The Catalyst

Features, Top Stories — By on January 22, 2013 4:11 pm

“The university is a huge economic engine just from the perspective of the staff they hire and people living and working here, and then you've got the whole influx of students throughout the school year. So you've got that double impact on the economy.” – Mayor Duke Bennett

Here’s a trivia question: Who is the third largest employer in the Terre Haute region?  

Sony DADC?

No.

Applied Extrusion Technologies?

No.

 Clabber Girl?

Wrong again.

According to the Terre Haute Economic Development, the honor goes to Indiana State University. With 1,813 employees in fiscal year 2011 (the latest year for which numbers are available), the university is fast closing in on first-ranked Union Hospital, with 2,252 employees, and the Vigo County School Corp. at 2,051.

Job provision and the subsequent spending power of these employees add up to position ISU as a major contributor not just to the economy in the five counties that make up the Terre Haute region (Vigo, Vermillion, Clay, Sullivan and Parke), but to the state of Indiana, too.

And that, says ISU President Dan Bradley, is just one way in which the university is living up to the fiscal expectations the public is placing on higher education today.

“We’re now talking about a reality in which 60 percent of the workforce has degrees, whereas a generation ago it was 10 percent and before WWII just 5 percent,” Dr. Bradley said during a recent interview. “As we’ve moved from agriculture and manufacturing to information and service industries, it’s making obtaining a college degree more important than ever.”

Amid the harsh realities of the New Economy, the role of colleges and universities is no longer considered in the simple context of a place where students go to earn advanced degrees and where scholars and researchers are nurtured in their pursuit of new knowledge. Accountability is the order of the day, with the onus especially on public institutions to prove they are a good return on investment as they compete for a share of taxpayer dollars and private donations.

The remarks of Florida Gov. Rick Scott epitomize how many policymakers view universities as an investment and the pressure they are exerting on higher education to improve their regions’ bottomlines. He told the Sarasota Herald-Tribune recently that he was shifting higher education funding in his state from programs involving the liberal arts to those that are known to produce high-paying jobs — particularly those engaged in the STEM fields (science, technology, engineering and mathematics).

“If I’m going to take money from a citizen to put into education then I’m going to take that money to create jobs,” he is quoted as saying.

Despite the governor’s assertion, most educators and many business leaders, too, agree that universities must continue to support those programs — many embedded in the liberal arts — that maybe can’t be linked directly to job creation, but are nevertheless important to the marketplace. That’s because these types of programs teach students valuable critical thinking skills and prepare them to operate in the business world, whether in a global conglomerate or in one of the privately owned ventures that helps form the financial backbone of many small towns.

“ISU is especially important to Terre Haute and the state because we’re working with future employees on how to thrive in a small-town environment,” Bradley added. “With a 60-mile radius of farming communities surrounding Terre Haute, we’re situated in the perfect spot to take on this role.”

Many of these opportunities are being brokered through the university’s Business Engagement Center, which partners with area businesses to provide university commercialization services and experiential learning opportunities.

“Our goal is to connect students, faculty and staff within the business and non-profit communities to create partnerships for experiential learning,” said interim director Jessica Starr. “This provides a win-win situation for the students and the entities in which they work.”

Starr said the center is currently assisting 12 companies — adding that number “can fluctuate on any given day” — and that last year alone the center paired 29 students with local businesses.

“We also worked with two marketing classes and a business capstone course in the Scott College of Business to partner with businesses,” she added. “Students’ projects were everything from social media advertising campaigns to creating informational packets sent all over the country informing companies why they should relocate to Terre Haute. Students also created a strategic plan for Parke County to help develop their local economy.”

Doing It Right

Beyond training the workforce, it’s important for universities to be involved in economic development in more immediate ways, too, Bradley thinks.

A recent editorial in Inside Indiana Business  by Larry Gigerich, managing director of the Indianapolis-based economic development advisory services firm Ginovus, outlines how colleges and universities can pinpoint the best ways to participate in the economic development process.

They should begin, he writes, by “completing a comprehensive inventory of all activities that have a material impact on economic development initiatives. This process will allow the institution to identify its key assets, which can be leveraged to help grow the regional, state and national economies.”

Once identified the next step is to take these assets and match them up with economic development initiatives that present an opportunity for leveraging people, facilities and capital in support of economic development efforts.
Gigerich could have taken his missive directly from the pages of the ISU strategic plan. A major portion of the plan is directed at how ISU can assist the region’s businesses and, hence, bolster economic viability.

“Indiana State University is proud of the role it has in building the local, regional and statewide economies,” Bradley said. “Responsiveness is what business leaders are telling us they expect from us today.

“So along with our primary focus on educating students we are partnering with the city and others to be a catalyst for development of Terre Haute’s downtown and riverfront areas while working to advance the quality of life for our students and residents of the Wabash Valley and the state of Indiana.”

Mayor Duke Bennett said he is a fan of the plan and, likewise, ISU’s progress thus far in implementing its economic development goals.

