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An Economic Engine for

North Central Indiana An Economic Impact Analysis


TABLE OF CONTENTS EXECUTIVE REPORT ............................................................................................................... 3 ECONOMIC IMPACT OF INDIANA UNIVERSITY KOKOMO .................................................. 3 INTRODUCTION ............................................................................................................................ 3 INDIANA UNIVERSITY KOKOMO STUDY OVERVIEW .......................................................... 4 ECONOMIC IMPACT ...................................................................................................................... 6 EMPLOYMENT IMPACT .................................................................................................................. 7 GOVERNMENT REVENUE IMPACT .................................................................................................. 7 COMMUNITY BENEFITS ................................................................................................................. 7 APPENDIX A: ECONOMIC IMPACT OF INDIANA UNIVERSITY AND INDIANA UNIVERSITY HEALTH .............................................................................................................. 9 APPENDIX B: DEFINITION OF TERMS ................................................................................. 10 APPENDIX C: IU KOKOMO PEER INSTITUTION COMPARISONS ..................................... 11 APPENDIX D: METHODOLOGY ............................................................................................ 12 APPENDIX E: FAQ’S REGARDING ECONOMIC IMPACT ASSESSMENT .......................... 14

2   INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT  


Executive Report Economic Impact of Indiana University Kokomo Introduction The  most  predominant  higher  education   resource  in  North  Central  Indiana,  Indiana   University  Kokomo  (IU  Kokomo)  enhances   the  lives  of  the  region’s  residents  through  its   academic  programs,  activities  and   organizations,  and  community  engagement.   IU  Kokomo  is  committed  to  regional   transformation  of  the  14-­‐county  area  it   serves  in  North  Central  Indiana.  By  providing   a  common  ground  where  educators,   members  of  the  business  and  industrial   community  and  citizens  can  come  together   to  share  resources  and  ideas,  IU  Kokomo   brings  new  energy  to  the  region’s  revitalization  efforts.       IU  Kokomo  is  a  campus  on  the  move.    IU  Kokomo’s  commitment  to  building  partnerships   throughout  North  Central  Indiana  to  strengthen  the  region  is  a  major  asset.    IU  Kokomo  is   working  closer  than  ever  with  Ivy  Tech  and  facilitating  collaboration  among  communities  across   North  Central  Indiana.  This  academic  year  was  IU  Kokomo’s  inaugural  year  for  sports  in  the   NAIA  division.  IU  Kokomo  is  experiencing  phenomenal  increases  in  enrollment;  15  new  degree   programs  have  been  introduced  to  ensure  that  the  university  stays  current  and  relevant.  IU   Kokomo  now  offers  10%  of  its  classes  on  Friday  and  has  added  many  online  classes.  IU  Kokomo   is  also  experimenting  with  innovative  ways  to  enhance  degree  attainment  to  ensure  that  all  of   those  enrolled  students  complete  their  degree.                    

INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT   3  

 


Indiana University Kokomo Study Overview In  April  2012,  Tripp  Umbach  was  retained  by   Indiana  University  Kokomo  to  measure  the   economic,  employment  and  government   revenue  impacts  of  operations  and  research  of   all  of  its  operations  in  the  State  of  Indiana  as   well  as  the  North  Central  Indiana  Region.  The   goals  of  Indiana  University  Kokomo’s  economic   impact  study  included  the  following:   ü To  quantify  the  economic  and  employment   impacts  of  IU  Kokomo  on  the  state  of  Indiana  and  North  Central  Indiana  Region  including:   Howard,  Tipton,  Cass,  Miami,  Clinton,  Carroll,  Wabash,  Grant,  Tippecanoe,  Fulton  and   Hamilton  Counties.       ü To  better  articulate  the  benefits  of  a  university  and  its  partnership  with  the  community,   citizens  and  the  state.  

