ECONOMIC IMPACT VALUE DEFINITION
GOVERNMENT REVENUE IMPACT DEFINITION
Study Year
Fiscal year was defined as FY2022: October 1, 2021-September 30, 2022.
Total Economic Impact
The total impact of an organization is a compilation of the direct impact, the indirect impact, and the induced impact generated in the economy as a result of the organization.
Direct Economic Impact
The direct impact includes institutional, employee, and visitor spending on the institution.
Indirect Economic Impact
Indirect impact, also known as the multiplier effect, includes the re-spending of dollars within the local economy by vendors/ suppliers and households.
Multiplier Effect
The multiplier effect is the additional economic impact created as a result of the organization’s direct economic impact. Local companies that provide goods and services to an organization increase their purchasing by creating a multiplier.
Direct Tax payments
Government revenue that is collected by governmental units in addition to those paid directly by an organization, including taxes paid directly by employees of the organization, visitors to the organization, and vendors who sell products to the organization.
Indirect Tax Payments
Governmental units collect government revenue in addition to those paid directly by an institution, including taxes paid directly by employees of the institution, visitors to the institution, and vendors that sell products to the institution.
Direct Employment
Total number of employees, both full-time and part-time, at the organization based on total jobs.
Indirect Employment
Indirect employment is the additional jobs created as a result of the organization’s economic impact. Local companies that provide goods and services to an organization increase their number of employees as purchasing increases, thus creating an employment multiplier.
For the purposes of the impact analysis UAB is defined as the combined impacts of the UAB Academic, the UAB Health System, and Southern Research. These entities are further defined as:
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UAB Academic – The UAB Academic impact analysis included all schools and colleges of UAB including UAB Arts (AEIVA, Alys Stephens Center) and UAB Athletics.
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UAB Health System – The UAB Health System impact analysis included the UAB Health System Corporate Office, the UAB Hospital, the University of Alabama Health Services Foundation (UAHSF), Medical West, Baptist Health System in Montgomery, Triton Health Systems / Viva Health Group, and UAB Callahan Eye Hospital Authority.
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Southern Research – Southern Research impact analysis included only the operations of Southern Research.
The 2022 analysis was completed using IMPLAN methodology. It is important to understand the different methodologies as the output differs related to methodology utilized.
IMPLAN Methodology – The economic impact of UAB was estimated using IMPLAN (IMpact Analysis for PLANning), an econometric modeling system developed by applied economists at the University of Minnesota and the U.S. Forest Service. The IMPLAN modeling system has been in use since 1979 and is currently used by over 500 private consulting firms, university research centers and government agencies. The IMPLAN modeling system combines the U.S. Bureau of Economic Analysis’ Input-Output Benchmarks with other data to construct quantitative models of trade flow relationships between businesses and between businesses and final consumers. From this data, one can examine the effects of a change in one or several economic activities to predict its effect on a specific state, regional or local economy (impact analysis). The IMPLAN input-output accounts capture all monetary market transactions for consumption in a given time period. The IMPLAN input-output accounts are based on industry survey data collected periodically by the U.S. BEA and follow a balanced account format recommended by the United Nations.
IMPLAN’s Regional Economic Accounts and the Social Accounting Matrices were used to construct state- and CSA-level multipliers, which describe the response of the economy to a change in demand or production as a result of the activities and expenditures of UAB. Each industry that produces goods or services generates demand for other goods and services, and this demand is multiplied through a particular economy until it dissipates through “leakage” to economies outside the specified area. IMPLAN models discern and calculate leakage from local, regional and state economic areas based on workforce configuration, the inputs required by specific types of businesses, and the availability of both inputs in the economic area. Consequently, economic impacts that accrue to other regions or states as a consequence of a change in demand are not counted as impacts within the economic area.
