Worth Every Penny
UW contributes $9.5 billion to Wisconsin's economy each year, study shows

By Erik Christianson

"Every state dollar invested in the UW System returns $9.50 in revenues." —UW System President Katharine C. Lyall

Investing in the University of Wisconsin System is money very well spent. According to a new study by NorthStar Economics measuring the university's most recent economic impact, the UW System contributes $9.5 billion to the state's economy each year-nearly a 10-fold return on Wisconsin's investment in the university.

The economic impact study also shows the UW System has created more than 150,000 jobs in communities across Wisconsin and generates $408 million in state tax revenues annually.

"These figures further confirm that the UW System is one of Wisconsin's main economic engines," said UW System President Katharine C. Lyall. "Every state dollar invested in the UW System returns $9.50 in revenues. The state's investment in the university is worth every penny."

The UW System's $9.5 billion economic impact is equal to 5.5 percent of Wisconsin's 2000 gross state product, according to the study. The operations of the UW System have created 150,699 jobs across the state-meaning 5.5 percent of Wisconsin's employment stems from university-related jobs, the study found.

Income and sales tax revenue generated by the UW System's presence in Wisconsin totals about $408 million annually, the study shows, equal to about one-third of the funding the university receives from the state.

The UW System's economic impact would rank the institution No. 350 on the Fortune 500's list of top performing companies, Lyall noted.

"We hope that legislators and the public understand that higher education is one of Wisconsin's major economic clusters," Lyall said, adding that the UW System alone graduates 25,000 professionals a year and produces research that leads to new companies and higher-paying jobs for Wisconsin.

With the state contributing about $1 billion to the university system's $3.3 billion annual budget, Wisconsin taxpayers are realizing a substantial return on their investment in the UW System, said David J. Ward, president of NorthStar Economics.

"That 10-fold rate of return is superior to just about any other kind of investment today," Ward said. "If Wisconsin wants to continue to grow in this new knowledge-based economy, a smart strategy would be more investment in educational opportunities through the UW System."

Ward noted that the state of Wisconsin is paid back for its investment in each UW System bachelor's degree recipient in less than 10 years through higher taxes paid by that graduate.

The $9.5 billion figure was determined by calculating the amount of in-state spending by UW System institutions, along with spending by UW employees, students and visitors. The amounts were multiplied by an average weighted sales multiplier to arrive at the total economic contribution.

The university's economic contribution to the state has increased in real dollars by 5 percent since the last study done five years ago, which showed the university's economic impact to be $8.2 billion. That growth is in spite of a downturn in the economy and a series of state budget cuts to the university that have resulted in 500 fewer faculty members at the UW than when the first study was conducted, Ward said.

State funding for the UW System was cut $58.9 million during the current biennium, a loss that represents state support for more than 8,000 students. In the budget repair bill adopted by the Legislature and signed by the governor earlier this year, 23 percent of cuts to state spending were taken by the university system, even though the UW represents less than 9 percent of the state's overall budget.