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Region’s $9.6 billion education cluster threatened by ‘all cuts’ state budget

A state budget that makes $25 billion in cuts will drastically impact the Sacramento region—especially the $9.6 billion education industry in six counties.

“The education industry is critical to our region’s economic prosperity,” said Matthew Mahood, Sacramento Metro Chamber president & CEO. “Not only for the work the sector does to educate our residents—but also for the huge injection of dollars into the region. Education institutions employ thousands of people who make consumer purchases throughout the region.”

A newly released Education Industry Cluster Economic Impact Report, commissioned by the Metro Chamber, analyzes everything from elementary schools and universities to private technical colleges. The report pegs the impact on the economy at $9.6 billion—generated by $5.1 billion in direct impacts, $3.1 billion in employee spending and $1.4 billion in industry purchases. The study analyzed data from 2008.

In fact, payroll for the education cluster employees totaled $4.2 billion in 2008. The largest sector, of course, is public education whose institutions employ 79,000 people in the region. Private sector schools account for 19,000 jobs.

Most visible are the region’s nationally and world-ranked institutions of higher education: UC Davis, Sacramento State and the Los Rios community colleges. These schools and others contributed $3.2 billion—or one-third of public education’s impact—on the region’s economy.

“Higher education is a huge economic engine for this region in so many ways,” said Los Rios Chancellor Brice Harris. “From the thousands of students we move into the workforce, to the millions of dollars we pour into goods and services, and the millions of dollars more spent in the region by our employees.”

Between 2004 and 2008, the education sector stood out as one of the region’s leading industries in terms of growth, racking up double-digit advances in terms of dollar value contributed to the economy. The annual dollar impact grew by 19.2 percent.

Gains made since 2004, however, are threatened if the state Legislature ultimately opts for the “all-cuts” budget. Statewide, the California State University and University of California systems will see about $1.1 billion cut, according to the S.F. Examiner. The community college system will lose $585 million and K-12 education will lose $5 billion.

“With a $73 million budget shortfall that could occur, UC Davis is projecting staff cuts of at least 450 to 500 employees,” Mahood said. “If this were a private company announcing they were shutting down or laying off 500 employees—there would be an uproar. These are employees who pay mortgages, buy cars, groceries, shoes, clothes and spend money across all sectors.”

“The report demonstrates the positive economic impact that education has all around in our region,” Mahood said. “Our region is known for its innovation driven by our institutions of higher education. It’s what keeps us competitive with other regions across the nation—and world. Strong schools mean a skilled workforce—and that’s something that business must have to create jobs. Our schools have an impact that ripples through the generations. These proposed massive cuts in the state’s education spending will be likewise: all around, everywhere and down through the generations. It’s very concerning.”

To download a copy of the complete report, visit http://bit.ly/SMCCEducationReport.


Hal Silliman is communications director for the Sacramento Metro Chamber.

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