The Economic Impact of a University on its

Community and State: Examining Trends Four Years Later

Presented by:Presented by:

Allison M. OhmeAllison M. Ohme

Institutional Research AnalystInstitutional Research Analyst

University of DelawareUniversity of Delaware

November 15, 2004November 15, 2004

NEAIR 2004 ~ Portsmouth, NHNEAIR 2004 ~ Portsmouth, NH

2

Session Outline

What is an Economic Impact Study?What is an Economic Impact Study? BackgroundBackground

1999 University of Delaware (UD) Economic 1999 University of Delaware (UD) Economic Impact Study Impact Study

Methodology – Replicated for 2003 Study to Methodology – Replicated for 2003 Study to examine trendsexamine trends

Highlights of FindingsHighlights of Findings Challenges and BenefitsChallenges and Benefits Questions and CommentsQuestions and Comments

3

What is an Economic Impact Study?

Effects on the Labor Market

Creation of new

knowledgeConducting

pure & applied research

Development of new technologies

& industries

Expenditures in the Local

Economy

Direct purchases to local merchants

Indirect purchases stimulating local

economy

Stud

ents

University and Personnel

Visito

rs

(Stokes & Coomes, 1998)

4

Background

UD’s 1999 Economic Impact StudyUD’s 1999 Economic Impact Study SurveySurvey

Student ExpendituresStudent ExpendituresFaculty and Staff ExpendituresFaculty and Staff ExpendituresLocal Business – affected by UD?Local Business – affected by UD?

University ExpendituresUniversity Expenditures Use of Multiplier to estimate induced (indirect) Use of Multiplier to estimate induced (indirect)

economic impact – OVERALL IMPACTeconomic impact – OVERALL IMPACT

5

What does the overall economic impact actually mean?

Student Expenditures

Faculty & Staff Expenditures

University Expenditures

ApplyMultiplierto direct

expenditures

OVERALL IMPACT - Estimates overall impact by accounting for the subsequent purchases made by merchants due to the profits from revenue of the direct purchases.

6

Methodology-Student Survey

7

Methodology - cont.-Faculty/Staff Survey

8

Methodology - cont.-Business Survey

Number of students and alumni employedNumber of students and alumni employed Approximate percentage of business income Approximate percentage of business income

attributed from the sales of products and services attributed from the sales of products and services to the University of Delaware and its communityto the University of Delaware and its community

Impact on business if student enrollment at the Impact on business if student enrollment at the University of Delaware declined University of Delaware declined

Ways the University of Delaware and its Ways the University of Delaware and its community influence business decisionscommunity influence business decisions

9

Methodology - cont.-Sample and Response Rates

Sample Responses Response Rate

Students 2580 618 24.2Faculty & Staff 1935 781 40.4Businesses 327 99 32.7

Student data set weighted to correctly represent overall Student data set weighted to correctly represent overall student population by gender, time states, class level, student population by gender, time states, class level, residence status, and on/off campus status.residence status, and on/off campus status.

Faculty/Staff data set weighted to represent faculty and Faculty/Staff data set weighted to represent faculty and staff population by employment and time status.staff population by employment and time status.

10

Mean monthly student income from all Mean monthly student income from all sources after taxes:sources after taxes: 2003 - $1,380 2003 - $1,380 **Increase of 35%**Increase of 35%

1999 - $1,0201999 - $1,020

Highlights of Findings-Student Income

11

Students – Mean Monthly Expenditures

1999

$

2003

$

Percent Change

Housing 244 271 11Utilities 39 38 (3)Telephone and Cable 37 41 11Food and Beverage 126 139 10Entertainment and Recreation 43 46 7Services 27 30 11Clothing 44 39 (11)Books and Educational Supplies 38 105 176Other Retail 45 42 (7)Automobile 114 114 0Medical and Dental 14 49 250Other - 1 9 61 578Other - 2 3 88 2833Other - 3 1 0 (100)Total Mean Monthly Expenditures 782 1,063 36

Mean Monthly Expenditures Spent in Delawareby Overall Student Respondents

12

Students – Full Time v. Part Time

Total Mean Monthly Student ExpendituresSpent in Delaware by Time Status

0

500

1,000

1,500

2,000

2,500

3,000

Full-Time Part-Time

Time Status

Do

llars

($)

