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The Regional Economic Impacts of Idaho State University, 1996 Dr. Richard Bowen, President of Idaho State University, requested the Center for Business Research to conduct a study of the impact of the University on Idaho, with particular emphasis on its regional impacts upon the Pocatello area. This publication reports the findings and results of that effort, which was begun in the fall of 1997. This report is a follow-up to, and a complete revision of, a previous study conducted in 1988 (A Report to the President of Idaho State University: The Impact of University-related Expenditures on Idahos Economy, 1986 - 87).
For several reasons, the direct comparison of the findings of the two reports is not advised. Specifically, the present report utilizes multipliers refined and updated by the Regional Science Research Institute, while the previous report relied upon Input-Output estimates generated by the US Bureau of Economic Analysis, Regional Input-output Measurement System (RIMS). Secondly, the focus and emphasis of the present report is on the Pocatello area economy, while the 1988 study emphasized state level impacts. Third, the present report attempts to discount those impacts generated by permanent area residents, attempts to estimate a return on investment for the State of Idaho, and makes other refinements or improvements to the 1988 approach. Paul R.
Zeus, Ph. D. , directed the study, and was ably assisted first by Nancy L. Kelly and then Walter Bulawa, Ph. D. , Research Associates of the Center for Business Research at Idaho State University. Acknowledgement is also extended to the many campus officials who provided the often tedious and detailed information needed to conduct the study. The many faculty, staff, and students who responded to expenditure surveys are acknowledged for the critical information they provided.
This project was aided immeasurably by the shared experiences of researchers from Boise State University, Northern Arizona University and the University of Virginia. In that order, I acknowledge the helpful comments and advice of Dr. Charles Skoro, Dr. Jerry Conover and Dr. John Knapp. Paul R.
Zeus, Ph. D. Project Director Table of Contents Executive Summary Institutional Expenses Faculty and Staff Spending Student Expenditures Visitor Expenditures Impact Assessment Executive Summary This study provides estimates of the economic impact of Idaho State University on the regional economy of the Pocatello area. During the 1996 academic year Idaho State University employed 657 full and part time faculty and 1, 156 full and part time staff employees, with wages and benefits totaling $ 47 million. It served 12, 245 students enrolled in a variety of courses and programs of study. The University operated on an annual budget of $ 149 million, of which $ 72 million was provided by the State of Idaho in the form of appropriations.
Nearly $ 45 million of its revenue represents federal scholarship and student assistance, while another $ 22 million is received through student tuition and fees. The remainder of revenue comes from private and miscellaneous sources. Direct local expenditures on the part of the university and its faculty / staff , students and out-of-area visitors exceeded $ 215 million. Institutional expenditures within the Pocatello economy exceeded $ 23 million for purchases of professional services ($ 5. 4 million), communication and utility services ($ 1. 9 million), materials, supplies and equipment ($ 5. 3 million), land and buildings ($ 6. 6 million), and miscellaneous purchases ($ 4. 2 million), representing 59 % of all institutional purchases.
Faculty and staff households paid $ 11 million in taxes and purchased an estimated $ 21 million in goods and services based on wages totaling $ 36 million. The households of students residing in dormitories, in private residences within the Pocatello area, and in private residences outside of the Pocatello area made local purchases totaling $ 156 million Out of area visitors spent an estimated $ 7 million on local purchases of goods and services. The indirect and inducted effects of $ 215 million in local spending stimulates an additional $ 76 million in regional economic activity, for a total estimated economic impact of $ 291 million. Permanent residents account for approximately $ 101 million o f that total, with the remaining $ 191 million in area expenditures attributed to the university's presence. Considering the State of Idahos annual budgeted investment of $ 72 million and its currently valued investment of $ 149 million in lands, buildings, and equipment, the aforementioned regional expenditures of $ 191 million represent a return on investment of approximately 87 %. Based on lifetime earnings differentials, ISU graduates maintaining a permanent residence within Idaho are estimated to add to their lifetime earnings by an aggregated $ 498 million over 40 years ($ 307 million if presently valued).
Institutional Expenses Highlights Idaho State University annually purchases more than $ 23 million in goods and services from Pocatello area businesses. Idaho firms receive 66 % of the University's institutional purchases with 59 % going to Pocatello area firms. Approach Records of University expenditures were obtained from the University Comptroller. Idaho State University (ISU) issued more than 35, 000 checks during the 1995 - 96 academic year, excluding payroll checks to faculty and staff.
