UWS 2016 Economic Impact Report PDF

University of Western States

2016 Economic Impact Report

University of Western States Economic Impact Analysis

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Executive Summary

Introduction

University of Western States is a health sciences institution located in Northeast Portland.

Through its multiple educational programs and five integrated clinics, UWS provides substantial

economic and community impacts, as do their alumni.

This study built an input-output model to show the economic impacts. This was done by using

UWS operational/capital expenditure data, estimated student expenditures, and BEA RIMS II

multipliers to determine. Outside of the input-output model’s reporting of economic impacts,

clinical and alumni impacts were also calculated and reported to give a comprehensive analysis

of UWS’ total impact.

UWS FY 16 Economic Impact

Annual Total Gross Output $60,076,485

Total GDP (Value Added) $36,061,151

Total Jobs (Person Years) 792

Additional Findings

Ø UWS provides ~26,000 pro-bono visits annually.

Ø These visits and other patient discounts value $2,968,789.47 annually.

Ø Approximately 2,500 (or 51%) of UWS alumni live in Oregon or Washington.

Ø In line with national data, DC alumni (92.8% of UWS alumni) will earn $62,000 more

than individuals with bachelor’s degrees only and create $76,166 greater gross

economic output.

Ø Using federal marginal tax rates, DCs create $15,610 more federal tax revenue than

bachelor’s degree only holders.


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Project Overview University of Western States (UWS) is a regionally accredited institution of higher education

located in Northeast Portland. It provides multiple master’s and doctoral degree programs in the

health sciences and related fields, in addition to a massage therapy certification and bachelor’s

degree completion program, to its 930 students. The institution’s involvement also plays a

significant role in the health of thousands of individuals in the region through its five healthcare

clinics whose workload is more than 70% pro-bono.

Over the last decade, UWS has experienced tremendous growth and transformation. From

moving to university status, to adding new master’s and doctoral degree programs, to nearly

tripling student enrollment, to building new facilities—and more in the near future—UWS has

significantly grown its economic and community contributions. With this involvement, the

determination of UWS’ economic impact has become an increasingly relevant endeavor. The

objective of this study will be to adequately and systematically answer facilitate greater

understanding of how extensive UWS’ economic and community involvement is in the area.

This economic impact analysis will enumerate UWS’ economic impacts on the Portland-

Vancouver-Hillsboro region and the seven counties it includes. It will do so by analyzing current

institutional operational and capital expenditures, as well as student expenditures, and creating an

input-output model. This input-output model will be made using the Bureau of Economic

Analysis (BEA)’s RIMS II input-output multipliers for the region and using UWS’ 2016 Fiscal

Year (FY 16) expenditure data.

In addition to showing UWS’ economic impact, this study will include philanthropic impacts and

potential economic impacts of future projects that the university plans to undertake. While this

report also includes some UWS alumni data and statistics regarding the value of its degrees in

general, it should be noted that neither of these figures will be factored into the any of the

economic impacts shown by this study. The purpose of including this information in the report is

to demonstrate UWS’ linear trend of increasing economic involvement and growth, as well as

the far-reaching community impacts that a UWS education facilitates.


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This report will include a methodology overview, which will explain this study’s research

practices, the input-output model, and the BEA’s RIMS II data. A detailed methodology will

then be presented. Following, the report will present the findings of this study and answer the

question of UWS’ economic impact in the region by showing three figures: total gross output,

total GDP (value added), and total jobs (person years). Lastly, it will provide auxiliary figures

and information that are highly informative and important, but not included within the input-

output model.


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Methodology Overview Economic impact analyses attempt to quantify the economic effects that an organization or event

have on a given region. They typically factor in capital and organizational spending, revenue

changes, and all economic activity that is directly produced by an organization or event. After

collecting a comprehensive analysis of these data points, they will use a given system or

framework to determine the effects that this direct activity has on other industries and sectors of

the local economy.

