Georgia Military College Economic Impact Study

Prepared for The Georgia Military College

Executive Summary

The Georgia Military College (GMC) has a significant economic impact in the 14 counties where it operates and in Georgia as a whole. The 1,508 direct employment jobs at GMC support an additional 550 jobs statewide for a total of 2,058. The total labor income across the state for these jobs is $61.7 million. In the 14 counties where it operates, GMC adds $72.9 million in value and about $97.2 million in economic activity. Statewide, GMC’s operations add $80.6 million in value to Georgia’s economy on more than $110.9 million in economic activity.

As shown in Table 1, the estimated jobs multiplier for GMC is 1.37, meaning that every 100 direct employment jobs at GMC support another 37 jobs statewide. GMC’s estimated economic output multiplier is 2.08, indicating that each dollar of GMC’s economic activity results in an additional $1.08 in economic activity in the state.

Totals may not sum due to rounding. All figures in current year dollars.

Source: IMPLAN, Carl Vinson Institute of Government

Table 1. Summary of Operating Budget Impacts for GMC, 2022

GMC capital expenditures from 2018 to 2023 resulted in the direct employment of 72 persons at the firms providing work on capital projects. About 12 jobs are supported indirectly by those firms’ suppliers. An additional 12 jobs are supported through an induced effect, bringing the Baldwin County total to about 95 jobs with more than $4 million in labor income. While the model allocates about 72 direct employment jobs to Baldwin County, some workers likely reside outside the county. For this reason, the impacts in Baldwin County may be overstated, while those in the remainder of the state are understated. Fifteen additional jobs are supported elsewhere in the state, bringing the average total number of jobs from capital expenditures to 110 annually with nearly $4.9 million in labor income. Table 2 shows that GMC’s capital investment added an average of about $7.9 million to the state’s economy on $15 million in economic activity in these years.

Totals may not sum due to rounding. All figures in current year dollars.

Source: IMPLAN, Carl Vinson Institute of Government

Table 2. Average Annual Capital Investment Impacts for GMC, 2018 - 2023

Introduction

The Georgia Military College requested that the Carl Vinson Institute of Government (Institute of Government) conduct a study to determine the economic impact of the GMC’s operating and capital budget expenditures GMC provided data for its fiscal year 2022 operating budget and for capital expenditures for fiscal years 2018 through 2023, the current year. This study will describe these data in more detail in the next section.

Colleges and universities significantly impact the student populations and communities they serve. Certainly, students whose prospects for employment and wage growth are enhanced through education realize the major benefits produced by an educational institution. Communities also benefit in many ways as colleges and universities add to the social and cultural life of their citizens. However, an economic impact study seeks to estimate only the measurable contributions a school makes to the local economy and the broader state economy. As such, this study does not attempt to quantify those benefits accruing only to students or the social and cultural life of the community. Economic impacts result solely from economic activity; that is, economic transactions where a party exchanges one thing (labor, goods, or services) for monetary resources

The Institute of Government research team would like to thank Chip Kirby, Joelle Trumbo, Christopher Babb, Alisa Stephens, and Heidi Thomas at GMC for their help with the data needed to conduct this study and for their very timely responses to questions as the work proceeded.

Data and Methods Input-Output Models

The economic benefits of the GMC’s operating and capital investment are primarily realized in the 14 counties where the college operates. However, other parts of the state also see benefits through spillover effects. The primary location for GMC’s operation is Milledgeville in Baldwin County. GMC has several distinct operations in Milledgeville, including its main campus, corporate offices, a K-12 preparatory school, and its Global Online Leadership College that offers remote students associate’s degrees and bachelor’s degrees. Additionally, GMC operates 13 satellite campuses across Georgia for in-person classes. Table 3 shows those locations, the number of positions, and combined salary and benefits for each location. There are 17 operating units in 14 locations across the state. The operation in Rockdale County is in the planning stages and thus had only minimal economic impacts in 2022

Economic impact studies of colleges and universities often include an analysis of student spending in the local economy for food, entertainment, and personal items. Many surveys of students at flagship and regional state schools have collected data on a sample of students to estimate a spending pattern. Researchers often use the spending patterns of residential students as an estimate for student spending at other institutions. However, this study does not include student spending since GMC largely operates as a commuter school. The only residential students at GMC’s main campus are those in the Corps of Cadets. It seems reasonable to believe that the spending patterns of commuter students and residential students surveyed at other institutions would not be the same To the extent that students make purchases from businesses in the communities where GMC operates, the impacts reported here are conservative.

