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The Impact of the Kansas Board of Regents System to the State's The Impact of the Kansas Board of Regents System To the State’s Economy A Study Produced By: March 2011 Preface Ga Goss & Associates The Impact of the Kansas Board of Regents System to the State’s Economy Preface The goal of this study is to evaluate the economic importance and contributions of the institutions of the Kansas Board of Regents System (hereafter KBOR System). The subsequent pages contain specific infor- mation that quantifies and explains the many ways the KBOR System contributes to the state’s economic progress. Additionally, this study evaluates how investments in higher education produce significant and positive returns for the state. It was concluded that the investment in higher education results in long-term economic benefits, including productivity and earnings gains from an educated workforce, new knowledge creation, new products and services, an increase in the supply of skilled professionals, and an improvement in the general quality-of-life. Specific Goals of the Study Are: ♦ Measure the business volume, employment, and government revenue impact of the KBOR System’s yearly operations and capital spending. ♦ Measure the economic impact of visitors who attend conferences, sporting, cultural and alumni events. ♦ Quantify the economic and social impact of students, employees and alumni. ♦ Quantify the economic impact on non-education organizations throughout the state. ♦ Quantify the spin-off effects of institutional research on new business formation, enterprise growth, employment, and Kansas government revenue. ♦ Estimate the impact of the KBOR System on Kansas “brain gain.” ♦ Estimate the rate of return for taxpayer investments in the KBOR System. The Goss & Associates research team thanks the staff of the Kansas Board of Regents for their assistance in facilitating the completion of this study. However, any errors, omissions, or misstatements are solely the responsibility of Goss & Associates and the principal investigator. Ernest Goss, Ph.D. Principal Investigator Professor of Economics and MacAllister Chair, Creighton University & The Goss Institute for Economic Research 600 17th Street, Suite 2800 South Denver, Colorado 80202-5428 (303) 226-5882 Email: [email protected] www.ernestgoss.com www.outlook-economic.com Table of Contents Ga Goss & Associates LOREM IPSUM | III The Impact of the Kansas Board of Regents System to the State’s Economy Table of Contents Executive Summary . 1 1 Chapter 1: Kansas Public Higher Education and Economic Development . 4 2 Chapter 2: The Contribution of the Kansas Board of Regents System to Local Communities’ Quality-of-Life. 13 3 Chapter 3: Estimated Economic Impacts . 18 Impacts by Industry . .21 Impacts by Kansas County . .22 Impacts by Senate District . .27 Impacts by House District . .28 Impacts by Institution . .29 Appendices Appendix A: The Importance of Higher Education Spending on the Economy . .40 Appendix B: The Multiplier Effect . .43 Appendix C: Sample of Community Service Provided by KBOR System Institutions . .44 Appendix D: Biography, Ernie Goss, Ph.D. .48 Executive Summary Ga Goss & Associates 4 | Enicaper ficaed susta nondin is es nonim et dolore percent for workers with a high school Executive Summary diploma and to 52.6 percent for those without a high school diploma. ◊ In 2009 compared to the high school In the subsequent pages of this study, the impacts dropout, workers with a bachelor’s of the Kansas Board of Regents System (hereafter degree earned almost $50,000 more 1 KBOR System) are identified and estimated. while workers with an associate’s For 2010, it is estimated that the KBOR System degree earned a $22,000 premium. produced approximately $7.3 billion in overall • Thus, by elevating the education level of the impacts, $3.4 billion in wages and salary impacts, Kansas population, the KBOR System is 95,327 in additional jobs, and $485 million in state boosting income and lowering joblessness and local tax collections. In terms of the rate of in the state. return, each one dollar in state tax support resulted in $11.94 in Kansas economic activity. It is found • Between 2000 and 2008, U.S. population that the payback period, or years to recover taxpayer growth was roughly three percentage points support, was less than five years for most occupations higher than that of Kansas. of graduates. Furthermore, it was concluded ◊ Since 1970, 41 Kansas counties have that counties with KBOR System institutions lost population for each of the four experienced higher rates of growth in technology decades. firms, lower rates of net out-migration, and higher x rates of job growth, all of which contribute to the Only four counties with KBOR state’s economic progress. System institutions lost population for all four decades. General Impacts x Thirty-seven counties without • The 32 institutions of the KBOR System KBOR System institutions lost have provided economic stability for the population for all four decades. 