, Research Paper The Regional Economic Impacts Idaho State University, 1996 Dr. Richard Bowen, President of Idaho State University, requested the Center for
, Research Paper
The Regional Economic Impacts
Idaho State University, 1996
Dr. Richard Bowen, President of Idaho State University, requested the Center for
Business Research to conduct a study of the impact of the University on Idaho,
with particular emphasis on its regional impacts upon the Pocatello area. This
publication reports the findings and results of that effort, which was begun in
the fall of 1997.
This report is a follow-up to, and a complete revision of, a previous study
conducted in 1988 (”A Report to the President of Idaho State University: The
Impact of University-related Expenditures on Idaho’s Economy, 1986-87). For
several reasons, the direct comparison of the findings of the two reports is not
Specifically, the present report utilizes multipliers refined and updated by the
Regional Science Research Institute, while the previous report relied upon
Input-Output estimates generated by the US Bureau of Economic Analysis, Regional
Input-output Measurement System (RIMS). Secondly, the focus and emphasis of the
present report is on the Pocatello area economy, while the 1988 study emphasized
state level impacts. Third, the present report attempts to discount those
impacts generated by permanent area residents, attempts to estimate a “return on
investment” for the State of Idaho, and makes other refinements or improvements
to the 1988 approach.
Paul R. Zelus, Ph.D., directed the study, and was ably assisted first by Nancy
L. Kelly and then Walter Bulawa, Ph.D., Research Associates of the Center for
Business Research at Idaho State University. Acknowledgement is also extended to
the many campus officials who provided the often tedious and detailed
information needed to conduct the study. The many faculty, staff, and students
who responded to expenditure surveys are acknowledged for the critical
information they provided.
This project was aided immeasurably by the shared experiences of researchers
from Boise State University, Northern Arizona University and the University of
Virginia. In that order, I acknowledge the helpful comments and advice of Dr.
Charles Skoro, Dr. Jerry Conover and Dr. John Knapp.
Paul R. Zelus, Ph.D.
Table of Contents
Faculty and Staff Spending
This study provides estimates of the economic impact of Idaho State University
on the regional economy of the Pocatello area. During the 1996 academic year
Idaho State University employed 657 full and part time faculty and 1,156 full
and part time staff employees, with wages and benefits totaling $47 million. It
served 12,245 students enrolled in a variety of courses and programs of study.
The University operated on an annual budget of $149 million, of which $72
million was provided by the State of Idaho in the form of appropriations. Nearly
$45 million of its revenue represents federal scholarship and student
assistance, while another $22 million is received through student tuition and
fees. The remainder of revenue comes from private and miscellaneous sources.
Direct local expenditures on the part of the university and its faculty/staff,
students and out-of-area visitors exceeded $215 million.
Institutional expenditures within the Pocatello economy exceeded $23 million
for purchases of professional services ($5.4 million), communication and
utility services ($1.9 million), materials, supplies and equipment ($5.3
million), land and buildings ($6.6 million), and miscellaneous purchases
($4.2 million), representing 59% of all institutional purchases.
Faculty and staff households paid $11 million in taxes and purchased an
estimated $21 million in goods and services based on wages totaling $36
The households of students residing in dormitories, in private residences
within the Pocatello area, and in private residences outside of the
Pocatello area made local purchases totaling $156 million
Out of area visitors spent an estimated $7 million on local purchases of
goods and services.
The indirect and inducted effects of $215 million in local spending stimulates
an additional $76 million in regional economic activity, for a total estimated
economic impact of $291 million.
Permanent residents account for approximately $101 million o f that total, with
the remaining $191 million in area expenditures attributed to the university’s
Considering the State of Idaho’s annual budgeted investment of $72 million and
its currently valued investment of $149 million in lands, buildings, and
equipment, the aforementioned regional expenditures of $191 million represent a
return on investment of approximately 87%.
