Penn State Single Largest Contributor to Commonwealth's Economy

Published 12.01.2004


A new economic impact study released this week positions Penn State as the single largest contributor to the state's economy an engine of 24 campuses generating $6.14 billion annually in direct net economic impact to the commonwealth.

PowerPoint slide illustrates Penn College's impact on Pennsylvania's economy.Pennsylvania College of Technology is a major cog in that engine, with a total impact of more than $455 million alone at the 6,358-student campus. In addition, the campus contributes significantly to Penn State's total business volume impact of more than $255 million in surrounding Lycoming County.

Overall, the University also influences an additional $6.9 billion indirectly each year through business services, research commercialization and the activities of alumni for a total of more than $13 billion in annual economic impact in Pennsylvania.

The purpose of the study, conducted by Tripp Umbach & Associates and commissioned by Penn State, was to analyze a number of economic factors spurred by the University and gauge the value of the institution to the commonwealth. Among the factors considered were government revenue, the impact of students, employees and alumni, and research.

"Penn State's annual economic impact of more than $6 billion represents the single largest institutional economic impact that Tripp Umbach has calculated after more than 15 years and hundreds of studies," said Paul Umbach, president of Tripp Umbach. "While it is typical that an organization's economic impact on its home state is roughly equivalent to its annual operating budget, Penn State's impact is nearly three times larger, due in part to more than a half a billion in tourism generation and more than a billion in economic impact associated with out of state dollars attracted for research activities.

"Tripp Umbach believes that Penn State has more economic impact on the Commonwealth of Pennsylvania than any other individual organization operating within the state," he added.

Based on the study's findings, Penn State is driving approximately 2 percent of the state's overall business volume or $1 out of every $50 in the Pennsylvania economy. Looking forward, the University's direct impact is projected to increase from $6.14 billion in 2003 to $7.4 billion in 2008 based on expected growth in operations and investment in capital expenditures.

"This report illustrates the stunning scope of that impact statewide today," said Penn State President Graham B. Spanier. "In terms of generating the greatest return for each dollar spent, it is quite clear that there is no more fruitful investment for the commonwealth than Penn State."

"The results of this University-commissioned study speak for themselves regarding Penn State's economic impact across the commonwealth," said Penn College President Davie Jane Gilmour. "For some time now, we have been independently assessing the economic benefits generated by Penn College in the Greater Williamsport area, and this report serves to validate our beliefs."

Compared with other industries that receive financial support from the state government, Penn State's level of impact is among the most significant. The University pumps more into the economy than other leading statewide economic entities such as airport hubs ($3.6 billion in annual impact), professional sports teams ($1 billion) and arts and cultural organizations ($600 million) combined.

Furthermore, the state's two largest industries agriculture and tourism are directly driven by Penn State. The University's agricultural research brings $84.2 million into the commonwealth each year, and discoveries made by Penn State and assistance offered through its cooperative extension offices located in all 67 counties directly enhances the productivity of the state's farming operations. Tourism generates an estimated annual impact of $23 billion, and Penn State accounts for the attraction of 875,000 visitors and $1.36 billion for the state's economy each year.

Spending by out-of-state visitors alone totaled $632.7 million last year, including $43.3 million at Pennsylvania College of Technology. Combined with spending by students ($717.7 million), employees ($522.4 million), and the University for capital improvements, goods and services ($796.3 million), Penn State drives nearly $2.67 billion in business volume into the state's economy, with nearly $198 million of that total coming from the Williamsport campus.

Tax revenue coming from Penn State alone more than repays the amount of appropriation received by the University each year. In 2003, tax revenue generated $492 million for the commonwealth. Government revenue driven by Penn State included $291.1 million $17.5 million at the Penn College campus as a result of its operations and payroll taxes and $201.5 million in impacts induced by alumni and businesses who benefit from Penn State research.

In sum, the University returned $1.56 in tax revenue for every $1 it received in state appropriation.

People are the driving force behind much of the University's statewide economic impact. In terms of employment, Penn State is the state's largest non-governmental employer with more than 35,000 full- and part-time employees in 2003. Combined with the number of jobs that indirectly support the University, Penn State is responsible for the employment of an estimated 60,000 people in Pennsylvania a figure projected to grow to 72,000 in the next four years.

As of 2003, Pennsylvania College of Technology had a total employment impact of 3,051 jobs.

The University's employees and more than 81,000 students actually provide benefits to the commonwealth beyond the more than $6 billion in annual operational impact. The study estimates that employees donate more than $116 million in charitable donations and volunteer services within the state, with students contributing an additional $88 million.

More than 200,000 alumni reside in Pennsylvania, and they generate $1.3 billion annually in additional economic impact and more than $40.7 million in additional government revenue for the state. Alumni volunteers are estimated to give 13.8 hours annually to charitable organizations in the state, valued at $235 million, and donate more than $103.3 million annually to these organizations.

In addition, the study reveals that more than 15,000 Penn State alumni own businesses in Pennsylvania, directly employing more than 425,000 residents. The average wage paid at companies owned by Penn State graduates is $8,500 higher than the average wage in the state, translating into more than $3.6 billion in addition expansion of the commonwealth's economy and more than $108 million in additional government revenue.

Penn State is one of the nation's leaders in industry-sponsored research attracting more than $545 million in 2003 and that status has direct positive impacts on the commonwealth. Research conducted at Penn State supports more than 16,000 jobs, generating more than $1.7 billion in additional economic impact and more than $52.8 million in additional tax revenue. These numbers should rise by 2008 as research expenditures approach $750 million over the next four years.

Afull summary of the economic impact study, as well asfacts on the methodology used and other information, is available on the Web.