SRI International Inventing the Future through Technology Innovation

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Economic Impact Analyses of Universities HGERC
Conference San Diego December 12, 2008
Matty Mathieson
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Presentation Agenda

• What is an economic impact assessment?
• What is the purpose?
• What is the theory and application? How do you do
  it?
• What do you do with it?

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What is an Economic Impact Assessment?
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University Roles

• Universities and colleges are viewed by the
  public as institutions for education and
  training.
• Universities are also important sources of
  knowledge the technology development and transfer
  (intellectual property).
• Only recently have universities been recognized
  as important economic actors and engines.
• Impact assessment is a tool to measure schools
  economic roles and contributions.

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What is an Economic Assessment?
Think About This

• What would your community, regional or state
  economy look like if your university or college
  did not exist?

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What is an Impact Assessment?
An economic impact assessment is an analysis that
measures the economic size, benefits and
importance of a university or college to its
local, regional or state economy.
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What is an Impact Assessment?
Little Known Facts

• Universities are economic actors that create
  employment and income.
• The U.S. is a service sector economy that
  exports educational services.
• Universities are often the largest employers and
  purchasers in regional economies.

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What is the Purpose of Economic Impact
Assessments?
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Why Are Impact Assessments Done?
Programs, Industries, and Firms Find Value in
Presenting their Case though Impact Analyses
Government Funded Programs
Prove Performance, Obtain Scarce Resources
National Science Foundation, Educational
Programs, Tourism Programs, Technology
Development Programs, etc.
Industries (Image, Regulation)
Appeal to Decisionmakers/Constituencies
Brewing, Golf, Spas, Aluminum, Sheep, Horses,
Poultry, Forest Products, Pharmaceuticals,
Semiconductors, etc.
Companies (Image, Public Relations)
Achieve Public Awareness/Acceptance/Bragging
Rights Toyota, FedEx, Boeing, WalMart, UPS,
Heinz, Coca Cola, Hughes Aircraft, Chrysler, etc.
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Examples of University Impact Analyses

• Michigan State Universities
• Stanford University
• Cornell University
• California State University
• Washington State University
• Brown University
• James Madison University
• Notre Dame University
• Montana State University
• Princeton University
• De Pauw University

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Goals of University Impact Assessments

• Change perceptions Universities are not cost
  centers.

• Show the value proposition and economic
  importance of universities to important
  constituencies.

• Expand the horizons of university staff their
  role goes beyond education and research.

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ExampIes of Impacts Benefits Cited

• Spending by universities
• Spending by students, faculty, staff visitors
• Employment generated
• RD funding from out of state
• Technology licensing and start-up ventures
• Educational premium (higher salaries for
  graduates
• Education and training of community state
  workers (if they stay)

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What is the Theory and Application? How do you do
it?
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University Cluster Structure
University Activities/Outputs
Direct Suppliers
Food service, construction, maintenance, vehicle
suppliers, cleaning, utilities, etc.
Indirect Suppliers
Business services
Public services
Travel services
Suppliers suppliers
Staff support
INTEGRATED CLUSTERS
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Impact Analysis Framework

• Consider the university as an enterprise a
  business.
• Measure the universitys economic inputs and
  outputs.
• Calculate size in terms of money and jobs.
• Calculate performance (return on investment,
  etc.).

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Inputs to the University Enterprise
State and local funding (general support, grants,
scholarships.
In-state private support Individual funding
(tuition, grants, charitable giving) by
local/state citizens.
Out-of-state support (tuition, grants, charitable
giving).
Auxiliary income (endowment, sporting event
revenues, payment for student services, licensing
royalties).
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Outputs/Impacts from the University Enterprise
Local spending (salaries, supplies, construction,
equipment, spending by students/faculty/visitors)
Employment (faculty and staff, student
assistants, local merchants and suppliers)
Intellectual property (RD, patents, licenses,
spin-out companies)
Educational outcomes (salary premiums,
local/state workforce development, knowledge
industries)
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Research Methodology
Impact Analyses Research Tasks
Set Analytical Framework Parameters
Determine scope of analyses identify data sets
required and communicate with data sources
secure collaboration and authorizations assemble
research team.
Collect Data
Prepare information lists, surveys, definitions,
etc., to assist data sources conduct surveys (if
necessary) collect data and review for
accuracy/consistency.
Conduct Analyses
Aggregate information determine size and nature
of spending, employment, and intellectual
property creation calculate multiplier effects
(average income and employment multiplier 2.0),
return on investment.
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Examples of University Impacts

• Washington State University (730MM total impact,
  10,000 jobs)
• De Pauw University (176MM total impact)
• Princeton University (1.1B total impact, 10,055
  jobs)
• University System of Georgia (11.0B total
  impact, 106,267 jobs)
• Stanford University (3.8B in direct spending,
  20,000 jobs)
• California State Universities (13.6 billion
  direct indirect spending, 207,000 jobs, 25B in
  educational premiums, total impact 53B!!!

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What Do You Do With Impact Assessments?
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Impact Analysis Uses

• Conveys that the universitys role and value
  proposition extends beyond education and
  research.
• Confirms the universitys economic importance and
  regional or state stewardship.
• Provides a compelling argument for public funding
  (public good investment that yields high
  returns).
• Strengthens the case for higher education not
  just an ivory tower.

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Further Uses of Analyses
Position Universities as Economic Drivers

• Economic development experts acknowledge the
  value of universities to their regions.
• The vitality of many regions is driven by
  universities (Silicon Valley, Austin, Boston).
• Universities can position themselves to enhance
  their contributions to regional economic health.
• Impact analyses add to understanding of
  universities economic roles.

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Analyses Can Be Strategic Tools

• In the current economic environment, may states
  (CA, OH, GA, PA, NY, OK) are investing in
  university/industry partnerships.
• Large schools can measure and monitor their IP
  outcomes (patents, licenses, spin-offs) to
  attract funds.
• Community colleges can document their activities
  to serve workforce skills needs.
• All universities and colleges can benefit from
  increasing awareness of their economic dimensions.

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Economic Impact Assessments
The bottom line Your university is worth more
than people or even you think!
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Economic Impact Analyses of Universities HGERC
Conference San Diego December 12, 2008
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