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An Economic Analysis of San Francisco State University

Prepared by Michael J. Potepan, Department of Economics, San Francisco State University, Fall 2003

Executive Summary

San Francisco State University (SFSU) itself generated more than $341 million in direct spending during the 2002-2003 fiscal year.

Students at SFSU generated an additional $387 million in direct spending through their personal purchases of goods and services during the 2002-2003 fiscal year.

From both these sources, almost $708 million dollars in direct spending was injected into the local Bay Area economy in 2002-2003.

This direct spending by the university and its students resulted in additional indirect and induced spending once these dollars began to circulate throughout the local economy.

All told, about $1,166 million dollars in direct, indirect, and induced spending occurred in the local Bay Area economy in 2002-2003 as result of spending by SFSU and its students.

SFSU itself directly created around 3,490 jobs during 2002-2003. About 11,662 additional jobs were indirectly supported elsewhere in the Bay Area economy from the spending by SFSU and its students.

All told, as many as 15,152 jobs were directly and indirectly created as a result of spending by SFSU and its students.

Budget cuts at SFSU in 2003-2004 are likely to result in an almost $30 million reduction in Bay Area economic activity, and almost 390 fewer jobs.

About $50 million in grants and contracts were awarded to SFSU faculty for conducting research by Federal, state, and local governments, and not-for-profit foundations.

The SFSU Foundation built a 192 apartment complex for students in 2001 which currently houses more than 750 students. The Foundation also owns and rents out an additional 180 apartment units that are available to faculty, staff, and students.

SFSU purchased more than $145 million in goods and service contracts from private sector businesses. The vast number of these contracts were for under $100,000 and were awarded to locally owned businesses.

SFSU has spent an average of $19 million per year on capital improvement projects since the early 1990's.

About 12,600 of SFSU's 28,000 students came here from other countries, from states other than California, or from other parts of the state outside the Bay Area.


1. Introduction

This report attempts to quantify the total economic impact San Francisco State University (SFSU) made on the local economy during the 2002-2003 fiscal year. As will be shown, SFSU is a major economic force in the Bay Area with more than 28,000 students, 3,333 employees, and annual spending at around $341 million. Its economic contributions are felt not only in the city of San Francisco itself, but ripple throughout the wider Bay Area and the Northern California region beyond.

For purposes of this analysis, it might be useful to view SFSU like any other enterprise that produces a product (in this case higher educational services) for which it receives revenues (fees from students, state support, etc.) and incurs expenses (salaries for faculty and staff, payments to suppliers of goods and services, etc.). As a public sector enterprise, SFSU does not make a profit, and from an accounting standpoint, its revenues equal its expenditures each year.

SFSU engages in a variety of activities which contribute to the local economy. Its core mission is the instruction of more than 28,000 students each. In 2002, 4,708 undergraduates, and 1,298 graduate students received baccalaureate and master's degrees from SFSU. These SFSU graduates enter or re-enter the local workforce better trained and more highly productive. This contribution to the local economy over time, though quite difficult to quantify in practice, will easily dwarf the spending contributions of the university itself. An important input in the provision of these higher education services is the university Faculty, of which in 2002/2003, 807 were in full time, tenured or tenure track positions, and another 915 were in temporary lecturer positions.

Aside from teaching, SFSU faculty members engage in research, a significant portion of which is sponsored through additional funding that comes from the federal, state and local governments, as well as non-profit organizations and foundations. This sponsored research not only contributes to the knowledge base of the local, national, and international economy, but its funding also brings additional dollars to the campus that further contribute to the local economy.

To support its basic mission in providing higher education, SFSU, like most other universities, has auxiliary units that are fiscally independent of the university itself. In the case of SFSU, the Franciscan Shops, Inc. operates a large bookstore and several smaller stores on campus, and the San Francisco State University Foundation, among other things, is an important provider of housing, renting out more than 370 housing units to students, staff, and faculty. The Foundation also leases out a number of food service and other facilities around campus to various private vendors. Such auxiliary units receive revenue and incur expenditures, and both are important additions to the local economy.

Each year, SFSU invests in a variety of capital improvement and construction projects on its campus. Not only are new buildings constructed, but existing buildings are retrofitted and seismically upgraded. Expenditures on these capital improvement projects, which has averaged more than $19 million a year since 1990, injects still another stream of spending into the local economy.

