Air Force Academy pours millions into local economy

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In a May 15 news release, Rep. Joel Hefley said, “Fort Carson and the other military bases in El Paso County are the cornerstones of our community’s identity, economic prosperity and growth.” Hefley, Sen. Wayne Allard and administrators from the Greater Colorado Springs Chamber of Commerce have co-written a plan – the El Paso County Military Installation Retention Initiative – outlining strategies and tasks to safeguard El Paso County’s military installations during the military’s BRAC (base realignment and closures), scheduled for 2005.

Meanwhile, one of the most prestigious cornerstones of the county’s identity – the U.S. Air Force Academy – is about to release its 2003 economic impact study. As the government determines the fate of military bases in the Springs and nationwide, the Air Force Academy is home safe, and it is a good thing. Its financial booty to the community is staggering.

Lt. Col. Randy Howard, the academy’s director of financial management, discussed the soon-to-be published impact study statistics and the tangible ways in which the academy affects the local economy.

In 1992, the military dropped the requirement that bases throughout the country had to develop an economic impact study relative to their individual communities. Howard said most bases, because of BRAC schedules, continued to generate some kind of financial impact document. However, he said at least 100 different methodologies were used to compose the figures, and no two studies were alike.

In 1995, Air Force personnel and others met with the Department of Defense to develop a base model for all economic impact studies. Although the impact studies remain optional, all base personnel are required to use the model if they choose to compile the impact figures. “That way, we are comparing apples to apples throughout the United States,” Howard said.

The model identifies three main components: payroll figures, annual base expenditures and the estimated number and dollar value of indirect jobs.

Academy payroll figures are broken down to active duty military, cadets, non-appropriated civilians (contract civilians who are in private business but exist solely for base support, i.e. on-base banks, credit unions) and appropriated civilians (tax-supported government jobs). Even though the bank or credit union pays the non-appropriated civilian salary, Howard said the academy counts those numbers because, without the academy’s presence, the jobs would not be available.

In 2003, the academy’s active duty military were paid $123.3 million, and cadets received $45 million in pay. The non-appropriated civilian payroll added up to $18.1 million, which included $1 million for contract civilians; the appropriated civilian payroll was $84.5 million. The total payroll figure increased from $268.8 million in 2002 to $271million in 2003.

A good chunk of the $271 million is spent in the Pikes Peak region. Although many people on the academy’s payroll live on base and shop at the commissary, all of them spend money one way or another in the area. Civilian employees usually live off base, and their academy paycheck is a boost to the area housing industry. Military personnel, too, like Howard, who lives in downtown Colorado Springs, are contributing to the housing market by living off base.

What does the academy spend in the local area?

Annual base expenditures are divided into three categories: construction, service contracts and materials and equipment. “We don’t count everything we spend because some of our expenses won’t affect the economy,” Howard said. “The numbers are close, but it’s not an exact science.” Construction accounted for $111.4 million of the 2003 academy’s expenses, compared to $61.6 million in 2002. “Even if we hire out-of-state contractors for a job, they still have to hire locally and buy parts and lumber for the project,” Howard said.

Service contracts included in the study are contracts that affect the local area only or specify the use of locally supplied goods and services. A good example is a janitorial service, Howard said. The Springs service industry gained $55.5 million in revenue from the academy in 2003. In 2002, the academy paid more than $35.8 million to service-oriented businesses.

The materials and equipment category is a catchall for the remaining expenditures, Howard said. Included in this category is health care – monies spent outside of the military’s health care system. “We can only capture what the government pays toward private health care, but there are co-pays, too, that are not included in these figures,” Howard said. In line with health care costs, the figure is rising. In 2002, the academy poured $13.9 million into the local private health care system – they spent almost $6 million more in 2003 for a total of $19.7 million.

Also included under materials and equipment are educational expenses – tuition reimbursement and impact aid. The academy offers opportunities to its military personnel who wish to further their education through courses at other universities, such as the University of Colorado at Colorado Springs and the University of Phoenix. Because the people who live on base do not pay property taxes, the federal government financially supplements the local school districts. The total amount spent on education in 2003 was $3.5 million, compared to $2.6 million in 2002.

Other line items in the materials and equipment category include locally purchased supplies like office supplies and furniture, computers and produce for the commissary. “When people come to the academy on business trips, we might house them at local hotels, and the expense is counted in this category,” Howard said.

Annual base expenditures totaled $250.5 million in 2003, a sizeable increase from 2002’s $172.4 million.

The last component of the study model is the estimated number and dollar value of indirect jobs created because of the academy’s existence in the community. In 1995, the academy hired Logistic Management Institute to configure a method to determine the number of jobs created in the area because of the academy’s presence. Institute administrators came up with various job category-specific percentages that are then multiplied by the number of personnel in each job category.

For example, there are 2,041 active duty military personnel in Colorado Springs, Howard said. That number is multiplied by 0.41 percent (previously determined by Logistic Management), and the result – 837 – is the actual number of jobs (not directly related to the academy) that would be lost if the active duty people were not based here, Howard said. The highest multiplier – 0.55 percent – is used in conjunction with civilians, the largest number of academy employees.

To figure the dollar value, the academy uses the number of jobs lost in each category, i.e. 837 for the active duty military category, and multiplies it by the average Springs salary, which is based on the latest Bureau of Labor statistics. Howard said the last labor statistics figure listed for the average Springs salary was $34,958 in 2002. The academy increased the salary figure by a small percentage to estimate the 2003 salary average.

The final tally for the estimated number of indirect jobs created by the academy in 2003 was 3,403, and the estimated value of those jobs was $118.9 million. The 2002 estimates: 3,498 jobs valued at $120.3 million.

The total dollar amount that flowed into the Springs economy in 2003 as a result of the academy’s payroll, expenditures and indirect influence on the job market was $640.4 million. The grand total for 2002 was $561.4 million. Both figures represent the tangible economic impact. Howard said the force is much greater when the intangible factors, such as special events – football games, graduation
, etc. that bring in thousands of people to the academy and the community – and airline flight travel and tourism, are factored in.

Elizabeth Youngquist, director of public relations and marketing for the Colorado Springs Convention and Visitors Bureau, agreed with Howard. “The Air Force Academy is the No. 1 tourist attraction in the area, second to Garden of the Gods,” Youngquist said. “The impact is huge.”

The CSBJ is publishing a special section celebrating the Air Force Academy’s 50th anniversary later this year. At that time, Youngquist and others, such as Jeff Markovich, the vice president of military affairs for the Greater Colorado Springs Chamber of Commerce will address how the academy’s unapparent impacts affect the local economy.

Meanwhile, President Bush is speaking next week at the academy’s graduation ceremonies, adding more than financial infusion into the local economy. His presence also supports the academy’s presence as a cornerstone of the community’s identity.