Each check was classified by vendor zip code and type of service or product purchased. The dozens of expenditure types were then summarized into the five categories reported in Table 1. Zip code classifications were used to identify those expenditures that were made within the state of Idaho and those that were made within Bannock County. Table 1: Idaho State University, 1995 - 96 Expenditures Within Bannock County Within Idaho Expenditure CatagoryAmountPctAmountPctTotal Professional Services$ 5, 475, 77164 %$ 6, 699, 26378 %$ 8, 613, 647 Communications &# 038; Utilities$ 1, 990, 65645 %$ 3, 615, 04382 %$ 4, 393, 939 Insurance, Land &# 038; Buildings$ 6, 652, 55179 %$ 6, 652, 55179 %$ 8, 429, 554 Materials, Supplies &# 038; Equipment$ 5, 363, 40546 %$ 5, 406, 87346 %$ 11, 697, 428 Miscellaneous Purchases$ 4, 240, 14659 %$ 4, 289, 05460 %$ 7, 170, 258 Total Institutional Expenditures$ 23, 722, 53059 %$ 26, 662, 78466 %$ 40, 304, 826 Since many larger vendors maintain local offices for billing purposes only, there may be considerable leakage outside of the Bannock County and Idaho areas.
The fact that a given vendors mailing address is within Pocatello or even within Idaho does not guarantee that a local economic impact has occurred. Every effort has been made to include only the purchases of real goods and services. Excluded are all payments to students, fringe benefits purchased for employees, federal loans and monies which pass through the university from outside sources, payments to escrow accounts, and various adjustments made during the auditing process. Institutional Expenditure Patterns As shown in Table 1, Idaho State University contributes more than $ 23 million annually to the local Pocatello economy through its purchases of goods and services from area businesses.
This represents 59 % of all such purchases made by the University. An additional $ 3 million was spent within Idaho but outside of Bannock County. The remaining $ 14 million in purchases was made outside of the state. The University purchased more than $ 8. 6 million in professional services during 1995 - 96. Three-fourths of this amount was used to purchase legal, accounting, advertising, and architectural services from Idaho firms, with Pocatello-based companies receiving $ 5. 4 million or 64 % of the category total. Almost all (82 %) of the University's $ 4. 3 million annual expenditure for communications and utilities reflects purchases made within the state of Idaho.
Pocatello-based firms account for $ 1. 9 million (45 %) of this amount. The total includes telephone, gas and electric utility purchases. Whether these purchases accrue to Pocatello or to some other regional Idaho economy is difficult to assess, given the previously stated caution regarding regional offices and billing addresses. During 1995 - 96, the University made significant purchases of land and buildings ($ 6. 6 million), all of which are located within the Pocatello economic area. Nearly all of the remaining $ 1. 8 million from this category involves the purchase of insurance policies and services from companies located outside of the state of Idaho.
Supplies and equipment combine to make up the single largest category of University expenditures. More than $ 11. 6 million is expended annually on a variety of office supplies, scientific laboratory supplies and equipment, and a myriad of education-related supplies. These materials and supplies comprise about $ 5. 2 million of the category total, with the remaining $ 6. 4 million devoted to data processing, computing, and transportation purchases. Nearly half (46 %) of the combined total of $ 11. 6 million is expended within the Pocatello area, with almost the entire remaining amount going to out-of-state firms.
The University operates several auxiliary enterprises, which have their own budgets and produce their own revenue. Examples include food services, student housing, the University bookstore and the University's motor pool operations. Combined, these auxiliary services receive about $ 20 million in customer revenue from students, faculty and staff, from university departments, and from customers outside of the University. To the extent that these auxiliary enterprises make purchases of goods for resale, those purchases are considered a part of the University's expenditure contribution to Idahos economy.
Nearly $ 2. 4 million in Idaho purchases are made annually by the University's various auxiliary services, with $ 1. 3 million being expended in the Pocatello area economy. The above expenditures for the purchases of resale goods by the University's auxiliary enterprises are a part of the $ 7. 1 million reported as Miscellaneous Purchases in Table 1. Miscellaneous expenditures, other than purchases for resale, involve about $ 4. 7 million for maintenance and repair of the University's buildings and equipment. About $ 2. 3 million of such expenditures are made within the Pocatello economy for such things as cleaning, janitorial, and repair contracts. Faculty &# 038; Staff Spending Highlights Faculty and staff households receive $ 36 million in wages and $ 10 million in employee benefits. Disposable income after taxes results in $ 25 million in purchases of food, shelter, clothing and other consumer items.
