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University Communications

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Winter 2001
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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 1999–2000. 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 1999–2000 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 1999–2000, 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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