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University System of Georgia Has $7.7 Billion Impact on the State

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Atlanta — March 8, 2000

The economic impact of the University System of Georgia on the state was $7.7 billion in Fiscal Year 1999, according to a study conducted by Dr. Jeffrey M. Humphreys, director of economic forecasting for the Selig Center for Economic Growth in the University of Georgia’s Terry College of Business.

Humphreys said the FY 1999 figure represents a $464 million or 6.4 percent increase over the System’s FY 1998 impact of $7.3 billion. The Board of Regents Office of Development and Economic Services’ Intellectual Capital Partnership Program (ICAPP) commissioned the study by Humphreys. He was charged with creating an economic template that would define and enhance understanding of how Georgia’s public colleges and universities contribute to the state’s economy. According to Humphreys, the economic impact is reflected in “the simplest and broadest term.” He calculated the “output impacts” - the most-inclusive, largest measure of economic impact – of each of the 34 University System institutions on their host communities by analyzing three important categories of college/university-related expenditures:

  • Spending by the institutions themselves for salaries and fringe benefits, operating supplies and expenses, and other budgeted expenditures;
  • Spending by the institutions for capital projects (construction); and
  • Spending by the students who attend the institutions.

Humphreys said the University System’s 34 institutions also collectively accounted for nearly 100,000 jobs in the state during FY ‘99 - 2.7 percent of all the jobs in Georgia, or about one job in 37. This represented an increase of 5.6 percent over the 94,703 jobs created by the System in FY ‘98. Approximately 42 percent of the University System’s jobs are on campus - as employees of the University System of Georgia - and 58 percent are off-campus in either the private or public sectors. For each job created on campus, on average there are 1.4 jobs created off-campus because of spending related to the institution.

“We often talk about investing in education,” said Chancellor Stephen R. Portch. “This study demonstrates that the return on the investment that is being made in higher education in Georgia is both economic and educational.”

In addition, the System generated $3.6 billion in labor income, an increase of 10 percent over FY 1998’s $3.2 billion labor income figure.

Humphreys’ study delineates the economic impact of the University System and each of the 34 campuses into the following categories: Initial Spending; Output Impact; Value Added Impact; Labor Income Impact; and Employment Impact. Of the University System’s $7.7 billion total economic impact, $4.9 billion, or 64 percent, represents initial spending by the institution and students attending the institution; the remaining $2.8 billion, or 36 percent, is the induced or re-spending (multiplier) impact.

Humphreys said the $7.7 billion figure is conservative, because it does not include additional categories of economic impact. Excluded were factors such as employee spending, spending by former employees receiving retirement benefits from the University System, or consulting by University System employees and the corollary spending that results from such income. It also does not reflect spending by visitors to the System’s campuses for conferences, professional meetings, alumni reunions, etc. Nor does it include the impact of athletic events, or visits to the campuses by the parents and friends of matriculating students. In addition, it does not measure any of the long-term benefits of the University System to the state’s economic development, quality of life, or the increased lifetime earnings of its graduates.

Because the study is not a net benefit analysis, it also does not calculate what the presence of a tax-exempt college or university costs the community in which it is located.

Many factors contributed to the University System’s increased economic impact, according to Humphreys, such as construction of campus facilities, an increase in grants and contracts to System institutions, faculty and staff salary increases, and “aggressive spending by our students,” among other factors.

“We are not divorced from the long and strong positive economic cycle that’s being experienced nationally,” Humphreys stated. “In addition, Georgia is the fastest-growing state East of the Mississippi and the fourth-fastest-growing state in the nation. As a state, we are growing at twice the national rate (2 percent versus 1 percent), and this growth has a direct impact on the economy.”

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