Once these effects are determined, they are put into a more accessible format, typically including

gross output, GDP, and employment. By utilizing this format, individuals are able to see the

figures in a more conventional light, and also compare these impacts to other industries. As a

result, economic impact analyses tend to be used in a variety of industries, typically for the

purpose of objectively evaluating an organization’s or event’s significance and efficacy.

When evaluating UWS, direct institutional expenditures were relevant to determining economic

impacts. Because UWS offers programs that no institution in the region does, the study did not

have to factor the competitive aspect of economic losses that local institutions may experience.

However, just institutional spending did not entirely show the economic impact. UWS attracts

students from all over the nation and world and most students are not from the study’s region.

Due to this, student spending on room and board, entertainment, transportation, and

miscellaneous expenses comprise a vital component of the overall impact. By factoring student

economic activity—which is activity that would not occur without the institution—and the

institution’s operational and capital expenditures, the economic impact is able to be fully and

comprehensively factored.

Besides determining the scope of direct impacts, another initial point of order in the economic

analysis was to establish the study’s region. Because the university is located within Oregon, but

is just a few miles from the Washington border, it was very quickly established that parts of

Washington would need to be included to correctly calculate UWS’ impact. The region that was

used in the study is the Portland-Vancouver-Hillsboro area. This includes seven counties;


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namely, Clackamas, OR, Columbia, OR, Multnomah, OR, Washington, OR, Yamhill, OR, Clark,

WA, and Skamania, WA.

The next decision was to use an input-output model. Input-output models use regional or

Keynesian multipliers to estimate economy-wide changes as a result of direct spending. These

multipliers demonstrate indirect and induced impacts, which are then summed with direct

benefits to determine the full economic impact. Multipliers are divided into highly specific

industries and aggregates that measure commodities produced by industries and their respective

consumption. Multipliers are based off of many behavioral assumptions: marginal consumption

propensity, anticipated economic changes, supply, asset prices, and empirical interconnectedness

of industries.

Input-output models are highly efficient and an exceptional tool for estimating economy-wide

effects. Due to their specificity, input-output models are able to effectively isolate industries and

determine how much additional economic activity spawns from changes in that industry. For this

reason, input-output models tend to be used the vast majority of the time when conducting

economic impact analyses. For these reasons it was determined that the input-output model

would be the best fit for this particular study.

It should be noted, though, that input-output models have limitations—as do all models. Input-

output models tend to place too much emphasis on short-term effects—they are a “snapshot” of

the economy—and with that can underestimate the amount of time that changes take to occur.

Additionally, input-output models can rely too heavily on a linear demand-production curve,

with the model assuming that there is an equally proportional response in production to a change

in demand. Along with the linearity limitation, input-output models can tend to underestimate

supply constraints, which can slightly skew figures. However, despite some limitations within

input-output models, they tend to be the most accurate and precise estimation model.

For this economic study, the BEA’s RIMS II multipliers were used to develop the input-output

model. RIMS II multipliers are provided for 369 industries and 64 industry aggregates. They take

national input-output multipliers and modify them for a given region. RIMS II takes final


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demand charges, direct impacts, indirect impacts, and induced impacts and then sums them to

produce accurate economic impacts. It provides multipliers for four distinct categories: gross

output, value added, earnings, and employment.

Direct and indirect impacts are based on how goods/services are supplied and purchased in a

given region. Induced benefits are how employees spend earnings that are a result of direct and

indirect expenditures, e.g. household spending.

Direct + Indirect + Induced Impacts = Total Impacts

For UWS’ economic impact study, three of the RIMS II measures were used; namely, gross

output, value added, and employment. Gross earnings consist of intermediate earnings and value

added summed. Value added is the industry’s GDP, and is simply the net value of gross output

(gross output minus intermediate input). Employment is determined in person years. It is the

number of jobs that the institution directly provides added to the total jobs—both full and part-

time—created by the given economic activity.

Using the aforementioned methodology, UWS’ economic impact analysis was completed. Using

RIMS II multipliers for the specified region and for specified items of the budget, the

institution’s operational economic impact was determined. This was then added to the student

impacts. Student costs of living and estimated expenses are determined by UWS’ department of

financial aid. Total impacts were then figured using household multipliers. It ought to be noted

that these figures are highly conservative, due to the study’s inability to accurately determine the

expenses of students’ families living with them.

