The Economic Impact of the University of
Wisconsin-Stout on Local Economy
Working Paper No. 2007-01
May 2007
Dr. Rula Qalyoubi-Kemp
Social Science Department
University of Wisconsin – Stout
kempru@uwstout.edu
Acknowledgments
Without the assistance of several campus offices and personnel this study would have
never been completed. Meridith Wentz from the University Budget, Planning and Analysis
provided a major help in coordinating efforts in data collection. Many thanks to Char Coss
and Jo Johnson from Human Resources, Scott Griesbach from the University Housing, Amy
Lane from Career Services, Michael Potter from the accounting, and Patti Cramer from the
Budget, Planning and Analysis. I am grateful to Dean John Murphy for his financial support.
Special thanks to Jenna Wendorf, my research assistant and Becky Simonson from the Social
Science department for her input. I am indebted to Richard Tyson for his support and
assistance. The findings, interpretations, conclusions and any errors are the author’s own
responsibility and should not be attributed to any personnel and/or offices mentioned.
About the Author
Rula Qalyoubi-Kemp is an Assistant Professor of Economics at the University of
Wisconsin – Stout since 2006. She earned her Ph.D. in Economics from Colorado State
University in 2005 with two fields; Public Finance and Taxation and, Environmental and
Resource Economics. Additionally, her area of expertise includes Economic Development
and Regional Economics.
In 2005 professor Kemp wrote the executive summary to his Majesty King Abdullah
II of Jordan about Jordan’s long run sustainable economic growth – potentials and
impediments. She has four years of experience working in economic consulting firms,
nationally and internationally. Currently, professor Kemp is working on assessing
restrictions on upward labor mobility in Jordan and researching the institutions that
encourage entrepreneurship in China.
Professor Kemp reactivated the Social Science Research Center hoping to help Dunn
County achieve its economic potentials. This is done by identifying the dynamics of the
regional economy and by investigating the forces that shape potential local growth and
capturing growth spurs from neighboring states. This is especially true since Dunn Country
is in partnership with the I-94 Corridor Technology Zone Program.
2
Table of Contents
Executive Summary ………………………………………………………………
4
I. Introduction …………………………………………………………… 7
1. University of Wisconsin – Stout ……………………………… 7
2. The Impact of the University as a Higher Education Institution .. 9
II. Methodology ………………………………………………………....
11
1. Scope and Objectives ……………………………………….. 11
2. The Multiplier Effect ……………………………………….. 12
3. Leakages and the Regional Purchase Coefficient …………..
13
4. The IMPLAN System ……………………………………….. 13
5. Margins and the Deflator …………………………………… 14
6. Data …………………………………………………………
15
III. Impact of UW-Stout on Local Economy …………………………….. 15
1. University Operation and Equipment Expenditures …………. 15
2. Payroll ……………………………………………………….. 18
3. Students Expenditures ……………………………………….. 21
4. Visitors Expenditures ……………………………………….. 23
5. Impact Summary Tables …………………………………….. 27
6. UW-Stout Direct Spending and Impact …………………...… 28
IV. Concluding Remarks …………………………………………………
30
References ………………………………………………………………………… 32
3
Executive Summary
The primary focus of this study is to estimate the University of WisconsinStout economic impact on local economy. Total spending by UW-Stout institution,
its staff, students and visitors have “ripple effects” on local and surrounding
economies, and that depends on the estimate amount of local spending. When these
expenditures are factored in, they measure the amount of dollars that circulate
through the region. Therefore, spending by the university as an institution, its
employees, students and visitors generates a multiple effects on the local economy
beyond its initial spending. This ripple effect can be seen in terms of increase in
output, employment and increase in income levels in Dunn County.
Key findings of this study for the 2005-06 academic year includes:
 The $49.6 million in total spending on auxiliaries and other activities
produced a total impact of $67.44 million in terms of local output. For every
dollar in initial university-related spending, there is an additional 36 cents of
output increase.
 The university added a total of $44.4 million of additional total labor income
in Dunn County. Labor income includes salaries and wages which directly
impacts household spending and the presence of the university in Dunn
County generated an additional 1,357 full time jobs.
4
 Spending by university employees produced a total effect of $42.1 million in
terms of local output. Total job creation by employees spending is 545
additional jobs and the estimated total labor income earned is $12.7 million.
 The estimated impact of the university students spending is $79.7 million in
terms of local output; for every dollar in initial student spending, there is 59
cents increase in output. Student expenditures supported 1,578 full time jobs,
earning $55.5 million in Dunn County.
 The estimated visitors spending generated $23.2 million in terms of local
output, for every dollar visitors spent there is an additional 47 cents of output
increase. Visitors supported 455 full time jobs with earned income close to
$7.3 million.
 Major employment categories are medical services, food and drinking
services, residential care services, sanitation, personal care services, motor
vehicles and parts dealers, hotel and motels, recreational sports centers,
finance, insurance and real estate services, construction, stationary and related
product manufacturing.
 Major industries affected by university total spending is telecommunications,
transportation, architecture and engineering services, travel agencies, power
generation plants, retail and whole sale trade, furniture, electronics, gas
stations, agriculture sector, sporting and athletic vendors, commercial laundry
and dry cleaning services, food and beverage industry, lumber and wood, and
confectionery manufacturing.
5
 The total estimated sales tax revenue increase is $11.5 million for Dunn
County and the total estimated income tax revenue increase for the state of
Wisconsin is $7.2 million.
 Total contribution of the University of Wisconsin-Stout amounts to more than
$367 million to the local economy and more than $386 million for the state of
Wisconsin.
