The Economic Impact of Binghamton University · PDF file · 2016-03-08This study...

The Economic Impact of

Binghamton University

FY 2013-14

Economic Impact of Binghamton University 2013-14 - Office of Institutional Research & Assessment

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Contents

Executive Summary ........................................................................................................................... 3

Introduction ............................................................................................................................................ 6

An Estimation Model of the University’s Economic Impact ..................................... 6

Economic Output ................................................................................................................................. 8

University Direct Expenditures ................................................................................................ 8

Student and Visitor Spending ................................................................................................... 9

Student Spending ........................................................................................................................ 9

Visitor Spending ......................................................................................................................... 10

Total Output ..................................................................................................................................... 11

Impact on Jobs ................................................................................................................................... 12

Community Impact ........................................................................................................................... 12

Binghamton Alumni ...................................................................................................................... 12

Community Services .................................................................................................................... 14

Conclusion ............................................................................................................................................ 15

Endnotes ................................................................................................................................................ 17


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Executive Summary

Binghamton University positively impacts the local economy (Broome and Tioga counties) and the

New York State economy in terms of economic output, jobs, and human capital. University

spending on wages and salaries, goods and services, and construction has a direct economic impact.

Spending by students and visitors to the campus also impacts the economy. Highlights of the study

include:

1. Economic Output

Through its own expenditures and the spending of its visitors and students,

Binghamton University direct and associated expenditures totaled approximately

$670 million from July 1, 2013 to June 30, 2014 (up from $650 million in FY 2012-

13).

These direct and associated expenditures of the university resulted in an overall

economic impact of over $1 billion on Broome and Tioga counties in FY 2013-14

Binghamton University’s direct and associated expenditures of $670 million resulted

in an overall economic impact of $1.38 billion on New York State during this time

period (up from $1.34 in FY 2012-13).

Total expenditures and economic impact for FY 2013-14 increased slightly from FY

2012-13. A $64 million decrease in construction was offset by increases in all other

categories; Salaries/Wages/Benefits (up $22 million), Purchases of Goods and

Services (up $31 million), Student Spending (up $30 million), and Visitor Spending

(up $250,000) all increased in FY 2013-14.

Despite the large decrease in construction expenditures, the overall economic

impact increased by $30 million on the Binghamton MSA from FY2012-13.

Binghamton University’s economic impact accounted for an estimated 12% of the

GDP of Broome and Tioga counties between July 1, 2013, and June 30, 2014.

2. Jobs

Binghamton University employed nearly 5,000 people in FY2014. This includes

Faculty, Staff, and Student workers at the University.


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Binghamton University’s expenditures supported an additional 6,000 full and part-

time jobs in the local economy (Broome and Tioga Counties).

Over 240 full- and part-time jobs were supported in New York State beyond those

supported in Broome and Tioga Counties.

In all, the presence of Binghamton University directly and indirectly supported

approximately 11,500 jobs in New York State in FY 2013- 14.

3. Binghamton Alumni

Over 62,000 Binghamton University alumni still reside in New York State, about 60%

of all those who have graduated from the university. This suggests that Binghamton

University has a sustained impact on New York’s regional and state economies.

Because alumni have increased earning capacity as a result of a Binghamton

University education, and a majority of alumni stay in New York State, this impact

will continue in the medium to long term.

Alumni who stay in New York live throughout the state, in all regions.

Approximately 20% of out-of-state students live in New York State after graduation.

During the 2013-14 academic year, nearly eight thousand Binghamton University

students engaged in clinical experiences, course practica, and volunteer

experiences. These experiences represented $11.8 million in value this past year in

Broome and Tioga counties.

4. Return on Investment

During the 2013-14 academic year, revenue from New York State appropriations

(does not include tuition revenue) was about $154 million. As to the university’s

economic impact, every $1 resulted in an overall $9 additional economic impact on

the state.

The university’s presence creates jobs in the Binghamton area and in New York

State, resulting in increased tax revenues and the earning of additional human and

intellectual capital for the state.