Regarding points of data that are included within this report but not factored into the economic

impact. Total discounted visits and the value of these visits is data that is kept by UWS’ clinics

and can be directly reported. The same is true of alumni geography. With respect to future

projects and economic activity, the cost of these investments and projects were self-reported

UWS and then the projected total impact was calculated using appropriate multipliers. The


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earnings difference estimates included in this report were collected from multiple nation-wide

earnings reports.


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Detailed Methodology Institutional Expenditures

Because this study calculated the impacts for FY 16, UWS’ operational and capital expenditures

were limited to FY 161. UWS’ expenditures totaled $21,543,137 in FY 16. However, $989,957

of these expenses—Depreciation, amortization, and accretion—were excluded for the purpose of

this study, as they provide no economic impact. Thus, the institutional expenditures that were

usable in calculating the economic impact summed to $20,553,1802.

The largest portion of the expenditures was salaries and benefits, comprising 66% of the

expenses by natural class. The three largest functional expenses were instruction, institutional

support, and clinics, comprising 36, 23, and 12% of the budget, respectively.

Figure 1.1, UWS budget breakdown

Using the detailed industry, Junior colleges, colleges, universities, and professional schools, as

well as breakdowns for each aggregate industry in the Portland-Vancouver-Hillsboro region, the

1July 1, 2015 to June 30, 2016 2Source: University of Western States


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gross output, value added, and employment were calculated. This calculation shows a gross

output of $44,037,243. It shows a value added (GDP) impact of $26,466,329. Lastly, it shows an

employment change in 654 jobs. This was calculated using a direct-effect multiplier for a more

precise calculation.

Student Expenditures

In addition to UWS’ expenditures, student expenditures were included in the study. However,

there are a few points of consideration for this calculation that ought to be noted.

• Of UWS’ 930 students, many are online. Any student in an online program was excluded

from the economic impact because they do not contribute an economic impact. Though

some students in the online programs do live in the region, they were not counted because

they did not actively come to the region for UWS—they just happened to live in it.

Therefore, UWS cannot claim their impact.

• Some students, especially in the massage therapy certification program, are from local

areas and/or live at home. Their impact was not counted. However, all students in the

post-graduate programs who physically attend UWS were counted in the economic

impact study.

• Tuition, fees, books, and supplies were excluded from the economic impact. Tuition and

fees were excluded because it is assumed they were accounted for in UWS’ operational

expenditures. Books and supplies were excluded because it is assumed books and

supplies are typically purchased online, and those purchased locally comprise a very

marginal impact.

• Only the students’ cost of living was included in the economic impact; the additional cost

of their spouses and children were excluded. There are two reasons for this.

o Reason one: this study is decidedly scientific and will only use data that can be

proven; the data pertaining to family members could not be garnered or estimated

reliably.

o Reason two: this study has taken a conservative approach to the economic impact.

Incorrect estimates could compromise the conservative nature.


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Based off of these criteria and considerations, as well as data collected and produced by the

office of financial aid, student spending was calculated to be $13,055,9563. The line-item

breakdown of indirect (non tuition and fees) costs is shown below.

Figure 1.2, UWS Student Expense Table

Using the household’s industry and each aggregate industry breakdown for the Portland-

Vancouver-Hillsboro region, then summing each aggregate together for the full household

impact, gross output, value added, and employment were calculated. These calculations show a

gross output of $16,039,241. They show a value added (GDP) value of $9,594,822. The

employment added is calculated to be 138 jobs.

3Source: University of Western States


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Overall Impact

UWS’ overall impact was calculated by summing the previously calculated impacts from prior

calculations.