SFSU students, the prime direct beneficiaries of the higher education services produced by the university, also contribute to the local economy through personal expenditures on tuition and fees, books, room and board, transportation, and personal expenses. As will be demonstrated later in the report, the total level of personal spending by students is significantly larger than spending by the university.

Combined, these various sources of spending – the university budget itself, as well as from its sponsored research, auxiliary units, capital improvement projects, and student expenditures – constitute a sizable contribution to the local economy, more than $341 million in combined direct spending. SFSU is one of the Bay Area’s larger enterprises. However, the university’s impact on the local economy does not stop there. Economists have long noted what they term a “multiplier effect” to local spending by a large enterprise like SFSU.

The multiplier effect works, in the first instance, when dollars whose source is from outside of the local economy are injected into the local economy. For instance, SFSU receives a large portion of its revenue from beyond the Bay Area (General Fund revenue from the State government, Grants and Contracts funded by the Federal and State Government, student financial aid from the State and Federal governments, student fees from students coming from beyond the Bay Area, etc.). When the university’s revenues from these sources are paid out to university employees, students, local contractors, etc., these persons in turn spend some of this income in the local economy on locally provided goods and services (rent, groceries, gasoline, etc.) The businesses that sell these goods and services and receive this revenue pay much of it out to their employees and suppliers, who, in turn, will re-spend a portion of that in the local economy. The process repeats itself a number of times, and all told, the outside dollars initially injected into the Bay Area economy because of the presence of SFSU are re-spent a multiple number of times, generating a multiple economic impact. The larger the amount of outside dollars flowing into the spending stream in the first instance, the larger the multiplier effect. Also, the larger the amount spent in the local economy in each round, the larger the effect.

In this report, I have attempted to measure and document all the ways the university has an economic impact in the local Bay Area economy and beyond. In preparing this report, I was fortunate to be able to make extensive use of the university’s own data (see Appendix A for a list of those SFSU staff persons who have made generous contributions of their time and attention in helping me obtain the necessary data). I was alone in conducting the research and analysis of these data, and am solely responsible for any errors or mistakes contained in this report.


2. SFSU Revenues and Expenditures

A. 2002-2003 General Operating Revenues and Expenditures
This sub-section focuses on annual operating revenues and expenditures. Table 1 lists SFSU’s revenues by major source for the 2002/2003 fiscal year. It shows that the university brought in a total of just more than $341 million last year. The largest single portion of this, $144 million (42% of the total), came in the form of General Fund revenue from the State of California. Student Fees, at $59 million, made up the second largest category, followed by Research Grants and Contracts, at just under $50 million. Other large revenue sources were State and Federal aid to students ($32 million), Sales to the Franciscan Shops bookstores ($17 million), the College of Extended Learning ($13 million), the SFSU Foundation ($12 million), and a number of other units that collectively totaled around $15 million.

Table 1: SFSU Source of Revenue, 2002-2003
Source
Total Revenue
Percent
of Revenue
State Government (General Fund)
$ 144,047,658
42.2%
Student Fees
$ 59,422,584
17.4%
Research Grants and Contracts
$ 49,866,300
14.6%
State and Federal Aid to Students
$ 31,574,943
9.3%
Franciscan Shops Inc.
$ 16,910,000
5.0%
College of Extended Learning
$ 12,732,854
3.7%
SFSU Foundation
$ 12,071,465
3.5%
Other
$ 14,574,536
4.3%
Total Revenues
$ 341,200,340
100.0%


Table 2 below shows the use of these funds at SFSU during 2002-2003. As can be seen, employee compensation for salaries, wages, and benefits at $165 million is the largest use of funds (more than 48%). Spending on goods and services totaled $145 million (at around 43%), and the remaining $31 million were paid out to students in the form of financial aid.

Table 2: SFSU Expenditures, 2002-2003
Source
Total Expenditure
Percent of Expenditure
Employee Compensation*
$ 164,507,893
48.2%
Goods and Services
$ 145,117,504
42.5%
Financial Aid to Students
$ 31,574,943
9.3%
Total Expenditures
$ 341,200,340
100.0%

*Includes all wages, salaries and benefits

All figures reported above are for annual general operating revenues and expenditures and do not include revenues and spending on large capital improvement and construction projects. Figures for this will be presented in Section 3 of this report. The also do not include (except for tuition and fees, and some bookstore sales) the total amount of personal spending by students, the subject of Section 4.

