Economic report shows UIC’s positive impact on Illinois
December 7, 2018

The University of Illinois Hospital & Health Sciences System pumps $1.1 billion in salaries, wages, and benefits into the economy.

By Igor Studenkov

A recent study by Idaho-based Economic Modeling Specialists shows the University of Illinois System brings considerable economic benefit to the State of Illinoisand the University of Illinois at Chicago (UIC) is a big part of it.

According to the study, during fiscal year 2017, the university system brought the State $7.6 billion in revenue. Researchers also argued that, for all the money students and taxpayers put into the system, they get a good return on their investment.

Economic Modeling Specialists did a similar study three years earlier. Since then, the system’s economic impact has increased by 26%.

This time around, the researchers looked at data from fiscal year 2017, which ran from July 1, 2016, to June 30, 2017. Gazette Chicago analyzed the study’s section specifically covering UIC. The study looked at how UIC affected the State as a whole, rather than just Chicago. As the study itself noted, however, most of the impact tends to be local. Students tend to live in the Chicago area, so they spend most of their money in the city and suburbs. The same is true for many businesses with which the university deals.

“The university benefits local businesses by increasing consumer spending in the State and supplying a steady flow of qualified, trained workers into the workforce,” the study stated. “It enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential. It benefits State and local taxpayers through increased tax receipts across the State and a reduced demand for government-supported social services. Finally, it benefits society as a whole in Illinois by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students.”

Research at UIC not only benefits the economy, but patents and other returns from research contribute as well.

Operations impact

The study looked at how much money UIC contributes through its day-to-day operations. As of fiscal year 2017, it employed 10,295 full- and part-time faculty and staff who collectively earned $1.2 billion. Because 97% of those employees live in Illinois, the study argued the majority of that money comes back to businesses throughout the State as employees spend money on “groceries, rent, dining out, clothing, and other household expenses.” 

It also noted that, throughout fiscal year 2017, UIC spent $446 million “to cover its expenses for facilities, professional services, and supplies, excluding research and hospital expenditures.” Adding together employee salaries and spending and taking out money UIC received from the State, UIC contributed around $1.5 billion to the Illinois economy, which the study described as the equivalent of supporting 13,988 jobs.

Economic Modeling Specialists uses complex statistical models to estimate the jobs equivalency factors, which are different in each category because various jobs have different wages.

The study goes on to explain that UIC also contributes to the economy through research. In fiscal year 2017, it spent $180.6 million to pay researchers and $192.1 million in “other research spending.” The study calculates that, together, this puts more than $370 million into the State economyan equivalent to supporting more than 4,000 jobs. In fiscal year 2017, UIC also earned $28 million from licensing inventions this research created.

The University of Illinois Hospital & Health Sciences System (UI Health) is one of the area’s bigger medical entities. In fiscal year 2017, the system spent $1.1 billion in salaries, wages, and benefits and another $379.2 million in “non-labor income.” The study calculated that, together, this supports an equivalent of 14,348 jobs.

UIC also makes an impact in start-up companies. The study looked at “start-up companies connected to UIC,” which it defined as “companies created specifically to license and commercialize technology or knowledge from UIC.” In fiscal year 2017, 17 start-up companies fitting that category were active in Illinois. They employed 321 people. The study estimated that, between the people they employed and the products and services they provide, those start-ups bring $342.7 million to the Illinois economy, an equivalent to supporting 683 jobs.

The study also touted that UIC attracted out-of-state students who spent money in Illinois that they otherwise would spend elsewhere. The study indicates that, as of fiscal year 2017, 17% of undergraduate and graduate students came from out of state. It also argued that in-state students had impact, too, because they chose to attend UIC specifically when they could have chosen to attend college out of state.

Together, their impact is substantial. UIC’s students spent $98.7 million on expenses such as groceries, rent, and transportation. Most of that spending happened in Illinois, generating $87.2 million and supporting an equivalent of 1,648 jobs.

Once the UIC students graduate, the money they bring to Illinois is far greater. The study estimates that, between the salaries and benefits alumni earn, these graduates help create business productivity and spend money with other Illinois businesses; alumni help bring about $3.8 billion to Illinoisan equivalent to supporting 38,440 jobs.

The study also examined industries in which alumni work, noting the largest percentage work in healthcare and social services. Other major fields include manufacturing, government, professional and technical services, and finance and insurance.

Out-of-state visitors who come to UIC brought in $4 million during fiscal year 2017, an equivalent of supporting 83 jobs.

UIC students contribute significantly to the economy and continue to do so as alumni after they graduate. More than 100,000 UIC alumni live in Chicagoland.

Investment impact

The study also delves into UIC’s impact from the investment perspectivethat is, whether student fees and State funding generated through tax revenues are worth it vis-à-vis the amount of money the university winds up bringing in, directly and indirectly.

The study estimates that, during fiscal year 2017, students invested $629.1 million into UIC in terms of both tuition and fees and the amount of money they would have made if they worked instead of attending college. The study argues that investment is worth itstudents who graduated from UIC with a bachelor’s degree “will average $29,500 higher than someone with a high school diploma or equivalent working in Illinois” in terms of what they earn per year. Over their working lives, that would collectively add up to $3.3 billionmore than enough to justify the investment in the university education.

“In other words, for every $1 students invest in UIC in the form of out-of-pocket expenses and forgone time and money, they receive a cumulative of $5.30 in higher future earnings,” the study stated. “The average annual rate of return for students is 16.5%. This is an impressive return, especially when compared to the 30-year average 10.1% return to the U.S. stock market.”

According to the study, out of a little more than $2.1 billion in revenue the university received in fiscal year 2017, $621,271,991 of that came from the state government, and $841,139 came from local governments which, collectively, accounted for about 30% of all funds.

The study argues that this investment pays off for taxpayers for several reasons. When the students earn more, they pay more in taxes. They are also less likely to use tax-funded medical services, need unemployment compensation, or commit crimes.

In a statement issued in the wake the study’s release, Tim Killeen, president of the U of I System, said he was happy to hear the universities’ economic impact continues to grow.

“I am thrilled that our universities continue to have such a dramatic impact on the lives of our students and the fortunes of our State,” he said. “The study’s findings reinforce our value to students and taxpayers, alike and signal that we never stop working to better serve our crucial role in moving Illinois forward.”

UIC Chancellor Michael Amiridis emphasized one word, “momentum.” He noted that, “We have a strong and steady upward momentum.”