HAYS, Kan. -- As the Legislature enters another session faced with declining revenues, higher education officials have cautioned that any further cuts in financial support for the Kansas Board of Regents system will damage the future of the state.

Dr. Edward H. Hammond, president of Fort Hays State University, warns that cuts to higher education also damage the communities, such as Hays, where the state universities are located.

"We periodically study the economic impact of FHSU on the city and county," President Hammond said. "During the fiscal year that ran from July 1, 2006, through June 30, 2007, the university had a total impact of $194,104,551 locally. It follows logically that reductions in the FHSU budget since fall 2008 must naturally produce a corresponding reduction in local business activity."

State funding for higher education has been cut by $106 million, which takes support for the Regents system back to the funding level of three years ago. As a result, 750 jobs have been eliminated systemwide, and more than 450 programs and classes have been eliminated or curtailed. FHSU has been cut more than $4.5 million.

"I asked Dr. Tom Johansen, professor of economics and finance and co-author of the 2007 study of FHSU's local economic impact, to analyze the impact of the budget cuts locally," President Hammond said. "Dr. Johansen concluded there has been a reduction of more than $8 million in the local economy."

The economic impact of FHSU on the Ellis County economy has three components: a direct effect, an indirect effect and an induced effect. Essentially, money "ripples" through the local economy, producing a multiplier effect. Some studies wildly inflate the ripple effect by using an exaggerated multiplier, but the president noted that Johansen used a conservative approach that, if anything, underestimated FHSU's impact.

"The direct effect is the amount of money that FHSU spends in the local economy," Dr. Johansen explained. "That is, FHSU purchases goods and service from local firms. Those businesses that receive money from FHSU also purchase goods and services and hire people who will spend their wages and salaries in the local economy. This additional amount of spending by businesses that receive income as a result of FHSU spending is the indirect effect. Finally, employees of FHSU and employees of FHSU vendors also spend a portion of their wages and salaries locally, and that produces the induced effect."

"With a reduction of spending by FHSU, spending will also be reduced by others within the economy, i.e., the direct effect, indirect effect and induced effect work in reverse," Dr. Johansen further explained. "If FHSU reduced spending by $4,500,000, then the 'ripple effect' is estimated to be an additional $3,600,000 reduction in spending, for a total economic impact of $8,100,000 reduction in total spending in the local economy. These are approximations based on historical data."

Dr. Johansen's estimates of the reductions in local economic impact as a result of the cuts in state funding for FHSU:
· Direct effect -- $4,500,000;
· Indirect effect -- $900,000;
· Induced effect -- $2,700,000;
· Total impact -- $8,100,000.

"As we entered this economic downturn, we established planning principles to guide our budget decisions," President Hammond said. "Our first four principles -- serve students; protect faculty and staff; ask people to do more; and keep costs down for students -- were directed internally. However, we are very aware of the important relationship between the university and the community. Neither can flourish unless both are healthy. Therefore, we adopted a fifth planning principle -- minimize the impact of cuts on the local community -- that was directed outward."

Accordingly, FHSU played a key role in supporting the $10-million Hays Sports Complex. The university will directly spend $2 million dollars for a soccer stadium in the complex. In addition, work continues on the $5.39-million renovation of Picken Hall using a local general contractor. FHSU will use the major share of its $2.8 million in federal stimulus money to pay for deferred maintenance projects, which also will provide work for local contractors. These projects include an overdue roof replacement at Rarick Hall, replacement of the final 250 feet of the original tunnel that carries utilities into campus buildings, and a multi-year Campus Electrical Improvement Project, which will modernize electric lines that deliver power to campus buildings. Also of note, in partnership with Virginia Tech and several other universities, FHSU constructed two Super Dual Auroral Radar Network antennas that will study the impact of the changing solar winds on Earth's near-space environment.

"We believe strongly in being a good partner with the local community, and we have literally backed up that belief with money," President Hammond said. "Now we need the local community to voice its support for higher education. For the sake of our community, our young people and our state's economic future, we must educate our way out of this recession. Any further cuts to higher education will cause damage that will require decades to repair."