Jobs, spending help power regional economy U.Va. ‘exerts stabilizing effect’

Photos by Andrew Shurtleff

These four know firsthand how vital the University is to Central Virginia’s economy. They are (l-r): George Kasidiaris of the White Spot, a Corner area restaurant; Robert De Mauri, executive director of the Thomas Jefferson Regional Economic Development Partnership; John Knapp, director of business and economic research for U.Va.’s Weldon Cooper Center for Public Service; and Klara Ferro, manager of Café Europa, also on the Corner.

By Charlotte Crystal

“Without U.Va., we don’t have a business,” says Klara Ferro, manager of Café Europa.

The cash register at the popular Greek restaurant on University Avenue may be more tuned to the rhythms of the University than those of other businesses in Central Virginia, yet it is not alone in benefiting from the presence of the University.

U.Va. is an engine that helps power the economy of Central Virginia.

Traditionally a Southern school that featured Thomas Jefferson’s historical architecture, U.Va. more recently has gained a national reputation as a mid-Atlantic powerhouse generating research to reckon with as much in the sciences as in the humanities.

Ranked among the top 25 universities in the country by U.S. News & World Report, the University’s reputation for excellence has allowed it to attract talented
researchers. They in turn have brought in millions of dollars in outside funding as they seek cures for cancer, work to protect the nation’s infrastructure against terrorist attack, and create new materials for use in medicine and industry.

In fiscal year 2002, U.Va. faculty members obtained more than $257 million in research support, an increase of 82 percent over 1996, boosting the University to 49th place nationwide in attracting federal research dollars.

Employment

U.Va. is by far the area’s largest employer — nearly one-fifth of the non-farm workers in the Charlottesville metro area work for the University, either its academic or medical center divisions, according to John Knapp, director of business and economic research for the University’s Weldon Cooper Center for Public Service.

In 2001, U.Va. had more than 18,720 employees, including 5,315 at the Medical Center. The next-largest employers in the area are Albemarle County, the city of Charlottesville, State Farm Insurance Companies and Martha Jefferson Hospital.
“The University exerts a stimulating and stabilizing effect on the employment picture in the regional economy,” Knapp said.

Due in large part to the University’s presence, the unemployment rate in the Charlottesville Metropolitan Statistical Area, which includes the city of Charlottesville and the counties of Albemarle, Fluvanna and Greene, is consistently lower than the statewide rate. The unemployment rate in July was 3.2 percent in the Charlottesville metro area, compared with 4.1 percent for Virginia, according to the Virginia Employment Commission.

Direct spending

Beyond its payroll expenditures, the University also pumps money directly into the local economy. In 1989-90, U.Va. spent $118.4 million for goods and services, including $60.8 million for construction projects, in the Charlottesville metro area, according to Knapp, who conducted an economic study of the University’s impact on the surrounding community in 1990 and recently updated some of his figures. Today, Knapp estimates that the University’s current direct spending is about $167 million in the Charlottesville metro area.

Indirect spending

In addition to direct spending by the University, U.Va. employees recycle their paychecks throughout the regional economy. University employees, who earned $277.3 million in wages and salaries in the 1989-90 fiscal year, spent about $121.7 million of their earnings locally that year. Based on his earlier study, Knapp believes that about 44 percent of the dollars earned by University employees are spent locally. So, in 2001, when the payroll was $721.8 million, U.Va. employees injected an estimated $318 million into the local economy.

For their part, students — there are nearly 19,200 graduate and undergraduate students enrolled at the University — spend a substantial amount with non-University vendors. Based on his earlier study, Knapp estimates students now spend about $85 million annually, including $30 million for housing, $25 million for groceries and restaurant meals, and another $30 million for a variety of goods and services, ranging from furniture to entertainment.

In some cases, the economic impact of the University community is clear. Retail shops and restaurants on the Corner, such as Café Europa, thrive during the academic year and see business slow dramatically in the summertime or during winter break when many students are away and faculty are on leave.

