The Economic Value of the University of Mississippi
In February 2019, the University of Mississippi released a report measuring the economic impacts created by UM on the business community and the benefits the university generates in return for the investments made by its key stakeholder groups — students, taxpayers, and society.
For detailed information, see the Executive Summary, Full Report and Infographic. (All results reflect employee, student, and financial data, provided by the university, for fiscal year (FY) 2016-17.)
The value of the University of Mississippi (UM) stands out in several key areas:
- helping students increase their employability and achieve their individual potential;
- facilitating new research and company developments;
- drawing visitors and students to the state, generating new dollars and opportunities for Mississippi.
UM provides students with the education, training, and skills they need to have fulfilling and prosperous careers. Furthermore, UM is a place for students to meet new people, increase their self-confidence, and promote their overall health and well-being.
UM influences both the lives of its students and the state economy. The university supports a variety of industries in Mississippi, serves state businesses, and benefits society as a whole in Mississippi from an expanded economy and improved quality of life. The benefits created by UM even extend to the state government through increased tax revenues and public sector savings.
Economic Impact Analysis: Total Impact
UM added $2.9 billion in income to the Mississippi economy during the analysis year, equal to the sum of operations, research, and medical center spending impacts, the start-up and spin-off company impact, the visitor and student spending impacts, and the alumni impact. For context, the $2.9 billion impact was equal to approximately 2.6% of the total gross state product (GSP) of Mississippi. This contribution that the university provided on its own is as large as the entire Utilities industry in the state.
UM’s total impact can also be expressed in terms of jobs supported. The $2.9 billion impact supported 43,121 state jobs, using the jobs-to-sales ratios specific to each industry in the state. This means that one out of every 37 jobs in Mississippi is supported by the activities of UM and its students. In addition, the $2.9 billion, or 43,121 supported jobs, impacted state industries in different ways. Among non-education industry sectors, UM supported the most jobs in the Health Care & Social Assistance industry sector – supporting 13,496 jobs in FY 2016-17. These are impacts that would not have been generated without the university’s presence in Mississippi.
Operations Spending Impact:
- In FY 2016-17, the university employed 2,136 full-time and part-time faculty and staff (not including research and medical center employees), 92% of which lived in Mississippi.
- Total payroll at UM was $189.4 million.
- The university spent $167.7 million on day-to-day expenses related to facilities, supplies, and professional services (excluding research and medical center expenditures).
UM’s day-to-day operations spending added $181 million in income to the state during the analysis year. This figure represents the university’s payroll, the multiplier effects generated by the in-state spending of the university and its employees, and a downward adjustment to account for funding that the university received from state sources. The $181 million in added income is equivalent to supporting 2,589 jobs in the state.
Research Spending Impact:
- Research activities impact the economy by employing people and requiring the purchase of equipment and other supplies and services.
- Over the last four years, UM received 54 invention disclosures, filed 20 new patent applications, and produced 19 licenses.
- In FY 2016-17, UM spent $84.9 million on payroll to support research activities.
- This, along with $49.6 million in other research spending, created a net total of $117.7 million in added income for the state economy. This added income is equivalent to supporting 1,584 jobs.
Medical Center Spending Impact
- In FY 2016-17, UM spent over $1.5 billion on medical center operations. These expenditures added a net impact of $1.6 billion in added income to the state. This is equivalent to supporting 20,661 jobs.
Start-up and Spin-off Company Impact
- In FY 2016-17, UM start-up and spin-off companies added $18.5 million in income to the Mississippi economy, which is equivalent to supporting 524 jobs.
- Of this added income, $771.5 thousand was due to the start-up companies, with the remainder due to spin-off companies.
Visitor Spending Impact
- The off-campus expenditures of the university’s out-of-state visitors generated a net impact of $19.2 million in added income for the state economy in FY 2016-17.
- This $19.2 million in added income is equivalent to supporting 641 jobs.
Student Spending Impact
- Student spending generated $86.9 million in added income for the state economy in FY 2016-17, which supported 2,137 jobs in Mississippi.
- In FY 2016-17, UM alumni generated $905.1 million in added income for the state economy, which is equivalent to supporting 14,985 jobs.
The total investment made by UM’s students in FY 2016-17 amounted to a present value of $548.2 million, equal to $290.5 million in out-of-pocket expenses (including future principal and interest on student loans) and $257.6 million in forgone time and money.
In return for their investment, UM’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average UM bachelor’s degree graduate from FY 2016-17 will see an increase in earnings of $20,600 each year compared to a person with a high school diploma or equivalent working in Mississippi. Over a working lifetime, the benefits of the bachelor’s degree over a high school diploma will amount to an undiscounted value of $906.4 thousand in higher earnings per graduate. Altogether, UM’s FY 2016-17 students will receive $1.8 billion in higher future earnings over their working lives, as a result of their education and training at UM.
The students’ benefit-cost ratio is 3.3. In other words, for every dollar students invest in UM, in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $3.30 in higher future earnings. Annually, the students’ investment in UM has an average annual internal rate of return of 12.3%, which is impressive compared to the U.S. stock market’s 30-year average rate of return of 10.1%.
Total taxpayer benefits amount to $539.8 million, the present value sum of the added taxes and public sector savings. Taxpayer costs are $121.5 million, equal to the amount of state government funding UM received in FY 2016-17. These benefits and costs yield a benefit-cost ratio of 4.4. This means that for every dollar of public money invested in UM in FY 2016-17, taxpayers will receive a cumulative value of $4.40 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is 10.6%, which compares favorably to other long-term investments in the public and private sectors.
Altogether, the social benefits of UM equal a present value of $4.8 billion. These benefits include $4.4 billion in added income through students’ increased lifetime earnings and increased business output, as well as $311.4 million in social savings related to health, crime, and income assistance in Mississippi.
People in Mississippi invested a present value total of $840 million in UM in FY 2016-17. The cost includes all university and student costs. The benefit-cost ratio for society is 5.7, equal to the $4.8 billion in benefits divided by the $840 million in costs. In other words, for every dollar invested in UM, people in Mississippi will receive a cumulative value of $5.70 in benefits. The benefits of this investment will occur for as long as UM’s FY 2016-17 students remain employed in the state workforce.