The Institute of Government research team used IMPLAN, a county-based input-output model of the U.S. economy to estimate the economic impacts of GMC’s operating and capital budget expenditures. As a county-based model capable of multi-region analysis, IMPLAN allowed the research team to estimate the impacts of GMC’s expenditures in the counties where it has operations and elsewhere in the state.

A local economy might be defined as a community, county, or group of counties that meets the research objectives of an economic impact study. However, we define a local or regional economy, it includes households and businesses. Both household residents and businesses contribute supply and demand to the local economy. For example, think about a single business called Acme Company located in a county or region. Acme Company provides jobs to some residents and likely to some non-residents. For Acme Company, these are direct employment jobs. Acme Company purchases goods and services that include raw materials for its manufacturing or production process, utilities, equipment, fuels such as gasoline or diesel, and business services (e.g. consulting, accounting, building maintenance). Regarding Acme

Company, the jobs at its suppliers and vendors are indirect. They are supported indirectly by the activity at Acme Company. These suppliers may be other businesses in the region or ones located outside the region. Financial resources exit the region when businesses purchase labor or goods from firms outside the local economy. This exit of resources is called economic “leakage.” Economic leakage also occurs when residents make purchases from businesses outside the region. To the extent that business-to-business transactions and residential spending involves firms in the region, money continues to circulate in the region and contributes to the so-called multiplier effect.

IMPLAN uses the estimated labor income from direct employment and indirect employment to estimate the number of additional jobs supported in the economy through an induced effect. An induced effect occurs when the households of the persons in direct and indirect jobs spend their salaries and wages. Induced jobs are largely in the retail, grocery, restaurant, and service sectors, such as banks, dry cleaners, landscaping, and repair shops, but also jobs at the offices of physicians, dentists, attorneys, accountants, and insurance agents.

Source: GMC

Table 3. GMC Payroll Data, 2022

Operating Budget Expenditure Modeling

IMPLAN can estimate the economic impact of the operating activities of a business firm or organization, such as a college, in a number of ways. The most common input for any inputoutput model is the number of jobs (direct employment) for the firm or organization in a particular business sector. IMPLAN uses 546 distinct economic sectors based on the North American Industrial Classification System (NAICS), including one for colleges and universities. The input usually includes the labor income (wages and benefits) associated with the jobs. If labor income is unavailable, IMPLAN estimates the labor income based on the industry sector’s average labor costs in the region, as reported in NAICS data from the Bureau of Labor Statistics. In the current study, GMC provided the number of positions for each of the 17 operating units and the labor income for those jobs (see Table 3). Included in the data (but not shown in Table 3) was a breakdown by ZIP code for employees at each of the 17 operating units. This breakdown allowed the research team to model the impacts of labor income in counties where employees live, including counties outside of those where GMC operates.

Using the number of jobs as a model input, IMPLAN can estimate the value of goods and services the college purchases from its suppliers/vendors and the number of jobs supported at those businesses and the transportation sectors (indirect employment) IMPLAN accomplishes this estimation through the use of built-in social accounting matrices (SAM). IMPLAN developers created a SAM for the typical purchases made by a college or university, including classroom and lab supplies, building maintenance, utilities, and other goods and services. Additionally, GMC provided the research team with data on its non-payroll operating budget, as shown in Table 4. Using the data in Table 4 as the demand for goods and services in these sectors allowed for a more accurate estimate of GMC’s indirect impacts. Finally, IMPLAN estimates the additional jobs supported through the induced effect.

In summary, the research team modeled GMC’s payroll as household income in the county of residence and GMC’s non-payroll operating expenditures as the demand for goods and services in the county of operation rather than relying on the SAM included in IMPLAN. The induced impact was estimated from household income in the county of residence for direct employment jobs and from the indirect employment labor income derived from the non-payroll operating budget expenditures in the county where each unit operates. The IMPLAN impact summaries provide the number of jobs, labor income (wages and benefits), value added to the local economy, and total economic output. These measures of economic activity are discussed more fully in the next section.

The labor income modeling for each of the operating units required the research team to build a multiregional IMPLAN model that consisted of single counties where employees lived and a region that included all the remaining counties. Using the GMC data, labor income was

allocated to each of the individual counties. This input estimated the induced impact in each county and in the remainder of the state.