Based on lifetime earnings differentials, ISU graduates maintaining a permanent
residence within Idaho are estimated to add to their lifetime earnings by an
aggregated $498 million over 40 years ($307 million if presently valued).
Idaho State University annually purchases more than $23 million in goods and
services from Pocatello area businesses.
Idaho firms receive 66% of the University’s institutional purchases with 59%
going to Pocatello area firms.
Records of University expenditures were obtained from the University
Comptroller. Idaho State University (ISU) issued more than 35,000 checks during
the 1995-96 academic year, excluding payroll checks to faculty and staff. Each
check was classified by vendor zip code and type of service or product
purchased. The dozens of expenditure types were then summarized into the five
categories reported in Table 1. Zip code classifications were used to identify
those expenditures that were made within the state of Idaho and those that were
made within Bannock County.
Table 1: Idaho State University, 1995-96 ExpendituresWithin Bannock
Communications & Utilities$1,990,65645%$3,615,04382%$4,393,939
Insurance, Land & Buildings$6,652,55179%$6,652,55179%$8,429,554
Materials, Supplies & Equipment$5,363,40546%$5,406,87346%$11,697,428
Since many larger vendors maintain local offices for billing purposes only,
there may be considerable leakage outside of the Bannock County and Idaho areas.
The fact that a given vendor’s mailing address is within Pocatello or even
within Idaho does not guarantee that a local economic impact has occurred.
Every effort has been made to include only the purchases of real goods and
services. Excluded are all payments to students, fringe benefits purchased for
employees, federal loans and monies which “pass through” the university from
outside sources, payments to escrow accounts, and various adjustments made
during the auditing process.
Institutional Expenditure Patterns
As shown in Table 1, Idaho State University contributes more than $23 million
annually to the local Pocatello economy through its purchases of goods and
services from area businesses. This represents 59% of all such purchases made by
the University. An additional $3 million was spent within Idaho but outside of
Bannock County. The remaining $14 million in purchases was made outside of the
The University purchased more than $8.6 million in professional services during
1995-96. Three-fourths of this amount was used to purchase legal, accounting,
advertising, and architectural services from Idaho firms, with Pocatello-based
companies receiving $5.4 million or 64% of the category total.
Almost all (82%) of the University’s $4.3 million annual expenditure for
communications and utilities reflects purchases made within the state of Idaho.
Pocatello-based firms account for $1.9 million (45%) of this amount. The total
includes telephone, gas and electric utility purchases. Whether these purchases
accrue to Pocatello or to some other regional Idaho economy is difficult to
assess, given the previously stated caution regarding regional offices and
During 1995-96, the University made significant purchases of land and buildings
($6.6 million), all of which are located within the Pocatello economic area.
Nearly all of the remaining $1.8 million from this category involves the
purchase of insurance policies and services from companies located outside of
the state of Idaho.
Supplies and equipment combine to make up the single largest category of
University expenditures. More than $11.6 million is expended annually on a
variety of office supplies, scientific laboratory supplies and equipment, and a
myriad of education-related supplies. These materials and supplies comprise
about $5.2 million of the category total, with the remaining $6.4 million
devoted to data processing, computing, and transportation purchases. Nearly half
(46%) of the combined total of $11.6 million is expended within the Pocatello
area, with almost the entire remaining amount going to out-of-state firms.
The University operates several auxiliary enterprises, which have their own
budgets and produce their own revenue. Examples include food services, student
housing, the University bookstore and the University’s motor pool operations.
Combined, these auxiliary services receive about $20 million in customer revenue
from students, faculty and staff, from university departments, and from
customers outside of the University. To the extent that these auxiliary
enterprises make purchases of goods for resale, those purchases are considered a
part of the University’s expenditure contribution to Idaho’s economy. Nearly
$2.4 million in Idaho purchases are made annually by the University’s various
auxiliary services, with $1.3 million being expended in the Pocatello area
economy. The above expenditures for the purchases of resale goods by the
University’s auxiliary enterprises are a part of the $7.1 million reported as
Miscellaneous Purchases in Table 1.
