The University of New Hampshire A Pillar in the New Hampshire Economy

The University of New Hampshire A Pillar in the New Hampshire Economy An Economic Impact Study Ross Gittell, James R. Carter Professor of Management Josh R. Stillwagon, Ph.D. Candidate in Economics February 2009 Whittemore School of Business and Economics University of New Hampshire TABLE OF CONTENTS I. Overview II. Main Findings III. Comparing UNH Economic Impact Estimate with Other Universities IV. UNH Economic Impact Methodology V. UNH’s Net Impact VI. UNH’s Skilled Workforce Contribution VII. UNH Contributions that are Hard to Quantify VIII. Alumni and Corporate Contact Surveys IX. Conclusion OVERVIEW This report documents the economic contributions of the University of New Hampshire (UNH). UNH’s economic impact includes the direct and multiplier impacts of the University’s employment of New Hampshire residents and expenditures in the state and UNH’s contribution to the skilled workforce in the state. The analysis draws on commonly used and well-accepted economic impact assessment methods. It provides conservative figures for UNH’s impact as it uses modest valuation and multiplier assumptions in economic impact estimates. The report also describes some of the important contributions the University makes to New Hampshire’s economy that are dificult to quantify and are not included in the economic impact estimates. MAIN FINDINGS The University of New Hampshire’s economic footprint in New Hampshire is significant. At a time when private industry is reducing employment, the University is playing a very important role as a stabilizing force in the state’s economy and helping to ensure the state is well-positioned for growth when the national economy recovers. UNH currently contributes approximately $1.3 billion annually to New Hampshire’s economy. This represents 2.5% of New Hampshire’s total $51 billion Gross State Product in 2008. UNH’s economic contributions include approximately $760 million from direct and indirect expenditures within the state and employment of New Hampshire residents. This estimate includes a conservative 1:1 multiplier to capture the so-called “ripple effects” of UNH’s expenditures and UNH employee salaries and benefits in the New Hampshire economy. Vendors and services providers to UNH provide “multiplier” jobs and economic benefits in the state, and UNH employees spend their compensation at in-state businesses producing multiplier benefits in the state’s economy. A 2:1 multiplier for research and development expenditures— which are commonly recognized as having stronger secondary effects in the economy than other expenditures with regard to company and job creation—is used. UNH Economic Base Impact w/o Multiplier Economic Base Impact with Multiplier Average Research and Development Awards/Grants 2005–2007 Research and Development with Multiplier Skilled Worker Valuation UNH Total $ 323 Million $ 646 Million $ 117 Million $ 352 Million $ 562 Million $ 1.3 Billion COMPARING UNH ESTIMATE WITH OTHER ECONOMIC IMPACT ANALYSES OF UNIVERSITIES The estimate of UNH’s economic impact is similar to other institutions in terms of dollar value and percentage contribution to the respective state’s Gross State Product. Exact comparisons are dificult as different institutional studies use different methodologies, both in their accounting assumptions to arrive at expenditure figures as well as the multiplier they choose to apply to get the economic base contribution. The most appropriate comparison of UNH’s economic impact is without the skilled worker contribution valuation. This is $760 million or 1.5% of Gross State Product. On the high side of University economic valuations is the University of Texas System at $14.9 billion, equivalent to 1.3% of Texas’s Gross State Product. The University of Wisconsin System estimated an economic base contribution of $11.6 billion or 5% of Gross State Product. Harvard University has an estimated impact in Massachusetts of $5.3 billion or 1.5% of the state’s Gross State Product. The University of Massachusetts system arrived at an estimated economic impact in the state of $5 billion or 1.4% of Gross State Product. Oregon State determined its economic impact to be $1.7 billion, or over 1% of Gross State Product. Washington State’s economic impact was valued at over $1 billion, or .33% of Gross State Product. The University of Delaware estimated its economic impact at nearly $880 million, or 1.5% of Gross State Product (Economic Impact Studies listed in work cited). Institution University of Texas System University of Wisconsin System Harvard University Economic Base Contribution (2008 dollars) $ 14.9 Billion $ 11.6 Billion $ 5.3 Billion Percent of Gross State Product 1.3 % 5.0 % 1.5 % University of Massachusetts System Oregon State Washington State University of Delaware University of New Hampshire $ 5 Billion 1.4 % $ 1.7 Billion 1.0% $ 1 Billion .33% $ 880 Million 1.5% $ 760 Million 1.5% UNH ECONOMIC IMPACT METHODOLOGY The economic base approach is the most commonly used in economic impact valuation. The approach takes the total state expenditures by an institution and then adds a multiplier effect. UNH’s total expenditures are about $324 million dollars annually. This is composed of several categories, including expenditures on goods and services from N.H.-based vendors, capital spending to N.H. firms, employee spending by in state residents, medical and dental benefits spent in state, and student and visitor spending in the state. The figures we used were provided by UNH’s Ofice of Finance. There are several implicit assumptions used in these categories. Institutional capital spending is a very conservative estimate in that it reflects only contracts with in-state companies and does not take into account that many out-of-state companies subcontract within the state, so a portion of these dollars return to the state. Employee spending is based on 80% of gross salary of New Hampshire residents, as estimated by the Bureau of Labor Statistics, and does not take into account N.H. spending by UNH employees who are not state residents. Medical and dental benefits are estimated at 19% of gross salary for New Hampshire residents receiving benefits from UNH. The figure then assumes 80% of these benefits will go to in-state insurers and health care providers. Student spending is estimated at $410 monthly, which was estimated via student surveys, and does not include UNH Manchester or continuing education students. Visitor spending is based on a conservative estimate of $15 spent outside UNH but in New Hampshire per visitor on fuel, food, and other goods and services. The detailed breakdown for UNH expenditures in New Hampshire (see detailed table below) includes institutional goods and services spending totaling nearly $27.3 million, capital spending of $42.4 million, employee benefits $25.8 million, employee spending $148.2 million, student spending $74.6 million, and visitor spending $5.2 million. In this figure is included, on average, over $110 million annually going towards research and development. Category Institutional Goods and Services Institutional Capital Spending Employee Medical and Dental Expenses Employee Spending Student Spending Visitors Spending Total Amount $ 27,270,145 $ 42,355,255 $ 25,798,072 $ 148,232,763 $ 74,645,829 $ 5,164,050 $ 323,466,114 A multiplier is applied to the expenditure data to capture the “ripple effects” of UNH’s expenditures in the state. A 1-to-1 multiplier is used. This multiplier was supported in an analysis of University Economic Impact Studies by the Federal Reserve Bank of Boston. Some university studies have used higher multipliers such as 1.8-to-1, 3-to-1, or even higher. Some studies apply different multipliers to different types of expenditures. Here, a 2-to-1 multiplier is used for research and development expenditures due to the strong relationship between research and development spending and long term income and job creation. Economic base approaches often include a jobs multiplier to estimate the number of outside jobs created indirectly through UNH’s expenditure within the state. Some studies use a multiplier of .04 jobs created per $1,000 of expenditure, but other studies (McFarland, 1997) offer multipliers as high as .09 jobs per $1,000. Using these two multipliers, this gives us an estimated range of almost 13,000 or more than 29,000 jobs created outside of UNH as a result of its expenditure within the state (Nagowski 2, 3). ... - tailieumienphi.vn