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October 9, 2006

Analysis indicates UCSC's annual economic impact is about $960 million

By Guy Lasnier

A recent analysis of UCSC spending pegs the economic benefit to Santa Cruz County at about $960 million dollars a year.

Periodically since 1979, the university has analyzed its economic impact on the local economy. Last year, UCSC contracted with Bay Area Economics (BAE) of Emeryville, to review campus data and create a new analytical framework for future studies. In its recent report BAE, using an economic multiplier, estimated that university spending spins off $960 million of economic activity a year.

The full impact is greater than the total of the university’s actual spending on salaries and wages, goods and services and construction, BAE said. Spending by students and visitors is also included, and economists use a multiplier to account for economic activity “down the line.”

When the university and its students and employees spend dollars, local businesses and individuals receiving those dollars in turn spend a portion in the local area. BAE estimates the multiplier in UCSC’s case to be about $1.60 of economic activity for every dollar the university spends.

UCSC’s largest expense at $292 million, during the 2004-05 fiscal year, was on salaries and benefits for faculty and staff, according to figures supplied by the Office of Planning and Budget. UCSC employs 4,500 people, making it the largest employer in Santa Cruz County. Roughly 3,850 of those employees live within the county.

The next largest expense was $108 million in University purchases, followed by $40 million in capital projects such as the new Humanities and Social Sciences Building. Only funds spent locally were counted.

Added to that is an estimated $145 million in spending by students and $23 million from visitors who come to Santa Cruz to tour the campus, help a student move in, or to attend a conference or special program. Visitors who take advantage of cultural activities such as Shakespeare Santa Cruz are included.

BAE noted that the majority of the campus’s over $400 million budget is supplied by out-of-county sources, which include state funding, tuition and fees, and research grants. “Thus,” the study concluded, “much of the money spent by the university represents new money to the community and generates new economic activity within the region that would otherwise not have occurred without the presence of the campus.”

BAE found that UCSC bought almost 100 percent of the fresh and bulk food served each day on campus from local suppliers. About 60 percent of office supplies were purchased locally, and the university rented or leased more than $4 million in off-campus space.


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