Study Assesses Economic Impact of College on Town

Author: Kelsey Rinehart

On April 2, Middlebury College held a press conference at the Middlebury Inn to announce the findings of a recent study detailing the College's economic impact on the community. The study, conducted by Arthur Woolf and Richard Heaps of Northern Economic Consulting, Inc. (NEC), found that Middlebury College brings $125.2 million into Addison County each year and is the largest employer and largest source of wage income in the town of Middlebury and Addison County. In its 2002 list of the state's top employers, Vermont Business Magazine ranked Middlebury College at 13.
In his introduction, Middlebury College President John McCardell said that the investigation was an update of a similar study released by NEC in 1996 and noted that the exclusively positive nature of the report is due to the fact that it is "a College-initiated and College-sponsored document." McCardell said that the study "is something that would benefit from regular updating," as it uses methodology to gauge the College's economic impact, addressing the question of what the College's presence means to the town. McCardell stressed the necessity of basing analysis on factual information rather than on individual viewpoints, commenting, "When issues regarding the financial relationship between the town of Middlebury and the College arise, it's important to have real data rather than opinions." McCardell continued, "Each time the word 'burden' is used, [the study] may be a corrective to those who think in those terms." Still, McCardell remarked, "The purpose of this document is impossible to define." After briefly summarizing the study's findings, McCardell introduced Woolf, as well as Executive Director of the Addison County Chamber of Commerce, Linda Stearns.
Woolf then explained the process, results and significance of his study, "The Economic Impact of Middlebury College of The Economies of Middlebury Town and Addison County". The investigation, which drew its data from Middlebury College, a survey of its students and the State of Vermont, attempts to provide a thorough, though not exhaustive, analysis of the College's economic influence. The study states, "Middlebury College brings money into the local economy through student tuition payments, student spending at local businesses, spending by visitors to the campus, research and grant money and through a variety of other means."
Secretary of the College and Professor of Political Science Eric Davis attended the press conference. He commented, "The study shows that Middlebury College is definitely the 'economic engine' for both the town of Middlebury and Addison County. Because the College has been relatively less affected by the current economic downturn than other sectors of the economy (manufacturing and technology), Addison County has weathered these economic storms with relatively less damage than other parts of Vermont, [such as] Chittenden County, where IBM has laid off 1,000 people. This is good for all those who live and work in Addison County, not just those affiliated with the College."
The NEC study found that the College, in addition to employing 1,253 workers, due to a multiplier effect, creates 736 jobs in Addison County. The College is directly and indirectly responsible for roughly one out of every seven jobs, paying county residents $59.3 million in wages and benefits. Middlebury College, through economic activity generated at and by the College, also gives $10.3 million in taxes to the State of Vermont. Woolf noted that the College "raises everybody's income in the economy," estimating that the College's presence raised each salary in Addison County about 50 to 100 dollars.
The NEC study reports, "The most important source of export earnings in the Town of Middlebury is Middlebury College. The College exports services and brings in revenues from a variety of sources, including tuition, endowment income and gifts to the College. All of these revenue sources are the same as export earnings from a manufacturing facility." The study also points to student spending in the town of Middlebury as a source of export earnings. According to a Dec. 2002 student survey, students spend $2.7 million per year in town, while their visitors spend $2 million on hotel rooms, in restaurants and on other purchases.
This figure, however, is lower than the amount of student spending cited in the 1996 study. "The students at Middlebury are more thrifty," Woolf noted. "For whatever reason, they're not spending as much." Davis offered two possible explanations for this: one, "As the mix of stores in downtown Middlebury moves away from 'general merchants' and toward 'boutiques,' students find it harder to find basic items in downtown stores - an issue faced by town residents as well as by students." The other is that "students are making more purchases of clothing and other items from Web-based merchants."
Woolf said that the College is "very similar to an automobile plant, but in this case, what is being sold is a service" - the service of education, which Woolf noted is valued highly in Addison County. Woolf touched on Act 60, pointing out that people involved in higher education generally want to spend more on education, and that the more money spent, the higher taxes will be.
The study measures economic impacts on three levels: "The direct impact of the College itself on the local economy,the spending that occurs because of the presence of the College in the community, [and] the more indirect effects, which are generally known as multiplier effects." One example of a multiplier effect is that, when the College buys products from local businesses, "spending circulates in the economy and supports additional jobs and income in the community."
Stearns next presented the views of the Addison County Chamber of Commerce regarding the study. She noted that in every community there is one business, an "enhancer," she said, which, if it were removed, would cause "a drastic change." Stearns pointed to Middlebury College as that business and said that Addison County's vibrant identity is greatly enhanced by the image of "the New England town with a college." Stearns said that the $55.1 million spent in Addison County was "an enormous amount of buying power that allows our businesses to thrive."
Davis agreed that the College's presence in the community added something. "The cultural, athletic, library and other resources associated with the College make living in Addison County a desirable option for retired professionals." Davis did observe, however, that "much of the new home development associated with this market is taking place in Weybridge, Cornwall and New Haven, rather than in Middlebury. This is both because the tax rates in the outlying towns are somewhat lower than in Middlebury and because it is easier, and less expensive, to acquire buildable land in the outlying towns than in Middlebury."
Woolf, in his analysis of the NEC study, conceded that the study did not take into account several elements, two of which were the facilities that the College provides and student work-study jobs. Perhaps the most significant aspect of town- college relations that the study did not consider is student volunteer involvement in the local community. McCardell noted that about 1,000 students are involved in some kind of volunteer service in the community, which is impossible to quantify.
The study concludes, "The total impact of Middlebury College on the town and county economies is large and positive. The direct and indirect impacts of the College help to maintain the health, diversity and vitality of the Addison County and Middlebury Town economies and also provide a net fiscal benefit to the State of Vermont."