Making an impact: Study quantifies economic effects of CMU
As Colorado Mesa University grows, so does the role of CMU in the Western Colorado economy.
According to an analysis of the 2011 and 2012 fiscal year, the Grand Junction-based university injected a total of almost $200 million into the regional economy through capital projects, employee wages, purchases and student expenditures. Add the indirect effects of all that spending, and the estimated total tops $351 million.
The latest figure constitutes an almost 11 percent increase over the estimated total economic contributions of CMU for the 2009 and 2010 fiscal year and a 143 percent increase over the estimated contributions for the 2003 and 2004 fiscal year.
With student enrollment and capital expenditures expected to continue to increase, the figure likely will climb higher still in two years.
While education remains the primary goal, CMU President Tim Foster said he’s pleased with another benefit of the process. “We’re happy to see we have an economic impact.”
According to the study, 76 percent of expenditures on purchases during the 2011 and 2012 fiscal years were spent in Western Colorado, while 80 percent of capital expenditures were spent in the region.
“That has a huge impact,” says Diane Schwenke, president and chief executive officer of the Grand Junction Area Chamber of Commerce. The purchases CMU and its students and employees make as well as the money paid to contractors make a difference to local businesses. “We all see a benefit. Every business in the valley will see a benefit.”
That effect has been especially beneficial in the aftermath of downturns in the energy sector and overall economy in the region, Schwenke adds.
Moreover, the presence of a regional university strengthens the position of Grand Junction as a regional hub. And that brings in still more business, she says.
Kelly Flenniken, executive director of the Grand Junction Economic Partnership, says the economic effects of CMU go beyond the numbers.
The university plays a key role in educating the workforce and in turn promoting higher earnings. By one estimate, people with college degrees earn $1 million more over the course of their careers than people without degrees, Flenniken says. What’s more, CMU helps GJEP in its efforts to recruit new businesses to the region.
“I look at it a little bit differently. This kind of touches in a lot of different areas.”
According to the analysis for the 2011 and 2012 fiscal year, more than half of the direct economic effects of Colorado Mesa University was attributed to student spending for room, board, transportation, entertainment and other expenses. Total student spending was estimated at nearly $121 million. Assuming 90 percent of that money remained in the local economy, student spending accounted for almost $109 million.
Student enrollment at CMU continues to increase, climbing to almost 9,500 for the fall 2012 semester. About 65 percent of those students come from 14 Western Colorado counties.
College purchases for everything from office supplies to furniture to utilities accounted for the second largest direct contribution to the economy. In-state expenditures for the 2011 and 2012 fiscal year totaled $33 million. Of that, 76 percent — or more than $25 million — was spent in Western Colorado.
More than $21 million in additional economic contributions were attributed to the money visitors to CMU spent for food, fuel, lodging and other expenses. It’s estimated that almost 360,000 visits were made to CMU during the 2011 and 2012 fiscal year, including 62,350 people attending athletic events, 16,000 people attending musical and theatrical productions and 9,000 people attending commencement exercises. The calculation assumes that 25 percent of visitors came from outside the region and spent an average of $137 a day for lodging, meals and other expenses, while the remaining 75 percent purchased meals.
Colorado Mesa University also contributes to the regional economy through the wages it pays employees — a total of nearly $23 million for the 2011 and 2012 fiscal year after federal and state taxes and benefits. It’s estimated that 90 percent of those wages were spent in the region. CMU employed more than 1,800 people last year.
In addition to the direct economic impacts of CMU, the study calculated the indirect impacts of spending in the region. Businesses that sell goods and services to the university in turn spend money on their vendors and employees. Wages paid to CMU faculty and staff are spent on housing, transportation, clothing and other expenses.
Studies of the economic impact of other universities have pegged output multipliers at between 1.38 and 2.3. The CMU analysis used a multiplier of 1.8. That means the nearly $200 million in direct economic impacts multiplied by 1.8 resulted in a total of $351 million in direct and indirect effects.
The economic effects of CMU are expected to continue to increase along with student enrollment and additional capital construction. Foster says the “sweet spot” for growth in student enrollment for the university falls between 2 percent and 5 percent. He expects CMU to spend a total of about $35 million over the next two years on a new dormitory already under construction and the planned addition of a classroom facility.