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Executive Summary

  • State higher education contributes nearly $25 billion annually to the Texas economy. This is greater than a $5 economic return for every $1 in state government appropriations.

  • Spending and re-spending of out-of-state higher education student, research, and health care expenditures add $6.8 billion per year to state economic output.

  • The higher productivity of higher education’s students increases state economic capacity by another $17.8 billion per year.

  • Even with these positive impacts, state higher education funding is losing ground to other functions.

  • The current allocation of public university federal indirect cost recovery funding restricts state economic growth.

  • Difficulties quantifying general knowledge and economic development roles of higher education understate even these total estimated impacts.

Summary Table 1
Estimated Impact of Texas Higher Education System
on State Economic Output, FY98
(Amounts in Million $)

Multiplier Impacts
Student Expenditures $2,315
Research & Related Expenditures $3,904
MD Anderson Cancer Center $605
Total Multiplier Impacts $6,824 $6,824

Discounted Earnings Gains
Sub-Baccalaureate Degrees (1) $2,343
Bachelor’s Degrees $4,736
Advanced Degrees (2) $2,112
Total Earnings Gains (3) $9,191 $17,342

Discounted Productivity Gains
Manufacturing $2,536
Non-Manufacturing $15,814
Total Productivity Gain $18,350 $18,350

Average Earnings/Productivity Gains $17,846

Total Economic Impact $17,342 $18,350 $24,670

State and Local Funding
1998-99 State GR Appropriation/Year (4) $4,112
Less: Noneducational Appropriations
 Texas A&M Services $126
 Higher Education Coordinating Board $175
Plus: Available University Fund $262
Direct Educational Appropriation $4,073
Plus: Community College Levy $489
Total State/Local Funding $4,562

(1) Includes some college and associate degrees.
(2) Includes master's, doctorate and professional (including medicine and law) degrees.
(3) In order to estimate productivity gain, discounted earnings gain is divided by earning's 53 percent share of Texas economic output.
(4) Includes undedicated general revenue and employee benefits.