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APRIL 2O24Executive SummaryThe Economic Value of Algoma University to Ontario
2 IntroductionALGOMA UNIVERSITY (Algoma U) creates value in many ways. The university plays a key role in helping students increase their employability and achieve their individual potential. It facilitates new research developments and draws visitors and students to the province, generating new dollars and opportunities for Ontario. Algoma U provides students with the education, training, and skills they need to have fullling and prosperous careers. Furthermore, Algoma U is a place for students to meet new people, increase their self-condence, and promote their overall health and well-being.Algoma U inuences both the lives of its students and the provincial economy. The university supports a variety of industries in Ontario, serves provincial businesses, and benets the provincial government through increased tax revenues and public sector savings. The benets created by Algoma U even extend to society as a whole in Ontario, which benets from an expanded economy and improved quality of life.This study measures the economic impacts created by Algoma U on the business community and the benets the university generates in return for the investments made by its key stakeholder groups—students, taxpayers, and society. The following two analyses are presented:Economic impact analysisInvestment analysisAll results reect employee, student, and nancial data, provided by the university, for scal year (FY) 2022-23. Impacts on the Ontario economy are reported under the economic impact analysis and are measured in terms of added income. The returns on investment to students, taxpayers, and society in Ontario are reported under the investment analysis.Algoma U inuences both the lives of its students and the provincial economy.Ontario
3Economic impact analysisAlgoma U promotes economic growth in Ontario through its direct expenditures and the resulting expenditures of visitors, students, and provincial businesses. The university serves as an employer and buyer of goods and services for its day-to-day and research operations. The university’s reputation and activities attract visitors and students from outside Ontario, whose expenditures benet provincial vendors. In addition, Algoma U is a primary source of postsecondary education to Ontario residents and a supplier of trained workers to provincial industries, enhancing overall productivity in the provincial workforce. Operations spending impactAlgoma U adds economic value to Ontario as an employer of provincial res-idents and a large-scale buyer of goods and services. In FY 2022-23, the university employed faculty and sta equivalent to 323 full-time employees (excluding research employees), 99% of whom lived in Ontario. Total payroll at Algoma U was $38.8 million (excluding payroll from research employees), much of which was spent in the province for groceries, mortgage and rent payments, dining out, and other household expenses. In addition, the university spent $55.7 million on day-to-day expenses related to facilities, supplies, and professional services (excluding research expenditures).Algoma U’s day-to-day operations spending added $107.5 million in income to the province during the analysis year. This gure represents the university’s payroll, the multiplier eects generated by the in-province spending of the university and its employees, and a downward adjustment to account for funding that the university received from provincial sources. The $107.5 million in added income is equivalent to supporting 990 jobs in the province.Research spending impactResearch activities impact the economy by employing people and requiring the purchase of equipment and other supplies and services. In FY 2022-23, Algoma U spent $981 thousand on payroll to support research activities. This, along with $618.4 thousand in other research spending, created a net total of $1.9 million in added income for the provincial economy. This added income is equivalent to sup-porting 16 jobs.Algoma U’s research activities create an economic impact beyond spending. There are impacts created through entrepreneurial and innovative activities stemming from Economic impact analysisImpacts created by Algoma U in FY 2022-23Operations spending impact$107.5 millionResearch spending impact$1.9 millionConstruction spending impact$11.1 millionVisitor spending impact$0.2 millionStudent spending impact$118.9 millionAlumni impact$338.0 millionORTotal economic impact$577.6 millionJobs supported5,597
4Economic impact analysisthe university’s research. From exploring neuroscience to utilizing geographic infor-mation systems to support the quality of life for First Nations Peoples and rural, remote communities, Algoma U research faculty lead an impressive range of high-impact research projects that have tremendous value in the regional economy. However, the full scope of these factors is diicult to quantify. Some of this impact may be captured in the alumni impact. The broader spillover eects, however, remain as additional value created beyond this analysis.Construction spending impactAlgoma U spends millions on construction each year to maintain its facilities, create additional capacities, and meet its growing educational demands. While the amount varies from year to year, this spending generates a short-term infusion of spending and jobs in the provincial economy. The quick infusion of income and jobs that occurred in the provincial economy as a result of this construction spending is considered short-term due to the one-time nature of such projects. Nonetheless, the university’s construction spending had a substantial impact on the provincial economy in FY 2022-23, equal to $11.1 million in added income and equivalent to supporting 87 jobs.Visitor spending impactVisitors from outside the province were attracted to Algoma U during the analysis year to attend commencement, sports events, and other activities sponsored by the university. While in the province, visitors spent money for lodging, food, transportation, and other personal expenses. The o-campus expenditures of the university’s out-of-province visitors generated a net impact of $226.5 thousand in added income for the provincial economy in FY 2022-23. This $226.5 thousand in added income is equivalent to supporting four jobs.Student spending impactAround 87% of students attending Algoma U originated from outside the province in FY 2022-23, and all these students relocated to Ontario to attend Algoma U. These students may not have come to the province if the university did not exist. In addition, some in-province students, referred to as retained students, would have left Ontario if not for the existence of Algoma U. While attending the university, these relocated and retained students spent money on groceries, accommodation, transportation, and other household expenses. This spending generated $118.9 million in added income for the provincial economy in FY 2022-23, which supported 1,317 jobs in Ontario.Alumni impactThe education and training Algoma U provides for provincial residents has the greatest impact. Since its establishment, students have studied at Algoma U and entered the provincial workforce with greater knowledge and new skills. Today,
