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.
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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