The more than $ 11 million in taxes paid by ISU faculty and staff help purchase an array of governmental services that benefit the entire community. Approach Faculty and staff salary and benefit totals for the 1995 - 96 academic year were obtained from the University Comptroller. Household expenditures were estimated using data from previous studies of the spending patterns of Southeast Idaho families and sub-populations, including the workforce at the Idaho National Engineering and Environmental Laboratory 1. The household expenditures of ISU faculty and staff were calculated by applying the proportions derived from these studies to the ISU faculty and staff salary totals.
While different income levels and varying lifestyles make it inappropriate to assume that the calculated spending pattern applies to each and every ISU employee, its application to derive an expenditure pattern illustrative of the entire faculty and staff population is reasonable. Spending Patterns A total of 657 faculty and 1, 156 staff received wages of $ 36. 3 million during the 1995 - 96 academic year. Full time employees include 510 faculty and 882 staff. Included in the part time totals are 147 faculty and 274 classified and exempt employees. In addition to salaries, the university provided $ 10. 1 million in employee benefits, including its calculated portion of Social Security (FICA), pension contributions and medical benefits.
Table 2 depicts the salary totals and the estimated aggregate expenditures made by ISU faculty and staff. The spending for each expense type reflects the proportions that a typical Southeast Idaho family has been determined to spend, and is illustrated in Figure 2. Table 2: Faculty and Staff Salary ExpendituresRecipientSalary Faculty$ 19, 702, 878 Staff$ 16, 630, 221 Total$ 36, 333, 099 Expense Type Amount Taxes: Federal, State &# 038; Local$ 11, 204, 328 Housing$ 5, 616, 427 Food$ 3, 819, 238 Transportation$ 4, 353, 696 Clothing$ 3, 172, 350 Medical$ 2, 338, 360 Recreation$ 1, 692, 312 Donations &# 038; Gifts$ 871, 746 Miscellaneous$ 3, 264, 643 Expenditures for food, clothing and transportation total $ 11. 3 million annually, with approximately 90 % of that total being expended within Bannock County. Housing costs consist primarily of mortgage payments, which in turn quickly leave the local economy in the form of bank investments made outside of the Pocatello area. Consequently, the estimated $ 5. 6 million in housing-related expenditures made by ISU faculty and staff are not directly infused into the local economy in the same way that consumer expenditures would be.
On the other hand, mortgage purchases represent an induced stimulus to the areas residential construction market, thereby having a significant multiplier effect on the economy of the area. (See the section entitled Impact Assessments for a discussion of multiplier effects. ) Medical and recreational expenditures on the part of ISU faculty and staff total $ 4. 0 million annually, with an estimated 70 % of that amount expended locally and 30 % expended elsewhere. Purchases of drugs and hospital care often accrue to out-of-state providers, so it is unlikely that the local share of such purchases will increase. Figure 2: Allocation of Wage and Salary Income for a Typical Idaho Family Donations and gifts totaling about $ 870, 000 are contributed by ISU faculty and staff to numerous causes and beneficiaries. While a comparatively smaller dollar value than other expenditure categories included in Table 2, it represents 2. 4 % of gross wages. Area churches and civic organizations benefit and depend on these generous donations, which are supplemented by contributions of time and talent on the part of faculty and staff households. The economic benefit to Pocatello's community life generated by these expenditures is significant beyond the dollar values involved.
Miscellaneous consumer expenditures not included in the above categories total another $ 3. 2 million; they include catalogue sales, investment and gambling expenditures, etc. About 50 % of the expenditures in this category can be attributed to the local economy, with the other half spent elsewhere. Taxes are mistakenly not often thought of as beneficial to a local economy. However, property taxes in particular are directly translated into governmental services including public education and municipal services like police and fire protection, libraries, roads, sewer, water, etc. ISU faculty and staff contribute about 31 % of their gross wages to taxes of various kinds: About $ 7. 3 million of the $ 11. 2 million in aggregate taxes consist of federal payments in the form of personal income tax withholding, social security (FICA) contributions, and various federal taxes, e. g.
alcohol, tobacco, and gasoline. The State of Idaho receives an estimated $ 2. 7 million in taxes from ISU faculty and staff, with $ 1. 8 million being withheld for personal income taxes. Based on consumption patterns and wages, an estimated $ 581, 440 in sales tax is paid by ISU faculty and staff in the course of a typical year of consumer purchases. The State of Idaho also receives nearly $ 200, 000 per year in gasoline taxes and $ 129, 000 in Alcohol, Tobacco and Vehicle taxes from ISU households. Property taxes and fees for sewer and trash pickup account for most of the $ 1. 1 million in local taxes paid by ISU faculty and staff.