1999

2003

13

Students – Overall Annual Expenditures

* Annual Calculation – see next slide

1999ExpendituresPer Year ($)

2003Expenditures

Per Year ($) *

Percent Change

Housing 44,506,332 49,547,608 11Utilities 7,113,717 6,947,635 (2)Telephone and Cable 6,748,911 7,496,133 11Food and Beverage 22,982,778 25,413,718 11Entertainment and Recreation 7,843,329 8,410,295 7Services 4,924,881 5,484,975 11Clothing 8,025,732 7,130,468 (11)Books and Educational Supplies 6,931,314 19,197,413 177Other Retail 8,208,135 7,678,965 (6)Automobile 20,793,942 20,842,905 0Medical and Dental 2,553,642 8,958,793 251Other - 1 1,641,627 11,152,783 579Other - 2 547,209 16,089,260 2840Other - 3 182,403 0 (100)Total Annual Expenditures 143,003,952 194,350,948 36

Annual Expenditures Spent in Delawareby Overall University Student Population

14

The annual expenditures for each student category were calculated by multiplying the mean monthly expenditure by the student headcount for each term by the number of months in each term.

The terms (number of months) included: fall 2003 (4 months) winter 2004 (1 month) spring 2004 (4 months) summer 1 and 2 2003 (1.5 months each)

The total annual expenditures were the sum of each category’s above calculations.

Student Overall Annual Expenditures- Calculations

Mean Monthly Expenditure for each Category

Student Headcount for

each TermX

# of Months in each Term =

Annual Exp. for

each Category

X

15

Highlights of Findings-Faculty & Staff Mean Monthly

Expenditures

1999

$

2003

$

Percent Change

Housing 690 767 11Utilities 149 160 7Telephone and Cable 74 89 20Food and Beverage 374 392 5Automobile 308 375 22Medical and Dental 84 99 18Services 92 116 26Clothing 91 89 (2)Other Retail 90 119 32Entertainment and Recreation 66 70 6Education and Tuition 178 145 (19)Other - 1 92 153 66Other - 2 32 114 256Other - 3 1 40 3900Total Mean Monthly Expenditures 2,323 2,728 17

Mean Monthly Expenditures Spent in Delawareby Overall Faculty and Staff Respondents

16

Faculty & Staff – Overall Annual Expenditures

1999Expenditures Per

Year ($)

2003Expenditures

Per Year ($) *

Percent Change

Housing 28,094,040 33,511,764 19Utilities 6,066,684 6,990,720 15Telephone and Cable 3,012,984 3,888,588 29Food and Beverage 15,227,784 17,127,264 12Automobile 12,540,528 16,384,500 31Medical and Dental 3,420,144 4,325,508 26Services 3,745,872 5,068,272 35Clothing 3,705,156 3,888,588 5Other Retail 3,664,440 5,199,348 42Entertainment and Recreation 2,687,256 3,058,440 14Education and Tuition 7,247,448 6,335,340 (13)Other - 1 3,745,872 6,684,876 78Other - 2 1,302,912 4,980,888 282Other - 3 40,716 1,747,680 4192Total Annual Expenditures 94,501,836 119,191,776 26

Annual Expenditures Spent in Delawareby Overall University Faculty and Staff Population

* Annual Calculation – see next slide

17

The annual expenditures for each faculty/staff category were calculated by multiplying the mean monthly expenditure by the employee headcount by 12 months.

The total annual expenditures were the sum of each category’s above calculations.

Faculty & Staff Overall Annual Expenditures

- Calculations

Mean Monthly Expenditure for each Category

Employee Headcount X 12 Months =

Annual Exp. For each Category

X

18

Highlights of Findings-Business Responses

38% of the business respondents employed 1 to 4 38% of the business respondents employed 1 to 4 current University of Delaware students and current University of Delaware students and almost half (49%) employed 1 to 4 University of almost half (49%) employed 1 to 4 University of Delaware alumni.Delaware alumni.

