Center for Applied Demography & Survey Research
University of Delaware
The Economic Impact of the University of
Delaware’s College of Health Sciences
by
Daniel T. Brown
March 2013
An Analysis of Delaware’s Economy
Economic Analysis Studies
The Economic Impact of the University of Delaware’s College of Health Sciences
The University of Delaware is committed to assuring equal opportunity to all persons and does
not discriminate on the basis of race, color, gender, religion, ancestry, national origin, sexual
preference, veteran status, age, or disability in its educational programs, activities, admissions, or
employment practices as required by Title IX of the Educational Amendments of 1972, Title VI
of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities
Act, other applicable statutes, and University policy. Inquiries concerning these statutes and
information regarding campus accessibility and Title VI should be referred to the Affirmative
Action Officer, 305 Hullihen Hall, 302/831-2835 (voice), 302/831-4552(TDD).
ii
The Economic Impact of the University of Delaware’s College of Health Sciences
Acknowledgements
The author would like to thank the College of Health Sciences for their support and interest in
conducting this study. We would particularly like to acknowledge the Associate Dean of
Research Daniel C. Flynn for his efforts collecting critical information and reviewing earlier
drafts.
iii
The Economic Impact of the University of Delaware’s College of Health Sciences
TABLE OF CONTENTS
Page
List of Tables ...................................................................................................................................v
List of Figures ............................................................................................................................... vii
Executive Summary ..................................................................................................................... viii
Introduction ......................................................................................................................................1
Understanding Economic Impact Analyses .....................................................................................6
The Economic Footprint and Counterfactual .................................................................................11
Results ............................................................................................................................................35
Conclusion .....................................................................................................................................49
References ......................................................................................................................................51
Appendix ........................................................................................................................................52
iv
The Economic Impact of the University of Delaware’s College of Health Sciences
LIST OF TABLES
Table
Page
Table 1
CHS Degree Programs .............................................................................................3
Table 2
Most Common Location Decisions of CHS Alumni .............................................12
Table 3
Expected Wage for Persons in the Healthcare and Social
Assistance Sector, by Education and Industry .......................................................14
Table 4
CHS Bachelor's Degree and Relevant ACS Degrees.............................................15
Table 5
Top 8 Most Common Occupations among Employed Persons with
a Bachelor's Degree in a Related Health Degree ...................................................16
Table 6
Mean Wage of Employed Persons Holding a Relevant Terminal
Bachelor’s Degree: by Age ....................................................................................17
Table 7
Mean Wage of Employed Persons Holding a Relevant Bachelor’s
Degree and a Graduate Degree: by Age ................................................................18
Table 8
Alumni Residency Assumptions – Probability that Alumni Reside
in Local Area Post Graduation...............................................................................20
Table 9
Off-Campus Spending by CHS Students ..............................................................21
Table 10
Off-Campus Spending by CHS Visitors ................................................................22
Table 11
Direct and Indirect Expenses Used by the College of Health
Sciences..................................................................................................................23
Table 12
Non-Labor Input Costs for Junior Colleges, Colleges, Universities,
and Professional Schools .......................................................................................24
Table 13
State and Local Government Funds Benefitting CHS ...........................................32
Table 14
Summary of CHS Footprint, Counterfactual, and Direct Economic
Impact ....................................................................................................................34
Table 15
CHS’s Total Economic Impact in Delaware Due to the Student
Population ..............................................................................................................36
Table 16
CHS’s Total Economic Impact in Delaware Due to Increased
Human Capital .......................................................................................................38
v
The Economic Impact of the University of Delaware’s College of Health Sciences
LIST OF TABLES (continued)
Table
Page
Table 17
CHS’s Total Economic Impact in Delaware Due to the OffCampus Spending ..................................................................................................39
Table 18
CHS’s Total Economic Impact in Delaware Due to Labor and
Other Material Inputs .............................................................................................40
Table 19
CHS’s Total Economic Impact in Delaware Due to Health Clinics ......................41
Table 20
CHS’s Total Economic Impact in New Castle County Due to
Health Clinics.........................................................................................................42
Table 21
CHS’s Total Economic Impact in Kent County Due to Health
Clinics ....................................................................................................................42
Table 22
CHS’s Total Economic Impact in Sussex County Due to Health
Clinics ....................................................................................................................42
Table 23
CHS’s Total Economic Impact in Delaware Due to Construction of
the Health Science Complex ..................................................................................43
Table 24
Assumptions Behind the Business Occupants of the Health Science
Complex .................................................................................................................44
Table 25
CHS’s Total Economic Impact in Delaware Due to New
Businesses in the Health Science Complex ...........................................................45
Table 26
CHS’s Total Economic Impact in Delaware Due to Net Tax
Revenues ................................................................................................................46
Table 27
CHS’s Total Economic Impact in Delaware ..........................................................47
Table 28
CHS’s Total Impact on Employment, by Industry ................................................48
Table 29
Employment, Wages, and Job Projections for Speech Pathologists,
by State...................................................................................................................53
Table 30
Estimated Annual Increase in University Expenses due to Program
Enrollment..............................................................................................................55
Table 31
Total Economic Impact of Speech Pathology Program and Clinic .......................57
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The Economic Impact of the University of Delaware’s College of Health Sciences
LIST OF FIGURES
Figure
Page
Figure 1
Annual Fall Enrollment for the CHS ......................................................................2
Figure 2
Degrees Granted Between Summer 2011 and Spring 2012.....................................4
Figure 3
Illustration of the REMI PI+ Model.........................................................................8
Figure 4
Illustration of a Policy Forecast in REMI ..............................................................10
Figure 5
Expected Wage for Persons in the Healthcare and Social
Assistance Sector, by Education ............................................................................13
Figure 6
Annual Wages by Age and Educational Attainment .............................................19
Figure 7
Expected Number of Patient Visits Accommodated by Nurse
Managed Health Clinics .........................................................................................26
Figure 8
Physical Therapy Clinics and NMHC’s Expense Decomposition .........................27
Figure 9
Number of Employees per 1,000 Sq Ft, by Business Type ...................................29
Figure 10
Expected Increase in Delaware Wages Due to the CHS Enabling
Additional Education since 1997 ...........................................................................37
Figure 11
Student and Visitor Off Campus Purchases ..........................................................54
Figure 12
Expected Revenue from Speech Pathology Clinic ................................................56
vii
The Economic Impact of the University of Delaware’s College of Health Sciences
Executive Summary
The College of Health Sciences (CHS) at the University of Delaware offers degrees in health
care and clinical services. Bachelor’s and graduate programs are available in medical laboratory
science, nursing, kinesiology, applied physiology, physical therapy, behavioral health and
wellness, and nutrition. Students receive traditional classroom instruction, as well as hands on
learning in clinical and laboratory settings. Graduates go on to pursue nursing, medical
technician, and academic professions in the health sciences.
Research at the CHS covers many areas, from improving the quality of patient care to
rehabilitative technologies for spinal cord injuries. The college also boasts one of the best
physical therapy programs in the nation. Strategic partnerships exist with local businesses, nonprofits, and hospitals, and the CHS conducts community outreach through its physical therapy
clinics and nurse managed health clinics.
The Center for Applied Demography & Survey Research at the University of Delaware
conducted this report to assess the economic impact that the CHS has in the State of Delaware.
The report considers the actual activity of the college and the hypothetical activity that would
exist in lieu of the college. Although this work was funded by the CHS, the author is solely
responsible for its design and execution.
viii
The Economic Impact of the University of Delaware’s College of Health Sciences
The following points summarize the main results in this report.
•
The CHS enrolls 2,273 undergraduates and 337 graduate students, approximately 11% of
students in the University of Delaware. Enrollment is expected to increase by nearly 67
students each year over the next five years.
•
Students graduating with a bachelor’s (graduate) degree from the CHS are expected to
earn $450,000 ($670,000) more over the course of their working lifetimes than if they
received a terminal associate’s (bachelor’s) degree instead.
•
An estimated $51.3 million in faculty, staff, supplies, support, room and board expenses
are spent on CHS students.
•
CHS students and visitors spend $39.7 million in off-campus purchases each year.
•
The CHS will move into a $31 million health sciences complex being built on the STAR
Campus. Besides enabling the CHS’s expansion, the complex will also offer 200,000 sq.
ft. of space for businesses wishing to partner with the college.
•
The physical therapy clinics and nurse-managed health clinics currently add 15 jobs to
Delaware’s economy. Plans to expand service into Kent and Sussex counties will raise
that number to 23 jobs by 2017 in Delaware.
•
The CHS created 538 jobs and $40 million in compensation in Delaware in 2012 as a
result of direct, indirect, and induced effects. Building the health sciences complex will
create 268 jobs in the construction sector in 2013. By 2017, the CHS will create 770 jobs.
•
In 2012, the CHS created $68 million in total economic activity and $44 million in gross
regional product. In 2017, the CHS is expected to cause $94 million in total economic
activity and $61 million in gross regional product.
•
In 2012, wages and salaries were $34 million higher as a result of the CHS. Federal and
state personal tax receipts were $12 million higher, and $17 million of consumption
expenditures was caused by the CHS.
•
A speech pathology program and clinic are being considered to join the CHS in 2017.
The program is expected to create 18 jobs in the long run and raise annual compensation
by $1.6 million. Approximately $2.3 million in economic output will be generated by the
program; $1.5 million of which is gross regional product.
ix
The Economic Impact of the University of Delaware’s College of Health Sciences
Introduction
Founded in 1743, the University of Delaware (UD) is the largest postsecondary institution in
Delaware and an integral part of the state. The university’s main campus is in Newark, and
satellite campuses are located in Wilmington, Dover, Georgetown, and Lewes. In 2012, 16,340
undergraduate and 3,617 graduate students were enrolled at the main campus, and the UD was
ranked 75th among all universities by the U.S. News and World Report.
The College of Health Sciences (CHS) is one of seven colleges in the UD. Its mission is to
provide education, research, and leadership in health related areas while also conducting
community outreach. In the fulfillment of this mission, the CHS engages in activities that impact
Delaware’s economy. The purpose of this report is to estimate that impact. Although this work
was funded by the CHS, the author is solely responsible for its design and execution.
The College of Health and Nursing Sciences was originally formed in 1997 as a merger of the
College of Nursing and the College of Physical Education, Athletics, and Recreation. The merger
also encompassed the Department of Nutrition and Dietetics from the College of Human
Resources and became home to the interdisciplinary Biomechanics and Movement Science
Program. The name was changed to the College of Health Sciences in 2005, and the Department
of Physical Therapy moved to the new college in 2009.
1
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 1 Annual Fall Enrollment for the CHS
3,500
3,000
2,500
2,000
Graduate
1,500
Undergraduate
1,000
500
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
(Forecast)
•
Source: University of Delaware Department for Institutional Research
Currently the CHS enrolls 2,273 undergraduate students and 337 graduate students;
approximately 11% university enrollment. Figure 1 shows CHS enrollment over the last 16
years. Enrollment hovered around 1,600 between 1996 and 2003, and began increasing in 2004.
By 2008, it had approached 2,000 students. Merging with the Department of Physical Therapy
in 2009 caused another jump in enrollment. The college plans to expand undergraduate
enrollment by 45 each year students and graduate enrollment by 22 students each year over the
next five years.
CHS also enrolls proportionally more Delaware residents than other colleges in the university.
Approximately 44% of CHS undergraduate and 40% of CHS graduate students are residents of
Delaware. By contrast, approximately 35% of UD undergraduate students and 24% of UD
graduate students outside the CHS are Delaware residents.