Institutional Impacts + Student Impacts = Overall Impact

This resulted in the following:

Figure 1.3, Economic Impact Results Table

Impact Category Gross Output Value Added Employment

Institutional

Expenditures

$44,037,243 $26,466,329 654

Student Living

Expenditures

$16,039,241 $9,594,822 138

Total

Economic

Impacts

$60,076,485

$36,061,151

792


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Additional Impacts Not Included in Input-Output Model

This study is meant to be a comprehensive analysis of UWS. While the figures generated by the

input-output model show impressive results, they don’t fully portray the extent of UWS’

impacts.

UWS plays a vital role not just in the local economy, but in the overall health and wellness of the

community. They do this through a variety of avenues, such as their integrated clinics,

distinguished alumni, and projects where they utilize as many local businesses and industries as

possible. With a continued trend of increasing student enrollment, expanding programs, adding

infrastructure, and increasing clinical capacity and efficacy, UWS’ involvement and impacts

follow a positive linear trend.

Clinical Impact

UWS operates five clinics in Northern Oregon. These clinics are located in East Portland,

Gresham, downtown Portland, Salem, and an on-site Campus clinic. In total, they provided

32,820 visits in FY 16. Of those 32,280 visits, many of them were discounted and roughly

26,000 were pro-bono visits4. These visits, especially philanthropic visits, have a huge effect on

the local community. Because clinic expenditures were accounted for in the input-output model

and there isn’t a highly accurate method of evaluating philanthropic services within the model,

philanthropic services could not be included in impacts. However, the data is still there and they

are able to be quantified without multipliers.

The value of these clinic visits—including for-profit, pro-bono, and discounted-for-profit—

amounted to $3,826,890. The total value of the discounted visits summed to $2,968,789. This

equates to an average of $90.46 in discount (in value) per visit.5

4Source: University of Western States 5A main reason for such a high mean discount per visit is due to the high number of pro-bono visits where the entire visit is free.


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Figure 1.4, clinical visits summary

Total Visits (all clinics) 32,820

Total Discounts (value) $2,968,789

Average Discount (per visit) $90.46

By offering discounted and pro-bono services, UWS regularly makes healthcare accessible to

thousands of individuals who otherwise could not have afforded care. Additionally, it increases

discretionary income of families by giving them cheaper access to healthcare. The implications

of this are twofold. The increase in the availability of healthcare increases one’s likelihood of

seeking treatment and therefore, overall wellness. The increase in discretionary income increases

standard of living and consumption, thereby bolstering local industries.

Alumni Impact

According to a recent meta-analysis, UWS has 4,930 living, located alumni. Of these 4,930

alumni, 2,500 live in either Oregon or Washington. Of all of UWS’ alumni, 92.8% have been DC

graduates. As such, statistics regarding DC professionals were used to calculate and determine

the impacts of an average UWS graduate.

According to national data6, DCs, on average, earn $61,000 more annually than those with just

bachelor’s degrees. As a result, UWS has provided close to 4,000 surviving individuals with

approximately $60,000 higher earning potential than they otherwise would have had with just a

bachelor’s degree.

6See Appendix A


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Figure 1.5, earnings by degree

This is based upon the average DC earning $117,000 annually and bachelor’s degree holder

earning $55,0007. There are two main economic impacts that spawn from this increase in

income. The first is a larger disposable income, which facilitates more consumption and

economic activity. Using RIMS II household multipliers and breakdowns of industry aggregates,

this would mean that an average DC would have an impact of $143,734 gross output annually,

compared to a $67,568 gross output that someone with only a bachelor’s degree would have.

This would equal a difference of $76,166, meaning that each average DC has a $76,166 greater

gross output per year. Note that this figure is based entirely off of earnings and operates under

the assumption that both degree holders have perfectly average earnings.

The second impact that comes from this difference in income is the increase in tax revenues on a

national and state level. The state of Washington does not have a state income tax, so the

difference in state tax revenues, on a local level, is only applicable to Oregon. On a federal level,

assuming both degree holders filing as head of household, the difference in tax revenues would

7See Appendix A

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Bachelor'sDegree DCDegree

EarningsByDegree


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be $15,610 annually. On a state level, using Oregon as the example, the difference in tax

revenues would be $5,619 annually8.