Property taxes comprise $ 840, 000 of that total, with county, city and school district taxing authorities each receiving approximately one-third of the property tax total. Not all of the economic impact generated by the circulation of faculty and staff wages would be lost to the region if the University were not here. Some unknown but significant portion of ISU employees would likely secure employment in other sections of the regional economy. An estimate of the proportion of faculty and staff wages that would be lost to the area in the absence of the University is calculated in the Impact Assessments section of this report. While the present section of this report recognizes the logic of discounting the expenditures made by faculty and staff households who would likely remain in the area in the absence of the University, the total and more comprehensive impact figure is used here. Student Expenditures Highlights ISU student households spent an estimated $ 156 million in Bannock County during the 1995 - 96 academic year.
Approach Student expenditures were derived from the results of a questionnaire survey that was distributed to randomly selected ISU students during the 1996 - 97 fall semester; 611 questionnaires were completed and returned. For purposes of this analysis, the responses were divided into three groups of interest: dormitory residents students who live off campus and within Bannock County and, those who live outside of Bannock County. The survey solicited information on student spending in several expenditure categories. For each expenditure category, an average was calculated for each student group, with null responses included as zero values in the aggregate sum. The university-wide spending in each expense category for each student group was then weighted by multiplying the corresponding survey average by the total number of students at ISU in that group (i. e. 871 dormitory students, 6, 236 local off-campus students or 5, 138 out-of-area students, respectively).
Results The measured impact of ISU student spending on the local economy is limited to off-campus spending within Bannock County, therefore the spending excludes monies paid to the University or to vendors and landlords outside of the Bannock County area. Table 3 presents the total off-campus local spending in several expenditure categories for each of the three student groups of interest. The Housing expense category includes spending for rent, mortgage, home insurance and furnishings except for dormitory students where off-campus spending specifically does not include dormitory rent and would, therefor only include spending for furnishings for that student group. Utility expenses include costs for electricity, gas, telephone and cable services. The Education expense category does not include tuition and is limited to spending for books and supplies, including computers and their peripherals. Miscellaneous spending includes clothing, general insurance, contributions, gifts and purchases that do not fit into any of the other categories.
Dormitory Students The average number of students residing in dormitories during the 1995 - 6 academic year was 871. This student group reported an average age of 25 years and 31 % indicated that, at the time of the survey, they were married. Only 12 % of this group indicated that they would be living in the Pocatello area if they were not enrolled at the University. Consequently, a high proportion of this groups spending may be attributed to the University. Dormitory students reported household spending of over $ 6. 5 million annually or approximately $ 7, 486 per student household over a two-semester period not including the summer months.
The figure excludes tuition and dormitory fees, and includes only purchases of consumable goods and services. Over 30 % of the dormitory students expenses are automobile related. Miscellaneous expenses account for 25 % while food (over and above the dormitory meal plan) accounts for 21 %. Housing costs were proportionately low for this group because the dormitory rent payments were made to the University rather than to local landlords and are consequently excluded from impact considerations. Similarly most utility costs are included as part of the rent and are also excluded, leaving Utilities to primarily consist of telephone and cable costs.
