Study finds huge impact of higher education on Texas’ economy

The economic impact of Texas colleges and universities can be summed up in two words: multiplier effects.

Colleges and universities, including UTSA, have a huge impact on the Texas economy, not only by employing thousands of professors and other staff, but also by spending on outside goods and services to perform their daily operations and research. This initial spending is followed by further spending throughout other Texas businesses and is referred to as multiplier effects.

The multiplier effects and additional economic activity that is created by initial spending were considered in the Economic Modeling Specialists International (EMSI) report, which was presented during a state legislative session earlier this year.

According to the EMSI report, Texas colleges and universities created $143.9 billion in economic value during the 2013 fiscal year. This number represents nearly 11 percent of the gross state product – indicating the economic importance of higher education to the state of Texas as a whole, outside of just the students and staff of these institutions.

According to a 2008 report, UTSA alone added $1.2 billion in annual business revenue, and it supports an estimated 15,720 jobs in the San Antonio area.

The positive impacts on the Texas economy come from college and university spending as well as the returns on investments in higher education. Billions of dollars have been spent on the daily operations as well as the research these institutions provide. Research spending at Texas colleges and universities generated $2.1 billion in added state income in 2013. UTSA is among the top third of universities in the country for funding in research and sponsored programs.

About six percent of the students at Texas colleges and universities are from outside the state. These students spend money on groceries, rent, transportation and other local business, contributing nearly $1.5 billion in revenues.

The greatest amount of added state revenue comes from the human capital impact of these higher education institutes. $124.3 billion in added state revenue came from former students employed in Texas, which translates to the equivalent of creating almost 2,000,000 new jobs.

The return on investment for higher education is vital in calculating its contribution to the Texas economy. Society receives approximately $13.20 for every dollar spent on education at Texas colleges and universities, assuming the students from the 2013 study remain active in the workforce. Texas will have the additional benefit of nearly $36.5 billion in social savings due to reduced crime, lower unemployment and increased health and well-being associated with the enrollment of higher education.

For Texas taxpayers, every dollar spent will result in a return of $6.40 in benefits. The average annual return on investment is 18.5 percent for taxpayers.

Students spent $7.9 billion to cover educational costs at Texas colleges and universities, and students forewent wages of $20.4 billion that could have been earned during their time learning. The return of this investment, however, is 14.3 percent. This means that for every dollar spent on education, students will earn $3.50 more in future income, according to the report.