The remainder of this section will highlight in more detail, a few special features of the economic contributions made at SFSU that, from an accounting standpoint, have already been included in the annual operating figures cited above. Faculty researchers at SFSU have dramatically increased the amount of grant and contract funding over the past decade. In the last few years, the SFSU Foundation has stepped forward to play a significant role in providing much needed housing for SFSU students, staff, and faculty. Finally, when the university contracts to purchase goods and services from vendors, a significant portion of this is in the form of relatively small contracts with local businesses.


B. Externally Funded Grant and Contract Research
Research activities are a major aspect of SFSU's educational mission, and the scholarly contributions of its faculty to academic knowledge in general are substantial and widely varied. There is also a key economic impact to such research. Much of is externally funded through grants and contracts that are funded from various levels of government, foundations, and other non-profit organizations. Table 1 shows that in 2002-2003, nearly $50 million dollars was received by SFSU for such externally funded research. Almost all of this funding comes from sources outside of the local economy, and most of it is spent directly in the local economy, on either employee compensation for faculty researchers, staff, and graduate students, or on contracts with vendors for goods and services, many of which are located in the Bay Area. As noted before, funding received from outside sources and spent within the local economy has a far greater economic impact on the local economy than funds both received and spent locally.

Chart 1 below shows the level of externally funded grants and contracts awarded to SFSU since 1993. As can be seen, the campus has experienced a substantial increase in this source of funding, particularly since 1998-1999. Ten years ago, the campus brought in just $13.5 million in awards. This past year, it brought in a projected $49.9 million.

Graph of SFSU Grants and Contracts Awarded


C. Innovative Housing Solutions at SFSU
The availability of affordable housing is of vital concern at a campus located in one of America’s most expensive metropolitan areas to live in. In recent years, the SFSU Foundation, an auxiliary of the university, has taken an innovative approach to try and address the challenge of providing more affordable housing for SFSU students, faculty, and staff. Leveraging its own financial resources through the capital market, the Foundation was successful in securing funding for, constructing, and now operating a large new student housing complex. The Village at Centennial Square, a $47.5 million capital project, with 192 apartment units housing more than 750 students, opened on campus in 2001.

Also in 2001, through similar financial means, the Foundation purchased an additional 180 apartment units of existing housing from the Park Merced Corporation on a site immediately adjacent to the university. Units in this apartment and townhouse complex, called University Park, are rented to students, faculty, and staff, as well as to members of the community.

D. Contracts With Private Sector Providers of Goods and Services
Above, Table 2 showed that just more than $145 million of the university’s annual expenditures were for goods and services, much of these provided by private sector businesses. Table 3 below breaks this down further, showing the amount of goods and services purchased by various units on campus. As can be seen, the Central Administration purchases just over half (54%) of all goods and services purchased by campus units. A substantial portion of grants and contracts expenditures went towards purchase of goods and services, $34.6 million in all. The Franciscan Shops, primarily operating the campus bookstore, purchased another $14.5 million in goods and services.

Table 3: SFSU Contracts for Goods and Services by Size of Contract 2002-2003
SFSU Unit
Total Expenditure
Percent of Expenditure
Central Administration
$ 78,202,649
53.9%
Research Grants and Contracts
$ 34,636,991
23.9%
Franciscan Shops Inc.
$ 14,489,000
10.0%
SFSU Foundation
$ 9,976,798
6.9%
Other
$ 7,812,066
5.4%
Total
$ 145,117,504
100.0%

A closer examination of the records for goods and service contracts between the Central Administration and private sector businesses suggests that many of these contracts were entered into with small local businesses and were for relatively smaller amounts. Table 4 below breaks down about $74 million worth of these contracts between the Central Administration and private contractors according to the size category of the contracts. As can be seen, most goods and services contracts were relatively small. For instance, 750 of the contractors (about 45% of the total) had contracts with SFSU totaling under $10,000. More than 90% (1,492) of the contractors had contracts with SFSU totaling under $100,000. Visual examination of the names of these contractors suggested that most of these firms were local Bay Area businesses. As explained above, when dollars are spent within the local economy they have a far greater local economic impact than when they are spent beyond the local area.

