Growing the State Economy

For every dollar the state gives UT, the University gives back three. Sounds too good to be true. But true it is.

UT Knoxville's Center for Business and Economic Research measured the statewide economic impact of all the University's campuses and units, using 1992-93 as its baseline year. In a nutshell, what CBER found was

• The University of Tennessee gets less than a third of its annual operating budget from the state, about $313 million in 1992-93 (the year upon which this report is based).
• Total income from UT-related spending in Tennessee was more than $1 billion in 1992-93.
• The return on the state's investment was about $3 for every $1 appropriated.

The University's economic influence is felt in both short term and long term ways.

UT Martin's partnership with MTD Products is one of many cooperative arrangements that benefit Tennessee business and industry.

UT Medical Center in Knoxville plays a major role in the region's economy, as well as in the well being of its people.

UT graduates, such as these at UT Chattanooga, are a major resource for Tennessee.

Short Term

--UT itself generated about 86 percent of the $1.1 billion, or almost $919 million, through its payroll, other spending, and the multiplier process (the ripple effect when income is spent and respent).

--Spending by UT's 40,000 students at its campuses across the state created more than $55 million in income for merchants, wholesalers, and others who service their needs. The multiplier created about $50 million more, for a total of $105 million.

--Visitor spending generated income of more than $50 million.

Jobs, both those at the University and those in firms that supply goods and services to UT, its students, and visitors. UT spending supports 55,436 jobs in Tennessee.

--The statewide University employs 18,096 faculty and staff as well as 7,291 student employees, for a total of 25,387.

--The jobs created outside UT as a result of University spending are estimated at 22,956. This includes jobs created indirectly in firms that supply UT with goods and services and jobs created through the multiplier process.

--As UT students and visitors spend in the state economy, more jobs are created. Visitor spending is estimated to support 2,305 jobs, student spending 4,788 jobs.

Services the University provides, such as those through its hospitals and clinics.

--UT's two hospitals, University Memorial at Knoxville and Bowld in Memphis, generated a total economic impact of more than $207 million in 1992-93. The University also has clinics that provide professional services that might not be available from other sources.

--UT spent more than $67 million in 1992-93 for non-instructional programs beneficial to groups outside UT.

Sales taxes paid on purchases by employees, students, visitors, and businesses. Sales tax impact of UT employee, student, visitor, and business spending in 1992-93 totalled an estimated $31.3 million.

Out-of-state monies. UT attracts significant funds from outside Tennessee into the state economy. Chief sources are federal grants and student loans and tuition paid by students who aren't Tennessee residents.

--In 1992-93, UT received $13.3 million in federal appropriations, primarily for Agricultural Extension and the Agricultural Experiment Station.

--As of June 30, 1993, the federal government had provided $25.6 million for student loans at UT.

--Out-of-state students paid $15.2 million in tuition in 1992-93 in addition to the regularly assessed maintenance fee for all UT students.

Long Term

Research. Sponsored research totaled a record $150.8 million in 1992-93, $10 million more than the year before. Research boosts economic development as it is converted into new products and services.

Assistance to state business, agriculture, governments, and other institutions.

--The UT Institute for Public Service responded to requests from each of Tennessee's 95 counties and 342 cities in 1992-93. These projects accounted for more than 3,800 person days of service with at least $99,960,906 of economic impact. In addition to these projects, 725 training programs were conducted resulting in 58,206 person days of training.

--UT's Institute of Agriculture literally spans the state, with extension offices in each of the 95 counties, 11 experiment stations, colleges of agricultural sciences and natural resources and of veterinary medicine in Knoxville, an arboretum in Oak Ridge, and four 4-H centers. Income from spending by the units of the Institute of Agriculture was more than $113 million in 1992-93.

Community service by the University, its employees and students. UT's designation as a land-grant institution obliges it to share its scholarly resources with the state, and UT has historically taken this charge seriously. Faculty who share their expertise with their communities and with not-for-profit organizations enrich themselves and others. Students also give generously of their time to community projects.

Gifts to the University. The market value of UT's endowment funds and other funds invested for the benefit of the University reached an all-time high of $291 million in 1993.

Cultural impact. The University shares such resources as its museums, art galleries, radio stations, libraries, theatres, musical and dance groups, athletic contests, lectures, and performances with state and community residents.

UT has a high profile in Tennessee. University people and programs are literally throughout the state. UT President Joe Johnson says he thinks taxpayers reap a healthy return from their investment in their state university.

"We have every reason to think the return will continue to increase each year. UT appreciates being part of a state that is attuned to the value of education in its economic development."

Matthew N. Murray, associate professor of economics, and David T. Mayes, research assistant, prepared the report, "Economic Impacts of the University of Tennessee System on the State of Tennessee: Academic Year 1992/93." Murray and Mayes are with the Center for Business and Economic Research in the UT Knoxville College of Business Administration.