Study shows UH Hilo College of Pharmacy stimulates economy statewide

University of Hawaiʻi at Hilo

By the time its inaugural class graduates in 2011, the University of Hawaiʻi at Hilo College of Pharmacy (CoP) will stimulate more than $50.2 million per year in economic activity in the state. The college will support an additional $15 million in earnings by that time, according to a study by a UH Hilo economist.

"If growth continues as planned, our data shows the College of Pharmacy will more than double its current output, making it a significant growth pole within the university as well as within the state," said Dr. David Hammes, UH Hilo professor of economics.

Hammes conducted an analysis of the current and projected economic impact of the CoP. The data was based on the period between 2008 through 2012.

"I am pleased to see tangible evidence of residents of the Big Island strengthening the economy and showcasing our academic and research capabilities, and I congratulate a far-seeing university administration, specifically Chancellor Rose Tseng, as well as the Board of Regents for their support of this effort to build a professional College of Pharmacy in our state," said U.S. Senator Daniel K. Inouye.

CoP is bringing in $4.2 million revenue from tuition for the 2008-2009 academic year, Hammes found in his study. These are tuition dollars that would not come to Hawaiʻi without this program because UH Hilo is the only school in the Pacific Basin that offers a doctorate in pharmacy, or Pharm.D., Hammes pointed out.

"Building a college that educates pharmacists in Hawaiʻi owes a great deal to the leadership of Chancellor Rose Tseng and Dr. Jerry Johnson," said David McClain, president of the 10-campus University of Hawaiʻi System. "Their vision and its execution represent yet another channel via which the university is a positive force in the economy of our state."

The college attracts students and family from out-of-state who would otherwise not be here, Hammes said.

"CoP keeps students in-state who would leave to attend Pharm. D. programs elsewhere. It's also interesting and important to note that wage and salary costs associated with the 27 new faculty and staff jobs currently state-funded within the college are significantly more than funded by the new tuition revenues alone," Hammes added.

But beyond tuition revenues, students, faculty and staff are responsible for injecting $7.7 million into the local economy this year through increased spending by visitors, attracting grant and research funds, and on spending for living expenses. Hammes found that direct expenditures of $12 million result in a total increase of $22.8 million in increased demand for final goods and services within the state and supports 274 new jobs statewide. These impacts will grow as the college expands, Hammes said.

"The College of Pharmacy facilitates economic development by training health care professionals, conducting research, and forming collaborative partnerships," noted U.S. Senator Daniel Akaka, D-Hawaiʻi. "The economic benefits of the College of Pharmacy will continue to increase as enrollment, research and collaborative efforts grow and develop further."

Hammes said most of this increased economic activity can be expected to be in Hawaiʻi County, though CoP has a presence statewide. Some of the expenditures would be made in the other counties by way of visitor expenditures and research spending.

"I am a big fan of Dean Pezzuto and the College of Pharmacy," said Hawaiʻi Mayor Billy Kenoi. "I truly believe it will have a significant, positive long-term educational and economic impact on our community."

Every dollar generated by the program is new, and not at the expense of other university or state program, Hammes said. In addition, each dollar used by the state in salary and wages for CoP attracts a new $3.38 from outside sources, including tuition revenue, student and visitor spending. If the college grows as planned, this figure will be $4.04 by 2012 and will level out to $3.58, Hammes said.

"Another way to measure the impact is by measuring the increase in new output per 'state' dollar, including the direct and indirect, or multiplier, effects," Hammes explained. "This figure is close to $9 for every $1 of state wage and salary funding."

When the college has completed its growth arc and reaches its steady-state number of approximately 350 students in 2011-2012, Hammes projects:

• Tuition revenues will more than double to $9.6 million, assuming no change in Board of Regents-approved tuition rates.
• Statewide earnings induced over this four-year trajectory will rise from $6.9 million to $15.3 million.
• New job creation across all industries statewide, including housing, food, utilities, transportation, personal services, etc., will rise from 274 to 610.
• Demand for final goods and services within the state will increase from $22.8 million to $50.2 million.

Hammes said that through time, the college will attract more external funding through increased research funding, continuing education and conference activity that may take place anywhere in the state, bringing in out-of-state funds.

"These activities take time to get up and running, but the college certainly has the expertise to accomplish that," Hammes said.

CoP seated its inaugural class in fall 2007. Current plans call for the addition of 90 students per year for a total of four classes. The college has grown from a staff of about 15 to 32. Over the next few years, plans call for reaching a total staff of about 70.

"It's heartening to know of the positive influence we have on the finances of the state during these tenuous economic times," said Dr. John Pezzuto, dean of CoP. "More importantly, however, our continuous growth means we can concentrate on another matter of utmost importance, which is improving the condition of healthcare in Hawaiʻi and throughout the entire Pacific region."

Chancellor Tseng said the school fulfills a longstanding need in the Pacific, and an exceptional faculty has attracted top students from around the globe.

"We are justifiably proud of the success of our College of Pharmacy, and we thank both Senator Daniel Inouye and the State Legislature for their continued support," she said. "The need for pharmacists is ongoing, which makes the UH Hilo College of Pharmacy an excellent investment both in and for Hawaiʻi."

Hammes has taught at UH Hilo for 21 years and has conducted economic research in a number of areas, including a historical analysis on the formation of the U.S. Federal Reserve. In 2003, he was awarded the Regents‘ Medal for Excellence in Teaching.