Methodology Employed in the Economic Impact Study   This  economic  impact  analysis  measures  the  effect  of   direct  and  indirect/induced  business  volume  and   government  revenue  impacts  for  IU  Kokomo.  The   methodology  employed  in  the  calculation  of  these  impacts   is  IMPLAN.1  Data  included:  capital  expenditures,   operational  expenditures,  jobs,  payroll  and  benefits,  and   taxes.  The  approach  taken  on  this  study  was  decidedly   conservative.  However,  the  impact  findings  compare   favorably  to  its  peer  institutions  throughout  the  country,   as  shown  in  Appendix  C.     Economic  impact  begins  when  an  organization  spends   money.  Studies  measuring  economic  impact  capture  the   direct  economic  impact  of  an  organization’s  spending,   plus  additional  indirect  and  induced  spending  in  the  

Indiana  University                   Economic  Study  Overview   Study  Period:    Fiscal  Year   2010  –  2011  (FY  10-­‐11)   This  Study  Includes:     • IU  Kokomo   Study  Geography:    State  of   Indiana  and  North  Central   Indiana  Region   Methodology:    IMPLAN  

                                                                                                               

1  Minnesota  IMPLAN  Group,  Inc.  (MIG)  is  the  corporation  that  is  responsible  for  the  production  of  IMPLAN  (IMpact   analysis  for  PLANning)  data  and  software.  IMPLAN  is  a  micro-­‐computer-­‐based,  input-­‐output  modeling  system.  With   IMPLAN,  one  can  estimate  Input-­‐Output  models  of  up  to  528  sectors  for  any  region  consisting  of  one  or  more   counties.  IMPLAN  includes  procedures  for  generating  multipliers  and  estimating  impacts  by  applying  final  demand   changes  to  the  model.    

4   INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT  

 


economy  as  a  result  of  direct  spending.  Economic  impact  has  nothing  to  do  with  dollars   collected  by  institutions.   Total  economic  impact  measures  the  dollars  that  are  generated  within  Indiana  due  to  the   presence  of  IU  Kokomo.  This  includes  not  only  spending  on  goods  and  services  with  a  variety  of   vendors  within  the  state,  and  the  spending  of  its  staff  and  visitors,  but  also  the  business  volume   generated  by  businesses  within  Indiana  that  benefit  from  IU  Kokomo’s  spending.  It  is  important   to  remember  that  not  all  dollars  spent  by  a  university  remain  in  its  home  state.  Dollars  that   “leak”  out  of  the  state  in  the  form  of  purchases  from  out-­‐of-­‐state  vendors  are  not  included  in   the  university’s  economic  impact  on  the  state.  The  multipliers  utilized  in  this  study  are  derived   from  the  IMPLAN  software.  (See  Appendix  D.)   Key  economic  impact  findings  presented  within  the  summary  include  the  total  current  (FY  10-­‐ 11)  economic,  employment,  and  state  and  local  government  revenue  impact  of  IU  Kokomo’s   operations.    

Key  IU  Kokomo  highlights  include:    

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• •

• • • • • •

Offers  70  undergraduate  and  graduate  degree  programs.   Bachelor’s  degrees  in  many  arts  and  sciences  disciplines,  informatics,  medical  imaging   technology,  health  sciences,  criminal  justice,  nursing,  business,  education  and  general   studies.     Master’s  degrees  in  public  management,  business,  education,  nursing  and  liberal  studies.     Comprised  of  the  following  schools  and  divisions  (as  of  July  1,  2012):  Division  of  Allied   Health  Sciences,  School  of  Education,  School  of  Sciences,  School  of  Humanities  and   Social  Sciences,  School  of  Business  and  School  of  Nursing.   Home  to  Purdue  University  College  of  Technology  at  Kokomo,  representing  a  significant   partnership  for  the  campus,  the  community  and  the  region  since  1967.     Special  programs  include  an  Honors  Program,  Internships,  IU  Seek  and  student   publications,  The  Correspondent  and  From  the  Well  House.   Expanding  capacities  of  Bachelor’s  and  Master’s  degrees  nursing  programs  offered  in   Kokomo  to  play  a  leadership  role  in  meeting  a  critical  statewide  healthcare  need.     Offers  numerous  Overseas  Study  opportunities,  including  nursing  programs  in  South   Korea  and  Central  America  and  the  Innovation  Symposium  in  Great  Britain.   Athletic  teams  of  the  IU  Kokomo  Cougars  began  competing  as  a  member  of  the  NAIA  in   2011.   Opening  of  a  Nursing  Simulation  Center;  a  new  Welcome  Center;  a  Student  Success   Center;  a  Next  Generation  Classroom  and  a  Digital  Media  center.  Renovation  of  Havens   Auditorium  and  campus  beautification  efforts.      