Because Binghamton University’s full-time student retention rates and graduation

rates greatly exceed those of its comparison institutions, increased investment in


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the university will yield enhanced effects on the region and New York State in the

form of jobs and economic growth. This is especially true because the majority of

Binghamton University alumni remain in New York State.


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Introduction

This study applies the final-demand multiplier approach of the Regional Input-Output Modeling

System (RIMS II) model to estimate the economic impact of Binghamton University on the

region in which it is located. The study employs a model that uses basic financial, employment,

and student enrollment data combined with federal estimates of the appropriate regional and

industry input-output multipliers to describe major parts of the economic impact of the

University.

Binghamton University is located in the Binghamton Metropolitan Statistical Area (MSA)—

which includes Broome and Tioga counties. The presence of the University in these

communities generates a complex set of economic activities, the value of which is measured in

three different ways by the model employed in this study: by estimating output-, income-, and

employment-multiplier effects. The University’s students as well as alumni also make a large

contribution to the economic activity in the MSA, estimates of which are included in the

present study in each of these ways.

An Estimation Model of the University’s Economic Impact

As shown in the model illustrated in Figure 1 below, a full estimation of Binghamton

University’s economic impact on local communities involves three major steps. The first step is

to measure the University’s direct economic impact, which is the sum of all operating and

capital expenditures of the University. The second step is to estimate the spending of

Binghamton University students and visitors in a given fiscal year in the Binghamton MSA. This

spending directly results in economic activity that occurs as businesses produce and supply

goods and services purchased by the University, its students, and its visitors.

The third step is to estimate the indirect economic impact of the University’s operating and

capital spending and the spending of its students and visitors. The indirect economic impact is

the economic activity that comes about when those who supplied the goods and services to the

University and its students in the first step take their resulting income and spend a portion of it

on other goods and services, which spending in turn creates income for still others who

correspondingly spend a part on goods and services to meet their needs. The effect is that each

dollar spent by the University on operating and capital expenses plus each dollar spent by the

University’s students causes a chain reaction of spending by other individuals and firms in both

the Binghamton MSA as well as in regional areas.

Finally the fourth step is to estimate the impacts of Binghamton University’s direct

expenditures and local expenditures on jobs. The model also illustrates the community impacts

by Binghamton University students and alumni.


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Figure 1: The Economic Impact Model

Step 1: Direct Ec

Binghamton University Expenditures

Salaries, Wages, and Fringe Benefits

Goods and Services

Capital projects Funded

Local Expenditure Impact

Students' Spending Visitors' Spending

Estimated through the multiplier effect on inter-industry linkage

Impact on Jobs Community Impact

Binghamton Alumni Community Services

Step 1: Direct Economic Impact

Step 2: Associated Economic Impact

Step 3: Indirect Economic Impact

Step4: Other Economic Impacts


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Economic Output

When measuring the impact of Binghamton University on the Binghamton Metropolitan

Statistical Area (MSA)—which includes Broome and Tioga counties exclusively—we focus on

both direct and indirect spending. Direct spending includes those expenditures by the university

in the form of (1) salaries, wages, and fringe benefits; (2) operating expenses beyond salaries,

wages, and fringe benefits; and (3) expenditures associated with capital costs and outlays.i

University Direct Expenditures

Salaries and wages are reported by the university through a number of methods, most notably

through the U.S. Department of Education’s Integrated Post-Secondary Data System (IPEDS)

submission process in which the university is required to participate every year. ii The salary,

wage, and fringe benefits figure for Binghamton University was $308.2 million in FY 2013-14.

Operating expenses such as purchases of goods and services totaled $167.1 million in FY 2013-

14.

With regard to capital costs and outlays, we include funds expended through the State

University Construction Fund and the Dormitory Authority of the State of New York. We do not

include land purchases and equipment purchases because it is likely that these expenditures

involve few funds that flow into the area in the form of labor or local or regional spending.