6
I. Introduction
1. University of Wisconsin-Stout
The school, founded in 1891 by James Huff Stout provided Manual Training
for the Menomonie Public Schools. In 1899, a Kindergarten Training School began
to prepare kindergarten teachers and a School of Physical Culture, which provided
physical training opened in 1901. In 1903, training schools for manual training
teachers and domestic science teachers were added. From 1908-55, it became the
Stout Institute, and was designed to "provide facilities in the way of buildings,
equipment, and teachers, through which young people of both sexes may secure such
instruction and training in industrial and related lines of educational effort as will
enable them to become efficient industrial, social, and economic units within their
environment." In 1911, following Senator Stout's death, ownership transferred to the
State of Wisconsin. From 1955-64 the institution came under the jurisdiction of the
Board of Regents of the State Colleges, a move that the institute board resisted,
fearing a loss of prestige from being a special college. The institution changed name
from 1964-71 to Stout State University in an attempt to provide a plateau to reach out
wider public enrollment. The name change was authorized by the Board of Regents
who believed that the "state colleges had reached another plateau in their
development." Increased enrollment brought new and enlarged facilities. A traditional
focus was maintained even while new majors were added and new directions were
given to established majors. In 1971 the Wisconsin State Universities and the
University of Wisconsin campuses merged to form the University of Wisconsin
System. Stout was designated by the Board of Regents as one of only two special
mission universities in the UW System. Stout was to offer focused programs "related
to professional careers in industry, technology, home economics, applied art and the
helping professions."
During the academic year 2005-06 the university enrolled more than 8,400
students and awarded more than 1,350 degrees. The university employed more than
3,880 faculty, staff and graduate assistants with student/faculty ratio is 19:1. The
7
university has 24 undergraduate majors, 30 undergraduate minors, 12 specialization,
16 graduate majors, 1 graduate minor, and 2 advanced graduate majors.
In 2007, UW-Stout was designated as Polytechnic University. The goal of a
Polytechnic University is to combine teaching and applied learning with the changes
in the business community. University of Wisconsin-Stout became a
“comprehensive, career-focused polytechnic university where students, faculty and
staff use applied learning, scientific theory and research to solve real-world problems,
grow the state economy and serve society.” This bold move is intended to integrate
the university with the business and industrial communities and is projected to
complement the Stout Technology Park.
The Stout Technology Park was established in 1990 to “develop close
relationships with businesses and industries to provide real-world educational
opportunities.” This partnership is a first step to pave the way for the development of
the I-94 Corridor Technology Zone program. UW-Stout offers specializations in
Manufacturing Engineering, Packaging, Graphic Arts and Design, Hotel and
Restaurant Management, Computer Science and Applied Mathematics, CAD/CAM
Programs, and Computer Manufacturing Simulation. These specializations may
prove to be a source of workforce that could support industries in the I-94 Corridor
Technology Zone program.
This consortium has multiple advantages; from a teaching standpoint, it
allows instructors to use not only new technology, but new ideas and methods of
teaching. It also provide students new opportunities to see the business community
they will be entering and develop an understanding of their future careers that cannot
possibly be found in a typical classroom. The business community benefits from this
type of learning since they are assured to be hiring well-informed, educated
individuals that have been taught with the most up-to-date information and
technology that is already currently being used or will be used in their fields.
Incorporating the business community with UW-Stout will not only ensure the
success of the students and the university, but also the community as well.
8
The University of Wisconsin – Stout is located in Menomonie, Wisconsin in
Dunn County and is a unique location for college students to get an education.
Normally a “sleepy,” quiet town, Menomonie wakes up when over 8,000 college
students get to town in the fall. The area has amentias like Lake Menomonie, the Red
Cedar Trail, and Mabel Tainter Theater that not only provides students with activities,
but also educates them through culture and history that can only be found in this part
of Wisconsin.
2. The Impact of the University of Wisconsin - Stout as a Higher Education
Institution
For the local (and U.S.) companies to compete locally (and globally) the labor
force have to be equip to handle the changing nature of the business environment.
The university not only injects spending directly and indirectly to the local economy
but also engages in human capital formation and development. The economic
significance of UW-Stout as a higher education institution has both tangible and
intangible effects.
The tangible effects can be conceptualized in the university’s direct
expenditures on goods and services, physical structure, capital improvements, payroll,
students and visitors spending. These monetized transactions support a wide variety
of local businesses and, increase sales and State income tax revenues. Local
businesses benefit from these purchases in terms of increase in proprietors’ income
and business expansions and, these businesses in turn demand more labor and capital
goods which could support other businesses and industries.
Human capital is made up of individual people’s capacity for labor,
particularly the energy, knowledge and skills that each can personally bring to his or
her work. Investing in human capital has a rate of return that can be measured in
terms of wages earned and increase in quality of life. Although quality of life is a
little harder to quantify beyond material acquisition and health, but the increase in
potential earnings with higher education can be conceptualized in Figure 1.
9
Figure 1: Potential Earnings with Bachelor’s Degree
The Figure above illustrates a direct relationship between national median earnings
and their corresponding percentage of adult population with bachelor’s degrees.
Hence, higher education institutions provide individuals with the means to increase
their future potential income.
Additionally, higher education institutions carry out research which forms
bases of commercial achievements. Also, universities provide education that shape
and sharpen the intellect, character and skills of our future labor force. The intangible
significance of the University of Wisconsin-Stout is even more important with the
“hands-on” knowledge base learning. Building the human capital necessary to fuel
innovation, creativity and originality will be the driving force for businesses and
industries for the economies of the 21st century. Shaping our labor force with the
know-how fosters the development of our intangible capital and increases
productivity and hence wages. Therefore, the non-tangible effects of UW-Stout, as a
higher education institution, have both direct and indirect consequences of shaping
the future of the local (and U.S.) companies’ competitiveness.
