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Economic Impact of University System Reaches $13.2 Billion

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Atlanta — July 10, 2012

A newly released report states that the combined economic impact of the University System of Georgia’s 35 institutions on their host communities reached $13.2 billion in Fiscal Year 2011, which is 5 percent higher than the $12.6 billion reported for FY 2010.

The FY 2011 study found that Georgia’s public university system generated nearly 132,000 jobs, or more than 3 percent of all the nonfarm jobs that exist in Georgia. The bottom line is that one job out of every 29 in the State of Georgia is due to the University System.

While common wisdom might conclude that increased spending and jobs were the result of institutional actions, the study found just the opposite. Students accounted for the increased spending that generated more jobs off campus.

“Comparisons of the FY 2011 estimates to those for recent years show that our public college and universities really proved their economic worth during tough economic times” said study author Dr. Jeffrey M. Humphreys, director of the University of Georgia’s Selig Center for Economic Growth in the Terry College of Business.

The Selig Center analyzed financial and enrollment data for July 1, 2010 through June 30, 2011 to estimate the economic impact that each of Georgia’s 35 public colleges and universities make to the economy of the community where it is located. The Selig Center began producing the annual economic impact report in 1999.

Most of the $13.2 billion economic impact consists of 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. Initial spending by USG institutions and students equaled $9.5 billion, or 72 percent of the total output impact.

The remaining $3.7 billion (28 percent) of the output impact was created by respending – the multiplier effect of the dollars that are spent again in the region. For every dollar of initial spending by a University system institution, research found that, on average, an additional 39 cents was generated for the local economy. The study shows that between FY 2007 and FY 2011, total spending by all 35 institutions and their students rose by 30 percent, and the number of jobs that owe their existence to that spending rose by 24 percent – from 106,267 jobs to 131,990 jobs.

“That job growth is quite impressive given that the state’s total employment declined by 7 percent during this period” said Humphreys. “Without exception, each college or university is an economic linchpin of its host community.”

That’s mostly due to rising demand for higher education even when overall economic conditions deteriorate, said Humphreys. Higher spending by increasing numbers of enrolled students rather than higher spending by the institutions accounted for most of the job growth. The number of on-campus jobs barely increased while the number of off-campus jobs that exist due to institution-related spending rose by 41 percent. The Selig study excludes student spending on tuition and fees in its analysis.

One striking finding is that university – or college-related spending – creates far more jobs off the campus than it does on the campus. On average, for each job that exists on campus 2 off-campus jobs exist because of spending related to the institution. Almost all of the off-campus jobs are in private sector businesses. “That’s really not too surprising,” said Humphreys. “After all, the private sector businesses operating in the communities that are home to USG institutions are by far the biggest recipients of institution-related spending.”

Georgia Tech in Atlanta and UGA had the largest impacts on their regional economies: $2.3 billion and 18,640 jobs at Georgia Tech and $2.1 billion and 20,458 jobs at UGA. Georgia State University in Atlanta had a $1.5 billion economic impact with 13,201 jobs.

The FY 2011 study documented the economic impact of the clinical side of Georgia’s Health Sciences University in Augusta as well as three new clinical campuses in Albany, Savannah, and Rome.

The study reports a combined impact of the academic side and the clinical side of Georgia Health Sciences University on Augusta’s economy of more than $1.4 billion. Also, the GHSU/UGA Medical Partnership’s Athens Campus had a $13 million impact on Athens’ regional economy.

The study shows that the System’s two regional universities are significant economic players in their host communities. Georgia Southern University had an economic impact of $512 million and 6,885 jobs in the Statesboro area, while Valdosta State University’s economic impact was $340 million and 4,059 jobs.

Among the System’s state universities, Kennesaw State had the largest impact – $854 million and 8,324 jobs – in its Cobb County location. The University of West Georgia in Carrollton had the second largest impact – $418 million and 3,880 jobs. Third in economic impact among state universities was Clayton State University, at $252 million and 2,311 jobs. Fourth was Columbus State University, with a $236 million impact and 2,656 jobs.

Among the System’s state colleges, Georgia Gwinnett’s $211 million impact in FY 2011 was 62 percent higher than its $131 million impact in FY 2010. Gainesville State College’s FY 2011 impact was the second largest among state colleges – $206 million. Macon State’s impact was $157 million and 1,714 jobs.

The System’s three Historically Black Colleges and Universities also have a significant economic impact. For FY11, Albany State University had a $148 million impact with 1,772 jobs; Fort Valley State University had a $151.4 million impact with 1,760 jobs, and Savannah State University had a $138.7 million impact with 1,462 jobs.

Many of the state’s two-year colleges generated impacts that were large relative to the size of their host communities. For example, Bainbridge College’s impact was $77 million; East Georgia College’s impact in Swainsboro was $63 million; Georgia Highlands College’s impact in Rome was $113 million; South Georgia College’s impact in Douglas was $48 million; and Waycross College’s impact was $23 million.

“Each of Georgia’s public colleges and universities are strong pillars and drivers of the economies of their host communities. That translates into more jobs, higher incomes, and greater production of goods and services than would otherwise be the case,” said Humphreys.

The full study with data for all 35 USG institutions is available at: http://www.usg.edu/economic_development/documents/PS-USGImpact2011.pdf

Current and past economic impact studies can be found at: http://www.usg.edu/economic_development/publications/studies

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