Study shows major economic impact of higher education
A new study conducted by the Weldon Cooper Center for Public Service at the University of Virginia provides an unprecedented look at the large impact of Virginia's public colleges, universities, and community colleges on Virginia's economic output, job creation, and state tax revenues. The study demonstrates that for every dollar the state spends on the public higher education system, it generates $13.31 of economic activity and $1.39 in increased tax revenues that flow back to the State. The study was released today at the Virginia Summit on Economic Competitiveness and Higher Education, sponsored by the Virginia Business Higher Education Council (VBHEC).
The study is the first comprehensive analysis of the economic impact of Virginia's public higher education system. The study also measured the projected impact of the proposal by the VBHEC campaign – Grow By Degrees – to award 70,000 cumulative additional associate, bachelor's, and graduate degrees in Virginia by 2020. The study's key findings are that public higher education is responsible for:
• $9.5 billion annually in purchases of goods and services in the Commonwealth
• $24 billion in annual contribution to the state's gross domestic product (GDP) – 6.2 percent of Virginia's total GDP
• 144,550 jobs created by higher education operations
• $2.5 billion in annual tax revenues generated for Virginia
"The value the Commonwealth receives for its higher education investment is enormous," said VBHEC executive committee member John O. “Dubby” Wynne. "In fact, one of the study’s most important findings, perhaps the most important finding, is that the tax revenue produced by the state’s public higher education system considerably exceeds the amount the state spends on that system.”
The study is based on 2007 economic data, and all numbers are expressed in 2007 dollars. The study measured the impact of higher education expenditures as well as the economic benefits that flow from investing in human capital (the increased earning power and spending by college graduates). Copies of the study are available upon request. Among other key findings:
• $1.58 billion in Virginia GDP is generated by the spending that higher education produces in Virginia by persons and entities located outside the state (34,833 Virginia jobs)
• $588 million in Virginia GDP is generated by higher education research and development programs (12,927 jobs - $72 million in state tax revenues)
• $1.436 billion in Virginia GDP is generated by the university medical centers (27,311 jobs - $190 million in state tax revenues)
The economic impact study clearly shows that higher education spending has a positive impact on all Virginians. Further, if Virginia can reach Grow By Degrees’ goal of awarding 70,000 cumulative additional degrees over the next decade, the economic results will be compelling:
• $18 billion more in Virginia GDP
• $16 billion in increased personal income for Virginians
• $1.9 billion in new tax revenues for state government
In addition to the release of the study findings, the October 1st summit featured major addresses on higher education by both nominees for Governor in the current statewide election – State Senator R. Creigh Deeds, the Democratic candidate, and former Virginia Attorney General Robert F. McDonnell, the Republican candidate. Governor Tim Kaine delivered opening remarks; former Governors Gerald Baliles and George Allen of Virginia, Robert Ehrlich of Maryland, and Michael Easley of North Carolina addressed the importance of higher education to state economic development efforts; and five noted business leaders described the impact of Virginia’s colleges, universities, and community colleges on expansion of the job-creating private sector of the economy.
About the Grow by Degrees coalition: The coalition is comprised of business, community, education, and economic development leaders and organizations from throughout Virginia. Though they reflect a variety of perspectives and backgrounds, coalition members share a conviction that Virginians, regardless of income, should have access to the broader economic horizons opened by a college education. They also share a belief that only a sustained program of investment and innovation in higher education – embodied in state law and in the business plans of our educational institutions – will make Virginia a national and international leader in attracting new business investment, research grants, and excellent job opportunities in the new economy.
About the Virginia Business Higher Education Council: VBHEC was founded in 1994 by Virginia business leaders on the principle that the prosperity of Virginia and the well-being of its citizens is fundamentally tied to access to a strong system of public colleges and universities. A nonprofit, nonpartisan partnership between Virginia’s business community and higher education leadership, VBHEC’s mission is to enhance the performance of Virginia’s public colleges, universities, and community colleges and their funding by state government so they can produce the greatest possible positive impact on Virginia’s economy. VBHEC is committed to educating the public about higher education’s crucial role in Virginia’s economy, and it strives to secure the support needed for the Commonwealth’s colleges, universities, and community colleges to rank among the nation’s best.