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The Economic Impact of the University of Delaware’s College of Health Sciences
Table 1 CHS Degree Programs
College of Health Science Degrees
Dietetics
Dietetics & Nutrition
Applied Nutrition
Nutritional Science
Human Nutrition
Health and Physical Education
Health Behavior Science
Health Coaching
Health Promotion
Health Studies (Occupational Therapy)
Athletic Training
Exercise Science
Applied Physiology
Biomechanics and Movement Science
Physical Therapy
Medical Laboratory Science
Medical Diagnostics
Nursing
Nursing Science
Bachelor
x
Cert.
x
x
Master
Doctorate
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
CHS offers 11 undergraduate majors and 13 graduate degree programs, including 4 graduate
certificate programs. The degrees span nursing, physical therapy, athletic training, nutrition,
behavioral health, medical technologies, and exercise science. The CHS also runs the Medical
Scholars Program in collaboration with Thomas Jefferson University in Philadelphia. Students
wishing to become physicians can enter this program to receive a pre-med degree in liberal arts
and then pursue an MD at Jefferson Medical College. The Biomechanics and Movement
Science is an interdisciplinary graduate program (joint with the Department of Mechanical
Engineering) for students interested in motor function, physiology, and biomechanics.
The Department of Physical Therapy also operates clinics intended for orthopedic, athletic,
pediatric, and geriatric types of rehabilitation. By offering clinical services to the public, CHS
students receive hands on learning experiences while the community receives excellent rehab
services from experts in the field.
3
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 2 Degrees Granted Between Summer 2011 and Spring 2012
250
200
150
100
Graduate
Undergraduate
50
0
Department of Department of Department of Department of
Behavioral Kinesiology and Physical Therapy
Medical
Health and
Applied
Laboratory
Nutrition
Physiology
Sciences
School of
Nursing
Figure 2 shows the number of CHS degree completions between Summer 2011 and Spring 2012
by department. The School of Nursing is the largest CHS component, handing out 173 bachelor
degrees and 32 master degrees in 2012. The Department of Behavioral Health and Nutrition
awarded the highest number of graduate degrees in the college, with 41 professional certificates
and 7 master degrees. The Department of Physical Therapy awarded 34 doctoral degrees.
Besides teaching students important skills for careers in the health sciences, the CHS also
conducts important leading-edge research in the health sciences. For example, some research
analyzes the effects of poverty on nutrition and behavioral health while other research focuses on
using electrical stimuli for spinal cord rehabilitation.
4
The Economic Impact of the University of Delaware’s College of Health Sciences
During the next few years, the CHS will be expanding into UD’s STAR campus. The STAR
campus is a long term plan to redevelop the old Chrysler manufacturing plant into a campus
solely focused on science and technology. The first step in this plan is to construct a health
sciences complex that will have state-of-the-art facilities for the CHS. The complex will create
new space and equipment for the physical therapy clinics, nurse managed health clinics, and
clinical research centers, as well as modern classrooms and offices. Job training programs
affiliated with the Delaware Health Alliance will be enhanced, and new resources will be
available for biomedical research.
The STAR campus also rejuvenates the nearby railroad station to accommodate partnerships
forged with out-of-state organizations, like Thomas Jefferson University. Synergetic
collaboration with local organizations, like Christiana Care and Nemours is also anticipated at
the new complex. Students will find job opportunities while working with local hospitals,
hospitals will be able to influence the skills of their future employees, research opportunities will
be created for CHS faculty, and high quality clinical care will be made available for the
Delaware community. Space on the STAR campus will also be available for additional health
sciences related businesses wishing to partner with the college.
The CHS is a deeply rooted organization within Delaware. All of the aforementioned activities
impact the state’s economy in different ways. For example, employee wages and student
spending raise consumption, which in turn induces more income and household spending in the
state. The CHS also buys goods and services from Delaware suppliers as inputs. Research
grants raise the compensation of professionals, while the rehabilitation clinics, spin-off
companies, and CHS business partners are each a source of output and job creation. Given UD’s
pivotal role in Delaware, it receives more than $110 million each year from the state’s General
Fund, and a portion of that tax revenue helps fund the CHS. This report quantifies the overall
impact that the CHS causes in Delaware’s economy.
5
The Economic Impact of the University of Delaware’s College of Health Sciences
Understanding Economic Impact Analyses
Analyzing how various organizations and policies affect the economy is known as an economic
impact analysis (EIA). This section briefly covers important concepts of EIA to ensure proper
interpretation of the methods and results that are discussed later in the report.
The goal of EIA is to predict how policies will affect the macroeconomy. Legislators, for
example, may want to know how much employment might change if public funds were spent on
infrastructure as one option, or alternatively, if income taxes were lowered. EIA simulates
policies using economic and statistical models in order to answer such questions. Economic
models necessarily reduce the complex interactions of labor markets, factor markets, financial
markets, consumption patterns, government spending, etc. down to a list of equations and
parameters. Although some models may better describe certain economic components by
changing that list, ultimately every model is a simplification driven by assumptions.
It is therefore imperative that the modeler make appropriate assumptions when simulating policy.
Logical rigor and economic theory must be applied to each assumption if the simulation is to
accurately describe reality.
6
The Economic Impact of the University of Delaware’s College of Health Sciences
The economic impact of an organization refers to the change in macroeconomic variables caused
by the organization. Unfortunately, causal interpretation is difficult to discern. One cannot
simply measure every economic aspect of an organization, called that organization’s economic
footprint, and plug it into an economic model. Instead, it is crucial that the modeler specify what
activity would likely exist if the organization were hypothetically removed from the economy.
That hypothetical activity, called the counterfactual, is not caused by the organization, since it
would have happened anyway. The proper economic impact is therefore the difference between
the organization’s economic footprint and its counterfactual.
For instance, the CHS’s economic footprint includes all of its students’ off campus spending.
However some of that spending would have occurred without the CHS. Since some students
would likely attend another Delaware college in the CHS’s absence, the CHS did not cause every
dollar of student spending. The amount of spending not caused by CHS is in the counterfactual.
Once the economic footprint and counterfactual have been defined, the impact enters into an
economic model to simulate how that one impact influences the rest of the economy.
The REMI PI+ Model
The REMI PI+ software is a dynamic and structural model of Delaware’s economy that is
capable of estimating causal relationships. It is a regionalized version of a benchmarked national
model. Ten sub-regions are in the model, including each of the three counties in Delaware;
Salem County, NJ; Burlington, Camden, and Gloucester counties in New Jersey (combined);
Bucks, Montgomery and Philadelphia counties in Pennsylvania (combined); Delaware and
Chester counties in Pennsylvania (combined); Cecil County, MD; Harford County, MD; and the
combination of 10 counties in Maryland and Virginia that constitute the remainder of the
Delmarva peninsula. Each sub-region is treated as an independent, fully functioning economy
that interacts with every other sub-region specifically and with the nation in general.
7
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 3
Illustration of the REMI PI+ Model
The model is founded on conventional economic assumptions, such as households maximize
utility and firms maximize profits. Hundreds of equations have been developed over the last 25
years to describe the economy’s structure mathematically. These equations can be organized
into five major components: Output and Demand, Labor and Capital Demand, Population and
Labor Force, Wages-Prices-Costs, and Market Shares. Figure 3 illustrates REMI’s main
structure and components.
8
The Economic Impact of the University of Delaware’s College of Health Sciences
The equations assume that businesses use labor, capital, and fuel as inputs to supply goods and
services as output. Households (and some businesses) supply the inputs of production and
generate the demand for goods and services. Wages, prices, and profits adjust to form
equilibriums in each market, but the equilibrating process might take more than one year to
achieve. High market shares can generate cluster effects that influence factor productivity and
input prices.
REMI PI+ is a general equilibrium model with feedback. This means that the model describes
the entire economy as it changes over time. For example, changes in population, demographics,
and wages each influence the labor supply at any moment, but are themselves influenced in the
future by changes in today’s labor supply. Adjustments happen gradually, so the economy does
not statically jump from one equilibrium to another. This is a major advantage of using REMI
versus other economic simulation models (RIMS II, IMPLAN).
The general equilibrium model can capture the multiplier effect due to the repeated interaction
and eventual equilibration in other parts of the economy. In a sense, the multiplier effect is the
cumulative impact of any single change to the economy. For example, as final demand generates
intermediate demand, one dollar of retail sales will increase sales in construction 0.28¢, sales in
fabricated metal product manufacturing 0.30¢, sales in utilities 1.1¢, etc. The total impact from
these effects can be quite large.
9
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 4
Illustration of a Policy Forecast in REMI
What effect
would Policy X
have?
Change in policy
variables
associated with
Policy X
The REMI Model
Baseline
values for all
policy
variables
Control Forecast
Alternative Forecast
Compare Forecasts
Figure 4 illustrates how REMI estimates the effects of a policy. First, the REMI model is
calibrated and a standard future scenario is predicted. This is called the control forecast. Then a
policy is proposed that changes the economy. A modeler adapts this change into REMI by
selecting input variables and simulating the outcome. This alternative forecast is then compared
to the control forecast. Differences between the two forecasts are attributed to the policy.
This report employs the REMI PI+ model to understand the economic effect of the CHS. Since
there are thousands of variables influenced in the PI+ model, the report cannot detail how the
CHS affects each one. Instead, the report will focus on a few key macroeconomic variables,
including population, employment, output, gross regional product, consumption, and wages.
The upcoming section quantifies the footprint and counterfactual for various CHS components,
so that the economic impact can be simulated by the REMI model.
10
The Economic Impact of the University of Delaware’s College of Health Sciences
The CHS Footprint and Counterfactual
This section derives what modeling assumptions will define the CHS’s economic impact. Many
aspects are considered, from increased human capital in the workforce to the construction of the
health sciences complex. Each subsection estimates the footprint of CHS components and then
calculates the counterfactual components. For the reader interested in skipping these derivations,
Table 14 on page 34 summarizes the derivations made in this chapter.
Population
The CHS impacts Delaware’s population in multiple ways. Most obviously, the 1,480 nonresident students are a direct addition to Delaware’s population. The impact of 1,130 Delaware
resident students is less obvious, because many of these students would have likely remained in
the state in the CHS’s absence. In 2012, 524 CHS students transferred to the college from
another Delaware institution. The counterfactual scenario assumes that all of these students
would complete their education in Delaware. Of the remaining 606 resident students, the
counterfactual assumes that 35% would have left the state if the CHS did not exist.1 Thus, this
report causally ties an increase of 1,692 college students to the CHS.
1
According to Kodrzycki (2001), 35% of college graduates moved between states after high school.
11
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 2 Most Common Location Decisions of CHS Alumni
State
Delaware
Pennsylvania
New Jersey
Maryland
New York
% of CHS Alumni
33.7
18.4
11.8
9.1
4.0
State
Virginia
Florida
California
North Carolina
Massachusetts
% of CHS Alumni
2.5
2.4
2.1
2.1
1.3
Once CHS graduates receive their terminal degrees, they will enter a national or regional labor
market and migrate for economic reasons. Table 2 lists the 10 most common states of residence
for CHS alumni. Although the table indicates that nearly a third of CHS alumni reside in
Delaware, it is logically challenging to credit the CHS for their alumni’s residency decisions.
Other factors, like job opportunities and familial connections are also major influencing factors.
Human Capital and Wages
The academic programs offered by CHS develop human capital, thereby enabling their students
to earn higher wages (see Figure 5). Nationally, persons working in the healthcare industry with
a bachelor’s degree have an average wage that is nearly 20% higher than persons with a terminal
associate’s degree. Similarly, persons holding a master’s degree earn 22% more than those with
just a bachelor’s degree. A person with a doctorate degree earns nearly 50% more than a person
with a just master’s degree. 2
2
A widely known critique of such claims is that people with different education levels also have different levels of
other wage-related factors, like intelligence, creativity, or determination. How much of the wage differential is
explained by education alone is therefore questioned, since more education and higher wages may simply reflect a
person’s innate ability. After decades of research, the literature has generally agreed that each year of education
increases the annual salary by 10%. Given that associate’s, bachelor’s, and master’s degrees require 2, 4, and 6
years of post-secondary education respectively, the unadjusted return to educational degrees of persons working in
the health care industry are actually quite close to what would solely be attributed to education.
