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Study finds UMD contributed $581 million to region's economy in 2019, 2020

The study by the Labovitz School's Bureau of Business and Economic Research found the university's economic impact was made through operational budgets, construction spending and student and visitor spending in the Northland.

UMD's Labovitz School of Business and Economics
The University of Minnesota Duluth Labovitz School of Business and Economics.
2008 file / News Tribune
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DULUTH — The University of Minnesota Duluth contributed nearly $582 million to the Northland's economy in 2019 and 2020, according to a new study by the Labovitz School's Bureau of Business and Economic Research.

The report compiled school operation data from UMD's finance department, information about student impact from One Stop Student Services, and visitor information from a Wilder Research study. Monica Haynes, director of the BBER, said the study found that the impact on Northeastern Minnesota and Douglas County, Wisconsin, had slightly increased compared to 2015 data, despite the effects of the COVID-19 pandemic.

“The 2020 impact was actually a little bit larger, but fairly similar or in line with what the impacts had been in past years," Haynes said. "Considering we were modeling during kind of an unusual year, we were happy to see that the impacts hadn’t been really negative on the school and its impacts on the region overall.”

She said the study was meant to reflect a typical year of operations, so some model assumptions like student spending were kept despite the second half of the 2020 spring semester being held remotely. There was an increase of about $60 million in the recent economic impact report compared to the 2015 study, which was the previous economic impact research report from the BBER. Haynes said the two studies did not use exactly the same methods, but are similar enough to draw broad comparisons.

“In the end, the university’s spending and budget weren’t actually that different from what they had seen in past years,” she said.

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UMD budgeted $260 million in operational expenses for the 2019 and 2020 fiscal years, which included $188 million for employee compensation and benefits. The university had an average of 1,795 employees, and construction spending of $8 million led to 82 jobs and more than $11 million of additional output in the region.

The university's operational expenditures resulted in approximately 3,000 jobs in the region through direct spending, 1,200 jobs through indirect or induced spending, and almost $436 million of additional output. Haynes said this indirect spending includes employee incomes spent locally, and UMD's payments to suppliers and local industries that is reinvested in the community.

The research, which was conducted by UMD student Daniel Ye and two other undergraduate research assistants and compiled by writer and editor Gina Chiodi Grensing, estimates that 8,904 students spent $88 million in the region in 2019 and 2020. Visitors to campus are estimated to have spent an additional $10 million on lodging, restaurants, gas, shopping and entertainment. On average, students had 7.7 visitors per year who spent just under $150 each visit. Combined, student and visitor spending contributed to more than 1,100 jobs and increased the region's economic output by nearly $135 million.

The report stated that UMD received an average of $50.6 million in state funding in 2019 and 2020. Because of the $581 million in total output, UMD provided about $11.50 to the region for every dollar of state investment.

“The economic impact of almost $582 million demonstrates that UMD has been, and continues to be, a powerful engine for economic growth in the region,” UMD Chancellor Lendley Black said in a news release. Add in the volume of impressive research done by the faculty and UMD’s transformational education that produces career-ready graduates, and it’s clear that UMD plays a vitally important role in the vibrancy of our region, state and beyond.”

Laura Butterbrodt covers health for the Duluth News Tribune. She has a bachelor of arts in journalism from South Dakota State University and has been working as a reporter in Minnesota and South Dakota since 2014.
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