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

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.

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