Moreover, because universities engage in purchases, employees, students and
visitors demand goods and services, and pay sales and income taxes, state and local
government benefit in terms of revenue increase which could potentially increase
local and state government appropriations on socially constructive programs. Hence,
10
the cycle of purchases and spending triggered by the university, its employees,
students and visitors have both direct and indirect results on the local economy. This
is true especially of rural universities.
II. Methodology
1. Scope and Objectives
This study examines the impact of four actors namely, the university
expenditures, university payroll, spending by university students and visitors. The
impact attributable to the university is measured in three different areas: 1) number of
jobs that the university supports directly or indirectly 2) additional labor income. and
3) additional output (sales) that the university generates. Figure 2 illustrates the
abstract structure under examination. For the purposes of this study the local
economy is defined to include Dunn County.
Figure 2: Abstract Structure
University
Expenditures
Employment
Impact
Payroll
UW-Stout
Local
Economy
Students
Income
Impact
Output
Impact
Visitors
11
Additionally there will a discussion on local sales tax and income tax revenue
increase resulting from the purchases by the university, employees, students and
visitors.
2. The Multiplier Effect
The total impact of UW-Stout on the local economy, also recognized as the
multiplier effect, is equal to the sum of three elements: the direct effect, the indirect
effect and the induced effect. The direct effects are the initial consequence caused by
university spending, university payroll and spending by students and visitors. Due to
the exchanges between firms, industries, and social institutions (household, Federal
government, State and local government, enterprises, capital and inventory) that
naturally arise within the local economy, the direct effect commences a series of
iterative rounds of income creation, spending and re-spending that can be observed in
the indirect and induced effects. The indirect effects are changes in production,
employment and income that are caused by the inter-industry purchases and spending
prompted by the direct effect. This can be seen as production changes in backwardlinked industries caused by the changing input needs of directly affected industries.
The induced effects arise due to changes in household income and spending patterns
caused by direct and indirect effects. Since the total impact of the university
expenditures is a compound of the initial expenditures, the total effect is expressed as
a multiplier effect. The total effect is the sum of the direct, indirect and induced
effects. Therefore, the total impact of the university on the local economy is larger
than the initial spending. For example, an output multiplier of 1.3 indicates that for
every million dollars spent (direct expenditure) an additional 0.3 million dollars is
generated within the local economy. Similarly, an employment multiplier of 1.6
indicates that for each job created by direct expenditure, an additional 0.6 full time
jobs created or supported. Further, labor income multiplier of 1.8 implies that for
every million dollars spent an additional .8 million of labor income created within the
local economy.
12
3. Leakages and Regional Purchase Coefficient
Industries produce goods and services for final demand and purchase goods
and services from other producers. These other producers, in turn, purchase goods
and services. This buying of goods and services (indirect purchases) continues until
leakages from the region (imports) stop the cycle. Thus, the multiplier effect tracks
down the flows of spending by institutions until original spending leaks out of the
region. Leakages are payments made to imports sectors which do not in turn re-spend
the dollars within the region and the larger the leakages are the smaller the multiplier
effect resulting from economic activities. Therefore spending on goods not produced
locally has little impact of local spending by any type of social institution.
To implement a sound trade flow the regional purchase coefficient factor
needs to be adjusted to reflect such leakages. Therefore, the regional purchase
coefficient is the ratio of locally purchased to imported goods. An example a regional
purchase coefficient of .95 for dairy products indicates that 95 percent of local
demand is met by local producers and 5 percent met by producers outside the study
area.
4. IMPLAN System
This economic impact study is done using IMPLAN input-output model. It is
an integrated software and data package coupled with set of tools for creating
regional social accounts and for evaluating economic activities. IMPLAN software
allows a user to build a study area, also known as social accounts, customized for a
specific region. Social accounts track the monetary flows (both market and nonmarket activities) between industries and institutions. The market flows are those
between producers of goods and services and consumers, both industrial, and nonindustrial. The non-market flows are those between households and government,
government and households, capital and households and so on. These flows are
called inter-institutional transfers. The IMPLAN system is designed to serve three
functions: 1) data retrieval, 2) data reduction and model development, and 3) impact
analysis.
13
The data accompanied the software is collection of data tabulated by the U.S.
Department of Commerce, the U.S. Bureau of Labor Statistics, and other agencies.
Data are tabulated for 509 sectors of U.S. (national, state and county levels) which
correspond to the North American Industry Classification System (NAICS).
The
IMPLAN database consists of two major parts: 1) a national-level technology matrix
and 2) estimates of sectorial activity for final demand, final payments, industry output
and employment for each county in the U.S. along with state and national totals.
The software allows users to tailor a study region on county level, multiple
counties, or state and multiple states. The complete set of social accounts is then
converted to the industry by industry formulation of input/output accounts and
ultimately the predictive Leontief multipliers. The notion of the multiplier rests upon
the difference between the initial effect of a change in final demand and the total
effects of that change. The IMPLAN accounts closely follow the accounting
conventions used in the “Input-Output Study of the U.S. Economy” by the Bureau of
Economic Analysis and the rectangular format recommended by the United Nations.
5. Deflators and Margins
To account for inflation, deflators are used to convert impact expenditures
from current year to the base year and also can be used to inflate the impact reports of
the study area to the current year. This is a necessary step to find expenditures
expressed in same year’s dollars as the model’s data. The latest IMPLAN data for
the State of Wisconsin are for the year 2004. For that reason, the numbers are
adjusted to 2005 dollars, which is the year under analysis.
Margins are used to convert purchaser prices to producers’ prices. Margins
are different depending on the “final” consumer. Households pay transportation,
wholesale, and the full retail margins. Industries or the Federal government pay
different margins. For example, government may pay little or no retail margins as it
has more buying power. Therefore, margins represent the difference between
producer and purchaser prices. Margining assigns direct expenditures to the correct
input/output sector multipliers. It splits a purchaser price into the appropriate values.
