Economic Impacts of the University of Florida and Affiliated Organizations, 2005-06: Executive Summary
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Economic Impacts of the University of Florida and Affiliated Organizations, 2005-06: Executive Summary

   

Economic Impacts of the University of Florida and Affiliated Organizations, 2005-06: Executive Summary1

Alan W. Hodges, W. David Mulkey, and Thomas J. Stevens2

The following is the Executive Summary of a much larger report, which is only available in pdf format. To access the complete report, please click here or go to (http://edis.ifas.ufl.edu/pdffiles/FE/FE69900.pdf ).

Introduction

The University of Florida (UF) is one of the largest comprehensive public universities in the United States, with enrollment exceeding 50,000 students. Besides the main campus in Gainesville, the University has statewide operations at numerous Research and Education Centers, Shands Hospitals and clinics, and extension offices in all 67 counties of the state. UF has a significant economic impact to the state of Florida through its academic and physical operations; capital outlays; allied organizations; healthcare services; and spending by faculty, staff, students, and visitors. The purpose of this report is to provide an economic impact assessment for UF for fiscal year (FY) 2005-06. Because of differences in the methods used, the results of this analysis are not strictly comparable to previous studies done for 1993-94 and 2002-03 (UF Office of the Provost, 2004). Furthermore, this study only considers the monetary impacts of the University of Florida on the state's economy, and does not evaluate the intangible benefits of higher education to human capital in the workforce.

Methods and Information Sources

This economic impact analysis was based on information provided by a variety of sources. Information on total university revenues and expenditures were taken from the UF Annual Financial Report for FY 2005-06, ending June 30, 2006 (UF Controller, 2007). More detailed information on operating and non-operating expenditures, personnel salaries and benefits, and capital outlays were provided by the UF Finance and Accounting Division. Operating expenditures for Shands Hospital, Health Science Center Faculty Practice Associates, Direct Support Organizations such as the Athletic Association and Research Foundation, and other minor business enterprises were obtained from their annual financial statements and from supplemental tables of the UF Financial Report. Data on employment were obtained from the UF Division of Human Resources and the Office of Institutional Planning and Research.

The economic impacts of spending by UF employees were estimated based upon typical household personal consumption expenditures for specific income brackets representative of UF faculty, staff, and temporary employees. Impacts of spending by employees of Shands Hospital and other University component units were estimated as part of the overall operating expenses for those units. Expenses for Shands and health science faculty medical practices were assigned to the Implan sectors for Hospitals and Offices of Physicians. Depreciation expenses on fixed assets were excluded from the analysis since this does not represent a cash transaction which has a current local economic impact.

Total economic impacts of spending by UF, affiliated organizations, students, and visitors were estimated with a regional economic model for the state of Florida constructed using the IMPLAN Pro software and associated databases (Minnesota Implan Group, Inc., 2006). Further details of the analytical methodology are provided in the accompanying technical report (FE69900).

Revenues

Total revenues to the University of Florida and its affiliated organizations in FY 2005-06 are summarized in Figure 1 . Revenues totaled over $3.95 billion, and of this amount, an estimated $1.79 billion, or 44 percent, was received from sources outside the State of Florida. Shands Hospital and Health Sciences Faculty Practice Associates had revenues of $1.78 billion, or 45 percent of total revenues, of which 47 percent were from outside Florida (from health insurance payments and Medicare/Medicaid). State operating and capital improvement appropriations to UF amounted to $665 million, or 17 percent of total revenues. Grants and contracts for sponsored research activities totaled $389 million, including those from federal government agencies ($284 million), state and local governments ($36 million), and nongovernmental organizations ($69 million). Student tuition and fees net of scholarships together with federal and state financial aid received amounted to $250 million. Gifts, donations, and endowment contributions amounted to $259 million. Sales and services for auxiliary enterprises, educational departments, component units, and royalties and licensing fees were $281 million. Interest and investment income amounted to $172 million, and miscellaneous other revenues were $159 million.
Figure 1. University of Florida revenues ($ million)

Expenditures

Expenditures by the University of Florida, affiliated organizations, students, and visitors in FY 2005-06 are summarized in Figure 2 . Total spending, excluding certain non-cash transactions such as depreciation, amounted to $4.35 billion, of which $3.87 billion was spent within the state of Florida, and of this amount $1.66 billion was funded from sources outside the state. Spending for University operations amounted to $431 million, including $95 million for professional services, $61 million for supplies, and $47 million for utilities. Capital outlays totaled $181 million, including building construction ($103 million) and equipment purchased ($57 million). A total of $126 million in operational spending were from out-of-state sources, and $112 million in capital spending were treated as new resources to the state.

Figure 2. University of Florida expenditures ($ million)

Expenditures associated with University personnel amounted to $1.13 billion, including $924 million in salaries and wages to faculty and staff and $204 million in employee benefits and taxes. The wages and salaries were assumed to be spent as household consumption expenditures. A total of $411 million in spending by UF personnel was funded from out-of-state sources.

Healthcare services had expenditures amounting to $1.76 billion, including Shands Hospitals ($1.43 billion), Florida Clinical Practice Associates ($151 million), Jacksonville Physicians ($149 million), and other health sciences faculty practice associates. These expenditures include wages and benefits paid for hospital and health practice staff, but not the academic portion of salaries for UF medical faculty. A total of $748 million in healthcare spending was funded from out-of-state sources.

Direct support organizations had operating expenses, excluding outlays supporting the University, of $102 million, with the largest amounts for the University Athletic Association ($72 million) and UF Foundation ($22 million). A total of $19 million in spending was funded from out-of-state sources.