Table 4: Contracts for Goods and Services by Contract Size 2002-2003
Contract Size
Number of Contractors
Total Value of Contracts
$10,000 - $19,999
750
$ 11,250,000
$20,000 - $49,999
559
$ 19,565,000
$50,000 - $99,000
183
$ 13,725,000
$100,000 - $119,000
42
$ 4,620,000
$120,000 - $149,000
38
$ 6,080,000
$150,000 - $199,000
45
$ 7,875,000
$200,000 - $219,000
6
$ 1,260,000
$220,000 - $249,000
5
$ 1,175,000
$250,000 - $299,000
5
$ 1,375,000
$300,000 and above
20
$ 7,000,000
Total
1653
$ 73,925,000

 

3. SFSU Capital Spending Projects

The figures presented in the last section are for the annual operating revenues and expenses for SFSU. In addition to this annual flow of spending into the local economy, the campus also spends each year on long-term capital projects. For example, construction costs associated with such building projects as the construction of Village at Centennial Square, or the New Corporation Yard were not included in the earlier figures. Most of these capital spending projects were funded through taxpayer approved, State of California education bonds, which is an entirely separate funding source from the State's General Fund sources earmarked for annual operating expenditures. As noted above, construction of the Village at Centennial Square was independently financed through the SFSU Foundation.

Table Five below lists all of the major capital spending projects completed on the campus since 1990. As can be seen, almost $250 million has been spent in total, both for the construction of new buildings and the renovation and retrofitting of existing buildings. This translates to an average annual capital spending level of just over $19 million.

Table 5: SFSU Capital Spending Projects (Bond Funded) 1990-2003
Project
Year Completed
Project Cost
Residence Apartment Building Repairs current
current
$ 17,600,000
Seismic Upgrade & Renovation of Hensill Hall
current
$ 20,310,000
Dining Center Addition
2003
$ 850,000
Seismic Upgrade to Psychology Building
2002
$ 5,175,000
New Village at Centennial Square
2000
$ 47,456,000
Renovation & Addition Student Union
2000
$ 18,507,000
Renovation of Tiburon Laboratory Building
1999
$ 1,750,000
New Corporation Yard/Central Plant &Utilities
1997
$ 28,445,000
Seismic Upgrade Fine Arts Building
1996
$ 562,000
Seismic Upgrade Dining Center
1996
$ 555,000
Renovation of Elevators, Ward and Park Halls
1996
$ 771,000
Seismic Upgrade Administration Building
1995
$ 11,137,000
Renovation & Addition Burk Hall
1995
$ 17,372,000
Falling Hazards (Seismic)
1994
$ 320,000
New Humanities Building
1994
$ 28,302,000
Seismic Upgrade Parking Structure
1994
$ 5,405,000
New Children's Center
1994
$ 3,210,000
Correct Life Safety
1992
$ 4,030,000
Remodel and Addition Fine Arts Building
1992
$ 16,695,000
New Residence Apartment Building
1990
$ 20,496,000
Total Project Costs
$ 248,948,000
Average Annual Project Costs
$ 19,149,846

 

 

4. Spending By Students in the Local Economy

The figures presented so far only capture the impact of spending by SFSU as an institution. They do not factor the impact of the spending by students themselves in the local economy. The SFSU Office of Financial Aid estimates that a full-time undergraduate student living off-campus spends approximately $16,250 during the two semesters of the nine-month academic year. This includes expenditures on tuition and fees, books, room and board, transportation, and personal expenses. With more than 28,000 full and part-time undergraduate and graduate students, the total spending by all these SFSU students through the course of the year has a substantial economic impact.

Table 6 below estimates total spending by all SFSU students in each of the two semesters of the 2002-2003 academic year. These estimates were adjusted to account for the different spending patterns of graduate and undergraduates, full-time and part-time students, and students living on-campus, off-campus and with parents. As can be seen, student spending is sizable. At around $460 million total during the academic year, this spending is approximately $120 million higher than total spending by the university as a whole ($341.2) in 2002-2003.