14
Thus, the value of the impacts, if purchased by end users or consumers, must be
divided into the portion going to the retailer, and wholesaler, transportation, and the
manufacturer.
6. Data
All data used in this economic study are for the 2005-06 fiscal year and are
provided by different lists of sources, including the University Budget Office, the
Admission Office, the Human Resource office, Career Services, Accounting and the
University Housing. To infer a correct impact data, differentiation of expenditures
due to university operating expenditures, employees’ expenditures (which is related
to payroll), students and visitors expenditures is a necessary step. Therefore, the
following section present expenditure information and the impact of each of the
categories on the regional economy.
III. Economic Impact of UW-Stout on Local Economy
1. The University Operating and Equipment Expenditures
According to the Budge, Planning and Analysis 2005-06 Annual Report, UWStout spent almost $118 million; Table 1 displays expenditures by category.
Permanent Salaries
LTE/Student Help
Graduate assistant
Total Personnel
Table 1
Expenditures
Amount
$46,208,975
$4,943,551
$500,674
$51,653,200
Percent of Total
41.48
Fringe Benefits
$21,589,775
17.34
Service and Supplies
$34,069,211
27.36
Capital
$2,069,344
1.66
Special Purpose
$15,154,605
12.17
Total UW-Stout Expenditures*
$124,536,135
100%
* There is an additional ($-6,604,992) in Sales Credits,
total expenditures are $117,931,143
15
These expenditures consist of wages (non-academic and academic staff) and
purchases of goods, fringe benefits, and services from private vendors.
Approximately 29.02 percent of UW-Stout non-payroll expenditures, or $36.14
million, occurred in Dunn County. To avoid double counting, total UW-Stout nonpayroll spending in Dunn County is relegate by internal grants and assumed as
proceeds to UW-Stout in the form of tuition and fees. Capital spending on
construction is added to UW-Stout non-payroll dollars to reflect direct spending that
impact Dunn County.
Of the $124.5 million only 28.9 percent (34,075,920 million) is UW system
appropriation, the rest of the funds are made from academic student fees, government
and non-government organizations, and private gifts and grants; Table 2 displays
revenue source.
State Appropriations
Table 2
Sources of Funds
Amount
Percent of Total
$34,075,920
28.89
Academic Student Fees
$39,069,622
33.13
Auxiliary Enterprise
$22,534,604
19.11
Private Gifts & Grants
$2,003,605
1.70
Federal Grants and Contracts
$5,902,528
5.01
Federal Student Financial Aid
$7,181,370
6.09
Other
$7,163,496
6.07
Total UW-Stout Revenue
$117,931,145
100%
The difference between total revenue and expenditures is due sale credit
amounting to $6.6 million. Nearly 29 percent of revenue came from UW System
appropriation; students’ fees, tuition, room and board account for 33 percent; federal
grants and student aid amount to approximately to 11 percent and almost 2 percent
came from private gifts and grants.
Excluding fringe benefits, students’ aid and payroll (except for LTE and
graduate assistance – they are assumed to live in the area), UW-Stout spend
16
approximately $49,556,015. These expenditures are spent on everything from
equipment, construction, food services, and library material. These expenditures pour
directly into local economy and the surrounding areas, some spending is indirectly
observed yet others have induced impact. Table 3 depicts the impact of UW-Stout
expenditures in terms of number of job created, their earned income, contributions to
Wisconsin output and the multiplier effects.
Table 3
Institution Impact
Employment
Labor Income
Output
Total Direct
1,128
39,157,952
49,556,015
Total Indirect
6
166,568
512,259
Total Induced
222
5,096,806
17,471,736
Total
1,357
$44,421,326
$67,540,010
Multiplier
1.20
1.13
1.36
The impact analysis shows that the $49.6 million spent by the university and
its auxiliaries produced a total effect of $67.5 million in terms of output. Output is
measured by the total value of purchases by intermediate and final consumers –
measured in total direct, total indirect and total induced. Output can also be thought
as the value of sales, plus or minus inventory levels. Table 3 shows that the
university spending produced an additional $18 million of additional spending in the
local economy. The multiplier is found by dividing total numbers divided by the total
direct. A multiplier of 1.36 implies that for every dollar the university spent on capital
improvement there is 35 cents that is generated by the university expenditures.
Total job created from UW-Stout presence in Dunn County is an additional
1,356 employees with a value of labor income of $44.4 million. According to the
Wisconsin Department of Revenue, the average of Wisconsin Income tax rate is 6
percent thus the additional income tax revenue is $2,665,275.6. Major employment
categories are: food and beverage stores, childcare services, office physicians,
dentists and hospitals, nursing and residential care facilities, food services, civic,
social and professional services. Non-payroll impact on the local economy amounts
to $67.5 million with additional $3,667,422.7 in sales tax revenue (according to
Wisconsin Department of Revenue, the average weighted Wisconsin sales tax is 5.43
17
percent.) Among the sectors that are effected by UW-Stout presence in the Dunn
county area are: real estate, travel agencies, consulting services, architecture and
engineering services, financial institutions, legal services, telecommunication,
medical services, electronics and appliance, power generation plant, wholesale trade,
transportation and gas stations, postal services, furniture, computer system and
design, commercial printing, maintenance and repair, meat processing and farmers
(dairy, produce, cattle).
2. Payroll
According to the University Budget Office, the university employed a total of
1,213 employees at UW-Stout with 598 serve as faculty and academic staff, 37 with
limited appointments, 378 are classified staff, 130 are project/limited term
appointment and 70 are graduate assistant.