Total costs and outlays for capital projects in FY 2013-14 were $68.8 million.iii This total is

substantially lower than the $160 million in total construction outlays in FY 2012-13. The major

dormitory construction projects on the east side of campus wrapped up in FY 2012-13. As is

usual practice with construction funding, we subtract a percentage of expenditures that we

estimate would not flow into the area (also known as “leakage”). After subtracting these

elements, we estimate the total construction-related expenditures into the local economy and

state economy were approximately $48 million in FY 2013-14.


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Table 1. Binghamton University Direct Expenditures, July 1, 2013 to June 30, 2014

Category Amount FY2013-14 Amount FY2012-13

Salaries, Wages, and Fringe Benefits $308,184,859 $286,319,678

Goods and Services $167,113,534 $136,100,688

Capital Costs and Outlays $48,169,214 $112,031,200

Binghamton University’s Direct Spending $523,467,607 $534,451,566

Student and Visitor Spending

In addition to its direct expenditures, Binghamton University’s impact can also be measured

through the spending of its students and visitors.

Student Spending

During the course of their academic study, students spend within the Binghamton area, in the

form of rent, food, utilities, transportation, and in other ways. Binghamton University’s

Financial Aid Office produces annual cost of attendance budgets for both on-campus and off-

campus students. For the purposes of this analysis, tuition, fees and room and board expenses

are excluded. We are therefore able to estimate the amount of money students spend in the

local economy while studying at the university, as shown in Table 2 below.

Table 2. Student Spending in FY 2013-14

Number of

Students

Monthly Amount

Spent*

Months of Local

Residency

Amount

On-Campus Undergraduate

Students

6,875 $200 10 $13,750,000

Off-Campus Undergraduate

Students

6,128 $1,076 10 $65,937,280

Off-Campus Graduate

Students

3,074 $1,590 10 $58,651,200

Total 16,077 $138,339,200

*Based on Cost of Attendance Data from Financial Aid Office. Does not include Room and Board Expenses


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We therefore estimate total student spending at approximately $138 million during FY 2013-14.

This spending had an estimated economic impact of nearly $215 million on the local economy

and helped support over 2,300 jobs in the local area.

Visitor Spending

We estimate that more than 250,000 visitors came to campus during FY 2013-14, including

parents, prospective students, event attendees, and others. The first kind of visit occurs when

prospective students, their parents, and others, come to campus. The second kind of visit is for

events, such as athletic, Anderson Center, or graduation events. The third kind of visit occurs

when parents and others visit students during the course of the school year. Using

conservative estimates, we estimate that approximately 40,000 “out of area” visits occurred

during FY 2013-14. These visits involve staying in local hotels, eating at local restaurants and

spending on other items while in our area. Table 3 illustrates the estimates associated with

out-of-area visits directly attributable to Binghamton University.

Table 3. Visitor Expenditures, July 1, 2013 to June 30, 2014iv

Total Out of

Area Visits

Total Spent on

Hotels

Total Non-Hotel

Expenditures

Total Spent

Admissions

Events

21,289 $ 489,646 $ 665,280 $ 1,154,926

Alumni Events 835 $ 28,802 $ 23,190 $ 51,992

Anderson Center

Events

7,043 $ 121,496 $ 880,403 $ 1,001,898

Events Center

Events

6,344 $ 36,479 $ 3,172,073 $ 3,208,551

Graduation

Events

9,450 $ 543,375 $ 787,500 $ 1,330,875

Visits to Students 9,430 $ 216,883 $ 673,550 $ 890,433

Totals 40,534 $1,436,681 $ 6,201,995 $ 7,638,676

We estimate that visitor expenditures were approximately $7.6 million during FY 2013-14.


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Total Output

The university’s total impact is estimated to be the total of direct and indirect spending times

both regional and New York State multipliers as provided by the United States Bureau of

Economic Analysis.v Total direct and indirect spending during FY 2013-14 was approximately

$670 million.

Chart 1. Binghamton University’s Effect on Economic Output in the Binghamton MSA and New

York State (in millions).vi

As Chart 1 above shows, when this $670 million in direct and indirect expenditures are applied

to the regional multiplier for the Binghamton Metropolitan Area (which includes Broome and

Tioga counties), this becomes over $1 billion in total impact. For New York State, this becomes

nearly $1.4 billion in overall economic impact.