For each part of the non-payroll operating expenditures analysis in this study, the research team built a multiregional IMPLAN model that consisted of the operating location (county) as one region and the remainder of the state as a second region. IMPLAN uses an estimated local purchase percentage based on the characteristics of each region to allocate the purchase of goods and services to firms in the single county and allows the balance to leak to the remainder of the state. The model may also allocate a percentage of purchases to firms outside the state. For example, including a demand for $1,000 of building maintenance or landscaping services will result in some amount allocated to in-county firms based on the presence of that industry in the county and the balance allocated either to the remainder of the state or to firms outside the state.

Table 4. Operating Budget Expenditures by Campus, 2022

*Entered using IMPLAN estimated margins applied to producer cost Source: GMC

Capital Budget Expenditure Modeling

GMC provided summary data on its capital investment from 2018 through 2023. Table 5 presents those data. Naturally, capital expenditure varies significantly across time for most organizations, including colleges and universities. GMC is no exception, as the yearly amounts shown in Table 5 for 2018 through 2023 range from about $2.1 million in 2019 to $28.5 million in the current year. Averages are always affected by low or high figures in the data but are better indicators of economic impact than any one year’s expenditures. The average capital expenditure, in this case, is affected by the $28.5 million expenditure in the current year. For this reason, the research team emphasizes the six-year average capital expenditure impacts presented in Table 5.

The original data provided by GMC included amounts for the acquisition of real estate near the main campus in Milledgeville. Those amounts are not included in Table 5 or the modeling. Real estate acquisition involves two parties exchanging assets. GMC holds financial assets, and the land owner holds real estate. This process is a simple exchange Besides some financial services and recording fees, this transaction has no impact on the local economy. In some instances, the data provided by GMC included the closing costs or land surveying costs associated with land acquisition as separate amounts. The impact modeling included those expenditures as financial and professional services. The modeling also included demolition for some properties

Table 5 includes the IMPLAN sectors used in the modeling of capital expenditures. The modeling used current year dollars for each year from 2018 through 2023. That is, 2018 dollars are 2018 dollars, 2019 dollars are 2019 dollars, and so forth. The modeling does not adjust dollars for inflation to a single constant year.

Table 5. Capital Expenditures* (2018-2022)

*Does not include expenditures for real estate acquisition. Source: GMC

Measures of Economic Output

The standard measures reported by IMPLAN and other input-output models are jobs, labor income, value added to the local economy, and economic output. In this study, for each region listed, jobs and labor income will be reported by impact type: direct, indirect, and induced.

Input-output models estimate the economic response to an economic stimulus. The response is the sum of economic transactions from indirect and induced activity, often called the multiplier effect. For example, when individuals spend dollars at the grocery store, the company uses that revenue to pay its employees, replace inventory, and purchase business services. Employees are typically residents, and local firms provide many services, so the dollars circulate locally. However, as already noted, some purchases, especially for inventory, are made with outside firms. Those financial resources leak from the economy. The multiplier effect increases as the local economy becomes larger and more diverse.

The two measures of economic activity that IMPLAN provides are value added to the local economy and total economic output. Value added to the local economy is the sum of labor income, estimated business profits, and estimated taxes collected on behalf of government. These are the resources that circulate longest in the local economy. Total economic output is akin to the national gross domestic product. It is the total value of all goods and services produced as a result of the initial economic activity

Operating Budget Impacts

Summary Tables for GMS Operating Budget Impacts

Table 6 presents GMC’s operating budget impacts for 2022. In the 14 operating counties, the school’s operations support about 356 indirect employment jobs in addition to its 1,508 direct employment positions. Induced effects supported another 100 jobs, for a total of 1,964 estimated jobs in those counties. The total labor income associated with these jobs is nearly $58 million. The value added to the local economies of these counties is about $73 million on more than $97 million in total economic output. Again, Value Added is the sum of labor income (presented separately), estimated business profits, and taxes collected on behalf of the government. This figure represents the financial resources that circulate longest within the regional economy.

Elsewhere in the state, GMC’s operation supported another 94 or 95 jobs, bringing the total to about 2,058 jobs statewide with more than $61 million in labor income. The college’s operation adds more than $80 million in value to the state’s economy on more than $110 million in economic output.

Multiplier Effect of GMC

Jobs – 1.37

For every 100 jobs at GMC, an additional 37 jobs are supported in Georgia.