26% of the business respondents indicated that for 26% of the business respondents indicated that for the part of their company that is the part of their company that is located in the located in the Newark areaNewark area, 26 to 49% of their business income , 26 to 49% of their business income could be attributed to the University and its could be attributed to the University and its community.community.

Businesses buy products, schedule sales and Businesses buy products, schedule sales and promotions around University clientele. promotions around University clientele.

19

University Economic Impact

Conferences and Conferences and EventsEvents Local residents Local residents

spending at UD spending at UD eventsevents

Cash flow to UD in Cash flow to UD in addition to Tuition addition to Tuition & Fees& Fees

University PurchasingUniversity Purchasing UD’s in-state UD’s in-state

purchasing of products purchasing of products and servicesand services

Approx. $95 million Approx. $95 million purchased from in-purchased from in-state vendorsstate vendors

56% of total 56% of total purchasing is within purchasing is within the state of Delawarethe state of Delaware

Additional data collected from UD administration:

20

Overall Economic Impact

Use Output Multiplier of 1.8 to calculate the Overall Economic Impact. This estimates the induced effects after the direct purchases are made to in-state vendors.

Estimated Spending in Delaware Per Year

(Gathered from Surveys and UD data)

Percent Change

since 1999

Overall Economic Impact

(Using Multiplier*)

Percent Change

since 1999

Student Expenditures 194,350,948 36 349,831,706 29Faculty and Staff Expenditures 119,191,776 26 214,545,197 19University Purchases 94,893,449 51 170,808,208 43

Total Economic Impact 408,436,173 36 735,185,111 29

Annual Expenditures Spent in Delawareby the University of Delaware and Its Community

* Regional Input-Output Modeling System (RIMS II). Regional Economic Analysis Division, Bureau of Economic Analysis, U.S. Department of Commerce, 2004.

21

More about the Multiplier *

Output MultiplierOutput Multiplier Estimates the effect Estimates the effect

that UD’s spending that UD’s spending has on the state in has on the state in terms of direct terms of direct andand indirect purchases.indirect purchases.

Employment MultiplierEmployment Multiplier Number of jobs Number of jobs

created by each created by each additional $1 million additional $1 million of output.of output.

20 jobs/$1 million20 jobs/$1 million

20 x 408.436 = 20 x 408.436 = direct output direct output supports approx. supports approx. 8,169 jobs8,169 jobs

* Regional Input-Output Modeling System (RIMS II). Regional Economic Analysis Division, Bureau of Economic Analysis, U.S. Department of Commerce, 2004.

22

Economic Impact in Context

These estimated expenditures are more These estimated expenditures are more than 4 times the state operating than 4 times the state operating appropriations level ($100 million).appropriations level ($100 million).

The estimated total economic impact of the The estimated total economic impact of the University of Delaware is approximately University of Delaware is approximately $735 million, nearly a 29% increase $735 million, nearly a 29% increase compared to the results in the 1999 study.compared to the results in the 1999 study.

23

Challenges of an Economic Impact Study

If done in-house: large data set, multiple mailings If done in-house: large data set, multiple mailings to gain response.to gain response.

Detailed and sometimes overwhelming survey.Detailed and sometimes overwhelming survey. Location of the institution and commuters - the Location of the institution and commuters - the

spending may either stay local to the institution, spending may either stay local to the institution, or occur where the students and employees live. or occur where the students and employees live.

Multipliers available for regions and states.Multipliers available for regions and states. Difficult to account for institution’s visitors.Difficult to account for institution’s visitors.

24

Benefits of an EconomicImpact Study

Understand how students and employees spend Understand how students and employees spend money locally.money locally.

Examine institutional impact on local businesses.Examine institutional impact on local businesses. Provide government and public officials with an Provide government and public officials with an

estimate of the economic value an institution estimate of the economic value an institution adds to the region/state.adds to the region/state.

Create opportunity for institution to discuss local Create opportunity for institution to discuss local relationships and shared goals.relationships and shared goals.

25

Questions or Comments??

26

Thank you!Allison M. Ohme

Institutional Research Analyst

Office of Institutional Research & Planning

University of Delaware

325 Hullihen Hall

Newark, DE 19716

302-831-0239

aohme@udel.edu

This presentation and the accompanying paper are located at:

http://www.udel.edu/IR/presentations