Report: University has big local economic effect

The University has significant financial and job-creation impacts on both New Jersey and Mercer County: The University was at least partially accountable for $1.09 billion in economic activity and 10,655 full-time jobs in New Jersey, and it was at least partially responsible for $833 million in economic activity and 8,951 full-time jobs in Mercer County, according to a University statement about the study.

The report was compiled by Appleseed, an independent New York consulting firm. It was conducted under the auspices of University Vice President and Secretary Bob Durkee ’69, Director of Community and Regional Affairs Kristin Appelget, Director of Public Affairs Karen Jezierny and Legislative Assistant Matthew Camp.

The University “generates more than $1 billion in revenues (endowment earnings, gifts and grants, tuition payments, federal research funds, etc.) — more than 98 percent of which comes from sources outside the Princeton area, and most of which is spent within New Jersey on payroll, purchasing, construction, and other University purposes,” the report states.

The report also indicates that the University’s visitors are significant to the local economy. During the 2006-07 academic year, visitors’ off-campus spending totaled roughly $37 million. According to the report, “most of this visitor spending consists of payments to restaurants, hotels, and shops within the local Princeton area.”

The report also shows that, while 39 percent of the University’s employees live in Princeton-area zip codes, individuals in this group comprise 51 percent of the University’s payroll.

The University also generates money for the local economy with the taxes it pays, the report explained. According to the University’s statement, “The state received $14 million in state income taxes from Princeton employees’ wages and salaries in 2007, as well as $1.35 million from University energy taxes and fees. University spending also indirectly generated another $21 million in state tax payments by its employees, suppliers, contractors and their employees.”

Durkee said in an interview that it is not surprising that the University holds an important financial role in the local community. Even in the current economic downturn, he said, the University will continue to grow as an important member of the community.

Information in the report does not reflect effects from the current economic crisis, and the report noted that the University’s financial involvement in the area is projected to increase. “There is no expectation that the size of our faculty and staff will not remain at its current size, or perhaps even grow modestly,” Durkee said. “We will continue to be paying the people that work here, and they will in turn be generating economic activity in the communities they live in.”

Durkee emphasized that the University will not stop contributing to the local economy, noting that “there are still over $3.5 billion in projects going forward. That is a lot of economic activity.”

He said that because the University is “a very stable employer and a very stable contributor to the economy,” it will play an “even more significant role” in the local community as the economy continues to falter. “As other entities may have to lay people off or cut back on their production, the University is able to continue its operations and employ its staff,” he said. “And that’s a great economic advantage.”

Durkee added that everything from municipal parking revenues to greater tax revenue resulting from high occupancy rates at the Nassau Inn are related to University activities.

The University also contributes to the competitiveness of the Township’s and Borough’s bond rates, Appelget said in the University statement. “While the data collection and analyses in the report are extensive, there are economic impacts that are not included, such as the positive impact of the stabilizing presence of the University on the favorable bond ratings for Princeton Township and Princeton Borough,” she explained.

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Durkee explainied that “the municipalities can borrow at lower rates because of the expectation on the part of the lender that there is less risk because of the presence of the University, and the fact that in bad times as well as good times, the University is conducting its activities and paying its people and doing all of the things that provide a stable economic base for the community.”

Though he declined to comment for this story, because he had not yet read the report, Borough Councilman Andrew Koontz has previously expressed concern about the University’s expansion and its effect on the community.

In an April 2007 interview with The Daily Princetonian, Koontz said that the University’s increasing ownership of Borough land is a cause for concern. “It’s not in the interest of the community for the University to acquire property that is currently on the tax rolls,” he said. “It’s certainly not in our interest to see our current land further eroded.”

Appleseed has conducted similar reports for MIT, Brown and other universities. The 2005 report on Brown focused on Brown’s economic impact on Rhode Island and how the state stood to benefit from taking advantage of the school’s growth. Durkee said the Princeton report was commissioned in late 2007.

“We have been widely distributing the report to local officials and interested citizens,” Durkee said. “It is the kind of study a number of other universities have conducted, and they have found it helpful in their communities and states to have an outside organization come in and take a look at the nature of their economic impact.”