From a net impact perspective, the $670 million in direct and indirect spending directly

attributed to Binghamton University produces an additional $368 million in economic impact

for Broome and Tioga counties, and an extra $344 million for New York State beyond Broome

and Tioga counties.vii

However, this only tells part of the story because the University impacts the region and state

with regard to jobs and human capital. In the next section, we discuss how this spending is

associated with job creation in the Broome and Tioga counties and New York State.

$669.4

$1,037.6

$1,381.7

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400

Binghamton University Expenditures

Regional Impact

New York State Impact


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Impact on Jobs

Overall and Net Impact

After calculating the total impact on jobs as a result of direct expenditures by Binghamton

University and indirect spending attributed to students and visitors, these expenditures were

responsible for supporting an additional 6,281 full and part-time jobs in the Binghamton region

and 6,522 total full and part-time jobs in New York State beyond those jobs at the university

itself. viii

Table 4 below illustrates the impact on jobs by the direct expenditure categories of

Salaries/Wages/Benefits, Purchases of Goods & Services, and Capital expenditures on new

buildings and maintenance. This table also shows the effect on jobs resulting from spending by

Binghamton University students and visitors.

Table 4. Jobs Supported in Binghamton MSA and New York State Resulting from Direct and

Indirect Expenditures Associated with Binghamton University, July 1, 2013 to June 30, 2014. (Using

latest RIMS II multipliers; 16.795 jobs in Binghamton MSA and 17.16 jobs in NYS for each $1 million in expenditures).

Expenditure Type Expenditure Amount

# of Jobs Supported in Binghamton MSA

# of NYS Jobs Supported

Salaries/Wages/Benefits $308,184,859 5,178 5,288

Goods & Services $167,113,534 2,808 2,868

Capital Expenditures $48,169,214 809 827

Student Spending $138,339,200 2,324 2,374

Visitor Spending $7,638,676 128 131

Totals $669,445,483 11,247 11,488

Net Additional Jobs (Subtracting the 4,966 jobs at Binghamton University)

6,281 6,522

Community Impact

Binghamton Alumni

According to Binghamton University’s Office of Alumni Relations, nearly 103,000 Binghamton

University alumni lived throughout the United States in FY 2013-14; 62,164 of these still lived

within New York State.ix Chart 2 below depicts the percentage of alumni by U.S. region and

Table 5 the number of alumni in each region of the United States.


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Chart 2. Binghamton University Alumni by United States Region

Table 5. Binghamton University Alumni in the United States

US Region Alumni

New York State 62,164

West - (AK, CA, CO, HI, ID, NV, MT, OR, UT, WA, WY) 6,705

Northeast - (NJ, PA, MA, CT, NH, VT, ME, RI, DE, MD) 17,871

Southwest - (AZ, NM, OK, TX) 2,422

Southeast - (FL, VA, NC, DC, GA, SC, TN, KY, AL, LA, WV, AR, MS) 10,492

Midwest - (OH, MI, MN, IN, WI, MO, KS, IA, IL, NE, SD, ND)

3,289

Table 6 below contains a further breakdown of alumni who remain in New York State by region.

Binghamton University alumni live and work in every part of the state.

17.4%

10.2%

2.4% 3.2%

6.5%

60.4%

U.S. Regions

Northeast

Southeast

Southwest

Midwest

West

New York


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Table 6. Location of Binghamton University Alumni Living in New York Statex

New York State Region Number of Alumni Percentage

Capital Region 2,746 4.4%

Central New York 2,333 3.8%

Finger Lakes 1,869 3.0%

Southern Tier 13,850 22.3%

Mohawk Valley 1,046 1.7%

Long Island 12,809 20.6%

New York City 16,085 25.9%

Western New York 1,178 1.9%

North Country 359 0.6%

Mid-Hudson 9,889 15.9%

Total/Percentage 62,164 100.0%

These results demonstrate that Binghamton University students, the majority of whom come

from New York State when they begin their collegiate study, return to New York after

graduation, are gainfully employed, pay taxes, and otherwise contribute to the New York

economy. We estimate that the 62,164 alumni whom we are able to identify as living and

working in New York State earn in aggregate over $2 billion and pay over $100 million in state

sales and state income taxes each year.xi

In addition, when we observe where out-of-state alumni came from and then compare those

same alumni to where they are after they graduated, we find that about 20% of students who

came from out of state moved to New York State after graduation. This all suggests that about

one-fifth of Binghamton University alumni who come from out of state move to New York