Also, according to the University Budget
Office, the UW-Stout campus at the end of the 2005-2006 academic year, had a total
1001.9 FTE employees; Table 4 displays FTE employment by category.
Table 4
FTE Employment at UW-Stout
Unclassified
Classified
Category
FTE
Category
Non-Instructional
223.95 Project
Academic Staff Instr
46.64 Permenent
Faculty
289.97
Grad Assis
27.63
Total
588.19 Total
FTE
20.14
393.57
413.71
Table 5 depicts gross salaries by category where total wages earned by
unclassified and classified, graduate assistants, and limited-term and student
employment.
18
Table 5
Gross Wages by Category at UW-Stout
Category
Gross Wages
Unclassified and Classified Employees
$46,208,975
Graduate Assistants
4,943,551
Limited Term Employment and Student Help
500,674
Total
51,653,200
Total Wages Excluding LTE and Students
$51,152,526
Salary and wages amounted to $51.15 million for employees, excluding LTE
and Students. Table 6 displays wages earned by unclassified and classified
employees.
Table 6
Unclassified and Classified Net Wages at UW-Stout*
Gorss Payroll
$51,152,526
Taxes
Federal Income Payment
$5,514,242
State Income Payment
3,150,996
Social Security Payment
3,913,168
Total Taxes
12,578,406
After Tax Income
38,574,120
Leakage Expenditures
7,714,824
Disposable Income
$30,859,296
*Excluding benefits and Medicare
These figures do not include the amount received as benefits such as health care,
retirement, etc. Also, since consumers purchase goods and services using their
disposable income, the wage and salary numbers need to be adjusted by subtracting
income and social security taxes. Moreover, this study assumes a “conservative”
average disposable income ratio of 80 percent.1 Therefore, after adjusting for all
taxes, the total disposable income earned by UW-Stout FTE employees was $30.9
million. Using FTE figure instead of headcount is a better approximation to represent
the fact that some employees live outside Dunn County.
1
NorthStar Economics, Inc. assumed this ratio to be 90.2 percent. This study assumes that 80 percent
of total income earned by UW-Stout is spent locally the rest is spent elsewhere – a more liberal ratio
would yield higher impacts. Additionally it is assumed that Income tax withholdings equals tax
liabilities on average.
19
The impact analysis shows that the $30.9 million earned by UW-Stout
employees produced a total effect of $42.1 million in terms of output. The total effect
in terms of labor income created amounted to $12.7 million. The employment
multiplier derived by dividing total jobs by the number of direct jobs is 1.35.
Expenditures by UW-Stout employees supported a total of 545 jobs in the local area.
See Table 7 for a summary of UW-Stout employees spending impacts.
Employment
Labor Income
Output
Total Direct
404
9,177,049
30,859,296
Table 7
Payroll Impact combined
Total Indirect
Total Induced
71
70
1,879,221
1,623,418
5,679,061
5,529,363
Total
545
$12,679,688
$42,067,720
Multiplier
1.35
1.38
1.36
The total economic activities of UW-Stout payroll lead to creation of
additional new jobs. Each UW-Stout employee results in .35 total job creation, which
means for every FTE employee there is .35 employment. These created jobs
generated a total of almost $12.7 million dollars of labor income, yielding $ 760,781
to Wisconsin income tax revenue. Moreover, the purchases of UW-Stout employees
of goods and services contribute more than $42.1 million to the local economy and
yielding $2.3 million sales tax revenue. The jobs created, earned income (by these
created jobs) and the total contribution would have not be realized without the
presence of UW-Stout employees.
In the fiscal year 2005-06 UW-Stout employees’ disposable income was
almost $34.8 million. NorthStar Inc. in its 2002-03 report categorized UW-Stout
employees’ expenditures from their disposable income in four industry classes:
Private Business, Households, Not-for-Profits, and Government. Applying the same
percentage share as in NorthStar Inc. yields industry shares of UW-Stout employees
spending which is displayed in Table 8.
20
Table 8
UW-Stout Employees' Disposable Income by Category
Industry Sector
Disposable Income Percent of Total
Private Business
28,496,168
81.9
Households
208,763
0.6
Not-for-Profits
1,182,991
3.4
Government
4,905,934
14.1
Total
$34,793,856
100
UW-Stout employees spent almost $28.5 million at local businesses,
approximately $1.2 million is given to non-profit organizations and about $5 million
to government agencies. Among the sectors that are affected by UW-Stout
employees spending are the following: agriculture (dairy and meat), real estate, wood
windows and door manufacturing, sanitation manufacturing, plastic plumbing
fixtures, glass and glass products, general merchandise stores and whole sale trade,
insurance companies, postal services, banking, food and beverage stores, gasoline
stations, furniture and home furnishing stores, architectural services, personal care
services, legal services, travel agencies, employment services, veterinary services,
childcare services, hotel and motels, sporting and athletic vendors, fitness and
recreational sport centers, motor vehicles and parts dealers and automotive repairs.
3. Student Expenditures
College costs and additional expenditures vary depending on where a student
lives during the academic year - at home with parents or relatives, in campus housing
(residence halls), or off campus. The costs of attending UW-Stout in the 2005-06
academic year are presented in Table 9.
21
Table 9
Cost of Attendance at UW-Stout for 2005-05 Academic Year
Students Living
…on Campus … with Parents …off-Campus
Tuitions and Fees*
$4,692
$4,692
$4,692
Books and Supplies**
314
314
314
4,572
Room and Board**
1,758
2,820
1,758
Transportation**
720
720
720
Other expenses**
1,666
1,666
1,666
Total
$11,964
$9,150
$11,970
Total living expenses***
$6,958
$4,144
$6,964
*Total academic student fees ($39,069,622)/headcount (8,327)=$4,692/student
**Source:http://www.uwstout.edu/bpa/ir/factbook06.pdf
***Living expenses excluding tuition and fees, and books and supplies
To avoid double counting, expenditures on fees, books and supplies are
excluded since these payments represent sources of revenue to the university. Based
on numbers produced by the UW-Stout Housing, 67 percent of the 8,327 students
enrolled in the 2005-06 academic year lived off campus and/or commuted and 33
percent lived in the dorms. Numbers compiled by this study do not distinguish
between those students living with their parents or relatives and those living off
campus on their own. Thus, assuming all students living off campus spent the
“average” of the two possible classifications -living with their parents or relatives and
living off campus on their own- each student spent an average of $5,554 while each
student living on campus spent an average of $6,958. Based on these estimates, the
estimated total spending of UW-Stout students for the 2005-06 school year was equal
to $50.14 million.
