LPP and Impact of a Public College


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    IMPLAN Support
    Hi Patrick, To restate, what you have already indicated you definitely do always want to split out operations from Capital Expenditures and construction, as the operational spending patterns will not make appropriate intermediate (business to business purchases) purchases nor reflect the appropriate payroll ratios for construction and other Capital Expenditures. If you are using the Institution Spending Pattern for public colleges, you are correct to leave the Local Purchase Percentage at SAM Model Value. This is because you are looking at the line item purchases of the Industry and since these are first round Intermediate Expenditures. If you left in the payroll Sector or removed the payroll Sector from the spending pattern so that spending pattern sums to less than 1.0 (i.e. it is not normalized), then your entered value should reflect the total operational value. If you removed it and normalized or are using a spending pattern that does not include Sectors 437-440, and still sums to 1.00 the Activity Level should reflect the operational budget. If payroll is a part of the spending pattern you would not want to run it again. As regards the payroll, if you are using Sectors 437-440 or the Labor Income Change methodology there can be net regional leakage that is already accounted for, but you are correct that you only want to count those employees who live in the Study Area. This article describes how you can recalculate your income adjustments to account for what the Model is already removing. https://implan.com/index.php?option=com_content&view=article&id=737 You certainly can break that down by ZIP Code and if you knew those purchases were local you are absolutely correct you would set the Local Purchase Percentage to 100% for known local purchases. You might also find this article interesting. http://www.econ.iastate.edu/sites/default/files/publications/papers/p17708-2014-06-05.pdf For construction if the building is all in the Study Area Region you would want to leave LPP at 100%. The analysis frame of an Industry Change starts with the value of the building itself which is all local to where the building is. The software then applies RPC's to the requirement necessary for building that type of structure. For Capital Expenditures, there are a couple of considerations. First are Margins and the second is the LPP. Typically a number of our Capital Expenditures are not produced in the region, and are not purchased from the production floor but rather through a wholesale or retail venue. Thus applying LPP and Margins is typically the most appropriate methodology for these. These two articles describe how to go about applying Margins and where and when it is appropriate to set LPP on these types of expenditures. https://implan.com/index.php?option=com_content&view=article&id=160&Itemid=1702 https://implan.com/index.php?option=com_content&view=article&id=161 Thanks!
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