State, bringing with them higher incomes (than if they had only completed high school) and

thus more tax revenue to local governments and the state. xii

Community Services

Binghamton University encourages its students to participate in volunteer and internship

opportunities in the local region. Several units within the university strongly encourage or

require students to participate in community service, clinical experiences, or practica. Last year,

we estimate that student volunteer, clinical, and practicum experiences accounted for nearly

$11.8 million in value to the Broome and Tioga county communities.


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Table 7. Value of Binghamton University Volunteer, Practicum, and Clinical Presence, July 1,

2013 to June 30, 2014xiii

Number of

Students

Participating

Number of

Hours

Hourly Rate Value

Undergraduate

Internships

1,333 120 $22.14 $3,541,514

Undergraduate Clinical

Experiences

808 100 $25.00 $2,020,000

Graduate Clinical,

Practicum, and

Internship Experiences

919 120 $25.00 $2,757,000

Service Learning/

Volunteers

4,845 32 $22.14 $3,432,586

Totals

7,905 $11,751,100

Conclusion

This analysis demonstrates that Binghamton University clearly has a strong and profound

impact on the community in the form of economic impact, jobs, and human capital.

Binghamton University continues its commitment to serve as an engine for growth in Broome

and Tioga counties through its research, its service to the community, and its expenditures. As

this analysis indicates, the University plays an important role in economic development in the

region and in New York State.

While total appropriations from New York State remained flat from FY 2009-10 through FY

2012-13, the University managed to continue its upward trajectory as a vital economic entity.

Fortunately, state funding did increase in FY 2013-14. It is worth noting that the economic

impact on the Binghamton MSA exceeded the $1 billion mark for the third consecutive year in

2013-14.


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However, it is also worth noting that construction expenditures have varied greatly throughout

this time frame. Construction expenditures exceeded $100 million in FYs 2010-11, 2011-12,

and 2012-13. Construction spending in 2011-12 was nearly $140 million. This was the peak of

the major dormitory projects on the east side of campus. In contrast, construction spending

was well below $100 million in 2009-10 and only $48 million in 2013-14. It is informative to

look at BU’s economic impact excluding construction expenditures. Chart 3 illustrates BU’s

impact on the region due to the steady growth in the number of students, faculty, staff, and

visitors on the campus and in the community including and excluding construction

expenditures. The increased economic impact without the construction expenditures, is

directly attributable to the increased economic activity by the university and its people.

Chart 3. Total State Appropriationsxiv to Binghamton University and Economic Impact of BU on

Broome MSA, 2009-10 through 2013-14 (in millions)

$141 $140 $141 $139 $154

$604

$778 $795 $834

$963

$738

$965 $1,009 $1,008

$1,038

$0

$200

$400

$600

$800

$1,000

$1,200

2009-10 2010-11 2011-12 2012-13 2013-14

State Appropriations Broome MSA Impact-without construction

Broome MSA Impact Linear (Broome MSA Impact-without construction)


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Endnotes

i For this analysis, we choose to adopt what is called the “likely substitution” rule, meaning that we employ two decision rules when deciding which expenditures to include. First, expenditures are included if it is assumed that they would be expended outside the boundaries of the University, but within New York State. Second, we include such expenditures if it is reasonable to argue that such expenditures would not easily be substituted by other expenditures. See: John W. Siegfried, Allen R. Sniderman & Peter McHenry, “The economic impact of colleges and universities,” Change, March/April, 2008, pp. 25-29.

ii IPEDS F1B Survey, FY 2013-14.