The impact analysis shows that the $50.14 million spent by UW-Stout
students produced a total effect of $79.7 million in terms of total output. The total
effect in terms of labor income created amounted to $55.53 million. Student
expenditures supported a total of 1,578 jobs in Dunn County. The employment
multiplier, derived by dividing total jobs by the number of direct jobs, is 1.2. Table 10
displays a summary of student spending impacts.
22
Employment
Labor Income
Output
Total Direct
1,232
46,256,788
50,144,960
Table 10
Students Impact
Total Indirect Total Induced
171
175
4,635,046
4,635,050
14,799,055
14,799,060
Total
1,578
$55,526,884
$79,743,075
Multiplier
1.28
1.20
1.59
The total economic activities of UW-Stout students lead to creation of
additional new jobs; UW-Stout student supported a total of 1,578 jobs in Dunn
County. These created jobs generated a total of almost $55.53 million dollars of labor
income, yielding $ 3.3 million to Wisconsin income tax revenue. Moreover, the
purchases of UW-Stout students of goods and services contribute to $79.7 million to
the local economy and yielding $4.33 million sales tax revenue.
Among the sectors that are directly affected by UW-Stout students spending
are the following: cheese manufacturing, soft drink and ice cream manufacturing,
breweries, stationary and related product manufacturing, gas stations, automatic
vending, commercial laundry and dry cleaning machinery, health and personal care
stores, clothing and clothing accessories stores, miscellaneous store vendors,
newspaper publishers, motion picture and video rental, telecommunications, travel
management and reservation services, food services and drinking places, car washes,
automotive repair and maintenance, other personal services, and used and secondhand
goods.
4. Visitors Expenditures
Estimating visitors spending continuously poses a challenging task. One
common method is to simply use some estimated percentages of the university budget
to infer their contributions, though this method is not always accurate and does not
capture the unique nature of students’ and the university activities. To accurately
accomplish this task extensive surveys are needed to accounts for headcount and
spending patterns per event, which is prohibitively expensive. Therefore, this study
will use the recommended expenditures per visitor per day as prescribed by
Minnesota IMPLAN Group, Inc. These expenditures are listed in Table 11.
23
Table 11
Spending by Category
Category
Beverage
Snack food
Parking
Auto Gas
Meals from a restaurant
Hotels
Miscellaneous
Spending per Visitor Per Night…
Total spending w/Hotel
Total spending w/out Hotel
Spending Per Visitor
Per Day
$2.25
$4.00
$2.00
$15.00
$24.00
$65.00
$10.00
$122.25
$57.25
For the beverage category it is recommended to be $.75 with three beverage drinks a
day, snack at $2 twice a day, and meals at $8 three times a day. Thus, total spending
per day per visitor with hotel/motel stay is $122.25 and without hotel stay is $57.25.2
Miscellaneous expenditures account for souvenirs and other personal items.
Spending and purchases of such items may depend on the nature of the visitors if they
were business visitors or otherwise. This study estimated total visitor’s spending by
events held on campus. As such, this study recognizes five evens, including, move-in
and-out days, graduation commencements, athletic events, career conference visitors,
and, visitors to students, faculty and official business travelers destined to do business
with UW-Stout.
To estimate the number of family members that help students move in and out
of their dormitories (not accounting for family help extended to students who live offcampus) this study used the number of students in resident halls and assumed two
family members per student as a proxy; 277.5 students (it is the average of the fall
and spring residents, since students need help move-in in the fall and move-out at the
end of spring semester). Assuming it is a one-day trip, total spending is $524,570.
Graduation commencement is held twice during the academic year; the first is
held at the end of fall semester and the second is at end of the spring semester. Total
NorthStar Economics, Inc. assumed that total expenditures by visitors for “in-town stay” and a “oneday” visit to be $174 and $47 per day per visitor, respectively.
2
24
number of graduates is 1,351 with 6.2 family members and 9.9 peers attending two
commencement ceremonies, therefore the average is 8.05 visitors per graduate.3
Assuming it is a two night stay, total estimated spending from graduation ceremony is
$5.3 million.
Visitors to UW-Stout employees are assumed to be three visitors per FTE
employee (974) with two night stay, the estimated spending by employees visitors is
$714,429. The number of visitors per FTE student (7,199) is assumed to be two with
two night stay, total spending is $3.5 million. The total estimated spending by
visitors for the purpose of doing business with UW-Stout is more than $5.6 million; it
is assumed by NorthStar, Inc., that for every million dollar of university revenue the
number of visitors is 331, with a conservative daily spending of $122.25 for 7.7 days.
Therefore, the total estimated visitors (to employees, students and business travelers)
direct spending is $9.8 million.
