U.Va. Brings In More Than $1 Billion Locally, Generates More Than $600 Million From Out-Of-State Sources

June 28, 2007 — A new study by economists at the Weldon Cooper Center for Public Service found that the University of Virginia brings in $4.71 from outside the commonwealth for every $1 the institution receives in state support.

This study is the first to examine the University’s economic impact not only in the immediate Charlottesville area but also throughout the rest of the state. Researchers report that in fiscal year 2005 alone, U.Va. brought $622 million in out-of-state grants, out-of-state tuition, philanthropic support and graduate fellowships into Virginia. U.Va. received $132 million from Virginia’s General Fund in fiscal year 2005.

Locally, U.Va.’s impact on Charlottesville and Albemarle County exceeded $1 billion in 2005, according to the study. The figure represents total spending by all University units, components, employees, students and visitors. Local spending by the University itself, including payroll, totaled $791 million. The Academic Division spent more than three-fifths of this amount. The Medical Center and the closely related Health Services Foundation accounted for more than a third of local outlays.

The study, “The Economic Impact of the University of Virginia: How a Major Research University Affects the Local and State Economies,” was conducted by John L. Knapp, professor emeritus and senior economist at the Cooper Center, and William M. Shobe, director of business and economic research at the Cooper Center. The work was commissioned by the U.Va. President’s Office. 

This is the fourth economic impact study conducted by U.Va. The third was completed in 1990. Since then, the University has grown significantly: enrollment has increased by 12.5 percent, two research parks have opened, new classrooms and research facilities have been built, new athletic facilities have been added, and the football stadium has been expanded. Also, the number of full- and part-time salaried employees at the University has increased by 3,133.

Knapp, who also conducted the previous study, hopes the data the researchers uncovered can be useful in many ways, including “providing local leaders with a better understanding of U.Va.’s contribution to the community.”

The study is based on data from 2005, the most recent year available, and does not factor recent additions such as the John Paul Jones Arena into its findings.

Highlights from the report:

Statewide Impact

• In addition to the unquantifiable value U.Va. creates in fulfilling its educational, research and service missions, University operations directly generate annual in-flows of income of well over $600 million from sources outside the state.

• Tuition payments by out-of-state students to the University brought $166 million into the state in fiscal year 2005. Patients who come to Virginia for treatment at the Medical Center bring additional funds into the state.

• That same year, U.Va. attracted $456 million in out-of-state grants, philanthropic gifts and graduate fellowships to Virginia.

• The presence at U.Va. of talented graduate and undergraduate students draws productive researchers to the University, and the research creates value to the state’s economy in the form of new knowledge that leads to increased productivity and investment.

• In FY 2005, U.Va. faculty received almost $300 million in research funding from outside Virginia. On average, each full-time faculty position at U.Va. now generates in excess of $100,000 in sponsored research funding, most of which derives from sources outside the state.

• An increase in the number of corporate and development facilities in Virginia can be attributed, in large measure, to the access to necessary scientific and technical personnel, and the proximity to a university or research center is a significant factor in the decisions about where to locate such new facilities.

• Higher education is one of the important factors that led to Virginia’s receiving a “Best State for Business” award in 2006 by Forbes.com.

Local Impact

• Student spending in the Charlottesville area totaled $211.9 million in fiscal 2005.

• Spending by U.Va. visitors totaled $122.1 million in 2005 based on 1.6 million visitor-days. Visitors included: visitors of faculty and staff, students’ visitors, athletic-event season-ticket holders, Medical Center outpatients and patients’ families, conference attendees, attendees at Alumni Association events, prospective students and their parents, participants in the executive education programs run by the Darden School, participants in continuing medical education programs, presenters and attendees at the Virginia Festival of the Book, attendees at the Virginia Film Festival and participants in executive development programs run by the School of Continuing and Professional Studies.

• For every dollar attributable to the University that is spent locally, because of the multiplier effect, the ultimate local spending generated is $1.45.

• The University is the largest single employer in the Charlottesville metropolitan area, with 19,487 employees, or one-fifth of the area’s total non-farm payroll employment of 95,300, in 2005.

• The U.Va. Medical Center cared for 86,021 local residents on an outpatient basis in fiscal year 2005. In addition, the Medical Center provided a significant amount of indigent care to local residents: $11.8 million of inpatient care and $15.8 million of outpatient care.

• As a tax-exempt institution of higher education, the University pays no property taxes on real estate holdings used for academic operations. In 2005, however, the University of Virginia Foundation, a component unit of the University, paid $189,694 in real estate taxes to the city of Charlottesville and $1,149,487 to Albemarle County for properties such as the Boar’s Head Inn and research park buildings not used for academic purposes.

• Taxable real estate owned or rented by faculty, staff and students in the city of Charlottesville and Albemarle County was valued at $3.3 billion in 2005 and yielded $28.3 million in property tax revenues, divided nearly equally between the two localities.

For the study, the authors defined the “local area” as the Charlottesville Metropolitan Statistical Area (MSA), which has a population of 187,100, and includes the city of Charlottesville, and the counties of Albemarle, Fluvanna, Greene and Nelson.

(Note to Media: for more information, call John Knapp at (434) 982-5604, or contact him by email at jlk6a@virginia.edu. Or, contact William Shobe by phone at (434) 982-5376 or by email at shobe@virginia.edu.)