Economic productivity of UNM alumni also noted
A recently completed report of The University of New Mexico’s economic impact on the state of New Mexico reveals that one of its major employers is a significant contributor to the state’s economy.
The report, “The Statewide Economic Impact of the University of New Mexico,” looked at four major ways UNM contributes to the New Mexico economy by analyzing university operations, student expenditures, alumni human capital and technology transfer during fiscal year 2017. Combined, these four components produced approximately 24,985 jobs, $3.5 billion in annual employee compensation and $3.1 billion in economic output.
The study, made possible by support from the New Mexico Gas Company, an Emera Company, was commissioned by STC.UNM (STC), the University’s technology-transfer and economic-development organization. Dr. Kelly O’Donnell, research assistant professor in the UNM School of Public Administration, prepared the report. O’Donnell’s expertise focuses on research and analysis of local and regional economic development and economic impact.
The new study is the first of its kind to quantify the economic contributions of the entire UNM system—comprised of main campus, health sciences campus (medical school, cancer center, hospitals, medical group), and four branch campuses. The study also includes the impact on economic productivity of UNM alumni.
“Research universities are big economic drivers for their communities,” stated UNM President Garnett Stokes. “The learning and discovery missions that are central to these institutions are interconnected to the mission to drive economic and social prosperity. This report clearly shows that UNM is making a large economic contribution to our state.”
STC CEO Lisa Kuuttila added, “In addition to the economic impact of university operations, student expenditures and alumni human capital, the University has made great strides over the last several years in the area of entrepreneurship and innovation. We are a core component of New Mexico’s innovation ecosystem and an economic driver of high-tech industry in the state.”
The study used an input-output (I-O) analysis methodology, which is based on the theory that regional economies are composed of households, industries, and institutions. Each of these sectors purchases outputs and supplies inputs to the other sectors in an interdependent, complex system, or network. When there is a change in the network, for example in employment, income or productivity in one sector, other sectors connected to it will feel the impact.
Key report findings include the following:
- 47 percent of UNM’s annual revenue ($1.1 billion) came from out-of-state sources. Revenue originating outside the state produces a direct economic impact.
- 55 percent of UNM’s annual revenue came from patient revenue through Medicare and Medicaid payments.
- Clinical operations and general academic instruction are the two largest expenditures in university operations, contributing $2.1 billion in economic output.
- Spending by non-resident students contributed $78.5 million in economic impact.
- University alumni represent an investment in human capital because a college degree increases lifetime earnings potential. Fifty-eight (58) percent of UNM’s living alumni (184,000) have a New Mexico address. Each year, UNM alumni earn roughly $2.3 billion more than they would with just a high-school diploma and spent $982.4 million (42 percent of income) on locally produced goods and services and state and local taxes.
- Without UNM graduates’ increased earnings and spending, the New Mexico economy would have 7,313 fewer jobs, generate $2.6 billion less in wages and salaries, and produce $933 million less in economic output.
- In 2017, STC supported the creation of 12 startup companies. STC currently has 73 active startups, 40 (55 percent) of which are located in New Mexico. Between 2014 and 2017, the number of NM-based, STC-affiliated startups increased from 23 to 40. STC active startups generated 448 New Mexico jobs, $28 million in wages and salaries, and $56.1 million in total economic output.
- Innovate ABQ’s proposed bioscience business incubator, supported by a $1 million federal grant is expected to create 155 jobs and leverage $2.5 million in private investment.
- UNM Anderson School of Management’s Business Plan Competition has launched nearly 24 student startups.
- UNM Innovation Academy, the University’s entrepreneurial program for students, offers a curriculum and collaborative programs focused on students who are interested in innovation, creativity, and entrepreneurship. The program allows students to create new companies while completing their degree program. Its partnership with STC through the Rainforest Student Pitch Competitions has spun out 29 student startups. Its partnership with STC as co-PIs of a NSF-funded Innovation-Corps program started in fall 2017 to commercialize STEM technologies at UNM has created 4 active student startups.
Although the impact report focused on how UNM contributes to jobs creation, higher salaries, and workforce productivity in the state, other UNM benefits that improve quality of life could not be measured and monetized. For example, tourism-related activities generated from live performances at Popejoy Hall, lectures, academic conferences and athletic events that attract out-of-state visitors could not be captured with currently available data.
Community service activities and programs offered through UNM that add a great deal to the New Mexico economy, such as law clinics, healthcare clinics and access to art and culture, also could not be measured because UNM currently has no centralized inventory system and no uniform way to assess impact from such a diverse array of offerings. Other benefits to the community from an educated workforce, such as better health outcomes, greater social inclusiveness and civic engagement, and a lower crime rate, were outside the scope of this study, but no less important.
