October 1, 2009 — Every dollar spent by the Commonwealth of Virginia on higher education produces more than $13 in job-creating economic activity, says a new study conducted by the Weldon Cooper Center for Public Service at the University of Virginia.
Each higher education dollar also results in $1.39 in increased tax revenues that flow back to the state's coffers. The study was released today at the Virginia Summit on Economic Competitiveness and Higher Education in Richmond, sponsored by the Virginia Business Higher Education Council.
The study is the first comprehensive analysis of the economic impact of Virginia's public higher education system. The study also estimated the projected impact of the proposal by the council's Grow By Degrees campaign to award 70,000 cumulative additional associate, bachelor's, and graduate degrees in Virginia by 2020.
As chairman of the higher education council, W. Heywood Fralin, a member of the U.Va. Board of Visitors, helped launch the initiative in June. The study's key findings are that public higher education is responsible for:
- $9.5 billion annually in purchases of goods and services in the Commonwealth
- $24 billion in annual contribution to the state's gross domestic product (GDP) – 6.2 percent of Virginia's total GDP
- 144,550 jobs created by higher education operations
- $2.5 billion in annual tax revenues generated for Virginia.
"The value the Commonwealth receives for its higher education investment is enormous," said U.Va. Rector John O. Wynne, a member of the council's executive committee. "In fact, one of the study's most important findings, perhaps the most important finding, is that the tax revenue produced by the state's public higher education system considerably exceeds the amount the state spends on that system."
The study is based on 2007 economic data, and all numbers are expressed in 2007 dollars. The study measured the impact of higher education expenditures as well as the economic benefits that flow from investing in human capital (the increased earning power and spending by college graduates). Copies of the study are available upon request. Among other key findings:
- $1.58 billion in Virginia GDP is generated by the spending that higher education produces in Virginia by persons and entities located outside the state
- $588 million in Virginia GDP is generated by higher education research and development programs
- $1.436 billion in Virginia GDP is generated by the university medical centers.
According to the Grow By Degrees Web site, the goal of awarding 70,000 cumulative additional degrees must come through more sustained state investment, innovation in how education is delivered and flexibility in how colleges and universities are managed. If the goal is attained, the Cooper Center study estimates the economic results to be:
- $18 billion more in Virginia GDP
- $16 billion in increased personal income for Virginians
- $1.9 billion in new tax revenues for state government.
In addition to the release of the study findings, the summit featured major addresses on higher education by both nominees for governor, State Sen. R. Creigh Deeds, the Democratic candidate, and Robert F. McDonnell, former Virginia attorney general, the Republican candidate.
Gov. Timothy M. Kaine delivered opening remarks. Addressing the importance of higher education to state economic development were former Virginia governors Gerald Baliles, director of the Miller Center of Public Affairs at U.Va, and George Allen; Robert Ehrlich, former governor of Maryland; and Michael Easley, former governor of North Carolina.
The Cooper Center plans to release a second report this month looking at a broader range of economic and social benefits that result from educational investment, including the private return to individuals; enhancements to life circumstances, such as improved health; community benefits, such as reduced crime; and economic benefits that stem from industrial attraction, entrepreneurial activity and innovation.
About the Grow by Degrees Coalition
The coalition comprises business, community, education and economic development leaders and organizations from throughout Virginia. Though they reflect a variety of perspectives and backgrounds, coalition members share a conviction that Virginians, regardless of income, should have access to the broader economic horizons opened by a college education. They also share a belief that only a sustained program of investment and innovation in higher education – embodied in state law and in the business plans of our educational institutions – will make Virginia a national and international leader in attracting new business investment, research grants, and excellent job opportunities in the new economy.
About the Virginia Business Higher Education Council
The council was founded in 1994 by Virginia business leaders on the principle that the prosperity of Virginia and the well-being of its citizens is fundamentally tied to access to a strong system of public colleges and universities. A nonprofit, nonpartisan partnership between Virginia's business community and higher education leadership, its mission is to enhance the performance of Virginia's public colleges, universities and community colleges and their funding by state government so they can produce the greatest possible positive impact on Virginia's economy.