KU spending in Lawrence
In 2008, the most recent figures available, Kansas University spent the following amounts with Lawrence businesses:
Type of Goods and Services, Amount spent
Construction (materials, supplies, labor): $2.6 million
Municipal services (water, sewer, waste collection): $2.1 million
Professional services (legal, architectural, engineering): $1.7 million
Child care: $970,000
Printing/publishing: $904,000
Computer/Internet service: $643,000
Building/grounds maintenance: $612,000
Advertising/marketing/media services: $557,000
Hotels/housing: $509,000
Travel services: $487,000
Catering/food services: $271,000
Vehicle repair and maintenance: $200,000
Local community support: $155,000
Medical care/health services: $112,000
When Lawrence Chamber of Commerce President Tom Kern hears of another faculty position being held open at Kansas University, he thinks well beyond the students who won’t be educated that semester.
He thinks of the person who won’t be moving here from a community like Little Rock, Ark. That person won’t be buying a home in Lawrence, and one real estate agent won’t be earning a commission.
Grocery stores will likely be selling thousands of dollars less in grocery sales, and Home Depot won’t be getting a visit to help fix anything that goes wrong with the new house.
And so on.
As Kansas University begins to parcel out another round of state budget reductions, the effect will continue to be felt in the Lawrence community.
“They’re the economic engine that drives Lawrence,” Kern said, adding that the whole community hurts when KU has to absorb cuts to its personnel.
“The ripple effect is huge,” he said. “But it’s done in little pieces.”
KU’s hits have been substantial. The university has been cut by $36.6 million — about 12 percent of its state funding — including “unfunded mandates,” where the Legislature requires KU to spend money on a certain area without fully funding it.
That has meant about 200 fewer faculty and staff working across the KU campuses, including more than 125 positions in Lawrence, more than half of which were teaching positions.
“The budget situation has deteriorated rapidly,” KU Chancellor Bernadette Gray-Little said at a recent budget forum at KU. “And the expectation is, from the forecasts that we have received, is that there will be further decreases for the next year.”
Economic drivers
And more people in Lawrence are paying attention to the budget crisis than just KU employees. One of them is Mike McGrew, CEO of McGrew Real Estate in Lawrence.
“We absolutely care about the employment levels at the University of Kansas,” McGrew said. “It matters a lot, especially when they’re the single biggest employer in the city.”
They, like many other businesses in town, feel the ripple effect of KU’s 9,872 employees as of last fall, and their more than $300 million in spending. That’s before taking into account several major economic development efforts for the state — including bioscience and cancer efforts.
Keith Yehle, KU’s director of federal relations, said that in some Kansas communities major businesses drive their economic engines. In Wichita, for example, the major industry base comes in the form of companies like Sprint Aerosystems, Cessna and other aviation industries.
“We’re trying to convince the greater Lawrence community that our impact is just the same,” Yehle said.
Charles H. Whiteman, an economist at the University of Iowa, prepared a report in 1994 that examined the economic impact of state spending on that university. The report was updated in 2000, and nearly identical results showed that the figures likely withstood the test of time, Whiteman said.
He used a variety of economic multipliers from the U.S. Department of Commerce to calculate the indirect impact of the $240 million in state dollars spent on university activities.
The University of Iowa is often cited by KU as one of its peer institutions, and Whiteman — who earned his undergraduate degree at KU — said the study probably applied well to KU and Lawrence, which he said could likely be similarly compared to the University of Iowa and Iowa City.
The effects of these cuts have obvious implications for their surrounding communities, which house the vast majority of the university’s employees, he said.
More than numbers
Whiteman found that generally, the economic impact of his university was twice its budget. So if a university like Iowa or KU had a budget of $1 billion, the total economic activity generated by the school would be $2 billion. Accounting for dollars spent in other states, Whiteman said a multiplier for in-state dollars generated would be more like 1.4 times its budget.
“We’ve faced cuts of 20-, 30-, 40 million dollars,” Whiteman said. “Multiply those cuts by 1.4.”
It also works for the personnel at the university, too, he said. The economic activity for each of the 17,000 employees of a university allows another 24,000 people in the state to hold their own jobs.
Still, he says that while university administrators sometimes enjoy presenting facts in that manner, he thought the university should not be judged in the end from a purely economic basis.
“I try to emphasize that the university is not an employment scheme,” he said. “You should measure its impact by how well it serves its purpose.”
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anon1958 (anonymous) says…
“I try to emphasize that the university is not an employment scheme,” he said. “You should measure its impact by how well it serves its purpose.”
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If you follow the money, one of its main purposes is entertainment. By the way, the KUAC is an employment scheme to make a very select few people very rich.
Cant beat getting three million to do your job. That is best scheme ever!
Kookamooka (MJ Browne) says…
Actually, Mangino was offered 3 million dollars to NOT do his job. That was his severance package.