Table 3: Annual ISU Student Expenditures for Academic Year 1995 - 96 Expense Type Student Type Total DormitoryLocalOut of Area Housing$ 443, 0007 %$ 23, 014, 52327 %$ 18, 071, 71628 %$ 41, 529, 239 Utilities$ 110, 5172 %$ 8, 055, 7729 %$ 7, 997, 09212 %$ 16, 163, 381 Automobile Payments$ 1, 068, 35816 %$ 6, 187, 6607 %$ 4, 580, 1337 %$ 11, 8 36, 151 Auto Operating Expenses$ 967, 62715 %$ 6, 633, 8908 %$ 3, 751, 8546 %$ 11, 3 53, 370 Food$ 1, 348, 18021 %$ 19, 158, 57222 %$ 13, 809, 47721 %$ 34, 316, 229 Education$ 100, 1002 %$ 4, 445, 8065 %$ 2, 612, 1694 %$ 7, 15 8, 076 Recreation$ 311, 6775 %$ 1, 796, 2072 %$ 956, 0471 %$ 3, 063, 930 Medical$ 550, 4958 %$ 2, 058, 5292 %$ 2, 479, 1854 %$ 5, 088, 210 Miscellaneous$ 1, 620, 00525 %$ 14, 183, 32317 %$ 10, 077, 23916 %$ 25, 880, 566 TOTAL$ 6, 519, 959 $ 85, 534, 282 $ 64, 334, 912 $ 156, 389, 153 Local Off-campus Students The 6, 236 students in this group reside off-campus but within Bannock County. Approximately 36 % indicated that they owned their living quarters while 50 % rented and the remainder reported living with family or friends. The average age of the students in this group was 30 years with 50 % indicating that they were married. Over 57 % indicated that they would live here if not enrolled at the University. They reported a local total annual spending of $ 85. 5 million, which averages $ 13, 716 per student household, the greatest per student spending of the three groups.
Understandably, the largest spending category for this group is Housing which accounts for 27 % of its total expenditures. This is followed by Food (22 %) and Miscellaneous items at 17 %. Nearly two-thirds of this student group consists of permanent area households with one or more members currently attending ISU on either a part-time or full-time basis. An estimate of the proportion of this groups total area expenditures that would be lost to the area in the absence of the University is calculated in the Impacts Assessment section of this report. Out-of-Area Students This student group consists of 5, 138 ISU students who reside off campus and outside of Bannock County. The average age of this group was 35 years with 66 % reporting that they were married at the time of the survey.
Approximately 60 % owned their homes, 25 % rented and the remainder reported living with family or friends. Members of this group reported a total annual area spending of $ 64. 3 million or about $ 12, 521 per student household. The proportion of those consumption purchases made in Bannock county, as opposed to the neighboring communities where they reside, is unknown, but is presumed to be not more than 25 %. Their spending habits were approximately the same as the local non-dormitory students. Combining the spending of the two non-dormitory groups yields the graph in Figure 3, which illustrates the representative category spending of Isu's non-dormitory student households. While the University cannot claim to have directly caused the entire $ 156 million in consumer purchases made by its students and their entire households, it is important to recognize that a considerable number of area residents attend Idaho State University and have purchasing patterns and habits influenced by their student affiliation.
While the present section of this report recognizes the logic of discounting the expenditures made by student households who would likely remain in the area in the absence of the University, the total and more comprehensive impact figure is used here. Visitor Expenditures Highlights ISU attracts nearly quarter million visitors from outside the Pocatello area to its many events, facilities and programs. Out-of-area visitors spend an estimated $ 7 million annually on local purchases of lodging, food, automobile-related purchases and other retail items. Approach Visitors are drawn to the ISU campus to attend athletic and cultural events, attend conferences and workshops, and to visit facilities like Holt Arena, the Idaho Museum of Natural History, the Planetarium and the Bookstore. Other visitors conduct business on campus, including prospective students and faculty who are being recruited or interviewed. Still others are out-of-area personal visitors to ISU faculty, staff and students.
The number of visitors to the ISU campus has been estimated separately for the two visitor categories reported in Table 4. Recreational, Educational and Business Visitors include attendees and visitors to specific ISU facilities or sponsored events. Personal Visitors include only out-of-area visitors to faculty, staff and students reported in surveys of those populations. In order to obtain an estimate of the number of Recreational, Educational and Business Visitors, each facility was polled for its attendance figures for the 1995 - 96 academic year. Officials representing each facility also provided an estimate of the percentage of their attendees who originated outside of the Pocatello-Chub buck area. Isu's major facilities and programs include Holt Arena, Reed Gymnasium, the Student Union, the Idaho Museum of Natural History and the Planetarium operated by the Physics Department.