On August 28, UNM President Garnett Stokes held a news conference at the quarterly meeting of the UNM Rainforest Forum, held at the Lobo Rainforest Building, to announce the results of a UNM statewide economic impact study. Master of ceremonies for the event was STC CEO Lisa Kuuttila. Speakers also included President Stokes, STC Board Chair Sandra Begay, and New Mexico Gas Company President Ryan Shell. Ms. Kuuttila gave special thanks to Dr. Kelly O’Donnell, author of the report, the UNM Economic Development Council and Rainforest Forum, several STC board members and various members from the New Mexico congressional delegation who attended the event. To read local news coverage of the event, see the following media reports:
- Jessica Dyer’s August 28 article “Report: UNM has $3.1 billion statewide impact,” from the Albuquerque Journal, reprinted below
- Joseph Ditzler’s August 28 article, “Report touts UNM’s $6B economic impact in New Mexico,” from the Santa Fe New Mexican at http://www.santafenewmexican.com/news/education/report-touts-unm-s-b-economic-impact-in-new-mexico/article_c255cbb0-af49-5e30-a39f-cbdee7e8150c.html
- Megan Abundis’ August 28 report, “Study: UNM adds $3B to state’s economy,” from KOB4 at https://www.kob.com/albuquerque-news/study-university-of-new-mexico-adds-3b-in-economic-output/5048575/
- KRQE Media’s August 28 media report, “Study: UNM adds $3 billion in economic output to state’s economy,” from KRQENews13 at https://www.krqe.com/news/albuquerque-metro/study-unm-adds-to-state-s-economy/1401977895
- Collin Krabbe’s August 28 article, “Enrollment decline not impacting UNM’s economic impact, new report says,” from Albuquerque Business First at https://www.bizjournals.com/albuquerque/news/2018/08/28/enrollment-decline-not-impacting-unms-economic.html
- Kyle Land’s August 29 article, “Study shows UNM greatly affects state economy,” from DailyLobo.com at http://www.dailylobo.com/article/2018/08/unm-economic-impact-study.
Report: UNM has $3.1 billion statewide impact
By Jessica Dyer / Journal Staff Writer
Published: Tuesday, August 28th, 2018 at 11:26am
Updated: Tuesday, August 28th, 2018 at 10:03pm
Copyright © 2018 Albuquerque Journal
The University of New Mexico generates $3.1 billion in economic output annually – the bulk of it from operational spending, according to a new analysis released Tuesday.
But the $3.1 billion figure also includes impact of alumni in the workforce, spending by out-of-state students, and UNM’s technology transfer and economic development activities. The report’s author Kelly O’Donnell said that makes it the most “comprehensive” examination of how UNM affects the state’s economy.
“UNM is absolutely vital to New Mexico’s economic growth,” O’Donnell said.
UNM President Garnett Stokes announced the numbers in the Lobo Rainforest Building at the Downtown Innovate ABQ site, calling UNM “one of the state’s most valuable assets.”
“Pretty major news,” she said of the $3.1 billion figure. “Maybe we already knew it, but now we have it quantified what the University of New Mexico – what the university for New Mexico – means for our community here and for the state.”
STC.UNM, the university’s economic development and tech transfer organization, commissioned O’Donnell, a UNM research assistant professor, to conduct the analysis using a grant from the New Mexico Gas Company.
O’Donnell said economic output is a “measure of productivity,” likening it to gross domestic product.
UNM, which has an annual budget of approximately $3 billion, spent $2.2 billion on operations in fiscal year 2017. That includes about $1.4 billion for employee pay and benefits, according to the report.
But only expenditures made in New Mexico with funds coming from outside the state count toward the economic impact figure.
Nearly half of UNM’s operational revenue ($1.1 billion) comes from beyond the state’s borders. That generates $2.1 billion in direct, indirect and induced effects, according to the report.
Most of the incoming money is tied to clinical services provided by UNM Hospital and the UNM Medical Group, where approximately 65 percent of the payments come from Medicaid or Medicare.
“That is obviously hugely beneficial” because those programs are funded mostly or entirely by the federal government, O’Donnell said.
But the incoming revenue also comes from federal grants, out-of-state students’ tuition and other sources.
In addition to the $2.1 billion in economic output from operational spending, UNM’s impact includes:
• $933 from alumni income
• $79 million from out-of-state student spending
• $56 million from technology transfer
The report noted that degrees increase career earnings, giving alumni more money to spend and pay in local and state taxes.
UNM graduates residing in New Mexico earn about $2.3 billion more every year than they would have with only a high school diploma, according to the report.
However, while UNM draws about 83 percent of its student body from New Mexico, only about 58 percent of its 184,000 living alumni have New Mexico addresses currently, indicating that many of them leave.
Stokes said it is not unusual for a state’s flagship university to see its graduates seek and find opportunities elsewhere in the country or the world, but that such losses concern many around New Mexico.
“Over and over again what I’m hearing from many different constituents is the desire to reduce the amount of brain drain, and some of that is making sure that the talent that we have in New Mexico decides to stay in New Mexico to go to school to earn a bachelor’s, master’s or doctorate or professional degree,” said Stokes, who recently completed a statewide tour that included stops in all 33 counties. “But another part of that is trying to make sure we are proving that the state has ample opportunities for those graduates to actually stay and have successful careers and lives in New Mexico.”
Other findings from the new report:
• Nonresident student spending supported 822 full and part-time jobs;
• UNM had more than $300 million in contract and grant funding in 2017, including $247.7 million from the federal government;
• STC.UNM-affiliated startup companies employed about 247 New Mexicans in 2017 and generated $32.2 million in total output.