“It makes sense,” he said when asked about the university’s strategy. “Also,” he added, “it’s simply good to have a plan and it’s good to lay out how you will execute it, so as you meet goals you can come up with new ideas and ways to grow the university and the whole local economy — Terre Haute’s and Vigo County’s both.”

The new ISU Foundation Building on the edge of campus and the city’s central business district is a prime example of how this is panning out. The two-story, $5 million structure also houses a Barnes & Noble college superstore and as such makes it the first new retail building to be constructed downtown in more than 30 years.

The renovation of the Terre Haute Federal Building into the Donald W. Scott College of Business last fall and continued revitalization of student housing, including the possibility of new construction in the downtown area, are other ways in which ISU’s economic contributions are taking physical form.

The partnerships leading to this revitalization benefits all, Bennett thinks.

“We have a really good working relationship with the university and it continues to grow,” he said. “When they do these public/private partnerships it helps keep their costs down, but also brings some private people to the table that wouldn’t have an opportunity maybe to do something without that partnership.

“That continues to be a very positive thing from an economic development perspective.”

These partnerships aren’t confined to the city limits.

“We’re dedicated to addressing the unique economic needs of our community through initiatives such as the Rural-Urban Entrepreneurship Development Institute (RUEDI), whose primary objective is to improve the rural economy in Indiana by increasing entrepreneurship and new business start-ups in rural communities across the state,” Bradley explained.

RUEDI was one of eight proposals selected for the university’s Unbounded Possibilities (UP) initiative last year. The five-year, $5 million UP program was established to help the university do more to address community and societal needs by creating new internal collaborations with external partners in the Wabash Valley and Indiana as well as nationally and internationally.

Providing students with significant experiential learning and community engagement activities and assisting the university in recruiting and retaining great faculty, as well as helping to diversify revenue streams, are other benefits of the UP program, Bradley said.

“Indiana State University is proud of the role it has in building the local, regional and statewide economies.” – Indiana State President Dan Bradley

The ROI Pay Off

A recent economic impact report by Indianapolis-based Thomas P. Miller and Associates, presented to the Board of Trustees late last year shows that ISU’s effort are paying off in many other ways, too.  

For every dollar the state invests in the university, the actual economic impact is $1.68—more than two-thirds the return on investment. In total dollar amounts, ISU’s contributions to the Terre Haute area economy exceed $400 million a year.

Statewide, that number jumps to nearly $519 million.

“The university is a huge economic engine just from the perspective of the staff they hire and people living and working here,” Bennett said, “and then you’ve got the whole influx of students throughout the school year. So you’ve got that double impact on the economy.

“That’s obviously a huge and very good thing for a community to be able to have an engine of that size.”

Factor in the $3.7 million in wages and pension benefits to employees and retirees living the nearby Illinois counties of Clark and Edgar, and the university leverages an additional $1.5 million in spending and 51 jobs supported.

Along with the 1,813 workers employed by ISU, approximately 3,681 Indiana-based jobs are provided by initial ISU-related spending in the state and total jobs generated after multiplier effects are included equal 5,020 statewide. This adds up to a $109.4 million payroll at ISU and more than $77 million in compensation for indirect jobs related to the university’s operations.

ISU’s educational and cultural activities are economic boons, too. In 2011 they drew more than 266,000 visitors to the community to attend athletic events, touring Broadway productions, internationally known speakers, academic conferences, art exhibits, music festivals and performances, student activities, theatrical performances, alumni events and more.

Visitors to campus dine in local restaurants, shop in area retail outlets, purchase gas at local service stations and stay in area hotels. In total, they spend $10.9 million in the local community each year.

The study also revealed that each year the university provides the community and state with a pool of more than 1,900 graduates ready to enter the workforce and become engaged residents in their communities. The majority of them remain in Indiana working in nearly every sector of the economy, illustrating the university’s role in meeting the demand for an educated and skilled workforce.

University graduates enjoy an enhanced standard of living compared to those who do not pursue a higher education. On average, individuals in Indiana who earn a bachelor’s degree will earn 47 percent more over the course of their lifetime than those with only a high school diploma. Earnings for those with advanced degrees are another 20 percent higher for males and 36 percent higher for females over those with bachelor degrees.

Beyond providing a high quality education to its students, the study shows that ISU faculty, staff and students are active in a broad range of community social and cultural activities. An economic estimate of one dimension of ISU’s community engagement — community service time of students and faculty — revealed that time served by students and faculty for the programs identified in the President’s Community Service Honor Roll exceeded 1 million hours.

Even at the 2010 minimum wage of $7.25 per hour, the value of annual ISU community service exceeded $8 million.

And there’s one more benefit that should be factored in when analyzing ISU’s economic contribution, Bennett said:  the university’s image itself and what that means from a marketing standpoint.

“Just the fact that the university is here is great for Terre Haute,” he explained. “Anytime the athletic teams are successful or any of their programs get mentioned or rewarded for achievements, people are reminded that ISU is located in Terre Haute, Indiana.

“It gives you that dual ability to help in the marketing of the university and of our community, when people can see a progressive and successful university existing right here in the heart of the city.”

Laurel Harper is a freelance writer who lives in Louisville, Ky.

 

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