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REGIONAL TRANSFORMATION
New study shows economic value of ECU to the state and region

March 24, 2015

By Kelly Setzer
ECU News Services


East Carolina University generates billions of dollars for North Carolina and achieves significant regional transformation, according to the first-ever statewide analysis of higher education’s impact on the economy.

The study revealed that payroll and operations expenses at ECU – together with construction funding and spending by students, visitors, and alumni – created a $2.8 billion impact to the state, equivalent to 42,798 jobs, during fiscal year 2012-13.

Leaders from ECU and local community colleges convened at an event on ECU’s campus Tuesday to spotlight findings from the study, which was commissioned by the University of North Carolina system, the North Carolina Community College System and the 36 campuses of North Carolina Independent Colleges and Universities in the state.

ECU Chancellor Steve Ballard said the findings demonstrate that ECU is following through on its commitment to the region. Eastern North Carolina alone saw a $1.8 billion impact from the university during the same fiscal year, based on the study.

“We are very happy with this report, which provides further evidence that we are successful in our mission of regional transformation and economic prosperity for eastern North Carolina,” said Ballard.

The study also describes the return on investment to students, society and taxpayers. For every dollar society spent on education at ECU during the analysis year, North Carolina communities will receive a $10.40 value for as long as the 2012-13 students remain active in the state workforce. Students and taxpayers see a 12.6 and 12.3 percent return on investment, respectively.
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ECU Provost Ron Mitchelson said the economic impact numbers reflected the university's commitment to state and regional transformation. (Photo by Cliff Hollis)

But shared goals among neighboring institutions were another major theme for leaders at Tuesday’s event.

“The theme of regional economic development will only strengthen at ECU as we engage in new programs like the Center of Excellence for Pharmaceutical Manufacturing and other private-public partnerships,” said ECU Provost Ron Mitchelson. “The size of our impact is well reflected in these numbers and they help to validate our on-going commitment to the region and to North Carolina.”

Locally, a $1.3 billion impact was observed in the eight-county proximity zone around ECU, which includes Edgecombe, Wilson, Martin, Pitt, Beaufort, Greene, Lenoir and Craven counties.

Included in this zone with additional economic influence are Lenoir Community College, Martin Community College, Craven Community College, North Carolina Wesleyan College, The University of Mount Olive, Barton College, Edgecombe Community College, Pitt Community College and Beaufort County Community College.

“Our area institutions are leaders in the state for offering students different pathways to education,” said John Chaffee, president of the NC East Alliance, a regional economic development agency. “Moving students from high school to the community colleges to the university; ECU is a key part of that – offering more online programs than any other institution in the UNC system – and it really helps us leverage talent regionally.”

Allen Scott of Trent Woods spoke at the event about his experiences with higher education in the region. His story demonstrates how partnerships and education resources can impact both individual lives and the workforce. He received an associate's degree from Craven Community College in 1985, then returned there in 2011 to prepare for an economic transition. After one semester, he transferred to ECU’s Bachelor of Science in Industrial Technology program and graduated in 2013. He is now a quality manager for Spinrite in Washington.

“ECU played a huge role in preparing me for the workforce,” said Scott. “Thanks to the ECU degree, I’m much more viable in the workplace and certainly less vulnerable to layoffs. I’ll always be grateful for this educational opportunity to improve my circumstances.”

Alumni like Scott have proven to make a substantial mark on the state. The study concludes that the accumulated contribution of ECU alumni employed in North Carolina amounted to $2 billion in added income to the state economy, equivalent to creating 31,460 new jobs.

Approximately 78 percent of graduate and undergraduate students at ECU come to Greenville from outside the eight-county proximity zone. Their spending on things like groceries, transportation and rent added about $141.4 million in income to the zone’s economy.

Conducted by Economic Modeling Specialists International (EMSI), the analysis was funded by the North Carolina Business Higher Ed Foundation, the NC Community Colleges Foundation, the University of North Carolina system (from non-state funds) and the 36 campuses of North Carolina Independent Colleges and Universities.

The full text of the UNC system report, along with statewide analysis, is available at: http://northcarolina.edu/economic-impact-2015.

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ECU engineering student Coriyon Arrington works in a biomedical instrumentation lab on campus. ECU's impact includes preparing a skilled workforce for area manufacturers. (Photo by Cliff Hollis)


An Impact in the Billions


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In fiscal year 2012-13, the $795.3 million in payroll and operations spending of ECU, together with the  construction spending and spending by students, visitors, and alumni, created $2.8 BILLION to the state, $1.8 BILLION to the eastern region, and $1.3 BILLION to the ECU proximity zone.  Click image for larger view.
East Carolina University generates $2.8 billion for North Carolina’s economy— dollars that make a mark on the state, eastern North Carolina, and our local area.

These dollars come from research and entrepreneurship and from students and visitors who come to our state.

In addition, ECU produces professionals for many fields important to our state, such as medicine, dentistry, nursing, teaching, engineering, technology, science, business, and the arts.

The added income these graduates will earn as a result of their educations rises into the billions.


