ECONOMIC IMPACT ANALYSIS

Fiscal Year 2017 - 2018

Amanda Clarke, Elisabeth Diaz, Nghi Nguyen, Allisha Paulk, Hiral Sompura

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Acknowledgments The results of this report would not have been possible without the efforts and contributions of the individuals outside of our COBA Senior Experience team. We want to thank these individuals for taking the time to help us with their knowledge and expertise in completing this project. The individuals acknowledged below assisted our COBA Senior Experience team in meeting all our project objectives. We would personally like to thank:

Mark Kalpakgian Chief Business Development Officer, The Classical Academies Christopher Thibodeau Chief Financial Officer, The Classical Academies Dr. Hedayat Alibeiki Assistant Professor of Operations Supply Chain Management, CSUSM. COBA Faculty Advisor. Roger Herzler, MBA COBA Senior Experience Director, CSUSM. Director of Business Community Projects. Lecturer, Management Information Systems. Kirby Brady Research Director, San Diego Regional EDC Candi Clouse Economist, IMPLAN Brian Barlow Customer Success Manager, IMPLAN Ranjeeta Basu Professor of Economics, CSUSM Ann Fiegen Business Librarian, CSUSM Amanda Boudreault Economics Student, CSUSM Bert Salazar Economics Student, CSUSM

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TABLE OF CONTENTS KEY HIGHLIGHTS FOR THE FISCAL YEAR 2017 - 2018 ...... 1 EXECUTIVE OVERVIEW ...... 2 INTRODUCTION ...... 2 METHODOLOGY AND SCOPE ...... 3 A. DATA SOURCE ...... 3 B. INPUT-OUTPUT (I-O) APPROACH ...... 4 PURPOSE OF THE ECONOMIC IMPACT STUDY ...... 4 ECONOMIC AND FISCAL IMPACTS RESULTS (IMPLAN) ...... 5 A. OPERATIONAL EXPENDITURES ...... 5 B. LABOR EXPENDITURES ...... 6 C. CAPITAL EXPENDITURES ...... 8 D. VISITOR SPENDING ...... 8 E. TOTAL ECONOMIC IMPACT ...... 9 F. VALUE ADDED ...... 11 G. IMPACT ON STATE AND LOCAL TAX REVENUES ...... 13 COMPARATIVE ANALYSIS: ECONOMIC IMPACT IN THE PAST 4 YEARS ...... 13 ORGANIZATIONAL ACTIVITIES AND ITS SOURCES OF FUNDING ...... 15 A. ORGANIZATIONAL ACTIVITIES ...... 15 B. SOURCES OF FUNDING ...... 15 ADVANTAGES OF ATTENDING THE CLASSICAL ACADEMIES ...... 16 TESTIMONIALS ...... 17 CONCLUSION ...... 18 REFERENCES ...... 19 APPENDIX A – NUMBER OF STUDENTS ENROLLED FROM 1999 - 2019 ...... 21 APPENDIX B – TYPE I VS. TYPE SAM MULTIPLIER ...... 21 APPENDIX C – TOP 10 INDUSTRIES IMPACTED FROM OPERATIONAL EXPENDITURES ...... 22 APPENDIX D – TOP 10 INDUSTRIES IMPACTED BY PAYROLL EXPENDITURES ...... 22 APPENDIX E – SURVEY QUESTIONS TO PARENTS REGARDING VISITOR SPENDING ...... 22 APPENDIX F – TOP 10 INDUSTRIES IMPACTED FROM OPERATIONAL AND PAYROLL EXPENDITURES ...... 24 APPENDIX G – IMPLAN RESULTS FOR VALUE ADDED ...... 24

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Key Highlights for the Fiscal Year 2017 - 2018

The Classical Academies

$68.3 MILLION 803 $1.9 MILLION in Annual JOBS Supported generated in local and Output Impact state Tax Revenues.

 The Classical Academies generated $68.3 million in total Output impact within San Diego County.

 Business activities of The Classical Academies supported 803 jobs within San Diego County.

 The total economic impact of visitor spending computed through survey results was $2.78 million within San Diego County.

 The business activities of The Classical Academies helped generate $1.9 million in state and local government revenue.

 Three most impacted industries based on total output: real estate, owner-occupied dwellings, and book publishers.

 Three most impacted industries based on total employment: real estate, other educational services, and full-service restaurants.

 Three most impacted industries in terms of payroll compensation: office of physicians, real estate, and wholesale trade.

 Total employment in San Diego County was 2,105,167, activities of The Classical Academies contributed 0.038% of this total employment.

