UA's Economic Impact Tops $1.1 Billion
By Bill Gerdes
The University of Alabama had a total economic impact on the state during 1999-2000 of more than $1.1 billion, which includes $362.2 million in purchases, $295.3 million in UA payroll, $110.4 million in visitor expenditures and $333.6 million in student expenditures.
Those numbers are part of an economic impact study prepared and distributed by the Center for Business and Economic Research at the Culverhouse College of Commerce and Business Administration.
Presenting the study to reporters recently, UA President Andrew Sorensen said, "The University is an excellent investment opportunity for the state, providing a 6.1 percent annual rate of return on state appropriations."
Dr. J. Barry Mason, dean of the Culverhouse College of Commerce and Business Administration, said each home football game contributes more than $10 million to the Tuscaloosa economy, but the University’s impact goes far beyond the monetary impact.
"For example, the University enhances the quality of education, health care, the arts, music, literature - those things that are a necessary complement to our economic development initiatives. These aspects directly and indirectly improve the quality of life of all Alabamians and make our state a better place in which to work and live," Mason said. He also noted that UA attracts business and industry to the state and region.
Dr. Carl Ferguson, director of the Center for Business and Economic Research, said, "The University of Alabama is much more than a football team and a campus. It’s an investment for the state of Alabama, not a burden, not an expenditure."
Total UA direct expenditure for 1999-2000 was $498.5 million. The University spent almost $350 million on payroll and purchases, and students spent $148.5 million on off-campus housing, food, books, clothing and other items.
The state appropriated $119.1 million in 2000, which represents 32.7 percent of UA revenues, but only 23.9 percent of total UA expenditures for the year. The study said research grants and awards increased to $71.6 million from $67 million the previous year. The research awards component grew by 9.7 percent to $35.8 million.
Visitors to the University also contribute spending in addition to the $498.5 million. Football alone has a "visitor expenditure impact" of about $10.6 million per game, the study said. Basketball, baseball, gymnastics, swimming and other athletic events bring in another $4.2 million in visitor spending. Additional visitor spending is estimated at $17.2 million for a total visitor impact per year of $63.7 million. UA visitors attend athletic events, visit students and academic personnel, and make business calls to UA representatives. They also attend various activities such as honors day, commencement, homecoming, band competition, alumni weekends and reunions, conferences and seminars, lectures and other educational programs.
Part of what UA spent in 2000 went to vendors outside Tuscaloosa County, about 40 percent, according to the study, and about 10 percent of the University’s payroll went outside Tuscaloosa County. The study said after adjusting for out-of-county leakage and taxes, UA expenditures in Tuscaloosa County totaled $375.6 million.
The study said the direct UA expenditure "generates more rounds of spending in the county and state that are captured by multipliers determined through use of a model developed by the U.S. Department of Commerce’s Bureau of Economic Analysis." Using the multiplier, the total $498.5 million in UA expenditure, after adjusting for leakage and taxes, would result in an expenditure impact in Tuscaloosa County of $688.5 million, which climbs to $752.2 million when visitor spending is included. The expenditure impact is estimated to generate Tuscaloosa county and city sales tax revenues of about $19.1 million.
The study reported that the University had 3,477 full-time employees, 587 part-time workers, and 2,436 student workers in 2000. The study assumes that 30 percent of the class of 2000 will permanently live out of state and that state sales and income taxes will remain unchanged. Under those assumptions, the study said state appropriations to UA in 2000 were $119.1 million. After subtracting $19.7 million in direct taxes from the 2000 UA state appropriation, the net investment by the state amounted to $99.4 million. Over the course of their working lives, the members of the Class of 2000 who remain in Alabama would pay $415.2 million in taxes to the state, producing an annual rate of return on appropriations of 6.1 percent, according to the study.
UA's total economic impact on the state of Alabama in 2000 - $1.1 billion
Student expenditures - 37%
UA Payroll - 29%
Purchases - 26%
Visitor Expenditures - 8%
UA's total economic impact on Tuscaloosa County in 2000 - $752.2 million
Student expenditures - 30%
Purchases - 30%
UA Payroll - 27%
Visitor Expenditures - 10%
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