UMR’s economic impact: nearly $5 for every $1 of state investment

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On February 25, 2003

The University of Missouri-Rolla is a strong economic asset to the Missouri economy, generating nearly $5 into the state economy for every dollar of state funds invested, according to a recent analysis conducted by UMR.

The analysis, conducted by the UMR office of public relations and department of institutional research and assessment, found that UMR contributed $4.69 for every dollar of state funding it received during the 2001-2002 fiscal year (July 1, 2001-June 30, 2002). The analysis was prepared for distribution to members of the Missouri General Assembly.

"The Missouri General Assembly and Gov. Bob Holden face a difficult task in working to balance the state budget for this current fiscal year and the next," says UMR Chancellor Gary Thomas. "But we hope this analysis about UMR’s impact on the state economy will help them consider the economic value of higher education in the state. Truly, UMR is a valuable asset to Missouri, not just in economic terms, but in terms of the quality of life and added value our institution, our researchers, our students, our alumni, and our faculty and staff provide to Missourians."

All told, the state investment of $50.6 million last fiscal year resulted in more than $237 million of economic activity generated by UMR. Thomas points out that this is a conservative estimate of UMR’s overall economic impact, based solely on the direct impact of UMR’s tangible contributions to the state economy, such as payroll and expenditures for goods and services, research and development expenditures, and conservative estimates of student expenditures.

"This assessment does not take into account the many other ways through which the university benefits Missouri’s economy — in terms of jobs (both for UMR’s faculty and staff, and for the many UMR graduates who work in Missouri industry), the number of Missouri businesses created by UMR graduates, and the commercialization of technological advances developed in UMR’s laboratories," Thomas says. Furthermore, Thomas says, the growth in enrollment and research expenditures at UMR during the current fiscal year translates into an even greater economic impact on the state.

To determine UMR’s economic impact, UMR adapted a method used by the National Association of State Universities and Land-Grant Colleges (NASULGC) for the association’s 2001 report, "Shaping the Future: The Economic Impact of Public Universities." The formula measured the tangible economic benefits of UMR and its students and employees in five categories:

  • State income tax paid by UMR faculty and staff. This totaled $2,389,085 — or 3.6 percent of UMR’s payroll of $65,649,581.
  • Annual expenditures. This includes purchases of supplies and materials; equipment costs and purchases; acquisitions; maintenance; and capital improvements, including construction and renovation. UMR’s annual expenditures for last fiscal year totaled $37,661,662.
  • Annual research and development expenditures. UMR spent $28,799,000 in R&D endeavors last year.
  • Disposable (after-tax) income. The take-home pay for UMR faculty and staff, after taxes and other deductions (such as Social Security and health insurance), totaled $46,096,168.
  • Estimated student expenditures. By using an estimated and very conservative expenditure of $1,800 per student, as provided by federal financial aid guidelines, we estimate that UMR’s 4,987 students spent $8,976,600 in the local economy last fiscal year.

The sum of these five figures totals $124,922,515. But that number does not reflect the full economic impact of UMR. Economists have developed "multipliers" to better assess how universities and other entities affect local and state economies.

For the purposes of this study, UMR selected a conservative economic multiplier of 1.9, meaning that every dollar generated by UMR’s activities actually resulted in $1.90 in economic impact. The choice of this multiplier was based on a 1975 study by George R. Moore, which is seen as a kind of gold standard for economic impact studies.

Based on the economic multiplier of 1.9, UMR’s total economic impact to the state last fiscal year was $237,352,779. Dividing that total by the state of Missouri’s investment of $50.6 million in state funds, the result is that every dollar of state funding invested into UMR results in a return of $4.69 for the state — in state taxes, disposable income, R&D expenditures, purchases of goods and services, student spending, and more.

Generating jobs

Looking beyond the pure dollars-and-cents impact of UMR on Missouri’s economy, the campus also is a major employer for the Rolla community — and the jobs at UMR generate additional jobs in the local economy.

UMR employed 1,000 people full time and 271 people part time in 2001 (the most recent annual data available), making it the second-largest employer in Phelps County. Phelps County Regional Medical Center has around 1,100 employees, according to the Rolla Area Chamber of Commerce’s community profile of Rolla.

In addition, for every 10 jobs at UMR, an additional 16 jobs are created in the local economy. This estimate is based on an economic multiplier of 1.6 used in the 2001 NASULGC study, "Shaping the Future."

In other words, UMR’s 1,000 full-time and 271 part-time jobs generate an additional 1,600 full-time and 434 part-time jobs in the community, for a total employment impact of 2,600 full-time jobs and 705 part-time jobs.

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On February 25, 2003. Posted in News