Economic Development and Higher Education

GVSU creates $730M ripple effect

May 1, 2015
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Based on an annual study examining the economic benefit of its presence in the region, Grand Valley State University generated roughly $730 million in the 2013-2014 academic year.

The Economic Impact on West Michigan report, released April 24, examines how GVSU campuses and facilities impact surrounding communities and analyzes the amount of spending and flow of dollars in the region due to the university’s presence.

The report covers Kent, Ottawa and Muskegon counties using a model developed by an economist at the W.E. Upjohn Institute for Employment Research.

For the Greater Grand Rapids-Holland-Muskegon region, GVSU’s economic impact comprises both direct and indirect factors, such as direct purchases of goods and services from regional suppliers, student spending, employment, income, wages and dollars spent in the community.

Matt McLogan, vice president for university relations, said since the analysis uses a model prepared by a third party, the economic impact reflects actual numbers rather than estimates.

“What this year’s report shows is Grand Valley State University’s presence in West Michigan produced more than three-quarters of a billion dollars’ worth of economic impact, by which we mean the turnover of dollars in the region caused by the presence of the university and the spending that occurs from our faculty, staff and students,” said McLogan.

“All of that produces … nearly 11,000 jobs in the private sector and businesses that provide goods and services to the university, faculty, staff and students. That is a pretty big number.”

Using data from the 2013-2014 academic year, the report indicated the university had an economic impact of roughly $730 million, which represents the increase for all businesses in the three metropolitan areas and excludes GVSU alumni activity.

“If the average taxpayer in West Michigan is wondering why it is useful to have a public university campus in the area, the reason is it is a factor for economic stability and for job retention and job creation — even for those taxpayers who don’t have a son, daughter, granddaughter or grandson in college,” said McLogan.

With more than 25,000 full- and part-time students enrolled at GVSU, the report indicated, during the 2013-2014 period, roughly $175 million was attributed to student expenditures in the area, while the salaries of more than 3,000 GVSU employees resulted in a total of $234.6 million.

Expenditures for GVSU during 2013-2014 were divided into categories: 44.8 percent was spent on academics, with instruction, research and academic support; 20.3 percent was spent on public service, student services and institutional support; 16.4 percent was allocated to financial aid; 9.4 percent was spent on auxiliaries, with housing and dining, bookstore and golf course; and 9.2 percent was spent on operation and maintenance of facilities.

GVSU’s revenue was derived from a number of sources: 72.4 percent from students; 13.2 percent from state-appropriated funds; 9.2 percent from federal funds; 4.5 percent from private gifts; and less than 1 percent from capital construction funds, according to the report.

The report also indicated new construction and renovations contributed more than $133.5 million to the local economy in 2014, resulting in roughly 2,900 trade and construction jobs. Construction is underway on a new $37 million housing building and an approximately $7.8 million recreation center, and the new 151,000-square-foot P. Douglas Kindschi Hall of Science will open in August.

During 2014, GVSU invested more than $133.5 million in construction projects, with roughly $36.7 million in Kent County, more than $580,000 in Muskegon County, and roughly $96.2 million in Ottawa County, according to the university’s 2014-2015 Accountability Report.

In response to the importance of analyzing the university’s economic impact on the tri-county area for more than a decade, McLogan said not only does the total economic impact number change, but also the return on investment fluctuates in a given year by the number of students who graduate and the professions in which they graduate.

“For many years, the three largest categories of graduates from Grand Valley are in the College of Education, the College of Business, or the Colleges of Nursing and Health Professions. Those still remain the three highest, but in each case this year there were more graduates in those programs than the year before,” said McLogan.

“It demonstrates Grand Valley is providing to the region teachers, education professionals, folks who go to work in business, public administration, and most particularly in the health professions where we have the largest year-over-year growth.”

Roughly half of more than 100,000 GVSU alumni are living or working in the West Michigan region, and nearly 90 percent of recent graduates are employed or pursuing advanced degrees, with 86 percent working in the state, according to the report.

“In Allendale, in Grand Rapids, in Holland, where we have actual university campuses or campus buildings, we have improved the neighborhoods, brought stability to the areas that host our campuses, and then provided economic impact and employment opportunities to people who live in this region,” said McLogan.

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