NDSU Claims $884 Million Annual Economic Impact

dean bresciani

We’re coming up on another legislative session, so of course it’s time for the institutions in North Dakota’s university system to flood the zone with propaganda masquerading as fact regarding how much economic impact they have on their communities. And, of course, the always pliant North Dakota media goes right along with it, not questioning a single conclusion or even bothering to find one of the many higher education and economic experts who could tell you that these sort of “economic impact” studies are bogus.

“The university’s total operations and additional spending it spurs amounts to $884.6 million each year – about 1.9 percent of the total regional economy,” reports Ryan Johnson for the Fargo Forum about NDSU’s specific impact. That number includes money spent by students on living in Fargo, the money spent by the university itself in Fargo and the benefit to the students in terms of increased income.

Perhaps the most laugh-out-loud funny quote from the whole story is this one from a VP at Economic Modeling Specialists International (which performed the “study”):

“Taxpayers get a rate of return of around 3 percent, which is very solid considering that most government investments are not going to generate a return on investment that high,” she said.

What’s funny about that is the State Investment Board uses an 8% projected rate of return to calculate the fiscal health of the pensions funds it manages for public employees. This VP is right, states don’t usually get even a 3% rate of return on their investments. Which is why North Dakota’s pension funds are in so much trouble.

But I digress.

If this “economic impact” stuff sounds like the same sort of fiscal voodoo that surrounded President Obama’s stimulus spending efforts at the national level, you’re right. It’s the exact same thing. You cannot count the economic impact of government spending on higher ed without also taking into account the cost to the taxpayers of taking that money away from them.

If you say NDSU had an $841 million economic impact, you’re supposing that the money spent to achieve that impact wouldn’t have been spent if it weren’t spent on NDSU. That’s a false assumption.

What’s more, I’d like to know if this study includes the roughly 80% of NDSU students who don’t get their degrees on time, or the more than 50% of NDSU students who don’t finish with a degree at all. What’s the economic impact of that waste of time and money? How much better off would those students be if they weren’t saddled with tens of thousands in student loan debt for achieving nothing? What impact would they have had on the economy if they’d gone to work instead of wasting their time at NDSU?

Something tells me this study didn’t delve into those dark corners of North Dakota’s higher ed problem. But then, this sort of study isn’t intended to present an accurate picture of higher education in North Dakota. It’s intended to produce talking points that can be repeated by incurious reporters and higher ed officials who pull down six figures in salary (plus perks!) to protect and expand their bureaucratic empires.

And it’s all to distract from the fact that institutions like NDSU aren’t doing a very good job when it comes to their primary purpose, which is educating students. When you have abysmal graduation rates for degrees that have skyrocketed in cost, but not value, you spend a lot of time talking about “economic impact” and all your “research” deals with big business.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • Roy_Bean

    If the tooth fairy gave them $300 million dollars and they figured the positive impact of that money then their figures could possibly be accurate. If they were to subtract the negative impact of taking the $300 million out of the state economy in the first place I think they might find that the NDUS has a net negative impact on the state. But then I have to remember that this is all too complicated for me to understand anyway.

    • http://sayanythingblog.com Rob

      Money from thetooth fairy is a good way of putting it, because that’s exactly how these people treat it. Not money taken from taxpayers but money that just shows up by magic.

  • kevindf

    Big education in this state has had nothing but a negative impact on my household budget.

  • jimmypop

    ” you’re supposing that the money spent to achieve that impact wouldn’t have been spent if it weren’t spent on NDSU.” this is all you really have to say…. how much good would those dollars do if they were left in tax payers pockets? i bet more than 3%….far more.

    this is just a play to help bismarck folks make the ‘hard choice’ of giving ndsu more money in the next two years. i love ndsu. its a good place. we need it to remain. but id rather have an honest report saying we lose $75M a year having ndsu’s door open. then have ndsu tell us why its a good thing to have the doors kept open each year. it bet a majority of us would be happy to keep paying at a loss…we just want honesty not this.

    • http://sayanythingblog.com Rob

      I don’t think there’s anything wrong with the idea of.NDSU, but the purple in charge of the place are crooked and education clearly isn’t priority #1.

      • jimmypop

        im not sure id say crooked…. thou its fair to say they are trying to build a little kingdom. regardless, all it takes is a couple brave people in the board of higher ed and bismarck to actually WORK and dig into this mess. i dont think it would be that hard to fact find at that place if someone took the time to do it.

  • http://Sayanythingblog.com The Whistler

    The higher education system should be about educating the students. We don’t need their voodoo economics.

  • Yogibare

    This reminds me of the radio program we heard as we drove by Chicago a few years ago. The program featured Jesse Jackson Jr. on the program telling of the economic impact of a proposed gaming casino to be located on I-80 west of Chicago; once again the miracles of the multiplier effect of government spending. The State of Illinois would put in some hundred million dollars and the Casino would bring in several times that amount in revenue to the State.
    This kind of investing is like falling off a log!!! Why put money into ventures like manufacturing or service industry when there is such a fantastic return on Casinos?
    Obviously, the State should be “investing” in Casinos!
    Sounds to me like there are people at the State colleges and universities who do not have enough to do!

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