By Maria Claret M. Ruane
SUMMARY OF RESULTS
In fiscal 2019, UOG spent $86,197,243 and impacted Guam’s economy in the following way:
UOG contributed $1 of every $17 in Guam’s economy
UOG boosted Guam’s economy, measured by nominal Gross Domestic Product (GDP), by $349 million. This translates to
- 5.83% of the $5.92 billion measure of Guam’s economy in 2018 (the latest data available)
- 4.04 times UOG’s total expenditure of $86 million
- 12.72 times the $27.4 million budget appropriated to UOG by the Guam Legislature
UOG created one in every 15 jobs in Guam
UOG created a total of 4,194 fulltime jobs, comprised of
- 849 direct employees, i.e., employees by UOG (those in the Staffing Pattern and Work- Study) and related units (the Research Corp., the Endowment Fund, GERF/KPRG and AmeriCorps)
- 215 indirect employees, i.e., employees that UOG suppliers/vendors were able to employ because of their business with UOG
- 3,130 induced employees from the following sources:
° 570 jobs created when direct jobholders, i.e., employees of UOG and related units spent their incomes,
° 101 jobs created when indirect jobholders, i.e., employees by UOG on-island suppliers/vendors spent their incomes,
° 237 jobs created when UOG on-island suppliers/vendors spent their incomes, and
° 2,223 when UOG graduates spent their higher incomes, which resulted from their UOG degree.
The 4,194 jobs created by UOG make up 6.5% of the approximately 65,000 employees in Guam.
UOG generated $1 of every $8 of GovGuam tax revenues
UOG generated $78.4 million of GovGuam taxes in the form of income taxes ($52.3 million), Medicare taxes ($10.1 million) and Gross Receipts Taxes ($15.9 million). This $78.4 million
- was $51 million more than the $27.4 million budget appropriated by the Guam Legislature, as if UOG returned $27.4 million of taxpayers’ money and $51 million more, or that UOG gave Guam taxpayers a 186% return on their money;
- translated to 12.6% of GovGuam tax revenues in fiscal 2019; and
- could fund 1,112 GovGuam employees at an average annual salary and benefits of $70,473.
This report presents the calculation of the impact that the University of Guam has on Guam’s economy. The main focus will be on additional economic activity and overall income, additional jobs and additional taxes that result from UOG’s existence on Guam.
The methodology used here was first developed by Maria Claret M. Ruane in June 2012, refined in July 2018 and further improved upon in this latest calculation.
The above-referenced methodology was developed using the following data sources:
- 2017 Economic Census for the Island Areas, released by the U.S. Census Bureau on Jan. 31
- March 2019 quarterly Current Employment Statistics of the Guam Department of Labor’s Bureau of Labor Statistics.
- U.S. Department of Commerce’s Bureau of Economic Analysis 2018 Guam Domestic Product.
Direct jobs are those that establish an employer-employee relationship between the commercial enterprise and their employees, in this case, between UOG and UOG employees. From several sources and the author’s calculations/estimations, the number of employees by UOG and related units was 849.
Indirect jobs are held by persons who work for the producers of materials, equipment, and services used in a commercial enterprise’s capital investment project, but who are not directly employed by the commercial enterprise, in this case, employees by UOG suppliers/vendors.
Induced jobs are those jobs created when direct and indirect employees spend their increased incomes on consumer goods and services, in this case, when UOG employees and employees by UOG suppliers/vendors spend their incomes to buy goods and services sold (but not necessarily produced) on Guam.
Local spending multiplier is the amount of overall spending on Guam’s economy not including spending for purchases from Guam-based military base stores, online sources of off-island vendors. This was estimated by Ruane (2011b, December) at 1.30.
UOG data used in this report include
- 2020 UOG Alumni Survey; UOG Staffing Pattern fiscal 2019 Fourth Quarter; UOG Payments by Vendor List fiscal 2019; UOG Expenditures by Function fiscal 2018 and fiscal 2019; Payroll data for UOG and related units (UOGEF, RCUOG, GERF/KPRG and Americorps); Annual credit card statements
Calculation of UOG’s direct impact on jobs, incomes and taxes
The UOG Staffing Pattern FY2019 Fourth Quarter and Payroll Reports provided by the Office of Information Technology were used to calculate direct jobs created by UOG and by UOG-related units to include the Research Corporation of UOG, the UOG Endowment Foundation, the Guam Educational Radio Foundation/KPRG and AmeriCorps. Attempts were also made to calculate these direct jobs (along with other jobs in this report) on its Full-Time Equivalence basis, with full-time defined to be 40 work hours per week. As TABLE 2 shows, UOG created 849 FTE jobs, or 849 direct jobs.
It is important to note that payments by UOG as employer and its employees toward retirement, health insurance and other benefits, estimated at $10 million in fiscal 2019, are included in this report.
Taxes paid by UOG direct employees to GovGuam comprised of two types:
- Medicare, which was calculated as 1.45% share paid by employer (UOG) and 1.45% share paid by employee = 2.9% x $39.9 million = $1.157 million; and
- Income taxes, which was calculated by assuming an average income tax rate of 15% on total income, hence, 15% x $39.9 million = $5.985 million
Calculation of UOG indirect jobs and incomes
The UOG Payments by Vendor List FY2019 was used to calculate indirect jobs created by UOG. This data source was reviewed with the primary goal of tracking the amounts that UOG paid its Guam-based/on-island suppliers/vendors. This required going through the list of 4,222 vendors, defined as individuals or organizations to whom UOG issued payments (usually in checks), which showed a total amount of almost $59 million in fiscal 2019.
First, off-island suppliers/vendors were removed from the list, with corresponding payments of
$5.5 million. Second, a review of the Annual Credit Card Statements showed that approximately 97% of credit card charges estimated at $4.4 million were for purchases from off-island suppliers/vendors. Third, the total amount spent on travel in fiscal 2019 was obtained from UOG Expenditures by Function FY2018 and FY2019. This amount was $2.5 million, 100% of which was assumed to have been spent during travel and therefore paid off-island. In the future, a system that separates suppliers/vendors into on-island and off-island or codes them as such would be useful for this type of analysis. This sorting could also be done if information about vendor addresses or locations are entered into the existing UOG data base for payments.
For the purpose of this report, which is to calculate UOG’s economic impact, the amounts shown in TABLE 4 were used
TABLE 4 shows that approximately $12.45 million of UOG’s $86 million total expenditures in FY2019 or 14.44% went to off-island suppliers/vendors, meaning 85.56% went to Guam-based suppliers/vendors. This is important for performing impact on the local economy as amounts paid to off-island suppliers/vendors do not stay and multiply in the local economy and hence do not create local jobs, incomes and generate tax revenues to the local government.
At this point, work continued on UOG Payments by Vendor List FY2019 on suppliers/vendors who were now considered as Guam-based/on-island and payments to them estimated at $33.8 million in FY2019 as shown in TABLE 4. These payments in turn became sales revenues to these suppliers/vendors, which allowed them to pay their employees’ incomes, who then pay taxes to GovGuam. Supplier/vendors’ sales revenues were also subject to GRT, another tax revenue source for GovGuam.
Maria Claret M. Ruane
Professor of Economics, University of Guam