Study: U has $8.6 billion effect on state's economy

  • Article by: JENNA ROSS
  • Star Tribune
  • February 28, 2011 - 10:53 PM

In a time of multibillion-dollar deficits, the University of Minnesota has a few billion dollars' worth of good news.

A report previewed Monday tallies the U's direct and indirect economic effect on the state: $8.6 billion last year. Nearly 80,000 employees. A return of $13.20 for every dollar of state funding.

The study shows just some of the U's thrust. It accounts for things like research grants and spending by students, employees, visitors and the U itself. It does not measure graduates' increased earning power or technology brought to the private market.

If the U were an investment firm, providing a $13.20 return on every dollar, those results would be impressive, said Tim Mulcahy, the U's vice president for research.

"The financial return is above and beyond what the state is investing in us to do, which is to educate the workforce, to add innovation to the economy," he said. "This, to me, is a bonus."

The U's foundation paid Pittsburgh-based firm Tripp Umbach about $48,000 to conduct the study. It will be revealed fully at a U Board of Regents meeting next week.

Across the country, universities are using reports like this one to push back against shrinking state funding. Recently, Tripp Umbach studied the economic impact of the University of Iowa, the University of Washington and the University of Alabama at Birmingham, among others.

The University of Minnesota system is the fifth-largest employer in the state, the new report finds. Faculty and staff make up just half of the 42,319 "direct" jobs on its campuses. There are also students, fellows and some positions at the University of Minnesota Medical Center, Fairview.

Then there are 37,178 "indirect" jobs made possible through U spending, the report says. In total, the U is linked to one of every 43 jobs in the state.

"The percentage of what you mean to this economy is very, very significant," Paul Umbach, of Tripp Umbach, told U administrators Monday.

The U has touted its return on investment before. But this study, by an outside firm to give a "more objective view," as U President Robert Bruininks put it, comes during a tough fight for state funding.

The new report will provide legislators "richer information on our contributions and our value," Bruininks said. In a note to students and staff, he urged them to use the new data with lawmakers.

Upon hearing of the study, Rep. Bud Nornes, R-Fergus Falls, first questioned just how objective such a report could be. Then he said the results don't surprise him.

"I know they're a major factor in the state's economy -- there's no doubt about that," said Nornes, chairman of the higher education committee. "At least as far as the House is concerned, we're going to do our level best to help the U continue this as much as we can."

But "understanding the big picture of what we have to deal with," cuts will have to be made, he said.

Jenna Ross • 612-673-7168

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