12
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 5 Expected Wage for Persons in the Healthcare and Social Assistance Sector, by Education
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
•
•
Expected wages hold constant for age, race, and sex effects. A regression on the wage income of working
adults in the healthcare and social assistance sector was performed with a quadratic effect for age and
dummy variables for race, sex, and education categories.
Source: Authors calculations of the 2009-2011 American Community Survey
For a given level of education, wages also vary extensively based on the type of industry in the
healthcare and social assistance sector (see Table 3). For example, the average person with a
bachelor’s degree working in a hospital earned $58,000, while the average person with a
bachelor’s degree working vocational rehabilitation earned $37,000. Similarly, the high wages
for persons with professional certification largely comes from persons working in physician
offices, hospitals, outpatient care facilities, and other health care service facilities. Professional
certification for persons working in vocational rehabilitation and nursing care facilities, on the
other hand, earn substantially lower wages.
13
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 3 Expected Wage for Persons in the Healthcare and Social Assistance Sector, by Education and Industry
Offices of physicians
Offices of dentists
Offices of chiropractors
Offices of optometrists
Offices of other health practitioners
Outpatient care centers
Home health care services
Other health care services
Hospitals
Nursing care facilities
Residential care facilities, without nursing
Individual and family services
Comm. food and housing, and emergency svc
Vocational rehabilitation
Child day care
•
•
L.T. HS
HS/GED
Some Coll.
Assoc.
Bach.
Mast.
Doct.
Prof. Cert.
$35,665
$26,294
$23,658
$24,480
$16,281
$23,977
$14,352
$24,444
$23,923
$18,299
$17,316
$14,984
$17,516
$12,251
$7,364
$36,493
$29,870
$23,398
$28,912
$26,540
$27,654
$17,917
$30,076
$28,519
$21,999
$20,267
$19,442
$20,082
$16,314
$11,103
$37,875
$31,226
$23,174
$28,437
$27,351
$31,497
$20,874
$36,190
$35,978
$26,087
$23,291
$24,069
$24,226
$23,700
$12,769
$39,931
$38,611
$23,065
$28,794
$34,015
$38,541
$34,102
$42,678
$47,695
$35,993
$27,944
$26,602
$27,026
$30,431
$15,624
$48,362
$40,056
$26,335
$34,463
$34,589
$43,691
$40,445
$58,387
$57,996
$43,107
$34,756
$35,850
$38,064
$37,044
$20,202
$70,941
$45,984
$28,783
$44,386
$29,788
$51,805
$52,379
$76,531
$72,098
$52,761
$45,210
$41,109
$43,981
$45,745
$28,168
$119,385
$97,354
$50,986
$56,582
$34,209
$76,101
$58,827
$104,785
$99,718
$69,500
$51,536
$48,786
$57,795
$54,362
$38,375
$151,571
$97,772
$44,826
$67,570
$50,391
$124,105
$55,445
$139,307
$132,468
$65,373
$55,282
$48,062
$66,139
$49,286
$23,419
Expected wages hold constant for age, race, and sex effects. A regression on the wage income of working adults in the healthcare and social assistance
sector was performed with a quadratic effect for age and dummy variables for race, sex, and education categories.
Source: Author’s calculations of the 2009-2011 American Community Survey
14
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 4 CHS Bachelor's Degree and Relevant ACS Degrees
CHS Bachelor’s Degree
Medical Laboratory Science
Medical Diagnostics
Nursing
Health Studies (Occupational Therapy)
Athletic Training
Exercise Science
Health and Physical Education
Health Behavior Science
Dietetics
Applied Nutrition
Nutritional Science
Human Nutrition
ACS Code
6105
6105
6107
6109
6109
6109
6110
6110
6199
6199
6199
6199
Matched ACS Bachelor’s Degree
Medical Technologies
Medical Technologies
Nursing
Treatment/Therapy
Treatment/Therapy
Treatment/Therapy
Community and Public Health
Community and Public Health
Miscellaneous Health/Medical Professions
Miscellaneous Health/Medical Professions
Miscellaneous Health/Medical Professions
Miscellaneous Health/Medical Professions
The field of the degree a student obtains is another major factor influencing job market success.
Because suitable labor market information on CHS alumni does not exist, national data from the
American Community Survey (ACS) was used to evaluate the importance of degree field. Table
4 maps the bachelors degrees offered by CHS to their most similar counterparts in the ACS.
As a check that the correspondence between CHS and ACS degree fields are reasonable, Table 5
lists the most common occupations among working adults holding one of the five ACS bachelor
degrees. The table indicates that most of the occupations filled by persons with ACS degrees
match the expected occupations of CHS graduates. For example, nursing degree graduates were
most likely to work as nurses, medical technology degrees graduates most likely worked as
technologists and technicians etc. For students earning degrees in nutrition and dietetics, the
closest ACS matched degree is miscellaneous medical and health service.
15
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 5 Top 8 Most Common Occupations among Employed Persons with a Bachelor's Degree in a Related Health Degree
Medical Technologies Degree
Clinical Laboratory Technologists & Technicians
Diagnostic Related Technologists & Technicians
Medical And Health Services Managers
Respiratory Therapists
Registered Nurses
Physical Scientists, All Other
Miscellaneous Managers, Inc. Funeral Service
Nursing, Psychiatric, And Home Health Aides
% of Degree
Holders in
Occupation
36.3%
11.5%
4.5%
3.0%
2.4%
2.3%
2.0%
1.5%
Community and Public Health Degree
Registered Nurses
Other Healthcare Practitioners And Technical
Miscellaneous Managers, Inc. Funeral Service
Secretaries And Administrative Assistants
Elementary And Middle School Teachers
Medical And Health Services Managers
Recreation And Fitness Workers
Social Workers
Nursing Degree
Registered Nurses
Medical And Health Services Managers
Nursing, Psychiatric, And Home Health Aides
Social Workers
Licensed Practical & Vocational Nurses
Postsecondary Teachers
Elementary And Middle School Teachers
Clinical Laboratory Technologists And Technicians
77.0%
2.9%
2.0%
0.7%
0.7%
0.6%
0.6%
0.6%
Miscellaneous Health Medical Degree
Dietitians And Nutritionists
Social Workers
Registered Nurses
Counselors
Secretaries And Administrative Assistants
Elementary And Middle School Teachers
Retail Salespersons
Food Service Managers
Treatment/Therapy Degree
Physical Therapists
Occupational Therapists
Other Therapists, Inc. Exercise Physiologists
Registered Nurses
Medical And Health Services Managers
Other Healthcare Practitioners And Technical
Respiratory Therapists
Elementary And Middle School Teachers
26.0%
17.6%
2.7%
2.7%
2.3%
2.1%
2.0%
1.7%
•
% of Degree
Holders in
Occupation
5.5%
4.7%
4.2%
2.8%
2.6%
2.5%
2.1%
2.1%
15.9%
6.7%
3.7%
3.7%
3.1%
2.3%
1.8%
1.7%
Source: 2009-2011 American Community Survey
16
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 6 Mean Wage of Employed Persons Holding a Relevant Terminal Bachelor’s Degree: by Age
Medical Technologies
Nursing
Treatment/Therapy
Community and Public Health
Misc. Health/Medical Professions
CHS Weighted Total
•
20's
$37,954
$42,831
$28,901
$24,836
$29,366
30's
$53,011
$55,042
$50,701
$44,177
$40,946
40's
$61,735
$60,113
$55,470
$56,383
$40,215
50's
$61,804
$63,297
$54,995
$62,694
$43,822
60-64
$56,958
$60,934
$55,493
$50,247
$41,007
65+
$39,656
$42,046
$45,527
$50,266
$29,746
$34,146
$50,305
$55,255
$57,372
$54,831
$41,934
Total
$55,493
$56,416
$49,877
$42,442
$38,633
Source: 2009-2011 American Community Survey
Table 6 shows the average annual wage of working persons with a terminal bachelor’s degree in
one of the five ACS degree fields. Nursing is the most lucrative career choice, garnering an
average wage of $56,400 across all age groups. Those classified as receiving a miscellaneous
health degree – the category that includes nutrition and dietetics degrees – receive the lowest
annual wage on average, earning an average of $38,600 per year over a lifetime. Average
salaries tend to peak for persons in their 50’s, ranging between $43,800 and $63,300 for persons
with related bachelor’s degrees.
The final row in Table 6 weights the average salaries by the number of CHS degrees awarded in
2012. The row represents the expected average salary of the typical CHS graduate at various
ages. The average graduating CHS student is expected to earn nearly $34,100 per year during
his or her 20’s, but then $50,300 per year during his or her 30’s.
17
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 7 Mean Wage of Employed Persons Holding a Relevant Bachelor’s Degree and a Graduate Degree: by Age
Gen. Medical and Health Service
Medical Technologies
Nursing
Treatment/Therapy
Community and Public Health
Misc. Health/Medical Professions
CHS Weighted Total
•
20's
$48,018
$49,494
$57,134
$45,956
$45,041
$37,108
$48,739
30's
$70,711
$74,239
$78,280
$68,592
$60,334
$56,386
$69,781
40's
$92,922
$105,596
$85,382
$80,179
$87,401
$65,864
$82,037
50's
$91,378
$84,832
$84,479
$73,027
$92,548
$63,243
$78,128
60-64
$75,477
$82,017
$75,178
$68,161
$80,206
$59,357
$71,261
65+
$57,067
$70,650
$52,328
$54,946
$47,115
$51,114
$53,648
Total
$74,505
$85,770
$79,494
$68,287
$72,527
$58,941
Source: 2009-2011 American Community Survey
According to internal sources, 18% of CHS undergraduate students pursue further education
after receiving bachelor’s degrees. Assuming these graduates followed national trends, Table 7
reveals the expected average annual wage once they begin working. As expected, the average
wage income is significantly higher for graduate degree holders than it is for those receiving a
terminal bachelor’s degree. The expected annual income of the typical CHS alumni with a
graduate degree ranges between $48,700 and $82,000 over his or her working life.
Figure 6 compares the average annual wage of persons holding relevant bachelor’s or graduate
degrees to persons with less educational attainment. The trend is clear; working people with
these degrees earn substantially more than working persons without four year degrees.
More specifically, the typical CHS student with a terminal bachelor’s degree that works from age
22 to 65 can expect to receive $2.18 million in wages over his or her lifetime. Similarly, the
typical CHS student with a terminal graduate degree who works from ages 27 to 65 is expected
to earn $2.85 million in lifetime wages. By contrast, persons with just high school diplomas who
work from age 18 to 65 are expected to receive $1.32 million in wages over their lifetimes.
Persons with terminal associate’s degrees who work from age 20 to 65 are expected to receive
$1.73 million over their working lives.
18
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 6 Annual Wages by Age and Educational Attainment
$100,000
HS or GED
$80,000
$60,000
Some College
$40,000
Associates
$20,000
CHS Bachelors Degree
$0
20's
30's
40's
50's
60-64
65+
CHS Graduate Degree
Based on this information, the typical CHS graduating senior earns an additional $450,000 more
over his or her lifetime compared to someone with a terminal associate’s degree, or
$450,000
approximately $10,465 per year �
65−22
� that is worked. Similarly, the typical CHS graduate
student is expected to earn $670,000 more in a lifetime compared to persons with terminal
bachelor’s degrees, or $17,632 per working year �
$670,000
65−27
�. Given that 482 persons received
their terminal bachelor’s degrees and 94 received graduate degrees in 2012, CHS are expected to
receive $6.7 million in annual wages more than what they would have received had they
obtained less education instead.
