Cal Poly’s economic contributions generated more than $1.6 billion in industry activity and more than $105 million of state and local tax revenue during the 2018-19 school year, according to a new study conducted by the California State University (CSU) Chancellor’s Office.
The economic impact study provides a more comprehensive look at the return on California’s investment in the CSU.
Within the Central Coast region, Cal Poly specifically supported 18,365 jobs and $105.6 million in state and local tax revenue. The CSU as a whole generated $1.6 billion in state and local tax revenue and created more than 209,400 jobs.
Cal Poly’s more than 20,000 students spent nearly $280 million that year. CSU Spokesperson Michael Uhlenkamp said the nearly $280 million of student spending includes cost of attendance, housing, food and transportation.
Political science junior Hannah Gonzales said that she was not surprised about how much student spending accounted for in the overall economic impact report.
“I really haven’t ever thought about the economic impact that Cal Poly has on the Central Coast,” Gonzales said. “But just thinking about how expensive tuition is and how many students there are at Cal Poly, I guess it’s not all that shocking that $280 million was spent by students.”
In addition, the university spent more than $1 billion during the 2018-19 school year, which went toward everything from salaries to construction projects.
This report uses an Input-Output model of the California economy, which recognizes that a dollar spent in one industry causes a “ripple effect” across industries.
“For every dollar invested by the state in the CSU, $6.98 of positive economic activity is generated in the Golden State,” Cal Poly’s press release said. “When the impact of the enhanced earnings of CSU alumni is factored in, the figure is even greater — $29.90 in total economic activity for every dollar invested.”
Cal Poly Assistant Professor of Economics Jacqueline Doremus said that in order to calculate these effects, the researchers took fixed multipliers for industries and multiplied them by CSU spending.
Multipliers refer to an economic factor that, when increased or changed, causes increases or changes to other related economic variables.
“The main risks are that these are projections, based on empirically estimated relationships across industries,” Doremus said in an email. “The authors did not track each expenditure and have not compared these predictions to what actually happened, because they do not have the data to do this.”
The part of the report that is likely the least precise is the impact of CSU alumni, as that’s the most challenging factor to estimate according to Doremus. However, Doremus said that this is not a shortcoming unique to this project and is common in most Input-Output spending projections.
Doremus said that since there are no specific numbers available it is hard to say exactly how the pandemic will affect the economic impact for this academic year. Providing online education likely increased costs for the university. However, Cal Poly also implemented several cost-saving measures to reduce spending.
The CSU economic impact report represents only a “snapshot” of a given time period, according to Uhlenkamp.
“We do not currently have any plans to update the report to account for the unique fluctuations to the economy based on the global pandemic,” Uhlenkamp said.