5Economic impact analysisthousands of former Algoma U students are employed in Ontario. As a result of their Algoma U educations, the students receive higher earnings and increase the produc-tivity of the businesses that employ them. In FY 2022-23, Algoma U alumni generated $338 million in added income for the provincial economy, which is equivalent to supporting 3,183 jobs.Total impactAlgoma U added $577.6 million in income to the Ontario economy during the analysis year, equal to the sum of the operations, research, and construction spending impacts; the visitor and student spending impacts; and the alumni impact. Algoma U’s total impact can also be expressed in terms of jobs supported. The $577.6 million impact supported 5,597 provincial jobs, using the jobs-to-sales ratios specic to each industry in the province. In addition, the $577.6 million, or 5,597 supported jobs, stemmed from dierent industry sectors. Among non-education industry sectors, Algoma U’s activity and alumni in the Health Care & Social Assistance industry sector supported 1,014 jobs in FY 2022-23. These are impacts that would not have been generated without the university’s presence in Ontario.Top industry impacts (jobs supported),++++Public AdministrationHealth Care & Social AssistanceAdministrative & Support, Waste Management, & Remediation ServicesRetail TradeAccommodation & Food ServicesImpact of international studentsInternational students are an important part of the Algoma U commu-nity. In FY 2022-23, Algoma U served 5,119 international students, all of whom relocated to Ontario. These students brought new money to the provincial economy through their spending on housing, food, and other living expenses. International student spending in FY 2022-23 generated $105.2 million in added income for the provincial economy, equivalent to supporting 1,166 jobs.It is estimated that 95% of international students remain in the province after nishing their time at Algoma U. Today, thousands of these students are employed in Ontario, receiving higher earnings, and increasing the productivity of the businesses that employ them. In FY 2022-23, these active alumni generated $154.7 million in added income for the economy, equivalent to supporting 1,457 jobs.
6Investment analysisAn investment analysis evaluates the costs associated with a proposed venture against its expected benets. If the benets outweigh the costs, then the investment is nan-cially worthwhile. The analysis presented here considers Algoma U as an investment from the perspectives of students, taxpayers, and society in Ontario.Student perspectiveIn FY 2022-23, Algoma U served 6,232 credit and 51 non-credit students. In order to attend the university, the students paid for tuition, fees, books, and supplies. Additionally, students gave up money they would have otherwise earned had they been working instead of attending university. The total investment made by Algoma U’s students in FY 2022-23 amounted to a present value of $182.9 million, equal to $113 million in out-of-pocket expenses and $69.9 million in forgone time and money.In return for their investment, Algoma U’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average Algoma U bachelor’s degree graduate from FY 2022-23 will see an increase in earnings of $28,700 each year compared to a person with a high school diploma or equivalent working in Ontario. Over a working lifetime, the benets of the bache-lor’s degree over a high school diploma will amount to an undiscounted value of $1.1 million in higher earnings per graduate. Altogether, Algoma U’s FY 2022-23 students will receive $288.5 million in higher future earnings over their working lives, as a result of their education and training at Algoma U.The students’ benet-cost ratio is 1.6. In other words, for every dollar students invest in Algoma U, in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $1.60 in higher future earnings. Annually, the students’ investment in Algoma U has an average annual internal rate of return of 11.2%.Investment analysisSource: Derived from data supplied by Statistics Canada and the Lightcast CRIO model.The average bachelor’s degree graduate from Algoma U will see an increase in earnings of $, each year compared to a person with a high school diploma or equivalent working in Ontario.++++< High schoolHigh schoolDiplomaBachelor'sMaster’s$,$,$,$,$,
7Investment analysisTaxpayer perspectiveAlgoma U generates more in tax revenue than it takes. These benets to taxpayers consist primarily of taxes that the provincial government will collect from the added revenue created in the province. As Algoma U students earn more, they will make higher tax payments throughout their working lives. Students’ employ-ers will also make higher tax payments as they increase their output and purchases of goods and services. By the end of the FY 2022-23 students’ working lives, the provincial government will have collected a present value of $73.5 million in added tax revenue.Benets to taxpayers also consist of savings generated by the improved lifestyles of Algoma U students and the corresponding reduced government services. Education is statistically correlated with a variety of lifestyle changes. Students’ Algoma U edu-cations will generate savings in three main categories: 1) healthcare, 2) crime, and 3) income assistance. Improved health will lower students’ demand for health care services. In addition, students will be less likely to interact with the criminal jus-tice system, resulting in a reduced demand for law enforcement and reduced victim costs. Algoma U students will be more employable, so their reduced demand for income assistance such as welfare and unemployment benets will benet taxpayers. For a list of study references, contact the university for a copy of the main report. Altogether, the present value of the benets associated with an Algoma U education will generate $273 thousand in savings to provincial taxpayers.Total taxpayer benets amount to $73.8 million, the present value sum of the added taxes and public sector savings. Taxpayer costs are $15.9 million, equal to the amount of provincial government funding Algoma U received in FY 2022-23. These benets and costs yield a benet-cost ratio of 4.6. This means that for every dollar of public money invested in Algoma U in FY 2022-23, taxpayers will receive a cumulative value of $4.60 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is 20.2%, which compares favorably to other long-term investments in the public and private sectors.Social perspectiveSociety as a whole in Ontario benets from the presence of Algoma U in two major ways. Primarily, society benets from an increased economic base in the province. This is attributed to higher student earnings and increased business output, which raise economic prosperity in Ontario.Benets to society also consist of the savings generated by the improved lifestyles of Algoma U students. As discussed in the previous section, education is statistically correlated with a variety of lifestyle changes that generate social savings. Note that For every dollar of public money invested in Algoma U, taxpayers will receive a cu-mulative value of $4.60 over the course of the students’ working lives.
