"Focus on the Tangibles could be Eastern Kentucky University's (EKU) newest mantra, now that the university has released the results of a comprehensive economic impact study. Prepared by Dr. Charles Haywood, noted economics researcher and former dean of what is now called the Gatton College of Business and Economics at the University of Kentucky, the study sheds light on the economic impact of EKU on the commonwealth, the 21 contiguous counties south and southeast of Madison County and Madison County itself, home to EKU's main campus. It could also become part of the foundation of a long-range business plan for EKU.
"As Eastern celebrates 100 years of service, we are taking a comprehensive look at the tangible economic impact EKU makes in the life of our community, region and state in terms of economic development and quality of life," EKU President Joanne Glasser said. "As we continue our long-term planning and our development of a business plan, and continue to move forward with high quality academic programs and educational and outreach services, it is imperative that we take time to step back and assess our value. That is why we chose to engage the services and expertise of Dr. Haywood."
According to Haywood, who has prepared similar economic studies for Toyota Motor Manufacturing, Kentucky in Georgetown, Kentucky's equine industry and other higher education public institutions in the state, just to name a few, the study presents two ways to assess the tangible economic impact of EKU.
"One way of looking at EKU is to consider it a business enterprise, much like any other business, with revenues and expenditures," Haywood explained. "The other way is to view it as a manufacturer of "human capital," because the future earning capacities of persons receiving its services are increased above what their earning capacities would otherwise be."
Consider the numbers from Haywood's report: In fiscal year 2005, the state of Kentucky benefited from $256.6 million of spending directly attributable to EKU, and related activities resulted in spending of $261.9 million; employment was 5,876 greater in Kentucky and the impact on household incomes in the state totaled $192.1 million. As a "human capital manufacturer," EKU added $629.4 million to the stock of human capital in Kentucky, and although some of this addition to human capital will be lost to other states as graduates find jobs outside Kentucky, 66.4 percent of EKU graduates can be expected to stay in Kentucky.
"For fiscal 2005, state appropriations to EKU were $69.8 million. Through EKU's educational programs, the state increased the total capital stock in Kentucky by nine dollars for every dollar of state appropriations," Haywood noted. "Even by adjusting the numbers to reflect the proportion of graduates expected to leave the state, there is still a handsome return of approximately six dollars for each dollar of state appropriations."
Not surprisingly, the study points out that Madison County is the largest beneficiary of EKU's economic impacts in terms of number of jobs (5,021), the total effect of spending ($413.7 million), and the impact on household income ($163 million).
"The fact is, Eastern is a multi-million dollar enterprise, a leading employer in the region and both a magnet for economic growth and a vital contributor to the economic vitality of the community and region," President Glasser said, "But we're not like other businesses in terms of where we locate and who we serve — some of the most economically disadvantaged counties in the region. There is no chance EKU will close its doors, pull up stakes and move to another community — we're here to stay."
"However," she added, "for EKU to continue to maintain and enhance the quality of our academic programs, scholarship and services, we must have adequate resources, both public and private dollars. This study helps gauge the value of EKU and underscores the fact that an investment in EKU is an investment in our community, our region and our state. It will add validity and credibility to our requests for additional — and sustainable — financial resources."
Haywood also addressed the close relationship between EKU and Madison County.
"Through planning and hard work, EKU has the potential to double its enrollment over the next 15 years, in one of the fastest growing counties in the state. By looking at the economic impact of the university on the county and in turn, the support of the university by the city and county, it is evident that EKU could not only be part of that growth, but could lead the way," Haywood said.
"With the programs already in place and expansions underway and planned, this university also has the potential to help the state of Kentucky double the number of baccalaureate degrees awarded to residents over the next decade, increasing earning potentials and adding to the state's stock of human capital."