Economic Impact

What is an economic impact analysis (EIA)?

An EIA is the process of evaluating how the College contributes to the local, regional, or national economy. This analysis typically measures both the direct and indirect economic effects that the institution has through its operations, spending, and the activities of students, faculty, staff, and visitors.

Below are some of the main components of an EIA. 

• Measuring direct economic impact involves the college's own spending and operations. Key areas to consider include:
  • Institutional Spending: The college itself spends money on salaries, utilities, equipment, maintenance, and other operating costs.
  • Salaries and Wages: Payments made to faculty, staff, and other employees. These wages contribute to the local economy when spent on goods and services.
  • Purchasing Goods and Services: Colleges also spend money on things like supplies, technology, and facilities management, which benefit local businesses and vendors.
• Measuring indirect economic impact examines the ripple effects of the College’s spending on the local economy. This includes:
  • Spending by Employees: The money spent by college employees (faculty, staff, etc.) in the community, such as on housing, food, transportation, and entertainment.
  • Spending by Students: The expenditures made by students for housing, food, books, and other living expenses. For students who are from out of town or out of state, this spending represents new money entering the local economy.
  • Spending by Visitors: Parents, alumni, and other visitors often spend money in the area when they come for events like graduation, sports, or conferences.
• Estimating the multiplier effect refers to how spending in the local economy can have a larger, total impact. 
  • Every dollar spent by the university or its employees may generate additional economic activity in the community as that dollar circulates through businesses, services, and wages.
  • Multiplier ratios are used to estimate the broader impacts.
• Measuring long-term economic impact considers:
  • Workforce development and how the College contributes to the economy by producing educated graduates who join the workforce, helping to fill skill gaps in various sectors.
  • Colleges often create jobs not only within the institution but also in the surrounding community. This includes: on-campus jobs for students and local jobs in retail, construction, and service industries that depend on the college community.

Why is the EIA important and how can it be used?

• Public policy: Understanding the economic impact of the College can help guide decisions on funding and policy-making. The College can use the data to advocate for state or federal funding.
• Community development: The local government and businesses benefit from understanding the broader effects of having a large educational institution in their area.
• Financial planning: The College can use the EIA to evaluate its economic sustainability and make informed financial decisions.