 

INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT   5  

 


Economic Impact The  impact  of  IU  Kokomo’s  operations  on  the  North  Central  Indiana  region  in  2011  was  $41.7   million  ($20.1  million  direct  impact  and  21.6  million  indirect/induced).2    The  overall  economic   impact  of  all  IU  Kokomo’s  operations  on  the  state  of  Indiana  in  2011  was  $52.1  million  ($25.1   million  direct  impact  and  $27.0  million  indirect/induced).  (See  Figure  1.)   The   direct   impact   stems   from   the   in-­‐area   spending   of   the   following   principal   groups:   expenditures   for   capital   improvements,   and   goods   and   services;   spending   by   staff;   and   the   spending  by  out-­‐of-­‐area  visitors.  The  indirect  and  induced  impacts  are  derived  from  these  direct,   first-­‐round   expenditures,   which   are   received   as   income   by   businesses   and   individuals   in   the   study   area   and   re-­‐circulated   through   the   economy   in   successive   rounds   of   re-­‐spending.   For   example,  Company  A  produces  books  but  must  also  purchase  paper  to  print  those  books  and  so   they   contract   with   Company   B   to   provide   paper.     Company   A’s   spending   would   be   the   direct   impact   (the   money   they   spend   to   operate)   and   Company   B’s   additional   spending   to   ship   and   produce  the  paper  for  Company  A  would  be  the  indirect  impact.    The  initial  round  of  Company   A’s   spending   caused   Company   B   to   also   spend   money   to   provide   this   service   to   Company   A.     (For  a  full  definition  of  terms,  see  Appendix  B.)   Figure 1: IU Kokomo Economic Impact (in millions)! $52.1 ! million! $41.7 ! million!

$20.1 ! million!

$25.1 ! million!

Direct!

$21.6 ! million!

$27.0 ! million!

Indirect/Induced!

Regional Impact!

Total!

State Impact!  

                                                                                                                2  Eleven  counties  in  the  North  Central  Indiana  region  including:  Howard,  Tipton,  Cass,  Miami,  Clinton,  Carroll,   Wabash,  Grant,  Tippecanoe,  Fulton  and  Hamilton  Counties.      

6   INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT  

 


Employment Impact IU  Kokomo  is  a  statewide  employer  and  provides  employment  to  a  diverse  group  of  workers   who  pay  taxes  to  state  and  local  governments.    The  economic  expansion  created  by  BCBSMA   brings  about  demand  for  additional  employment  in  the  state’s  economy.    The  company’s   impact  on  employment  is  derived  from  employees  who  work  directly  for  IU  Kokomo  and  the   total  number  of  employees  who  work  for  other  businesses  that  supply  IU  Kokomo  with  goods   and  services. �� The  total  employment  impact  of  IU  Kokomo’s  operations  in  the  region  is  501  jobs  (247  direct   jobs  and  254  indirect/induced).  The  total  employment  impact  of  IU  Kokomo’s  operations  in  the   state  of  Indiana  is  626  jobs  (309  direct  jobs  and  317  indirect/induced)  (see  Figure  2).   Figure 2: IU Kokomo Employment Impact (in jobs)!

501 ! jobs! 247 ! jobs!

309 ! jobs!

Direct!

254 ! jobs!

626 ! jobs!

317 ! jobs!

Indirect/Induced!

Total!

Regional Impact! Statewide Impact!

Government Revenue Impact IU  Kokomo’s  operations  in  the  state  of  Indiana  generate  $2.7  million  per  year  in  state  and  local   tax  revenue.