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Executive Overview The Classical Academies began operations with a mission, “to partner with parents to inspire each student to think critically, communicate effectively, and achieve excellence by providing academic choice” (TCA webpage). TCA1 continues to ecstatically follow the mission and vision to ensure the student's success. The business operations of TCA have a significant economic impact in San Diego County. Economic impact studies come into action when businesses create monetary transactions with other local businesses in order to receive goods and services. Then those local businesses turn towards other businesses to receive other goods and services, which is also known as the indirect or second level of impact. The third level, also called induced impact, occurs when the employees, families, and other closely related bodies associated with TCA spend money earned by working at TCA in the local economy through purchases of consumer goods, these effects are referred to as an induced impact. The indirect and induced effects are measured in this report using an input-output (I-O) methodology. The input data was taken directly from TCA financial statements for the fiscal year 2017 - 20182. Our team used IMPLAN for this study, which is an economic impact assessment software and selected the entire region of San Diego County. "IMPLAN is a platform that combines a set of extensive databases, economic factors, multipliers, and demographic statistics with a highly refined modeling system that is fully customizable" (Tim French, 2018 IMPLAN). Based on the results from IMPLAN, total Output impact of $68,310,354 was generated in terms of output from direct, indirect, and induced inputs of TCA within San Diego County for fiscal year 2017 - 2018. Introduction The Classical Academies was founded in 1999 and has since expanded to seven schools in two corporations. The Classical Academy, Inc. includes The Classical Academy, Classical Academy Middle School, Classical Academy High School, Classical Academy Online, and Classical Academy. Coastal Academy Charter School, Inc. includes Coastal Academy and Coastal Academy High School. The operations began with the idea to reinvent public education, and now they have a “vibrant and sustainable personalized learning program to prepare students to think, communicate, and achieve” (TCA website). Currently, there are over 4,533 students enrolled in grades TK-12. Their programs are designed based on the interests of the students to encourage them to “explore their interests, accommodate their learning style, and reach their maximum potential by becoming thinkers, communicators, and achievers” (TCA website). Schools and colleges are not just institutions for education; they play an enormous role in local and regional development by providing quality education to students who, in turn, help the economy. Quality education ensures that individuals enter into a higher paid job market so that they can help improve their local communities and put money back into the economy. The results presented in this report represent the financial statements from fiscal year 2017 - 2018. The results of this study are not stagnant and could change in future years based on

1 TCA stands for The Classical Academies. 2 Fiscal year 2017 – 2018 represents the period from July 01, 2017 to June 30, 2018. 2 the number of students enrolled, the number of employees, outside expenditures, and employee payroll increases or decreases. Methodology and Scope A. Data Source The direct impact data was collected from the 2017 - 2018 fiscal year financial statements, a survey, and information provided by the administrative department of The Classical Academies, which consisted of operational expenditures, payroll expenditures, visitor sending, capital expenditures, and the total number of employees. The visitor spending total amount was generated through a survey filled out by parents who have children currently enrolled in TCA. The data collected from the fiscal year financial statements was evaluated thoroughly to ensure only relevant data was included. Prepaid expenses, accrued employee benefits, depreciation, and amortization expenses were all eliminated to confirm reasonable assurance and estimation. The input values for capital expenditures excluded fixed asset expenditures such as land, library books, and FF&E3 or any other prepaid expenditures, as these could be purchases made from outside San Diego County and would be considered leakages that do not impact the local region. A conservative approach was used to accomplish the results in this study. Apart from the direct economic impact of TCA, our team wanted to bring to attention the increase in the number of student enrollment in TCA since 1999, which would indirectly affect the economic impact. Figure 1 shows an increase in the number of students enrolled since 1999 when the school until the current year 2019. There is a significant increase in the number of student enrollment from just 157 students 20 years ago to 4,533 students in 2019. This increase could only happen with the growth and development of TCA. The growth and development of TCA indicate additional economic impact. The data for the number of students enrolled was obtained from the administration's department of TCA. For more information on the detailed data, see Appendix A.

4533 4027

1160

157 208 1999-00 2000-01 2005-06 2015-16 2018-19 Number of Students Enrolled Students of Number School Year Figure 1: Number of students enrolled from 1999 – 2019

3 FF&E stands for Furniture, Fixtures, and Equipment. 3

B. Input-Output (I-O) Approach The traditional economic impact measures the direct, indirect, and induced impacts of a business in the local economy. The methodology used for this study is the Input-Output approach through IMPLAN software. IMPLAN is currently the most reliable software used to analyze the economic impact of academies, professional sports teams, recreations and tourism, industries, governmental agencies, and other residential developments within a specific region. The technique used in this study is called analysis-by-parts in which the “stemming ripple effects of an industry event is split into different components such as industry spending pattern, labor income, and commodity output, which initiates the indirect effects and induced effects” (Analysis-by-Parts, 2019 IMPLAN). This technique is used to allow for a conservative approach and to conduct a more specific impact analysis. The direct effect comes from expenditures made by the institutions and direct creation of jobs that emerge due to the existence of The Classical Academies. The indirect and induced effect is the additional dollars and jobs stimulated by the spending of TCA and its employees. Once the direct effect values are entered, IMPLAN computes the indirect and induced effect based on a built-in multiplier. The multiplier plays a significant role in determining the final income, and it increases the total economic income from the injection of new spending. A multiplier is a numerical value that is multiplied to the base value, which would then double the base value. For example, a multiplier of 1.9 indicates that for every ten direct jobs created, nine more jobs are generated in the local economy. “IMPLAN software has a built-in multiplier, which is a type SAM multiplier, the multiplier is calculated by dividing the sum of the direct effects, indirect effects, and induced effects by the direct effects. SAM4 is a bookkeeping system that traces financial flow between different industries through double-entry resembling T-Accounts in financial accounting” (Introducing the SAM, Cheney, IMPLAN). Data incorporated in SAM is coherent with the Bureau of Economic Analysis’ National Income and Product Accounts (NIPA). SAM is a crucial part of IMPLAN as it considers the local or regional economic activities that impact the industries (Introducing the SAM, Cheney, IMPLAN). For more information, see Appendix B. Purpose of the Economic Impact Study This study is about the economic impact of The Classical Academies within San Diego County. The results are a combination of all seven schools: The Classical Academy, Classical Academy Middle School, Classical Academy High School, Classical Academy Online, Classical Academy, Coastal Academy, and Coastal Academy High School. The technique used is analysis- by-parts, where we analyzed the operational expenditures, payroll expenditures, visitor spending (based on a survey), and capital expenditures (studied but not included in the total economic impact) incurred during the 2017 - 2018 fiscal year. This study incorporates the direct effect of TCA through operational expenditures, payroll income of TCA employees, and visitors of TCA spending in the local economy. The direct inputs are entered into IMPLAN, and the software generates indirect and induced impact.

