State's investment in MnSCU returns $3.5 billion a year to state's economy

Posted: September 20, 2006

Contact: Doug Anderson, doug.anderson@so.mnscu.edu, 651-201-1426

System provides $2.4 billion a year in enhanced productivity; For every state dollar spent on the system, the economic benefits to the state amount to an estimated $10.87

The state's appropriation to the Minnesota State Colleges and Universities returns $3.5 billion a year to the state's economy, which includes $2.4 billion from enhanced productivity, according to a new study released Wednesday.

"There is no question that the state's investment in the Minnesota State Colleges and Universities pays real dividends to the state," Chancellor James H. McCormick told the Board of Trustees in his annual State of the System speech. "By educating our students, our system enhances the productivity of the state's workforce.

"Of the $3.5 billion return, about $2.4 billion is from enhanced productivity of Minnesota workers who received degrees or training at our colleges and universities. And our graduates do not make just a one-time addition to the state's economy; they continue to contribute throughout their working lives."

The study also shows that for every dollar spent in net state appropriation on the system, the economic benefits to the state amount to an estimated $10.87.

The system's capital expenditures also have had a significant impact on the state's economy, the report showed. During the last four years, construction spending on the system's 53 campuses has generated an average of $243 million per year of economic activity and the equivalent of more than 2,500 full-time jobs a year in Minnesota.

The study estimated that this year's bonding bill of $191.4 million will generate about $430 million in statewide economic activity and the equivalent of 2,150 full-time jobs over the next two years.

The report was done for the Minnesota State Colleges and Universities system by Paul Anton, chief economist for Wilder Research, a non-profit organization.

The study also reported the annual economic impact the seven state universities have on the regions in which they are located. They are: Bemidji State University, $105 million; Metropolitan State University, St. Paul and Minneapolis, $154.1 million; Minnesota State University, Mankato, $307.4 million; Minnesota State University Moorhead, $156.3 million; Southwest Minnesota State University, Marshall, $109.3 million; St. Cloud State University, $369.4 million; and Winona State University, $194.4 million.

In reviewing the past year, McCormick said the system has advanced on many fronts but still faces some challenges. "When I look back over the past five years, it is clear that public higher education in Minnesota and the nation has been hammered by a perfect storm," he said. Sagging state support, soaring tuition and painful budget cuts at the colleges and universities have all hit at the same time, he noted.

Over the past five years, the system's 32 colleges and universities have had to absorb cuts of nearly $240 million in state appropriations and impose double-digit tuition increases for four consecutive years and higher-than-inflation increases for the past two years, he said.

"Students have been the first casualties, going further and further into debt - or choosing not to go into higher education," he added. "Minnesota has slipped below the U.S. average in state and local support for public higher education per student, according to a recent report from the State Higher Education Executive Officers," McCormick said.

"It is good news for us that the state's budget woes seem to be past us," McCormick said. "However, even with a rosier economic climate than we've seen in the past several years, we know there will be tremendous competition for the state's resources. We will need to make a strong case for our appropriation request."

Printable text version of Chancellor McCormick's State of the System speech (pdf)