Community Benefits IU   Kokomo   has   partnered   with   many   organizations   to   provide   students   with   volunteer   opportunities.   Organizations   include:   The   American   Cancer   Society,   Bridges   Outreach,   The   Carver   Center   United   Way   and   Family   Service   Association,   just   to   name   a   few.   IU   Kokomo   believes  in  getting  students  involved,  giving  back  and  making  an  impact  on  the  community.     INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT   7  

 


Tripp  Umbach  estimates  that  IU  Kokomo,  faculty,  staff  and  students  generate  more  than  $3.4   million  annually  in  charitable  donations  and  volunteer  services.  These  benefits  (in  addition  to   the  $52.1  million  annual  impact  on  the  state  of  Indiana)  include  $735,981  donated  to  local   charitable  organizations  by  IU  Kokomo  faculty,  staff  and  students  and  nearly  $2.6  million  in   value  of  volunteer  time  provided  to  area  communities  by  IU  Kokomo.    

 

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Appendix  A:    Economic  Impact  of  Indiana  University  and  Indiana   University  Health   For  nearly  200  years,  Indiana  University  has  delivered  broad  access  to  undergraduate,  graduate   and  continuing  education  for  students  throughout  Indiana,  the  United  States  and  the  world,  as   well  as  outstanding  academic  and  cultural  programs  and  student  services.  Though  its  primary   missions  are  education,  research  and  community  service,  an  institution  as  vast  as  IU  is  also   central  to  the  fiscal  health  and  well-­‐being  of  the  state  of  Indiana.  Indiana  University’s  daily   operations  provide  ongoing  financial  benefits  to  the  state’s  economy.  The  University   significantly  impacts  the  statewide  economy  through  expenditures,  government  revenues,  and   the  employment  and  personal  income  of  residents.  Beyond  these  financial  benefits,  IU  is   preparing  the  workforce  of  the  future  and  creating  a  stronger  Indiana.   The  results  presented  in  Indiana  University’s  economic  impact  study  are  generated  on  an   annual  basis.  The  economic  impact  in  future  years  can  either  be  higher  or  lower,  based  on  the   number  of  students,  capital   expansion,  increases  in  external   research  and  the  level  of  state   appropriations.  It  is  important  to   note  that  the  economic  and   employment  impacts  stated  in  this   report  represent  the  “fresh  dollar”   impact  of  IU  and  IU  Health.    Annually,   the  impact  of  all  IU  and  IU  Health   Operations  represent  an  impact  of   $11.5  billion,  100,031  jobs  and   $511.7  million  in  state  and  local  tax   revenue.                

INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT   9  

 


Appendix B: Definition of Terms  

Study Year

Fiscal  Year  2010-­‐2011  (FY  10-­‐11)  

Total Economic Impact

The  total  economic  impact  of  an  institution  includes  both  the  direct   impact  and  the  indirect  impact  generated  in  the  economy  as  a   result  of  the  institution.  

Direct Economic Impact

Direct  impact  includes  items  such  as  institutional  spending,   employee  spending  and  spending  by  visitors  to  the  institution.   Indirect  impact,  also  known  as  the  multiplier  effect,  includes  the  re-­‐

Indirect Economic spending  of  dollars  within  the  local  economy  by  vendors/suppliers   Impact and  households.   Multiplier Effect

The  multiplier  effect  is  the  additional  economic  impact  created  as  a   result  of  the  institution’s  direct  economic  impact.  Local  companies   that  provide  goods  and  services  to  an  institution  increase  their   purchasing  by  creating  a  multiplier.  

Direct Tax Payments

Direct  tax  payments  made  by  an  institution  to  a  unit  of   government.  

Indirect Tax Payments

Government  revenue  that  is  collected  by  governmental  units  in   addition  to  those  paid  directly  by  an  institution,  including  taxes   paid  directly  by  employees  of  the  institution,  visitors  to  the   institution  and  vendors  who  sell  products  to  the  institution.  

Direct Employment

Total  employees  based  on  total  jobs.  

Indirect Employment

Indirect  employment  is  the  additional  jobs  created  as  a  result  of   the  institution’s  economic  impact.  Local  companies  that  provide   goods  and  services  to  an  institution  increase  their  number  of   employees  as  purchasing  increases,  thus  creating  an  employment   multiplier.  

