Study: UW-Madison essential to state’s economic growth

Chancellor John Wiley says UW–Madison’s contributions to the Wisconsin economy show that the state is getting a great return on its investment, but he warns that cuts to the university will have economic consequences.

“I think the Legislature, not to mention the general public, will be pleased to see the success the university is having in fulfilling its mission to create high-quality jobs and bolster the state’s economy,” Wiley says.

Wiley’s comments follow the release of an economic impact study conducted by David J. Ward and Dennis K. Winters, president and vice president of Madison-based NorthStar Economics, Inc.

The study, which was requested by the university and paid for using private funds from the UW Foundation, began in June 2002 and looked at 2001. According to the study, UW–Madison’s statewide economic impact is about $4.7 billion dollars, or 2.7 percent of the gross state product. It also states that more than 70,000 jobs exist because of the university, representing about 2.7 percent of state employment.

While those numbers reveal a lot about UW–Madison’s economic impact, the report says the university’s most important characteristic is its ongoing ability to reshape the Wisconsin economy.

Wisconsin has a mature, slow-growth economy based on manufacturing and agriculture, the report says. High-growth economies are built on brainpower, new ideas, research, new technology and high-paying jobs. Research universities such as UW–Madison are critical to creating those jobs.

In a letter to Wisconsin legislators, Wiley lays out the report’s findings and asks that lawmakers don’t further hamper UW–Madison’s ability to create high-paying jobs through enterprises such as the University Research Park.

The NorthStar study reveals the University Research Park is home to more than 100 companies that employ 3,058 people who earned an average of more than $60,000, twice the average Wisconsin income. Since 2001, the year NorthStar included in its analysis, the number of park employees has increased to about 4,000, says Mark Bugher, research park director. The report also states that the research park contributes $516 million to the Wisconsin economy, an amount that NorthStar does not include in its calculations for UW–Madison’s economic impact.

“These are the types of jobs that Wisconsin needs. To raise our state’s per capita income just to the national average, we need to create 140,000 new, high-paying jobs. Doing so would create an additional $460 million in tax revenue each year — without raising any taxes,” the chancellor writes in the letter.

Gov. Jim Doyle has said that he will not raise taxes to balance the state’s more than $3 billion budget deficit. Instead, he proposes a series of cuts and other cost-saving measures that, among other things, will cost UW–Madison $38.5 million — even after large tuition increases.

Wiley recognizes the realities of the current budget crisis and says that the university is willing to do its part to balance the budget at the levels proposed by the governor.

“Many legislators have made it clear to us that, given the state’s fiscal situation, we should not expect to have our budget cut reduced,” Wiley says. “We are, therefore, committed to managing it as best we can. However, even deeper cuts will undoubtedly affect educational quality and access more severely, and further hinder our ability to contribute to the development of Wisconsin’s high-growth economy.”

Wiley points out that the competition is fierce for the high-technology industry, venture capital and the scientists who generate new ideas. He says high-tech companies will locate in regions where there is committed support for the continued development of brainpower and new ideas.

“And the researchers active in the frontiers of science, who are generating these ideas, will go to institutions that can provide a basic level of secure and sustained support, bringing significant levels of federal and other external funding with them,” Wiley points out.

He says Wisconsin cannot wait until after it has lost research faculty and high-tech companies to other states to restore its commitment to the university.

“If the state does not leave UW–Madison strong enough in 2003-05 and reinvest in us in 2005-07, we will be unable to help grow jobs and strengthen the economy at the levels detailed in this report, much less build upon what we’re already doing,” he says.