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Appalachian’s economic impact on region exceeds $500 million

BOONE— Spending by Appalachian State University, its employees and students, and visitors to campus had a $506 million total economic impact on the region in the 2006-07 fiscal year, according to a report compiled by the Center for Economic Research and Policy Analysis housed in Appalachian’s Walker College of Business.

Economics professors Todd L. Cherry, Michael McKee and Stephen W. Millsaps compiled the report. They created an economic model specifically for a five-county region comprised of Watauga, Ashe, Avery, Caldwell and Wilkes counties.

“The report formalizes what we should already know – that the university is a significant entity within this region’s economy,” Cherry said.

University expenditures, including salaries and wages, operation and maintenance costs, capital spending, and spending that supports special programs and events totaled $258 million. Students spent almost $97 million for off-campus housing; food, entertainment and recreation; and transportation. Visitors attending campus athletic and cultural events spent almost $7.8 million.

“There is no way to capture every dollar that is spent, but we did try to include major expenditures in categories such as real estate, wholesale and retail trade; construction and repair; recreation; and transportation, communication and utilities,” Cherry said. “We wanted to determine how much regional economic activity is due to the university’s presence.”

The direct economic impact of that spending, plus the indirect and induced impact as dollars re-circulate among local business and households in terms of salaries, goods and services, yields the $506 million total impact.

Direct economic impact is defined as expenditures on goods and services by the university to regional businesses. Indirect impact is defined as economic activity of regional businesses that arises from them providing goods and services to the university. The induced impacts are the result of spending by individuals who receive their incomes either from the university or from businesses that supply the university.

“Most universities tend to overstate their economic impact by including federal and state payroll taxes in their expenditures, which are revenues not spent locally,” McKee said. “We carefully avoided that by excluding expenditures that flow outside the region. We also conducted all of our analysis using a regional model that we developed for this purpose.”

The university also contributed $39 million in indirect business taxes to local governments.

Appalachian employs 2,632 people, and researchers estimated the university indirectly is responsible for an additional 2,489 jobs in the region, including restaurant workers, apartment managers and rental agencies, and others who support university activities. “You can imagine all the businesses that probably wouldn’t be here if it weren’t for the university’s presence. These are people who don’t work for the university but work for companies and businesses that support or supply Appalachian in some way,” Cherry said.

While universities add an economic benefit to the communities in which they are located, the authors of the report said it is important not to lose sight of an academic institution’s purpose.

“The mission of a university is to educate, conduct research and advance knowledge. That’s where the real return comes. The local economic impact of a university can be thought of as a nice by-product of that broader mission,” McKee said.

A copy of the report is available at http://www.news.appstate.edu/misc/economic-and-tax-revenue-impacts-2008.pdf (file size: 6.9mb).

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