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Economic Impact Study 

Introduction

The analysis of the economic benefits of expenditures by EMU, its faculty and students on the local and state economy is based on an estimate of dollars spent in the Shenandoah Valley (defined as the area from Winchester to Staunton) and expenditures spent in the state for the fiscal year 2001-02. University expenditures include capital expenditures and operating expenses. Capital expenditures for 2001-02 should be representative, reflecting a normal level of maintenance and renovation projects, but no major construction projects. Student expenditures off campus for food, lodging and books and miscellaneous purchases are based on conservative estimates used by the Financial Aid Office in packaging student aid. The expenditures of the 246 full-time EMU faculty and staff are projected by the IMPLAN (Impact Analysis for Planning) software used by Ann Lang, chief economist at the Economic Information Services Division of the Virginia Employment Division (VEC).

Expenditures

Expenditure data for capital and operating expenses was supplied by the Business Affairs Division, with expenses for programs outside of Virginia deducted. Vendor codes were used to estimate the amount of purchasing from vendors within the Shenandoah Valley and the state. IMPLAN software estimates the impact of these expenditures on output, employment, and salaries and wages in the local and state economy in terms of direct, indirect and induced effects on the economy. When a group of students goes out for pizza, the increased demand for cheese (direct effect), creates an increased demand for milk from dairy farmers (indirect effect) and the dairy farmer has more money to spend on goods and services (induced effect).  A summary of the economic impact analysis by the VEC follows.

Expenditures in the Shenandoah Valley totaled approximately $19.6 million in 2001-02. Salary and wage expenditures adjusted for taxes were about half of the total at $9.4 million. University operating expenditures for food service, building construction, educational services, etc. were $7.2 million, and student expenditures of $3 million for food, rent, entertainment, books, utilities, etc. made up the rest. Expenditures by students from Virginia were not included in the total, assuming that they would have spent those dollars in Virginia even if they were not enrolled at EMU.

Expenditures in the state of Virginia were slightly higher, totaling $20.6 million for the year. Net salary and wages and student expenditures were the same, however university expenditures totaled $8.2 million.

Analysis of Economic Impact

The estimated $19.6 million in 2001-02 expenditures in the Shenandoah Valley generated $20.8 million in output (the total value of all goods and services produced) and supported an estimated 304 jobs in addition to the 246 staff employed at the university (see Table 1). The 304 jobs created an estimated $6.5 million in employee wages and compensation.

Table 1
Impact Analysis of Total Expenditures on the Shenandoah Valley

($Millions)

The estimated economic impact of the University, faculty, staff and student expenditures of $20.6 million on the Commonwealth of Virginia generated $25.0 million in output as illustrated in Table 2. The expenditures created an estimated 315 jobs in addition to 246 university employees, generating $8.2 million in compensation.

Table 2
Impact Analysis of Total Expenditures on the Commonwealth

($Millions)

The impact study conducted by VEC³⁷ concludes EMU “contributes to the economic vitality of the Shenandoah Valley as well as to the Commonwealth as a whole. Spending by university, employees and students support businesses in the local area. Various business sectors in the Shenandoah Valley and elsewhere are supported by university expenditures on operational and other non-wage activities. In addition, these direct expenditures generate added economic activity, further supporting employment and businesses. In total for fiscal year 2001-02, spending by Eastern Mennonite University and its faculty, staff and students in the Shenandoah Valley generated $20.8 million and supported 304 jobs in addition to those at the university. For the Commonwealth, expenditures generated $25 million in output and supported an estimated additional 315 jobs.”

2005 Update to Economic Analysis

The in-depth analysis of the economic impact of the University’s expenditures was not repeated in 2005, however it is possible to talk in a general way about the growth in expenditures over the period since 2002. Total expenditures increased from $24,366,380 in 2002 to $26,695,777 in 2005, an increase of $2,329,397 or 9.6% over the three year period.³⁸

The number of persons employed at EMU full-time³⁹ and living in the local area has increased from 246 in 2001-02 to 271 in 2004-05. Sixty-one percent of EMU’s total expenditures, or $16,271,986 was salaries and benefits which have a direct effect on the local economy, as well as an indirect effect through additional jobs created by the demand for consumer goods and services.

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