UW-RF Economic Impact

University of Wisconsin - River Falls

May 2, 1997

UW-RF Generates $211 Million Impact

A new economic impact survey completed for Wisconsin public higher education shows that UW-River Falls contributes more than $211 million in annual economic impact to the St. Croix River Valley.

Further, the survey demonstrates that a bachelor's degree continues to be the path of economic security while, as a result of taxpayer's subsidies, it is an investment that quickly recoups lost wages, tuition and expenses devoted to earning a degree.

The study was conducted by Professor William A. Strang, director of the Bureau of Business Research at the UW-Madison School of Business. The 62-page report was the first economic impact study of the entire 26-campus University of Wisconsin System.

Overall, the University of Wisconsin System contributes some $8.2 billion to Wisconsin's economy each year: a 10-fold return on taxpayers' investment of $847 million in public higher education.

"The economic impact of UW-River Falls is pretty obvious from this study," said UW-River Falls Provost Robert Milam. "But what is equally important is the quality of life that the University contributes to the St. Croix Valley. That is hard to quantify.

"The economic analysis is straightforward. But how can you measure the impact on the quality of life? Whatever factor we contribute on the economic side, I think, there is an equal contribution toward the quality of life that can't be measured."

Milam's question on contribution was answered in part by Strang's report, which employed what economists call the "poof principle." Simply put, Strang notes, "suppose (UW-River Falls) did not exist; if it went 'poof.' How would Wisconsin's economy change?"

The answer, Strang's report concludes, would be lost jobs and a substantial reduction in spending in local economies.

According to the report, during fiscal year 1996-from July 1, 1995, to June 30, 1996-UW-River Falls expenditures by category were:

  • Institutional spending: $19 million.

  • Estimated faculty and staff take-home salaries: $19 million.

  • Student expenditures: $38 million.

  • Visitor expenditures: $15 million.

  • Strang reaches a final economic impact dollar amount by multiplying the direct expenditures of $91 million by a conservative multiplier of 2.32. The multiplier signifies how many times that original dollar is "turned over" in local communities before it leaves.

    According to Strang's calculations, UW-RF generated $211,120,000 in spending last year.

    The report also indicated that the typical student draws nearly 13 visitors per year, while the average university employee attracts 24 visitors to town. The report also demonstrated that the time and expenses that students

    devote to pursuing a bachelor's degree represents an exceptional investment, with the average student recouping the investment in just three years after graduation due to higher earnings.

    Strang's study shows that a person with a bachelor's degree will earn an additional $517,744 more than a high school graduate, for an average lifetime earning of $1,460,693. A college graduate's lifetime earnings also were well ahead of someone earning a two-year degree: $321,712.

    Based on the current cost of taking 4.5 years to complete a degree at UW-River Falls and the average annual lost earnings while pursuing the education, the total cost is about $39,500. But the additional lifetime earning represents a 22.67 percent return on the investment.

    "The lesson has been that a high-quality university education has become more and more essential given the skills differentiation between unskilled jobs and employment requiring a university education," Strang said in his report. The study also concludes that Wisconsin taxpayers earn a reasonable return on their investment. State tax dollars represent just one-third of the cost of a degree, with the balance coming from tuition, gifts and grants.

    The Strang study shows a 6.74 percent return on tax dollars in the form of additional income taxes, with a lifetime contribution of $91,344 additional tax dollars per college graduate.

    Finally, Strang notes that while his report shows a remarkable economic impact, it does not measure quality of life. Although not measure, those contributions are apparent:

    "Universities and their communities are almost without exception known as attractive places to live. People are drawn to positive images that a university town presents, such as libraries, cultural events, art exhibits, concerts, readings and, at heart, an engaged and lively community of thinkers," Strang concludes.

    Where the Money Goes

    According to an economic impact survey of the University of Wisconsin System, campus institutional spending is distributed widely through business and industry.

    The report notes that 61 percent of spending by a University of Wisconsin System campus stays within the state.

    Here is how UW-River Falls spends its money, based on Strang's report:

    Finance, Insurance and Real Estate 17 percent

    Eating & Drinking places 15

    Auto Sales & Service 12

    Food Stores 10

    Transportation, Communication, Utilities 9

    Department Stores 7

    Apparel Stores 6

    Other Retail 5

    Furniture & Appliance 4

    Construction 4

    Personal & Business Service 4

    Wholesalers 3

    Lodging 3

    Amusement 1

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