tool.

Methodology

For the purposes of this analysis, an IMPLAN input/output model was utilized to help quantify the annual economic impact of the Living Classrooms Foundation.   The model enumerates the employment and income impact of each dollar earned and spent by the following: employees of the business, other supporting vendors (business services, retail, etc.), each dollar spent by these vendors on other firms and each dollar spent by the households of the new business' employees, other vendors' employees, and other businesses' employees.  

To quantify the economic impact of a new business entering into an area, economists measure three types of economic impacts: direct, indirect, and induced impacts.   The direct economic effects are generated as new business create jobs and hire workers to fill new positions.   The indirect economic impacts occur as new firms purchase goods and services from other firms. In either case the increases in employment generate an increase in household income, as new job opportunities are created and income levels rise.   This drives the induced economic impacts that result from households increasing their purchases at local businesses.

Consider the following example.   A new firm opens in a region and directly employs 100 workers.   The firm purchases supplies, both from outside the region as well as from local suppliers, which leads to increased business for local firms, thereby creating jobs for say, another 100 workers.   This is called the indirect effect.   The workers at the firm and at suppliers spend their income mostly in the local area, creating jobs for hypothetically another 50 workers.   This is the induced effect.   The direct, indirect, and induced effects add up to 250 jobs created from the original 100 jobs.   Thus, in terms of employment, the total economic impact of the hypothetical firm in our example is 250.

The IMPLAN model also estimates the annual flow of personal income, (defined as the sum of salaries and wages, other labor income and proprietors' income less transfer payments, dividends interest and rent) as well as fiscal impacts.   The fiscal impacts created by the Living Classrooms/National Historic Seaport of Baltimore are primarily driven by income tax revenues, sales tax revenues and additional real property tax revenues generated by new households moving into the state or county.  

Additional Qualitative Impacts

While economists can adequately measure quality of life under certain circumstances (e.g., hedonic pricing models that use regional home price variations to determine what value households place on certain types of amenities), here quality of life measurement is unduly difficult and speculative.   The point is that the impacts that have been measured in this report should not be confused with the total universal impacts of Living Classrooms Foundation.   

Conclusion

It is no surprise that the Living Classrooms Foundation generates substantial state and local economic impacts.   The organization directly relates to two vital engines of growth in Baltimore City, tourism and educational services industries.   The Foundation also participates in neighborhood revitalization, another key ingredient to Baltimore's future success.  

Given the benefits generated, it appears that Living Classrooms Foundation provides a superior social rate of return on investment/contributions, and the institution should be encouraged and allowed to expand the depth and/or array of services it provides.  

Ironically, the Foundation's impact is made greater by the fact that Baltimore City's school system faces such a daunting resource shortfall.   The Foundation is able to provide young people with experiences that local school systems would like to provide, but cannot due to fiscal constraints.   Therefore, the Foundation is nothing less than an indispensable companion to the Baltimore City Public School System.  

Total economic impact is defined as the sum of direct, indirect and induced effects.