Report proves link between higher education, healthy economy
Earlier this week, an interesting report came to my attention, confirming what I’ve always said about the importance of having a state university in our area. The report was prepared by Dr. Gary Jackson, director of the Regional Economic Research Institute (RERI) of the Lutgert College of Business at Florida Gulf Coast University (FGCU). In it, Jackson outlines FGCU’s impact — directly and indirectly — on Southwest Florida’s economy over the last year.
The findings are dramatic, if not surprising, for a school that opened just 11 years ago with 2,500 students. Today, FGCU boasts a student population of approximately 10,200, a number that is expected to grow to 15,000+ in the next five years. That also means a growing number of jobs, university expenditures and labor income, which has a huge economic impact on the five-county area that includes Charlotte, Collier, Lee, Hendry and Glades counties.
According to the report, FGCU’s presence in fiscal 2007-08 accounted for: $389 million in overall expenditures (including $232 million in direct and $73 million indirect/business-to-business expenditures); 3,525 jobs; and $162 million in labor income
RERI used a well-established input/output economic impact model to arrive at these and other figures. The model accounts not only for direct expenditures by the university, but for indirect economic impacts, as well (for ex: student and employee expenditures for housing, food, etc.). Here’s how the report breaks everything down.
n Operating Expenses: Salaries and benefits for the 1,751 faculty, staff, students and temporary workers constitute the largest portion (55 percent) of university expenditures. Of those, 1,284 are full-time equivalents, paid an average full-time salary of around $55,467 per position, which is well above average for our area. General expense, personal services, financial aid/scholarship, debt service and library resources account for the balance of expenses.
— Capital Expenses: Spending for new capital projects including classrooms, roads, dormitories and support facilities is a key element in allowing the university to meet the demands of a growing student population. fiscal 2007-08, more than $71.4 million was spent for infrastructure, a central energy plant, student housing, parking garage, Holmes Hall (engineering), Sugden Hall (resort and hospitality) and Lutgert Hall (business). In the coming year, the university planned continues to invest more than $31 million for a solar energy field installation, an academic building, a hospitality management building addition and support infrastructure.
— Student Expenses: This study makes a conservative estimate of the number of students in the area by assuming that of the 5,631 students who have a permanent address in the service area, 20 percent decided to attend FGCU instead of leaving the area to attend college. This accounts for an additional 1,126 students.
The direct expenditures by the students who came to the region to attend
FGCU or those who stayed to attend FGCU instead of leaving the local area total more than $39 million. This is based on the national average per-student, annual expenditure of almost $11,000, which covers food, housing, goods and services (including cars and clothes), health care, entertainment and other expenses.
— Total Economic Impact: Approximately 150 types of businesses showed expenditure and employment increases due to university and student spending. Among them: real estate (renting, leasing, development, management, purchasing, and selling); food and beverage service; doctor and dentist services; wholesale trade; services to buildings and dwellings; food and beverage stores; entertainment; investment firm services; retail stores; legal services; motor vehicle and parts dealers; performing arts; hotels and motels; postal service; architectural and engineering services; accounting services; dry cleaning and laundry services; and construction-related industries.
— Expenditures: The value of expenditures due to the university operations, capital expenditures and student spending totals $389 million. This includes: direct expenditures of $232 million (made by the university and students); indirect expenditures of $73 million (additional business-to-business expenditures created to meet the primary demands of university and students); and induced expenditures of $84 million (created by the increase in household incomes).
n Employment: This section of the study examines the additional employment created by the university and the spending of students in the surrounding communities.
— Total employment: 3,525 positions
— Direct employment: 2,150 positions
— Indirect (business-to-business) employment: 642 positions
— Induced (increase in household income) employment: 733 positions
— Labor Income: Exceeding $160 million, the total labor income created by the university comprises direct labor income of $110 million, indirect (business-to-business) labor income of $24 million and induced (increase in household income) labor income of $28 million. In other words, on average, each dollar of direct labor income creates an additional 50 cents of labor income in the community.
It’s no secret that communities and employers benefit from having a well-educated, skilled labor force and that students who earn degrees have higher incomes and greater opportunities for advancing on the job. The study quantifies this by examining academic degrees and majors, and their economic impact. Further, it cites U.S. Census findings that the median 2005 income of a high school graduate was $21,079, $40,166 for a bachelor’s degree, $51,509 for a master’s degree and $70,165 for a doctoral degree.
FGCU offers more than 60 different degree programs in the colleges of business, arts and sciences, professional studies, health professions and education. In 2007-08, it awarded 1,480 degrees, including 1,212 bachelor’s degrees and 268 master’s degrees.
All of this bodes well for our community. And if the last 10 years are any indication, FGCU will continue enabling Southwest Florida to cultivate and retain a vibrant, educated workforce – the key to diversifying our economy.
Gary Tasman is executive director of Cushman & Wakefield’s Southwest Florida office. For more information, please contact him at (239) 489-3600 or gary.tasman@cushwake.com.