Of course, most of the CHS students would have hypothetically received similar levels of
education at another college or university, so almost all of the human capital gains occur in the
counterfactual. Students transferring from other in-state programs, (e.g. Delaware Technical
Community College), on the other hand, are more likely to have obtained less education if not
for the CHS. It is assumed that 75% of the 348 in-state, undergraduate transfer students would
have just received a terminal associate’s degree if not for the CHS. Assuming that these students
graduate after 3.2 years at UD, 3 then 82 of the bachelor’s degrees awarded in 2012 was
education that would not have been obtained otherwise. These degrees represent an increase of
$858,000 in annual wages for each year’s graduating class.
3
An average graduation rate was calculated for in-state transfer students and for other undergraduate students based
on 2012 enrollment and awarded degrees. In-state transfer students were assumed to spend 2 fewer years at UD
compared to non-transfer students.
19
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 8 Alumni Residency Assumptions – Probability that Alumni Reside in Local Area Post Graduation
In-state students
Out-of-state students
Total in DE, NJ, PA, and MD
Total in Delaware
UG students
995
1,278
Kodrzycki
80%
49%
63%
29%
Adjusted
86%
63%
73%
34%
Of course, not all of these alumni will necessarily live in the state, so only some of the increased
earnings will impact Delaware. Kodrzycki (2001) used the 1979 National Longitudinal Survey
of Youth to estimate how the choice to migrate out-of-state for college affected the student’s
post-college migration decision. 4 She found that college graduates who did not migrate (i.e.
resident students) had an 80% chance of remaining in the local area five years after college.
Non-resident college students were estimated to have a 49% chance of remaining in the local
area of their college after graduation.
Table 8 classifies CHS undergraduate students into in-state and out-of-state students. Applying
Kodrzycki’s probabilities to CHS students implies that 63% of CHS students will likely remain
in the local Delaware region after graduation. Because internal estimates provided by CHS
estimates this proportion to be 73% instead of 63%, Kodrzycki’s probabilities are adjusted in
equal proportions so that they match the actual residency locations of CHS alumni (see Table 2).
The table shows that 86% of in-state students are assumed to find work in the local area, and
47% of those persons find work in Delaware, 40% of these increased wages likely remain in
Delaware. Thus, the REMI model assumes that salaries and wages going to Delaware’s
households rise by $343,000 for the 2012 graduating class. Previous CHS graduating classes are
assumed to have similar per-student gains to compensation.
4
For small states like Delaware, Kodrizycki used an alternative definition of the local area to include the state in
questions as well as any other contiguous state (i.e. Maryland, Pennsylvania, and New Jersey). Probabilities
reported in Table 8 reflect this alternative definition.
20
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 9 Off-Campus Spending by CHS Students
Category
Housing
Utilities
Telephone and Cable
Food and Beverage
Entertainment and Recreation
Services
Clothing
Books and Educational Supplies
Other Retail
Automobile
Medical and Dental
Charitable Donations
Other
Total
•
% of Total
Expenditures
31.9
5.4
4.0
16.8
4.5
2.8
3.5
10.1
3.5
10.7
2.0
0.9
3.9
100
Residents
$389
$66
$49
$205
$55
$34
$43
$123
$43
$130
$24
$11
$48
$1,218
Nonresidents
$212
$36
$27
$112
$30
$19
$23
$67
$23
$71
$13
$6
$26
$664
Source: Foote (2007)
Spending by the Student Population and CHS Visitors
Next, the footprint and counterfactual of off campus spending by CHS students and visitors are
derived. Table 9 decomposes off-campus student spending using the results of a survey
conducted by Foote (2007). The top three categories are housing (31.9%), food and beverage
(16.8%), and automotive (10.7%). Foote also found that resident students spent approximately
$1,100 per month in 2007, while nonresident students spend $600 per month. Table 9 calculates
the expected monthly purchases of both kinds of students. 5
5
A 10.7% inflation factor was added to Foote’s results.
21
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 10 Off-Campus Spending by CHS Visitors
Number of Visitors†
Estimated Stimulus Impact†
Number of Enrolled Students
Visitors per student
Visitor Impact per UD Student
Total Number of CHS Students in 2012
Inflation Factor
Visitor Impact of the CHS Students
673,984
$115,606,968
21,138
31.9
$5,469
2,610
7.2%
$15,302,254
† Source - Latham and Lewis (2010)
Assuming that resident students stay in Delaware for 12 months out of the year and nonresident
students stay in Delaware for 8 months out of the year, resident CHS students spend $16.5
million per year in Delaware and nonresident students spend approximately $7.9 million. 6
However, since most resident students would have enrolled in a Delaware college in the CHS’s
absence, the counterfactual includes their off campus spending. Applying previous assumptions
about the student population means that 81% of resident student spending is not causally
attributed to the CHS. Removing this from CHS’s footprint yields a direct impact of $11.0
million in off-campus student spending.
The CHS also brings expenditures into the area through visitors coming onto the campus. A
study by Latham and Lewis (2010) found that approximately 674,000 people who visited UD in
2009 spent a total of $116 million on goods and services. Their results imply that 31.9 persons
per enrolled student visit the Newark campus each year, and each UD visitor spent an average of
$171 off-campus. After adjusting for inflation, the portion of visitor spending attributed to CHS
students was $15.3 million in 2012.
6
Foote also decomposes student expenditure by the choice of living on-campus. She finds that students living offcampus spend $1,080 per month, but on-campus students spend just $380 per month. This difference, she notes, is
because “on-campus students have minimal housing and utility expenses”, implying that survey respondents did not
consider room and board fees paid to the university as part of their monthly expenses.
22
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 11 Direct and Indirect Expenses Used by the College of Health Sciences
Salaries & Wages
Other Benefits
Other Inputs
Direct
Academic
Expenses
$11,524,856
$3,808,738
$5,780,062
Academic
Support
$4,743,519
$2,086,568
$2,498,327
Non
Academic
Support
$2,998,615
$1,246,056
$1,614,050
Utilities
and
Facilities
$2,214,542
$1,250,555
$1,022,560
Auxiliary
Services
$886,930
$325,710
$9,306,990
Total
$22,368,462
$8,717,628
$20,221,988
Total
$21,113,656
$9,328,414
$5,858,721
$4,487,657
$10,519,630
$51,308,078
Labor and Other Inputs
The CHS stimulates the economy directly by hiring employees and purchasing goods and
services from other Delaware businesses. For example, there are currently 159 faculty and staff
in the CHS, and they receive $15.3 million in compensation, $11.5 million of which is in the
form of salaries and wages. 7 Of course, the CHS relies on the UD’s academic and nonacademic
support services, such as transportation, library services, public safety, administration, food
services, etc. Table 11 estimates the total direct and indirect costs attributed to the CHS and its
students. 8 In total, the CHS is responsible for $51.3 million, or 6.5%, of total university
expenses.
The CHS is also assumed to be responsible for $20.2 million of non-labor inputs, such as
utilities, computers, desks, projectors, medical equipment, maintenance, dorm rooms, etc.
Because it is not possible to attribute specific university purchases to CHS and its students, these
purchases are estimated using aggregate industry data from the Bureau of Economic Analysis
(BEA).
7
Compensation includes salaries and wages, health insurance, retirement contributions, and payroll taxes.
According to the UD’s 2012 Consolidated Financial Statements, salaries and wages make up approximately 75.1%
of employee compensation.
8
Expenses were estimated using RBB spreadsheets, University of Delaware Financial Statements, and statements of
the State of Delaware General, Capital Improvement, and Agency Funds Appropriated, Received, and Expended
23
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 12 Non-Labor Input Costs for Junior Colleges, Colleges, Universities, and Professional Schools
Percent of
Estimated
Non-Labor
CHS
Industry
Expenses
Expenditures
Real estate
24.6%
$4,981,149
Electric power generation, transmission, and distribution
7.8%
$1,583,911
Natural gas distribution
5.4%
$1,091,670
Water, sewage and other systems
5.1%
$1,028,814
Scientific research and development services
4.8%
$971,921
Animal (except poultry) slaughtering, rendering, and processing
3.0%
$611,567
Wholesale trade
2.9%
$581,749
Other computer related services, including facilities management
2.7%
$536,467
Lessors of nonfinancial intangible assets
2.6%
$516,201
Telecommunications
2.4%
$480,261
Food services and drinking places
1.6%
$323,675
Postal service
1.6%
$319,769
Internet publishing and broadcasting
1.5%
$312,275
Services to buildings and dwellings
1.4%
$284,040
Advertising and related services
1.4%
$283,512
Printing
1.4%
$281,771
Bread and bakery product manufacturing
1.2%
$240,816
Other educational services
0.9%
$190,204
Fluid milk and butter manufacturing
0.9%
$189,941
Hotels and motels, including casino hotels
0.9%
$184,082
Other support services
0.9%
$179,702
Other plastics product manufacturing
0.8%
$160,861
Architectural, engineering, and related services
0.7%
$147,139
Waste management and remediation services
0.7%
$146,981
Fruit and vegetable canning, pickling, and drying
0.7%
$146,928
• Source: Bureau of Economic Analysis – 2002 Detailed Use Table and author’s calculations
Table 12 shows the top 25 types of non-labor expenditures for junior colleges, colleges,
universities, and professional schools in the United States. According to the BEA, colleges and
universities spend nearly 25% of their non-labor expenses on real estate and 18% on utilities
(electricity, gas, and water). Applying the national average of input expenses to CHS non-labor
expenditures yields the last column in Table 12.
24
The Economic Impact of the University of Delaware’s College of Health Sciences
To calculate the economic impact that CHS labor and inputs has on Delaware, the counterfactual
must again be defined. As before, all non-resident students and 19% of the resident students are
assumed to receive instruction at a non-Delaware college or university if the CHS did not exist.
Assuming a constant expense per student ratio implies that another Delaware institution would
have made 35% of CHS expenditures in the counterfactual situation. Thus, total spending
credited to the CHS is reduced from $51.3 million (footprint) to $33.3 million (impact).
25
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 7 Expected Number of Patient Visits Accommodated by Nurse Managed Health Clinics
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2013
2014
2015
2016
2017
2018
2019
Clinics
The CHS’s Department of Physical Therapy runs patient clinics where faculty, staff, and
students provide health care to the public. The clinics specialize in sports medicine and
orthopedics, neurology and gerontology, and pediatrics. Similarly, physicians and faculty
members in the School of Nursing participate in Delaware’s only nurse managed health clinic
(NMHC). These clinics are more than teaching environments, they are also businesses that
create jobs and add to economic activity in the region. In 2012, these clinics made $1.3 million
in annual sales.
The CHS expects that demographic and legislative changes will create a heavy demand for
NMHCs. In preparation for this, the CHS will be expanding its existing clinic as part of the
STAR campus overhaul and opening locations in Kent and Sussex counties. The CHS expects
that the number of patient-visits accommodated by these clinics will rise from nearly 2,000 per
year in 2012 to 12,000 per year in 2019. By that time, the CHS expects that its PT clinics and
NMHCs will generate $2.1 million in sales.
26
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 8 Physical Therapy Clinics and NMHC’s Expense Decomposition
3%
3% 1%
1%
Personnel
7%
Lease
Indirect Costs
10%
Equipment
Supplies
74%
Utilities
Travel
Like any other business, the physical therapy and NMHCs will have to purchase intermediate
goods and services from other businesses. The CHS estimated that approximately three quarters
of its clinics’ expenses go towards personnel expenses, 10% goes towards building leases, and
7% goes to indirect costs. The remaining costs are distributed among equipment (3%), supplies
(3%), utilities (1%), and travel expenses (1%).
In absence of the CHS, other institutions would not likely set up similar clinics in Delaware.
Thus, the full impact of the CHS clinics will be counted in the economic impact.