Made_in_China (Paul R. Getto) says…
The manufactured financial crisis, and the slow-motion disaster continues. People need to speak up when the legislature returns to town. If this is what the 'people' want, so be it. If we want to continue running the state for the benefit of the well-to-do, and not attend to social services and education, this will continue.
down_the_river (anonymous) says…
Don't forget that KU has taken $120 million out of the Lawrence economy this year, compared with 10 years ago. That's a rough approximation of the amount the tuition increases over this decade have reduced the disposable income of KU students. If we want to apply the multipliers suggested in this article, tuition increases have sapped $200 million from the local economy this year. So where is the money going?
Boeing (anonymous) says…
All you who are angry/jealous of KU Athletics employees making a lot of money - nobody ever stopped you from entering this "scheme" except yourself. I for one say "good for them", they made some smart decisions and connections that got them a better payout than me. That's part of being in a free, capitalist country, you have the ability to become filthy rich.
Sigmund (anonymous) says…
The progressives were fond of telling us that "trickle down economics" during economic expansions was a fraud, but now trickle down economics is valid but only when money is taken out of the economy? Every dollar taken in taxes is one less dollar available for the private economy and conversely every dollar in tax cuts is an additional dollar available for the private economy.
just_another_bozo_on_this_bus (anonymous) says…
"That's part of being in a free, capitalist country, you have the ability to become filthy rich."
Yes, but much of the wealth that's funding ventures like KUAC is from bubble economies. These bubbles suck the oxygen out the economic room, leaving little to meet vital societal needs (like decent-paying jobs.) Those at the top of the bubble who accumulate all this vast wealth have more money than they know what to do with. Some spend it wisely on things that will do something good. Others spend it on vanities like mansions, cars, planes, or donating to their alma mater's sports teams.
yankeevet (anonymous) says…
Whats amazing is too see the KU Athletic buildings; new; beautiful; well made; and then you go see the KU Campus buildings; old; run down; doors and locks need to be replaced; as well as windows; carpets filthy; much maintenance needed. The salaries of the coaches are very good; while teachers are not; so i guess the important thing here is sports; and not academics. hummmmmmmmm.....
geekin_topekan (anonymous) says…
Sigmund (Anonymous) says…
The progressives were fond of telling us that “trickle down economics” during economic expansions was a fraud, but now trickle down economics is valid but only when money is taken out of the economy?
++++
Reagan's plan was fraudulent because its participation was assumed or voluntary, while this trickle is involuntary and affects the reaganites and their offspring, negatively instead of positively.
Trickle down could have easily worked except that its beneficiaries pocketed the extra cash instead of giving it to the next level. Just like healthcare reform and Obama's economic recovery plans will easily work but none of these people (the article's genre) want to participate so continued self-induced disaster looms.
bb837988 (anonymous) says…
Yes, the athletic department has nice, new buildings. They have donors who are willing to pay the money to build them. Of course, the buildings don't belong to the athletic dept. They are the University's.
Any other program on campus can also build or renovate their buildings. They just have to find the money. The Pharmacy school is in the process of building a new building; the Business school is working on the funding. The Pharmacy school was lucky in that they received money from the state before the budget crunch.
The problem is what you get for the money. If someone is a donor to the the athletic department, they receive something tangible - a good seat to football and basketball games. Plus the games are networking activities for businesses and academic units. How many of the schools who routinely complain about the athletic budget have suites at Memorial Stadium or basketball tickets as thank you's for their donors?
What do I get for a large donation to a school? A thank you letter from the dean? If the English department can charge $35 to $90 for someone to sit in on a class, they would have the same type of money.
And how much money does the athletic department bring into the community? Are the same people who are complaining about the athletic department's money the ones who complained about the loss of money for Lawrence when the KU/MU game is played in Kansas City.
Sigmund (anonymous) says…
geekin_topekan (Anonymous) says… "Reagan's plan was fraudulent because its participation was assumed or voluntary, while this trickle is involuntary and affects the reaganites and their offspring, negatively instead of positively."
Really? You alive at the time and witness the "fraudulent plan" fail? Most all the data showed that the economy during Carter was terrible and under Reagan as much better, for everyone. Most economist would say the economy under Reagan was spectacularly good. The jury is still out on Obamacare but everywhere similar plans have been tried the outcome appears less promising.
There is no difference in the economic mechanism that causes a "ripple effect" on the down side when the economy is bad and a "trickle effect" when the economy is good on the up side. It is just two sides of the same coin.
