College: Analyzing a Public College using Industry Impact Analysis (Detailed)

Candi Clouse, PhD

October 27, 2021 13:37

INTRODUCTION

Now that you have read Considerations when Conducting College & University Economic Impacts, you are ready to examine the economic impact of a public or nonprofit college or university. Colleges and universities that are nonprofits or public organizations usually have no Proprietors and therefore no Proprietor Income, aren’t paying taxes, and aren’t taking a profit. Therefore, edits to the standard Industry are required. But the good news is that these edits are very easy. Remember, each school is unique, so the more details that you enter in the model, the more accurate the results.

The goal of this article is to be a guide in framing your public or nonprofit college impact study. Spending can be split across operations, university labor, student spending, visitor spending, and capital expenditures.

OPERATIONS

Carolina Community College, a fictitious institution, is looking to open in North Carolina. They will operate as a nonprofit employing 650 faculty and staff with a loaded payroll value of $62M. They will also spend approximately $32M on other goods and services, with the exception of retail and restaurant spending, which are not allowed under their charter.

We’ll set this up with the state of North Carolina, Data Year 2019, and Dollar Year 2021 using the Industry Impact Analysis (Detailed) Event Type. We know the Values for Wage & Salary Employment (650), Employee Compensation ($62M), and Intermediate Inputs ($32M). We also know they will have zero Proprietor Employment, Proprietor Income, Other Property Income, and Taxes on Production & Imports. So for these four Values, we will enter zeros.

We also know that Carolina Community College will not be spending any money at retail stores or restaurants. We can click Edit on the Spending Pattern and delete each of the Commodities we know they won’t use.

In this case, Commodities 3402-3413 for retail and 3509-3511 for restaurants. The Spending Pattern for colleges and universities does not include any retail, so there is nothing to do there. But we do see spending on the three restaurant Commodities. Delete those by clicking on the trash icon. Next, click the menu button and normalize the Spending Pattern so that the Sum of Percentages at the bottom once again reads 100.00%.

STUDENT SPENDING

Personal spending by college students on goods and services (outside of tuition and fees paid to the school) will also have an impact on the local economy. To estimate these impacts, we will need to know how much they spend on personal items and what they purchase. Additional details on outlining student spending can be found in Surveying for Input-Output. Examples of potential spending categories include everything from books to beer. We know that Carolina Community College will have 1,000 students in their first year of operation. We will enter one Industry Event for each category of spending.

Category	IMPLAN Industry	Per Student Spend	Total Spend
Books purchased Locally	410 - Retail - Sporting goods, hobby, musical instrument and book stores	$100	$100,000
Food & Beverages	511 - All other food and drinking places	$250	$250,000
Recreation	501 - Museums, historical sites, zoos, and parks	$75	$75,000
Miscellaneous Retail	412 - Retail - Miscellaneous store retailers	$500	$500,000

Here we can use Event Tags on each of these four Events as “Student” to make filtering our Results easier.

VISITOR SPENDING

Colleges and universities welcome sporting event spectators, patrons of the arts, parents, siblings, and prospective students to campus as visitors. Their spending can be captured via survey and used as inputs in the model by adding a few more Industry Output Events. Consider spending categories such as hotels, restaurants, and retail. We know that Carolina Community College will welcome approximately 2,500 visitors in their first year of operation. Again, we will enter one Industry Event for each category of spending.

Category	IMPLAN Industry	Per Visitor Spend	Total Spend
Hotels	507 - Hotels and motels, including casino hotels	$250	$625,000
Restaurants	509 - Full-service restaurants	$400	$100,000
Retail	406 - Retail - Food and beverage stores	$500	$125,000
Gasoline	408 - Retail - Gasoline stores	$50	$12,500

We know that for the Retail events these are the prices paid by the guests, so ensure that the Event is set to Purchaser Price. We can tag all of these Events as “Visitor”.

CAPITAL SPENDING

Oftentimes, colleges and universities also like to show their economic impact in terms of large-scale construction projects. After the initial buildout of the campus, Carolina Community College just opened a brand new dormitory at a cost of $6 million. This can be entered as an Industry Output Event in Sector 58 - Construction of new multifamily residential structures. We can tag this Event as “Capital”.

Now we are ready to click RUN!

ANALYZING THE RESULTS

The results will show you the economic impact of all the Events you entered. While the capital expenditures only happen in one year, the operations will hopefully occur year over year so report them separately.

First filter for Carolina Community College in the Event Name field. This will show us the impact from the 650 Employees, $62M in Employee Compensation, and $94M in total Output ($62M in EC + $32M in Intermediate Inputs).

Notice here that Labor Income is equal to Value Added. This tells us that no Taxes on Production & Imports (TOPI) or Other Property Income (OPI) have been included.

You might be wondering why any values show up for the Direct Tax Results. On the Impacts Screen, zero was entered for Taxes on Production & Imports. While the college won’t pay taxes, it’s employees sure will. If you navigate to the Tax tab and filter for the Direct Effect, you will see two types of taxes paid: Social Insurance and Personal Tax.

If we add all 4 student spending plus all 4 visitor spending Events to the Event Name Filter, we will see the annual operations impact of the college.

Lastly clear all the filters and only filter for the Event Name “Capital.” This will show us the impact of the construction of the $6M dormitory on the state.