Report says UA Fayetteville has $1.2 billion annual economic impact

Just a day after a $692.175 million appropriation bill for the University of Arkansas system was filed in the Arkansas General Assembly, UA officials issued a report that the flagship university in Fayetteville had in 2014 a statewide economic impact of $1.2 billion.

The report said the impact had grown 66% from the $725 million in 2009.

Sen. Missy Irvin, R-Mountain View, introduced on Monday (Feb. 9) Senate Bill 269, the appropriations bill for the University of Arkansas system. The $692 million budget, which would cover expenses from June 30, 2015 until July 1, 2016, has $250 million set aside for operating expenses as well as $121 million for capital improvements. Nearly $800,000 is set aside for the University of Arkansas School of Law, with another $250,000 for the Research and Technology Park on campus.

Tuesday’s (Feb. 10) report on the university impact was conducted by UA researchers in the Center for Business and Economic Research at the Sam M. Walton College of Business. The center previously prepared an economic impact report for the university in 2009.

“Perhaps the most impressive finding is the return-on-investment that Arkansas taxpayers get from the state’s investment,” Kathy Deck, director of the Center for Business and Economic Research, and principal author of the study, said in a statement. “The state’s appropriation to the university in 2014 was $173.8 million. Arkansas is basically getting back almost $7 for every dollar the state legislature invests in the University of Arkansas.”

Deck said she and the research team carefully reviewed budgets and program funding formulas to determine how much money “really came to the campus.”

In terms of sustainable economic growth, the study finds that the university, one of the largest employers in Northwest Arkansas in 2014, had a total payroll of $317.9 million.

“The activities associated with the university’s annual operations more than add up to the total of $1.2 billion annually,” said Deck. “But the total impact is 2.7 times greater than the funds the university directly spends each year.”

The report said the university has short-range and long-range effects on state and local economies by developing human capital, fostering a knowledge economy and providing a sustainable economic base for growth in Northwest Arkansas and the state as a whole.

During 2014, spending by students contributed $307.4 million to the economy in Northwest Arkansas, and spending by campus visitors added another $35.8 million. The student spending was determined through a survey of a representative sample of the student body – 2,600 of the 26,200 enrolled in the fall. While student spending is allocated to a variety of categories, the largest monthly expenses of students were rent, restaurants and bars, and motor vehicle-related purchases.

The impact also included economic contributions by UA alumni living in Arkansas. According to the report, there are more than 68,622 UA alumni living in Arkansas, about 2% of the state’s population and up from 60,000 alumni in 2009. Deck’s report said the alumni contribute $54.9 million in sales and use taxes to state and county governments and an additional $114.8 million in state income taxes. The researchers calculated that university alumni living in the state earn $2.3 billion in wages each year, significantly contributing as workers, business leaders and consumers in their local economies.

The university’s economic impact in Northwest Arkansas is estimated at $932.3 million in 2014, and includes $907.2 million in recurring annual economic impact and $25 million in one-time construction impacts. The annual business operations of the university contribute $522.2 million to the Northwest Arkansas economy, while student spending contributes $307.4 million.

“The University of Arkansas has been a key driver of Northwest Arkansas’ economic success these past two decades,” Mike Malone, president and CEO of the Northwest Arkansas Council, said in the statement. “The U of A contributes to our economy in so many ways – as one of our largest employers, through direct investment and purchasing, by preparing our future workforce and conducting innovative, job-creating research – these are just a few examples.”

Visitors to Razorback athletic events, the UA admissions office and students contributed $35.8 million in spending in 2014 and the economic impact generated by university-affiliated volunteers is $3.8 million.

The operations of tenants in the Arkansas Research and Technology Park add nearly $38 million to the regional economy.

The report was first commissioned in 2009 by Chancellor G. David Gearhart, and then again in 2014. The center researchers spent four months (September 2014 to January 2015) preparing the report. Deck joined the Center for Business and Economic Research in 2001, and has managed 99 economic studies for clients that include various counties and municipalities across Arkansas, Arvest Bank Group, Chesapeake Energy, the Jones Center for Families, the Arkansas Economic Development Commission, and Bikes Blues and BBQ.