27
The Economic Impact of the University of Delaware’s College of Health Sciences
STAR Campus
The University of Delaware has committed to a long term plan to redevelop the former Chrysler
Plant on Delaware Avenue into a modern, environmentally friendly setting. The site, called the
STAR Campus, will renovate the 272 acre former manufacturing facility into an academic and
business cluster of science and technology. At the time of writing this report, the east coast
manufacturing facility of fuel cell producer, Bloom Energy, is slated to occupy 50 acres of the
STAR Campus. The Data Centers, a company that provides wholesale data space and IT
engineering services, is also scheduled to use an additional 43 acres of the STAR campus.
However, the first 15 acres to be developed will see CHS’s new home, a 300,000 square foot
health sciences complex.
The health science complex will greatly expand classroom, office, and meeting space available
to the CHS, as well as provide state-of-the-art medical equipment, laboratories, and patient
evaluation facilities. Once built, the CHS expects to increase enrollment and expand the physical
therapy clinics and NMHCs. The complex will also enhance the partnership with the Delaware
Health Sciences Alliance (Thomas Jefferson University, Christiana Health Care Systems, and
Alfred E. DuPont Hospital for Children/Nemours), by enhancing job training and increasing
residency opportunities for medical students.
Construction costs of the health sciences complex were $350,000 in 2011 and $3 million in
2012. $28 million of construction costs are scheduled for 2013. When it is finished, the new
complex will lease 200,000 square feet of space to private businesses interested in partnering
with the CHS. Although tenants have not yet signed leases for the complex, UD expects that it
will draw physicians, therapists, behavioral health practices, medical imaging and medical
testing facilities, a sleep center, an eye care clinic, an orthotic manufacturer, and possibly a retail
pharmacy.
28
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 9 Number of Employees per 1,000 Sq Ft, by Business Type
Administrative/professional office
Medical office (non-diagnostic)
Mixed-use office
Other office
Laboratory
Medical office (diagnostic)
Clinic/other outpatient health
College/university
Other classroom education
Retail store
0
5
10
15
20
Source: 2003 Commercial Building Energy Consumption Survey microdata – author’s calculations
Because the tenant list has not been determined, it is difficult to quantify the economic impact of this new
retail space with great precision. A rough estimate, however, can be made by evaluating the ratio of
employees per square foot of space in similar businesses. The box plots in Figure 9 show the
distribution of ‘main-shift’ employees per 1,000 square feet of floor space for relevant types of
businesses. On average, approximately 2.07 employees work during each business’s main shift
per 1,000 square feet of floor space, but there is substantial variability in the estimate. Assuming
81% of healthcare related jobs are ‘main shift’ jobs (McMenamin, 2007), the number of total
jobs per 1,000 square feet of retail space increases to 2.56. Using these proportions, 200,000
square feet of retail space in the health sciences complex would house 511 employees once the
space is fully occupied.
Like the physical therapy clinics and NMHCs, the counterfactual assumes that no health science
complex would be built and no such businesses would enter the region.
29
The Economic Impact of the University of Delaware’s College of Health Sciences
Fiscal Impact
As a non-profit, public university, the UD is funded by revenues from tuition, investments,
donations, research grants, state funds, and local tax expenditures. The portion of this money
coming from state and local government funds was raised through increased taxes, and those
taxes have negative consequences in the economy. This section of the report derives the impact
that the CHS has on state and local budgets.
The State of Delaware’s primary method of funding the university is through appropriations in
its annual operating budget. In FY 2012, the Delaware operating budget appropriated $10.1
million to UD for tuition assistance, $14.9 million to pay for specific programs (state lines), and
$87.4 million to fund general operations. Although $505,300 was appropriated to the CHS from
the state lines, the lion’s share of state appropriations is fungible. This makes it difficult to
directly assign specific amounts of state funding to each college.
Each year, state appropriations to the UD are audited based on the function with which those
dollars are spent (KPMG, 2012). The report finds that approximately $2.7 million of state
monies help pay for instruction and research at the CHS, but this number does not include the
cost of other university-wide services such as employee benefits, operations and maintenance,
academic support, and student services. UD’s revenue based budgeting system was used to
allocate the remaining fungible appropriations across all colleges. The process concluded that
the CHS indirectly benefited from an additional $7.6 million of state appropriations. Overall,
approximately $10.3 million of general appropriations, 9.2% of the total, benefited the CHS.
30
The Economic Impact of the University of Delaware’s College of Health Sciences
Government funds are also transferred to the CHS when it sponsors CHS research. In 2012, the
CHS disbursed $11 million for sponsored research, 13% of which came from state and local
sources. Excluding the $505,300 of state line funding leaves $925,000 in additional state
sponsored research.
On a similar note, the Brownfields Program in the Department of Natural Resources and
Environmental Control has pledged to give the University of Delaware up to $1 million in
funding to help remediate the 270 acre Chrysler plant, or $3,704 per acre. Since the CHS will be
using 15 of these acres, $56,000 of that grant is apportioned to the CHS.
Another component that this report considers is the local property tax which UD is exempt from
paying as a non-profit organization. While these exemptions are not direct expenditures from the
county and municipal governments, tax rates could be lowered if the tax base were larger.
According to the most recent tax parcel records on file, the UD owns properties in New Castle
County assessed at $621 million, but is exempt from paying property taxes on all but $8 million
of those properties. 9,10 This exemption translates to a $17.4 million reduction in property tax
revenues for 2012. Apportioning this tax on the square feet of space CHS currently uses relative
to the other six colleges implies that the CHS was exempted from paying $634,000 in property
taxes in 2012.
9
This includes the former Chrysler Plant tax parcel owned by UD subsidiary 1743 Holdings.
Property tax assessments are denominated in 1983 market prices.
10
31
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 13 State and Local Government Funds Benefitting CHS
Direct State Funds
Indirect State Funds
Sponsored Research
Brownfield Grant
Property Tax Exemption
Offsetting Income Taxes
Total
$2,662,303
$7,606,510
$924,700
$55,556
$633,588
-$1,126,340
$10,756,315
Of course, the CHS also adds state and local revenues through the income tax created by CHS
faculty, staff, and employees. Assuming that the $22.4 million in wages (see Table 11) were
distributed equally at the average university wage rate and that each employee took the standard
deduction ($3,250) in Delaware, then the State of Delaware would receive $1.1 million in
personal income taxes from UD employees.
The CHS’s footprint on state and local budgets is a net reduction $10.8 million. Of course, in
absence of the CHS, Delaware post-secondary educational institutions would still receive
revenue from state and local sources. Fixing the amount of net government spending per college
student implies that 35% of such spending would still occur in the counterfactual. Subtracting
this from the footprint implies that the CHS reduces state and local budgets by $7.0 million.
32
The Economic Impact of the University of Delaware’s College of Health Sciences
Summary
The CHS impacts the economy in many different ways. In each of the previous subsections, the
CHS’s economic footprint was described and calculated along with the counterfactual
assumptions. The direct economic impact credited to the CHS is therefore the difference
between these two concepts. Table 14 on the following page summarizes these assumptions.
The next section models CHS’s direct impact into REMI and calculates the direct, indirect, and
induced effect that each of the CHS activities have in the Delaware economy.
33
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 14 Summary of CHS Footprint, Counterfactual, and Direct Economic Impact
Economic Footprint
Population
Human
Capital &
Wages
Off Campus
Spending
•
In 2012, the CHS enrolled 2,610 students.
•
CHS Bachelor's degree holders will likely
earn $2.2 million in lifetime wages.
CHS graduate degree holders will likely earn
$2.9 million in lifetime wages.
The 2012 graduating class will likely earn
$21.0 million in their first year of work.
•
•
•
•
Faculty,
•
Staff and
Other Inputs
Health
Clinics
STAR
Campus
•
•
•
•
Fiscal
Impact
•
CHS students make $24.4 million in offcampus student spending.
Visitor spending increases $15.3 million
A total of $51.3 million is spent on direct and
indirect CHS expenses, $22.4 million of
which are wages for 274 UD jobs.
CHS clinics provide $1.3 million in services at
their physical therapy and nurse-managed
health clinics. The value is expected to grow
to $2.1 million by 2019.
$31.5 million will be used to construct a
300,000 sq. ft. health science complex.
200,000 sq. ft. of space to businesses that
could employ nearly 500 people.
The CHS directly or indirectly benefited from
$11.2 million in state funds and $634,000 in
property tax exemptions.
The 274 employees tied to the CHS paid $1.1
million in state income tax.
Counterfactual Assumptions
•
Another Delaware educational institution
would have enrolled 918 of CHS students.
•
82 of the Bachelor degrees awarded by the
CHS would have received a terminal
Associate’s degree instead, earning $1.7
million in lifetime wages.
All other CHS degree holders would have
received a similar education at other
educational institutions and command
similar wages.
Off-campus student spending would still be
$13.4 million.
No additional visitor spending is expected.
$18 million is spent at an alternative
Delaware school, $7.9 million of which are
wages associated with 96 university jobs.
•
•
•
•
Direct Economic Impact
•
Delaware's population increases by 1,692.
•
Each of the 82 students receiving additional
education earns $450,000 more over a
lifetime, or $10,465 per year worked.
Annual wages for the 2012 graduating class
increases by $858,000, $353,000 of which
will remain in Delaware as increased wages.
Wages for students who would have had a
similar education elsewhere are unaffected.
Off-campus student spending increases by
$11.0 million.
Visitor spending increases $15.3 million.
A total of $33.3 million is spent on direct and
indirect CHS expenses, $14.5million of which
are wages associated with 178 UD jobs.
CHS clinics provide $1.3 million in services at
their physical therapy and nurse-managed
health clinics. The value is expected to grow
to $2.1 million by 2019.
$31.5 million will be used to construct a
300,000 sq. ft. health science complex.
200,000 sq. ft. of space to businesses that
could employ nearly 500 people.
•
•
•
•
•
•
•
No such services would be provided.
•
•
No such campus would be built.
•
State and local budgets would decrease by
$3.8 million as a result of the state
increasing its funding to other in-state
institutions. Income tax revenues decrease
proportionately as well.
•
•
The net impact of the CHS on state and local
budgets is a reduction of $7.0 million.
34
The Economic Impact of the University of Delaware’s College of Health Sciences
Results
This section models the direct economic impact derived previously into a regional economic
model to simulate the ramifications that they make on the broader economy. The modeling
decisions of the REMI simulation are first explained, and then the simulation is conducted. The
direct, indirect, and induced economic impacts of each component are then discussed.
Student Population
The CHS is assumed to cause the population of college students in Delaware to increase by
1,692 persons, so the corresponding demographic component of the REMI model was adjusted.
This model predicted that increasing the population between 18 and 24 years of age puts
negative pressure on wages and increases the competition with the local labor supply. As wages
are depressed, some households search for employment opportunities elsewhere and leave the
state, causing disposable income and consumption to fall. In addition, because households
exiting the state include persons of all ages, the state’s population will gradually become
younger. A younger population generally means lower consumption per capita.
35
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 15 CHS’s Total Economic Impact in Delaware Due to the Student Population
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
-23
-44
-46
-45
-43
-41
-40
-41
-44
-49
1380 1191 1036
909
805
722
652
596
554
521
-$5.2 -$8.8 -$10.4 -$11.2 -$11.3 -$11.2 -$10.9 -$10.6 -$10.4 -$10.5
-$5.3 -$8.8 -$10.5 -$11.3 -$11.5 -$11.4 -$11.1 -$10.8 -$10.5 -$10.4
$0.3
-$0.3 -$0.7 -$0.9 -$1.1 -$1.1 -$1.2 -$1.2 -$1.3 -$1.3
-$10.2 -$14.6 -$16.5 -$18.6 -$20.5 -$22.4 -$24.4 -$26.3 -$28.4 -$30.7
-$1.4 -$5.4 -$6.4 -$6.8 -$6.8 -$6.8 -$6.9 -$7.2 -$7.7 -$8.7
-$0.3 -$1.7 -$2.0 -$2.1 -$2.0 -$2.0 -$2.0 -$2.0 -$2.1 -$2.4
-$1.1 -$3.7 -$4.4 -$4.7 -$4.7 -$4.8 -$4.9 -$5.1 -$5.5 -$6.2
Prices are in millions of 2012 dollars.
