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APRIL 2O24Executive SummaryThe Economic Value of Algoma University to Sault Ste. Marie
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 region, generating new dollars and opportunities for Sault Ste. Marie. 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 regional economy. The uni-versity supports a variety of industries in Sault Ste. Marie, serves regional 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 busi-ness 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:* Note due to data limitations, FY 2022-23 nancial data are utilized throughout this analysis as a proxy for FY 2022-23.Economic impact analysisInvestment analysisAll results reect employee, student, and nancial data, provided by the university, for scal year (FY) 2022-23.* Impacts on the Sault Ste. Marie 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 regional economy.Sault Ste. Marie, Ontario
3Economic impact analysisAlgoma U promotes economic growth in Sault Ste. Marie through its direct expendi-tures and the resulting expenditures of visitors, students, and regional 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 Sault Ste. Marie, whose expenditures benet regional vendors. In addition, Algoma U is a primary source of postsecondary education to Sault Ste. Marie residents and a supplier of trained workers to regional industries, enhancing overall productivity in the regional workforce. Operations spending impactAlgoma U adds economic value to Sault Ste. Marie as an employer of regional residents and a large-scale buyer of goods and services. In FY 2022-23, the university employed faculty and sta equivalent to 221 full-time employees (excluding research employees), all of whom lived in Sault Ste. Marie. Total payroll at Algoma U was $25.6 million (excluding payroll from research employees), much of which was spent in the region for groceries, mortgage and rent payments, dining out, and other household expenses. In addition, the university spent $11.3 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 $36.8 million in income to the region during the analysis year. This gure represents the university’s payroll, the mul-tiplier eects generated by the in-region spending of the university and its employees, and a downward adjustment to account for funding that the university received from regional sources. The $36.8 million in added income is equivalent to supporting 373 jobs in the region.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 $196.3 thousand in other research spending, created a net total of $1.3 million in added income for the regional economy. This added income is equivalent to support-ing 13 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$36.8 millionResearch spending impact$1.3 millionConstruction spending impact$4.2 millionVisitor spending impact$97.4 thousandStudent spending impact$13.9 millionAlumni impact$89.0 millionORTotal economic impact$145.4 millionJobs supported1,645
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 regional economy. The quick infusion of income and jobs that occurred in the regional 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 regional economy in FY 2022-23, equal to $4.2 million in added income and equivalent to supporting 39 jobs.Visitor spending impactVisitors from outside the region were attracted to Algoma U during the anal-ysis year to attend commencement, sports events, and other activities spon-sored by the university. While in the region, visitors spent money for lodging, food, transportation, and other personal expenses. The o-campus expenditures of the university’s out-of-region visitors generated a net impact of $97.4 thousand in added income for the regional economy in FY 2022-23. This $97.4 thousand in added income is equivalent to supporting two jobs.Student spending impactAround 95% of students attending Algoma U originated from outside the region in FY 2022-23, and all these students relocated to Sault Ste. Marie to attend Algoma U. These students may not have come to the region if the university did not exist. In addition, some in-region students, referred to as retained students, would have left Sault Ste. Marie 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 gen-erated $13.9 million in added income for the regional economy in FY 2022-23, which supported 205 jobs in Sault Ste. Marie.Alumni impactThe education and training Algoma U provides for regional residents has the greatest impact. Since its establishment, students have studied at Algoma U and entered the regional workforce with greater knowledge and new skills. Today, thousands of former Algoma U students are employed in Sault Ste. Marie. As a result of their Algoma U educations, the students receive higher earnings and increase the
