W&L Releases Study of Economic Impact on Shenandoah Valley
A new study concludes that Washington and Lee University contributed more than $225 million to the Shenandoah Valley’s economy in 2010.
The economic-impact study, conducted by Indiana-based EconImpact, examined W&L’s effect on the region in three areas — spending, knowledge and local government. The study defined the Shenandoah Valley as the counties of Augusta, Botetourt, Roanoke and Rockbridge, along with the independent cities of Buena Vista, Lexington, Roanoke, Staunton and Waynesboro.
Among the report’s major conclusions:
- Washington and Lee was responsible for $225,277,916 of the $12.88 billion in economic activity in the Shenandoah Valley during 2010. That translates into the University’s being responsible for $1 of every $60 of economic activity in the area.
- The W&L community consists of 3,751 people — 2,143 students, 869 employees and 739 alumni — or 1 of every 100 people in the Shenandoah Valley.
- W&L had a 2.3 percent net benefit to the city of Lexington by virtue of being responsible for 14.8 percent of the city’s revenues and 12.5 percent of its expenditures.
“We think it is important to undertake a study of this sort periodically so that we can better understand the economic dynamics of the University as it relates to our communities,” said Steve McAllister, Washington and Lee’s vice president for finance and treasurer. “Naturally, the impact in direct spending is a major factor, but this report also explored certain benefits to the community that are not always as evident, including what the report calls the ‘knowledge impact,’ but also cultural and community service benefits.”
The study divides the University’s overall impact into three distinct areas — spending, knowledge and local government.
• Download the complete report (pdf)
The spending impact is the result of both direct and secondary spending. Direct spending is from the University along with its employees, students and visitors. Secondary spending is by businesses and governments that benefit from the initial direct spending.
According to the study, W&L’s spending impact is large because most of the revenues are from students who reside outside the Shenandoah Valley.
In terms of direct spending, the University as a business entity spent $27.5 million, employees spent $65 million, students spent $14.6 million, and visitors spent $11.45 million, for a total in direct spending of $118.6 million.
According to the study’s author, “The economic impact of an organization on a region is derived from its ability to attract outside money to a region or to prevent funds from leaving it.” In W&L’s case, the share of revenues from tuition, contributions, grants and auxiliary activities that came from outside the Shenandoah Valley in 2010 was 98.4 percent.
Using a multiplier effect that calculates the value of re-spending estimates the secondary impact of W&L’s spending at $94.9 million, for a total spending impact of $213.6 million.
The knowledge impact of an organization on a region refers to the contribution it makes toward higher incomes and social benefits of positive lifestyle choices. In calculating this benefit for W&L, the study included the presence within the Shenandoah Valley of 532 alumni of the University, whose increased earnings impact on the region represents $6 million.
In addition, the study reported a social-benefit impact of more than $3.7 million, based on such items as reduced unemployment and reduced welfare expenditures, along with a cultural-benefit impact from the many programs at W&L, and a community-service impact. The latter is based on over 44,000 hours of volunteer activities performed by the University’s students in Lexington and the Shenandoah Valley.
Finally, the study concluded that the Washington and Lee community was responsible for more than $2.2 million in revenue to the city of Lexington in the 2010 fiscal year against expenditures of $1.8 million. The result is a net benefit of $352,639, which represents 2.3 percent of the city budget.
Jeffery G. Hanna
Executive Director of Communications and Public Affairs