Table 15 summarizes the REMI model’s impact of increasing Delaware’s population of college
students. Initially, the college population causes a large increase in population. However, as the
demographic changes affect the labor force, economic migrants leave the state, and the
population boost is lessened over time. Employment, compensation, wages, and personal
consumption decline as well. In the long run, the model predicts that the labor force effects will
lower area employment by 50 jobs and reduce salaries and wages by $10 million.
It is important to point out that the negative effects mentioned above arise from the effect that
college students have on the labor force and the state’s demography. This is only part of the
college student’s impact in the economy. College students will also raise demand in the local
area by spending non-wage sources of income, such as student loans and parental assistance. As
college students spend this income, positive effects flow to local businesses that are counter to
the effects just described. This spending is considered separately in the report.
36
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 10 Expected Increase in Delaware Wages Due to the CHS Enabling Additional Education since 1997
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
1995
2000
2005
2010
2015
2020
2025
Human Capital and Wages
Recall from the previous chapter that the CHS is assumed to have increased the annual wages of
Delaware residents in the 2012 graduating class by $393,000. Assuming a fixed ratio of
increased earnings to graduates enables a similar estimate to be derived for every graduating
class since 1997. Figure 10 shows the gains in Delaware wages caused by the CHS reached $4.3
million in 2012. As enrollment expands, these wage gains from human capital will continue to
compound. By 2021, wages in Delaware are expected to be $7.7 million higher as a result of the
CHS encouraging students to pursue bachelor’s degrees instead of finishing their post-secondary
education with associate’s degrees.
37
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 16 CHS’s Total Economic Impact in Delaware Due to Increased Human Capital
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
18
1
$5.1
$5.0
$0.6
$3.0
$2.1
$0.7
$1.3
2013
20
3
$5.6
$5.5
$0.7
$3.1
$2.3
$0.8
$1.5
2014
21
4
$6.1
$5.9
$0.7
$3.3
$2.5
$0.9
$1.6
2015
22
4
$6.6
$6.4
$0.8
$3.5
$2.5
$0.9
$1.6
2016
22
5
$7.0
$6.8
$0.9
$3.8
$2.6
$0.9
$1.6
2017
22
6
$7.4
$7.2
$1.0
$4.0
$2.6
$1.0
$1.7
2018
23
7
$7.9
$7.7
$1.0
$4.2
$2.7
$1.0
$1.7
2019
23
7
$8.4
$8.1
$1.1
$4.3
$2.7
$1.0
$1.7
2020
23
8
$8.8
$8.6
$1.2
$4.5
$2.8
$1.0
$1.8
2021
23
8
$9.3
$9.1
$1.3
$4.7
$2.8
$1.0
$1.8
Prices are in millions of 2012 dollars.
Table 16 shows the total expected impact of increased earnings over the next 10 years. These
earnings increase disposable incomes and raise household consumption. The portion of that
income which goes to local businesses induces economic activity in the state. Employment is
projected to be higher by nearly 20 jobs as a result. Similarly, consumption in the state is higher
by $3.0 million in 2012, and it is expected to grow to $4.7 million by 2021. Total output is
higher by $2.1 million in 2012, $1.3 million of which is gross regional product (GRP).
38
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 17 CHS’s Total Economic Impact in Delaware Due to the Off-Campus Spending
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
156
158
158
157
155
153
151
150
149
148
30
55
77
94
109
122
132
141
147
153
$5.8 $6.5 $6.9 $7.1 $7.1 $7.1 $7.1 $7.1 $7.1 $7.2
$5.0 $5.6 $5.9 $6.0 $6.0 $6.0 $6.0 $5.9 $5.9 $5.9
$0.7 $0.8 $0.9 $0.9 $0.9 $1.0 $1.0 $1.0 $1.1 $1.1
$13.9 $14.4 $14.9 $15.3 $15.7 $16.0 $16.4 $16.7 $17.1 $17.5
$16.6 $17.2 $17.4 $17.4 $17.3 $17.2 $17.1 $17.1 $17.2 $17.4
$5.7 $6.0 $6.1 $6.1 $6.0 $6.0 $5.9 $5.9 $5.9 $5.9
$10.7 $11.0 $11.1 $11.1 $11.1 $11.1 $11.1 $11.1 $11.2 $11.3
Prices are in millions of 2012 dollars.
Off Campus Spending
CHS students are credited with $11 million in off-campus purchases in Delaware, driven almost
exclusively by nonresident students. An additional $15.3 million was spent by CHS visitors.
Student spending was simulated in the REMI model by translating the decomposition of
purchases in Table 9 to increased commodity demand. Visitor spending was assumed to follow
the BEA’s 2007 Tourism and Travel account. As this demand draws on goods and services in
the Delaware economy, jobs are created, economic migrants move into the area, and
compensation, wages, and consumption rise.
Table 17 simulates the total impact that this spending has in Delaware. Approximately 150 more
jobs are created, and wages increase by $6 million each year in the future. Consumption, output,
and GRP also increase substantially. One can see that the positive gains from off-campus
student and visitor spending will largely offset the negative effects that college students are
projected to have on the labor force. Of course, the bulk of the money spent by college students
is not off-campus spending, but rather the tuition and room and board expenses that pay for CHS
faculty and support staff.
39
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 18 CHS’s Total Economic Impact in Delaware Due to Labor and Other Material Inputs
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
383
53
$33.2
$27.9
$3.4
$16.9
$50.5
$16.3
$33.0
2013
384
95
$35.2
$29.8
$3.7
$17.3
$50.5
$16.4
$32.9
2014
380
131
$36.4
$30.8
$4.0
$17.7
$49.8
$16.1
$32.5
2015
374
160
$37.3
$31.4
$4.2
$18.0
$48.7
$15.6
$31.8
2016
366
184
$37.9
$31.8
$4.4
$18.2
$47.5
$15.1
$31.1
2017
359
203
$38.4
$32.1
$4.5
$18.4
$46.3
$14.5
$30.4
2018
352
218
$38.7
$32.4
$4.7
$18.5
$45.1
$13.9
$29.7
2019
345
229
$39.1
$32.6
$4.8
$18.6
$44.1
$13.4
$29.1
2020
340
238
$39.5
$32.8
$5.0
$18.8
$43.2
$13.0
$28.7
2021
337
245
$40.3
$33.4
$5.1
$19.1
$42.7
$12.6
$28.4
Prices are in millions of 2012 dollars.
Labor and Other Inputs
By providing a college education to its students, the CHS is also a source of employment. In
addition, other jobs must exist at the UD to support CHS students, faculty, and staff. Finally,
inputs purchased by the CHS and the UD also stimulate demand from local businesses. In total,
the CHS causes $33.3 million of university related expenditures, which are assumed to follow
the spending decomposition in Table 11. Employee productivity, compensation, and total cost of
material inputs are adjusted in the REMI model to reflect these assumptions.
Like the off campus spending of UD students, the academic component provided by the CHS
adds jobs, wages, GRP, and other beneficial changes to the Delaware economy. Because 171
jobs were part of the CHS’s direct academic impact and the REMI model estimates that 383 jobs
are created, the CHS’s implicit employment multiplier is 2.2. The model also predicted that the
CHS raised $50 million of output and $17 million of consumption in 2012. REMI predicts that
personal tax receipts attributed to CHS’s academic components will increase from $3.4 million
in 2012 to $5.1 million in 2021, though most of these receipts will likely go to federal sources.
40
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 19 CHS’s Total Economic Impact in Delaware Due to Health Clinics
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
15
3
$1.0
$0.9
$0.1
$0.5
$1.9
$0.7
$1.2
2013
16
5
$1.2
$1.0
$0.1
$0.6
$2.0
$0.7
$1.3
2014
18
8
$1.4
$1.1
$0.2
$0.7
$2.3
$0.8
$1.5
2015
20
12
$1.5
$1.3
$0.2
$0.8
$2.5
$0.9
$1.6
2016
22
15
$1.7
$1.4
$0.2
$1.0
$2.7
$1.0
$1.7
2017
23
18
$1.8
$1.5
$0.3
$1.0
$2.8
$1.0
$1.8
2018
23
22
$1.9
$1.5
$0.3
$1.0
$2.8
$1.0
$1.8
2019
23
24
$1.9
$1.5
$0.3
$1.1
$2.8
$1.0
$1.8
2020
22
26
$1.9
$1.5
$0.3
$1.1
$2.7
$0.9
$1.7
2021
22
28
$1.9
$1.5
$0.3
$1.1
$2.7
$0.9
$1.7
Prices are in millions of 2012 dollars.
Health Clinics
The physical therapy health clinics and nurse managed health programs are expected to generate
$1.3 million in sales in 2012 and grow to $2.1 million in sales by 2019. The REMI model
simulated these impacts as increased sales in the ‘medical and diagnostic labs and outpatient and
other ambulatory care services’ industry. The sales were modeled according to the college’s
planned expansion.
Table 19 shows the total impact that these health clinics are expected to have in the state.
Overall, the clinics will likely create between 20 and 25 jobs each year and will add between
$1.0 and $1.5 million wages and salaries. Approximately $1.9 million in total state output is
credited to the existing clinics, and that is expected to grow to $2.8 million by the time the
NMHCs have fully expanded into Kent and Sussex counties.
The tables on the next page decompose the clinics’ impact in each Delaware county. Most of the
employment will remain in New Castle County in the near term, but as the clinics expand an
additional 6 jobs will be created in Kent County and another 5 jobs will be created in Sussex.
41
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 20 CHS’s Total Economic Impact in New Castle County Due to Health Clinics
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
2012
14
3
$1.0
$0.9
$0.1
$0.5
$1.9
$0.6
$1.2
2013
14
5
$1.1
$0.9
$0.1
$0.5
$1.9
$0.7
$1.2
2014
14
6
$1.1
$0.9
$0.1
$0.6
$1.8
$0.6
$1.2
2015
14
8
$1.2
$1.0
$0.1
$0.6
$1.8
$0.6
$1.1
2016
14
10
$1.2
$1.0
$0.1
$0.6
$1.8
$0.6
$1.1
2017
13
11
$1.2
$1.0
$0.1
$0.6
$1.7
$0.6
$1.1
2018
13
12
$1.2
$1.0
$0.2
$0.6
$1.7
$0.6
$1.1
2019
13
13
$1.2
$1.0
$0.2
$0.6
$1.6
$0.6
$1.0
2020
12
13
$1.2
$0.9
$0.2
$0.6
$1.6
$0.5
$1.0
2021
12
14
$1.2
$1.0
$0.2
$0.6
$1.6
$0.5
$1.0
2017
6
5
$0.4
$0.3
$0.1
$0.3
$0.6
$0.2
$0.4
2018
6
6
$0.4
$0.3
$0.1
$0.3
$0.6
$0.2
$0.4
2019
6
7
$0.4
$0.3
$0.1
$0.3
$0.6
$0.2
$0.4
2020
6
8
$0.4
$0.3
$0.1
$0.3
$0.6
$0.2
$0.4
2021
5
8
$0.4
$0.3
$0.1
$0.3
$0.6
$0.2
$0.4
2018
5
4
$0.3
$0.3
$0.1
$0.2
$0.5
$0.2
$0.3
2019
4
5
$0.3
$0.3
$0.1
$0.2
$0.5
$0.2
$0.3
2020
4
5
$0.3
$0.3
$0.1
$0.2
$0.5
$0.2
$0.3
2021
4
6
$0.3
$0.3
$0.1
$0.2
$0.5
$0.2
$0.3
Table 21 CHS’s Total Economic Impact in Kent County Due to Health Clinics
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
2012
0
0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
2013
2
1
$0.1
$0.1
$0.0
$0.1
$0.2
$0.1
$0.1
2014
4
2
$0.2
$0.2
$0.0
$0.1
$0.4
$0.1
$0.3
2015
5
3
$0.3
$0.3
$0.1
$0.2
$0.5
$0.2
$0.4
2016
6
4
$0.4
$0.3
$0.1
$0.2
$0.6
$0.2
$0.4
Table 22 CHS’s Total Economic Impact in Sussex County Due to Health Clinics
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
0
0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
2013
0
0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
2014
0
0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
2015
1
1
$0.1
$0.1
$0.0
$0.1
$0.1
$0.1
$0.1
2016
3
2
$0.2
$0.2
$0.0
$0.1
$0.3
$0.1
$0.2
2017
4
3
$0.3
$0.2
$0.1
$0.2
$0.5
$0.2
$0.3
Prices are in millions of 2012 dollars.