Performances held at Theatre ISU and Goranson Hall were also included, as were visitors to the ISU Bookstore. The number of personal visitors was estimated separately for students and faculty / staff households. Twenty percent of the Personal Visitors were assumed to purchase lodging for an overnight stay, based on results of the student survey. Table 4: Visitors to the ISU Campus by Sponsoring Department (1995 - 96) Sponsor All Visitors Out of Area Visitors Area (Persons) (Persons) (Visitor Days) Expenditures Holt Arena Events 433, 350220, 283220, 283 $ 6, 619, 489 Student Union Events 222, 81756, 94869, 415 $ 2, 217, 115 ISU Bookstore 60, 0003, 0001, 500 $ 39, 000 Idaho Museum of Natl History patrons 31, 39020, 40424, 484 $ 768, 804 Continuing Education events 13, 2621, 4685, 170 $ 483, 395 Physics Department &# 038; Planetarium 8, 0005, 8005, 800 $ 150, 800 Theatre ISU patrons 6, 631734734 $ 19, 084 School of Applied Technology visitors 3, 387868964 $ 27, 921 Music Department events 3, 000600600 $ 15, 600 Miscellaneous ISU departments 2, 3221, 3132, 417 $ 117, 660 Visitors to ISU Students 130, 847130, 847130, 847 $ 4, 108, 596 Visitors to ISU Faculty &# 038; Staff 8, 6538, 6538, 653 $ 271, 718 An estimate of the percent of out-of-area visitors who purchased overnight lodging was made for each facility or program within the Recreational, Educational and Business Visitors category. Lodging was estimated at $ 27 per night per visitor, assuming double occupancy and the average Pocatello room rate of $ 54 for 1996. Day visitors were assumed to expend a conservative $ 26 per day, excluding event specific admissions.
For overnight visitors the estimated $ 53 per day in area expenditures is consistent with other estimates for non-business travelers 2. While it is tempting to sum the expenditures and number of visitors in each category of Table 4, such a summary total is not recommended because an overlap of visitors across the various categories would vastly overstate the number of actual persons visiting the ISU campus. For example, a typical out-of-area visitor might be included as the Personal Visitor of a student, and attend an ISU athletic event or concert while taking advantage of noncommercial lodging with friends or relatives. Only out-of-area visitors are assessed as having a direct economic impact on the Pocatello economy. While the number of local visitors is significant, and their recreational and other spending is very real, especially to local establishments and merchants, their spending is assumed to already be a part of the local economy. In the absence of the ISU facility or event, they are assumed to make a comparable expenditure elsewhere in the Pocatello economy.
Their expenditures cannot, therefore, be claimed exclusively by ISU as a part of its economic impact on the region. Expenditure Patterns The Holt Arena attracts more out-of-area visitors than any other ISU facility. More than 400, 000 persons attended events held there during the 1995 - 96 academic year. An estimated 220, 283 of those attendees are from outside of the Pocatello area, with about 90 % of that number assumed to be purchasers of commercial lodging.
Major events such as the Dodge National Circuit Finals Rodeo attract out-of-area visitors who remain in the area for several days, thus heightening their economic impact. The Pond Student Union hosts numerous conferences, workshops, and other programs attended by outsiders as well as ISU faculty, staff, and students. Of the nearly quarter million attendees of its programs, about 56, 000 are estimated to be out-of-area visitors. A small proportion report staying overnight, with a total estimated area impact of $ 2. 2 million annually. The Idaho Museum of Natural History is visited by more than 20, 000 out-of-area patrons annually, with direct local expenditures of $ 768, 804. The Office of Continuing Education sponsors programs that attract an estimated 1, 468 participants from outside of the area, with each staying an average of 3 days, and representing a direct local impact of $ 483, 395.
Performances held at Theatre ISU and Goranson Hall attracted an estimated 1, 334 out-of-area patrons, while the ISU Planetarium attracted about 5, 800 nonlocal visitors. Student recruitment, including recruitment of students to the School of Applied Technology, is responsible for over 800 out-of-area visitors each year. Other significant categories of visitors with business on the campus include salespersons, accrediting teams and athletic team recruiting. Nearly 3, 000 nonlocal visitors and $ 145, 000 in direct impact can be attributed to those visitors. About 130, 000 individuals are estimated to visit the area as the personal visitors of ISU faculty, staff and students. The typical student reports ten such visitors per year, a seemingly high figure, but consistent with visitor studies conducted by universities comparable to ISU 2.
