Direct Economic Impact

Direct Economic Impact = Employee Spending + University Purchases +
Capital Expenditures + Student Spending + Visitor Spending

Data were obtained from two sources: Integrated Postsecondary Education Data System (IPEDS), which is maintained by the U.S. Department of Education, and the institutions themselves. All IPEDS data used in the present study is from the 2021-2022 academic year.

Employee Spending

Data on employee spending was obtained from IPEDS. It was assumed that all employee compensation is new to the region. In the IPEDS data set, faculty and staff compensation fall under the spending categories “Total Expenses-Salaries and Wages” and “Total Expenses-Benefits”. 

Methodology

Methodology

University Purchases

The IPEDS category “Total Expenses-All Other” was used as an estimate of total spending by the university for all goods and services purchases. 

Capital Expenditures

Investment spending data (annual spending on buildings, equipment, etc.) was obtained from the member institutions. 

Student Spending

Student Spending = (Off-campus Students) x ($10,330) +  (On-campus Students) x ($5,437)  + (Graduate Students) x ($22,156)

First, data on student enrollments, broken down by graduate and undergraduate levels, were obtained from IPEDS. Second, data on the percentages of undergraduate students living on-campus were obtained from the member institutions. I assumed that all graduate students lived off-campus. Third, per student spending data were obtained from an economic impact study prepared for the University of Maryland (Impacts of the University of Maryland, College Park, June 2008). 

Visitor Spending

To obtain an estimate of visitor spending, data on visitors were obtained from member institutions. Visitor attendance was disaggregated by day visitors and overnight visitors. It was assumed that 20% of day visitor spending is new to the region, but that all overnight visitor spending is new to the region. Data on the average amount spent by a university visitor was also obtained from the 2008 University of Maryland report. According to this report, the average amount spent by a day visitor was $75 (adjusted to $102), and the average amount spent by an overnight visitor was $441 (adjusted to $600).

Using the above information, visitor spending was estimated as follows:

Visitor Spending = (Day Visitors x 0.2) x ($102) + (Overnight Visitors) x ($600)

Induced Spending

Induced and total economic impacts were estimated as follows:

Total Economic Impact = Direct Spending x Multiplier and Induced Spending = Total Economic Impact - Direct Spending.

The total number of jobs created was estimated using the following equation:

Jobs Created = Direct Spending (in millions of dollars) x Jobs Multiplier

Alumni Spending

Data on the number of alumni residing in Maryland were obtained from the member institutions. Income data were obtained from the U.S. Census Bureau. It was assumed that only 20% of alumni living in Maryland were living there because of the presence of their alma mater.

Given the above assumptions, alumni spending was estimated as follows:

Alumni Spending = (Alumni x 0.2) x Income