UT Contributes $1 Billion Annually To State’s Economy

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KNOXVILLE, Tenn. — The University of Tennessee returns $3 to the state’s economy for every $1 in appropriations, a study by the UT Center for Business and Economic Research shows.

Matt Murray, UT-Knoxville economist who directed the 1994 study, used 1992-93 fiscal year data to measure the ripple effect of money spent by the university within the state.

Spending by the university, its students and visitors generated nearly $1.1 billion in additional state income, the report shows. UT’s state appropriation that year was only $313 million.

“When UT pays its employees or pays its bills, that money also generates income for the firms who supply goods and services. When students and visitors to UT buy goods and services, the money they spend generates income for merchants and suppliers in Tennessee,” Murray said.

“When income is spent and re-spent, a ripple effect occurs and produces more income.” Murray calculated the ripple effect, using only the dollars spent by UT, students and visitors within the state.

The university’s 1992-93 operating budget was $878.5 million. UT that year spent $699.3 million within the state. The ripple effect from that in-state expenditure was $918.9 million.

UT’s 40,000 students spent $305.7 million, creating a ripple effect of $104.5 million.

The 5 million visitors to UT athletic events, conferences, camps and hospitals spent $98.1 million, which generated another $50.3 million.

The study also shows:

* UT spent $417.5 million for salaries alone.

* UT supported 55,436 Tennessee jobs, including 25,387 on the UT payroll, 22,956 employed by firms doing UT-related business, and 7,093 created by money spent by students and visitors.

* UT-related spending generated $31.3 million in state sales tax and another $11.7 million in local sales tax, even though state schools are exempt from paying the sales tax.

“More important than those one-year benefits are UT’s longer-term contributions to the state — such things are the medical and legal clinics, the technical assistance provided to local governments, business and industry, and the research that has led to 564 inventions the past decade,” Murray said.

“The Tennessee Alumnus” magazine, in reporting the study, said UT’s value to the state exceeds its economic impact because of the “human capital, cultural enrichment (and) services to Tennessee’s governments and businesses.”

In addition, the magazine said, UT faculty and students provide many hours of free service to community projects.

“Taxpayers reap a healthy return from their investment in their state university,” UT President Joe Johnson said. “We have every reason to think the return will continue to increase each year.”

The biggest campus and unit contributors to the $918.9 million economic impact were:

* UT-Knoxville, $300.2 million.

* Medical Center-Knoxville, $186 million.

* UT-Memphis, $166.3 million.

* UT-Chattanooga, $53.3 million.

* UT-Martin, $41.3 million.

* Agricultural Extension Service, $35.9 million.

* Agricultural Experiment Station, $27.4 million.

* Bowld Hospital-Memphis, $21.3 million.

* UT Space Institute, $17.5 million.

Contact: Matt Murray (615-974-5441)

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