New study pegs Adams State economic impact at $70 million
Alamosa got its start as a railroad town. Now it's a college town, and Adams State is proving to be every bit as influential in the community's growth as the Denver & Rio Grande was to its inception.
As the single largest employer in the San Luis Valley, Adams State College is responsible for a total economic impact in the region of more than $70 million a year. This is one of many conclusions drawn by an Economic Impact Analysis and Report recently completed by the San Luis Valley Development Resources Group (DRG.)
Michael Wisdom, executive director of the DRG, said, "It's always been an intangible belief that students and jobs at the college have a significant impact on the valley. We see now that Adams State has the largest impact of any single employer or entity in the San Luis Valley region."
Commissioned by Adams State, the report based its findings on data from the 2003-04 fiscal year. John S. Stump of DRG was the principal author and researcher. He was assisted by Phil Lopez, an intern in the Adams State Office of Business and Finance, who gathered and verified college data, consulted on college practices and procedures, and helped to assemble the report.
A 2004 graduate from Adams State in finance and economics, Lopez heads to the University of Colorado Law School this fall. The Alamosa native is a first-generation college graduate.
"This is the most comprehensive review of Adams State's economic impact to date,' said Adams State President, Richard A. Wueste. "We are grateful for the expertise, resources, and services the DRG offers Adams State and the valley. They have been instrumental in development of our region for over three decades, and are a valuable partner as Adams State seeks to collaborate in enhancing our community."
Stump explained, "The total economic impact measured in the study includes direct spending in the area from all sources related to the college, plus the extra economic activity caused as those dollars circulate through the community." The study uses a multiplier of 1.7 for most of its impact calculations, meaning that every dollar spent stimulates expenditure of another 70 cents locally.
The report breaks down the college's $40.8 million of direct spending impacts in the valley into four contributors:
- $26.9 million spent by students at off-campus locations
- $8.8 million spent by college employees
- $3.3 million spent by college operations
- $1.8 million spent by valley visitors attending college athletic and cultural events
Applying the multipliers brings the total economic impact of Adams State in the San Luis Valley to $70.1 million, according to Stump.
Wueste said, "We are particularly pleased that the researchers chose a modest multiplier. There is a tendency to overstate the impact of financial transactions in rural areas and imply a greater impact than actually occurs. We've deliberately chosen to be conservative in our approach. We'd rather release information that is modest and accurate, than make exaggerated claims that suggest the college is more important than it is."
Wisdom calls Stump "a near perfect demographer," noting that he used a federally recognized method of analyzing demographic information, and reviewed other college economic impact studies.
"John has passion for numbers and what they mean, but he is also ethical and responsible. We may have established a national benchmark with this report for Adams State," Wisdom said. "John made a lot of adjustments that other studies didn't do, such as excluding withholdings from salaries, and analyzing the portion of operating funds actually spent in the valley. Some schools simple multiply using the entire operating budget, without distinguishing where the money is spent. It doesn't all make a direct local impact."
The study also excludes an estimated 25 percent of employee salaries that is either saved or spent outside the valley. But about 15 percent of total salaries remain within Colorado. By incorporating employee and college spending, and using the same assumptions and multipliers, researchers approximated a total impact for ASC spending in Colorado outside the Valley of just under $16.0 million. Combined with the valley impacts, this brings Adams State's total annual economic impact across the state to $86.1 million.
"With an investment of $12.1 million from the state, the college returns $7.10 in statewide economic impact for every $1 invested," Stump noted.
The report draws economic and demographic data from the 2002 Comprehensive Economic Development Strategy for the San Luis Valley, written by Stump for the federal Economic Development Administration (EDA). The 500-plus page document was judged in the top four out of 300 from across the nation by the EDA review board, according to Wisdom.
ASC SPENDING EQUALS TOURISM INCOME
Stump puts the college's impact in the context of the valley's economy. "The $40.8 million in direct spending attributed to Adams State is 31 percent of the $129.6 million in basic income needed to drive Alamosa County's economy. It is also equivalent to 43 percent of the Valley's basic income from agriculture, which totals $95 million; and virtually equal to all the basic income from tourism, $44 million. Adams State offers a rare and much needed element of diversity and stability to our economy, particularly in the winter months," he added.
In addition to direct spending, the college's presence is responsible for an additional 265 off-campus job opportunities, Stump said. With a campus workforce of 529, the college's economic influence results in one more position off-campus for every two of its employees.
LARGEST FACTOR IS STUDENT SPENDING
The college's 3000-some students are the largest factor in its economic contributions, with their living expenses contributing a total impact to the valley of $45.8 million, more than 65 percent of Adams State's influence. Because the majority of students live off campus, rent consumes the largest share of their spending.
Stump noted that the study does not, however, take into account student earnings from off-campus employment, only work study jobs, because that data was not available.
"I found it particularly interesting that student spending has the single greatest financial impact on the community," Wueste said. "By offering excellent academic preparation in a region with limited opportunities, Adams State gives its graduates more career and life options. Our student population, in turn, stimulates a vital economy, then joins the workforce of the valley and the state. As successful graduates, they not only contribute directly to the economy and tax base, but serve to attract and sustain new businesses."
As the study notes, this fact has far-reaching implications. ASC operates in a low-income area of the state; 47% of its students are low-income; and it has the highest percentage of Hispanic minority students in the state (27%). It also has the state's lowest tuition rates among four-year institutions, making it possible for low-income, minority, and other students to attend college.
The DRG study estimates that two-thirds of the college's students have the resources to attend college elsewhere, if ASC were not available. "This may suggest that more than 450 valley students would lose access to higher education, if Adams State were eliminated from the valley," Wisdom.
In addition to the campus impacts, the study notes that ASC Extended Studies meets the off-campus educational needs of more than 13,000 persons statewide. It also reports that students with a bachelor's degree can expect to earn up to 92% more than those who go no further than high school.
"We can view the significance of Adams State to the valley from two perspectives. First, we can look at the potential of the first perspective: economic and community impacts, more money in our economy, good jobs, and educational opportunity," Wisdom reflected. "Then we can look at how life would be if we did not have this tremendous asset for feeding the economy. Our focus needs to be with a certain respect for the impact of the second. We cannot image the loss of these benefits. We are partners in economic, community and human development."
Wueste hopes the college will be valued for its contributions, causing community members will think, "Look at how much we have and can do because Adams State is part of us."
BEYOND DOLLARS AND SENSE
In addition to measurable economic impacts, the study also acknowledges "an impressive array of un-quantified 'supply-side' impacts to the community," such as activities and facilities that are available to the community, assistance to the business sector through Small Business Development Center, and new initiatives promoted by the Office of Community Partnerships.
"The information provided by this study can help us identify issues to address, what's working, and what can be improved," Wisdom added. "It can help us target new services that will meet student needs." The study itself also provides data that pre-qualifies many valley programs for federal grants.
"The impact study tells us that we cannot afford to rest on our laurels. The value of the college will be determined by what we do," Wueste said. "Seventy million dollars is a lot of money. But it alone is not sufficient to fulfill the college's mission as an economic engine for the region."