by Walker Moscop
Vanderbilt University had an $8.6 billion impact on the Tennessee economy last year, according to a study the school is scheduled to release today.
The study, which was conducted by research firm TXP Inc. of Austin, Texas, calculated the university’s direct and indirect economic output, including its direct spending, off-campus spending by students and visitors, as well as business spending resulting from Vanderbilt’s presence.
The study also estimated tax revenue derived from Vanderbilt-related activity.
Vanderbilt’s presence supported nearly 58,000 jobs and more than $3.4 billion in wages and benefits during the fiscal year ending June 30, 2012, the study found.
Chancellor Nicholas Zeppos said the university commissioned the study to demonstrate the school’s significance in the region at a time when people are calling into question the value of higher education and, more specifically, research institutions.
“We want to be a part of that debate and make sure we have an independent third party validate (our) impact and tell that story,” he said.
The university probably will conduct the studies on a regular basis, Zeppos said.
The vast majority of the school’s economic impact – nearly $8 billion – stemmed from spending on university operations, which included employee wages and the downstream effect of purchases those employees made.
Vanderbilt is the largest private employer in Nashville and the second-largest private employer in Tennessee, according to the university, with 21,000 full-time and 4,000 part-time employees. The school has 6,800 undergraduate and 6,000 graduate and professional students. The university’s budget grew to $3.52 billion last year, up from $3.4 billion a year earlier.
To assess the school’s economic impact, the study looked at direct economic effects associated with Vanderbilt, such as off-campus spending by students; indirect effects, such as purchases of food and supplies made by a restaurant patronized by students; and induced effects, such as the change in spending patterns of the owner of a restaurant resulting from income earned from student spending.
The study estimates the state received $221.6 million in tax revenue resulting from Vanderbilt-related activity during 2011-2012.
Some of the school’s direct economic impact included:
• $1.8 billion paid in wages.
• $86.6 million spent on construction, building and leasehold improvements.
• $215.4 million in off-campus spending by students and visitors.
“Investment in education and research, as you see from the study, produces enormous economic development,” Zeppos said, “and obviously betterment for society.” He said the study’s estimates were probably conservative.
The university generated a $158 million surplus last year, largely attributable to performance by its hospitals and clinics, according to the ratings agency Standard & Poor’s.
The university is in great financial shape, Zeppos said, but he noted that the sequester – a series of federal budget cuts that will begin in March if Congress doesn’t take action – would take a chunk out of the school’s research budget.
More than 80 percent of the $572 million the university raised for research last year came from federal agencies, and the cuts could cut research funding by about $25 million, university spokeswoman Elizabeth Latt said.