Table 6: SFSU Total Student Spending 2002-2003
 
Fall 2002
Spring 2003
Total
Student Enrollment *
28,378
27,877
28,128 †
 
Student Expenditures
Student Fees
$ 29,975,897
$ 29,446,687
$ 59,422,584
Books and Supplies
$ 17,111,934
$ 16,809,831
$ 33,921,765
Room and Board
$ 135,788,730
$ 133,391,445
$ 269,180,175
Personal
$ 15,125,474
$ 14,858,441
$ 29,983,915
Transportation
$ 34,053,600
$ 33,452,400
$ 67,506,000
Total Spending
$ 232,055,635
$ 227,958,804
$ 460,014,439

* Includes all Full and Part-time, Undergraduates and Graduate Students
Average

As argued earlier in this report, the spending impact of dollars coming from outside the local economy has the greatest economic impact on the local economy. While most SFSU students come from the immediate Bay Area, a significant number come from outside of it, and therefore, spending by these students is of special interest. SFSU attracts a substantial number of international students. Foreign visa holders, refugees, and first generation immigrants comprise a total of 5,333 students out of SFSU’s 28,128 total students (about 19%).

Table 7 below shows the spending contribution to the local economy of these international students. As can be seen, the spending impact of international students alone is significant, at more than $86 million total for the entire academic year.

Table 7: SFSU International Student Spending 2002-2003 *
 
Foreign
Visa Holders
Refugees
& Immigrants
Total
Student Enrollment
2,169
3,164
5,333
 
Student Expenditures
Student Fees
$ 4,488,426
$ 5,851,833
$ 10,340,259
Books and Supplies
$ 2,615,814
$ 3,815,784
$ 6,431,598
Room and Board
$ 20,757,330
$ 30,279,480
$ 51,036,810
Personal
$ 5,205,600
$ 7,593,600
$ 12,799,200
Transportation
$ 2,312,154
$ 3,372,824
$ 5,684,978
Total Spending
$ 35,379,324
$ 50,913,521
$ 86,292,845

* Projected from Fall 2002 semester enrollment
Includes all Full and Part-time, Undergraduates and Graduate Students

Another significant source of student spending of dollars from outside the local economy comes from is American students who are residents of places beyond the Bay Area. This includes out-of-state students, as well as students from counties outside of the nine-county San Francisco Bay Area. Altogether, there are 6,364 of these students. Table 8 below shows the spending contribution to the local economy of these non-Bay Area students. As can be seen, their spending impact is considerable, at about $102.4 million total for the entire academic year.

Table 8: SFSU Non-Local Resident Student Spending 2002-2003 *
 
Rest-of-California
Out-of-State
Total
Student Enrollment
5,841
523
6,364
 
Student Expenditures
Student Fees
$ 10,801,941
$ 971,844
$ 11,773,785
Books and Supplies
$ 7,044,246
$ 630,738
$ 7,674,984
Room and Board
$ 55,898,370
$ 5,005,110
$ 60,903,480
Personal
$ 14,018,400
$ 1,255,200
$ 15,273,600
Transportation
$ 6,226,506
$ 557,518
$ 6,784,024
Total Spending
$ 93,989,463
$ 8,420,410
$ 102,409,873

* Projected from Fall 2002 semester enrollment
Includes all Full and Part-time, Undergraduates and Graduate Students


SFSU students are a diverse lot in terms of gender and ethnicity. Table 9 below breaks down the SFSU student body according to gender, ethnicity, and undergraduate/graduate status.

Table 9: SFSU Student Characteristics 2002-2003 *
 
Females
Males
Total
Undergraduates
12,205
8,623
20,828
Native American
89
49
138
African American
793
465
1,258
Chicano, Mexican American
805
519
1,324
Hispanic
760
491
1,251
Asian
2,538
1,817
4,355
Filipino
1,226
840
2,066
Pacific Islander
93
76
169
White-Non Hispanic
3,024
2,194
5,218
Other †
2,877
2,172
5,049
 
Graduates
5018
2532
7,550
Native American
26
19
45
African American
234
101
335
Chicano, Mexican American
188
98
286
Hispanic
227
101
328
Asian
677
345
1,022
Filipino
208
94
302
Pacific Islander
13
10
23
White-Non Hispanic
2,074
958
3,032
Other †
1,371
806
2,177

* Projected from Fall 2002 semester enrollment
Includes no response, declined to state, non-resident alien, transitory, plus all other responses

 

5. Total Persons Employed at SFSU

SFSU itself employed 3,333 persons during the Fall 2002, while the Franciscan Shops and the SFSU Foundation additionally employed another 157 employees. The 3,333 persons employed by SFSU itself received a total of $160 million in total compensation (including all salary, wages, and benefits), which translates into an average compensation level of $48,002 per employee.

