2013 LSU Economic Impact Study:

Transcription

1 2013 LSU Economic Impact Study: Estimating the Economic Impact of LSU on Louisiana 2013 Stephen Barnes, PhD Dek Terrell, PhD

2 LSU System Impact Study 2 LSU E. J. Ourso College of Business Administration

3 2013 Report Executive Summary Consisting of the state s flagship university, regional institutions, health sciences centers, and research entities, LSU makes a significant contribution to the state s economy. These economic benefits include the impact of current LSU operations throughout the state as well as the long-run benefits that a leading research university offers towards economic growth and the accumulation of human capital. The purpose of this study is to estimate the economic impact of LSU operations on the state in ÊÊ ÊÊ ÊÊ ÊÊ During 2013 fiscal year, LSU supported nearly $3.9 billion in Louisiana sales, $1.5 billion in new statewide earnings and an estimated 36,757 direct and indirect annualized jobs. For every operating and capital dollar provided by the state, LSU support $5.08 of economic activity. The immediate economic benefits brought to Louisiana by non-resident students attracted to programs across LSU include over $353 million in new Louisiana sales, $137 million in earnings and nearly 3,500 new jobs for Louisiana. Throughout the state, LSU brings significant benefits to regional economies: In the Baton Rouge MSA, the 2013 LSU operations generated $2.1 billion in sales, nearly $764 million in earnings, and more than 21,400 jobs. In the New Orleans MSA, the 2013 LSU operations generated $888 million in sales, over $390 million in earnings, and over 6,900 jobs. In the Shreveport-Bossier City MSA, the 2013 LSU operations generated $536 million in sales, nearly $215 million in earnings, and 4,900 jobs. In the Alexandria MSA, the 2013 LSU operations generated $53 million in sales, nearly $18 million in earnings, and nearly 640 jobs. In the Lafayette MSA, the 2013 LSU operations generated $47 million in sales, over $17 million in earnings, and almost 520 jobs. Manuel Hall on the campus of LSUE in Eunice. Division of Economic Development 3

4 LSU System Impact Study Introduction This study examines the economic impact of LSU on Louisiana and each of the metropolitan statistical areas (MSAs) that are home to an LSU institution. LSU attracted an average of more than 36,500 students and employed approximately 13,200 full-time faculty and staff during the academic year. While there are many full-time professors, instructors, researchers and staff working each day in LSU, there are also 12,040 parttime workers, student workers and graduate assistants. When part-time employees are included, total employment was nearly 25,300. LSU attracts a significant portion of these students and employees to move to the state from outside of the area and contribute to the state s economy. Many more students and faculty would undoubtedly leave the state for other universities without the attraction of LSU s high quality. The reputation of LSU is what draws many students and faculty to its ranks as it continues to receive national recognition in various areas. The flagship university is the only public Carnegie designated Research Extensive University in Louisiana and the highest-ranking public university in the Best National Universities category as published by U.S. News & World Report. In addition, the flagship is home to top ranking programs ranging from the Flores MBA program which was ranked #1 among MBAs providing best financial value, to Landscape Architecture with #2 and #3 rankings by DesignIntelligence for the undergraduate and graduate programs, respectively, and a top ten ranking Master of Fine Arts in Ceramics program (ranked #9 by U.S. News & World Report). More generally, LSU has taken the necessary steps to provide the future workforce of Louisiana with the only public medical schools in the state and regional campuses providing a high quality education to meet the needs of local businesses. These accomplishments make LSU an attractive destination to study, work and live. LSU is not only a source of new residents, but a source of new investment and revenue streams into the state. Professors and students work to obtain grants to conduct research in their fields with more than 2,000 sponsored research projects underway at any given time. The grant application process is extremely competitive, but LSU faculty attracted over $74.7 million in new federal grants last year alone. A professor s success in receiving a grant for research is not only a win for that faculty member, but also for the state s economy. By receiving federal funding for research, LSU is directing monies from outside the state into Louisiana. Beyond those acute economic benefits, there is a wide array of benefits that LSU provides to each of the communities it touches. LSU is a leading contributor to the local workforce through educating future business and community leaders. The skilled workforce that LSU provides also creates an incentive for businesses to relocate to the area. A recent example of this is the announcement of a new IBM Services Center in Baton Rouge that will create 800 new jobs. The quality of LSU s existing programs and its ability to further expand the computer science department have been widely cited as integral to the company s decision to come to Louisiana. LSU can also serve as a catalyst for long-term economic growth by cultivating entrepreneurship and technical expertise. In fact, the Louisiana Business & Technology Center was recognized as the Emerging Research Park of the Year in 2013 by the Association of University Research Parks. Even beyond economic impacts, LSU serves as a beacon for artistic and cultural activities that promote a better quality of life and also serves its community by promoting educational opportunities for children. While these additional contributions to the local community represent important benefits in both economic and non-economic terms, the effects are more dispersed and have not been considered in this study. Table 1: LSU Employment by Institution Institution Full-Time Part-Time LSU 6,090 9,930 LSU HSC Shreveport 2, LSU HSC New Orleans 2, LSU AgCenter 1, Pennington Biomedical LSU Shreveport LSU Alexandria LSU Eunice Paul M. Hebert Law Center LSU System Office Total 13,230 12,040 4 LSU E. J. Ourso College of Business Administration