4 SAM stands for Social Accounting Matrix. 4

Figure 2 is the conceptual framework for how the results of this study were accomplished. TCA first exchanges financial obligations with other local businesses, local meaning within San Diego County. Then the local businesses turn to other local businesses to purchase goods and services, which is the indirect impact. The induced impact is generated from employees of TCA who spend their paychecks in the local economy. Lastly, the total economic impact is generated from the sum of the three impacts.

Figure 2: Conceptual framework of TCA economic impact within San Diego County Economic and Fiscal Impacts Results (IMPLAN) A. Operational Expenditures The Classical Academies spends a substantial amount of money on running the day to day operations of their corporations. These operational expenditures include leasehold real estate, books, musical instruments, athletic supplies, meals, utility bills, and much more. The operational expenditures data is collected from The Classical Academy, Inc. and Coastal Academy Charter School, Inc. Profit & Loss statements for the fiscal year 2017 - 2018. Figure 3 shows the top 5 industries impacted due to the operational expenditures of TCA. A significant portion of the impact was on the real estate industry, other educational services, owner-occupied dwellings, personal and household goods repair and maintenance, and general and consumer goods rental. For more information on the detailed data, see Appendix C.

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Top 5 Industries Induced Impact from Operational Expenditures

Real estate 5% 6% 7% Other educational services

7% Owner-occupied dwellings

Personal and household goods repair and 75% maintenance General and consumer goods rental except video tapes and discs

Figure 3: Top 5 Industries Impacted from Operational Expenditures Table 1 shows a summary of the operational expenditures from the direct expenditures of TCA. The direct expenditures generate both indirect and induced effects in the local economy. TCA operational expenditure in the fiscal year 2017 - 2018 was about $14,024,408 (Input), which generated a total economic impact of $29,399,005 (Output). The expenditures contributed to a total of 706 employees in the economy, 596 are direct employees of TCA, and another 110 jobs are created due to the business activities of TCA.

Impact Direct Indirect Induced Total

Output $14,024,408 $12,292,638 $3,081,959 $29,399,005

Labor Income - $4,190,566 $1,019,558 $5,210,124

Value Added - $8,446,647 $1,916,080 $10,362,727

Employment 596 90 20 706

Table 1: Economic impact of operational expenditures B. Labor Expenditures The Classical Academies pays a significant amount of money to their employees who, in turn, spend these earned dollars in the local economy. The money spent by TCA employees in the local economy generates an induced impact. IMLAN has a built-in capability of removing any leakages from the dollars spent in the economy by TCA employees. “The leakages and expenditures removed include payroll taxes, personal income taxes, savings, in-commuter income, and non-local purchases before spending the rest locally" (Cheney, 2019 IMPLAN).

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Figure 4 shows the top 5 industries where the employees of TCA spent their earnings from TCA in the local economy. Most of the earnings were spent on owner-occupied dwellings, real estate, wholesale trade, limited-service restaurants, and offices of physicians. For more information on the detailed data, see Appendix D.

Top 5 Industries Induced Impact from Payroll Expenditures

9% Owner-occupied dwellings 10% Real estate 44% 12% Wholesale trade

Limited-service restaurants

25% Offices of physicians

Figure 4: Top 5 Industries Impacted from Payroll Expenditures Table 2 shows employee's earnings from working for TCA; the employees include staff, instructors, teachers, executive members, and other full-time employees who are on the payroll system for the institution. The direct impact of payroll distribution was $20,118,020. The employees spent these earnings in the local economy by purchasing property, leasing, trade, dinning, doctor visits, as well as spending on amusement parks and movie theaters and created an induced impact. The total economic impact of payroll expenditures was $34,982,673, which is a significant amount.