5Economic impact analysisproductivity of the businesses that employ them. In FY 2022-23, Algoma U alumni generated $89 million in added income for the regional economy, which is equivalent to supporting 1,013 jobs.Total impactAlgoma U added $145.4 million in income to the Sault Ste. Marie 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. For context, the $145.4 million impact was equal to approximately 3.8% of the total gross regional product (GRP) of Sault Ste. Marie. This contribution that the university provided on its own is nearly as large as the entire Professional, Scientic, & Technical Services industry in the region.Algoma U’s total impact can also be expressed in terms of jobs supported. The $145.4 million impact supported 1,645 regional jobs, using the jobs-to-sales ratios specic to each industry in the region. This means that one out of every 24 jobs in Sault Ste. Marie is supported by the activities of Algoma U and its students. In addition, the $145.4 million, or 1,645 supported jobs, stemmed from dierent industry sectors. For example, Algoma U’s activity and alumni in the Health Care & Social Assistance industry sector supported 273 jobs in FY 2022-23. These are impacts that would not have been generated without the university’s presence in Sault Ste. Marie.Top industry impacts (jobs supported)++++Administrative & Support, Waste Management, & Remediation ServicesHealth Care & Social AssistancePublic AdministrationRetail TradeAccommodation & Food Services Impact of international studentsInternational students are an important part of the Algoma U community. In FY 2022-23, Algoma U served 1,054 international students, all of whom relocated to Sault Ste. Marie. These students brought new money to the regional economy through their spending on housing, food, and other living expenses. International student spending in FY 2022-23 gener-ated $7.6 million in added income for the regional economy, equivalent to supporting 111 jobs.It is estimated that 60% of international students remain in the region after nishing their time at Algoma U. Today, thousands of these stu-dents are employed in Sault Ste. Marie, receiving higher earnings, and increasing the productivity of the businesses that employ them. In FY 2022-23, these active alumni generated $20.3 million in added income for the economy, equivalent to supporting 231 jobs.One out of every 24 jobs in Sault Ste. Marie is supported by the activities of Al-goma U and its students.
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 1,854 credit and 49 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 $38.3 million, equal to $18.7 million in out-of-pocket expenses and $19.6 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 $27,200 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 $81.5 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 2.1. 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 $2.10 in higher future earnings. Annually, the students’ investment in Algoma U has an average annual internal rate of return of 14.4%.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 $55.5 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 $835.2 thousand in savings to provincial taxpayers.Total taxpayer benets amount to $56.3 million, the present value sum of the added taxes and public sector savings. Taxpayer costs are $11.8 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 4.8. This means that for every dollar of public money invested in Algoma U in FY 2022-23, taxpayers will receive a cumulative value of $4.80 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is 36.9%, 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 $4.80 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 $424 million. These benets include $175 million in added student income, $67.7 million in added income from university activities, $161.5 million in added business income, $17.6 million in tax revenue, and $2.1 million in social savings related to health, crime, and income assis-tance in Ontario. People in Ontario invested a present value total of $59.5 million in Algoma U in FY 2022-23. These costs include all university and student costs.The benet-cost ratio for society is 7.1, equal to the $424 million in benets divided by the $59.5 million in costs. In other words, for every dollar invested in Algoma U, people in Ontario will receive a cumulative value of $7.10 in benets. The benets of this investment will occur for as long as Algoma U’s FY 2022-23 students remain employed in the provincial workforce.Summary of investment analysis resultsThe results of the analysis demonstrate that Algoma U’s is a strong investment for all three major stakeholder groups—students, taxpayers, and society. As shown, students receive a great return for their investments in an Algoma U education. At the same time, taxpayers’ investment in Algoma U returns more to government budgets than it costs and creates a wide range of social benets throughout Ontario.Social benets in Ontario from Algoma USource: Lightcast impact model.+44+22+++UAdded student income$ million$ millionTotal benets to societyAdded income from univeristy activities$. millionAdded business income$. millionAdded tax revenue$. millionSocial savings$. million* 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 return2.1 14.4%Benet-cost ratio Rate of return4.8 36.9%Benet-cost ratio Rate of return7. 1 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$81.5 million $56.3 million $424.0 million$38.3 million $11.8 million $59.5 million$43.2 million $44.5 million $364.5 million
9ConclusionThe results of this study demonstrate that Algoma U creates value from multiple perspectives. The university benets regional businesses by increasing consumer spending in the region 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 government-sup-ported 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.** Note due to data limitations, FY 2021-22 nancial data are utilized throughout this analysis as a proxy for FY 2022-23.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.