Q&A - May 26, 2017

Investment analysis is the process of evaluating costs and measuring them against benefits to determine if a venture is profitable. If benefits outweigh costs, the investment is worthwhile. But if costs outweigh benefits, the investment will lose money and is unprofitable. Since OSUIT is a public institution of higher education with a large portion of our operational costs supported by the citizens of Oklahoma, it is important to share investment related information publicly with the taxpayers who are investing in this institution.

Q:How does OSUIT contribute to the state’s economy?

OSUIT promotes economic growth in Oklahoma in many ways. This institution is an employer and buyer of goods and services, and the living expenses of students benefit local businesses. In addition, OSUIT is a primary source of education to Oklahoma residents and a supplier of trained workers to Oklahoma industries.

Likewise, OSUIT is an important employer in Oklahoma. In the year just completed (fiscal year 2015-16), we employed 416 full and part-time faculty and staff, and all of them live in Oklahoma. Our total payroll was $24.8 million, much of which was spent in the state for groceries, rent, dining out, clothing, and other household expenses.

This institution is itself a large-scale buyer of goods and services. Last year, OSUIT spent $19.2 million to cover its expenses for facilities, professional services, and supplies.

During fiscal year 2015-16, OSUIT added $29.1 million in income to the state as a result of our day-to-day operations. This figure represents our payroll, the multiplier effects generated by the spending of the institution and our employees, and a downward adjustment to account for funding we received from other sources.

Q:What is the taxpayers’ return on investment from OSUIT?

OSUIT generates more in tax revenue than it takes in. Benefits to taxpayers consist primarily of taxes the state will collect from the added revenue created by OSUIT in the state. As our students earn more, they make higher tax payments. Employers also make higher tax payments as they increase their output and purchase more supplies and services. By the end of fiscal year 2015-16, it is estimated the state collected $39.3 million in added taxes due to the increased productivity of our students in the workforce.

Education is statistically correlated with a variety of positive lifestyle changes among students and graduates. Taxpayers benefit when the state spends proportionally less on healthcare, crime prevention, and unemployment. Last year, the improved lifestyles of OSUIT students generated an estimated $7.3 million in savings to state taxpayers.

Total benefits to taxpayers equal $46.6 million (increased tax payments plus public sector savings). Comparing this to the taxpayer costs of $21.2 million (funding OSUIT received from the state last year) yields a benefit-cost ratio of 2.2. In other words, taxpayers more than double their investment as a result of supporting OSUIT. The average annual rate of return for taxpayers is 6.3%, a solid investment that compares favorably with other long-term investments in both the private and public sectors. OSUIT is a profitable investment for state taxpayers!

 

Please continue to submit your question about OSUIT. You may direct them to osuit-president@okstate.edu.