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Commonwealth Campus Network Key To Penn State’s Economic Impact

An economic impact study published last month and released by Penn State details the university’s economic contribution to the Pennsylvania commonwealth and highlights the importance of the university’s 24-campus network to the regional economy.

The study analyzed the university’s overall output via three specific economic indicators: the school’s value as a research, educational, and public service institution, economic contributions provided through Penn State Health Services, and value derived from non-university student spending in local communities.

The $11.6-billion total reported by the university represents the university’s direct, operational contribution to Pennsylvania’s total industrial output — in other words, the total transactions that occurred because of the university in the regional economy.

“[Penn State] looks like a relatively well-funded, integrated, public institution,” Dave Swenson, the study’s author, said over the phone.

Swenson serves as an associate scientist in economics at Iowa State University and a lecturer in urban and regional planning at the University of Iowa. He has extensive experience in conducting economic impact studies, and was contacted by the university last spring to submit a proposal to examine Penn State’s contribution to the Pennsylvania economy.

Additionally, Swenson worked with the Association of Public Land Grant Universities to develop guidelines for university economic impact studies that were too often published as “bloated declarations of economic activity” that he described as “bordering on embarrassing.”

Swenson’s study found Penn State employed 50,748 people and educated 98,783 students in 2017. It also recorded a $4.66-billion total economic value added through its operations, a unit of measurement the study compares to gross domestic or state product (GDP).

“Economists prefer to look at the value added column, because that is also analogous to gross domestic product,” Swenson said. “That allowed me then, subsequently, to say, how important is the university to the state’s economy.”

The study also calculated that Penn State students across the university’s 24 campuses spent $619.39 million on non-university related expenses. In other words, this total represented student spending in the communities and economy surrounding their specific campuses while attending Penn State. This spending total contributed a total of more than $400 million in value added.

Penn State’s extensive health network contributed a direct economic output of $2.06 billion, with $1.16 billion in payroll payments for the 13,355 jobs the program creates making up the majority of this total. In all, Penn State Health contributed a total economic value added of $2.49 billion. Additional value was added via renovation, equipment, and transaction costs.

“This study highlights the widespread nature of Penn State’s economic contributions,” Penn State President Eric Barron said in a release. “Our university, with 24 locations across the Commonwealth, an academic medical center, and a growing health system, is an engine that drives the economy and improves lives in all 67 Pennsylvania counties.”

Penn State’s $7.39 billion in value added economic contribution accounts for approximately one percent of the state of Pennsylvania’s estimated $740 billion 2017 GDP, according to the study. The study also found that Penn State generated an estimated total of $394.7 million in state tax revenue for the fiscal year.

Swenson emphasized the importance of the university’s contribution of highly-skilled graduates to the regional workforce as a key, though immeasurable on a university-based scale, aspect of its economic clout.

“[Alumni] continue to boost the state economy’s capacity for growth, that’s the real value of Penn State University,” he said.

But it was Penn State’s extensive campus network that set its economic contribution apart from other universities. Penn State Harrisburg alone reported a $198 million contribution to the state economy, while Altoona and Behrend generated $178.9 and $137.8 million, respectively.

“Where Penn State stands out in comparison to other studies that I’ve done is that you have this amazing distribution of 24 campuses across the state,” Swenson said. “You have economic activity that isn’t just localized in one major university setting…it is significantly distributed out across the state.”

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About the Author

Jim Davidson

Jim is a junior English and history major and the features editor for Onward State. He, like most of the Penn State undergraduate population, is from 'just outside Philadelphia,' and grew up in Spring City, Pennsylvania. He covers a variety of Penn State topics, but spends nine months of every year waiting for the start of soccer season. You can reach him via email at [email protected] or follow him on twitter @messijim.

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