8Investment analysisthese costs are avoided by the consumers but are distinct from the costs avoided by the taxpayers outlined above. Healthcare savings include avoided medical costs associated with smoking, alcohol dependence, obesity, and mental illness. Crime savings include reduced criminal justice system expenditures, lower victim costs, and increased productivity of individuals who are working rather than spending time in custody. Income assistance savings include the reduced demand for employment insurance benets and employment-related social assistance. For a list of study ref-erences, contact the university for a copy of the main report.Altogether, the social benets of Algoma U equal a present value of $2.8 billion. These benets include $1.3 billion in added student income, $239.6 million in added income from university activities, $1.1 billion in added business income, $150.3 million in added tax revenue, and $3.5 million in social savings related to health, crime, and income assistance in Ontario. People in Ontario invested a present value total of $171.6 million in Algoma U in FY 2022-23. These costs include all university and student costs.The benet-cost ratio for society is 16.3, equal to the $2.8 billion in benets divided by the $171.6 million in costs. In other words, for every dollar invested in Algoma U, people in Ontario will receive a cumulative value of $16.30 in benets. The benets of this investment will occur for as long as Algoma U’s FY 2022-23 students remain employed in the provincial workforce.Summary of investment analysis resultsThe results of the analysis demonstrate that Algoma U is a strong investment for all three major stakeholder groups—students, taxpayers, and society. As shown, students receive a great return for their investments in an Algoma U education. At the same time, taxpayers’ investment in Algoma U returns more to government budgets than it costs and creates a wide range of social benets throughout Ontario.* The rate of return is not reported for the social perspective because the beneciaries are not necessarily the same as the original investors.Benet-cost ratio Rate of return1.6 11.2%Benet-cost ratio Rate of return4.6 20.2%Benet-cost ratio Rate of return16.3 n/a*Student perspective Taxpayer perspective Social perspectivePresent value benets Present value benets Present value benetsPresent value costs Present value costs Present value costsNet present value Net present value Net present value$288.5 million $73.8 million $2.8 billion$182.9 million $15.9 million $0.2 billion$105.5 million $57.9 million $2.6 billionSocial benets in Ontario from Algoma USource: Lightcast impact model.+55+11+++UAdded student income$. billion$. billionTotal benets to societyAdded income from univeristy activities$. millionAdded business income$. billionAdded tax revenue$. millionSocial savings$. million
9ConclusionThe results of this study demonstrate that Algoma U creates value from multiple perspectives. The university benets provincial businesses by increasing consumer spending in the province and supplying a steady ow of qualied, trained workers to the workforce. Algoma U enriches the lives of students by raising their lifetime earnings and helping them achieve their individual potential. The university benets provincial taxpayers through increased tax receipts and a reduced demand for gov-ernment-supported social services. Finally, Algoma U benets society as a whole in Ontario by creating a more prosperous economy and generating a variety of savings through the improved lifestyles of students. About the studyData and assumptions used in the study are based on several sources, including the FY 2022-23 academic and nancial reports from Algoma U, industry and employment data from Statistics Canada, outputs of Lightcast’s Canadian Regional Input-Output model, and a variety of studies and surveys relating education to social behaviour. The study applies a conservative methodology and follows standard practice using only the most recognized indicators of investment eectiveness and economic impact. For a full description of the data and approach used in the study, please contact Algoma U for a copy of the main report.ConclusionLightcast is a labour market analytics rm that integrates data from a wide variety of sources to serve professionals in postsecondary education, economic development, workforce development, talent acquisition, and site selection. Lightcast is a leading provider of eco-nomic impact studies and labour market data to educational institutions in Canada, the U.S. and internationally. Since 2000, Lightcast has completed over 2,800 economic impact studies for institutions across three countries. For more information about Lightcast’s products and services, visit lightcast.io/solutions/education. The results of this study demonstrate that Algoma U creates value from multiple perspectives.