Out-of-area visitors to ISU faculty and staff number about 8, 653. Combined, these personal visitors contribute more than $ 4. 2 million into our local economy. As indicated above (see Approach), a high percentage of Personal Visitors are included as attendees and participants of various ISU events and programs, and should not be considered as additional to the visitors specific to those facilities or events. Impact Assessment Highlights Approximately 9 % of all area economic activity are in some way related to ISU. The State of Idahos annual investment of $ 102 million stimulates at least $ 191 million in economic activity within southeastern Idaho, for an annual return of 87 %. Indirect and Induced Impacts Purchasing patterns for the University, as well as expenditure patterns for its students, faculty, staff and campus visitors were presented in detail in previous sections of this report.
Approximately $ 215 million in direct expenditures are attributed to Isu's presence using this approach. As those monies are expended in various sectors of the area economy they serve to stimulate additional business activity (induced effects) and additional household spending (indirect effects) on the part of those businesses and households benefiting from the direct expenditures. These effects combine to produce a multiplier effect of total spending. Multipliers for local institutional purchases (1. 391), visitor expenditures (1. 366), household expenditures of locally resident faculty and staff (1. 265), and for dormitory students (1. 260) and non dorm students (1. 364) were generated by the Regional Science Research Institutes Input-Output model for Bannock County. This model makes use of industry interaction data across county lines to generate highly reliable estimates An estimated 8 full and part time jobs, represented by $ 1 million of business activity, and a wage proportion (. 263), were then used to generate an estimate of the number of full and part time jobs and the amount of wages and salaries represented by the induced business activity.
Table 5 identifies the direct, indirect, and total impacts of each of the four sources of economic impact under review. It identifies an additional $ 76. 2 million in multiplier effects generated by the direct infusion of $ 215. 7 million in business activity within the Pocatello economy. Altogether, those four sources of expenditures represent an economic stimulus of $ 291. 9 million in private sector business activity within the region. Table 5: Summary of ISU-induced Local Spending Direct Effects Indirect Effects Total Effects Students$ 156. 4 $ 56. 2 $ 212. 6 Faculty/Staff$ 23. 6 $ 6. 3 $ 29. 9 ISU Institutional Purchases$ 23. 7 $ 9. 3 $ 33. 0 Visitors to ISU$ 12. 0 $ 4. 4 $ 16. 4 Total: $ 215. 7 $ 76. 2 $ 291. 9 Estimated contributions for each source of expenditure are also included in the table. Isu's 12, 245 students represent the single largest proportion of impacts, with their household expenditures totaling more than $ 212 million in area business activity. The total stimulus of institutional purchases generates another $ 33 million, while the households of faculty and staff ($ 29 million) and campus visitors ($ 16 million) generate significant impacts.
During 1996, Bannock County's 73, 379 residents earned $ 854 million in wage and salary income, while county establishments conducted $ 1. 2 billion in retail business sales. Non retail business added another $ 2 billion, yielding a gross county product value of about $ 3. 2 billion. This perspective suggests that about 9 % of the areas economic activity is in some way connected to ISU, with nearly 75 % of that amount due to the local spending of ISU students and their households. Discounting Local Residents A significant portion of the University-related expenditures included in Table 5 would likely continue to occur in the absence of the University.
Consequently, it is realistic to discount contributions made by area residents whose households would be reasonably assumed to maintain comparable contributions to the local economy if ISU were to cease to exist. The discounting procedure adopted for purposes of this study involves a relatively straightforward estimate of the proportion of ISU students, faculty and staff who would likely remain in the Pocatello area in the absence of the university. The proportion of institutional purchases and out-of-area visitor expenditures that would occur in the absence of the university is assumed to be near zero. Based on a survey of students conducted in conjunction with this report, an estimated 39 % of the $ 212 million in student household expenditures would be lost in the absence of the University. A similar survey of faculty and staff reveals that 80 % of faculty and 25 % of staff would be lost to the area if the university were to cease to exist. The prorated proportion of Isu's estimated $ 29. 9 million in wage-based local purchases at risk under these assumptions is $ 18. 5 million.
Table 6: Discounting Area Resident Impacts Gross Total Effects Expenditures of Permanent Residents Net Total Effects Students$ 212. 6 $ 82. 7 $ 129. 9 Faculty/Staff$ 29. 9 $ 18. 5 $ 11. 4 Institutional Purchases$ 33. 0 $ 0. 0 $ 33. 0 Visitors$ 16. 4 $ 0. 0 $ 16. 4 Total$ 291. 9 $ 101. 2 $ 190. 7 A summary of these calculations and assumptions is shown in Table 6. The net effect of this discounting procedure is to reduce the local impact of Idaho State University on the areas economy by about $ 91 million. Consequently, $ 190. 7 million in area expenditures remain as directly attributable to Isu's presence. Cost Benefit Analysis Another way to look at the economic impact of Idaho State University involves cost-benefit analysis, i. e. a comparison of value returned for investment made.