Table 10 below breaks down total employment at SFSU by Faculty and Staff positions, further sub-dividing these by type of employment in each. As can be seen, Faculty positions (1,738 in total) make up 49.8% of total employment, about 23% of which is comprised of 807 permanent Tenured and Tenure Track faculty positions. Of the 1,752 Staff positions (50.2% of the total), the largest sub-category is Technical and Paraprofessional positions (713, or 20.4% of the total). Management positions (154 in all) make up only 4.4% of total employment.

Table 10: SFSU Employment Fall 2002
 
Number
Percent of Total
Faculty
1,738
49.8%
Tenured and Tenure Track
807
23.1%
Lecturers
915
26.2%
Counselors
16
0.5%
 
Staff
1,752
50.2%
Technical and Paraprofessional
713
20.4%
Clerical and Administrative
319
9.1%
Academic Support
181
5.2%
Management
154
4.4%
Franciscan Shops
137
3.9%
Service and Maintenance
116
3.3%
Health Care
57
1.6%
Skilled Craft
41
1.2%
SFSU Foundation
20
0.6%
Public Safety
14
0.4%
     
Total
3,490
100.0%

Like SFSU students, the Faculty at SFSU is a diverse lot. Table 11 below breaks down the 807 Tenured and Tenure Track permanent positions according to gender and ethnicity.

Table 11: SFSU Faculty Characteristics 2002-2003
  Number Percent of Total
Male 464 57.5%
Female 343 42.5%
 
African American 42 5.2%
Native American 8 1.0%
Asian American 111 13.8%
Filipino 12 1.5%
Chicano, Mexican American 39 4.8%
Other Non-White 29 3.6%
Pacific Islander 1 0.1%
White-Non Hispanic 564 69.9%
 
Total Tenured and Tenure Track 807 100.0%

 

6. Multiplier Effects of SFSU Spending in the Local Economy

As explained in the introduction to this report, the total economic impact SFSU exerts on the rest of the Bay Area economy results from both the direct economic activity generated by the university itself, as well as the indirect and induced level of economic activity that occurs elsewhere in the economy in response to direct spending and employment at SFSU. For example, when SFSU employees spend part of their income in the local economy, this indirectly supports jobs and economic activity elsewhere in the regional and state economy. Similarly, when SFSU directly purchases goods and services from local vendors and other suppliers, this supports jobs and further spending elsewhere in the regional and state economy. Urban economists refer to this process as the “multiplier effect,” as every dollar of direct spending is re-spent an average of several times within the regional economy so that the total economic impact is a multiple amount of the original direct expenditures. Similarly, each job at SFSU indirectly supports a multiple amount of other jobs in the regional economy as income from SFSU employment is re-spent several times. To estimate such multiplier effects, I used the 1997 IMPLAN multipliers for spending and employment, developed by the U.S. Department of Agriculture, specifically for the San Francisco Primary Metropolitan Statistical Area.

Table 12: Spending Multiplier Effects of SFSU and Student Spending 2002-2003
Type of Spending
Direct Spending
Multiplier
Indirect & Induced Spending
Total Direct, Indirect, & Induced Spending
 
SFSU Spending †
$ 320,788,282
1.72
$ 229,886,415
$ 550,674,697
Payroll
$ 164,507,893
1.67
$ 110,220,288
$ 274,728,181
Purchasing
$ 145,117,504
1.77
$ 111,740,478
$ 256,857,982
Construction
$ 11,162,885
1.71
$ 7,925,648
$ 19,088,533
 
SFSU Student Spending*‡
$ 387,063,855
1.59
$ 228,367,674
$ 615,431,529
 
Total Multiplier Effect
$ 707,852,137
1.65
$ 458,254,089
$ 1,166,106,226

Does not include student financial aid
* Does not include Tuition and Fees
Spending on books and supplies reduced by 80% of Franciscan Shop revenues

Table 12 above shows the spending multiplier effect of SFSU on the Bay Area Economy. As can be seen, the total of all direct, indirect, and induced spending in the Bay Area was more than $1,166 million in 2002-2003. The university's adjusted spending level of $ 320.8 million (student financial aid revenue was removed to avoid double-counting) was multiplied 1.72 times through the local economy to generate $ 550.7 million in total economic activity. I calculated an adjusted student spending level of $ 387 million. Student expenditures on fees, which were already counted as revenue for the university, were removed to avoid double-counting. Similarly, an estimated portion of student spending on books and supplies at the Franciscan Shops was also removed. This $ 387 was multiplied 1.59 times through the local economy, generating another $615.4 million in total economic activity.

