Study finds University adds $8.6 billion to MN economy

The University-sponsored study found the college generates $13.20 for every dollar the state invests.
March 01, 2011

The University of Minnesota generates $13.20 for every dollar of state funding it receives, according to a study released Monday that will be another tool for school officials in their continuing battle with the Legislature for increased support.
The University’s economic impact on the state totals $8.6 billion annually, according to a study by consulting firm Tripp Umbach, which the University contracted for the research. The money comes from a variety of sources, including the school’s research, inventions, hospitals, taxes and other day-to-day operational spending.
Thousands of visitors to the campus generate about $2 billion by spending money at local businesses, staying at hotels and renting cars, said Paul Umbach, whose consulting firm conducted the study.
The report will help the University better communicate to the Legislature and the state the value and return on investment the school provides, said University President Bob Bruininks.
“This is only one way to measure the impact and value of the University, but it’s a way of communicating that people understand,” he said. “It’s easier to understand than giving you 20 statistics about the University.”
Bruininks was quick to point out that the study is “incomplete” because it doesn’t factor in the University’s educational operations and the benefit of an educated workforce.
More than 10,000 Minnesota companies have been started by University alumni, according to the report, generating an additional $100 billion in revenues that aren’t factored into the University’s total value.
Umbach praised the University’s infrastructure and balanced research portfolio, saying that the school is well-positioned for future growth. But he warned that further investments are needed to continue attracting top faculty and students, and declines in state funding could hurt the University’s return on that investment.
“If the University continued to have major decreases of funding … at some point things would tip over, and the University would lose a lot of its impact,” he said. “By the time that happens, it’s too late.”
The study was conducted at a cost of $48,000 by Tripp Umbach, which is based in Pennsylvania. Vice President for Research Tim Mulcahy, who oversaw the study, said the University chose an outside consultant to get an objective, credible view of the University’s impact.
Mulcahy said the University will take the model used in the study and continue to use it in future years with updated numbers.
Tripp Umbach has conducted similar studies at about 150 colleges nationwide, including the University of Michigan, Penn State University and Ohio State University. Umbach said the University of Minnesota’s impact was among the top two highest he’d ever seen, along with the University of Washington-Seattle.
A more detailed second part of the study that maps the University’s impact on a regional level will be released at next week’s Board of Regents meeting.

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