The model accounts for substitution and displacement effects by deflating industry-specific multipliers to levels well below those recommended by the U.S. Bureau of Economic Analysis. In addition, multipliers are applied only to personal disposable income to obtain a more realistic estimate of the multiplier effects from increased demand. Importantly, IMPLAN’s Regional Economic Accounts exclude imports to an economic area, so the calculation of economic impacts identifies only those impacts specific to the economic impact area. IMPLAN calculates this distinction by applying Regional Purchase Coefficients (RPC) to predict regional purchases based on an economic area’s particular characteristics. The RPC represents the proportion of goods and services that will be purchased regionally under normal circumstances, based on the area’s economic characteristics described in terms of actual trade flows within the area.
IMPLAN analysis is conducted to measure jobs/positions (part-time or full-time), not full-time equivalents (FTEs). Full-time and part-time employees generate impact in the economy and support additional indirect and induced employment throughout the state of Alabama. Employment data of the UAB Academic, UAB Health System, and Southern Research was provided as an output of all individuals who receive a paycheck from the respective institution. This includes all full-time, part-time, and employed faculty, staff, and students.
ECONOMIC IMPACT VALUE DEFINITION
The overall economic impact values provided in this report for UAB, UAB Academic, UAB Health System, and Southern Research include the following impact values that were broken out as sub-analyses:
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Organizational spending – capital and operational
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UAB Arts
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UAB Athletics
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UAB Research
The impact values of UAB, UAB Academic, UAB Health System, and Southern Research that were presented in this report that are not included in the overall economic impact value and are, therefore, in addition to the economic impact of the organization are:
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Community benefit impacts
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Alumni impacts
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Construction impacts
STATE AND LOCAL TAX IMPACT DEFINITION
Government revenue impacts generated in the current, FY2022 study included all taxes paid by each of the UAB entities to the state of Alabama and the Birmingham CSA (i.e., payroll, property, sales, unemployment, income, and any other taxes paid to the state and local government). Any federal taxes paid by UAB were not included in the government revenue impacts (i.e., FICA payments).
Impact analysis looks to quantify the impact of the attraction of “fresh” dollars to a region. Therefore, when including visitor spending in the impact analysis of a university, health system, or other organization, the analysis will only include those visitors coming to a region from outside of said region. Visitors to events who also live in the region would have spent their dollar in that region otherwise; therefore, this dollar was not attracted to the region as a result of the organization being analyzed.
For UAB, the impact analysis looked at impacts to the state of Alabama and the Birmingham CSA region. Visitors to UAB were only counted if they were from outside of said region being analyzed.
Tripp Umbach uses federal per diem rates to estimate visitor spending in an area. Per diem rates can be found here by area: http://www.gsa.gov/portal/content/104877. Tripp Umbach has utilized per diem rates to estimate visitor spending as they can be considered a conservative measure (i.e., visitors generally spend more than the per diem rates in any given area).
The rates utilized specifically for this analysis were:
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Birmingham region = $113 for lodging; $69 for meal and incidental expenses
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Standard for Alabama = $98 for lodging, $59 for meal and incidental expenses
Community benefits provided in this report outline two forms of impact — monetary donations made by employees and students to local nonprofits as well as volunteer hours that are valued at a monetary value.
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Tripp Umbach has conducted survey research to estimate the amount of monetary donations a student, staff, faculty, and physicians will spend in a year. This amount differs per individual but ranges from $500-$700. Tripp Umbach also understands that not all individuals donate; therefore, this is adjusted as well.
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The value of a volunteer hour has been quantified by Independent Sector to be $29.95 per individual per hour. Tripp Umbach utilized this value with the understanding (also from survey research) of the average number of hours faculty, staff and students engage in volunteer activities (estimated 100 hours per year, for 50 percent of the employees and students).
For the 2022 analysis, research impact was quantified as the annual impact of UAB research expenditures in FY22. The analysis looks at the research expenditures that occurred in FY22 to estimate the annual impact of UAB research on the state economy.