Table 13 below shows the employment multiplier effects of direct spending by the university and its students. According to these estimates, a total of 15,152 jobs in the Bay Area are supported by the $707.9 million in direct spending by SFSU and its students.

Table 13: Employment Multiplier Effects 2002-2003
 
Direct Spending
Direct Jobs
Multiplier**
Indirect Jobs
Total Jobs
SFSU Spending †
$ 320,788,282
3,490
20.8
2,953
6,443
 
Student Spending *‡
$ 387,063,855
0
22.5
8,709
8,709
 
Total
Multiplier Effect
$ 707,852,137
3,490
21.7
11,662
15,152

Does not include student financial aid
* Does not include Tuition and Fees
Spending on books and supplies reduced by 80% of Franciscan Shop revenues.
** Employment Multiplier represents the total number of direct and indirect jobs generated for each $1 million in expenditures.

 

7. The Multiplied Effects of This Year's Budget Cuts at SFSU

Due to the current fiscal crisis of the State of California, the California State University system as a whole will be facing an estimated $410 million reduction in its level of State General Fund support in the 2003-2004 fiscal year. The Central Administration at SFSU estimates that its proportionate share of this system-wide cut will amount to around $25.6 million. However, the administration also expects that the impact of these cuts will be partly offset by expected revenue increases from a combination of higher student fees, and expected enrollment growth which will be partially funded. Accounting for this, the net effect on SFSU's overall budget is estimated to be just $9.4 million in 2003-2004.

Using an analysis similar to that in the last section, we can estimate the multiplier effects of these cuts on the overall local economy. As the university spends less on salaries, and purchases of goods and services, this will translate to less indirect and induced spending elsewhere in the Bay Area. Similarly, as students spend more of tuition and fees, this will leave less in their budget for spending on other goods and services, and this will translate to less indirect and induced spending elsewhere. Just as spending decreases by the university and its students will have indirect and induced effects, so too will employment elsewhere be affected by such cutbacks.

Table 14: Spending and Employment Effects of SFSU Budget Cuts 2003-2004
 
Direct Spending Cuts
Multiplier
Indirect & Induced Spending Reductions
Total Spending Reductions
SFSU Spending
$ 9,435,884
1.72
$ 6,764,290
$ 16,200,174
Payroll
$ 5,013,405
1.67
$ 3,358,981
$ 8,372,386
Purchasing
$ 4,422,479
1.77
$ 3,405,309
$ 7,827,789
 
SFSU Student Spending *
$ 8,562,416
1.59
$ 5,051,825
$ 13,614,241
         
Total Spending Effect
$17,998,300
1.66
$ 11,816,116
$ 29,814,416
 
 
Direct Job Loss
Multiplier
Indirect Job Loss
Total Job Loss
SFSU Spending
106
20.8
90
196
 
SFSU Student Spending **
0
22.5
193
193
 
Total Employment Effect
106
0.6
283
389

† * Same assumptions as in Table 12
‡ ** Same assumptions as in Table 13

Table 14 indicates that $9.4 million in SFSU budget cuts and $8.5 million in student fee increases will have a sizable impact on the local Bay Area economy. Once all the indirect and induced spending effects of these cuts are felt, the local economy will see almost $30 million in reduced economic activity. Table 14 suggests that the SFSU budget cuts will result in about 106 fewer jobs at the university itself. This, combined with the 90 fewer jobs from the reduced spending elsewhere in the economy, translates to 196 fewer jobs in total. In addition, the reduced spending by students on other goods and services due to higher fees at SFSU, will result in another 193 jobs lost. Altogether, these figures indicate that around 389 jobs will be lost in the entire Bay Area economy as a result of these cuts.

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