  North Carolina Eastern Region ECU Proximity Zone
Income $2.8 billion $1.8 billion $1.3 billion (excluding start-up companies)
Percent of gross state product 0.6 percent 18 percent 5.6 percent
Equivalent number of new jobs 42,798 30,859 20,810



Return on Investment to Students, Society, and Taxpayers

Student Perspective

Students attending ECU during fiscal year 2012–13— our analysis year—paid a total of $189.8 million for tuition, fees, books, and supplies. They also passed up $526.3 million in income they could have earned had they been working instead of in school.

In return for the money students invest to earn their degrees, they will receive an estimated $2.1 billion in today’s dollars in increased earnings over their working lives.

This translates to a return of $2.90 in higher future income for every $1 that students invest in their ECU educations. The average annual return for students is 12.6 percent.

Societal Perspective

North Carolina as a whole will receive $10.2 billion in today’s dollars in added state income over the course of the students’ working lives. Communities will benefit from $1.6 billion in savings due to reduced crime, lower unemployment, and better health and well-being.
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For every dollar society spent on education at ECU during the analysis year, North Carolina communities will receive a cumulative value of $10.40 in benefits for as long as the 2012–13 students of ECU remain active in the state workforce.

Taxpayer Perspective

In fiscal year 2012–13, North Carolina taxpayers invested $294.1 million (excluding clinical dollars) to support ECU operations. The net present value of the added tax revenue stemming from the students’ higher lifetime incomes and the increased output of businesses amounts to $989.5 million. North Carolina’s public sector will save another $284.7 million due to a reduced demand for government-funded services.

Dividing benefits to taxpayers by the associated costs yields a 4.3 benefit-cost ratio. Thus, every $1 in cost returns $4.30 in benefits. The average annual return on investment for taxpayers is 12.3 percent.

Impact on the State and Regional Business Community

In fiscal year 2012–2013, ECU spent $524.6 million on payroll and benefits for 7,301 full-time and parttime employees and another $270.7 million on goods and services to carry out daily operations and research.

This initial round of spending creates more spending across other businesses throughout the state and regional economies, resulting in what is commonly referred to as multiplier effects. This study estimates these multiplier effects and reports the additional economic activity that is created by the initial spending of ECU.*

Impacts are reported in terms of total income, similar to gross regional product, and the corresponding number of jobs created.



* Our estimated economic impacts are conservative in that we directly take into account the fact that state and local dollars spent on the university could have been spent elsewhere in North Carolina and thus would have created some economic impacts regardless.

We account for these alternative uses directly in our analysis by (i) assuming that if funds were not directed to ECU, they would have been returned to the taxpayer and generated economic impacts through household spending on goods and services and (ii) subtracting the estimated economic impacts generated by these alternative uses from the estimated economic impacts of ECU.

Thus, we report a net impact of ECU that is above and beyond what would have occurred had the funds been returned to the taxpayer.



East Carolina University created $2.8 billion in added state income in FY 2012-13, equivalent to 42,798 jobs.


Impact of Spin-Off Companies

Spin-off companies include those created and fostered through programs at ECU that support entrepreneurial business development as well as companies created by faculty, students, or alumni from their work at ECU.

These impacts are important because they make up a significant part of the region’s business environment. The connection between ECU and its related spin-off companies is less direct than with start-up companies licensing ECU technology. For this reason, the impact of business spin-offs related to ECU is presented separately for the university in this analysis.

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State
The collective impact of spin-off companies related to ECU in fiscal year 2012–13 was $1.3 million in added state income, equivalent to 13 new jobs.

Regional

The collective impact of these spin-off companies in fiscal year 2012–13 was $926,100 in added regional income, equivalent to 10 new jobs.

Proximity Zone

The collective impact of these companies in fiscal year 2012–13 was $224,600 in added income in the eight counties closest to ECU, referred to as the economic proximity zone, equivalent to four new jobs.

Continue reading below chart.


State Impacts Created by ECU IN Fiscal Year 2012-13
  Income Jobs
Operations Spending Impact $389.2 million 5,473
Clinical Spending Impact $298.5 million 3,653
Research Spending Impact $36 million 540
Construction Spending Impact $8.2 million 365
Business Start-Up Impact $4.2 million 29
Student Spending Impact $41.1 million 750
Visitor Spending Impact $20.6 million 528
Alumni Impact $2.0 billion 31,460
Total Impact $2.8 billion 42,798

Operations Spending Impact

Payroll and non-pay expenditures to support ECU’s day-to-day operations (less clinical and research operations) amounted to $349.3 million and $197.2 million, respectively.

State

The net impact of the university’s operational spending in North Carolina during the analysis year was approximately $389.2 million in added income, equivalent to creating 5,473 jobs.

Region

In the eastern region, the net impact was approximately $460.8 million in added income, equivalent to creating 6,890 jobs.

Proximity Zone

And in the counties closest to ECU, the net impact was approximately $448.9 million in added income, equivalent to creating 6,779 jobs.


Clinical Spending Impact


In fiscal year 2012–13, the ECU Division of Health Sciences spent $210.5 million on clinical faculty, staff, and other costs to support its operations in North Carolina.