Future Projects

As UWS’ programs and student enrollment expand, their structures are forced to expand. Within

the next three years, UWS plans to undertake a $3 million—conservatively—building project on

their 22-acre campus. Using RIMS II multipliers, this is projected to create an impact of

$6,329,400 gross output.

In the more recent future, UWS’ approved FY 17 expenditures are $1,111,214 higher than FY

16’s (excluding depreciation, amortization, and accretion in both budgets due to lack of

economic impact). As a result, UWS’ gross output is projected to be $2,380,887 higher than FY

16, showing a positive linear trend in economic impacts and involvement.

8See Appendix B


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Appendix A: Salary Methodology In order to compute estimated differences in earnings between individuals with only bachelor’s

degrees and individuals with DC degrees, an average figure for each category was pulled from

multiple sources.

Data on DC earnings was pulled from three sources. The reason for using three sources was to

eliminate bias, and also to account for limitations in each poll. Because many DCs are self-

employed, salaries and earnings often have statistically significant variation. Consequently, a

poll that only looks at the salary of DCs who are employees would not correctly show earnings

on its own. The sources used to determine DC earnings were as follows: Salary.com

(http://www1.salary.com/Chiropractor-Salaries.html), the Bureau of Labor Statistics

(http://www.bls.gov/ooh/healthcare/chiropractors.htm), Chiropractic Economics

(https://www.chiroeco.com/chiropractic-salary-expense-survey).

Each of these data points were given equal weight and were summed together, then divided by

three to determine the average. Salary.com determined the average annual earnings of DCs to be

$139,225. The Bureau of Labor Statistics9 and Chiropractic Economics reported $64,440 and

$147,334, respectively. This yielded an average of $116,999.67.

Data on bachelor’s degree holders’ earnings was pulled from two sources. First was the

Hamilton Project

(http://www.hamiltonproject.org/papers/major_decisions_what_graduates_earn_over_their_lifeti

mes/). Second was the Bureau of Labor Statistics (http://www.bls.gov/emp/ep_chart_001.htm).

The Hamilton project argues that the average lifetime earnings for bachelor’s degree holders,

factoring discounted earnings, is between $800,000 and $2,000,000 – depending on degree –

with an average of 1.19 million for all holders. It assumes a 40-year work life. This economic

impact study assumed the highest end, $2,000,000, which would average to $50,000 annually.

The Bureau of Labor Statistics shows that the average annually earnings are $59,124. The

average of the two is $54,562.

9Note: The Bureau of Labor Statistics only factors wages, not total earnings. Nonetheless, it was given equal weight, potentially deflating figures and certainly creating a conservative estimate.


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The difference of the degree holder’s average earnings was computed to be $62,437.67. Each

respective salary was used to determine economic impacts and tax revenues, as well as the

difference in economic impacts and tax revenues.


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Appendix B: Tax Methodology The total federal tax revenues and difference in tax revenues by degree’s earnings was calculated

using the IRS’ 2015 marginal tax rates (https://www.irs.com/articles/2015-federal-tax-rates-

personal-exemptions-and-standard-deductions), as well as the calculated earnings (See Appendix

A). The tax revenues for each degree’s earnings were found using the Head of Household table.

Therefore, the assumption was that each degree-holder would each be filing as the head of

household.

Figure 1.6, Head of Household Tax Rates

Using this table, the taxes paid, and therefore the tax revenue, for bachelor’s degree holders

would be $7,963. The taxes paid for a DC holder would be $23,572.50. The difference of the two

is determined to be $15,609.50.

State tax revenues were calculated for Oregon alone. Once again, they were determined using the

assumption that the degree holders would each be filing as the head of household. The tax rates

were found using the state of Oregon’s website, under income tax rates and tables

(https://www.oregon.gov/DOR/programs/individuals/Documents/full-year-income-tax-tables-

rates-101-043_2015.pdf).

Using this table, bachelor’s degree holder’s Oregon state income taxes would amount to

$4,440,58. DC holders would be $10,059.97. The difference of the two is $5,619.39.