5 2013 Report Measuring the Economic Impact of LSU The pure magnitude of LSU implies its operations are quite important to the state s economy. Although its large expenditures and number of employees represent a large amount of sales, they only represent the direct impact of the university. In order to determine the full impact of LSU operations, the indirect and induced impacts must also be considered. To use an analogy, imagine the Louisiana economy as a large pond. If a large rock (i.e. LSU) were suddenly dropped into the pond, it would make a big splash. However, the rock will also create ripples extending to the outer edges of the pond. For example, when LSU pays its employees, they will spend their paychecks at local retail stores and restaurants, for services, on housing, etc. Their purchases create sales, earnings and jobs at stores throughout the local area, which in turn ripple through the entire state. A view of the Memorial Tower from the Quad on the campus of Louisiana State University in Baton Rouge. To measure the statewide economic activity supported by LSU, three primary sources of spending were used: university spending, student spending, and auxiliary spending. University spending includes the total expenditures of each institution minus the total auxiliary revenue. This measure includes the salaries paid to faculty and staff, as well as the overhead expenses required for operations at each of the institutions and campuses, while avoiding the potential for double counting by removing the potential effects of student spending on auxiliary services and accounting for auxiliary activity separately. In total, $1.6 billion in LSU expenditures for 2013 were considered in this study. Table 2 shows how students allocate their budgets while attending an LSU institution. Because university spending is supported to a large extent by tuition and fees paid by students, those dollars are excluded to avoid double counting. However, student spending on other items contributes a significant amount of sales including books and supplies, room and board, transportation, and other personal expenses are. Table 2: Student Spending by Category Category All Students Tuition & Fees $384.0 Books & Supplies $68.9 Room & Board $449.1 Transportation $66.3 Personal & Miscellaneous $86.7 Total $1,055.0 Figures reported in $millions. Accounting for all direct spending by LSU, students and auxiliary services, and the indirect impact of that spending, the total economic activity supported by 2013 operations includes nearly $3.9 billion in state sales, $1.5 billion in Louisiana earnings, and approximately 36,757 Louisiana-based annualized jobs. When comparing the estimates of jobs supported by LSU operations to actual employment by LSU, it is important to recognize that estimated jobs in Table 3 are annualized to represent year-round employment. Because many university employees are on 9-month appointments and many contingent and student workers are employed for much less than 12 months, actual employment appears larger than the direct effect identified in Table 3. Table 3: LSU Impacts on the Louisiana Economy in 2013 Sales Earnings Jobs Direct Effect $2,111.4 $ ,054 Indirect Effect $540.6 $ ,047 Induced Effect $907.7 $ ,946 Aux. Services $331.6 $ ,710 Total Effect $3,891.2 $1, ,757 Division of Economic Development 5