In other cases, the connection with U.Va. is more subtle. Several of Charlottesville’s state and federal government employers — such as the U.S. Army’s Judge Advocate General School, the Federal Executive Institute and the Virginia Transportation Research Council — have limited business connections with U.Va., but it was the University’s presence that initially drew them to Charlottesville.

“The University raises the visibility of the community nationally,” said Robert De Mauri, executive director of the Thomas Jefferson Regional Economic Development Partnership. “Charlottesville plays a lot larger role than it normally would given the size of our area.”

Visitor spending

University events — such as Finals, which attracts more than 20,000 people for a weekend every May; Family Weekend in October; and football games throughout the fall — bring thousands of visitors to Charlottesville each year.

In 1989-90, the University’s presence brought an estimated 477,350 visitors, who filled hotel rooms, ate in restaurants, shopped in local stores and spent an estimated $43.7 million in the area, Knapp said.

Since then, the University’s growth in several areas — population, reputation, special events and sports facilities — has increased the attractiveness of Charlottesville as a tourist destination. Knapp believes that a conservative estimate of spending by U.Va.-affiliated visitors could easily reach $58 million a year.

Mark Shore, director of the Charlottesville-Albemarle Convention and Visitors Bureau, said U.Va. special events help fill the Charlottesville region’s 3,200 hotel rooms. The weekend of Finals is particularly popular.

“We spend a lot of time that weekend helping interstate travelers find rooms,” Shore said.

Construction

The University has entered a period of construction and construction planning that rivals any in its history. From 2003 through 2006, when the $129.8 million John Paul Jones Arena is expected to be completed, U.Va. plans to spend $555.6 million on construction projects.

About half of the University’s spending on construction contracts goes for labor, according to Richard Dickman, contract administration manager for facilities management. And construction workers, regardless of their permanent residence, spend about 60 percent of their paychecks locally, plus paying state income and sales taxes, he said.

Building materials are purchased locally whenever available, added Charles “Sack” Johannesmeyer, U.Va. director of facilities planning and construction.

At a community briefing in June, Leonard Sandridge, U.Va. executive vice president and chief operating officer, estimated that the University construction expenditures will mean an economic benefit to the community of about $1.1 billion over the next three years, and lead to the creation of 1,450 jobs, directly and indirectly.

Health care

Over many years, the U.Va. Medical Center has developed a national reputation, according to Solucient Inc., a leading, independent provider of health-care data and analysis, which has ranked the U.Va. Medical Center among the nation’s top 100 hospitals.

“The quality of health care in Charlottesville far exceeds what one would expect to find in a small community,” De Mauri said. “That attracts retirees to the area because they know they can get the best care without having to live in a big metro area.”

The Medical Center serves patients around the state and beyond, providing quality health care and acting as a safety-net hospital, said Larry Fitzgerald, chief financial officer for the U.Va. Health System. In 2001, the Medical Center provided $66 million in care for uninsured Virginians from around the state, serving more than 27,000 people who could not pay for their care.

“Our mission is to treat all patients, regardless of their ability to pay for medically necessary care,” Fitzgerald said.

Workforce training

Another economic benefit difficult to quantify is the presence of a highly educated workforce in Charlottesville. Many local businesses and government agencies unaffiliated with the University profit from the presence of students, faculty and their highly educated spouses.

The University also reaches out to adult students interested in attending classes part time. The School of Continuing and Professional Studies offers a broad array of programs around Virginia, from one-day seminars to certificate programs that enable working professionals to boost their skills and job prospects.

Other U.Va. initiatives include master’s degree programs in engineering and management of information technology, which serve students employed full time.
U.Va. also collaborates with Piedmont Virginia Community College and other state community colleges, admitting qualified transfer students into the undergraduate program and hiring lab technicians trained in specialized programs.

“As we promote the region, the University is one of the first things we talk about,” De Mauri said. “There’s the availability of continuing education. Faculty and students provide an educated workforce. There’s research going on. The schools of business, medicine and engineering are seen as assets, especially by smaller technology businesses.”