Winter
2001
THE
ECONOMIC ENGINE THAT COULD
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Figuring out the economic impact of a university is an exacting,
if not exact, science. Direct spending is simple to work out;
it's a matter of public record and subject to audits. Determining
the "ripple effect," however, is the real art of this
sort of economic study. For example, according to the LAEDC study,
UCLA students spent an estimated $16.9 million on transportation
in fiscal 19992000. Previous research has determined that,
on average, every million dollars spent on transportation in L.A.
County creates 17.7 jobs, from the oil wellhead to the gas pump,
from the assembly line to the parking lot. In turn, those gas-station
attendants and oil-rig workers need transportation of their own.
They buy clothes and food, pay rent and go to the doctor, all of
which also creates jobs. So, according to the LAEDC, spending by
UCLA students on transportation created 299 jobs. The people who
held those jobs, along with the students buying gas, coughed up
millions in taxes. All that tax money helped to employ bureaucrats,
lawyers, road workers and highway patrol officers, among others.
This ripple
effect multiplies the impact of every dollar spent by UCLA's administrators,
faculty, students, staff and visitors æ upwards of 60,000
people each and every day, a population roughly equivalent to Galveston,
Texas, or Schenectady, N.Y., and greater than that of Palo Alto,
Calif.
The most
obvious area of UCLA's economic impact is the university's direct
spending. Its operating budget for fiscal 19992000 was greater
than $2.6 billion. UCLA spent that money on everything from stationery
and books to waste disposal and construction projects.
The construction
of new academic-health-center facilities on campus and in Santa
Monica, for example, is currently the fourth-largest capital-investment
project in Southern California. (Only the MetroRail Red Line subway
project, $4.5 billion, the Alameda rail corridor, $2.4 billion,
and Disney California Adventure, $1.4 billion, are bigger.) At an
estimated $1.3 billion, it will, over the life of the project, create
nearly 23,000 jobs through construction spending and purchase of
project-related equipment. Those jobholders will have combined pretax
earnings of more than $825 million. There is other construction
spending as well. In fiscal 19992000, UCLA spent $162 million
on general construction and renovation other than the medical-center
project.
Then there
are goods and services, on which the university last year spent
about $884 million, buying from hundreds of different vendors.
Sunglo
Telecom Inc. of Upland, Calif., is one such vendor. The company
installs and maintains voice and data systems throughout the campus,
and will be bidding on the contracts for the new medical-center
construction as well. "UCLA is probably one of our top-five
customers," says Louis Johnson, chief operating officer. "Three
years ago, we opened our office in West L.A., near LAX, specifically
to handle the needs of UCLA." Last year, UCLA spent approximately
$2 million with Sunglo, about 15 percent of the company's business
overall.
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