Economic Output – 2.08

Every dollar of economic activity at GMC results in an additional $1.07 in economic activity elsewhere in Georgia

From the data in Table 6, the multiplier effect is calculated simply by dividing any of the statewide economic activity measures by the direct impact figure. For example, the jobs multiplier is 2,058.6 statewide jobs divided by 1,508 direct employment jobs. This equation yields a multiplier of 1.37. In other words, every 100 jobs at GMC supports an additional 37 jobs in the state. The labor income multiplier is also 1.37. The Value-Added multiplier is 1.51, while the Economic Output multiplier is 2.08. These calculations mean that each dollar of economic output at GMC results in an additional $1.08 in economic activity in the state’s economy.

Table 7 contains the same data as Table 6, broken out by county. These tables include data for each of the counties where GMC has operations. As anticipated, Baldwin County, where the largest portion of GMC’s operations is located, realized the largest impacts.

Totals may not sum due to rounding. All figures in current year dollars.

Source: IMPLAN, Carl Vinson Institute of Government

Table 6. Operating Budget Impacts for GMC, 2022

Table 7. Operating Budget Impacts by County, 2022

Totals may not sum due to rounding. All figures in current year dollars.

Source: IMPLAN, Carl Vinson Institute of Government

Impact Tables for Individual Operating Units

Tables 8 through 24 present impacts for each of the 17 operating units.

Table 8. Operating Budget Impacts for GMC Corporate Offices, 2022

Table 9. Operating Budget Impacts for GMC K-12 Preparatory School, 2022

Table 10. Operating Budget Impacts for GMC Global Online Leadership College, 2022

Table 11. Operating Budget Impacts for GMC Milledgeville Main Campus, 2022

Table 12 Operating Budget Impacts for GMC Augusta Campus, 2022

Table 13. Operating Budget Impacts for GMC Columbus Campus, 2022

Table 15. Operating Budget Impacts for GMC Eastman Campus, 2022

Table 14. Operating Budget Impacts for GMC Dublin Campus, 2022

Table 16. Operating Budget Impacts for GMC Fairburn Campus, 2022

Table 17. Operating Budget Impacts for GMC Fayetteville Campus, 2022

Table 18. Operating Budget Impacts for GMC Madison Campus, 2022

Table 19. Operating Budget Impacts for GMC Rockdale Campus, 2022

Table 20. Operating Budget Impacts for GMC Sandersville Campus, 2022

Table 21. Operating Budget Impacts for GMC Stone Mountain Campus, 2022

Table 22. Operating Budget Impacts for GMC Valdosta Campus, 2022

Table 23. Operating Budget Impacts for GMC Warner Robins Campus, 2022

Totals may not sum due to rounding for Tables 8 through 24. All figures in current year dollars.

Table 24. Operating Budget Impacts for GMC Zebulon Campus, 2022

Source: IMPLAN, Carl Vinson Institute of Government

Capital Budget Impacts

Table 25 presents the impacts for average capital expenditures from 2018 through 2023. The capital budget supports more than 70 jobs in Baldwin County. Direct jobs in this section’s tables are those at the contractors and vendors providing services directly to GMC at its campus in Milledgeville. To some extent, the impact in Baldwin County is likely overestimated as many employees of these contractors and vendors are located outside the county. IMPLAN uses its SAM and local purchase percentages to determine each region’s allocation of total jobs in this model. Since the research team has no information on the firms actually doing the work, impacts in one region may be overestimated while those in another region are underestimated. In this case, some impacts estimated in Baldwin County may be realized in the remainder of the state. The indirect jobs are those at suppliers and vendors providing materials and services to those contractors.

Labor income in Baldwin County for the contractors completing the capital projects and vendors providing capital equipment/resources is more than $3.2 million. In total, capital expenditures add an average of $6.4 million to Baldwin County’s budget on more than $12 million in economic activity. Total labor income statewide is $4.8 million for 110 jobs. Capital expenditures add an average of nearly $7.9 million annually on about $15 million in economic activity.

Tables 26 through 31 present capital expenditure impacts for each individual year. However, the tables should be interpreted carefully, due to the tremendous variation in capital expenditures from one year to another.

Table 25. Average Annual Capital Investment Impacts for GMC, 2018 - 2023

Table 26. Capital Investment Impacts for GMC, 2018

Table 27. Capital Investment Impacts for GMC, 2019

Table 28. Capital Investment Impacts for GMC, 2020

Table 29. Capital Investment Impacts for GMC, 2021

Table 30. Capital Investment Impacts for GMC, 2022

Table 31. Capital Investment Impacts for GMC, 2023

Totals may not sum due to rounding for Tables 25 through 31. All figures in current year dollars.

Source: IMPLAN, Carl Vinson Institute of Government