Friday, June 6, 2008

Economic Impact of University System Reaches $11 Billion

An updated report offers confirmation that Georgia’s public university system continues to be one of the state’s key economic engines. Together, the 35 institutions of the University System of Georgia (USG) packed an economic impact totaling $11 billion on the state’s economy during Fiscal Year 2007.

The Intellectual Capital Partnership Program (ICAPP), an initiative of the Board of Regents' Office of Economic Development, commissioned the Selig Center for Economic Growth in the University of Georgia's Terry College of Business to analyze data collected between July 1, 2006, and June 30, 2007, to calculate the University System’s FY2007 economic impact. This work updates a similar study conducted on FY2004 data that placed the University System’s economic impact at $9.7 billion. The first such study calculated the USG’s impact at $7.7 billion in FY1999.

In addition to the $11 billion in total impact generated by the University System in FY2007, the study determined that Georgia’s public higher education system is responsible for 106,267 full- and part-time jobs – 2.6 percent of all the jobs in the state or about one job in 39. Approximately 42 percent of these positions are on-campus jobs and 58 percent are positions in the private or public sectors that exist because of the presence in the community of USG institutions.

Locally, Clayton State University has an economic impact on its region (the Southern Crescent) of 1,737 jobs. Initial spending in the Southern Crescent generated by the University for FY2007 was just under $120 million and the output impact of the University was just under $184 million.

“All 35 of the University system’s institutions are economic engines in their communities and the state,” said study author Dr. Jeffrey M. Humphreys, director of economic forecasting for the Selig Center. “The benefits they provide permeate both the private and public sectors of the communities that host the campuses. For each job created on a campus, there are 1.4 off-campus jobs that exist off-campus because of spending related to the college or university. These economic impacts demonstrate that continued emphasis on colleges and universities as a pillar of the state’s economy translates into jobs, higher incomes and greater production of goods and services for local households and businesses.”

Humphreys’ report quantifies the economic benefits that the University System of Georgia’s institutions convey to the communities in which they are located. He determined that $7.3 billion (66 percent) of the $11 billion in total economic impact was due to initial spending by USG institutions for salaries and fringe benefits, operating supplies and expenses, and other budgeted expenditures, as well as spending by the students who attended the institutions in FY2007. Re-spending – the multiplier effect of those dollars as they are spent again in the region – accounted for another $3.8 billion (34 percent). Researchers found that, on average, for every dollar of initial spending in a community by a University System institution, an additional 52 cents was generated for the local economy hosting a college or university.

The Selig Center’s research has its limitations – it neither quantifies the many long-term benefits that a higher-education institution imparts to its host community’s economic development nor does it measure intangible benefits, such as cultural opportunities, intellectual stimulation and volunteer work, to local residents. Spending by USG retirees who still live in the host communities and by visitors to USG institutions (such as those attending conferences or athletic events) is not measured, nor are additional sources of income for USG employees, such as consulting work, personal business activities and inheritances.
“Another important aspect of this study is that we have very detailed data across institutions that can be used for a wide range of planning purposes by the Board of Regents and other state and local agencies, as well as the private sector,” said Humphreys.

Seven institutions in the metro Atlanta area – Georgia Institute of Technology, Georgia State University, Clayton State University, Kennesaw State University, Southern Polytechnic State University, Atlanta Metropolitan College and Georgia Perimeter College – accounted for almost $4.5 billion of the University System’s $11 billion total, and 40,700 jobs.

“This Economic Impact Report continues to be an invaluable study,” said Terry Durden, interim assistant vice chancellor of the University System’s Office of Economic Development. “It conclusively demonstrates that – beyond all the benefits colleges and universities offer communities through a more educated society, cultural opportunities and other activities – our campuses have an ongoing and powerful economic impact on communities large and small.”

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