Miscellaneous expenditures, other than purchases for resale, involve about $4.7
million for maintenance and repair of the University’s buildings and equipment.
About $2.3 million of such expenditures are made within the Pocatello economy
for such things as cleaning, janitorial, and repair contracts.
Faculty & Staff Spending
Faculty and staff households receive $36 million in wages and $10 million in
Disposable income after taxes results in $25 million in purchases of food,
shelter, clothing and other consumer items.
The more than $11 million in taxes paid by ISU faculty and staff help
purchase an array of governmental services that benefit the entire
Faculty and staff salary and benefit totals for the 1995-96 academic year were
obtained from the University Comptroller. Household expenditures were estimated
using data from previous studies of the spending patterns of Southeast Idaho
families and sub-populations, including the workforce at the Idaho National
Engineering and Environmental Laboratory1. The household expenditures of ISU
faculty and staff were calculated by applying the proportions derived from these
studies to the ISU faculty and staff salary totals. While different income
levels and varying lifestyles make it inappropriate to assume that the
calculated spending pattern applies to each and every ISU employee, its
application to derive an expenditure pattern illustrative of the entire faculty
and staff population is reasonable.
A total of 657 faculty and 1,156 staff received wages of $36.3 million during
the 1995-96 academic year. Full time employees include 510 faculty and 882
staff. Included in the part time totals are 147 faculty and 274 classified and
exempt employees. In addition to salaries, the university provided $10.1 million
in employee benefits, including its calculated portion of Social Security
(FICA), pension contributions and medical benefits.
Table 2 depicts the salary totals and the estimated aggregate expenditures made
by ISU faculty and staff. The spending for each expense type reflects the
proportions that a typical Southeast Idaho family has been determined to spend,
and is illustrated in Figure 2.
Table 2: Faculty and Staff Salary ExpendituresRecipientSalary
Taxes: Federal, State & Local$11,204,328
Donations & Gifts$871,746
Expenditures for food, clothing and transportation total $11.3 million annually,
with approximately 90% of that total being expended within Bannock County.
Housing costs consist primarily of mortgage payments, which in turn quickly
leave the local economy in the form of bank investments made outside of the
Pocatello area. Consequently, the estimated $5.6 million in housing-related
expenditures made by ISU faculty and staff are not directly infused into the
local economy in the same way that consumer expenditures would be.
On the other hand, mortgage purchases represent an induced stimulus to the
area’s residential construction market, thereby having a significant multiplier
effect on the economy of the area. (See the section entitled Impact Assessments
for a discussion of multiplier effects.)
Medical and recreational expenditures on the part of ISU faculty and staff total
$4.0 million annually, with an estimated 70% of that amount expended locally and
30% expended elsewhere. Purchases of drugs and hospital care often accrue to
out-of-state providers, so it is unlikely that the local share of such purchases
Figure 2: Allocation of Wage and Salary Income
for a Typical Idaho Family
Donations and gifts totaling about $870,000 are contributed by ISU faculty and
staff to numerous causes and beneficiaries. While a comparatively smaller dollar
value than other expenditure categories included in Table 2, it represents 2.4%
of gross wages. Area churches and civic organizations benefit and depend on
these generous donations, which are supplemented by contributions of time and
talent on the part of faculty and staff households. The economic benefit to
Pocatello’s community life generated by these expenditures is significant beyond
the dollar values involved.
Miscellaneous consumer expenditures not included in the above categories total
another $3.2 million; they include catalogue sales, investment and gambling
expenditures, etc. About 50% of the expenditures in this category can be
attributed to the local economy, with the other half spent elsewhere.
Taxes are mistakenly not often thought of as beneficial to a local economy.