          10   INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT  

 


Appendix C: IU Kokomo Peer Institution Comparisons  

Indiana  University  Kokomo  Peer  University  Comparisons   State   Economic   Employment   Appropriation     Impact*   Impact     $10.8  M                                          $52.1       M                                   Indiana  University  Kokomo   626  jobs   (FY  08-­‐09)   (2010,  IMPLAN)   $6.3  M     $96.5  M                                       Bluefield  State  College   520  jobs   (FY  07-­‐08)   (2008,  IMPLAN)   $48.5  M     Minot  State  University   $145.5  M     1,362  jobs   (FY  08-­‐09)   University  of  Texas  of  the   $13.6  M   $71.9  M     1,551  jobs   Permian  Basin   (FY  03-­‐04)   (2004,  IMPLAN)   $26.8  M   $61.5  M   University  of  Alaska  Southeast   545  jobs    (FY  09-­‐10)   (2009,  IMPLAN)   *Note:  The  methodologies  utilized  to  complete  the  economic  impact  studies  by  the  peer   universities  in  the  table  vary  by  entity.    Tripp  Umbach  was  not  the  researcher  for  all   studies.   Peer  University  

INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT   11  

 


Appendix D: Methodology IMPACT ON STATE BUSINESS VOLUME AND GOVERNMENT REVENUE The  university  is  a  major  employer  in  the  state  and,  as  such,  a  major  generator  of  personal   income  for  state  residents.  Businesses  operating  within  Indiana  in  the  wholesale,  retail,  service   and  manufacturing  sectors  benefit  from  the  direct  expenditures  of  the  institutions  and  their   faculty,  staff,  students  and  visitors  on  goods  and  services.  Additionally,  many  of  these  “direct”   expenditures  are  re-­‐circulated  in  the  economy  as  recipients  of  the  first-­‐round  of  income  re-­‐ spend  a  portion  of  this  income  with  other  businesses  and  individuals  within  Indiana.    

METHODOLOGY AND DATA UTILIZED FOR THE ESTIMATION OF THE ECONOMIC IMPACT OF INDIANA UNIVERSITY KOKOMO The  economic  impact  of  Indiana  University  Kokomo  was  estimated  using  IMPLAN  (IMpact   Analysis  for  PLANing),  an  econometric  modeling  system  developed  by  applied  economists  at   the  University  of  Minnesota  and  the  U.S.  Forest  Service.  The  IMPLAN  modeling  system  has  been   in  use  since  1979  and  is  currently  used  by  over  500  private  consulting  firms,  university  research   centers  and  government  agencies.  The  IMPLAN  modeling  system  combines  the  U.S.  Bureau  of   Economic  Analysis’  Input-­‐Output  Benchmarks  with  other  data  to  construct  quantitative  models   of  trade  flow  relationships  between  businesses  and  between  businesses  and  final  consumers.   From  this  data,  one  can  examine  the  effects  of  a  change  in  one  or  several  economic  activities  to   predict  its  effect  on  a  specific  state,  regional  or  local  economy  (impact  analysis).  The  IMPLAN   input-­‐output  accounts  capture  all  monetary  market  transactions  for  consumption  in  a  given   time  period.  The  IMPLAN  input-­‐output  accounts  are  based  on  industry  survey  data  collected   periodically  by  the  U.S.  Bureau  of  Economic  Analysis  and  follow  a  balanced  account  format   recommended  by  the  United  Nations.   IMPLAN’s  Regional  Economic  Accounts  and  the  Social  Accounting  Matrices  were  used  to   construct  state-­‐level  multipliers,  which  describe  the  response  of  the  state  economy  to  a  change   in  demand  or  production  as  a  result  of  the  activities  and  expenditures  of  the  Indiana  University   system.  Each  industry  that  produces  goods  or  services  generates  demand  for  other  goods  and   services;  and  this  demand  is  multiplied  through  a  particular  economy  until  it  dissipates  through   “leakage”  to  economies  outside  the  specified  area.  IMPLAN  models  discern  and  calculate   leakage  from  local,  regional  and  state  economic  areas  based  on  workforce  configuration,  the   inputs  required  by  specific  types  of  businesses,  and  the  availability  of  both  inputs  in  the   economic  area.  Consequently,  economic  impacts  that  accrue  to  other  regions  or  states  as  a   consequence  of  a  change  in  demand  are  not  counted  as  impacts  within  the  economic  area.  The   12   INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT  