Impact Direct Indirect Induced Total

Output $20,118,020 - $14,864,653 $34,982,673

Labor Income - - $4,917,095 $4,917,095

Value Added - - $9,234,858 $9,234,858

Employment 596 98 694

Table 2: Economic impact of payroll expenditures

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C. Capital Expenditures The I-O model requires that fixed asset expenditures that are required to be depreciated be distinguished separately from the annual operational expenditures. The capital expenditures do not occur repeatedly and must be omitted from the annual industry spending pattern. (Lucas, 2019 IMPLAN). Capital expenditures can be studied but presented separately; the reason is that capital expenditures are a one-time purchase of a durable good, whereas everything else such as labor, operational, and visitor spending are annual expenditures. Table 3 shows the capital expenditures of the new building construction for Coastal Academies (Bond-Calle Platino) of $10,185,465 less accumulated depreciation and TCA new building construction (Bond-Penn) of $18,321,729 less accumulated depreciation. Capital expenditures do not typically re-occur on an annual basis, but the impact of such expenses in the 2017 - 2018 fiscal year was $40,950,290, which includes direct, indirect, and induced impact. The total jobs created due to the construction of the new buildings is 217.

Impact Direct Indirect Induced Total

Output $26,279,463 $7,051,236 $7,619,590 $40,950,290

Labor Income $7,861,323 $2,541,099 $2,520,598 $12,923,020

Value Added $11,662,795 $4,171,427 $4,735,721 $20,569,944

Employment 129 38 50 217

Table 3: Economic impact of capital expenditures D. Visitor Spending The economic impact generated from The Classical Academies is further increased from out-of-town visitors who visit students for school-related reasons. We surveyed families with children attending TCA to estimate the economic impact of visitors coming with a purpose related to the school for their visit. Reasons for the visit include sports activities, plays, music rehearsals, graduations, or anything else that would not occur if the student did not attend TCA. We analyzed the data from a straw poll that we sent out via newsletter to parents of students. See Appendix E for the survey conducted. We estimated the total number of visitors by analyzing the same data and applying that to the population based on total student enrollment. We then inputted the spending data from the different spending categories into IMPLAN on a per person spending basis and analyzed by parts. IMPLAN calculated the direct, indirect, and induced levels of spending based on the number of visitors estimated from enrollment. The results added $2,775,071.90 of economic impact of TCA in San Diego County, which is shown below.

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Impact Direct Indirect Induced Total

Output $1,728,762 $468,095 $578,215 $2,775,072

Labor Income $613,684 $169,751 $191,273 $974,708

Value Added $946,355 $279,588 $359,297 $1,585,240

Employment 18 3 4 25

Table 4: Economic impact of visitor spending E. Total Economic Impact The total economic impact studied here is a combination of both operational and payroll expenditures. Figure 5 shows the top 5 industries impacted based on direct expenditures of The Classical Academies during the fiscal year 2017 - 2018. The data was generated from IMPLAN after running the direct impact results for operational and payroll expenditures. For more information on the detailed data, see Appendix F.

Top 5 Industries Overall Economic Impact by TCA

7% Real estate 8% Owner-occupied dwellings 10% Book publishers 52% Wholesale trade 23% Limited-service restaurants

Figure 5: Top 5 industries impacted based on operational and payroll expenditures of TCA Table 5 shows the total economic impact of TCA after summing the direct impact of operational and payroll expenditures and visitor spending. The direct impact of operational and payroll expenditures was $34,142,429, the indirect impact was $13,285,847, and induced impact was $18,107,006, for a total economic impact of $65,535,282. With the addition of $2,775,072 in visitor spending, a total economic impact of $68,310,354 was generated.

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Impact Direct Indirect Induced Total

Output $34,142,429 $13,285,847 $18,107,006 $68,310,354

Labor Income $20,118,020 $4,223,172 $5,989,709 $30,330,901

Value Added $22,366,668 $9,381,895 $11,250,553 $42,999,116

Employment 596 87 120 803

Table 5: Economic impact from operational and payroll expenditure Figure 6 shows the impact in the number of employees from TCA for the fiscal year 2017 - 2018. 596 jobs were due to the direct impact of TCA, 207 indirect/induced jobs, and the total economic impact of the number of jobs was 803.

Figure 6: Direct, Indirect/Induced, and Total Employment Impact Table 6 shows the top 5 industries that generated the majority of indirect employment. Real estate generated 17.43 employees, followed by other educational services, services to buildings, independent artists, writers, and performers, and general and consumer goods rental. Industry Description Indirect Employment Real estate 17.43 Other educational services 8.27 Services to buildings 5.44 Independent artists, writers, and performers 4.76 General and consumer goods rental except videotapes and discs 4.62 Table 6: Top 5 industries generating indirect employment

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Table 7 shows the top 5 industries that generated the majority of the induced employment. Full-service restaurants generated 7.16 number of employees, followed by limited- service restaurants, real estate, offices of physicians, and individual and family services. Industry Description Induced Employment Full-service restaurants 7.16 Limited-service restaurants 6.52 Real estate 5.58 Offices of physicians 3.93 Individual and family services 3.86 Table 7: Top 5 industries generating induced employment

F. Value Added Value added is an essential component of the economic impact report; this measure is often overlooked when assessing the economic impact of an industry. Value added is also known as the economic profit; economic profit is a combination of explicit cost and opportunity cost. Explicit cost is direct operational expenditures recorded in the profit & loss statements, and opportunity cost is the return of investment that is forfeited to receive the return on investment that is generated. There are multiple ways in which value added is computed in IMPLAN: 1. Value added equals the "sum of employee compensation, proprietor income, other property income, and taxes on production and imports fewer subsidies (TOPI)" (Clouse, 2018 IMPLAN) 2. Value added equals output minus intermediate expenditures. Figure 7 shows the conceptual framework of value added. Value added comprises a significant portion as it includes the following components: employee compensation, proprietor income, taxes on production and imports, other property income. Intermediate expenditures value is inputted from operational expenditures, not including any capital expenditures (Cheney, 2019 IMPLAN). It is essential to understand the value added factor in IMPLAN as it connects many other factors in a single number.