However, property taxes in particular are directly translated into governmental
services including public education and municipal services like police and fire
protection, libraries, roads, sewer, water, etc. ISU faculty and staff
contribute about 31% of their gross wages to taxes of various kinds:
About $7.3 million of the $11.2 million in aggregate taxes consist of
federal payments in the form of personal income tax withholding, social
security (FICA) contributions, and various federal taxes, e.g. alcohol,
tobacco, and gasoline.
The State of Idaho receives an estimated $2.7 million in taxes from ISU
faculty and staff, with $1.8 million being withheld for personal income
taxes. Based on consumption patterns and wages, an estimated $581,440 in
sales tax is paid by ISU faculty and staff in the course of a typical year
of consumer purchases. The State of Idaho also receives nearly $200,000 per
year in gasoline taxes and $129,000 in Alcohol, Tobacco and Vehicle taxes
from ISU households.
Property taxes and fees for sewer and trash pickup account for most of the
$1.1 million in local taxes paid by ISU faculty and staff. Property taxes
comprise $840,000 of that total, with county, city and school district
taxing authorities each receiving approximately one-third of the property
Not all of the economic impact generated by the circulation of faculty and staff
wages would be lost to the region if the University were not here. Some unknown
but significant portion of ISU employees would likely secure employment in other
sections of the regional economy. An estimate of the proportion of faculty and
staff wages that would be “lost” to the area in the absence of the University is
calculated in the Impact Assessments section of this report.
While the present section of this report recognizes the logic of discounting the
expenditures made by faculty and staff households who would likely remain in the
area in the absence of the University, the total and more comprehensive impact
figure is used here.
ISU student households spent an estimated $156 million in Bannock County
during the 1995-96 academic year.
Student expenditures were derived from the results of a questionnaire survey
that was distributed to randomly selected ISU students during the 1996-97 fall
semester; 611 questionnaires were completed and returned. For purposes of this
analysis, the responses were divided into three groups of interest:
students who live off campus and within Bannock County and,
those who live outside of Bannock County.
The survey solicited information on student spending in several expenditure
categories. For each expenditure category, an average was calculated for each
student group, with null responses included as zero values in the aggregate sum.
The university-wide spending in each expense category for each student group was
then weighted by multiplying the corresponding survey average by the total
number of students at ISU in that group (i.e. 871 dormitory students, 6,236
local off-campus students or 5,138 out-of-area students, respectively).
The measured impact of ISU student spending on the local economy is limited to
off-campus spending within Bannock County, therefore the spending excludes
monies paid to the University or to vendors and landlords outside of the Bannock
County area. Table 3 presents the total off-campus local spending in several
expenditure categories for each of the three student groups of interest.
The Housing expense category includes spending for rent, mortgage, home
insurance and furnishings except for dormitory students where off-campus
spending specifically does not include dormitory rent and would, therefor only
include spending for furnishings for that student group. Utility expenses
include costs for electricity, gas, telephone and cable services. The Education
expense category does not include tuition and is limited to spending for books
and supplies, including computers and their peripherals. Miscellaneous spending
includes clothing, general insurance, contributions, gifts and purchases that do
not fit into any of the other categories.
The average number of students residing in dormitories during the 1995-6
academic year was 871. This student group reported an average age of 25 years
and 31% indicated that, at the time of the survey, they were married. Only 12%
of this group indicated that they would be living in the Pocatello area if they
were not enrolled at the University. Consequently, a high proportion of this
group’s spending may be attributed to the University.
Dormitory students reported household spending of over $6.5 million annually or
approximately $7,486 per student household over a two-semester period not
including the summer months. The figure excludes tuition and dormitory fees, and
includes only purchases of consumable goods and services.
Over 30% of the dormitory student’s expenses are automobile related.
