January 26, 2013
As the legislative session gets underway, people look to the various state entities to determine where they think tax dollars should be spent. The North Dakota University System (NDUS) has always had a significant impact on the state of North Dakota. It is a large player in economic development, research, and community and industrial partnerships. Historic services such as educating our citizens and providing cultural events and athletic performances are very important, but economic impact is also of key interest to our community’s citizenry.
Each of the state’s college campuses is an important component of that area’s local economy. The brief analysis that follows will provide highlights of an economic impact analysis of Mayville State University in the Mayville area. The information has been taken from a document entitled “The Economic Impact of the North Dakota University System in 2011,” which was recently released. Key economic indicators estimated in the analysis include direct impacts, total level of economic activity, personal income, retail trade, tax revenues, and employment. All dollar values are presented in terms of current year dollars, i.e., the effects of inflation have not been removed. The Consumer Price Index indicates that inflation during the 12-year period from 1999-2011 was 35 percent. Expenditures by Mayville State University comprise the direct impacts, or “first round effects.”
Expenditures by Mayville State University were $9.4 million in FY1999, $15.8 million in FY2004, $13.7 million in FY2006, $14.0 million in FY2008, $14.6 million in FY2009, and $24.5 million in FY2011. Over the last 12-year period, expenditures increased over $15.1 million or by 160 percent. Total impacts associated with Mayville State University were estimated by applying the North Dakota Input-Output Model coefficients to total direct expenditures.
Total economic contribution was estimated at $28.4 million in FY1999, $45.2 million in FY2004, $41.0 million in 2006, $41.5 million in FY2008, $43.5 million in FY2009, and $70.2 million in FY2011. The sector with the largest impact was households (i.e., personal income of area residents) for each year presented. Personal income increased from $11.3 million in FY1999 to $26.1 million in FY2011 or by 130 percent.
Other sectors receiving major contributions included retail trade, construction, finance, insurance and real estate, and business and personal services. Increased retail trade activity was estimated to be $6.8 million in FY1999, $10.3 million in FY2004, $10.2 million in FY2006, $10.2 million in FY2008, $10.4 million in FY2009, and $16.2 million in FY2011. This represents a $9.3 million (135.9 percent) increase for the 12-year period. Increased levels of retail trade activity would generate $748,000 in sales and use tax collections in FY2011, compared to $317,000 in FY1999 and $483,000 in FY2009.
Personal income tax collections were estimated to be $170,000 in FY1999, $251,000 in FY2004, $248,000 in FY2006, $246,000 in FY2008, $260 in FY2009, and $391,000 in FY2011 as the result of increased economic activity in the household sector.
Levels of business activity resulting from Mayville State University expenditures would support 179 secondary (indirect and induced) jobs in 2011. These jobs are in addition to the 238 positions (excluding student jobs) at Mayville State University in 2011.
In the Fall of 2010, 704 full-time equivalent students were enrolled at Mayville State University. In addition to the economic impact resulting from the institution’s expenditures, spending by students also contributes to the local economy. Direct impacts of student spending in the Mayville area was $6.7 million in FY2011. The total economic contribution was $16.7 million. Student spending was estimated to generate an additional $350,000 in sales and use tax revenue and $61,000 in personal income tax collections. This level of student spending would create enough business activity to support nearly 36 secondary (indirect and induced) jobs.
It is clear that institutions of higher education are a significant force in North Dakota’s economy. Besides the economic impact, they provide educational opportunities necessary for a workforce that needs increasing technological skills, and they serve as centers for local and regional economic and cultural opportunities.
When we consider the future of our area, and the types of businesses we would like to attract, let’s not forget about maintaining the economic engines we already have in our community. The tremendous increase in economic impact created by our unprecedented enrollment growth should provide us millions of reasons to support MSU!