2 state over the past decade. x None of the counties with KBOR • January 2011 Bureau of Labor Statistics data System universities lost population show unemployment rates of 16.5 percent for all four decades. for workers without a high school diploma, • Between 2000 and 2008, Kansas lost 10.7 percent for workers with a high school more than 5,000 residents per 100,000 in diploma, 8.5 percent for workers with an population to other states via migration. associate’s degree, and 4.5 percent for those During the same period of time, Kansas 3 with a bachelor’s degree. gained more than 1,200 residents per 100,000 in population from international ◊ For the period 1994 to 2009, workers 4 with a bachelor’s degree or higher in-migration. enjoyed wage growth of 92.6 percent ◊ In terms of median domestic migration compared to 50.0 percent for workers for each 100,000 in population, with an associate’s degree, to 50.3 counties with KBOR universities lost 1Impacts are expressed in 2011 dollars throughout the study. 1,754 residents, counties with KBOR 2 In 2011 the KBOR System was composed of: seven public community and technical colleges lost universities, six technical colleges, and nineteen community col- 5,322 residents, while counties with no leges. In this study, Kansas State University College of Veterinary KBOR institution lost a much larger Medicine, the University of Kansas Medical School, and Kansas 7,565 residents. State University Extension Service are included with the rest of the respective institutions. 4 3 International migrants are non-U.S. citizens that lived outside http://www.bls.gov/news.release/pdf/empsit.pdf the U.S. the previous year. The Impact of the Kansas Board of Regents System to the State’s Economy Page 1 Executive Summary Ga Goss & Associates Goss & Associates LOREM IPSUM | 5 ◊ In terms of median international electrical engineers, 3.2 years for architects migration for each 100,000 in and 6.1 years for computer systems analysts. population, counties with KBOR • Kansas taxpayers recover their finan- universities gained 1,684 residents, cial support for community and tech- counties with KBOR community and nical college graduates in 1.6 years for technical colleges added 454 residents, dental hygenists, 2.0 years for biologi- while counties with no KBOR cal technicians, and 3.1 years for welders. institution added a much smaller 211 residents. Impact on the State’s Labor Force 5 Impact on the Overall Economy for 2010 • Both directly and indirectly, institutional spending supported an average of 95,327 • The KBOR System generated more than jobs with a total payroll of approximately $7.3 billion in sales or business volume for $3.4 billion in 2010. the state of Kansas; of the total, $2.0 billion were spillover impacts.6 • Average salaries and wages for the direct and indirect jobs supported was approxi- • For each $1 of state taxpayer support, 7 mately $35,430. the KBOR System produced $11.94 in economic returns. Impact on Related Industries (Spillovers) • For each $1 of state and local taxpayer • For 2010, 388 of Kansas’ 394 industries ex- support, the KBOR System generated perienced impacts from institutional spend- $3.24 in economic returns. ing. For example, for the state’s real estate Impact on the State and Local Tax industry, KBOR System spending support- ed approximately 4,392 jobs, $105 million Collections for 2010 in wages and salaries, and $549 million in sales or business volume. • It is estimated that the KBOR System accounted for more than $485 million in Impact on State and Local Long-Term state and local tax collections. Economic Growth • Of total state and local taxes created, 26.8 percent were sales taxes, 27.6 percent were • The presence of the 32 institutions increases individual income taxes, 3.4 percent were the attractiveness of the home community corporate taxes, 30.5 percent were property and encourages the startup and/or reloca- taxes and the remaining 11.7 percent came tion of other businesses to the state. from other, or miscellaneous taxes. ◊ Between 2000 and 2008 per 100,000 • Kansas taxpayers recover their financial population, counties with KBOR Sys- support for university graduates in 3.5 tem universities added a median of years for accounting graduates, 2.6 years for 13.7 high tech companies, and counties with KBOR System community and 5 This study was completed using the Implan Input-Output technical colleges gained a median of methodology explained in Appendices A and B. The economic impact in future years will be higher or lower based on the infla- 2.8 high tech firms. tion rates, the number of students, capital expansion, increases in 7 external research and the level of state appropriations. Includes both part-time and full-time jobs. 6 $7.3 billion (total impact) minus almost $5.3 billion (direct im- pact). Spillover impacts represent ‘ripple’ impacts in related busi- nesses as higher education dollars are re-spent in the community.
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