Athletic events includes home-games for baseball, basketball, cross county,
football, gymnastics, hockey, indoor and outdoor track, soccer, softball, tennis and
volleyball. Using Athletic tickets sold as a proxy, almost 42,000 people attended
UW-Stout home-game athletic events. This study assumes 20 percent of the
attendees were from outside the county, thus the estimated spending by these visitors
is $1.02 million.4
Career Services hosts Career Conference each October providing recruiters/
companies an opportunity to meet informally with students to share company
information and discuss career options. Also, recruiters may come back for a second
interview as a follow up on candidates. It is a three day event with an average of
three interviewers per potential employer. It is reported by career services that 1,406
employers were present on-campus in October 2005. For the second interview, per
employer presence is assumed to be two interviewers staying for two nights. This
study adopted the number of successful placements as a proxy for the second on3
Source: UW-Stout’s Economic Contribution to the Region, Dennis K. Winters, NorthStar Economics, Inc. 200203.
4
NorthStar assumed 50 percent were from out of the county attendees.
25
campus interview; there were 281 placements. The total estimated spending by
employers for the two events is $1.55 million. Table 12 and Figure 3 summarize the
above discussion.
Table 12
Visitors Spending by Function
Expenditures by Function
Expenditures occurred during Move-in-out Days
Graduation Ceremony Visitors
Visitors to Employees, Students and Business on Campus
Athletic Events
Career Conference Visitors
Total Spending
Figure 3
Visitors Expenditure by Category
Total Dollars Percentage
524,570
2.9%
5,318,144
29.1%
9,845,107
53.9%
1,026,900
5.6%
1,546,581
8.5%
$18,261,301
100.0%
Expenditures occurred
during Move-in-out
Days
Graduation Ceremony
Visitors
Visitors to Employees,
Students and Business
on Campus
Athletic Events
Career Conference
Visitors
The largest estimated spending percentage belongs to the visitors (to
employees, students and business); second category is the two graduation
commencements attendees, followed by career conference and athletic events visitors.
The smallest estimated spending is during the “move-in-out days”. The total
estimated spending by all visitors (for all five categories) is $18.3 million. The
impact analysis was done on total expenditures by category listed in Table 11 and the
result of this analysis is displayed in Table 13.
Employment
Labor Income
Output
Total Direct
373
4,909,157
15,840,253
Table 13
Visitors Impact
Total Indirect Total Induced
36
46
1,137,888
1,223,051
3,467,214
3,905,419
Total
455
$7,270,096
$23,212,886
Multiplier
1.22
1.48
1.47
The total economic activities of UW-Stout visitors lead to creation of new
jobs in the local economy. Each UW-Stout visitor results in .22 total job creation of
455 jobs.5 These created jobs generated a total of almost $7.2 million dollars of labor
income, yielding $436,205 increase in Wisconsin income tax revenue. Moreover, the
purchases of UW-Stout visitors of goods and services contributed to $23 million to
5
These jobs could be on a temporary base, but nevertheless, Dunn County experienced increase in job
creation during the aforementioned events.
26
the local economy and yielded $1.3 million sales tax revenue. Among the industries
that are directly affected by the visitors are the hotel and motel industry, food services
and drinking places, soft drink and ice manufacturing, and confectionery
manufacturing.
5. Impact Summary Tables
Table 14 shows a summary of impacts that the university and its auxiliaries,
payroll, students and visitors expenditures had on local economy in 2005-06
academic year.
Table 14
Impact Data
Summary of Employment Impact for All Spending Categories
Total Direct
Total Indirect Total Induced
University and Auxiliaries
Expenditures
Payroll
Students Expenditures
Visitors Expenditures
1,128
404
1,232
373
6
71
171
36
Total
3,137
285
Total
Multiplier
222
70
175
46
1,357
545
1,578
455
1.20
1.35
1.28
1.22
513
3,935
1.25
Summary of Labor Income Impact for All Spending Categories
Total Direct
Total Indirect Total Induced
University and Auxiliaries
Expenditures
Payroll
Students Expenditures
Visitors Expenditures
$39,157,952
$9,177,049
$46,256,788
$4,909,157
$166,568
$1,879,221
$4,635,046
$1,137,888
Total
$99,500,946
$7,818,723
Total
Multiplier
$5,096,806
$1,623,418
$4,635,050
$1,223,051
$44,421,326
$12,679,688
$55,526,884
$7,270,096
1.13
1.38
1.20
1.48
$12,578,325
$119,897,994
1.20
Summary of Output Impact for All Spending Categories
Total Direct
Total Indirect Total Induced
University and Auxiliaries
Expenditures
Payroll
Students Expenditures
Visitors Expenditures
$49,556,015
$30,859,296
$50,144,960
$15,840,253
$512,259
$5,679,061
$14,799,055
$3,467,214
Total
$146,400,524
$24,457,589
27
Total
Multiplier
$17,471,736
$5,529,363
$14,799,060
$3,905,419
$67,540,010
$42,067,720
$79,743,075
$23,212,886
1.36
1.36
1.59
1.47
$41,705,578
$212,563,691
1.45
The main contributor to employment in the local economy is expenditures by
UW-Stout employees’ expenditures followed by students and visitors’ expenditures.
In terms of labor income, expenditures by the visitors followed by payroll are the
main source of increase in labor income in Dunn county. The main contributor to
local output is expenditures by students followed respectively by visitors and the
university spending and payroll. The relative contribution of each segment is
illustrated in Figure 4.
Figure 4
Relative Contribution by Category
Category
Visitors
Expenditures
Students
Expenditures
Total Labor Income
Total Output
Total Employment
Payroll
University and
Auxiliaries
Expenditures
0%
20%
40%
60%
80%
100%
Percentage
It is useful to conceptualize the total economic impact of UW-Stout by
considering what would happen if the university was not located within Dunn
County. Total local output would decrease by about $212.6 million, labor income
would decrease by $119.9 million, and employment will be 3,935 smaller.
