PULLMAN, Wash.–Washington State University produces statewide a direct economic impact of $730 million annually, building on legislative appropriations of $226 million, according to a new economic and social impact report released today.
The economic analysis was distributed to the university’s Board of Regents by T. L. “Les” Purce, vice president for Extended University Affairs.
Prepared by WSU economics professors Carolyn Clark and Ernst Stromsdorfer, the study examines 1996 sources of revenue, expenditures, employment levels, and how funds generate a chain reaction of induced economic activity that adds to the total output of the state.
Purce said that while the story of economic impact is written in charts and figures, the most complete picture of WSU’s influence on the state’s development is “best seen through examples of its social impact–the development of human capital through advanced education that enables our state to grow and be competitive in the national and global marketplace.”
The $226 million allocated to WSU from the state’s general fund for 1996 represents only 44 percent of the university’s revenues, the report shows. Funds from federal sources, student fees, private grants, contracts and investments, and from auxiliary programs such as student housing accounted for an additional $289 million.
Using a standard economic multiplier of 1.4 to determine the total indirect effect of expenditures as they are recycled through the economy, the professors established the total university economic impact at $730 million for 1996.
During 1996, the university spent 52 percent of its $521 million budget for salaries, wages and benefits. Purchase of direct goods and services accounted for 23 percent of expenditures and 17 percent was spent on capital outlay.
WSU employed more than 10,000 faculty, staff and students at its four campuses, research centers and extension offices throughout the state, with a payroll exceeding $223 million.
The economists’ report includes information from several studies that examine lifetime earnings of graduates, the return on investment in education, and evidence of significant savings in social costs resulting from providing college education opportunities for the public.
“Post secondary education, particularly the bachelor’s degree, is a major contributor to economic growth and development of the State of Washington,” Stromsdorfer concludes. “It reduces poverty. It improves the economic well-being of women. It reduces unemployment. It represents a major contribution to economic growth. Investment in this form of human capital is likely as effective a tool to foster economic growth and development as is the investment in physical plant and technology,” wrote Stromsdorfer.
The report also charts economic and social impacts of several university programs and offices. For example, the Small Business Development Center, a statewide network of offices headquartered at WSU, assisted 2,800 small businesses in 1996. SBDC had a positive effect on 1,318 jobs and on nearly $21.5 million of working capital to finance operations and investments in plants and equipment.
Washington benefits extensively from research discoveries and developments by WSU faculty. The timber industry, for example, is currently cultivating 100,000 acres of fast-growing poplar trees to produce pulp. The trees, developed in part by WSU faculty, will produce a yield worth an estimated $250 million.
The College of Veterinary Medicine and its Animal Disease Diagnostic Laboratory and Field Disease Investigation Unit saves farm animal producers an estimated $50 million annually.
“This report demonstrates that WSU touches virtually every segment of the state’s economy and positively influences the social fabric of Washington,” Purce said. “It validates the proposition that investing in higher education is wise and enlightened public policy.”