Figure 7: Conceptual framework of how the value added is computed (IMPLAN)

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Table 8 shows the value added figures based on the input from the fiscal year 2017 - 2018 TCA financial statements. The labor income values were directly from the payroll expenditures, the TOPI was computed by multiplying the TOPI/worker values (2,844.9) from the regions tab in IMPLAN with total number of TCA employees (596), and the OPI was computed by multiplying the OPI/worker values (927.99) with total number of TCA employees (596).

VALUE ADDED LABOR INCOME 20,118,020 TOPI 1,695,566 OPI 553,082 TOTAL 22,366,668 Table 8: Value added for 2018 Table 9 shows another formula to compute value added; it can also be computed by taking the difference between the output and intermediate expenditures. Formula: Output – Intermediate Expenditure = Value Added

Output Intermediate Expenditures Value Added 36,917,500 14,550,832 22,366,668 Table 9: Formula to compute value added Figure 8 shows the total value added from the operational and payroll expenditures of TCA. The direct expenditures were $22.36 million, which created an indirect and induced effect; the total value added equaled $42,999,116. For more information on detailed data, see Appendix G.

Value Added Total = $42,999,116

$ 11,250,553 Direct $ 22,366,668 Indirect $ 9,381,895 Induced

Figure 8: Total value added from operational and payroll expenditures

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G. Impact on State and Local Tax Revenues The idea behind the tax impact report from IMPLAN is to exhibit the tax revenue generated in an area of study, which can include local, county, state, and federal taxes (Interpretation of tax impact report, IMPLAN). For the purpose of this study, we are concerned only with local, county, and state taxes. Table 10 shows the different taxes that are generated due to the operations of The Classical Academies. The total amount of taxes generated from the business activities of TCA for the fiscal year 2017 - 2018 was $1,896,085. There was a significant portion generated from property taxes of $669,226, sales tax of $618,641, and personal tax: income tax of $329,453. Tax Description Total TOPI: Property Tax $669,226 TOPI: Sales Tax $618,641 Personal Tax: Income Tax $329,453 Corporate Profits Tax $97,977 TOPI: Other Taxes $95,249 Social Insurance Tax - Employer Contribution $28,951 TOPI: Motor Vehicle License $15,778 Social Insurance Tax - Employee Contribution $14,470 TOPI: Special Assessments $11,134 Personal Tax: Motor Vehicle License $9,630 Personal Tax: Property Tax $3,912 TOPI: Severance Tax $865 Personal Tax: Other Tax $800 TOTAL $1,896,085 Table 10: State and local taxes generated due to the economic activities of TCA Comparative Analysis: Economic Impact in the Past 4 Years The economic impact changes every year due to the increase or decrease in operational and payroll expenditures. We decided to run the results for the past four fiscal years to show the changes in total economic impact of the schools. Figure 9 shows a stacked graph indicating the direct, indirect, and induced impact of TCA for the past four years. Based on the results, the total economic impact for the fiscal year 2017 - 2018 was $68.31 million, this includes $2,775,072 from visitor spending, $34 million from the direct impact of operational and payroll expenditures, $13 million from indirect impact, and $18 million from induced impact. The graph shows an increase in total economic impact each year since 2015, with a small drop in 2018 due to a slight decrease in payroll distribution.

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Figure 9: Total Economic Impact of TCA for the past four years Figure 10 shows the increase in total employment due to the direct impact of TCA for the past four years. The graph depicts a rising curve in total employment from direct, indirect, and induced impact of TCA. The data was collected from the administrative department of TCA, and the indirect and induced impact resulted from IMPLAN. The total impact on employment in 2018 was 803 jobs, which included a direct impact of 596. This implies that TCA had 596 employees receiving payroll from them directly, which in turn created 87 indirect jobs and 120 induced jobs.

