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Regent report finds universities have $15B impact in Iowa
‘One out of every 10 jobs in Iowa is supported’ by regents’ campuses
With lawmakers in the throes of deciding how much money to appropriate Iowa’s public universities for the upcoming budget year, the Board of Regents this week released a new “economic impact report” showing its campuses collectively added $14.9 billion to the state’s economy in the 2022 budget year.
The combined impact from the University of Iowa, Iowa State University and the University of Northern Iowa operations, construction, health care, economic development, research activities, visitor and student spending, volunteerism and alumni support is equal to about 7 percent of the state’s gross state product, the report said.
“Educational institutions are like beekeepers,” according to the report. “While their principal aim is to provide education and raise people’s earnings, in the process they create an array of external benefits. Students’ health and lifestyles are improved, and society indirectly benefits just as orchard owners indirectly benefit from beekeepers.”
The study — conducted by Lightcast, which did the regents’ first economic impact study in 2018 — found the universities’ total economic impact equal to supporting 198,837 jobs. “For perspective, this means that one out of every 10 jobs in Iowa is supported by the activities of the universities and their students,” according to the study, which doesn’t take into account the campuses’ extension and outreach activities.
Last week, Iowa’s public university presidents sat before the Iowa House Education Appropriations Subcommittee in defense of their ask for $34.7 million more in education appropriations for the upcoming 2024 budget year — marking the regents’ largest funding increase ask in nearly a decade.
Lawmakers haven’t granted the board’s full appropriations request in years — and even cut appropriations in 2020. Should they appropriate the full amount this year, total education appropriations for the regents would rise from $575.9 to $610.5 million.
That, according to the economic impact study, would be money well spent.
“For every tax dollar spent educating students attending the universities, taxpayers will receive an average of $2.70 in return over the course of the students’ working lives,” according to the study.
A breakdown of the regents’ $14.9 billion economic impact includes:
- $2.3 billion from operations spending, including $1.9 billion spent paying tens of thousands of employees;
- $117.8 million generated through construction spending;
- $2 billion added through UI Hospitals and Clinics spending, including to pay employees and support operations;
- $607.6 million added through research spending, including on payroll;
- $2.3 billion added through economic development, including the universities’ creation of startup and spinoff companies;
- $179.8 million in visitor spending, like on hotels, restaurants and gas;
- $166.2 million in student spending, like on housing and other living expenses;
- $96.5 million in volunteerism from students and employees who gave nearly 2 million hours of their time in fiscal 2021;
- $7.2 billion in alumni contributions, with hundreds of thousands staying in Iowa for work post-graduation.
The last economic impact report the board commissioned in the 2018 budget year found its institution had an $11.8 billion boon for the state. The board paid Lightcast $132,000 for its work on the new report and $118,000 for its 2018 report.
Beyond straight economics, according to both studies, Iowa’s public universities benefit students, taxpayers and society at large.
For their investment into tuition, books, supplies and loans, students yield a return of $5.40 in higher future earnings for every dollar they spent at the Iowa universities — correlating to an annual rate of return of 16 percent, according to the new report.
Put another way, over a working lifetime, benefits of a bachelor’s degree will amount to $1 million in higher earnings than a high school diploma or equivalent.
“Iowa will also benefit from an estimated $814.4 million in present value social savings related to reduced crime, lower welfare and unemployment, and increased health and well-being across the state,” according to the study.
Breaking down “social savings” into three categories — health, crime and income assistance — the analysis tallied “avoided costs that otherwise would have been drawn from private and public resources absent the education provided by the universities.”
Under health-related savings, the report estimated educated Iowans saved the state $671.6 million “due to a reduced demand for medical treatment and social services, improved worker productivity and reduced absenteeism, and a reduced number of vehicle crashes and fires induced by alcohol or smoking-related incidents.”
It estimated $133.9 million in “crime savings,” including savings associated with fewer “crime victims, added worker productivity, and reduced expenditures for police and law enforcement, courts and administration of justice, and corrective services.”
Regarding income assistance, the report found $8.9 million in savings “stemming from a reduced number of persons in need of welfare or unemployment benefits.”
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