Sigmund (anonymous) says…
just_another_bozo_on_this_bus (Anonymous) says… "Yes, but much of the wealth that's funding ventures like KUAC is from bubble economies. These bubbles suck the oxygen out the economic room, leaving little to meet vital societal needs (like decent-paying jobs.) "
Building arena's and buildings are not "decent jobs" and the employees don't spend their wages in the local economy? Fans don't travel to Lawrence to watch the games and spend their money here? I know these jobs are not as great a job as driving empTy buses all over town, but still they hardly sucking decent jobs from the economy.
vermont (anonymous) says…
I just look at KUAC as KU's marketing department. All of the money spent there is absolutely necessary. Did you see Free State Brewery or Strong hall on national T.V. during the game of ever heard the shout out's to The Wheel? These things are thing that all schools are doing, KU is just really good at it. The funding of athletics is completely justified.
orbiter (anonymous) says…
ah yes, Reagan, the one who did no wrong. The '87 crash wasn't his fault, the recession during Bush I wasn't his fault, the massive deregulation he championed and that was continued during Bush I and Clinton and beyond wasn't his fault (and that we are seeing the fruits of now), the obscene rift between the super rich and the middle class isn't his fault (just laziness on the part of everyone except the super rich that rig the system for themselves).
Oh, and "cutting and running" from Lebanon after Muslim terrorists killed 200+ American Marines wasn't cowardice, trading arms for hostages was patriotic, funding death squads in Central America was absolutely necessary, his “states rights” speech in Philadelphia, Mississippi had nothing to do with racial politics.
Reagan did no wrong! and he defeated the USSR with his own bare hands. Quite a feat for a guy who acted in war movies but never left US soil during the real war. A true hero.
wastewatcher (anonymous) says…
Always remember that KU and the rest of the Regents schools only care about themselves and are totally selfish. If they cared about their communities and Kansas, they wouldn't move so many activities to KC, Mo. How much does this cost our state and communities, figure it by using the schools studies and you come up with millions.
just_another_bozo_on_this_bus (anonymous) says…
"Building arena's and buildings are not “decent jobs” and the employees don't spend their wages in the local economy?"
Hey, I'm as entertained as anybody by bread and circuses. In terms of meeting basic human needs, it's way down the list, but in our screwed up culture, it's put near the top of supposed "needs."
Sparko (anonymous) says…
Kansas has been a republican stronghold for decades. As a matter of fact, the economic disintegration was entirely predicated upon extracting the most out of Kansas without giving much back. How about some real industry and real wages outside of the university? I see a lot of right wing screed here, but no solutions.
nobody1793 (anonymous) says…
One could estimate that the loss of Mangino from our local economy will hurt, as seemingly a good chunk of his salary went back into hamburgers. That Gill fellow seems a little too skinny to me.
BigPrune (anonymous) says…
KU = zero property taxes
Private industry asking for a tax abatement = hell no
The Progressives made sure any industrial company considering Lawrence should look elsewhere. The reason we all heard was tax abatements never pay for themselves.
Now the shoe is on the other foot (since most of the Progressives were/are employed by KU).
No jobs = no consumer spending (regardless of no property taxes)
Sigmund summed it up nicely.
bevy (anonymous) says…
Prune, KU belongs to the state of Kansas, so how does them paying 0 property taxes matter? They would simply take the money they get (from the state) and pay it back (to the state). No net gain there that I can see, unless I misunderstood your post?
Sigmund (anonymous) says…
just_another_bozo_on_this_bus (Anonymous) says… "Hey, I'm as entertained as anybody by bread and circuses. In terms of meeting basic human needs, it's way down the list, but in our screwed up culture, it's put near the top of supposed “needs.”
Lets let those who build the arena or work in athletics and earn their money decide what their needs are, and when and where they will spend it. There is no reason why your priorities should dictate their lives.
MyName (anonymous) says…
I see alot of generalizations on this thread and very few actual hard facts. This article was merely a comment on the multiplier effect of money.
You all can try and read in all this BS about ideology, local politics, or the effect of tax policies from 30 years ago, but it's not there. What is there, is the fact that every research professorship brings money to Lawrence both from teaching students, and winning public and private grants to study and research.
The critics can talk about how KU is generating "fake jobs", but there's a reason why West campus gets a new building every year or two, and it has to do with PhDs doing valuable research that brings in money to the community. That impact is just as important as the money coming in from Topeka.
deskboy04 (anonymous) says…
I thought that it was neat when the city of Lawrence sent a letter opposing the new coal plants in Western Kansas. The folks out there wanted and needed jobs. It is hard to imagine that people west of Highway 81 wouldn't snicker when they read this article.
kenos (anonymous) says…
Did everybody miss the Sunday edition where Tom Kern says: "We do want and need to evolve to have a smaller carbon footprint"? and yet here he is bemoaning the fact that our carbon footprint is being reduced. You can't have it both ways, Tom. Make up your mind.
toe (anonymous) says…
Cuts are not real. There is plenty of money for sports.
jafs (anonymous) says…
Sigmund,
When people have less money, they will spend less money (because they're forced to do so).
When people have more money (and businesses make higher profits), they may spend more money (create more jobs, etc.) and they may not, because they're not forced to do so.
That's the difference between the two scenarios.