Figure 10: Total Employment Impact of TCA for the past four years

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Organizational Activities and its Sources of Funding A. Organizational Activities The Classical Academies consists of a system of charter schools ranging from TK – 12. Charter schools are defined as "independently-operated public schools that have the freedom to design classrooms that meet their students’ needs" (publiccharters.org). TCA consist of The Classical Academy, Inc., which includes: The Classical Academy, Classical Academy Middle School, Classical Academy High School, Classical Academy Online, and Classical Academy and Coastal Academy Charter School, Inc. which includes: Coastal Academy and Coastal Academy High School. The locations of TCA are primarily in Escondido, Vista, and Oceanside. In contrast to traditional public schools, charter schools have more control over their curriculum, personnel, and budget. The trade-off for this liberty is that they are funded differently. Most of the funding comes from government aid, so they must meet rigorous standards regarding compliance, curriculum, and performance in order to receive this aid and continue operations. They are also held accountable to the standards outlined in their charter. Traditional schools, on the other hand, are given government funding in order to improve their performance; their funding is not as contingent on meeting public expectations as charter schools. The state government takes into consideration test scores, student enrollment and attendance, age demographics, curriculum, and transportation when calculating the amount of funding a charter school receives. B. Sources of Funding Prop 30 EPA, in-lieu property taxes, and general-purpose state aid comprised approximately 84.68% of TCA revenue during 2017 - 2018. To put into perspective, of $42,449,000 of revenue that was generated during the 2017 - 2018 fiscal year by the TCA, $35,945,360 of it was a result of these three sources of funding alone. Proposition 30, or The Schools and Local Safety Protection Act of 2012, increased state sales tax rate for all taxpayers and the personal income tax rates for upper-income taxpayers. The money that comes from Prop 30 is deposited into a state account called the Education Protection Account (EPA). Charter schools like the TCA receive funds from the EPA based on their proportionate share of statewide revenue limit amount, which includes its general-purpose state aid funding. For the 2017 - 2018 fiscal year, TCA received a total of $6,255,340, or 14.74% of total revenue, from Prop 30 EPA income. The other two major sources of funding are in-lieu property taxes and general-purpose state aid. In 2017 - 2018, in-lieu property taxes comprised $13,532,860, or 31.88% of total revenue and general-purpose state aid comprised $16,157,155, or 38.06% of total revenue.

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Advantages of Attending the Classical Academies According to Niche Best Schools 2020, Classical Academy High School (CAHS) ranks #4 in the best charter high schools in the San Diego area and #16 in the best charter high schools in California. Many current and former students surveyed stated that their teachers care more about personal success and well-being, not just the grades. CAHS is academically challenging and successful in preparing students for the rigorous college environment. The teachers are very accessible and provide readily available tutoring, and education is diverse, with many extracurricular activities, including dance, football, tennis, cheerleading, and many more. The school offers several arts options including, woodshop, painting classes, yearbook, dance, and more. The woodshop option is unique to CAHS in that students create art from repurposed wood and without electric tools, allowing them to learn more with the additional hands-on experience. Classical Academy High School also offers the option for dual enrollment through Palomar College, in which students take some of their classes through college, which counts toward graduation as well as providing college credit. Some students prefer this option in place of taking Advanced Placement courses, which do not necessarily provide the same college credit. The options for instruction format are very flexible and include a 4-day studio program, Classical Academy online (hybrid program), or a mix of both. The 4-day studio program requires students to attend class on campus at Classical Academy High School from Tuesday through Friday, taking all their classes there, except for any college classes taken for dual enrollment. Another option is Classical Academy Online (CAO), in which most classes are taken through an online platform, but some classes (such as science classes) must be taken at the CAO location. Tutoring is available, as well as a space for individual or group work that is conducive to studying. Academic coaches are provided to keep students on track and to evaluate their progress periodically. Many parents and students appreciate that CAHS and the K-8 Classical Academy offer personalized programs made to fit the needs of each individual student. TCA provides the opportunity for students to learn to organize and structure their time, as well as the option for accelerated graduation. This is possible because of the accelerated classes offered at CAHS, which may allow for graduation as early as one year in advance. The student-teacher ratio of 26:1 is also an additional benefit of attending CAHS, as many schools in the region have closer to 40:1. According to the Great Schools Ranking, K-8 Classical Academy scores a 7/10, which is among the highest in the region. In comparison with other schools in California, students at Classical Academy continuously make more progress when moving from one grade to the next. The homeschool aspect is particularly appealing to many families who want to be more involved in their child's education but also would like to give them a well-rounded experience. Students attend class 2-3 days a week and are taught by their parents the remainder of the time, where the parents can select the curriculum if it meets the approved standards. Classical Academy places emphasis on partnering with parents. The families have a common goal in educating their children and raising them to be respectable, and many parents are on a first-name basis with the principal, which is not very common in public schools.