6 LSU System Impact Study With results this large, it is important to consider the industries most effected with the operations of LSU. As should be expected, LSU also supports much of the state s University industry. Also, with the inclusion of the Health Sciences Centers in New Orleans and Shreveport, LSU has a very strong effect on the hospitals industry. A similar pattern emerges when looking at the distribution of earnings supported by LSU operations on each industry. Outside of the two industries that comprise the bulk of LSU employment, food service and drinking places, retail stores, and real estate establishments emerge as those with the largest amount of earnings (see Table 5). Finally, Table 6 shows how employment is distributed across industries. As with the other impact measures, the number of jobs is concentrated in the two industries where LSU employees are counted. However, over a thousand jobs are supported by LSU operations in real estate, food services and drinking places, retail stores, and transit and ground passenger transportation. Tables 4, 5, & 6: LSU Impacts on Louisiana Sales, Earnings, and Jobs in 2013 by Industry Industry Junior Colleges, Colleges, Universities, And Professional Schools Sales $1,098.8 Hospitals $542.0 Real Estate Establishments $357.3 Food Services And Drinking Places $178.6 Retail Stores - General Merchandise $89.2 Transit And Ground Passenger Transportation $68.5 Scientific Research And Development Services $62.1 Offices Of Physicians, Dentists, And Other Health Practitioners $59.4 Wholesale Trade Businesses $48.9 Employment Services $15.5 All Other $1,039.4 Total $3,559.6 Economic Impacts of Non-Resident Students on the State The high quality programs offered throughout LSU have not only successfully attracted students from around the state, but has also been successful in attracting students from outside of the state, with 5,800 nonresident students in With greater than $137.6 million in tuition and fees paid to LSU institutions and more than $108.3 million in related expenses injected into related industries, non-resident students contributed just under $246 million to the state economy in This economic activity generated more than $353.1 million in Louisiana sales, $137.4 million in earnings, and nearly 3,500 jobs. Industry Junior Colleges, Colleges, Universities, And Professional Schools Earnings $571.3 Hospitals $253.5 Food Services And Drinking Places $61.8 Retail Stores - General Merchandise $45.4 Real Estate Establishments $41.8 Transit And Ground Passenger Transportation $36.4 Offices Of Physicians, Dentists, And Other Health Practitioners $36.1 Scientific Research And Development Services $31.0 Wholesale Trade Businesses $23.9 Employment Services $11.7 All Other $318.7 Total $1,431.5 Industry Junior Colleges, Colleges, Universities, And Professional Schools Jobs 10,129 Hospitals 4,185 Real Estate Establishments 3,637 Food Services And Drinking Places 3,134 Retail Stores - General Merchandise 1,636 Transit And Ground Passenger Transportation 1,328 Offices Of Physicians, Dentists, And Other Health Practitioners 442 Scientific Research And Development Services 405 Employment Services 401 Wholesale Trade Businesses 342 All Other 7,407 Total 33,047 Note: Tables do not include the effects of Auxiliary Services. 6 LSU E. J. Ourso College of Business Administration

7 2013 Report Economic Impacts of LSU on Louisiana MSAs Measuring the economic impact of individual LSU campuses involves capturing the spending of the institution as well as all of the spending associated with all students from outside of that MSA. The data were compiled by campus and impact estimates for sales, earnings, and jobs created by LSU campuses in each MSA are reported below. Table 7: LSU Economic Impacts on the Baton Rouge MSA in 2013 Sales Earnings Jobs Direct Effect $1,047.1 $ ,628 Indirect Effect $288.0 $82.3 2,205 Induced Effect $400.3 $ ,651 Aux. Services $397.5 $ ,948 Total Effect $2,132.9 $ ,432 The Baton Rouge MSA: The Baton Rouge MSA is home to LSU, the Paul M. Hebert Law Center, the LSU AgCenter, and the Pennington Biomedical Research Center. The nine parish region, which includes Ascension, East and West Baton Rouge, East and West Feliciana, Iberville, Livingston, Pointe Coupee, and St. Helena Parish, houses more than 8,300 (62.7 percent) full-time LSU employees. Overall, the LSU institutions located within the Baton Rouge MSA and auxiliary services generate more than $2.1 billion in sales for the MSA, $764.1 million in earnings for the MSA, and 21,432 jobs within the Baton Rouge MSA. The contribution of each LSU institution to this economic impact is presented in Table 8. With the highest employment and enrollment, the main LSU campus has the largest impact on the region s economy of the LSU institutions in Baton Rouge. The LSU AgCenter and the Pennington Biomedical Research Center are both responsible for bringing in numerous federal grants and projects into the region. While the Paul M. Hebert Law Center is the smallest of the Baton Rouge institutions, the economic benefits of the institution include more than $44 million in new sales, $16 million in new earnings and 459 new jobs. The New Orleans MSA: Though only housing one LSU institution, more than 2,000 (15.2 percent) full-time LSU workers are employed in the New Orleans MSA. The New Orleans MSA is an eight parish region that includes Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John the Baptist, and St. Tammany Parishes. Impacts for the region were generated by measuring the impact of the university spending and student spending associated with the LSU Health Sciences Center in New Orleans. In 2013, the Health Sciences Center in New Orleans supported about $887.8 million in sales for the MSA, $391.2 million in earnings for the MSA, and about 6,900 jobs in the New Orleans MSA. Table 8: LSU Economic Impacts on the Baton Rouge MSA in 2013 by Institution Sales Earnings Jobs LSU $1,742.0 $ ,806 LSU AgCenter $234.5 $92.2 2,278 Pennington Biomedical $111.9 $ Paul M. Hebert Law Center $44.5 $ Total Effect $2,132.9 $ ,432 Table 9: LSU Economic Impacts on the New Orleans MSA in 2013 Impact Type Sales Earnings Jobs Direct Effect $502.8 $ ,699 Indirect Effect $144.3 $52.9 1,230 Induced Effect $240.7 $87.5 1,974 Total Effect $887.8 $ ,903 The Shreveport-Bossier City MSA: Impacts for the Shreveport-Bossier City MSA, which consists of Bossier, Caddo, and De Soto Parishes, were calculated using the inputs from the two LSU institutions in the area, LSU at Shreveport and the LSU Health Sciences Center in Shreveport. These two institutions employ about 2,400 full-time LSU employ- The Paul M. Hebert Law Center on the LSU campus in Baton Rouge. Division of Economic Development 7