ISU represents a capital investment on the part of the State of Idaho of $ 139 million in fixed assets including buildings, property and equipment. Annually the State of Idaho appropriates about $ 72 million to fund ISU operations. The University also receives about $ 41 million per year from federal sources (primarily student scholarships and loans), $ 23 million from student fees and sales of auxiliary services, and another $ 13 million from private and other sources. Altogether, the University operates on annual revenues of $ 149 million and an investment in property and equipment of $ 139 million. Return on those investments can be measured many different ways, but the one used here strives to place a value on the educational benefit received by ISU graduates. According to a similar assessment conducted by Boise State University 3, a 1993 male college students lifetime earnings are enhanced by $ 456, 362 over earnings he would have received with only a high school diploma.
Similar estimates are generated for female graduates, and for recipients of occupational certificates, academic Associate degrees and Master degrees. Based on the number of each type of graduate and their gender, the lifetime earnings of Isu's 2, 083 graduates for the year 1996 are increased by an aggregated $ 863 million! To realize an equivalent 40 -year return, the initial investment would be valued at $ 466 million assuming an estimated 3 % annual rate of return. Table 7: 40 Year Estimated Lifetime Earnings Differential for ISU Graduates Estimated Aggregated Lifetime Earnings Differential Graduates All 1995 - 96 Graduates Idaho Resident Graduates Occupational (Vo Tech) 521 $ 72, 961, 728 $ 42, 242, 026 Academic AA 17 $ 3, 845, 089 $ 2, 226, 158 BA 1, 047 $ 588, 928, 485 $ 340, 966, 875 MA 498 $ 197, 222, 276 $ 114, 184, 090 Totals 2, 083 $ 862, 957, 578 $ 499, 619, 150 Based on information compiled by Isu's Office of Alumni Relations, about 58 % of all known graduates of ISU programs reside within the State of Idaho. Proportionately, Idaho residents realize a lifetime earnings enhancement of $ 499 million because of their educational attainment, with a present value of approximately $ 307 million. This present value is roughly equivalent to the human capital return on Isu's activity.
In addition to the estimated value of an education received by Isu's graduates, the University has been shown (Table 6) to annually stimulate approximately $ 191 million worth of economic activity within the Pocatello area. Combined, the two forms of benefits total $ 498 million. This total annual benefit of $ 498 million costs the taxpayers of Idaho about $ 72 million per year, plus an investment of land, buildings and equipment worth $ 149 million. If the land and building assets are divided over a five-year period, the combined annual cost to the State of Idaho for operating Idaho State University is estimated at $ 102 million. Summary In summary, the State of Idahos calculated annual investment of $ 102 million realizes an annual return valued at $ 498 million. This is very close to a five-to-one return on investment, if the value of the education received is given an estimated dollar value.
A more conservative estimate of the State of Idahos return on its ISU investment can be calculated by excluding any reference to the value of the education received by its graduates. The direct and indirect impacts of institutional purchases, faculty, staff, and student household expenditures, plus the expenditures of out-of-area visitors and the prorated expenditures for land, buildings, and equipment totals a previously calculated $ 191 million. Those expenditures alone represent an 87 % return on the initial $ 102 million investment. The realization of the above rates of return on an ongoing basis, year after year, testifies to the significant profitability of Idaho State University in addition to its measured economic impact on Pocatello and the State of Idaho. 1 INEEL Impacts, US Dept of Energy, Idaho Operations Office, 1997; Idaho Income Survey, Associated Taxpayers of Idaho, 1992; and Microvision Market Segmentation System, EquiFax/National Decision Systems, 1998. 2 The Economic Impact of Northern Arizona University on Coconino County (1995), College of Business Administration, Northern Arizona University, 1995; The University of Virginias Impact on the Charlottesville Metropolitan Area, Center for Public Service, University of Virginia, 1990. 3 The Impact of boise State University on the Economy of Idaho, Chuck Skoro, Department of Economics, Boise State University, 1996.
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