42
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 23 CHS’s Total Economic Impact in Delaware Due to Construction of the Health Science Complex
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
37
0
$2.1
$1.7
$0.2
$1.2
$4.2
$1.8
$2.4
2013
330
1
$19.7
$16.3
$2.4
$10.5
$38.4
$16.4
$21.8
2014
-4
1
$0.9
$0.8
$0.1
$0.2
-$1.1
-$0.3
-$0.7
2015
-9
0
$0.2
$0.1
$0.0
$0.1
-$2.0
-$0.7
-$1.3
2016
-11
0
-$0.3
-$0.3
$0.0
-$0.1
-$2.4
-$0.9
-$1.5
2017
-11
0
-$0.5
-$0.5
-$0.1
-$0.1
-$2.4
-$0.9
-$1.5
2018
-10
0
-$0.6
-$0.5
-$0.1
-$0.1
-$2.3
-$0.8
-$1.4
2019
-8
0
-$0.6
-$0.5
-$0.1
$0.0
-$2.0
-$0.7
-$1.3
2020
-6
0
-$0.5
-$0.5
-$0.1
$0.0
-$1.7
-$0.6
-$1.1
2021
-5
0
-$0.5
-$0.4
$0.0
$0.1
-$1.4
-$0.5
-$0.9
Prices are in millions of 2012 dollars.
STAR Campus
The STAR campus will have two main effects on the Delaware economy. The first effect comes
from the construction of the health science complex. In 2012, $3 million was spent on the
complex, and $28 million will be spent in 2013. The REMI model simulates this spending as
sales in the construction of nonresidential commercial and healthcare structures. Table 23 shows
changes in the economy due to this construction.
Building the health sciences complex will increase employment by 330 jobs in 2013, and raise
gross regional product by $22 million. Wages and consumption will also see a one time boost of
$16.3 million and $10.5 million respectively. The table also shows that these economic benefits
end once the construction is complete. In fact, the REMI model predicts that the withdrawal of
business activity will slightly dampen the future as adjustments begin in 2014.
43
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 24 Assumptions Behind the Business Occupants of the Health Science Complex
Ambulatory health care services
Nursing and residential care facilities
Professional, scientific, and technical services
Retail trade
Educational services
Percent of
Retail Space
50%
20%
15%
10%
5%
100%
Employees per
1,000 Sq. Ft.
2.44
2.61
3.07
1.36
2.06
2.44
Employees at
Full Occupancy
244
104
92
27
21
488
The STAR Campus’s second effect on the state’s economy will be the possibility of new
businesses moving into the 200,000 square feet of retail space. The characteristics of these
businesses will largely determine the economic impact. Businesses engaged in ambulatory
health services are envisioned to occupy 50% of the retail space, while nursing and residential
care facilities are expected to make up 20% of the space. The remaining retail space will be split
between professional, scientific, and technical services (15%), retail trade (10%), and
educational services (5%). Assuming this composition of business, 488 employees will be
employed once the health science complex is completely occupied.
The level of business competition must be considered when estimating the economic impact.
Companies that sell goods and services to a national customer base are not expected to interfere
with the sales of existing Delaware businesses. However, businesses that primarily sell to local
customers will reduce sales to the competition. For example, a retail pharmacy would capture
customers that would have gone to another store in the area and decrease employment at other
businesses to some extent.
Similarly, the health sciences complex is assumed to lease space only to new and expanding
businesses. If existing Delaware businesses simply relocated staff from one Delaware location to
another, then the move will not have a measureable economic impact. Finally, businesses are
assumed to gradually fill the 200,000 square feet of retail space between 2014 and 2017.
44
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 25 CHS’s Total Economic Impact in Delaware Due to New Businesses in the Health Science Complex
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
0
0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
2013
0
0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
2014 2015 2016 2017 2018 2019 2020
81
161
239
315
310
302
294
16
45
84
132
171
204
230
$5.3 $11.0 $16.9 $23.0 $23.6 $23.8 $23.8
$4.5 $9.3 $14.2 $19.3 $19.7 $19.8 $19.7
$0.6 $1.4 $2.1 $3.0 $3.2 $3.3 $3.4
$2.8 $5.7 $8.7 $11.7 $11.9 $12.0 $12.1
$10.1 $20.3 $30.4 $40.2 $39.5 $38.5 $37.4
$3.4 $6.8 $10.1 $13.4 $13.1 $12.7 $12.2
$6.7 $13.3 $20.0 $26.5 $26.1 $25.5 $24.9
2021
287
252
$23.9
$19.8
$3.4
$12.3
$36.5
$11.8
$24.4
Prices are in millions of 2012 dollars.
Table 25 shows the impact beginning in 2014 and reaching its maximum in 2017 by assumption.
REMI estimates that approximately 300 more jobs will be added to Delaware in the long run.
Note that the net number of jobs is less than the 488 jobs assumed to be in the complex, due to
the competition with other businesses in the area. Compensation is expected to increase $24
million per year, while consumption rises by $12 million per year in the long run. GRP also
increases by nearly $25 million per year, reflecting a portion of the $38 million increase in total
output.
45
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 26 CHS’s Total Economic Impact in Delaware Due to Net Tax Revenues
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
-47
-43
-$2.1
-$1.7
$6.7
-$7.6
-$5.5
-$1.9
-$3.5
2013
-51
-80
-$2.3
-$1.9
$6.7
-$7.8
-$5.9
-$2.1
-$3.7
2014
-52
-111
-$2.3
-$1.8
$6.7
-$8.0
-$6.0
-$2.2
-$3.8
2015
-52
-138
-$2.3
-$1.8
$6.7
-$8.1
-$6.0
-$2.2
-$3.7
2016
-51
-160
-$2.2
-$1.7
$6.7
-$8.2
-$5.9
-$2.2
-$3.7
2017
-51
-179
-$2.1
-$1.5
$6.7
-$8.4
-$5.8
-$2.1
-$3.6
2018
-50
-195
-$2.0
-$1.4
$6.7
-$8.5
-$5.7
-$2.1
-$3.6
2019
-50
-209
-$1.9
-$1.3
$6.7
-$8.7
-$5.7
-$2.1
-$3.6
2020
-50
-220
-$1.9
-$1.3
$6.7
-$8.8
-$5.7
-$2.1
-$3.6
2021
-51
-229
-$1.9
-$1.3
$6.7
-$8.9
-$5.8
-$2.1
-$3.6
Prices are in millions of 2012 dollars.
Fiscal Impact
The direct fiscal impact of the CHS reduces the state and local budgets by $7 million per year.
For sake of simplicity, REMI assumed that these funds were obtained through increased income
taxes, even though UD appropriations almost entirely come from the Delaware’s General Fund. 11
Table 26 reports the economic impact from enacting this tax.
The REMI model estimates that collecting $7 million in tax revenues reduces total economic
activity by nearly $6 million and gross regional product by $3.5 million. Employment is reduced
in the state by nearly 50 jobs each year, and migrants gradually move away in response to the
depressed economic environment. Despite the collection of $7 million in revenues, the REMI
model estimates that personal taxes increase by $6.7 million, reflecting the slight offset from
federal tax obligations.
11
General Fund contains revenues from the income tax, the franchise tax, the corporate profits tax, abandoned
properties, the lottery, and other sources.
46
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 27 CHS’s Total Economic Impact in Delaware
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Regional Product
•
2012
538
1431
$40.1
$33.6
$12.0
$17.7
$68.4
$23.0
$44.1
2013
814
1346
$57.2
$47.5
$14.0
$23.6
$99.2
$36.5
$61.1
2014
556
1223
$44.3
$36.6
$12.5
$15.2
$68.5
$22.7
$44.3
2015
627
1138
$50.2
$41.4
$13.3
$16.8
$76.7
$25.3
$49.8
2016
699
1085
$56.9
$46.9
$14.2
$18.5
$85.3
$28.1
$55.6
2017
770
1058
$64.0
$52.8
$15.2
$20.2
$94.1
$30.8
$61.4
2018
757
1032
$65.6
$54.2
$15.6
$19.1
$92.3
$30.0
$60.3
2019
742
1012
$67.0
$55.3
$15.9
$17.8
$90.2
$29.1
$59.1
2020
726
998
$68.3
$56.3
$16.3
$16.4
$88.0
$28.1
$57.9
2021
712
987
$69.8
$57.6
$16.5
$15.1
$86.1
$27.2
$56.9
Prices are in millions of 2012 dollars.
Total Economic Impact
This section brings all of the individual CHS impacts together in one simulation and should be
viewed as the total impact of the college. In 2012, the CHS faculty, staff, students, and visitors
were estimated to create 538 jobs in Delaware and nearly $70 million in economic output. GRP
was $44 million larger because of the CHS. Consumption was $18 million higher than what it
otherwise would have been, and total compensation was nearly $40 million higher as well. 12
Table 27 also shows the economic impact rises significantly in 2013 and again in 2015, due
primarily to the construction of the health science complex and the future business activity of its
occupants. Overall, the CHS and the affiliated businesses are expected to cause between 700 and
770 jobs in the state. Increased compensation credited to the CHS is expected to rise from $40
million in 2012 to $70 million in 2021.
12
Because the REMI model relies on a series of non-linear and dynamic formulas, the sum of the economic impact
from each individual aspect of the CHS will not necessarily equal the total impact of all aspects.
47
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 28 CHS’s Total Impact on Employment, by Industry
Educational services
Food services & drinking places
Prof, scientific, & technical srvcs
Retail trade
Ambulatory health care srvcs
Construction
Administrative & support srvcs
Nursing & residential care
Real estate
Amusement, gambling, & recr
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
236 237 243 249 255 261 262 263 264 264
68
70
65
65
65
66
65
63
62
61
10
16
28
47
67
86
85
84
83
82
39
51
39
44
49
54
52
50
48
46
-2
5
18
40
62
82
81
79
78
76
48
268
29
29
30
32
31
29
27
25
19
23
20
23
26
29
28
27
26
25
3
3
11
21
30
39
38
38
37
37
21
19
15
14
13
13
12
10
9
8
10
11
10
10
10
10
10
10
10
10
Table 28 decomposes the total change to employment by industry. As expected, employment in
educational services is the biggest industry and is projected to increase moderately over time as
enrollment expands. In 2012, employment in restaurants and bars is the second most affected
industry (68 employees), followed by construction (48 employees) and retail trade (39
employees). Building the health sciences complex is projected to create 268 jobs in the
construction sector in 2013. Nearly 30 additional construction jobs will be needed each year
after it is built. Employment in other industries, such as professional and technical services,
ambulatory health care services, and nursing and residential care facilities, is projected to
increase substantially between 2014 and 2017.