Miscellaneous expenses account for 25% while food (over and above the dormitory
meal plan) accounts for 21%. Housing costs were proportionately low for this
group because the dormitory rent payments were made to the University rather
than to local landlords and are consequently excluded from impact
considerations. Similarly most utility costs are included as part of the rent
and are also excluded, leaving Utilities to primarily consist of telephone and
Table 3: Annual ISU Student Expenditures for Academic Year
1995-96Expense TypeStudent TypeTotal
DormitoryLocalOut of Area
TOTAL$6,519,959 $85,534,282 $64,334,912 $156,389,153
Local Off-campus Students
The 6,236 students in this group reside off-campus but within Bannock County.
Approximately 36% indicated that they owned their living quarters while 50%
rented and the remainder reported living with family or friends. The average age
of the students in this group was 30 years with 50% indicating that they were
married. Over 57% indicated that they would live here if not enrolled at the
They reported a local total annual spending of $85.5 million, which averages
$13,716 per student household, the greatest per student spending of the three
groups. Understandably, the largest spending category for this group is Housing
which accounts for 27% of its total expenditures. This is followed by Food (22%)
and Miscellaneous items at 17%.
Nearly two-thirds of this student group consists of permanent area households
with one or more members currently attending ISU on either a part-time or
full-time basis. An estimate of the proportion of this group’s total area
expenditures that would be “lost” to the area in the absence of the University
is calculated in the Impacts Assessment section of this report.
This student group consists of 5,138 ISU students who reside off campus and
outside of Bannock County. The average age of this group was 35 years with 66%
reporting that they were married at the time of the survey. Approximately 60%
owned their homes, 25% rented and the remainder reported living with family or
Members of this group reported a total annual area spending of $64.3 million or
about $12,521 per student household.
The proportion of those consumption purchases made in Bannock county, as opposed
to the neighboring communities where they reside, is unknown, but is presumed to
be not more than 25%.
Their spending habits were approximately the same as the local non-dormitory
students. Combining the spending of the two non-dormitory groups yields the
graph in Figure3, which illustrates the representative category spending of
ISU’s non-dormitory student households.
While the University cannot claim to have directly “caused” the entire $156
million in consumer purchases made by its students and their entire households,
it is important to recognize that a considerable number of area residents attend
Idaho State University and have purchasing patterns and habits influenced by
their student affiliation.
While the present section of this report recognizes the logic of discounting the
expenditures made by student households who would likely remain in the area in
the absence of the University, the total and more comprehensive impact figure is
ISU attracts nearly quarter million visitors from outside the Pocatello area
to its many events, facilities and programs.
Out-of-area visitors spend an estimated $7 million annually on local
purchases of lodging, food, automobile-related purchases and other retail
Visitors are drawn to the ISU campus to attend athletic and cultural events,
attend conferences and workshops, and to visit facilities like Holt Arena, the
Idaho Museum of Natural History, the Planetarium and the Bookstore. Other
visitors conduct business on campus, including prospective students and faculty
who are being recruited or interviewed. Still others are out-of-area personal
visitors to ISU faculty, staff and students.
The number of visitors to the ISU campus has been estimated separately for the
two visitor categories reported in Table 4. Recreational, Educational and
Business Visitors include attendees and visitors to specific ISU facilities or
sponsored events. Personal Visitors include only out-of-area visitors to
faculty, staff and students reported in surveys of those populations.
In order to obtain an estimate of the number of Recreational, Educational and
Business Visitors, each facility was polled for its attendance figures for the
1995-96 academic year. Officials representing each facility also provided an
estimate of the percentage of their attendees who originated outside of the
Pocatello-Chubbuck area. ISU’s major facilities and programs include Holt Arena,
Reed Gymnasium, the Student Union, the Idaho Museum of Natural History and the
Planetarium operated by the Physics Department. Performances held at Theatre ISU
and Goranson Hall were also included, as were visitors to the ISU Bookstore.