6. UW-Stout Direct Spending and Impact
In 2005-06 academic year the University of Wisconsin – Stout contributed to
the local economy by more than $146.4 million, the university related expenditures
accounts for $49.5 million in total direct impact, employees’ payroll accounts for
28
$30.9 million, students expenditures accounts for $50.1 million and visitors accounts
for $15.8 million. Table 15 displays economic contribution by each actor. Recipients
from the total direct spending are private businesses, households, non-profit
organizations and the local government. The impact of total direct spending is the
largest for private businesses, followed by local government. Figures 5 and 6 depict
contributors and recipients shares.
Table 15
UW-Stout Direct Economic Contribution and Recipient Shares
Contributor
University
Payroll
Student Expenditures
Visitor Expenditures
$49,556,015
$30,859,296
$50,144,960
$15,840,253
Total
$146,400,524
Recipient
Private Businesses
Households
Non-Profit Organizations
Local Government
$133,370,877
$439,202
$3,806,414
$8,784,031
Total
$146,400,524
Figure 5
Contributor Share
Figure 6
Recipient Share
Inst it ut ion
Privat e Businesses
Payroll
Households
St udent Expendit ures
Non-Prof it Organizat ions
Visit or Expendit ures
Local Government
The students contribution accounts for 34.3 percent, the university contribute
33.8 percent followed by payroll contribution which accounts for 21.1 percent and
visitors contributions amounts to 10.8 percent. Private businesses are the biggest
29
recipient which accounts for 91.1 percent followed by local government, non-profit
organizations and households; 6, 2.6, and .3 percent respectively.
Among the businesses and industries that benefited from UW-Stout total
direct spending are the following: agriculture, forestry, fish and hunting, mining,
utilities, constructions, manufacturing, wholesale trade, transportation and
warehousing, retail trade, information, finance and insurance, real estate,
administrative and waste services, educational services, health and social services,
entertainment and recreation, accommodation and food services, other services and
government.
The impact of total contribution of UW-Stout on the local economy is
displayed in Table 16.6
Table 16
UW-Stout Total Output Impact
University
Payroll
Student Expenditures
Visitor Expenditures
Total
$140,739,083
$73,445,124
$116,336,307
$36,749,387
$367,269,901
The total economic contribution of UW-Stout to the local economy is $367.2 million,
with 38 percent of total impact is attributed to the university, 32 percent is credited to
student expenditures, 20 and 10 percent comes from employees payroll and visitors
respectively.
IV. Concluding Remarks
This study analyzed the monetary exchanges between four actors; the
university as employer and demander for goods and services, its employees, students
and visitors for the 2005-06 academic year. It does not quantify the long run affects
of the university on Menomonie and local economy in terms of its intrinsic value of
6
NorthStar Inc. used multipliers of 2.84 for the university, 2.38 for payroll, 2.32 for both student and
visitor spending.
30
increased diversity awareness and culture, or the increase in social capital and sense
of scholarship. It does not quantify the increase demand for amenities and specialized
services, the increase in property value, the potential increase in local wages and the
potential increase in proprietor income. It does not capture the increase in research
funding outside the university, the increase in “know-how”, the productivity increase
of the human capital and does not consider the impact of Poly Technical designation.
The latter may prove to be a driver force in attracting new businesses and industries
to the region in the long run.
To infer the short run economic impact of the university on local economy,
this study utilized conservative assumptions and narrow restrictions to reduce the
error margins in the predictive models. This was a necessary step to draw realistic
conclusions from the aggregate reports. Some modifications to the data used were
needed; however sound attempts were made to eliminate double counting and
inaccuracies.
Because Dunn County is surrounded by Eau Claire, St. Croix, Chippewa, Polk
and Pierce counties, an impact analysis including these counties would result in an
estimated contribution that would be much larger since it reduces leakages from trade
flow accounts and increase the multiplier effects by a factor of 2.09. Nevertheless,
the evidence suggests that the university is major contributor to the local economy - it
is the second largest employer in Dunn County following Wal-Mart Associates Inc.
In 2005-06 academic year the University of Wisconsin-Stout contributed more than
$367 million to Dunn county economy and more than $386 million to the state of
Wisconsin economy.7
7
Total direct and taxes contributions.
31
Reference:
Dunn County Workforce Profile:
http://dwd.wisconsin.gov/oea/cp_pdf/2006/d033cpw.pdf
IMPLAN Data and Software. 2004. Minnesota IMPLAN Group, Inc., IMPLAN
System,
1725 Tower Drive West, Suite 140, Stillwater, MN 55082 www.implan.com
Measuring Bowling Green State University’s Impact on Ohio’s Economy, Michael C.
Carroll, Bowling Green State University.
Stout Technology Park: http://www.uwstout.edu/stp/about/
Tax Foundation: http://www.taxfoundation.org/taxdata/show/228.html
The Economic Impact of California State University, Fresno on the San Joaquin
Valley’s Economy, Dr. Antonio Avalos, Department of Economics, California
State University, Fresno, 2006.
University of Wisconsin-Stout, Office of Budget, Planning and Analysis,
http://www.uwstout.edu/bpa/opbudget/yereview/yebr06.doc
University of Wisconsin-Stout, Office of Budget, Planning and Analysis, Fact Book:
http://www.uwstout.edu/bpa/ir/factbook06.pdf
University of Wisconsin System, Annual Financial Report-2004,
http://www.uwsa.edu/fadmin/finrep/afr04.pdf
University of Wisconsin System, Office of Budget and Planning,
http://www.uwsa.edu/budplan/annualOpBudget.htm
University of Wisconsin System, Office of Policy Analysis & Research, Student
Statistics Reports, http://www.uwsa.edu/opar/ssb.htm
U.S. Census Bureau, American Community Survey - 2005,
http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS
UW-Stout’s Economic Contribution to the Region, Dennis K. Winters, NorthStar
Economics, Inc. 2002-2003.
Wisconsin Department of Revenue,
http://www.dor.state.wi.us/faqs/pcs/taxrates.html#txrate2
32