48
The Economic Impact of the University of Delaware’s College of Health Sciences
Conclusion
The purpose of this report was to estimate the total economic impact that the University of
Delaware’s College of Health Sciences (CHS) has in the State of Delaware. There are different
ways in which the CHS impacts the economy, from increasing wages for its students to being an
employer for CHS faculty and staff. The CHS also runs physical therapy and health care clinics
in the community and will soon be expanding its presence in the state.
In order to measure the CHS’s impact, the report evaluates what Delaware’s economy would
look like in the absence of the CHS. By making such considerations explicit, the economic
impact carries a causal interpretation. Because the model used to estimate this impact, the REMI
PI+ model, is a dynamic and evolving system, the economic impact evolves over time rather than
being a static concept.
Unfortunately, some ways in which the CHS impacts the economy could not be quantified. For
example, it is difficult to measure the economic impact of the research conducted by CHS faculty
and researchers, even though that research improves the quality of health care training. Despite
this limitation, the report still calculates the impact of the CHS’s major components.
49
The Economic Impact of the University of Delaware’s College of Health Sciences
The REMI simulation predicted that there are 540 more jobs in Delaware today because of the
CHS. For each CHS faculty member and staff, there are approximately 0.7 support jobs
employed by the University of Delaware and another 1.7 jobs created elsewhere. As the STAR
Campus comes to Delaware and the nurse managed health clinics and physical therapy clinics
expand, the CHS is expected to create 770 jobs in Delaware by 2017.
The CHS causes a net draw of $7 million on state and local government revenues. On its own,
this decrease would have reduced economic activity, but in light of all the other benefits that the
college makes in the state, economic output and GRP actually increased by $68 million and $44
million in 2012, respectively. Moreover, the CHS’s expansionary plans will raise these two
figures nearly 40% within five years. The CHS also significantly raises compensation and wages
in the area. In 2012, $34 million of increased wages were caused by the college, which in turn
created $18 million of consumption.
In short, the intention of this report was to uncover the CHS’s total economic impact in
Delaware. The report demonstrates that it is a source of large and meaningful benefits.
50
The Economic Impact of the University of Delaware’s College of Health Sciences
References
Foote, Lynne. (2007). The Economic Impact of the University of Delaware on Newark and the
State of Delaware. University of Delaware, Office of Institutional Research.
<www.udel.edu/IR/reports/eci/irs08-03.pdf>
Kodrzycki, Yolanda K. (2001) “Migration of Recent College Graduates: Evidence from the
National Longitudinal Survey of Youth”. New England Economic Review. 12(1).
<www.bos.frb.org/economic/neer/neer2001/neer101b.pdf>
KPMG. (2012). University of Delaware: Consolidated Financial Statements.
<www.udel.edu/vpfa/pdfs/2012_Financials.pdf >
KPMG. (2012). University of Delaware: Statements of State of Delaware General, Capital
Improvement, and Agency Funds Appropriated, Received, and Expended, and
Supplemental Data.
<auditor.delaware.gov/Reports/FY2013/UofD_StateAppropriations_FS%20FY12.pdf>
Latham, William, and Lewis, Kenneth. (2010). The Economic Impact of the University of
Delaware. University of Delaware, Center for Applied Business and Economic
Research. <www.udel.edu/CABER/UD%20Impact%20Study%202010.pdf>
McMenamin, Terence. (2007). “A Time to Work: Recent Trends in Shift Work and Flexible
Schedules.” Monthly Labor Review, December 2007.
<http://www.bls.gov/opub/mlr/2007/12/art1full.pdf>
51
The Economic Impact of the University of Delaware’s College of Health Sciences
Appendix
A 2008 directive by Governor Minner instructed a task force to recommend ways of increasing
the number of speech pathologists in Delaware. The task force concluded that creating a speech
pathology program in the CHS was the best way to achieve that goal. The CHS has since
planned for the creation of a Master’s degree program in speech pathology. Like the Department
of Physical Therapy and the School of Nursing, the program would offer services to the public in
a clinic, where students can hone their skills under faculty supervision. Because the program and
its clinic are still in the planning stages, its economic impact was not included in the main report.
This appendix details the program’s anticipated economic impact.
The CHS envisions the speech pathology program to be a two-year Master’s degree program that
will initially enroll 15 students in 2017. Enrollment in each subsequent year will increase by 5
until the 30 students are admitted in the program each year. The academic program will require
a director, five faculty members, and one staff administrator. The clinic will require a director,
supervisor, and administrative assistant. The academic program is expected to occupy 10,000
square feet of space in the health sciences complex, while the clinic will use existing space on
the main campus.
Next, each component of the speech pathology program’s economic impact is briefly discussed.
Assumptions derived in the main report will continue to be used to construct the program’s
footprint, counterfactual, and direct economic impact.
52
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 29 Employment, Wages, and Job Projections for Speech Pathologists, by State
Delaware
District of Columbia
Maryland
Pennsylvania
New Jersey
New York
Virginia
National
•
Employment
350
310
2,590
3,930
4,470
8,870
2,640
117,210
Annual
Wage
$74,540
$81,520
$83,310
$72,990
$85,350
$78,130
$74,250
$72,000
10 Year Job
Openings
149
132
1,099
1,668
1,898
3,765
1,121
49,757
Source: Bureau of Labor Statistics Occupational Employment Survey and Occupational Projections
Population
Approximately 40% of CHS graduate students are in-state residents. Assuming that every nonresident student and 35% of resident students would have attended a master’s degree program in
another state if not for the speech pathology program, then 84% of the program’s students
represent an increase to Delaware’s population. In 2017, the program will increase Delaware’s
population by 13 students. Once the program is at capacity in 2021, Delaware’s population will
be higher by 50 college students.
Wages and Human Capital
The Bureau of Labor Statistics (BLS) Occupational Employment Survey estimates that the
national average wage for the 117,210 speech pathologists in the country is $72,000. The
average annual wage for speech pathologists in Delaware is $74,540, which is higher than in
Pennsylvania and Virginia, but less than the average annual wage in Maryland, New Jersey, New
York, and the District of Colombia (see Table 29).
53
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 11 Student and Visitor Off Campus Purchases
$400,000
$300,000
Visitor Spending
$200,000
Student Purchases
$100,000
$0
2017
2018
2019
2020
2021
2022
The BLS also anticipates that increased demand will create the need for 23.4% more speech
pathologists between 2010 and 2020. Factoring in the replacement needs of the existing
workforce implies that there will be job openings equal to 42.4% of existing speech pathologists.
Table 29 calculates these projections for each state and shows that Delaware will need 149
speech pathologist positions over the next 10 years.
The main report assumed that the only students influenced to get more education due to the CHS
were those that transfer from an Associate’s degree program. Maintaining this assumption
implies that without the speech pathology program, its future students would enter a different
master’s program and earn similar wages. Thus, the counterfactual accounts for any increased
earnings in Delaware.
Off Campus Student and Visitor Spending
Assuming that the ratios of real off-campus spending per student is the same in 2017 as it is
today, then Figure 11 shows how the program will raise the level of off-campus spending in
Delaware. The level of increased off-campus student spending attributed to the program will
eventually reach $314,000 once the program is at capacity. Similarly, visitor spending increases
by an additional $352,000 per year as a result of increased enrollment.
54
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 30 Estimated Annual Increase in University Expenses due to Program Enrollment
Salaries & Wages
Other Benefits
Other Inputs
Direct
Academic
Expenses
$729,570
$241,109
$365,901
Academic
Support
$109,046
$47,967
$57,433
Non
Academic
Support
$68,934
$28,645
$37,105
Utilities
and
Facilities
$50,909
$28,748
$23,507
Auxiliary
Services
$20,389
$7,488
$213,954
Total
$978,848
$353,957
$697,900
Total
$1,336,580
$214,446
$134,683
$103,165
$241,831
$2,030,704
Labor and Other Inputs
In 2017, the extra faculty and staff wages are expected to cost $862,000. Assuming a 2% rate of
inflation and similar ratios of wages to other benefits and inputs, then the program is anticipated
to cost nearly $1,337,000 in direct academic expenses. After taking the UD related support costs
into consideration, total costs would increase by $2.0 million as documented in Table 30. If we
again assume that 65% of resident students would have enrolled in an alternative Master’s degree
program in Delaware, then only $1.5 million of labor and other input costs are credited to the
speech pathology program. The program will also require an initial set of up-front expenditures:
$300,000 for infrastructure, $850,000 for equipment, $25,000 for search expenses, and $300,000
for other non-labor related start-up costs.
55
The Economic Impact of the University of Delaware’s College of Health Sciences
Figure 12 Expected Revenue from Speech Pathology Clinic
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
FY17
FY18
FY19
FY20
FY21
Health Clinics
The speech pathology clinic will be staffed by a clinical director, a supervisor, and an
administrative assistant. Initially, the clinic is expected to offer services to 50 patients per year,
but that is expected to increase to 250 patients per year in 2021. The typical patient will likely
use the clinic once per month for an hour session and generate $84 in revenue per visit. 13 This
implies that the clinic should generate $50,400 of revenues in their first year. By 2021, however,
the clinic is expected to generate $252,000 in sales (see Figure 12).
Fiscal Impact
The fiscal impact from the speech pathology program is expected to be a one-time payment of $2
million. The CHS anticipates that the academic program and clinic will be self-sufficient, and
does not predict any further need for state appropriations. No other fiscal information, such as
state line appropriations, research grants, and property tax exemptions can be calculated at this
time.
13
Persons with private insurance or no insurance are expected to generate $100 in revenue, while persons with
Medicare or Medicaid are expected to generate $60 in revenue. A 60/40 patient mix is assumed.
56
The Economic Impact of the University of Delaware’s College of Health Sciences
Table 31 Total Economic Impact of Speech Pathology Program and Clinic
Total Employment
Population
Total Compensation
Wages and Salaries
Personal Taxes
Personal Consumption
Total Output
Intermediate Demand
Gross Domestic Product
2016
7
1
$0.5
$0.4
$0.1
$0.3
$1.0
$0.4
$0.6
2017
4
1
$0.9
$0.8
$2.1
-$1.4
$0.6
$0.1
$0.4
2018
16
15
$1.5
$1.2
$0.2
$0.7
$2.1
$0.7
$1.4
2019
17
21
$1.6
$1.3
$0.2
$0.7
$2.2
$0.7
$1.5
2020
18
26
$1.6
$1.3
$0.2
$0.7
$2.3
$0.7
$1.5
2021
18
27
$1.6
$1.3
$0.2
$0.6
$2.3
$0.7
$1.5
2022
17
25
$1.6
$1.3
$0.2
$0.6
$2.2
$0.7
$1.4
2023
16
23
$1.6
$1.3
$0.2
$0.5
$2.0
$0.6
$1.3
2024
16
21
$1.6
$1.3
$0.2
$0.5
$2.0
$0.6
$1.3
The various components of the speech pathology program at the CHS were entered into the
REMI model using methods analogous to those in the main report. The results begin in 2016 as
the CHS begins to initiate the program. Seven new jobs are added to the economy and total
output increases by $1.0 million as construction services, material, and equipment are needed for
the program’s launch.
In 2017, the initial increase in the student population, the cessation of construction activity, and
the economic impact of raising $2 million in personal income taxes create negative economic
effects in 2017. However, these effects are offset by the positive effects of off-campus spending
and the increased demand for labor and other inputs due to the academic program. The net
impact increases GRP by $400,000 in 2017, despite lowering consumption by $1.4 million.
The long run effects of the program and clinic will be reached in 2021. By this time, the speech
pathology program is anticipated to create 18 jobs in the state and raise compensation by $1.6
million each year. Wages and consumption are greater by $1.3 million and $0.6 million,
respectively. Total output will likely be $2.3 million higher, driven by $1.5 million in GRP and
$0.7 million in intermediate demand.
57