 


model  accounts  for  substitution  and  displacement  effects  by  deflating  industry-­‐specific   multipliers  to  levels  well  below  those  recommended  by  the  U.S.  Bureau  of  Economic  Analysis.   In  addition,  multipliers  are  applied  only  to  personal  disposable  income  to  obtain  a  more  realistic   estimate  of  the  multiplier  effects  from  increased  demand.  Importantly,  IMPLAN’s  Regional   Economic  Accounts  exclude  imports  to  an  economic  area,  so  the  calculation  of  economic   impacts  identifies  only  those  impacts  specific  to  the  economic  impact  area,  in  this  case  the   State  of  Indiana.  IMPLAN  calculates  this  distinction  by  applying  Regional  Purchase  Coefficients   (RPC)  to  predict  regional  purchases  based  on  an  economic  area’s  particular  characteristics.  The   Regional  Purchase  Coefficient  represents  the  proportion  of  goods  and  services  that  will  be   purchased  regionally  under  normal  circumstances,  based  on  the  area’s  economic  characteristics   described  in  terms  of  actual  trade  flows  within  the  area.  

MODEL INPUTS AND DATA SOURCES Model  inputs  included  actual  FY  10-­‐11  expenditures  provided  by  IU  for  IU  Kokomo.  

 

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Appendix  E:  FAQ’s  Regarding  Economic  Impact  Assessment    

What is economic impact? Economic  impact  begins  when  an  organization  spends  money.  Economic  impact  studies   measure  the  direct  economic  impact  of  an  organization’s  spending,  plus  additional  indirect   spending  in  the  economy  as  a  result  of  direct  spending.  Economic  impact  has  nothing  to  do  with   dollars  collected  by  institutions,  their  profitability  or  even  their  sustainability,  since  all  operating   organizations  have  a  positive  economic  impact  when  they  spend  money  and  attract  spending   from  outside  sources.   Direct  economic  impact  measures  the  dollars  that  are  generated  within  the  State  of  Indiana  due   to  the  presence  of  Indiana  University  Kokomo.  This  includes  not  only  spending  on  goods  and   services  with  a  variety  of  vendors  within  the  state,  and  the  spending  of  its  employees  and   visitors,  but  also  the  business  volume  generated  by  businesses  within  Indiana  that  benefit  from   Indiana  University  Kokomo’s  spending.  It  is  important  to  remember  that  not  all  dollars  spent  by   Indiana  University  Kokomo  stay  in  Indiana.  Dollars  that  “leak”  out  of  the  state  in  the  form  of   purchases  from  out-­‐of-­‐state  vendors  are  not  included  in  Indiana  University  Kokomo’s  economic   impact  on  the  state.   The  total  economic  impact  includes  the  “multiplier”  of  spending  from  companies  that  do   business  with  Indiana  University  Kokomo.  Support  businesses  may  include  lodging   establishments,  restaurants,  construction  firms,  vendors,  temporary  agencies,  etc.  Spending   multipliers  attempt  to  estimate  the  ripple  effect  in  the  state  economy  where  the  spending   occurs.  For  example:  Spending  by  another  IU  campus  with  local  vendors  provides  these  vendors   with  additional  dollars  that  they  re-­‐spend  in  the  local  economy,  causing  a  “multiplier  effect.”   What is the multiplier effect? Multipliers  are  a  numeric  way  of  describing  the  secondary  impacts  stemming  from  the   operations  of  an  organization.  For  example,  an  employment  multiplier  of  1.8  would  suggest   that  for  every  10  employees  hired  in  the  given  industry,  eight  additional  jobs  would  be  created   in  other  industries,  such  that  18  total  jobs  would  be  added  to  the  given  economic  region.  The   multipliers  used  in  this  study  range  from  1.8  to  2.0.   The  Multiplier  Model  is  derived  mathematically  using  the  input-­‐output  model  and  Social   Accounting  formats.  The  Social  Accounting  System  provides  the  framework  for  the  predictive   Multiplier  Model  used  in  economic  impact  studies.  Purchases  for  final  use  drive  the  model.   Industries  that  produce  goods  and  services  for  consumer  consumption  must  purchase  products,   raw  materials  and  services  from  other  companies  to  create  their  product.  These  vendors  must   14   INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT  

