USM Economic Impact Study Finds $6.7 Billion in Additional Maryland Incomes and Sales Taxes Generated by Three Classes Analyzed

Study Validates Substantial Return on State's Investment


Adelphi, Md. (Jan. 25, 2013) -- A new report commissioned by the University System of Maryland (USM) to study the system's impact on the state economy finds that three representative graduating classes analyzed will yield $6.7 billion in additional Maryland income and sales taxes, from estimated lifetime incremental earnings and the multiplier effect of the classes' associated economic activities.

The study reveals ample evidence of the system's significant contribution to the health of Maryland's economy. It also validates the recognition that an investment in a USM education pays a lifetime of dividends in the form of better jobs and higher incomes.

The system's financial impact was estimated by a detailed analysis of three representative USM graduating cohort classes: 1986, 1989, and 1996. The study finds that the cumulative impact on state revenues of these graduates is considerable.

Over the course of their working lives, the 1986, 1989, and 1996 graduates will have increased earnings, and pay increased taxes, for a total of $2.8 billion in additional Maryland income and sales taxes as follows:
  • For 1986 graduates, estimated lifetime incremental earnings will be $12.0 billion, generating $796.3 million in additional Maryland income and sales taxes;
  • For 1989 graduates, estimated lifetime incremental earnings will be $13.3 billion, generating $883.8 million in additional Maryland income and sales taxes;
  • For 1996 graduates, estimated lifetime incremental earnings will be $17.4 billion, generating $1.2 billion in additional Maryland income and sales taxes.

In addition to increasing state tax revenues, the incremental earnings of USM graduates stimulate the Maryland economy through a "multiplier" effect. When these graduates spend their earnings, other economic activities are supported that result in jobs.

For instance, economic activity generated by the lifetime incremental earnings of the three cohorts will result in nearly $3.9 billion in additional state taxes and will support an average of 9,356 annual jobs.

The USM commissioned the Jacob France Institute (JFI) at the University of Baltimore to conduct the study. It provides an in-depth analysis of the system's impact in three key areas:

  • Earnings, Economic, and Fiscal Impact: The system's impact on the state as measured by increased earnings of and taxes paid by system graduates, and new spending attracted into Maryland from sources such as federal research support and out-of-state students;
  • Workforce Development: The system's ability to produce graduates in areas of workforce shortages;
  • Economic Development: The system's contribution to Maryland's economic vitality through its research, partnerships with the private sector, and technology transfer.

When comparing the positive impact of the USM to state appropriations for the system, it becomes clear the state has made a sound investment. For the 1986 cohort of graduates, the state receives $3.10 in revenue for each $1 invested. The figures are equally impressive for the 1989 cohort ($2.50 received by state for each $1 invested) and the 1996 cohort ($2.75 for each $1).

"A guiding principle of the University System of Maryland is a strong commitment to serving not only our students and institutions but all citizens of Maryland," said USM Chancellor William E. "Brit" Kirwan. "The USM is a major economic driver in the state, and this economic impact study confirms the system's long tradition of delivering a remarkable return on the state's continued investment in our activities and mission."

Actual earnings information of the graduates was examined and compared to the estimated earnings of persons with the next lower level of educational attainment.

Average earnings of a 1986 University System of Maryland bachelor's degree recipient in 2010 were $85,830, with incremental earnings of $53,482 more than a person whose highest level of educational attainment was a high school degree. Average 2011 earnings for 1986 master's degree recipients were $84,147, a level of earnings $3,296 below the earnings of the average USM bachelor's degree recipient. The average 2011 earnings for a 1986 professional school graduate were $169,983 with incremental earnings of $82,541 more than the average USM bachelor's degree recipient.

With three of the state's four primary research universities-University of Maryland, College Park (UMCP); University of Maryland, Baltimore (UMB); and University of Maryland, Baltimore County (UMBC)-the USM is also a core element of Maryland's academic and scientific infrastructure. The system annually generates $1.1 billion in academic research and development expenditures.

"I am pleased that this thorough study of the USM's impact on Maryland's economy reflects the system's substantial influence on the state's financial well-being," said Gary L. Attman, chair of the Board of Regents Committee on Economic Development and Technology Commercialization. "I know that the USM will remain committed to building a culture of entrepreneurship and continuing to strengthen practices to boost the translation of campus research into new commercial opportunities that will benefit citizens throughout the state."

USM institutions host four research parks that house 117 tenants with nearly 3,200 employees. Those four sites are M Square Research Park (UMCP); UMB BioPark (UMB), bwtech@UMBC (UMBC); and the Allegany Business Center at Frostburg State University.

In keeping with a recent strategic goal to help create 325 companies in 10 years, the USM has had significant impact on the development of 51 companies from July 2011 to June 2012.

USM Economic Impact Study

Executive Summary of USM Economic Impact Study

Contact: Mike Lurie
Phone: 301.445.2719