Release Date: Monday, April 7, 2002

STUDY SAYS ECONOMIC IMPACT OF SPENDING BY UNIVERSITY OF GEORGIA AND ITS STUDENTS APPROACHES $2 BILLION ANNUALLY FOR ATHENS AREA

ATHENS, Ga. — Well over $1 billion a year flows into the Athens-area economy from the budgets and checkbooks of the University of Georgia, its employees and its students, according to a recently completed study by the university's Terry College of Business.

That study, conducted by the Terry College's Selig Center for Economic Growth, shows the Athens economy and UGA are bound together more closely than ever. In 1998, more than 20 percent of the jobs held by local residents owed their existence directly to UGA-related spending. Today, it's about 30 percent, according to Selig Center Director Jeffrey M. Humphreys, who wrote the study.

The study included UGA spending in fiscal year 2001 on salaries and fringe benefits paid to Athens residents, operating supplies and expenses and other budgeted expenditures, spending on construction projects and money spent locally by students.

Humphreys said UGA, its employees and students pumped $1.128 billion last year into the Athens-area economy, but the actual economic impact was much closer to $2 billion. Humphreys' study determined that every $1 spent locally generated an additional 56 cents for the local economy.

The study also doesn't take into account the economic impact of tourism or the money spent in Athens by sports fans attending various athletic events throughout the year or even money spent by parents visiting students. Also left out of the equation is much of the money in UGA's travel budgets, since that money is spent outside the Athens area.

"We didn't include money spent by visitors who come here because of the university," Humphreys said. "We only included capital projects and student and employee spending." To track other kinds of income and spending would've required surveys to acquire more data, making the study more costly and complicated to conduct, he said.

To calculate the economic impact of each dollar spent as accurately as possible, Humphreys uses common statistical devices called multipliers. Starting from initial expenditures, a multiplier traces the flow of respending that occurs locally and tallies that respending repeatedly until the money has left the local economy completely. To make them even more accurate, Humphreys adjusts some of the multipliers from year to year to account for inflation.

The economic impact study defined the Athens area as including Clarke, Oconee, Barrow, Jackson, Madison and Oglethorpe counties. Humphreys said limiting the study area to what in the past was considered the Athens metro area would've ignored the large numbers of students and UGA employees who now live in those areas. "It was just common sense," he said.

A summary of the study's significant findings follows:

• Total initial expenditures by UGA and students in FY 2001: $1.128 billion
• Actual economic impact of UGA on regional economy in FY 2001: $1.733 billion
• Number of jobs dependent on UGA presence in FY 2001: 22,178
• On campus = 9,857
• Off campus = 12,321
• One out of every 37 workers in the state is employed by the University System of Georgia—2.8 percent of the entire work force.
• 57 percent of the jobs created by University System institutions are actually off campus—not on campus.
• Each job created on campus results in 1.4 jobs created off campus by spending related to the institution. For example, five jobs created on campus results in seven jobs off campus.

Calculating all the benefits and costs of the University of Georgia's presence in the Athens area would be extremely difficult, if not impossible, Humphreys said. Long-term benefits to the Athens community as a result of UGA's presence include such intangibles as cultural opportunities, intellectual stimulation and volunteer work, plus the positive effects of UGA's intellectual capital resources.

The study also does not take into account the costs to the local community due to the presence of a tax-exempt university and the services local governments must provide to support it, its employees and its students.

The study was sponsored by Georgia's Intellectual Capital Partnership Program (ICAPP), the Simon S. Selig Jr. Center for Economic Growth and the Terry College of Business at the University of Georgia.

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