iii SUNY Construction Fund (SUCF) report sent to Binghamton University’s Office of Institutional Research &

Assessment, March 2015; Dormitory Authority of the State of New York (DASNY) report sent to Office of Institutional Research & Assessment, March 2015.

iv Visitor expenditures are calculated by contacting various offices on campus and asking them for

estimates of how many visitors attended events and conferences on campus. We then calculate the percentage of those we feel came far enough out of town to require a hotel room (usually no more than 10-15%). As is our practice, we use lower bound estimates.

v RIMS II multipliers downloaded from the Bureau of Economic Analysis and are available from the Office

of Institutional Research & Assessment. See also Zoe O. Ambargis and Rebecca Bess, “RIMS II workshop,”

vi Direct expenditure data is taken from IPEDS form F1B for the time period of July 1, 2013 to June 30, 2014.

vii The Bureau of Economic Analysis estimates the impact of spending outside the Binghamton University

area based on separate multipliers for the Binghamton Metropolitan Statistical Area (Binghamton MSA), which includes Broome and Tioga counties, and for New York State. These multipliers can be used to estimate an overall economic impact, including spending that occurs beyond a core economic area (in this case, spending within the geographic confines of Binghamton University). Such calculations also estimate the economic effects in both directions—the positive impact and the negative impact (what would happen in such spending were to suddenly disappear). For the Binghamton MSA, the “colleges, universities, and junior colleges” sub-item multiplier (under the general category “educational services”) is 1.55, meaning that for every one dollar in direct and indirect spending associated with Binghamton University, the Binghamton MSA incurs an additional economic impact, in the form of dollars of economic output, of $0.55. In addition, the RIMS II multiplier for New York State for educational services is 2.064, meaning that every dollar of direct and indirect spending associated with the university produces an additional $1.064 of economic output.

viii The economic multiplier used for this study does not differentiate between part- and full-time jobs.

ix Alumni information was provided by Binghamton University Alumni Relations Office.

x Regions are consistent with the Regional Economic Development Council regions established by

Governor Cuomo in 2011.

xi See “Binghamton University Economic Impact Analysis, 2008-09,” Office of Institutional Research and

Assessment, Binghamton University. We adopt a conservative estimate of alumni earnings by multiplying the total number of identified Binghamton University alumni by 85%, assuming that 10% are not working, and 5% are unemployed. We then take this number (52,839) and multiply it by a conservative estimate of average earnings ($45,000) per employed alumnus. This number is then multiplied by 3.2% average state


Page 18

(and other) taxes as a percentage of income and 2% in average state income taxes as a percentage of state income.

xii In 2010 and 2013 the Office of Institutional Research & Assessment obtained the zip code information of

all Binghamton alumni, and then created a file that enabled the office of plot zip codes on US and New York maps using SAS ©.

xiii In order to produce this table, we accessed the student record system available at the Office of

Institutional Research & Assessment, and took tallies of students registered for clinical and practicum courses. We also used results from the Undergraduate Civic Involvement Survey and the Graduate Exit Survey – both administered in Spring 2014 - to estimate how many students engaged in volunteer service or a service-learning course during FY2014.

xiv State Appropriations include: Fringe benefits, Local assistance (member items) expenditures State

purpose activity, Banking services, Financial Statement adj. for equipment shift, Ed facility Debt Service payment, Litigation expense / change in accrual, and Transfer to State for Budget Cut.

The mission of Office of Institutional Research and Assessment is to support the University’s mission through the collection, analysis,

interpretation, and dissemination of institutional data. We provide contextually relevant information to both internal and external

constituents in support of institutional effectiveness including assessment, accreditation, planning, policy analyses, and decision-making.

As a source of official statistics about the University, we respond to requests

for information from the campus community, state and federal agencies, accrediting bodies, and print media.

We perform our duties with objectivity, integrity, and professionalism.

Binghamton University Office of Institutional Research & Assessment

PO Box 6000 Binghamton, NY 13902-6000 Phone: 607-777-2365 · Fax: 607-777-4513

http://www.binghamton.edu/oira

http://www.binghamton.edu/oira

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