The number of personal visitors was estimated separately for students and
faculty/staff households. Twenty percent of the Personal Visitors were assumed
to purchase lodging for an overnight stay, based on results of the student
Table 4: Visitors to the ISU Campus by Sponsoring Department
(1995-96)SponsorAll VisitorsOut of Area VisitorsArea
Holt Arena Events433,350220,283220,283$6,619,489
Student Union Events222,81756,94869,415$2,217,115
Idaho Museum of Nat’l History patrons31,39020,40424,484$768,804
Continuing Education events13,2621,4685,170$483,395
Physics Department & Planetarium8,0005,8005,800$150,800
Theatre ISU patrons6,631734734$19,084
School of Applied Technology visitors3,387868964$27,921
Music Department events3,000600600$15,600
Miscellaneous ISU departments2,3221,3132,417$117,660
Visitors to ISU Students130,847130,847130,847$4,108,596
Visitors to ISU Faculty & Staff8,6538,6538,653$271,718
An estimate of the percent of out-of-area visitors who purchased overnight
lodging was made for each facility or program within the Recreational,
Educational and Business Visitors category. Lodging was estimated at $27 per
night per visitor, assuming double occupancy and the average Pocatello room rate
of $54 for 1996. Day visitors were assumed to expend a conservative $26 per day,
excluding event specific admissions. For overnight visitors the estimated $53
per day in area expenditures is consistent with other estimates for non-business
While it is tempting to sum the expenditures and number of visitors in each
category of Table 4, such a summary total is not recommended because an overlap
of visitors across the various categories would vastly overstate the number of
actual persons visiting the ISU campus. For example, a typical out-of-area
visitor might be included as the Personal Visitor of a student, and attend an
ISU athletic event or concert while taking advantage of noncommercial lodging
with friends or relatives.
Only out-of-area visitors are assessed as having a direct economic impact on the
Pocatello economy. While the number of local visitors is significant, and their
recreational and other spending is very real, especially to local establishments
and merchants, their spending is assumed to already be a part of the local
economy. In the absence of the ISU facility or event, they are assumed to make a
comparable expenditure elsewhere in the Pocatello economy. Their expenditures
cannot, therefore, be claimed exclusively by ISU as a part of its economic
impact on the region.
The Holt Arena attracts more out-of-area visitors than any other ISU facility.
More than 400,000 persons attended events held there during the 1995-96 academic
year. An estimated 220,283 of those attendees are from outside of the Pocatello
area, with about 90% of that number assumed to be purchasers of commercial
lodging. Major events such as the Dodge National Circuit Finals Rodeo attract
out-of-area visitors who remain in the area for several days, thus heightening
their economic impact.
The Pond Student Union hosts numerous conferences, workshops, and other programs
attended by outsiders as well as ISU faculty, staff, and students. Of the nearly
quarter million attendees of its programs, about 56,000 are estimated to be
out-of-area visitors. A small proportion report staying overnight, with a total
estimated area impact of $2.2 million annually.
The Idaho Museum of Natural History is visited by more than 20,000 out-of-area
patrons annually, with direct local expenditures of $768,804. The Office of
Continuing Education sponsors programs that attract an estimated 1,468
participants from outside of the area, with each staying an average of 3 days,
and representing a direct local impact of $483,395. Performances held at Theatre
ISU and Goranson Hall attracted an estimated 1,334 out-of-area patrons, while
the ISU Planetarium attracted about 5,800 nonlocal visitors.
Student recruitment, including recruitment of students to the School of Applied
Technology, is responsible for over 800 out-of-area visitors each year. Other
significant categories of visitors with business on the campus include
salespersons, accrediting teams and athletic team recruiting. Nearly 3,000
nonlocal visitors and $145,000 in direct impact can be attributed to those
About 130,000 individuals are estimated to visit the area as the personal
visitors of ISU faculty, staff and students. The typical student reports ten
such visitors per year, a seemingly high figure, but consistent with visitor
studies conducted by universities comparable to ISU2. Out-of-area visitors to
ISU faculty and staff number about 8,653. Combined, these personal visitors
contribute more than $4.2 million into our local economy. As indicated above
(see Approach), a high percentage of Personal Visitors are included as attendees
and participants of various ISU events and programs, and should not be
considered as additional to the visitors specific to those facilities or events.