Total student spending was estimated at $630 million, with $252 million for off-campus housing; $135 million for food and beverages; $107 million for books, supplies, and computers; $78 million for personal items and insurance; $33 million for clothing; and $23 million for transportation. A total of $169 million in student spending was from out-of-state sources.

Spending by campus visitors not affiliated with the University was estimated at $112 million, with $74 million for campus attractions and academic events, $33 million for football games, and $6 million for other mens and womens athletic events. A total of $24 million in visitor spending originated from out-of-state sources.

Total Economic Impacts

Total economic impacts associated with the University of Florida represent not only the direct effects of expenditures, but also the indirect and induced effects calculated using regional economic multipliers (Implan) for in-state spending funded by revenues from outside sources. Output, employment, and value added are three distinct and independent measures of economic impacts.

Total output or revenue impacts of UF and affiliated organizations amounted to $5.85 billion dollars in 2005-06. Among UF entities, some $2.72 billion in output impacts, or 46 percent of the total, was for healthcare services, $1.48 billion (25%) was for personal spending by faculty and staff and payroll benefits and taxes, $664 million (11%) for student spending, $502 million (9%) for University operations, $282 million (5%) for capital outlays, $95 million (2%) for visitor spending, and $111 million (2%) for direct support organizations ( Figure 3 ). In the case of visitor spending, the output impacts were less than actual expenditures because a significant portion of retail purchases are lost to "leakage" (i.e., goods purchased from outside the state).
Figure 3. University of Florida total output impacts ($ million)

Total value added is an important measure of economic impacts which represents personal income to individuals, business profits, rents, and other property-related income. The total value added impact of the University of Florida amounted to $3.24 billion in FY 2005-06. This represented approximately 0.48 percent of the $673.3 billion in Gross State Product (GSP) for Florida in 2005. GSP is the broadest measure of economic activity, which is equivalent to the Gross Domestic Product at the national level. Value added impacts for the largest components of the University were $1.56 billion for healthcare services, $696 million for UF personnel, $427 million for student spending, and $270 million for operations ( Figure 4 ).
Figure 4. University of Florida employment impacts (jobs)

Employment is also an important measure of economic impact. Direct employment at the University of Florida in the Fall semester of 2006 was 20,156 jobs, including 12,373 permanent employees in faculty and staff positions, plus 7,783 in temporary (OPS) positions. Employment in Shands Healthcare was 13,056, including 11,777 at large hospitals in Gainesville and Jacksonville, and smaller hospitals in Lake City, Starke, and Live Oak, plus 595 employees at various rehabilitation and elder care facilities, and 684 employees in faculty practice associates (Apr. 2007). The two largest direct support organizations, the University Athletic Association and the UF Foundation had 776 employees. All together, total direct employment at UF and affiliated organizations was nearly 34,000 jobs. In addition to the direct employment at UF and affiliated organizations, spending for University operations, by employee households, students, and visitors generated 40,906 more jobs in the Florida economy through indirect and induced employment impacts, giving a total employment impact of 74,894 jobs. The total employment impact included 31,232 jobs (42%) associated with direct employment and spending by UF personnel; 25,863 jobs (34%) for healthcare services; 7,422 jobs (10%) for student spending; 4,797 jobs (6%) for UF operations; 2,883 jobs (4%) for capital outlays; 1,301 jobs (2%) for direct support organizations; and 1,344 jobs (2%) for visitor spending ( Figure 4 ).

Summary and Conclusions

Economic impacts of the University of Florida and its affiliated organizations on the state's economy were evaluated for FY 2005-06 using financial data together with regional economic models. Total revenues to UF were $3.95 billion, including $1.79 billion from sources outside of Florida. Total spending amounted to $4.35 billion for University operations, personnel, capital outlays, healthcare services, direct support organizations, students, and campus visitors. Total spending within Florida was $3.87 billion, of which $1.66 billion was from sources outside the state. Total output or revenue impacts to the state economy were $5.85 billion, including multiplier effects associated with in-state spending from outside sources. Value added impacts to personal income and business profits were $3.24 billion. The University had direct employment of 34,000 jobs for faculty and staff, including Shands Healthcare, and total statewide employment impacts were 74,894 jobs. Student enrollment in FY 2005-06 was 122,775 student-semesters. There were a total of 3.5 million visitors to campus facilities and academic events, with output impacts of $9.1 million. In addition, there were 1 million visitors for athletic events. Healthcare services by Shands hospitals, Faculty Practice Associates, and the Colleges of Health Sciences and Veterinary Medicine had output impacts of $3.39 billion. Teaching, research, and statewide extension education by the Institute of Food and Agricultural Sciences (IFAS) had output impacts of $283 million. In Alachua County, there was $2.84 billion in total spending, $4.95 billion in output impacts, $2.80 billion in value added impacts, and employment impacts of nearly 65,000 jobs.

References

Footnotes

1. This is EDIS document FE699, a publication of the Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Published October 2007. Please visit the EDIS website at http://edis.ifas.ufl.edu.

This study was sponsored by the University of Florida, Office of University Relations.

2. Alan W. Hodges, Associate Extension Specialist, W. David Mulkey, Professor and Associate Chair, and Thomas J. Stevens, Post Doctoral Associate, Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL.

The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other extension publications, contact your county Cooperative Extension service.

U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Larry Arrington, Dean.


Copyright Information

This document is copyrighted by the University of Florida, Institute of Food and Agricultural Sciences (UF/IFAS) for the people of the State of Florida. UF/IFAS retains all rights under all conventions, but permits free reproduction by all agents and offices of the Cooperative Extension Service and the people of the State of Florida. Permission is granted to others to use these materials in part or in full for educational purposes, provided that full credit is given to the UF/IFAS, citing the publication, its source, and date of publication.