8 LSU System Impact Study ees, which represents about 18.4 percent of LSU s full-time workforce. It s estimated that these two institutions supported about $535.7 million in sales for the MSA, $214.8 million in earnings for the MSA, and approximately 4,900 jobs within the Shreveport- Bossier City MSA in The contribution of each LSU institution to the region s economic impact is presented in Table 11. Impacts to the Shreveport-Bossier City MSA are largely driven by the operations of the LSU Health Sciences Center in Shreveport. As the second largest employer in the LSU, the Health Sciences center employs roughly 15% of LSU s full-time and part-time workforce. With its quality programs and close proximity to the state line, LSU Shreveport has the second highest non-resident enrollment count and records the highest impacts of the three regional universities. The Alexandria MSA: Impacts for the Alexandria MSA, which consists of Grant and Rapides Parish, were generated by measuring the impact of the university spending and student spending associated with LSU at Alexandria. LSU-A employs approximately 290 full-time workers and generates about $52.7 million in sales for the MSA, $17.7 million in earnings for the MSA, and about 640 jobs within the Alexandria MSA. Table 10: LSU Economic Impacts on the Shreveport-Bossier City MSA in 2013 Impact Type Sales Earnings Jobs Direct Effect $301.1 $ ,062 Indirect Effect $99.3 $ Induced Effect $135.3 $45.9 1,173 Total Effect $535.7 $ ,900 Table 11: LSU Economic Impacts on the Shreveport-Bossier City MSA in 2013 by Institution Sales Earnings Jobs LSU HSC Shreveport $449.1 $ ,062 LSU Shreveport $86.6 $ Total Effect $535.7 $ ,900 Table 12: LSU Economic Impacts on the Alexandria MSA in 2013 Impact Type Sales Earnings Jobs Direct Effect $34.4 $ Indirect Effect $7.9 $ Induced Effect $10.4 $ The Lafayette MSA: The Lafayette MSA, which consists of Lafayette and St. Martin Parishes, is home to about 190 full-time LSU employees. The university spending and student spending associated with LSU at Eunice was used to generate impact estimates for the region. LSU-E supported about $47.2 million in sales for the MSA, $17.1 million in earnings for the MSA, and about 515 jobs in the MSA in Total Effect $52.7 $ Table 13: LSU Economic Impacts on the Lafayette MSA in 2013 Impact Type Sales Earnings Jobs Direct Effect $29.3 $ Indirect Effect $8.2 $ Induced Effect $9.8 $ Total Effect $47.2 $ Mulitpurpose Academic Center on the campus of LSUA in Alexandria. 8 LSU E. J. Ourso College of Business Administration

9 2013 Report Summary and Conclusion With an average of more than 36,000 students, 13,000 full time employees, and $1.6 billion in operations expenditures, it should come as no surprise that LSU has a large impact on the state economy. This study seeks to quantify the direct, indirect, and induced impacts of LSU on the Louisiana economy, as well as the impacts of LSU campuses on regional economies throughout the state. The results indicate that LSU s presence supports nearly $3.9 billion of sales in Louisiana. In terms of jobs and earnings, 36,757 jobs and approximately $1.5 billion in earnings are supported by LSU. Memorial Tower on the campus of Louisiana State University in Baton Rouge. A view of the campus at LSU Shreveport. Division of Economic Development 9

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