Approximately 9% of all area economic activity are in some way related to
The State of Idaho’s annual investment of $102 million stimulates at least
$191 million in economic activity within southeastern Idaho, for an annual
return of 87%.
Indirect and Induced Impacts
Purchasing patterns for the University, as well as expenditure patterns for its
students, faculty, staff and campus visitors were presented in detail in
previous sections of this report. Approximately $215 million in direct
expenditures are attributed to ISU’s presence using this approach.
As those monies are expended in various sectors of the area economy they serve
to stimulate additional business activity (induced effects) and additional
household spending (indirect effects) on the part of those businesses and
households benefiting from the direct expenditures. These effects combine to
produce a “multiplier effect” of total spending.
Multipliers for local institutional purchases (1.391), visitor expenditures
(1.366), household expenditures of locally resident faculty and staff (1.265),
and for dormitory students (1.260) and nondorm students (1.364) were generated
by the Regional Science Research Institute’s Input-Output model for Bannock
County. This model makes use of industry interaction data across county lines to
generate highly reliable estimates
An estimated 8 full and part time jobs, represented by $1 million of business
activity, and a wage proportion (.263), were then used to generate an estimate
of the number of full and part time jobs and the amount of wages and salaries
represented by the induced business activity.
Table 5 identifies the direct, indirect, and total impacts of each of the four
sources of economic impact under review. It identifies an additional $76.2
million in multiplier effects generated by the direct infusion of $215.7 million
in business activity within the Pocatello economy. Altogether, those four
sources of expenditures represent an economic stimulus of $291.9 million in
private sector business activity within the region.
Table 5: Summary of ISU-induced Local Spending Direct
ISU Institutional Purchases$23.7$9.3$33.0
Visitors to ISU$12.0$4.4$16.4
Estimated contributions for each source of expenditure are also included in the
table. ISU’s 12,245 students represent the single largest proportion of impacts,
with their household expenditures totaling more than $212 million in area
business activity. The total stimulus of institutional purchases generates
another $33 million, while the households of faculty and staff ($29 million) and
campus visitors ($16 million) generate significant impacts.
During 1996, Bannock County’s 73,379 residents earned $854 million in wage and
salary income, while county establishments conducted $1.2 billion in retail
business sales. Nonretail business added another $2 billion, yielding a gross
county product value of about $3.2 billion. This perspective suggests that about
9% of the area’s economic activity is in some way connected to ISU, with nearly
75% of that amount due to the local spending of ISU students and their
Discounting Local Residents
A significant portion of the University-related expenditures included in Table 5
would likely continue to occur in the absence of the University. Consequently,
it is realistic to discount contributions made by area residents whose
households would be reasonably assumed to maintain comparable contributions to
the local economy if ISU were to cease to exist.
The discounting procedure adopted for purposes of this study involves a
relatively straightforward estimate of the proportion of ISU students, faculty
and staff who would likely remain in the Pocatello area in the absence of the
university. The proportion of institutional purchases and out-of-area visitor
expenditures that would occur in the absence of the university is assumed to be
near zero. Based on a survey of students conducted in conjunction with this
report, an estimated 39% of the $212 million in student household expenditures
would be lost in the absence of the University. A similar survey of faculty and
staff reveals that 80% of faculty and 25% of staff would be lost to the area if
the university were to cease to exist. The prorated proportion of ISU’s
estimated $29.9 million in wage-based local purchases at risk under these
assumptions is $18.5 million.
