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March 2025

Beyond an Educated Future Workforce, North Dakota University System Provides Benefits for Local and State Economies

Nancy Hodur & Dean Bangsund

Dr. Nancy Hodur is the director of the Center for Social Research at North Dakota State University (NDSU) and has over 25 years of professional experience in applied research, public policy, and outreach education. Dean Bangsund is an economist in the NDSU Department of Agribusiness and Applied Economics. He specializes in Impact Assessment, and has over 25 years of experience conducting applied economic research.

In this article, Hodur and Bangsund provide a brief overview of the recent assessment of the economic effects of the North Dakota University System.

Introduction

The North Dakota University System (NDUS) is comprised of the university system office, the system-wide Core Technology Services enterprise, and 11 public higher education institutions across the state. North Dakota’s institutions of higher education provide the state with an educated workforce ready to meet the challenges of North Dakota’s dynamic state economy. They also provide research, outreach, continuing education programs, arts and cultural activities for the state’s residents and businesses. In addition to these obvious effects, North Dakota’s universities and colleges are also drivers of economic activity. To quantify economic effects, the Center for Social Research and the Department of Agribusiness and Applied Economics at North Dakota State University have regularly estimated the economic effects of NDUS since 1999. Below is a summary of key findings and highlights from the recent assessment of the economic effects of the North Dakota University System for Fiscal Year (FY) 2023. The full report can be found at https://bit.ly/3EUjLGi.

North Dakota University System 11 Public Higher Education Institutions

Background

Data provided by the NDUS system office were used to estimate the economic contribution of the NDUS overall and each of its 11 colleges and universities. Economic effects are categorized into direct and secondary effects. Direct effects, also referred to as first-round effects, are just that, direct expenditures for university operations (wages and benefits, operations, capital expenditures) and student expenditures. Secondary effects are a measure of the additional economic activity generated by businesses and households as a result of direct or first-round effects. For example, indirect secondary effects from operations would include business activities supported by university expenditures for inputs to operations such as food supplies, services, utilities, equipment, office and educational supplies and payments to households in the form of wages and salaries. Secondary effects are also called multiplier effects. The IMPLAN modeling platform, a widely accepted input-output model, was used to estimate secondary economic effects.

Direct Expenditures for Operations

One way the university system impacts the state’s economy is through its operating expenditures. Funds for NDUS operations come from two sources, General Funds and Non-general Funds.
General Funds are dollars provided by the state of North Dakota. Non-general Funds come from all other sources such as grants, contracts, sponsored programs, tuition and fees, and donations.

Total NDUS operations expenditures in FY2023 were $1.69 billion, of which a substantial portion were from Non-general Fund sources. In 2023, $1.3 billion or 76 percent of operations expenditures were from Non-general Funds.

Since FY2013, Non-general Funds as a percentage of total expenditures has trended higher than General Funds. From FY2013 to FY2017 Non-general Funds as a percentage of total expenditures ranged from 66 to 68 percent. After 2017, Non-general Funds as a percentage of total funds has ranged from 71 to 76 percent.

The ratio of Non-general to General Funds increased from $2.14 in FY2013 to an all-time high of $3.17 in FY2023, a 48 percent increase. In other words, for every dollar of General Funds provided by the state of North Dakota, NDUS’ colleges and universities generated an additional $3.17 in Non-general Funds in FY2023.

Major Expenditures

Direct effects, also referred to as first-round effects, are direct expenditures for university operations (wages and benefits, operations, capital expenditures) and student expenditures. Overall, wages, salaries and benefits were the largest expenditure category, comprising half of NDUS total expenditures (49%). General Operating comprised 34 percent of total expenditures with Capital Improvements and Scholarships comprising 10 and 7 percent, respectively. However, spending in major expenditure categories as a percentage of total spending by fund type varies between General and Non-general Funds.

Student Expenditures

Student spending also adds to the economic contribution of the NDUS. Student spending includes outlays for personal items, recreation, books, supplies, and room and board. Students also incur expenses for fees and tuition. However, expenditures for fees and tuition are not included in the assessment of economic effects associated with student expenditures. Those expenditures are included in the analysis of university expenditures. Tuition and fees generate revenue which are in turn used to pay for university operations.

In the fall 2023 semester, 33,421 fulltime equivalent (FTE) students were enrolled and attended the state’s 11 universities and colleges. FTE student enrollment was adjusted to account for the number of high school students that take classes for college credit. The adjusted number of FTE students was 31,835. The rationale for the refinement is that high school students likely live at home and living expenses while still attending high school should not be attributable to the NDUS.

Per-student living expenses averaged $12,892 for the 2023-2024 school year. Based on expenditures per adjusted FTE students, students were estimated to have spent $430.8 million in North Dakota on books, room and board, personal items, and recreation during the 2023-2024 school year.

Direct and Secondary Economic Effects

In FY2023, total economic effects (direct and secondary) from NDUS operations (payroll, operations, and capital expenditures) and student expenditures were $3.71 billion. Direct effects from NDUS expenditures were $1.6 billion while direct effects from students’ expenditures total $430.1 million. Secondary effects from NDUS operations and student expenditures were $1.3 billion and $454.7 million, respectively.

Employment

Business activity associated with NDUS expenditures and student expenditures supports substantial direct and secondary employment. Total direct employment by NDUS (excluding student workers) was 11,094 jobs in FY2023. Business activity from NDUS expenditures and spending by students supported secondary employment of 9,710 jobs. Total direct and secondary employment supported by NDUS and student expenditures was 20,804 jobs in FY2023.

Tax Revenue

In FY2023, business activity from NDUS General and Non-general Fund expenditures was estimated to result in about $16.50 million in revenue to state and local government jurisdictions in the form of sales, property, personal income, corporate and other taxes. Student expenditures generated and additional $8.20 million in state and local tax revenues. Combined, NDUS operations and student expenditures generated $24.71 million dollars in state and local tax revenue.

Conclusions

Institutions of higher education in North Dakota provide the state with an educated workforce ready to meet the challenges of North Dakota’s dynamic state economy. They provide research, outreach and continuing education programs for the state’s residents and businesses. The activities and services of the North Dakota University System are used to purchase inputs and services and pay wages and salaries which generates secondary economic effects and supports secondary employment.

Overall, the economic contribution of the NDUS on the state was estimated at $3.71 billion in FY2023, which includes $2.83 billion from operational expenditures and $885.6 million from student spending.

Of the total economic effects (direct plus secondary) associated with NDUS operations, of $2.83 billion from both General and Non-general Funds, $2.20 billion was associated with Non-general Funds.
The NDUS system generated $3.17 in Non-general Funds (external funding) for every dollar of General Funds provided by the state of North Dakota.
Student expenditures also contribute to the University System’s economic effects. In 2023, the university system’s 33,421 FTE students spent on average approximately $13,000 each, totaling $430.8 million in direct expenditures and $885.6 million in total economic effects (direct plus secondary).
The NDUS also supports employment throughout the state. In FY2023, the NDUS directly employed 11,094 individuals. Business activity associated with University System and student expenditures supported an additional 9,710 secondary jobs in FY2023.
Combined, NDUS operations and student expenditures generated $24.71 million dollars in state and local tax revenue.

The North Dakota University System has positive effects on the state’s economy overall and the local economies of the communities’ home to North Dakota’s colleges and universities.