 


also  procure  goods  and  services.  This  cycle  continues  until  all  the  money  is  leaked  from  the   region’s  economy.  There  are  three  types  of  effects  measured  with  a  multiplier:  the  direct,  the   indirect  and  the  induced  effects.  The  direct  effect  is  the  known  or  predicted  change  in  the  local   economy  that  is  to  be  studied.  The  indirect  effect  is  the  business-­‐to-­‐business  transactions   required  to  satisfy  the  direct  effect.  Finally,  the  induced  effect  is  derived  from  local  spending  on   goods  and  services  by  people  working  to  satisfy  the  direct  and  indirect  effects.   •

Direct  effects  take  place  only  in  the  industry  immediately  being  studied.  

Indirect  effects  concern  inter-­‐industry  transactions:  because  IU  Kokomo  is  in  business,   they  have  a  demand  for  locally  produced  materials  needed  to  operate.    

Induced  effects  measure  the  effects  of  the  changes  in  household  income:  employees  of   IU  Kokomo  and  suppliers  purchase  from  local  retailers  and  restaurants.    

Total  Economic  Impacts  the  total  changes  to  the  original  economy  as  the  result  of  the   IU  Kokomo’s  operations.  i.e.,  Direct  effects  +  Indirect  effects  +  Induced  effects  =  Total   Economic  Impacts  

What methodology was used in this study? IMPLAN  (IMpact  analysis  for  PLANning)  data  and  software.  Using  classic  input-­‐output  analysis  in   combination  with  regional  specific  Social  Accounting  Matrices  and  Multiplier  Models,  IMPLAN   provides  a  highly  accurate  and  adaptable  model  for  its  users.  The  IMPLAN  database  contains   county,  state,  zip  code  and  federal  economic  statistics  which  are  specialized  by  region,  not   estimated  from  national  averages  and  can  be  used  to  measure  the  effect  on  a  regional  or  local   economy  of  a  given  change  or  event  in  the  economy’s  activity.     What is employment impact? Employment  impact  measures  the  direct  employment  (employees,  staff,  faculty,   administration)  plus  additional  employment  created  in  the  economy  as  a  result  of  the   operations  of  Indiana  University  Kokomo.   Indirect  and  Induced  employment  impact  refers  to  other  employees  throughout  the  region  that   exist  because  of  Indiana  University  Kokomo’s  economic  impact.  In  other  words,  jobs  related  to   the  population  –  city  services  (police,  fire),  employees  at  local  hotels  and  restaurants,  clerks  at   local  retail  establishments,  residents  employed  by  vendors  used  by  Indiana  University  Kokomo.  

INDIANA  UNIVERSITY  KOKOMO  ECONOMIC  IMPACT   15  

 


What is the difference between direct and indirect taxes? Direct  tax  dollars  include  sales  taxes  and  net  corporate  income  taxes  paid  directly  by  the   institution  to  the  state,  while  indirect  taxes  include  taxes  paid  to  the  state  by  vendors  that  do   business  with  Indiana  University  Kokomo  and  individuals.   Is this a one-time impact or does the impact repeat each year? The  results  presented  in  the  Indiana  University  Kokomo  economic  impact  study  are  generated   on  an  annual  basis.  The  economic  impact  in  future  years  can  either  be  higher  or  lower  based  on   number  of  employees,  students,  capital  expansion,  increases  in  external  research  and  state   appropriations.     What are Tripp Umbach’s qualifications to perform an Economic Impact Study for Indiana University Kokomo? Tripp  Umbach  is  the  national  leader  in  providing  economic  impact  analysis  to  leading   healthcare  organizations,  universities  and  academic  medical  centers.  We  have  completed  more   than  150  economic  impact  studies  over  the  past  20  years  for  clients  such  as:  The  Pennsylvania   State  University,  The  Ohio  State  University,  The  University  of  Washington,  The  University  of   Iowa,  UAB,  Cleveland  Clinic,  University  of  Florida  Shands  HealthCare,  the  University  of  North   Carolina  Hospitals,  the  University  of  Pennsylvania  Medical  Center,  the  University  of  Pittsburgh   Medical  Center  and  the  Ohio  State  University  Medical  Center.      

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Economic impact iu kokomo during tenure of chancellor michael harris