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June 2011 Issue

Economic Impact of University System Reaches $12.6 Billion

Even during tough economic conditions Georgia’s public university system remains a powerful economic engine for the state as chronicled in a newly released report. The Selig Center for Economic Growth in the University of Georgia’s Terry College of Business found that the University System of Georgia (USG) had a $12.6 billion economic impact on the state’s economy during Fiscal Year 2010.

The FY 2010 output impact of USG Institutions on their regional economies was essentially flat compared to FY 2009, reflecting both lower spending by USG institutions on operations and consequently smaller levels of spending by vendors and business that service the System’s 35 institutions. But, the overall employment impact increased substantially, reflecting higher enrollments, more spending by students in labor-intensive economic sectors, and higher overall employment multipliers.

Details of the study indicate that Georgia’s public higher education system generated 130,738 full- and part-time jobs. This was 3.4 percent of all the jobs in Georgia in FY2010, or about one job in thirty. Most of those jobs – 66 percent of them – are off-campus positions in the private or public sectors that exist because of the presence in the community of USG institutions. The remainder of the jobs (34 percent) are on campus.

The Selig Center analyzed data collected between July 1, 2009, and June 30, 2010, to calculate the University System’s FY2010 economic impact. The report updates similar studies conducted on behalf of the Intellectual Capital Partnership Program (ICAPP), an initiative of the USG Office of Economic Development. The first study in the series calculated the USG’s impact at $7.7 billion in FY1999; the FY2010 economic impact of $12.6 billion is a nearly $5 billion increase since FY1999 – a growth of 64 percent in the system’s economic impact on Georgia’s communities.

“Colleges and universities are key drivers in economic development,” said study author Dr. Jeffrey M. Humphreys, director of economic forecasting for the Selig Center. “Higher education institutions educate the workforce, innovate through basic and applied research, and collaborate with employers to help them become more competitive.”

Initial spending by USG institutions equaled $9.1 billion, or 72 percent of the total. This spending included salaries and fringe benefits, operating supplies and expenses, and other budgeted expenditures. When combined with spending by students who attended the institutions in FY2010, total initial spending accounted for the lion’s share of the $12.6 billion in overall economic impact. The remaining $3.5 billion (28 percent) in economic impact was created by re-spending – the multiplier effect of those dollars as they are spent again in the region.

In addition to state-wide economic impact, the report quantifies the significant contributions that each of Georgia’s 35 public colleges and universities makes to the local economy of its host community. Researchers found that, on average, for every dollar of initial spending by a USG institution in its host community an additional 38 cents was generated for the local economy.

For example, the University System’s largest institution – the University of Georgia (UGA) with 34,677 students – has the single greatest economic impact: $2.0 billion on the Athens-area economy, or 16 percent of the System’s total statewide economic impact.

The eight institutions of the University System located in the metro Atlanta area accounted for $5.8 billion of the University System’s $12.6 billion total. Georgia Institute of Technology, Georgia State University, Clayton State University, Kennesaw State University, Southern Polytechnic State University, Georgia Gwinnett College, Atlanta Metropolitan College and Georgia Perimeter College also produced 53,658 jobs.

The study shows that the System’s two regional universities are significant economic players in their host communities. Georgia Southern University had an impact of $487 million on the local economy and an employment impact of 6,925 jobs, and Valdosta State University’s economic impact was $315 million with 4,007 jobs.

In regions across the state, University System institutions make substantial economic impacts. In north Georgia, the combined economic impact of North Georgia College & State University, Gainesville State College, Dalton State College and Georgia Highlands College was $588 million with an employment impact of 7,122 jobs.

The Augusta area receives a substantial economic benefit from the presence of Georgia Health Sciences University and Augusta State University. Together, these two institutions have a $1.0 billion economic impact on the Augusta economy and produce 11,569 jobs.

The three USG institutions in the coastal Georgia area – Armstrong Atlantic State University, Savannah State University and the College of Coastal Georgia – pumped $399 million and 4,461 jobs into the coastal economy.

In middle Georgia, Fort Valley State University, Georgia College & State University, Middle Georgia College, Gordon College, and Macon State College combine to have an economic impact of $700 million and contribute 8,213 jobs.

Together, the University of West Georgia and Columbus State University bring an economic impact of $637 million and contribute 6,583 jobs to the west Georgia region.

Georgia Southwestern State University and Bainbridge College have an economic impact in the southwest Georgia region of $140 million and an employment impact of 1,867 jobs.

The Albany–Tifton area institutions include Albany State University, Abraham Baldwin Agricultural College and Darton College whose combined economic impact totals $329 million and 4,180 jobs.

In southeast Georgia, South Georgia College, Waycross College and East Georgia College have a collectively economic impact on the region of $127 million and contribute 1,715 jobs.

“In addition to the impacts detailed in this report, the University System contributes to the state’s economy as the higher education member of Georgia’s economic development team, bringing USG resources to 44 prospect company projects during FY 2010,” said Terry Durden, assistant vice chancellor of the University System’s Office of Economic Development. “On campuses across the state, career services offices connect Georgia employers with college-educated talent. Professional development offered through continuing education programs keeps employees up to date with changing technology and industries.”

The Selig Center’s research has its limitations – it neither quantifies the many long-term benefits that a higher-education institution and its outreach and service units impart 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.

To download the Selig Center’s FY2010 report, go to: http://www.icapp.org/pubs/usg_impact_fy2010.pdf.

Posted by Sonja Roberts on June 30, 2011
Published in: Board of Regents

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