University improvements create ripple effect
Spending money on deffered maintenance is good for state economy
A report from the Docking Institute of Public Affairs at Fort Hays State University said that if the state invested money into Kansas universities $727 maintenance backlog, it would have a profound economic effect on the state economy.
By Nathan Gill
Friday, April 20th, 2007
Spending money to repair Kansas universities would be good for the state’s economy, according to a Kansas Board of Regents report released in late March.
The report, produced by the Docking Institute of Public Affairs at Fort Hays State University, said that if the university’s estimated $727 million maintenance backlog was addressed, it would produce more than $1.6 billion for the Kansas economy.
According to the report, every million dollars spent on deferred maintenance would produce a $2.2 million increase in gross state product, a $644,500 increase in earnings and 19 new jobs.
Brett Zollinger, director of the institute, said that each dollar spent had an affect of more than $1. He said that an economic effect, called a multiplier, took place whenever money was spent.
“A way of thinking about the multiplier is that money is spent as it is passed along,” Zollinger said.
According to the report, every million dollars spent on deferred maintenance would produce a $2.2 million increase in gross state product, a $644,500 increase in earnings and 19 new jobs. If the full $727 million was spent, those amounts would be $1.63 billion, $468.5 million and 13,964 jobs, respectively.
Kip Peterson, Regents spokesman, said that spending money to fund such a large and costly construction project was bound to have a profound economic effect on Kansas.
“It’s going to have a trickle down, or ripple, effect all around the state,” Peterson said.
Carl Parker, an institute policy fellow who prepared the report, explained that maintenance money would filter through the industries involved with construction projects. For example, if a company were paid to fix a building, that company would pay another business for related materials. That business would use the money to pay its employees, who would spend the money in their communities. The money, in effect, would multiply.
Parker said the communities in which project money would be spent — university towns including Lawrence — would benefit the most, but that the state’s entire economy would be affected.
Kansan staff writer Nathan Gill can be contacted at ngill@kansan.com.
— Edited by Trevan McGee
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