Economic Impact

Another way in which the University benefits the state is through the impact of its spending patterns on the overall state economy. As the University spends dollars on salaries, equipment, and the goods and services it relies on to conduct its business, it generates additional economic activity, creating jobs and more demand for goods and services throughout the economy. This effect is often referred to by economists as the "multiplier effect."

When a standard model for measuring this economic impact is applied to the University, an impressive picture emerges:

[Graphic: Bar
graph displaying impact of UW and related expenditures]

If the University of Washington were not a major research university, the return on investment would not be nearly as spectacular. The quality of the University determines the rate of return. That return, in dollars and jobs alone, has a powerful impact on the state's economy.

In fiscal 1997, the University's budget totaled $1.6 billion ($378 million of state funding plus $1.22 billion attracted from other sources, including $500 million from outside the state).
This $1.6 billion of total spending generated an additional $2.8 billion of economic activity, for a total economic impact of $4.4 billion.
Of this $4.4 billion of economic activity, $3.6 billion occurred in the state of Washington.
The University's $3.6-billion statewide economic impact produced $143.3 million in 1997 tax revenues for the state of Washington.
When this $143.3 million in tax revenue is subtracted from the UW's $378 million of state funding, the remainder is a net state investment in the University of $235 million. By this calculation, the state's investment produced a rate of return, in statewide economic activity, of better than 15 to 1.
The University employed about 20,000 people in 1997 (6,000 funded by the state). Another 38,000 jobs were generated in the state by the UW's economic impact.

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