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Testimonials "Classical Academy was the highlight of my K-12 experience. For me, the difference was in the faculty. When I was there, the teachers were passionate about the subjects they taught and actively engaged in helping their students learn. To me, personal investments in the students made a world of difference." - Anastasia R., Classical Academy Graduate "We chose TCA for our family due to class size, ability to adjust the level of work to our children's abilities without having to put them in another grade, arts programs, and overall focus on having rounded students instead of teaching to tests. What originally drove us to look into charter school was a kinder class of 40 kids at our local public school, however since then we have truly come to appreciate the ability to have individualized education programs for each of our very different kids without the stigma of "special" classes or being asked to move our kids ahead/behind a grade level. We appreciate partnering with compassionate, thoughtful, and dedicated teachers to find the right curriculum and classes for the kids' learning styles. We are thankful that while many other schools are cutting the Arts, Classical has so many fantastic opportunities. We feel very thankful to have found a beautiful community in The Classical Academy to partner within educating our children to become the best people they can be." - Sara Monge, Classical Academy Parent "My experience of attending Classical Academy High School was overall a great one. The small, personalized setting of the school opened opportunities for me as an individual, with particular desires and needs, that would have been closed off to me elsewhere. Having a public, charter high school, with a Christian world-view leaning experienced through teachers and staff, available to myself and my family, was a blessing and encouragement. I spent 2013 - 2016 at Classical and spoke on behalf of my experience of the school as it was then." - Simone F., Classical Academy Graduate "Our family has been involved with The Classical Academies for the last nine years - 2010 to the present time. Our oldest daughter attended The Classical Academy (TCA) for grades 5-8 and then Classical Academy High School (CAHS) for grades 9-12. Our younger daughter attended TCA for grades 3-8 and CAHS for grade 9. She is currently attending the Classical Academy Online (CAO) as a Senior who will graduate this coming May 2020. What stands out the most is the flexibility of their program and their desire to meet the needs of each student and their parents as well as where they are at. We have the freedom to be whom we are and express ourselves according! Each year with the Classical Academy has been a real blessing and enrichment to our children's lives and ours as a family. It will be a sad day when we will no longer have children at the Classical Academies. An end to a truly Golden Era for us." - Christina Reimann, Classical Academy Parent "Three years ago, we were stuck at the end of the road. My son, who has ADHD and mild autism, had tried his third school without success. We wanted to find a way to homeschool him

17 but have a strong school to send him to for extra classes. We chose Classical Academy due to flexibility, small class size, and solid academics. TCA stands out to us with its positive teaching environment, acceptance of special needs students, and parental involvement. This is the first time my son has ever loved school, and it has been a tremendous blessing to us." - Carrie Neuner, Classical Academy Parent Conclusion This study has addressed many, but not all, of the individual, economic, and social benefits that have resulted from the existence of The Classical Academies. The main focus of this study was the direct, indirect, and induced impact of the TCA from their operational and payroll expenditures within the defined region of San Diego County for the 2017 - 2018 fiscal year. We also conducted a survey via newsletter to the parents of students to measure visitor spending. After inputting data from financial statements and the survey into IMPLAN, the results were as follows: total impact from operational expenditures $29,399,005, total impact from labor expenditures $34,982,673, and total impact from visitor spending $2,775,072; with the total economic impact of TCA within San Diego County for the fiscal year 2017 - 2018 being $68,310,354. We also analyzed capital expenditures, in which the total impact was $40,950,290. However, capital expenditures are not included in the total economic impact because they do not occur on a recurring basis and as such, were presented separately (Lucas, 2019 IMPLAN). While conducting this study, all controls and assumptions were regarded with great care and consideration. From the beginning of the project, the team has taken a conservative approach to ensure that the results are representative of TCA actual economic impact within San Diego County. This report would not have been completed without the efforts of many individuals and experts (see acknowledgments) beyond that of our team. Also, we would like to state that the IMPLAN software, with its I-O approach and analysis-by-parts, did the massive data computing and helped us to conduct this study smoothly and made the economic impact report for TCA the best it can be.

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References

Cheney, Phil. “Explaining the Type SAM Multiplier.” IMPLAN Group, https://implanhelp.zendesk.com/hc/en-us/articles/115009674768-Explaining-the-Type-SAM- Multiplier.

Clouse, Candi. “College: Modeling Public College & University Impacts.” IMPLAN Group, https://implanhelp.zendesk.com/hc/en-us/articles/360033112453-College-Modeling-Public- College-University-Impacts.

Clouse, Candi. “Tourism Spending.” IMPLAN Group, https://implanhelp.zendesk.com/hc/en- us/articles/360026545913-Tourism-Spending.

“Definition of Owner-Occupied Residential Dwelling.” Owner Occupied Residential Dwelling | Legal Definition of Owner-Occupied Residential Dwelling by Law Insider, https://www.lawinsider.com/dictionary/owner-occupied-residential-dwelling.

“Explore Classical Academy High School.” Niche, September 12, 2019, www.niche.com/k12/classical-academy-high-school-escondido-ca/#ranking.

“Explore Classical Academy in Escondido, CA.” GreatSchools.org, 2019, www.greatschools.org/california/escondido/12038-Classical-Academy/.

French, Tim. “What Is IMPLAN?” What Is IMPLAN, http://blog.implan.com/what-is-implan.

IMPLAN November 19. “Introducing the SAM.” IMPLAN Group, https://implanhelp.zendesk.com/hc/en-us/articles/115009674708-Introducing-the-SAM-.

IMPLAN August 05. “Local Purchase Percentage (LPP).” IMPLAN Group, https://implanhelp.zendesk.com/hc/en-us/articles/115009499327-Local-Purchase-Percentage- LPP-.

Lucas, Maria “ABP: Analysis-by-Parts Using an Industry Spending Pattern Event with Labor Income Event(s).” IMPLAN Group, https://implanhelp.zendesk.com/hc/en- us/articles/360025901434-ABP-Analysis-by-Parts-Using-an-Industry-Spending-Pattern-Event- with-Labor-Income-Event-s-.

Lucas, Maria “IMPLAN Pro: Modeling Capital Expenditures.” IMPLAN Group, https://implanhelp.zendesk.com/hc/en-us/articles/360004858794-IMPLAN-Pro-Modeling- Capital-Expenditures.

