MinnPost photo by James Nord

University President Bob Bruininks will present a more detailed version of the study to the U of M's Board of Regents in two weeks.

Pity the educator, kindergarten to post-grad: No sooner do they get religion when it comes to aping private industry’s lobbying tactic of talking about return on investment than the coffers run dry. So dry that not even the most supremely persuasive argument about rewards to taxpayers can open the spigots.

You can’t blame them for trying, though. From early childhood on up, the case that funding education would fill those empty coffers, albeit slowly, is compelling indeed. The University of Minnesota yesterday released a preliminary study showing that every dollar the state invests in the U returns $13.20 to the economy, for a total of $8.6 billion a year.

Put another way, $1 of every $25 that changes hands in Minnesota is generated directly or indirectly by the university, money that is tied to nearly 80,000 jobs — or one of every 43 — statewide.

Research at the U of M has become a significant economic driver, the consultants found, bringing $825 million in “fresh money” to the state in 2009 and, presumably, larger amounts since then. Those competitive research grants support 16,000 jobs with an overall economic impact of some $1.5 billion.

A little more than half of that activity is the result of spending on university operations. Thirty percent is generated by the U’s Medical Center and the University of Minnesota Physicians. The remaining 17 percent comes from other U of M research.

More details in two weeks
University President Bob Bruininks will present a more detailed version of the study to the U of M’s Board of Regents in two weeks, but there can be little doubt that its real intended audience is housed at the Capitol. You know — that big white building in St. Paul where many of our elected curmudgeons grouse annually and loudly about the percentage of the state’s budget that is dedicated to education.

Seeking to close a budget gap yesterday downgraded to $5 billion, Gov. Mark Dayton recently proposed cutting higher ed in Minnesota by 6 percent over the next biennium. Lawmakers must now decide whether to accept the governor’s plan or come up with one in which state colleges and universities could lose a lot more.

U of M administrators understand that no one is likely to be happy with the budget that gets hammered out as a result, but they sound a cautionary note: Big research institutions have two economic modes, on the rise or on the decline; at a certain point on the decline, they cease to become the economic driver the state needs to rise again.

Seeking to spread that message, the university retained a consulting firm that specializes in researching the financial ripple effects of colleges, hospitals and other large institutions. Headquartered in Philadelphia, Penn., Tripp-Umbach used what researchers called a conservative methodology to quantify the portion of the economy that is generated by the U of M, including its outstate “coordinate campuses.”

Dispelling a misconception
One of the project’s goals, according to firm founder Paul Umbach, is to dispel the misconception that the U of M takes up state resources without generating any. In addition to generating more than half a million dollars in tax revenue, the institution is responsible for driving some $2 billion in spending by visitors.

Just where is the tipping point? “The answer is there’s no good way to know,” Bruininks said yesterday. “You just know it retrospectively, when it’s happened.”

What is certain, he added: “We’ll never cut ourselves into a more competitive position.”

Funding cuts mean the most talented faculty, those with the most promising research prospects, may be tempted to go elsewhere. The ensuing hiring freezes mean fewer scholars applying for research dollars to make up for those losses. Fewer top scholars mean fewer top student talents, ultimately resulting in fewer future business leaders and a less attractive workforce.

“The real question is, do you really get a good net return on the public’s investment?” said Bruininks. “What’s your contribution to the development of Minnesota’s workforce?”

Early-ed research calculated pre-K effects
Using an economic multiplier to express the value of an education isn’t a wholly new idea. Minnesota’s early-childhood-education advocates have several times calculated pre-K’s financial ripple effects — both as an industry and in terms of tax dollars both saved and generated — ever since 2003, when the first significant cuts to child-care funding occurred.

After eight legislative sessions of repetition, the arguments are now commonly accepted as sound. But that yawning budget gap means even Mark Dayton, arguably the most education-friendly governor of the last decade, has been forced to admit there is simply no new money for early ed.

Indeed, Bruininks and his team yesterday conceded that cuts are likely. They’d like to see as few as possible and they think they’ve mustered a compelling argument why the U of M ought to be spared as much of the bloodletting as possible.

Bruininks and his kitchen cabinet began thinking about commissioning an economic-impact study nearly two years ago. They used $48,000 in private funding from the University of Minnesota Foundation to hire Tripp-Umbach.

Will the plan pay off? If the effort has the same ripple effect its authors conclude the U of M has on the state, the university will need to be spared just $633,600 in cuts.