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Engines of a new economy

Universities, colleges work with business to create a well-equipped workforce

No city or region wants to be dependent on a single sector for growth. But if universities are economic catalysts, it bodes well for Rochester’s future.
"Colleges and universities have been the most resilient institutions in our society, in part because we will always have students," said Joel Seligman, president of the University of Rochester.
One of the strengths of New York is the high number of schools per capita. In Rochester, UR is the largest employer in the area while Rochester Institute of Technology ranks high in terms of enrollment and wields important influence on the economy.
The total enrollment in the Finger Lakes area is approaching 90,000 students, and the 18 institutions of higher education collectively employ 34,000 people with a total payroll of nearly $2 billion, Seligman said. The Rochester area ranks No. 3 in the nation for degrees conferred per capita, he added.
This growth, experts say, will continue through the next two decades. But colleges and universities will need to adapt to change, including responding to a growing interest in online learning.
Higher education in Rochester is an economic enterprise in its own right and will play an even more important role in the next 25 years, said William Destler, president of RIT.
"It circulates something like $5 billion of economic activity into the Finger Lakes region alone, so I think that the 18 colleges in the region themselves will become more of a factor," he said.
Kjell Christophersen, founder and president of Economic Modeling Services Inc. in Moscow, Idaho, said he measures the impact of higher education on a local economy in three major ways. First, he looks at an institution’s payroll and how it spends money on salaries or local vendors, creating a ripple effect.
The next thing measured is productivity, or the lasting effect of benefits generated by alumni for as long as they work. The presence of a university or a college means the region has benefited in higher quantity and quality of workers.
The final impact, Christophersen said, has to do with investment. EMSI has done more than 1,200 impact studies for colleges outside Rochester in the last 12 years and has found that students generally are better off economically if they take the time to go to college instead of entering the workforce straight from high school.
"On the investment side, the impact depends on the percentage of students remaining in the region. The average for all of the institutions we have studied is somewhere between 60 and 70 percent," Christophersen said.
Anne Kress, president of Monroe Community College, said the vast majority of her college’s students wish to stay here, and she cited this as a difference between community and private colleges.
MCC alone adds $510 million to Monroe County each year, 81 percent of students enrolled are from Monroe County, and they seek employment near home, Kress said.
Dan Butin, dean of the School of Education at Merrimack College in North Andover, Mass., researches higher education’s impact on communities. He questions whether educational institutions looking to survive will maintain local attachment as a high priority-"for example, as colleges move to an online format, as students start taking classes more online, as place in many ways becomes less important for getting a college education.
"Thirty percent of college students will transfer at least once in their four years," he said, "so realizing that both students and faculty are migratory, it becomes hard to sustain long-term investments."
RIT takes advantage of migratory students. Destler said it looks outside the region to recruit students and faculty.
"The downside could be that for some of our institutions, they might become enrollment-challenged by the demographics in the Northeast," he said. "High school enrollment is going down, so our solution is to reach out nationally and globally to people who hadn’t noticed us before."
Though some colleges may find that a challenge, he said it can be overcome as Rochester builds its reputation as a college town.
In the coming years, colleges and universities here will need to sharpen their focus on offering skills that are useful in the workplace. MCC, RIT and others are doing that already.
"By our very creation MCC is obligated to have a very different impact on workforce development and addressing the workforce needs of the region," Kress said.
She said MCC works closely with industry and adds new programs to meet the needs of business. One aspect of MCC’s new strategic plan, called Fulfilling the Promise, examines how to maintain workforce development and industry partnerships, keeping a constant supply of workers in the pipeline.
At RIT, tailoring majors to the job needs of the area is the school’s modus operandi, Destler said.
"We basically grew out of the needs of the local industry for trained personnel, and we continue to respond to the needs in a very aggressive fashion," he said. "For example, we have the world’s strongest program in sustainable manufacturing, and that’s a direct result of the needs of companies for using less energy and less materials.
"I think that those kinds of majors can give our local area an edge," he added.
In the next few decades there will be a call for more accountability for education institutions, both for the quality of graduates and how dollars are spent, Kress said.
Christophersen agreed: "Accountability simply means that the universities need to be much better prepared with data-driven arguments to economically justify the mix of programs they offer. This does not mean that they need to scrap programs that are purely academic and don’t necessarily show any economic justification."
Much depends on the extent to which the universities are willing to change the status quo.
"Many universities have simply ossified," Christophersen said. "They produce graduates who cannot find jobs or can only find jobs that pay very little."
He believes this is because schools are not focused on aligning programs with needs in the real world.
"Regions containing universities rising to the challenge of greater accountability will see faster economic growth and development than regions that don’t," Christophersen said.
The dream, Seligman said, is to build on the strengths of the majors offered and workforce needs and create a kind of Silicon Valley or Route 128 economy where there are powerful links to startups and established businesses.
Bigger campuses like RIT and UR are seeing businesses develop from student and faculty ideas. Destler said these are going to be increasingly successful and grow to significant size.
"I think what we’re seeing is, for example, the quality of businesses we’re spinning out of our incubator here at RIT," he said. "Companies like Sweetwater Energy, and we have another 30 companies in there with similar promise. You are going to see some kind of renaissance of small-company generation, and hopefully some of those will be big winners."
Besides employing people themselves, educational institutions are expected to strengthen employment by creating small businesses in the area.
The state’s focus on higher education has helped area colleges and will continue to do so. Seligman said that without these changes, UR would be limited in its growth potential, both in building projects and employment.
"MCC is part of the State University of New York, and I think it’s very clear that Gov. (Andrew) Cuomo has seen SUNY as a real engine of economic development in the region and in the state," Kress said. "We have 64 SUNY campuses and several in the Finger Lakes region. The strength of a state’s public education system has a great deal to do with their ability to capitalize on economic development potential."
Being nimble and ready to adapt to change is key.
"There are a lot of interesting things on the horizon that will affect the nature of what we do," Destler said. "We want to be able to adapt."

Megan Goldschmidt was a Rochester Business Journal summer intern.

10/12/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.


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