1. The Economic Impact of a University on its Community and State: Examining Trends Four Years Later Presented by: Allison M. Ohme Institutional Research Analyst University of Delaware November 15, 2004 NEAIR 2004 ~ Portsmouth, NH

2. 2 Session Outline What is an Economic Impact Study? What is an Economic Impact Study? Background Background  1999 University of Delaware (UD) Economic Impact Study Methodology – Replicated for 2003 Study to examine trends Methodology – Replicated for 2003 Study to examine trends Highlights of Findings Highlights of Findings Challenges and Benefits Challenges and Benefits Questions and Comments Questions and Comments

3. 3 What is an Economic Impact Study? Effects on the Labor Market Creation of new knowledge Conducting pure & applied research Development of new technologies & industries Expenditures in the Local Economy Direct purchases to local merchants Indirect purchases stimulating local economy Students University and Personnel Visitors (Stokes & Coomes, 1998)

4. 4 Background UD’s 1999 Economic Impact Study UD’s 1999 Economic Impact Study  Survey  Student Expenditures  Faculty and Staff Expenditures  Local Business – affected by UD?  University Expenditures  Use of Multiplier to estimate induced (indirect) economic impact – OVERALL IMPACT

5. 5 What does the overall economic impact actually mean? Student Expenditures Faculty & Staff Expenditures University Expenditures Apply Multiplier to 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. 6 Methodology -Student Survey

7. 7 Methodology - cont. -Faculty/Staff Survey

8. 8 Methodology - cont. -Business Survey Number of students and alumni employed Number of students and alumni employed Approximate percentage of business income attributed from the sales of products and services to the University of Delaware and its community Approximate percentage of business income attributed from the sales of products and services to the University of Delaware and its community Impact on business if student enrollment at the University of Delaware declined Impact on business if student enrollment at the University of Delaware declined Ways the University of Delaware and its community influence business decisions Ways the University of Delaware and its community influence business decisions

9. 9 Methodology - cont. -Sample and Response Rates Student data set weighted to correctly represent overall student population by gender, time states, class level, residence status, and on/off campus status. Student data set weighted to correctly represent overall student population by gender, time states, class level, residence status, and on/off campus status. Faculty/Staff data set weighted to represent faculty and staff population by employment and time status. Faculty/Staff data set weighted to represent faculty and staff population by employment and time status.

10. 10 Mean monthly student income from all sources after taxes: Mean monthly student income from all sources after taxes:  2003 - $1,380 **Increase of 35%  1999 - $1,020 Highlights of Findings -Student Income

11. 11 Students – Mean Monthly Expenditures

12. 12 Students – Full Time v. Part Time

13. 13 Students – Overall Annual Expenditures * Annual Calculation – see next slide

14. 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 Term X # of Months in each Term = Annual Exp. for each Category X

15. 15 Highlights of Findings -Faculty & Staff Mean Monthly Expenditures

16. 16 Faculty & Staff – Overall Annual Expenditures * Annual Calculation – see next slide

17. 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. 18 Highlights of Findings -Business Responses 38% of the business respondents employed 1 to 4 current University of Delaware students and almost half (49%) employed 1 to 4 University of Delaware alumni. 38% of the business respondents employed 1 to 4 current University of Delaware students and almost half (49%) employed 1 to 4 University of Delaware alumni. 26% of the business respondents indicated that for the part of their company that is located in the Newark area, 26 to 49% of their business income could be attributed to the University and its community. 26% of the business respondents indicated that for the part of their company that is located in the Newark area, 26 to 49% of their business income could be attributed to the University and its community. Businesses buy products, schedule sales and promotions around University clientele. Businesses buy products, schedule sales and promotions around University clientele.

19. 19 University Economic Impact Conferences and Events Conferences and Events  Local residents spending at UD events  Cash flow to UD in addition to Tuition & Fees University Purchasing  UD’s in-state purchasing of products and services  Approx. $95 million purchased from in- state vendors  56% of total purchasing is within the state of Delaware Additional data collected from UD administration:

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

21. 21 More about the Multiplier * Output Multiplier Output Multiplier  Estimates the effect that UD’s spending has on the state in terms of direct and indirect purchases. Employment Multiplier  Number of jobs created by each additional $1 million of output.  20 jobs/$1 million 20 x 408.436 = direct output supports approx. 8,169 jobs * Regional Input-Output Modeling System (RIMS II). Regional Economic Analysis Division, Bureau of Economic Analysis, U.S. Department of Commerce, 2004.

22. 22 Economic Impact in Context These estimated expenditures are more than 4 times the state operating appropriations level ($100 million). These estimated expenditures are more than 4 times the state operating appropriations level ($100 million). The estimated total economic impact of the University of Delaware is approximately $735 million, nearly a 29% increase compared to the results in the 1999 study. The estimated total economic impact of the University of Delaware is approximately $735 million, nearly a 29% increase compared to the results in the 1999 study.

23. 23 Challenges of an Economic Impact Study If done in-house: large data set, multiple mailings to gain response. If done in-house: large data set, multiple mailings to gain response. Detailed and sometimes overwhelming survey. Detailed and sometimes overwhelming survey. Location of the institution and commuters - the spending may either stay local to the institution, or occur where the students and employees live. Location of the institution and commuters - the spending may either stay local to the institution, 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. 24 Benefits of an Economic Impact Study Understand how students and employees spend money locally. Understand how students and employees spend money locally. Examine institutional impact on local businesses. Examine institutional impact on local businesses. Provide government and public officials with an estimate of the economic value an institution adds to the region/state. Provide government and public officials with an estimate of the economic value an institution adds to the region/state. Create opportunity for institution to discuss local relationships and shared goals. Create opportunity for institution to discuss local relationships and shared goals.

25. 25 Questions or Comments??

26. 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