Table 6: Discounting Area Resident Impacts Gross
Total EffectsExpenditures of
A summary of these calculations and assumptions is shown in Table 6. The net
effect of this discounting procedure is to reduce the local impact of Idaho
State University on the area’s economy by about $91 million. Consequently,
$190.7 million in area expenditures remain as directly attributable to ISU’s
Cost Benefit Analysis
Another way to look at the economic impact of Idaho State University involves
cost-benefit analysis, i.e. a comparison of value returned for investment made.
ISU represents a capital investment on the part of the State of Idaho of $139
million in fixed assets including buildings, property and equipment. Annually
the State of Idaho appropriates about $72 million to fund ISU operations. The
University also receives about $41 million per year from federal sources
(primarily student scholarships and loans), $23 million from student fees and
sales of auxiliary services, and another $13 million from private and other
sources. Altogether, the University operates on annual revenues of $149 million
and an investment in property and equipment of $139 million.
Return on those investments can be measured many different ways, but the one
used here strives to place a value on the educational benefit received by ISU
According to a similar assessment conducted by Boise State University3, a 1993
male college student’s lifetime earnings are enhanced by $456,362 over earnings
he would have received with only a high school diploma. Similar estimates are
generated for female graduates, and for recipients of occupational certificates,
academic Associate degrees and Master degrees. Based on the number of each type
of graduate and their gender, the lifetime earnings of ISU’s 2,083 graduates for
the year 1996 are increased by an aggregated $863 million! To realize an
equivalent 40-year return, the initial investment would be valued at $466
million assuming an estimated 3% annual rate of return.
Table 7: 40 Year Estimated Lifetime Earnings Differential for ISU Graduates
Estimated Aggregated Lifetime Earnings Differential
GraduatesAll 1995-96 GraduatesIdaho Resident Graduates
Based on information compiled by ISU’s Office of Alumni Relations, about 58% of
all known graduates of ISU programs reside within the State of Idaho.
Proportionately, Idaho residents realize a lifetime earnings enhancement of $499
million because of their educational attainment, with a present value of
approximately $307 million. This present value is roughly equivalent to the
“human capital” return on ISU’s activity.
In addition to the estimated value of an education received by ISU’s graduates,
the University has been shown (Table 6) to annually stimulate approximately $191
million worth of economic activity within the Pocatello area. Combined, the two
forms of benefits total $498 million.
This total annual benefit of $498 million costs the taxpayers of Idaho about $72
million per year, plus an investment of land, buildings and equipment worth $149
million. If the land and building assets are divided over a five-year period,
the combined annual cost to the State of Idaho for operating Idaho State
University is estimated at $102 million.
In summary, the State of Idaho’s calculated annual investment of $102 million
realizes an annual return valued at $498 million. This is very close to a
five-to-one return on investment, if the value of the education received is
given an estimated dollar value.
A more conservative estimate of the State of Idaho’s return on its ISU
investment can be calculated by excluding any reference to the value of the
education received by its graduates. The direct and indirect impacts of
institutional purchases, faculty, staff, and student household expenditures,
plus the expenditures of out-of-area visitors and the prorated expenditures for
land, buildings, and equipment totals a previously calculated $191 million.
Those expenditures alone represent an 87% return on the initial $102 million
The realization of the above rates of return on an ongoing basis, year after
year, testifies to the significant “profitability” of Idaho State University in
addition to its measured economic impact on Pocatello and the State of Idaho.
1INEEL Impacts, US Dept of Energy, Idaho Operations Office, 1997; Idaho Income
Survey, Associated Taxpayers of Idaho, 1992; and Microvision Market Segmentation
System, EquiFax/National Decision Systems, 1998.
2The Economic Impact of Northern Arizona University on Coconino County (1995),
College of Business Administration, Northern Arizona University, 1995; The
University of Virginia’s Impact on the Charlottesville Metropolitan Area, Center
for Public Service, University of Virginia, 1990.
3The Impact of boise State University on the Economy of Idaho, Chuck Skoro,
Department of Economics, Boise State University, 1996.
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