State

Across the state, the total net impact of these clinical operations was $298.5 million in added income, equivalent to creating 3,653 new jobs.

Region

The total net impact of these clinical operations in the region was $235.6 million in added income, equivalent to creating 2,919 new jobs.

Proximity Zone

Locally, ECU’s clinical operations had a total net impact of $220.6 million in added.



Continue reading below chart.

Regional Impacts Created by ECU IN Fiscal Year 2012-13
  Income Jobs
Operations Spending Impact $460.8 million 6,890
Clinical Spending Impact $235.6 million 2,919
Research Spending Impact $28.5 million 475
Construction Spending Impact $11.3 million 340
Business Start-Up Impact $1.0 million 10
Student Spending Impact $121.6 million 2,558
Visitor Spending Impact $38.2 million 1,162
Alumni Impact $904.8 million 16,505
Total Impact $1.8 billion 30,859

Research Spending Impact

ECU’s research activities boost the state economy by employing people and through the purchase of equipment, supplies, and services. They also enable knowledge creation through inventions, patent applications, and licenses. In fiscal year 2012–13, ECU spent $16.3 million on payroll to support research activities.
addedincomesmall
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State

ECU’s research spending generates $36 million in added income for the North Carolina economy, equivalent to creating 540 new jobs.

Region

In the region, ECU’s research spending generates $28.5 million in added income, equivalent to creating 475 new jobs.

Proximity Zone

Locally, research spending by ECU generates $26.3 million in added income, equal to creating 425 new jobs.

Construction Spending Impact


ECU built or renovated a number of its facilities during the analysis year. This spending generated a short-term infusion of income and jobs in the state economy.

State

The net impact of the university’s construction spending in fiscal year 2012–13 was $8.2 million in added state income, equivalent to 365 new jobs.

Region

The net impact of ECU’s construction spending in the region in fiscal year 2012–13 was $11.3 million in added income, equivalent to 340 new jobs.

Proximity Zone

ECU’s construction spending in fiscal year 2012–13 had a net impact of $9.4 million in added income locally, equivalent to 256 new jobs.


Continue reading below chart.

Proximity Impacts Created by ECU IN Fiscal Year 2012-13
  Income Jobs
Operations Spending Impact $448.9 million 6,779
Clinical Spending Impact $220.6 million 2,633
Research Spending Impact $26.3 million 425
Construction Spending Impact $9.4 million 256
Student Spending Impact $141.4 million 3,325
Visitor Spending Impact $29.6 million 925
Alumni Impact $408.2 million 6,466
Total Impact $1.3 billion 20,810

Business Start-Up Impact

ECU creates an exceptional environment that fosters innovation and entrepreneurship, evidenced by the number of ECU-related start-up companies in the state.

State

In fiscal year 2012–13, start-up companies related to the university created $4.2 million in added income for the North Carolina economy, equivalent to creating 29 jobs.

Region

Regionally in fiscal year 2012–13, ECU-related start-up companies created $1 million in added income for the economy, equivalent to creating 10 jobs.


ECUstudents

Student Spending Impact


State
Students from outside the ECU Proximity Region add approximately $141.4 million to the zone’s economy, equivalent to creating 3,325 new jobs.

About 12 percent of graduate and undergraduate students attending ECU come from outside the state. Some relocated to North Carolina and spent money on groceries, transportation, rent, and so on at North Carolina businesses.

The spending of these students during the analysis year added approximately $41.1 million in income to the North Carolina economy, equivalent to creating 750 new jobs.

Region


About 55 percent of graduate and undergraduate students attending ECU come from outside the region. The expenditures of these students during the analysis year added approximately $121.6 million to the eastern region economy, equivalent to creating 2,558 new jobs.

Proximity Zone

About 78 percent of graduate and undergraduate students attending ECU come from outside the proximity zone. The money these students spent during the analysis year added approximately $141.4 million to the zone’s economy, equivalent to creating 3,325 new jobs.

Visitor Spending Impact


Visitors to ECU brought new dollars to the economy through their spending at hotels, restaurants, gas stations, and other businesses.

State

Out-of-state visitor spending added approximately $20.6 million in income to the North Carolina economy, equivalent to creating 528 new jobs.

Region

In the region, visitor spending added approximately $38.2 million to the economy, equivalent to creating 1,162 new jobs.

Proximity Zone

In the local area, visitor spending added approximately $29.6 million to the economy, equivalent to creating 925 new jobs.


Alumni Impact


Over the years, students have gained skills and become more productive workers by studying at ECU. Today, thousands of these former students are employed in North Carolina.
More than 102,500 alumni live in North Carolina creating $2 billion in added state income.

State

The accumulated contribution of ECU alumni employed in North Carolina amounted to $2 billion in added income to the state economy, equivalent to creating 31,460 new jobs.

Region

In the region, these alumni contribute $904.8 million in added income to the economy, equivalent to creating 16,505 new jobs.

Proximity Zone

Locally, alumni contribute $408.2 million in added income to the economy, equivalent to creating 6,466 new jobs.



Study by Economic Modeling Specialists International 409 S. Jackson St., Moscow, Idaho, 83843 208-883-3500.