Lucas, Maria “The Output Equation.” IMPLAN Group, https://implanhelp.zendesk.com/hc/en- us/articles/360035998833.

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“The Classical Academies.” The Classical Academies, https://classicalacademy.com/.

“What Is a Charter School?” National Alliance for Public Charter Schools, https://www.publiccharters.org/about-charter-schools/what-charter-school.

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Appendix A – Number of students enrolled from 1999 - 2019

Fiscal Year # of Enrollment 1999-00 157 2000-01 208 2001-02 450 2002-03 637 2003-04 850 2004-05 1135 2005-06 1160 2006-07 1291 2007-08 1421 2008-09 1664 2009-10 1691 2010-11 1998 2011-12 2208 2012-13 2545 2013-14 2950 2014-15 3482 2015-16 4027 2016-17 4221 2017-18 4464 2018-19 4533

Appendix B – Type I vs. Type SAM multiplier

Industry description Type I Type Sam Multiplier Multiplier Book publishers 1.06 1.18 Limited-service restaurants 1.27 1.52 Monetary authorities and depository credit intermediation 1.33 1.61 Other local government enterprises 1.47 1.84 Owner-occupied dwellings 1.32 1.41 Real estate 1.18 1.34 Wholesale trade 1.30 1.65 Wireless telecommunications carriers (except satellite) 1.45 1.60

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Appendix C – Top 10 industries impacted from operational expenditures

Top 10 industries impacted from Operational Expenditures Induced Impact Real estate $5,107,126 Other educational services $481,575 Owner-occupied dwellings $479,729 Personal and household goods repair and maintenance $398,782 General and consumer goods rental except videotapes and discs $365,862 Performing arts companies $346,309 Other local government enterprises $330,090 Services to buildings $294,528 Limited-service restaurants $278,708 Marketing research and all other miscellaneous professionals, scientific, $256,943 and technical services

Appendix D – Top 10 industries impacted by payroll expenditures

Top 10 industries impacted by Payroll Expenditures Induced Impact Owner-occupied dwellings $2,269,351 Real estate $1,277,768 Wholesale trade $640,132 Limited-service restaurants $533,611 Offices of physicians $493,353 Hospitals $405,181 Wireless telecommunications carriers (except satellite) $373,732 Other financial investment activities $370,767 Full-service restaurants $335,615 Monetary authorities and depository credit intermediation $309,927

Appendix E – Survey questions to parents regarding visitor spending

Q1: How many of your children attend The Classical Academies? A. One child: 327 B. Two children: 248 C. Three children: 74 D. Four children: 23 E. Five children: 2 F. 6 children: 3 Total: 1,165 students for 682 responses

Q2: On a yearly basis, how many out of town visitors do you have? *for school-related visitations only, such as a football game, graduation, etc. A. 0 - 2: 439 B. 3 - 5: 136 C. 6 - 9: 56

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D. 10+: 51 Total: 1,885 out of town visitors for 682 responses

Q3: If your visitors stay in other lodgings, how much do they spend on their total lodging expense? A. $0 - $99: 194 B. $100 - $199: 39 C. $200 - $299: 51 D. $300 - $399: 22 E. $400 - $499: 19 F. $500 - $599: 45 G. Other: 5 Total: Approximately $76,900 for 376 responses

Q4: While visiting, do your visitors rent a vehicle? If so, how much do they spend on their rental vehicle and gas for their entire stay? A. $0 - $99: 235 B. $100 - $199: 60 C. $200 - $299: 73 D. $300 - $399: 35 E. $400 - $499: 20 F. $500 - $599: 13 G. N/A: 60 Total: Approximately $67,400 for 436 responses

Q5: How much in total, do your visitors spend on food and beverages while visiting? (i.e., groceries and dining out) A. $0 - $99: 211 B. $100- $199: 132 C. $200- $299: 121 D. $300 - $399: 74 E. $400 - $499: 31 F. $500 - $599: 57 G. Other: 1 Total: Approximately $132,400 for 627 responses

Q6: How much in total do your visitors spend on recreation or amusement while visiting? (i.e., concerts, movies, museums, amusement parks, zoos) A. $0 - $99: 221 B. $100- $199: 121 C. $200- $299: 101 D. $300 - $399: 60 E. $400 - $499: 38 F. $500 - $599: 50 G. Other: 60 Total: Approximately $123,150 for 595 responses

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Appendix F – Top 10 industries impacted from operational and payroll expenditures

Top 10 industries impacted from Operational and Payroll Total Economic impact Expenditures Real estate $6,397,003 Owner-occupied dwellings $2,773,353 Book publishers $1,230,356 Wholesale trade $969,853 Limited-service restaurants $814,970 Offices of physicians $600,520 Other local government enterprises $600,398 Wireless telecommunications carriers (except satellite) $539,854 Monetary authorities and depository credit intermediation $493,194 Hospitals $491,644

Appendix G – IMPLAN results for value added

Impact Direct Indirect Induced Total

Output $22,366,668 $13,285,847 $18,107,006 $53,759,521

Labor Income $20,118,020 $4,223,172 $5,989,709 $30,330,901

Value Added $22,366,668 $9,381,895 $11,250,553 $42,999,116

Employment 596 87 120 803

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